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Sunday, July 18th, 2010
Another Battle Begins
11:00pm (EST)
Earnings season officially got underway last week and so far it favors the bears going forward. There were a number of “surprises”, some good/ some bad, but the overall theme is companies are having no problems beating lowered expectations but they aren’t doing Jack with growing their revenues. We covered quite a few companies last week so we will look at who said what on Friday.
The market plunged on the last day of the week on disappointing economic data and from the Financial sector which was blasted for a loss of 3%. The bears were punishing the market right from the open and continued to pour it on after hearing the Reuters/University of Michigan consumer confidence index report. The index fell to 66.5 in July, down from 76 in June. Needless to say, Wall Street’s pencil pushers did not figure a 9.5 point drop and the bears used it as extra ammo.
Elsewhere, the Labor Department chimed in and said the seasonally-adjusted Consumer Price Index slid 0.1% in June. Core consumer prices were up 0.2%. In May, consumer prices were down 0.2%.
Turning to earnings, Bank of America (BAC, $13.98, down $1.41) and Citigroup (C, $3.90, down $0.26) tanked 9% and 6%, respectively. Both companies posted better-than-expected earnings per share but revenue fell short of expectations.
Bank of America reported a profit of $3.1 billion, or $0.27 a share, versus $3.2 billion, or $0.33 a share, in the year earlier period. The Street was expecting $0.22 a share. Revenue came in at $29.5 while analysts were expecting $29.8 billion.
Citigroup said its earnings were $2.7 billion, or $0.09 a share, compared to $4.3 billion, or $0.49 a share in last year’s quarter. Analysts had estimates of $0.05 cents a share. Revenue was $22.1 billion which was slightly below the $22.2 billion call.
We mentioned in our 1pm update on Friday when the market was down about 2% we could see more selling pressure and a possible 3% clip. On average, we were close. The Dow fell 261 points, or 2.5%, to settle at 10,097 and below its 10 and 20-day moving averages (MA). For the week, the index dropped 100 points, or 1%, and could not bust through the 10,400 level.
The S&P 500 plunged 32 points, or 2.9%, to settle at 1,064 and below its 50-day MA. The index was unable to penetrate the 1,100 level which is looking like a concrete wall. For the week, the index declined 13 points, or 1.2%.
The Nasdaq suffered the worst losses as it got hammered for 70 points, or 3.1%, to finish at 2,179. The Tech-rich index was down 17 points, or 0.8%, for the five trading days but the 200-day MA of 2,250 will likely keep the bulls in check over the near-term.
Downside targets in play this week will be Dow 10,000 then 9,800. The S&P could be headed for a break below 1,050 which could lead to 1,020. Meanwhile, watch for the Nasdaq to test 2,150 then 2,050. If these levels fail once again then we could finally see the bears do some real damage.
Looking ahead to this week, there will be an overload of earnings news and we could get aggressive on our trades as we see a number of opportunities to go short this market. We know this trading range has been tough for a lot of investors but we strongly feel another test to the downside is imminent.
Two keys things we are watching that will keep the bulls at bay are the Financials, which look nasty right now, and what is revealed in Europe’s bank stress tests this week.
At some point in 2010, we can see a breakout to the upside for the market but we think a “cleansing” is still needed before investors feel like they are getting a bargain on stocks. (Although Bank of America looks interesting at $14 right now).
We will be back in the morning with a full update on the companies reporting and maybe a possible trade or two.
Tags: bac, Bank of America, c, call options, Citigroup, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, volatile options
Posted in Earnings, Market Analysis, Market Commentary, Weekly Wrap | Comments Off
Tuesday, June 8th, 2010
9:00am (EST)
The bears continued to pressure the bulls on Monday as a choppy session favored short-sellers into the close. Selling pressure intensified in the final hour of trading as all three of the major indexes ended the day in negative territory.
There wasn’t much economic news yesterday and we mentioned the weakness in the euro once again. The Financial sector took a beating after Goldman Sachs (GS, $138.68, down $3.57) was issued a subpoena by the Financial Crisis Inquiry Commission. Shares still face headline risk and there might not be a bottom until the stock falls to $120.
Bank of America (BAC, $14.83, down $0.82) fell over 3% after Wall Street found out the bank will have to pay a little over $100 million to settle federal charges. Two if its Countrywide Financial units were found guilty of charging extra fees to homeowners who were behind on their mortgage payments. There is support here in the $14 area but a drop to $12 could be in the cards.
