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Tuesday, October 19th, 2010
8:50am (EST)
You can’t always get what you want…
The bulls finally got some good news from the Financial sector as Bank stocks helped push the market higher on Monday. We talked about Citigroup’s (C, $4.17, up $0.22) numbers yesterday as the company reported a better-than-expected quarter and also said it is seeing less credit provisions. Strength among this group, which has been battered and bruised over foreclosure issues, helped push the Financial sector to a 2.3% gain for the day.
As far as the major indexes, the Dow added 81 points, or 0.7%, to finish at 11,143. The index trade to a high of 11,159 and right into our 11,150-11,200 zone but could not close inside this area. Although the Dow was able to settle atop the 11,100 level for the first time since early May, we knew these hurdles would be hard to clear as the bulls push towards the April highs.
The S&P 500 banged out a 9 point gain, or 0.7%, and ended at 1,184. We have been watching for the 1,170-1,175 area to hold and the index trade to a low of 1,174 before rebounding on a possible push towards 1,200.
The Nasdaq added 12 points, or 0.5%, to finish at 2,480 after trading in the red for much of yesterday’s session. The index traded to a low of 2,462 which is in our 2,450-2,500 zone and went out on its high for the day. However, all of our resistant targets will have to wait as futures are pointing towards a nasty open this morning.
Apple (AAPL, $318.00, up $3.26) posted better-than-expected results for their latest quarter after the bell on Monday, but got spanked despite strong sales of its iPhone. The problem was with the company’s iPad, which sold extremely well, but fell short of Wall Street’s projections.
Specifically, Apple sold 9 million iPod’s during the quarter, 14 million iPhones, 4.2 million iPads, and 3.9 million Macs. The iPad number was well short of the 4.8 million units that were baked into the cake but Apple simply couldn’t make them fast enough as there was a backlog for some components that make up the device.
Although profits came in at $4.3 billion, or $4.64 a share, it wasn’t enough to offset the high expectations that investors were looking for. Revenue jumped nearly 70% to over $20 billion.
These numbers were higher than the $4.06 a share on revenue of $19 billion analysts had penciled in but gross margins (36.9%) slipped and the company offered a weaker guidance going forward. Apple said it sees current quarter earnings at $4.80 a share, versus $5.04 a share, on sales of $23 billion, versus estimates of $22 billion.
Shares of Apple are down $14.45, or 5%, to $303.55 in early action.
Elsewhere, International Business Machines (IBM, $142.83, up $1.77) posted better-than-expected results after the bell as well. Nothing new here, as the company also raised earnings guidance for the full year.
“Big Blue” reported a profit of $2.82 a share, on revenue of $24.3 billion. The knuckleheads were looking for $2.75 a share on sales of $24.1 billion. Looking forward, IBM raised its 2010 earnings forecast to $11.40 a share from a previous estimate of $11.25 a share. Analysts are currently looking for $11.29 a share.
Shares of IBM are down $4.78 to $138.05 in pre-market trading.
Apple and IBM are heavily weighted on the major indexes so we can expect a lower open as futures are looking ugly.
Dow futures are lower by 38 points to 11,007 while the S&P 500 futures are off by 7 points to 1,171. The Nasdaq 100 futures are down 23 points to 2,071. Subscribers, check the Members Area for the updates.
Tags: Apple (AAPL), IBM, option trading picks
Posted in Apple, Earnings | Comments Off
Monday, October 18th, 2010
1:05pm (EST)
The market started off in the red but has rebounded as the bulls look to extend their 6-week rally that they hope will take them through the April highs. The bears got out of bed early, started the campfire, and then went back sleep. The few that showed up took a shot at support, but there wasn’t any backup for the bears to make a meaningful dent to the downside.
There will be a flood of earnings releases this week and economic data will also come into play as Wall Street gets ready. The bulls got some good news and moved the indexes higher after the release of the NAHB Housing Market index, a survey of homebuilder confidence. The reading came in at 16, up 3 ticks, while expectations were for 14, and better than last month’s print of 13.
Elsewhere, September Industrial Production was down 0.2% versus hopes for a 0.2% pop while September Capacity Utilization came in at 74.7% compared to expectations for reading of 74.8%.
Turning to earnings, Citigroup (C, $4.13, up $0.18) is up over 4% after reporting better-than-expected numbers. The company posted a profit of $2.2 billion, or $0.07 a share, versus a loss of $101 million, or $0.27 a share, in the year earlier period. Wall Street had penciled in a profit of $0.06 a share.
Revenue came in at $21 billion for the quarter, but Citigroup said it took an $800 million pre-tax loss on the sale of its student lending operations, or they would have earned $2.6 billion, or $0.08 a share.
