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Friday, April 29th, 2011
1:15pm (EST)
The bulls are putting an explanation point on a strong month as they have once again pushed the major indexes to new 52-week highs. Earnings and economic news continue to drive the headlines which have been pretty positive today.
Caterpillar (CAT, $115.29, up $2.65) is trading at fresh highs after plowing through Wall Street’s estimates. The company reported a 425% increase in its first quarter profit which came in at $1.2 billion or $1.84 a share. Last year at this time, CAT earned $233 million, or $0.36 a share. Revenue jumped nearly 60% to $12.9 billion, up from $8.2 billion last year, and well ahead of analysts expectations for earnings of $1.31 a share on revenue of $11.7 billion.
The huge, 53 cent earnings beat has accounted for 20 of the Dow’s current 68 point gain which has pushed the index to 12,831. The S&P is up by 3 points to 1,363 while the Nasdaq is higher by 2 points to 2,874.
We also like the strong move shares of Skyworks Solutions (SWKS, $31.49, up $3.98) are making today, up 14%, after crushing the suit-and-ties on their estimates as well. We first profiled this stock for you 6 months ago in the mid-$20’s before it hit a 52-week high of nearly $38 back in February. Since then, shares have slipped but have rebounded sharply today. We love this stock going forward and our price target then was $40. Still is. At current levels, Skyworks is a steal.
We said on Tuesday if resistance were broken that there could be some chasers of the rally which is what we have seen this week. We have a lot to cover in our Members Area, including a NEW TRADE for today, so we have to cut it a little short but remember to watch our near-term targets from this morning. We will be back Sunday night with the Weekly Wrap which will be packed with some good information and what to watch for in May.
If you want a head start and would like to get Sunday’s Weekly Wrap or today’s NEW TRADE, click here. The Weekly publication is 9-for-9 in trade recommendations which are averaging double-digit returns and we will be looking to add our next winner soon.
Have a great weekend everyone!
Tags: call options, CAT, CAT earnings, high beta stocks, Hot stocks, momentum options, Momentum stocks, option tips, options trading course, Skyworks Solutions, stock market options, strangle option trades, SWKS, SWKS earnings, weekly options
Posted in Market Analysis, Market Commentary | Comments Off
Monday, September 27th, 2010
8:55am (EST)
The market was at a pivot point on Friday and the bulls used the opportunity to push the market to its April highs. They are also threatening to push the bears into hibernation after Friday’s surge and it is clear the market is building momentum for a possible test of new highs for the year.
Although the recent run-up has come on lighter-than-normal volume, 3Q earnings start in October and it will likely bring a lot of action to the table. There are still earnings trickling in from companies that announce later in the 2Q cycle and the recent results have been encouraging. On the other hand, there have been some companies that have lowered the bar going into forward.
The November elections may be playing a small part in the lack of volume as uncertainty about the outcome can keep investors on the sideline. However, the longer traders sit out and the higher the market goes, they will want to get back in and there could be a rush of buying if there is a continued breakout.
The talk of a double-dip recession has faded (for now) but the economy is still fragile and a lot of companies aren’t rolling out the red carpets to hire workers back. Many companies are building up their coffers but we have also seen a flurry of merger and acquisition activity over the past few weeks which is also a positive catalyst for the bulls.
As a result, the Dow added nearly 200 points, or 1.9%, on Friday to close at 10,860 as all 30 of the Dow blue chips finished the day in the green. Caterpillar (CAT, $79.73, up $3.47) set another 52-week high and led the charge after nearly breaking $80. The Dow easily powered past our 10,800 top and will now focus on the the 11,000 level. For the week, the index added 250 points, or 2.4%, and is up 8.4% in September.
The S&P 500 Index jumped 24 points, or 2.1%, to settle at 1,148 and just shy of our 1,150 target. If this level is broken, then the index could see a quick run to 1,160-1,165 as it targets 1,200. For the week, the S&P 500 gained 23 points, or 2.1%, with all of the pop coming on Friday.
