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Monday, June 7th, 2010
1:10pm (EST)
The bulls tried to rally the market at the open but after a brief stay in positive territory the major indexes are mixed. The euro fell to a low of $1.188 before bouncing back to $1.192 which helped stabilize the overseas market but the trend is still bearish and isn’t going to change anytime soon.
We are watching the $1.180 level for the euro which is where the currency ended its first day of trading back in January 1999. The 10-year average for the euro against the dollar is $1.20 and we wouldn’t be surprised if $1.15 is taken out.
Biotech is making a lot of noise today with mixed results but we are watching shares of Dendreon (DNDN, $38.26, down $2.58) which are down 6% today. Investors seemed disappointed when the company’s CEO said they had no plans to partner with someone to produce Provenge faster. He said they have a few more plants coming on board to manufacture the drug and that they are the experts on Provenge with plenty of support to move the company forward.
Dendreon has spent nearly $1 billion over the past 15 years to bring Provenge to the market so they have a game plan in place. In fact, we can’t blame them for doing it their way and their pipeline could yield other cancer cures. If shares fall back to $32 then we would seriously think about actually buying the stock but there may also be a chance to buy some longer-term call options.
Apple (AAPL, $256.27, up $0.30) was trading lower but has turned around. The company is unveiling its 4G iPhone during its annual software developer’s conference in San Francisco today. There is a lot of chatter on what new features have been added and we are hearing a higher-resolution screen, improved battery life, a cooler camera and the ability to multitask.
 AAPL 15-minute chart The bad news from all of this is that AT&T (T, $24.58, up $0.41) has eliminated its unlimited monthly data plans for new users of the iPhone and iPad. If you haven’t been with AT&T then you will have to choose between two data plans with monthly usage limits and pay more for extra use. There has been talk that Apple will partner with other carriers so AT&T could be taking a big risk trying to squeeze out more revenue.
As we head to press, The Dow is trading higher by 20 points and is at 9,952 while the S&P 500 is up 2 to 1,067. The Nasdaq is showing a 7 point loss and was last seen at 2,211.
We have a lot to cover with our current trades and there are a few others on our Watch List that are making some nice moves today. Current subscribers, check the Members Area for the updates as we expect any rally to fade.
Tags: AAPL, Apple, AT&T, Dendreon, dndn, momentum options trading, option picks, options alerts, stock options trading, T
Posted in Apple, BioTech, Company Commentary | Comments Off
Thursday, May 27th, 2010
9:00am (EST)
The bulls put on a good show for much of yesterday’s session, but the lack of follow-through has been apparent for a few weeks now. Despite some robust economic news, the bears were able to erase all of the gains their counterparts had made and scored a huge win after the euro fell in late trading.
We mentioned yesterday in our 1pm update we didn’t think the rally would hold, and when word spread that China was reviewing its holdings of European bonds, well, things turned south. Folks, if China starts losing faith in the euro and starts selling some of its Euro bond holdings then we could see new lows for the currency which is already at a 4-year bottom.
As a result, the Dow gave back a triple-digit gain of 135 points to finish Wednesday at 9,974, a loss of 69 points, or 0.7%. The index had only closed below 10,000 once this year which was back on February 8th when it closed at 9,908. Since then, it has traded below that psychological level a number of times but has managed to close above it. Not yesterday.
The S&P 500 fell a half-dozen points, or 0.6%, to settle at 1,067 while the Nasdaq gave back 15 points, or 0.7%, to finish at 2,195. It was also the first time since mid-February that Tech has closed beneath the 2,200 level. This is the exact target we told you to watch for and yesterday’s close confirmed our beliefs that the Nasdaq will take out the 2,000 level.
On a positive note, we thought we would roll out the red carpet for Apple (AAPL, $244.11, down $1.11) this morning after the company passed Microsoft (MSFT, $25.01, down $1.06) as the #1 “Tech” company as far as market cap.
This is a rather important event, but even more glaring is the hidden message Microsoft’s stock price is telling us. Shares have folded like a cheap lawn chair since last week after basing in the $28-$31 area since mid-February. The next level of support for the stock is at $23 and if that is broken then Microsoft could be headed to $20.
Apollo Group (APOL, $53.40, down $1.66) and Moody’s (MCO, $20.88, down $0.36) are on the move this morning and were two recent trades that we recommended.
We took a 16% hit on Apollo after the parameters of the trade were broken but we have been warning our subscribers to stay away from this dog for years. Justice might not have been served on our recommended option trade, but the 52-week low of $52.20 looks like it will fall today.
We didn’t like the volatility when shares shot up to $60 last Thursday on some bogus rumor so we got our subscribers out. However, we should have listened to our gut as the stock looks poised to fall below $50 today.