As a result, the Dow back peddled 115 points, or 1.2%, to finish at 9,816. We said in our Weekly Wrap on Sunday night to look for 9,800 and then 9,500. So far, so good.
We also said to watch the 1,050 level and that was exactly where the S&P 500 ended at. The index fell 14 points, or 1.4%, and the magnet was strong enough to pull it there right before the closing bell sounded. Wow. There are a lot of investors who will start to cover at these levels and this was the clue we were watching for all day yesterday.
The Nasdaq, however, took the worst beating as it declined 45 points, or 2%, and settled at 2,173. There will be some support at 2,150 but we are targeting 2,050 as confirmation that we head below 2,000. With the S&P and Dow already at our first wave of targets, we expect the Nasdaq to join them shortly in dramatic fashion.
The CBOE Market Volatility Index (VIX, 36.57, up $1.09) added 3% although it’s down from a recent high of 48 which was set back in May. The VIX measures “fear” on Wall Street and is one of the indicators we like to follow to try and get a read on the market. For our new subscribers, high readings mean that Wall Street is nervous and bearish. A low reading indicates calm and the Street is bullish. If we get a continued sell-off then look for the VIX to blow past 50.
We were hoping for a continued selloff and yesterday’s 1% decline was significant. On Friday, we talked about a lower Friday/ Monday close and what you are seeing now is nothing compared to what we could see. For you bulls, we hate to be Debbie Downer but the technical levels on this market are terrible.
We doubt we see a “double dip recession” or anything that dramatic but the bears clearly have momentum and there are a number of opportunities in the market right now that look good. Naturally, everyone is running to Gold right now which added 2% and ended at $1,240/ ounce yesterday. Gold could continue its winning ways but we still think are better sectors to make money that aren’t as crowded.
Futures are pointing towards a slightly higher open (Dow futures, +45) but in bear markets you usually see strong opens followed with weak closes. We saw it yesterday and we should see it today. Subscribers, check the Members Area for the trade updates.
Tags: bac, Bank of America, CBOE Market Volatility Index, GS, momentum options trading, option picks, options alerts, stock options trading, VIX
Posted in Company Commentary, VIX | Comments Off
Monday, November 2nd, 2009
9:15am (EST)
It what comes as no surprise, CIT Group (CIT, $0.72, down $0.23) made it official by filing for Chapter 11 bankruptcy protection on Sunday.
The news may not be a shock but really it should be. CIT Group joins an ever growing list of once proud companies that have now gone belly-up. Wall Street will overlook the fact that it is one of the biggest Chapter 11 filings in U.S. corporate history…right up there with Enron, General Motors, Lehman Brothers, Washington Mutual and WorldCom.
The Financial stocks have been very weak of late and have helped pull this market lower. CIT’s bankruptcy filing showed $71 billion in assets versus total debt of $65 billion. Over 155 million shares changed hands on Friday and we hear Vegas has the over/ under for today’s action at 1 billion shares…
Bank of America (BAC, $14.58, down $1.15) tanked 7% Friday on fears of a S&P downgrade and is back below $15. The company’s biggest problem seems to be finding a replacement for its CEO, Ken Lewis, who will retire at the end of this year. We would love to see this one fall to $10…
We knew when the Financial stocks rallied off their March lows we would get to a point to where there would pull back. Just like they fell too far to the downside back then, maybe they may have rallied too far and now we are seeing that pullback. After two solid earnings quarters, they seem to be on shaky ground.
There will be a lot of action this week and below we list quite a few of the companies that will be reporting earnings this week. We also have a pretty sweet show-and-tell session in our Members Area this morning with the Current Trades. We have included some charts to try and show you exactly why we are in these trades and what we are looking for. The option trade we profiled for Apollo Group (APOL, $57.10, down $1.05) is nearing a triple-digit return and hopefully we get there in the next few days.
We have about 30 minutes before the bell and stock futures are pointing towards a slightly higher open. The Dow futures are currently ahead by about 40 points; the S&P’s are up by 5 points, while the Nasdaq futures are up 4.
BREAKING NEWS…Dendreon (DNDN, $25.27) is up to $27 in pre-market trading after news broke that the company has re-submitted its approval application to the FDA for Provenge.