The Nasdaq remained the most explosive as it advanced 54 points, or 2.3%, to finish at 2,381. The index easily blew right past our 2,350 target with Friday’s jump and added 65 points, or 2.8%, for the week. It looks crystal clear that the index will challenge the 2,400 level and a shot at 2,500 could be in the cards by year-end if the rally holds.
The bears, meanwhile, are rolling over and are doing a great job of playing dead or they are waiting for every single bull to jump on the bandwagon before they ambush. The bears like to strike when they can hurt the most people at just the right moment so October is setting up to be explosive either way.
As far as this week, the economic news will be slow for the first few days but we are targeting Thursday and Friday to be a busy days for the market.
Today, the market will get a look at regional manufacturing activity for Chicago and Texas; on Tuesday – Richmond, Virginia; and Thursday for New York, Chicago and Kansas City.
The S&P/Case Shiller index comes out Tuesday and will give us a snapshot of July home prices in 20 major cities. The Consumer Confidence index report is also due out.
Thursday will be a crucial as second-quarter gross domestic product (GDP) numbers hit the Street and Federal Reserve Chairman, Ben Bernanke, will be testifying about the new financial regulation law before the Senate Banking Committee.
August personal income and spending numbers are will be released as well as August construction spending on Friday. Auto makers will report September sales figures and the final reading on the Reuters/University of Michigan’s September consumer sentiment index is due out. And if that weren’t enough, the Institute for Supply Management’s September manufacturing index will hit the trading floor.
As we head to press, Dow futures are higher by 13 points to 10,797 while the S&P 500 futures are up by 2 points to 1,145. The Nasdaq 100 futures are showing a gain of 4 points and are at 2,022. Subscribers, check the Members Area for the updates.
Tags: CAT, how to trade stock options, options trading alerts
Posted in Economic News, Market Analysis, Market Commentary | Comments Off
Tuesday, August 24th, 2010
9:00am (EST)
The bulls got off to a good start Monday morning as merger and acquisition news boosted stocks at the opening bell, but the rally soon faded once the major indexes hit technical resistance levels. The bears quickly pushed back and battled the bulls in the neutral zone for much of the session before the market eventually finished lower.
With no economic news to back the positive M&A activity, the bulls lacked conviction with Tech leading the way lower. While we were expecting some kind of bounce to hold, the bulls look scared and the rest of the week is already favoring the bears.
As a result, the Dow fell nearly 40 points, or 0.4%, to settle at 10,174 and below our 10,200 target. Caterpillar (CAT, $66.84, down $0.22) fell 3% and accounted for 15 of the 40 point loss as the index now looks poised to test 10,000.
The S&P 500 slipped 4 points, or 0.4%, and closed at 1,067. Our near-term target has been 1,050 for the index but we had to take out 1,070 first. The index traded to a high of 1,081 but finished near its low for the day which wasn’t a good sign.
The Nasdaq gave up 20 points, or 0.9%, to finish at 2,159. Our near-term magnet remains 2,150 but a break below this level could speed up the selling pressure that leads to 2,050.
Yesterday’s action was a warning sign and it looks as though the bulls could be in trouble today. Theirs is no need to talk about earnings or economic news this morning because futures are pointing towards a nasty open and it appears the market will be taking out the aforementioned support levels we just talked about.
Dow futures are off a whopping 105 points to 10,052 while the S&P 500 futures are lower by 12 points to 1,053. The Nasdaq 100 futures are down 21 points to 1,788.
No worries. We have a number of put options on the table and it looks as though our subscribers will be ringing the cash register on a number of profitable plays as we look to close out some of our current trades. We will be back at 1pm with a look at the damage but it’s going to be a great day for us, folks.
Subscribers, check the Members Area for the updates!