Moody’s is another joke of a company that we have been all over like grass on dirt. Our subscribers took advantage of the commentary inside the Members Area and were able to turn a put option trade into an 80% winner. We were telling readers to take “half’ position profits in this choppy market, and we ran out of halves as we closed this trade last Tuesday. Shares are poised to sink below $20 this morning and we have said this stock was headed to the teens.
We have been talking about the “faded rallies,” and as we head to press this morning futures are showing a huge open. It’s a busy Thursday, but the Dow futures are up a whopping 154 points to 10,075 this morning which means we are going to have a HUGE open. The Dow futures were up over 200 points but gave a little back after jobless claims came in higher than expected.
We have loaded up our Watch List to take advantage of another faded rally this morning.
Tags: AAPL, APOL, Apollo Group, Apple, MCO, Microsoft, Moody's, MSFT, option picks, option signals, options alerts, stock options trading
Posted in Company Commentary, Market Analysis, Market Commentary | Comments Off
Wednesday, November 25th, 2009
9:00am (EST)
To quote a famous football coach of the Green Bay Packers back in the day…
“What the hell is going on around here?”…
We did a big write-up on A123 Systems (AONE, $17.09, up $2.56) yesterday at 12:45pm when the stock was at $14.75 and shortly after 1pm the stock started soaring. There was no specific news so we are not sure of why the shares surged 17% after we profiled the company.
We did NOT list any call options but if you looked up the stock quote shortly after our update then please email us and say you were able to get into the December 17.50 calls (ZKQLW, $0.95, up $0.80) at lower prices.
Folks, these call options OPENED at 20 cents and traded to a low of 15 cents before ZOOMING over 500% yesterday! The option activity was brisk as nearly 5,000 contracts traded hands. Incredible.
We wish we could take credit for the trade and maybe it was our loyal readers who started to take positions but again, we didn’t list these options as a trade. The only “catalyst” out there could be the news that U.S. electric sports car maker Tesla Motors plans to go public soon.
In any event, we were thisclose to hitting a homerun this week but keep an eye on these call options. We still don’t know where they will end up but consider it a free trade if it does well from here (sly grin). If the stock falls back to $14 then maybe we ”strangle” it with an option trade to capture the volatility for some nice profits.
We have been trying to catch A123 but the price action is hard to predict given the shares have only been trading for a few months. The company’s stock climbed to nearly $20 on the first day of trading (September 24th), a 45% increase from its IPO price of $14. Two weeks later, it made a high of $28.20.
These are the types of stocks we LOVE to trade but we have to be careful with the swings.
Breaking economic news…
Weekly Jobless claims dropped 35,000 for the week ending 11/21 to 466,000, October personal income was up 0.2% and personal spending was up 0.7%. One negative was the durable goods order which came in at -0.6%.
Futures were already higher before the rash of economic news and held up strong following the reports. Dow futures are currently up 63 points to 10,468 while the S&P 500 futures are up 7 to 1,110. Nasdaq 100 futures are up 10 1,796.
We do profile a NEW TRADE this morning and we like its potential for a double. The trade is a play on the housing sector. Current subscribers, please check the Members Area NOW for the trade updates as well…
Tags: A123 Systems, American International Group, Apple, momentum stock option trading, Moody’s, Netflix, option trading online, option trading picks, options mentoring, options newsletters, options track record, support and resistance levels, triple-digit option trades
Posted in Company Commentary, Hot Stocks, Market Analysis, Option Trades | Comments Off
Tuesday, November 24th, 2009
12:45pm (EST)
The market is has come off its morning lows but is still in negative territory for the day. The China news really put a damper on yesterday’s rally. The Chinese banks were pressured by concerns of capital-raises and some regulators want higher capital ratios.
As a result, the Dow is currently down 44 points to 10,406 and the S&P 500 is off by 3 to 1,103. The Nasdaq is lower by 11 points to 2,164.
All of the Financial stocks on our Watch List are mostly lower. These stocks have been tricky to trade which is why we are waiting for the storm to pass. We made some great returns when they bottomed in March and reported back-to-back solid quarters but we are in transition with them right now.
We haven’t shorted the Financials either although there are a few that we still think are due for major corrections…American International Group (AIG, $34.37, down $0.91) is still over-inflated and should be a single-digit stock as well as Moody’s (MCO, $23.64, up $0.67). Patience will pay-off as we feel both of these stocks are headed lower at some point in the future.