Earnings for the week (quotes are from Friday):
Monday: Administaff (ASF, $24.82, down $0.23), American Physicians Service Group (AMPH, $24.07, down $0.03), Avis Budget Group (CAR, $8.40, down $0.52), Carmike Cinemas (CKEC, $9.83, down $0.18), Clorox (CLX, $59.23, up $0.40), Consolidated Edison (ED, $40.68, down $0.64), Cooper Tire & Rubber (CTB, $15.26, down $0.19), Dean Foods (DF, $18.23, up $0.11), Ford Motor (F, $7.00, down $0.30), Humana (HUM, $37.58, down $1.15), Loews (L, $33.10, down $1.27), Parkway Properties (PKY, $17.65, down $0.64), Texas Roadhouse (TXRH, $9.47, down $0.37) and Vulcan Materials (VMC, $46.03, down $1.77).
Tuesday: American Tower (AMT, $36.82, down $1.42), Anworth Mortgage (ANH, $7.13, down $0.19), Archer Daniels Midland (ADM, $30.12, down $0.80), Blackboard (BBBB, $35.47, down $0.49), Chesapeake Energy (CHK, $24.50, down $1.54), Con-Way (CNW, $32.99, down $0.17), Diebold (DBD, $30.24, down $0.49), Digital River (DRIV, $22.83, down $0.20), FirstService (FSRV, $17.77, down $0.24), Getty Realty (GTY, $24.51, down $0.10), Grand Canyon Education (LOPE, $16.22, down $0.43), Hartford Financial Services (HIG, $24.52, down $1.15), IntercontinentalExchange (ICE, $100.19, down $5.24), James River Coal (JRCC, $18.99, down $1.47), Marvel Entertainment (MVL, $49.97, down $0.49), Onyx Pharmaceuticals (ONXX, $26.60, up $0.71), Papa Johns International (PZZA, $22.50, down $0.74), Pitney Bowes (PBI, $24.50, down $0.46), Polo Ralph Lauren (RL, $74.42, down $1.52), Royal Caribbean Cruises (RCL, $20.23, down $1.12), Steven Madden (SHOO, $40.50, up $0.59), Teva Pharmaceutical (TEVA, $50.48, down $0.32), UBS (UBS, $16.59, down $0.85) and UBS (VIA, $29.18, down $0.70).
Wednesday: 99 CENTS Only (NDN, $11.37, down $0.63), Baker Hughes (BHI, $42.07, down $2.18), Bridgepoint Education (BPI, $14.18, down $0.27), Career Education (CECO, $20.84, down $0.55), Cisco Systems (CSCO, $22.81, down $0.71), Comcast Corporation (CMCSA, $14.50, down $0.51), Comcast Corporation (CNO, $5.21, down $0.30), Devon Energy (DVN, $64.71, down $3.18), El Paso (EP, $9.81, down $0.51), Evergreen Solar (ESLR, $1.45, down $0.06), Foster Wheeler (FWLT, $27.99, down $1.68), Goldcorp (GG, $36.77, down $0.90), Healthsouth (HLS, $14.61, down $0.40), j2 Global Communications (JCOM, $20.45, down $0.15), Kendle (KNDL, $16.88, down $0.39), Prudential Financial (PRU, $45.23, down $3.02), Pulte Homes (PHM, $9.01, down $0.32), Qualcomm (QCOM, $41.33, down $0.94), Time Warner (TWX, $30.12, down $0.55), Transocean (RIG, $83.91, down $2.93)
Thursday: Activision Blizzard (ATVI, $10.83, down $0.26), Biovail (BVF, $13.46, up $0.12), Blue Nile (NILE, $60.05, down $2.01), Boston Beer (SAM, $38.00, down $0.95), Blue Nile (CFL, $30.98, down $0.18), Coinstar (CSTR, $31.74, down $0.93), Deutsche Telekom (DT, $13.54, down $0.65), Dr Pepper Snapple Group (DPS, $27.26, down $0.43), i2 Technologies (ITWO, $15.74, down $0.71), Imax (IMAX, $10.30, down $0.48), Kimco Realty (KIM, $12.64, down $0.34), Kimco Realty (KG, $10.13, down $0.19), Lifetime Brands (LCUT, $6.07, up $0.05), Mid-America Apartment Communities (MAA, $43.82, down $0.33), National CineMedia (NCMI, $9.00, down $0.06), Omnicare (OCR, $21.67, down $0.43), Public Storage (PSA, $73.60, down $1.07), ResCare (RSCR, $12.03, down $0.55), Rosetta Stone (RST, $20.75, down $0.16), Sara Lee (SLE, $11.29, down $0.27), Starbucks (SBUX, $18.98, down $0.54), Sunoco (SUN, $30.80, down $1.15), Time Warner Cable (TWC, $39.44, down $1.45), Toyota Motor (TM, $78.89, down $1.19) and VeriSign (VRSN, $22.81, down $0.47).