Hmmm…We were particularly interested in our last sentence as we still have the Educational sector on our radar. We may have missed an Apollo Group (APOL, $37.21, up $0.63) option trade as we watched shares drop from $50 to current levels in under a week but we still see more pain for the sector. We have added Apollo’s ugly cousin, Strayer Education (STRA, $131.18, down $0.39), to our Watch List.
This will be the first “peak” week of 3Q earnings so expect the volatility to pick up as 11 of the 30 blue-chips that make up the Dow will announce while more than 100 of the S&P 500 companies are set to report.
We expect a BUSY week and we may be sending alerts outside of our normal updates so stay locked and loaded. Don’t forget, you can sign-up for our cell phone alerts or you can follow us on Twitter so you don’t miss any action.
We will be back in the morning with a full update and as we head to press, the Dow is up 45 points to 11,108. The S&P 500 is up 2 points to 1,179 while the Nasdaq is up a point to 2,469. Subscribers, check the Members Area for the updates as one of our trades is approaching a triple-digit return. We have SPECIAL INSTRUCTIONS on how to play it from here on out.
Tags: Apple (AAPL), Citigroup (C), Option Trades
Posted in Market Analysis, Market Commentary | Comments Off
Friday, October 15th, 2010
1:20pm (EST)
Although the futures were pointing towards a higher open , you could almost feel the nervousness in the bulls as Ben Bernanke spoke this morning before the market opened. A lot has been riding on the real “Big Ben” as he tries to quarterback the economy into the endzone and if he could make interest rates below 0% to where the government pays us to borrow money, he would.
 Daily chart of support and resistance for AAPL. We will save our long-term comments on how he is driving down the American dollar but at some point, the printing presses can’t run forever.
In any event, Bernanke reiterated the central bank is ready to do more to stimulate the sluggish economy and his comments were the latest confirmation the central bank is about to ramp up its purchase of Treasury bonds to spark growth. We wouldn’t be surprised if it were Monday. No wonder our assessment of government economic policies have fallen to the lowest level since Obama took office.
Bernanke’s comments helped the futures strengthen and better-than-expected economic news led to a decent open. Retail sales continue to surprise as they rose 0.6% month-over-month in September. Wall Street was expecting a 0.5% increase. The Empire State Manufacturing Index rose to 15.73 in September, compared to estimates of 8.0. The consumer price index (CPI) rose 0.1% month-over-month in September but fell short for estimate of 0.2%. Excluding food and energy, the CPI was unchanged last month.
Business inventories increased 0.6% in August which was better than expectations for a 0.4% gain. And finally, the Reuters/University of Michigan consumer sentiment index for October came in at 67.9, versus the consensus estimate of 69.0.
However, the Financial stocks are getting whacked again and we continue to say they will need to rebound and get healthy before the bulls can push through the April highs and start a real run at higher levels. It was just 3 years ago this month the Dow was at 14,000…
The Dow managed to open higher and made its way to a high of 11,141 but sold-off after some of the economic news hit. The index then traded to a low of 11,010 and as you can see in the 130 point swing, volatility is picking up. The index continues to test our 11,150 target and a close above this level will have the bulls feeling good over the weekend. Currently, the Dow is down 40 points to 11,054.
The S&P 500 is staying within our 1,170-1,175 range and is flat at 1,174. A close above 1,175 today should lead to a test of 1,200 next week so we are watching this level like a hawk.
The Nasdaq traded above our target of 2,450 yesterday but didn’t close there but has broken through this level on the heels of Google’s (GOOG, $$599.93, up $59.00) blowout quarter. The index is trading at 2,458 (up 23 points) and a close above our target should lead to a push towards 2,500. However, we said the other day the Nasdaq could see 2,600 and the index has a good chance of doing that on Monday if Apple (AAPL, $310.00, up $7.69) can once again impress Wall Street.
The company reports earnings on Monday and it could shape the direction of Tech over the next few weeks. Apple should report great earnings but expectations are high. The only problem that worries us is the shortage of supply on some of the components used to make the iPhone and iPad. However, if Google can do it, we are sure Apple can follow suit.
One analyst came out today with a $500 price target for shares of Apple.
As far as Google, some traders took a chance on the October 600 calls (GOOG101016C00600000, $1.00, up $0.60) before the close yesterday as they were only selling for 40 cents. In our training video for our options manual “How to Trade Options on Momentum Stocks”, our editor-in-chief went over how to look at playing Google’s earnings.
Although there was no recommendation, this type of trading out-of-the-money calls (or puts) are like going to a casino. Sometimes they hit, sometimes they don’t but you have to act fast and you have to know what you are doing. The October 600 calls are currently at $1 but they traded to a high of $5.90 at the opening bell!