Another stock we were/ are looking at is a possible option trade in A123 Systems (AONE, $14.75, up $0.22). We did a big write-up on October 21st and we simply blew this one folks. The stock was at $24 and now stands at $14. The straddle option trade would have been a thing of beauty and we do use them every now and again. We are bullish on A123′s long-term prospects but a spat a bad news has investors bailing like rats on a ship. Here we our thoughts a month ago:
“A123 Systems (AONE, $24.63, up $0.11) is the one we want to start watching…like a hawk. Its 52-week high is $28.20.
A few things we like to see are volume and volatility and this stock has both. The average daily volume is over 5 million shares and the option pits are pretty liquid.
The company makes lithium-ion batteries and had high hopes over a year ago as they thought they were closing in on a Chevy Volt contract but eventually lost out. However, they signed a deal to supply Chrysler with batteries for its cars. And the market for these types of batteries is HUGE.
Besides cars, think smartphones and other products…every iPod, iPhone and Apple laptop has a lithium-ion battery. The “new” battery is smaller, more energy efficient, longer lasting, and are effectively replacing the previous generation of nickel metal hydride batteries.
Of course, there is competition in the space but with other car manufacturers joining the race for electric cars, and the transition over to these batteries have dramatically improved the potential market. However, many other would-be competitors have not even begun mass production yet which will play into A123’s hand once demand starts to peak.
A123 will likely play a big role for temporary energy storage for utilities and they were recently awarded a $250 million grant from the Department of Energy to build a manufacturing plant.
On the negative side, the stock could see some selling pressure once their “lock-up period” is up. Typically, when a company goes public, its insiders can’t sell their shares for a certain period of time which is usually 90 days to a year. If a company is full of smoke-and-mirrors or has some skeletons in its closet, company insiders who know about them can’t act on this “inside” knowledge until after the lock-up period has ended. They will start to sell stock before the public learns of any bad news hoping to get out at the top.
Now, I’m not saying A123 is shady or anything, I’m just explaining how the IPO market works.
A123 appears to be a boom or bust company and from the way it has been trading it has become clear there is action in the stock. The key for us will be to watch for an opportunity to get into some options. We might go long, we might go short, or we might do a straddle or strangle trade. However, we have to wait for our opportunity.
Keep this one on your Watch List and when we see a trade, we will alert our subscribers.” (END)
Well, the “hawk” left its perch and we didn’t get into a trade. Bummer.
We are excited about the possibilities of an Apple (AAPL, $204.12, down $1.76) deal in the future but the company has been hit with some bad news of late that has caused a steep drop in its shares.
Fiat recently tinkered with Chrysler’s electric car plans which included A123′s batteries and this has caused some concerns due to the uncertainty. The company also recently announced earnings and posted a $23 million loss but did see an increase in revenue.
On the bright side, electric cars are the future and there is a major push for their development. President Barack Obama’s recent China visit was a good indication that things will happen sooner rather than later. He has called for the U.S.-China Electric Vehicles Initiative to help get the snowball rolling.
We are still uncertain of the direction A123 Systems shares take from here but we would think most of the “bad” news is already priced into the stock.
Only time will tell if electric cars will turn into an avalanche for the American consumer but if you can identify the companies that have their fingers in the pie before it is main stream then there may be some opportunities down the road.
Which brings up a good point.
Most of you know we are working hard to get the “Momentum Options Trading” Playbook (or whatever we call it) ready and it is our trading manual that is aimed at teaching you how to trade options and to find your own trades. The manual will go hand-in-hand with the website and we really believe it is a must read if you really want to understand the market and to get a better “feel” for our trades.
Yes, we are an option trading service but we also want to be your mentor as well. We have repeatedly said we will limit the number of subscribers we are allowing because we don’t want our trades crowded but we also want you to LEARN how to trade options. We have a success rate of 80% on our trades and it isn’t by accident.
We hope that you seriously consider a subscription before we are full. We cover a lot of things outside of the Members Area but today we wanted to bring you a short story on A123 Systems.
Tags: A123 Systems, American International Group, Apple, momentum stock option trading, Moody's, Netflix, option trading online, option trading picks, options mentoring, options newsletters, options track record, support and resistance levels, triple-digit option trades
Posted in Apple, Company Commentary, Earnings, Financial Stocks, Market Analysis, Market Commentary, Option Trades, Sectors, strangle option trades, Strategies, Trading Psychology | Comments Off
Tuesday, October 20th, 2009
1:00pm (EST)
The bears took advantage of a weak housing report today and have crashed the earnings party the bulls were ready to have. The Commerce Department said applications for home building permits, a measure of future construction, fell in September by the largest amount in five months. Not a good sign for the housing industry which has been struggling to recover this year.