Friday: Blackstone Group (BX, $13.42, down $0.45), Edison International (EIX, $31.82, down $0.30), Greatbatch (GB, $19.67, down $0.34), LifePoint Hospitals (LPNT, $28.33, down $0.81), Mirant (MIR, $13.98, down $0.64), Perot Systems (PER, $29.94, down $0.02) and Smith & Nephew (SNN, $44.23, down $0.80).
Tags: Bank of America, momentum options, MomentumOptionsTrading.com, options help, options mentoring, options track record, options trading, trading options
Posted in Company Commentary, Earnings, Financial Stocks, Market Analysis, Market Commentary | Comments Off
Wednesday, October 14th, 2009
12:40pm (EST)
Is it me or does it feel like we are watching paint dry? In what should have been an easy grand-slam today, the Dow is having trouble punching through that 10,000 point brick wall. We got a strong pop and then lost some of the fizz shortly after the market opened but the bulls seem to be gathering more strength as we head into the afternoon. Currently, the Dow is up 113 points to 9,984 and has traded as high as 9,991 but we have yet to “break on through to the other side”…
One thing that worries me is that everyone expects all of this “new money” to come into the market, which it very well could, but I want to talk about the emotions of investors and the market in general. First off, where were all these people when the March lows were around and why didn’t they buy back then? When the Dow bottomed at 6,440 six months ago, I suggested buying longer-term call options to play the bounce as I knew we were in for a turnaround.
Our trading rules are simple. You buy call options during bull markets and you buy put options in bear markets. There are times when we are looking for direction which can cause some losing trades but overall, you want to stay AHEAD of the trend.
People were calling for a pullback in September and we said to stay focused on Dow 10,000. And we are almost there. Look, we don’t care about market direction. We want big moves. If the Dow does break 10K and we zoom higher, we will keep playing the upside with call options. If the market stalls from here and we have a sell-off, we will start buying put options.
The reason I say this is because we are still in a trader’s market and the market tends to hurt the most people at the most inopportune time. I’m not saying we are setting up for a correction but the Dow needs to break 10,000 today and hold.
There are a number of heavy hitters set to report earnings the rest of the week. International Business Machines (IBM, $127.21, up $0.19), Google (GOOG, $533.68, up $7.47), Goldman Sachs (GS, $193.01, up $5.78) and Bank of Amercia (BAC, $18.37, up $0.56) are on deck over the next few days.
Intel (INTC, $21.05, up $0.56) has treated us well today and our current subscribers easily cashed out for triple-digit returns. We have updated the trade in the Members Area so make sure you login in get our current comments.
Tags: Bank of America, Goldman Sachs, Google, International Business Machines, options blog, options trading strategies, Stock Market Blog
Posted in Company Commentary, Earnings, Market Analysis, Market Commentary, Option Trades | Comments Off
Tuesday, October 13th, 2009
1:00pm (EST)
The bulls are trying to get the market higher today after starting off the session behind the 8-ball. They are doing a pretty good job as they did get the market into positive territory but we have since slipped once again. The Dow opened lower and traded to a low of 9,815 (down 70) but has rebounded off the session lows. Currently, the Dow is down 13 points to 9,872.
We have a mixed bag with the Financial stocks. The credit card companies are doing well…American Express (AXP, $35.39, up $0.31), Mastercard (MA, $216.78, up $0.78) and Visa (V, $74.47, up $0.77) are up while Bank of America (BAC, $17.80, down $0.23), JPMorgan Chase (JPM, $45.23, down $0.83) and Goldman Sachs (GS, $186.32, down $3.80) are slightly lower.