Had you bought 10 contracts of the Google 600’s, it would have cost you $400. Imagine this morning waking up to a gain of $5,500! Or, if we expand it for the high rollers, a $4,000 investment would have been worth $55,000. The ROI (return on investment) would have been 1,275%.
Now this is important, since October options expire today, the battle ground will be if Google stays above or below $600 a share. If the shares stay below $600, these options will expire worthless and as we go into the close today, these options could trade wildly. The key was to get in yesterday before the close and out at the open today.
We show you how to find these trades and we have played them in the past with the likes of Priceline.com (PCLN, $355.20, up $6.14), Nike (NKE, $82.27, up $0.50) and others but we didn’t feel like going to Vegas this week. However, we are going over this weekend as we have a trade for Monday.
If you are serious about taking your trading to another level and want to learn how to find trades like this, then you should seriously consider a purchasing to our trading manual. We will be doing another video this weekend to go over other types of trades and we look forward to you joining us!
For October, we are also offering a free 1-month subscription to our exclusive Members Area if you purchase the option trading manual. You can get a peak at what’s inside by clicking on the hot, shiny yellow button to your left on the website.
We have some last minute updates before the weekend which is why we are running a little late today. We are swinging the bat on an earnings trade for Monday and wanted to do a little more research. Subscribers, check the Members Area for the NEW TRADE!
We will be back Sunday night with the Weekly Wrap and until then, have a good weekend!
Tags: Apple (AAPL), Google (GOOG), options trading course
Posted in Apple, Google | Comments Off
Wednesday, October 13th, 2010
12:40pm (EST)
Futures were pointing towards a strong start following better-than-expected corporate earnings and overall optimism is in the air as the bulls’ continue to push through resistance. We covered the key levels we were looking at this morning and on Monday – Dow 11,150-11,200; S&P 500 1,170-1,175; and Nasdaq 2,450-2,500 – and we are right on target.
The market paused shortly after the open as it met resistance at some of these levels but quickly resumed its steady climb higher throughout the day.
We have a lot going on but we wanted to cover Apple (AAPL, $301.40, up $2.86) which is at all-times highs after topping $300 a share. The company continues to see white-hot iPad sales with Wal-Mart (WMT, $54.26, up $0.34) coming into the mix shortly and there is also the obvious rumor about a “Verizon iPhone” in early 2011. A planned expansion into China will only add to the momentum as the company prepares Wall Street with their earnings which are due out next Monday (10/18).
We would love to see Apple do some sort of stock-split and the company has in the past. If Apple can come in with better-than-expected earnings AND they announce a split, then shares could explode higher. Our only hope is that they don’t say something negative which would certainly ruin the bulls’ current momentum.
There is a lot happening inside our Members Area and we will be back in the morning with a full update but we wanted to go over our new trades. We are also hopeful that we will have our first video ready this afternoon or later this evening for those of you who have purchased our trading manual, How to Trade Options on Momentum Stocks, so we are sending today’s update out a little early as we spend the afternoon getting it to the internet for those of you have already purchased the trading course. Look for a special email later on today.
Remember, we are offering the option course for a very reasonable introductory offer and once we get the videos done the price will go up. We are also including a free 1-month membership to our exclusive trade picks (a $129 value) for a limited time for those of you who purchase the course now. This offer will likely end soon, so don’t delay. If you are serious about learning how to trade options then we believe you will find no better trading manual (with videos) at a better price.
We recommended 3 NEW TRADES this morning so we are also a little early as we wanted to go over them with our current subscribers.
As we head to press, the Dow is up by 124 points to 11,144 while the S&P 500 is higher by 13 points to 1,183. The Nasdaq is showing a 29 point pop and is at 2,447. We can’t call it any better than this, folks.
Things are looking good in the bulls’ neighborhood…
Tags: Apple (AAPL), Apple's next earnings
Posted in Apple, Earnings | Comments Off
Monday, October 4th, 2010
12:40pm (EST)
The market stayed in a tight range for much of today’s session but the sell-off has picked up steam as both the bulls and bears get ready for October. After a strong September, the bulls will be looking for history to repeat itself, as it usually portends a positive October and fourth quarter going forward.
According to the numbers, when the market rises 5% or more in September, October is up, on average, 1%. There was one occurrence, in 1939, following this type of September returns where the market did not advance in the fourth quarter so the bears have some “history” too.
We have mentioned over the past month that volume continues to be light and we think that trend could continue as we see a lot of people were sitting out the volatility and waiting for a trend to emerge. Volume could pick back up as we head into the bulk of earnings season but until we get a breakout, we feel this market will remain range bound.
The Dow is currently down 101 points to 10,728 and is back below the 10,800 level. Short-term support will come in at 10,600 but a break below this level will likely lead to a test to the bottom of the current 4-month trading range.