We mentioned Apple’s (AAPL, $199.00, up $9.14) earnings this morning and we knew $200 would be the new battle ground for the stock. Shares are now trading at a ”premium” according to some analysts and could fall over the near-term now that all of the hoopla is out. And that could be the case but we tend to shy away from buying Apple put options because it is such a strong company. It looks ripe for a short at these levels but I don’t think I’d sleep easy betting against Apple no matter how high shares have run.
I was sure hoping the company would announce a stock-split but that didn’t happen. A 3-for-1 split would put shares at $67 and make it affordable for the retail investor to purchase the stock again. The smartphone market will get even more intense over the next several quarters but Apple is head and shoulders above the competition. And Mac sales are set to EXPLODE.
Caterpillar (CAT, $59.00, up $1.15) also came in with a great report as the company posted earnings of $0.64 a share, blowing-out Wall Street’s estimate of just $0.06 a share. Shares have traded to a high of $61 and the outperformance was attributed to the foreign exchange, lower tax rates and accounting. Revenues came in at $7.3 billion, versus estimates of $7.5 billion but Caterpillar believes the worst is behind us. Quote…the company’s CEO now sees “encouraging signs that indicate a recovery may be underway.”
Yahoo (YHOO, $16.95, down $0.26) reports after the bell and Wall Street is looking for earnings of $0.07 a share on revenue of $1.1 billion. For the second quarter, Yahoo did 16 cents a share and easily doubled 8 cents the Street was looking for. The November 17 calls (YHQKR, $0.85, down $0.10) have traded over 7,000 contracts compared with 3,500 contracts of the November 17 puts (YHQWR, $0.90, up $0.20). That is a 2-to-1 ratio for the bulls and the action is suggesting an 8%-10% move up or down on Wednesday. We’d love to play this one but we are going to sit on the sidelines.
As we head to press, the Dow is down 87 points to 10,005, the S&P 500 is off by 10 to 1,087 while the Nasdaq is lower by 21 points and is trading at 2,155. We have profiled a new trade today and it is in the retail sector. If you are a current subscriber, please check the Members Area NOW for the 1pm Update.
Tags: Apple, Caterpillar, Momentum stocks, option trade picks, options mentoring, options trade picks, Yahoo
Posted in Company Commentary, Earnings, Market Analysis, Market Commentary, Option Trades | Comments Off
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Market Action Choppy, Dendreon (DNDN) Slips
Monday, June 7th, 2010
1:10pm (EST)
The bulls tried to rally the market at the open but after a brief stay in positive territory the major indexes are mixed. The euro fell to a low of $1.188 before bouncing back to $1.192 which helped stabilize the overseas market but the trend is still bearish and isn’t going to change anytime soon.
We are watching the $1.180 level for the euro which is where the currency ended its first day of trading back in January 1999. The 10-year average for the euro against the dollar is $1.20 and we wouldn’t be surprised if $1.15 is taken out.
Biotech is making a lot of noise today with mixed results but we are watching shares of Dendreon (DNDN, $38.26, down $2.58) which are down 6% today. Investors seemed disappointed when the company’s CEO said they had no plans to partner with someone to produce Provenge faster. He said they have a few more plants coming on board to manufacture the drug and that they are the experts on Provenge with plenty of support to move the company forward.
Dendreon has spent nearly $1 billion over the past 15 years to bring Provenge to the market so they have a game plan in place. In fact, we can’t blame them for doing it their way and their pipeline could yield other cancer cures. If shares fall back to $32 then we would seriously think about actually buying the stock but there may also be a chance to buy some longer-term call options.
Apple (AAPL, $256.27, up $0.30) was trading lower but has turned around. The company is unveiling its 4G iPhone during its annual software developer’s conference in San Francisco today. There is a lot of chatter on what new features have been added and we are hearing a higher-resolution screen, improved battery life, a cooler camera and the ability to multitask.
AAPL 15-minute chart
The bad news from all of this is that AT&T (T, $24.58, up $0.41) has eliminated its unlimited monthly data plans for new users of the iPhone and iPad. If you haven’t been with AT&T then you will have to choose between two data plans with monthly usage limits and pay more for extra use. There has been talk that Apple will partner with other carriers so AT&T could be taking a big risk trying to squeeze out more revenue.
As we head to press, The Dow is trading higher by 20 points and is at 9,952 while the S&P 500 is up 2 to 1,067. The Nasdaq is showing a 7 point loss and was last seen at 2,211.
We have a lot to cover with our current trades and there are a few others on our Watch List that are making some nice moves today. Current subscribers, check the Members Area for the updates as we expect any rally to fade.
Tags: AAPL, Apple, AT&T, Dendreon, dndn, momentum options trading, option picks, options alerts, stock options trading, T
Posted in Apple, BioTech, Company Commentary | Comments Off