Tags: CAT, option picks, stock options trading
Posted in Market Analysis, Market Commentary | Comments Off
Thursday, July 22nd, 2010
1:05pm (EST)
Notes from the sea of choppiness…
You don’t need us to tell you where the market is at, we did so this morning in our upside targets, but here are the numbers; The Dow is up 210 points, or 2.1%, and is at 10,332 while the S&P 500 is higher by 25 points, or 2.3%, and was last seen at 1,094. The Nasdaq is showing a 56 point win, or 2.6%, and is standing at 2,244.
In economic news, the number of people filing initial claims for unemployment benefits jumped by 37,000 to 464,000. Wall Street was bracing for claims to rise to 450,000. Elsewhere, the National Association of Realtors said existing-home sales fell 5.1% to a seasonally adjusted annual rate of 5.4 million units in June from 5.7 million in May. The “numbers” don’t matter. All you need to know is inventories are still on the rise but prices remained fairly stable, for now.
Ben Bernanke is giving a follow-up to yesterday’s update on what the Fed is thinking in his Q&A session to the House Financial Services Panel. It has been rather boring to say the least and has been a non-factor today. Yesterday, his remarks sent the market into a tailspin in the final two hours of trading.
Turning to earnings, Caterpillar (CAT, $67.76, up $0.89) is up 1% after beating estimates for its most recent quarter and raising the bar for the remainder of the year. The company reported a profit of $707 million, or $1.09 a share, versus $371 million, or $0.60 a share, in the year earlier period. Analysts were looking for $0.89 a share.
Caterpillar also raised its 2010 guidance to $3.15-$3.85 a share, up from $2.50-$3.25. Revenue for the year is expected to reach $40 billion. Shares have traded to a high of $68.35 but the news should have lifted them past its 52-week high of $72.83. The stock might still get there down the road but we expected to see more strength after hearing these blowout numbers.
Friday will be a pivotal day as the bulls and bears try to square up positions before the weekend. Amazon.com (AMZN, $118.63, up $1.20) will report after the close today and Europe will give us an update on the bank stress tests. Microsoft (MSFT, $25.89, up $0.77) will also chime in with an earnings update. Tomorrow should be interesting.
We have a lot to cover in our Members Area today so let’s get on it.
Tags: AMZN, call options, CAT, how to trade options, momentum options trading, Momentum stocks, MSFT, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, volatile options
Posted in Earnings, Market Commentary | Comments Off
Tuesday, May 11th, 2010
9:00am (EST)
The bulls staged an impressive rally on Monday after learning the European Union (EU) and the International Monetary Fund (IMF) have agreed on nearly a $1 trillion rescue package to help debt-riddled nations across the euro zone. It was the biggest sign of support we have seen from our friends across the way and Wall Street ate it up.
The negotiations lasted into the early hours of Monday, and the timing was brilliant as EU officials agreed the 16 euro nations would put up $572 billion in new loans and $78 billion under an existing lending program. The IMF is adding another $325 billion.
Furthermore, our Federal Reserve said it would provide U.S. dollars to a number of foreign banks, which can then lend the cash to banks in their respective countries.
Needless to say, the bears never had a chance as the bulls maintained most of the gains from the initial pop at the open yesterday.
The Dow surged to a high of 10,835 shortly after trading got underway and finished Monday’s session with a 405 point gain, or 3.9%, to close at 10,785. It was the biggest point jump since March of last year as all 30 stocks that make up the Dow finished in positive territory.
Boeing (BA, $71.00, up $4.28), Caterpillar (CAT, $66.69, up $4.59) and International Business Machines (IBM, $126.27, up $4.17) accounted for nearly 100 points of the Dow’s move and Bank of America (BAC, $17.30, up $1.12) chipped-in by adding 7% to led the Financials.
However, the Dow settled just south of 10,800 which is now acting as resistance after being short-term support.