The S&P 500 is off by 12 points to 1,134 and the bulls will have to hold the 1,125-1,130 level to keep the bears from gaining serious momentum. The index has traded to a high of 1,148 and the continued test and fail of the 1,150 level is doing some serious technical damage to the index. However, if we get a breakout above 1,150 and it looks like it’s a real breakout, it will give the bulls confidence for another push to new highs for the year.
The Nasdaq is lower by 34 points to 2,336 and is back below the 2,350 level. We have been mentioning a possible top at 2,400 which was hit last Thursday and support will come in at 2,300.
As far as specific stocks, Microsoft (MSFT, $23.85, down $0.53) is down 2% after getting a downgrade from Goldman Sachs (GS, $145.48, down $2.22) based on valuation. Shares were cut to “Neutral” as the company continues to struggle to gain market share in mobile devices which is the wave of the future.
Microsoft’s price target was also cut from $32 to $28.
We don’t get too hung up on analyst upgrades and downgrades because most of the time they are late to the party and issue an alert after the fact. However, we can agree with this one as shares of Microsoft have been a boring investment over the last decade.
The problem with Microsoft lies with its CEO, Steve Ballmer, who has failed to see the growing trend to mobile computing. The company has struggled to match mobile devices from rivals like Apple (AAPL, $278.91, down $3.61) and Google (GOOG, $522.05, down $3.57) whose iPhone, Droid smartphones and the iPad have revolutionized how people get information and keep in touch now.
These devices have the potential to hurt computer sales going forward as consumers start to favor tablets and are developing a loyal following. This should keep a lid on Microsoft’s share price but the company needs a change at the top if it is to stay competitive with the changing world.
It looks like the bears could get serious today and it will be interesting to see how the close shakes out. Subscribers, check the Members Area for the latest updates.
Tags: Apple (AAPL), explain the concept of options, Microsoft (MSFT), momentum options trading, Nasdaq: AAPL, option picks, option trading blog, option trading course, option trading courses, straddle option trades, strangle option trades, triple-digit options returns
Posted in Apple, Market Analysis | Comments Off
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Citigroup (C) Surprises, Apple Announces (AAPL) After the Close
Monday, October 18th, 2010
1:05pm (EST)
The market started off in the red but has rebounded as the bulls look to extend their 6-week rally that they hope will take them through the April highs. The bears got out of bed early, started the campfire, and then went back sleep. The few that showed up took a shot at support, but there wasn’t any backup for the bears to make a meaningful dent to the downside.
There will be a flood of earnings releases this week and economic data will also come into play as Wall Street gets ready. The bulls got some good news and moved the indexes higher after the release of the NAHB Housing Market index, a survey of homebuilder confidence. The reading came in at 16, up 3 ticks, while expectations were for 14, and better than last month’s print of 13.
Elsewhere, September Industrial Production was down 0.2% versus hopes for a 0.2% pop while September Capacity Utilization came in at 74.7% compared to expectations for reading of 74.8%.
Turning to earnings, Citigroup (C, $4.13, up $0.18) is up over 4% after reporting better-than-expected numbers. The company posted a profit of $2.2 billion, or $0.07 a share, versus a loss of $101 million, or $0.27 a share, in the year earlier period. Wall Street had penciled in a profit of $0.06 a share.
Revenue came in at $21 billion for the quarter, but Citigroup said it took an $800 million pre-tax loss on the sale of its student lending operations, or they would have earned $2.6 billion, or $0.08 a share.
Hmmm…We were particularly interested in our last sentence as we still have the Educational sector on our radar. We may have missed an Apollo Group (APOL, $37.21, up $0.63) option trade as we watched shares drop from $50 to current levels in under a week but we still see more pain for the sector. We have added Apollo’s ugly cousin, Strayer Education (STRA, $131.18, down $0.39), to our Watch List.
This will be the first “peak” week of 3Q earnings so expect the volatility to pick up as 11 of the 30 blue-chips that make up the Dow will announce while more than 100 of the S&P 500 companies are set to report.
We expect a BUSY week and we may be sending alerts outside of our normal updates so stay locked and loaded. Don’t forget, you can sign-up for our cell phone alerts or you can follow us on Twitter so you don’t miss any action.
We will be back in the morning with a full update and as we head to press, the Dow is up 45 points to 11,108. The S&P 500 is up 2 points to 1,179 while the Nasdaq is up a point to 2,469. Subscribers, check the Members Area for the updates as one of our trades is approaching a triple-digit return. We have SPECIAL INSTRUCTIONS on how to play it from here on out.
Tags: Apple (AAPL), Citigroup (C), Option Trades
Posted in Market Analysis, Market Commentary | Comments Off