Of course, the big news today is Intel’s (INTC, $20.61, up $0.21) earnings after the bell. The stock has held up rather well today and there is heavy volume in the option pits. By the look of things, the action is pricing in a 5%-10% move in the stock and there is a bullish tone being set. However, Intel will need to beat on earnings AND revenue, in my opinion, for us to move higher.
Current Subscribers are up 60% on one of our Intel trades and can check the Members Area for the updates…oh, Imax (IMAX, $10.16, up $0.11) has set a 52-week high of $10.25 today and continues to reward our patience.
Tags: American Express, Bank of America, Goldman Sachs, Imax, Intel, JPMorgan Chase, MasterCard, option picks, options trading blog
Posted in Hot Stocks | Comments Off
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MomentumOptionsTrading.com Weekly Wrap for 7/18/10
Sunday, July 18th, 2010
Another Battle Begins
11:00pm (EST)
Earnings season officially got underway last week and so far it favors the bears going forward. There were a number of “surprises”, some good/ some bad, but the overall theme is companies are having no problems beating lowered expectations but they aren’t doing Jack with growing their revenues. We covered quite a few companies last week so we will look at who said what on Friday.
The market plunged on the last day of the week on disappointing economic data and from the Financial sector which was blasted for a loss of 3%. The bears were punishing the market right from the open and continued to pour it on after hearing the Reuters/University of Michigan consumer confidence index report. The index fell to 66.5 in July, down from 76 in June. Needless to say, Wall Street’s pencil pushers did not figure a 9.5 point drop and the bears used it as extra ammo.
Elsewhere, the Labor Department chimed in and said the seasonally-adjusted Consumer Price Index slid 0.1% in June. Core consumer prices were up 0.2%. In May, consumer prices were down 0.2%.
Turning to earnings, Bank of America (BAC, $13.98, down $1.41) and Citigroup (C, $3.90, down $0.26) tanked 9% and 6%, respectively. Both companies posted better-than-expected earnings per share but revenue fell short of expectations.
Bank of America reported a profit of $3.1 billion, or $0.27 a share, versus $3.2 billion, or $0.33 a share, in the year earlier period. The Street was expecting $0.22 a share. Revenue came in at $29.5 while analysts were expecting $29.8 billion.
Citigroup said its earnings were $2.7 billion, or $0.09 a share, compared to $4.3 billion, or $0.49 a share in last year’s quarter. Analysts had estimates of $0.05 cents a share. Revenue was $22.1 billion which was slightly below the $22.2 billion call.
We mentioned in our 1pm update on Friday when the market was down about 2% we could see more selling pressure and a possible 3% clip. On average, we were close. The Dow fell 261 points, or 2.5%, to settle at 10,097 and below its 10 and 20-day moving averages (MA). For the week, the index dropped 100 points, or 1%, and could not bust through the 10,400 level.
The S&P 500 plunged 32 points, or 2.9%, to settle at 1,064 and below its 50-day MA. The index was unable to penetrate the 1,100 level which is looking like a concrete wall. For the week, the index declined 13 points, or 1.2%.
The Nasdaq suffered the worst losses as it got hammered for 70 points, or 3.1%, to finish at 2,179. The Tech-rich index was down 17 points, or 0.8%, for the five trading days but the 200-day MA of 2,250 will likely keep the bulls in check over the near-term.
Downside targets in play this week will be Dow 10,000 then 9,800. The S&P could be headed for a break below 1,050 which could lead to 1,020. Meanwhile, watch for the Nasdaq to test 2,150 then 2,050. If these levels fail once again then we could finally see the bears do some real damage.
Looking ahead to this week, there will be an overload of earnings news and we could get aggressive on our trades as we see a number of opportunities to go short this market. We know this trading range has been tough for a lot of investors but we strongly feel another test to the downside is imminent.
Two keys things we are watching that will keep the bulls at bay are the Financials, which look nasty right now, and what is revealed in Europe’s bank stress tests this week.
At some point in 2010, we can see a breakout to the upside for the market but we think a “cleansing” is still needed before investors feel like they are getting a bargain on stocks. (Although Bank of America looks interesting at $14 right now).
We will be back in the morning with a full update on the companies reporting and maybe a possible trade or two.
Tags: bac, Bank of America, c, call options, Citigroup, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, volatile options
Posted in Earnings, Market Analysis, Market Commentary, Weekly Wrap | Comments Off