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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
Friday, October 9th, 2009
8:40am (EST)
We all know that stock-splits don’t mean much in monetary value when a company announces a 2-for-1 split. It means you own twice as many shares as before but at half the price. We haven’t seen too many of these events lately because of what the market has been through over the past several years but they do happen. Green Mountain Coffee Roasters (GMCR, $72.60, up $0.72) is a recent example as they did a 3-for-2 split back in June. They also did a 3-for-1 split back in July 2007.
In the past, when stock-splits were more frequent, a company would always seem to split their stock when it got to a certain price. Then again, there are some companies like Berkshire Hathaway (BRK.A, $100,401.50, up $1.50) and Google (GOOG, $514.18, down $3.36) who plan to never split the outstanding shares. Yes, that quote for the Class A shares for Mr. Buffet’s empire is correct. For 100g, you too, can own ONE share of Berkshire…
Anyway, with Apple (AAPL, $189.27, down $0.98) approaching $200, I did some research to see when they might announce a split. Apple has split its stock 3x since 1987 and each time it was a 2-for-1 deal when the stock was trading at $80-$100. Judging by history, Apple is overdue.
I cover stock-splits and how to play them in the Momentum Options Trading Manual (which is almost complete and will be available soon) but it remains to be seen what Apple does. Normally you see a run into the split and a little after, then a sell-off, then another rally.
Of course, old market principles have been thrown out the window but it will be interesting if Apple were to announce a split. And what better way when the company reports earnings on October 19th?
Apple continues to push 52-week highs and by splitting the stock, it makes it “cheaper” for the investment world to buy shares at $100 (2-for-1) or $65 (3-for-1) instead of $200. Apple is known for making a splash and what better way to do it when the company has center stage once again in two weeks?
It may not happen but don’t be surprised if it does…
Quick Note: We are pleased to announce that we are upgrading our servers this weekend to allow us to send UNLIMITED emails to our subscribers. Many of you wanted this service because you told us you could not check the website daily (or at work, sly grin) and it was a GREAT idea. Because of this, the website may work slow over the weekend or at times may be down but we will be back to normal by Monday.
We also have the CURRENT TRADES update for this morning so please check the MEMBERS AREA for the latest and greatest.
Tags: Apple, Berkshire Hathaway. Google, Green Mountain Coffee Roasters, Imax, momentum options, Momentum stocks, option blog, option track record, Option Trades
Posted in Apple, Company Commentary, Earnings, Google, Hot Stocks, Market Analysis, Option Trades, Strategies | Comments Off
Monday, September 21st, 2009
12:05pm (EST)
The market took a hit this morning (as it seems to do every Monday morning) but has bounced off its lows of the session. The futures were pointing towards a nasty open after the Asian markets sold-off slightly but the bulls are focused on Dow 10,000.
Currently the Dow is down 32 points to 9,788. The Nasdaq is up 4 points to 2,137 while the S&P 500 is lower by 3 to 1,063.
Two stocks going in different directions today…Research In Motion (RIMM, $84.12, up $0.49) which reports earnings on Thursday is up while Apple (AAPL, $182.89, down $2.13) is rolling over. The drop in Apple has taken us out of October 200 calls (APVJT, $1.54, down $0.48) but not before we booked a 100% return. These call options were going for 85 cents when we sent out a News Flash alerting you of another possible move to the upside when the stock was at $178. Subscribers, check the Members Area for the trade updates on RIMM and Changeyou.com (CYOU, $38.03, down $0.72).
Rick@MomentumOptionsTrading.com
Tags: Apple, ChangeYou.com, options track record, options trading blog, Research in Motion
Posted in Apple, Hot Stocks, Market Analysis, Option Trades | Comments Off
Friday, September 18th, 2009
9:00am (EST)
Futures are pointing to a slightly higher open today, as the bulls look to resume this week’s rally after a slight pullback yesterday. Overseas markets were mostly higher this morning and the economic data has been better than expected this week. The bulls are still eyeing Dow 10,000 and at this point is almost seems to be a given.
Ahead of the bell, Dow futures are up 30, S&P 500 futures are up 3, while Nasdaq futures are up 6.
Palm (PALM, $14.44) should be pretty active today after reporting quarterly results that topped Wall Street’s estimates. After the close yesterday, shares fell 7% as nervous investors mulled the earnings report and the 16 million share offering the company announced as well. However, the stock rebounded once investors sifted through the numbers and at one point the stock was up 7%.
Palm beat their number by 14 cents and guided higher for fiscal year 2010 but I see nothing to get excited about. Palm shipped a little over 800,000 smartphones during the quarter which exceeded what many analysts had expected but most whisper numbers were hoping for a million units.
The recent rally has left many on Wall Street confused because almost everyone has been calling for a pullback. Well, I don’t work on the Street but this is what I’ve learned.
Every market is different and the old saying the market hurts the most people when most people are in the same boat. A lot of short-sellers have had their lunches handed to them because they have been calling for a September pullback. But you have to trade the tape, folks.
As much as the talking heads were saying September was going to be a bad month…I have profiled 8 trades so far in September, all of them have been on the winning side and only one has been a put option trade. There are times when the market will be looking for direction and that is often the time we may miss a few trades. But if you can get a feel for market direction it’s pretty simple.
You buy call options in a bull market and put options in a bear market. Many of you were not with us last year but I profiled a ton of put option trades during last year’s market crash. My point is, until something changes, the trend is our friend.
Subscribers, check the Members Area for the current trade updates. Apple (AAPL, $184.55) and Dendreon (DNDN, $28.90) were hot yesterday and have returned some monster gains for us…
Rick@MomentumOptionsTrading.com
Tags: Apple, Dendreon, momentum options, options blog, options trading picks, Palm
Posted in Apple, Hot Stocks, Market Analysis, Option Trades | Comments Off
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Bulls Fighting Back
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