The S&P 500 also has a stellar day as it advanced nearly 50 points, or 4.4%, to settle at 1,159. The index traded to a high of 1,163 and is slightly above the 1,150 level. We can see a test up to 1,170 but the bulls will need a lot of momentum if they want to run past current levels.
Meanwhile, the Nasdaq led the rodeo with an eye-popping triple-digit gain of 109 points, or 4.8%, to close at 2,374. It was the first 3-digit move higher since October 2008 but the index failed the 2,400 level after reaching a high of 2,379.
As a result of yesterday’s strong rally, the CBOE Market Volatility Index (VIX, 28.84, down 12.11) fell 30% after reaching fresh highs last week. You can trade options on the VIX just like ordinary stock options but the premiums are super-jacked and we didn’t see any good trades. We were thinking of doing a straddle or a strangle option trade but after doing the research, we think there are so many better opportunities elsewhere.
We doubt yesterday’s relief rally repaired all of the damage done by the recent sell-off and we would are expecting a retest of those levels again sometime over the next month of two. However, anything is possible in this crazy and volatile market so we can’t ignore the fact the bulls brought the market back into positive territory for 2010.
Despite yesterday’s rally, futures are pointing towards a nasty open as Dow futures are off by 90 points to 10,652 while the S&P 500 futures are lower by 11 points to 1,145. The Nasdaq 100 futures are off by 17 to 1,922. We used yesterday’s rally to scale in two more put trades and they should get off to a good start if the market is indeed headed lower today.
Subscribers, check the Members Area for the updates.
Tags: BA, bac, CAT, IBM, option picks, option signals, options alerts, stock options trading
Posted in Market Analysis, Market Commentary, Option Trades | Comments Off
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April Closing with a Bang, (NEW TRADE ALERT)
Friday, April 29th, 2011
1:15pm (EST)
The bulls are putting an explanation point on a strong month as they have once again pushed the major indexes to new 52-week highs. Earnings and economic news continue to drive the headlines which have been pretty positive today.
Caterpillar (CAT, $115.29, up $2.65) is trading at fresh highs after plowing through Wall Street’s estimates. The company reported a 425% increase in its first quarter profit which came in at $1.2 billion or $1.84 a share. Last year at this time, CAT earned $233 million, or $0.36 a share. Revenue jumped nearly 60% to $12.9 billion, up from $8.2 billion last year, and well ahead of analysts expectations for earnings of $1.31 a share on revenue of $11.7 billion.
The huge, 53 cent earnings beat has accounted for 20 of the Dow’s current 68 point gain which has pushed the index to 12,831. The S&P is up by 3 points to 1,363 while the Nasdaq is higher by 2 points to 2,874.
We also like the strong move shares of Skyworks Solutions (SWKS, $31.49, up $3.98) are making today, up 14%, after crushing the suit-and-ties on their estimates as well. We first profiled this stock for you 6 months ago in the mid-$20’s before it hit a 52-week high of nearly $38 back in February. Since then, shares have slipped but have rebounded sharply today. We love this stock going forward and our price target then was $40. Still is. At current levels, Skyworks is a steal.
We said on Tuesday if resistance were broken that there could be some chasers of the rally which is what we have seen this week. We have a lot to cover in our Members Area, including a NEW TRADE for today, so we have to cut it a little short but remember to watch our near-term targets from this morning. We will be back Sunday night with the Weekly Wrap which will be packed with some good information and what to watch for in May.
If you want a head start and would like to get Sunday’s Weekly Wrap or today’s NEW TRADE, click here. The Weekly publication is 9-for-9 in trade recommendations which are averaging double-digit returns and we will be looking to add our next winner soon.
Have a great weekend everyone!
Tags: call options, CAT, CAT earnings, high beta stocks, Hot stocks, momentum options, Momentum stocks, option tips, options trading course, Skyworks Solutions, stock market options, strangle option trades, SWKS, SWKS earnings, weekly options
Posted in Market Analysis, Market Commentary | Comments Off