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Monday, April 18th, 2011
1:30pm (EST)
Futures were pointing towards a slightly lower market when we released this morning’s update but things got even worse shortly after we sent it out. Before the opening bell. Standard & Poor’s lowered the U.S. debt outlook from “Stable” to “Negative” while reaffirming the country’s “AAA” debt-rating. This sent shock waves through Wall Street and futures tanked on the news.
The bulls were floored as it basically means there is a one-in-three chance the AAA rating could be lowered within the next two years. This was not good news for the government which released a statement saying that the S&P’s information was compiled prior to the release of the latest employment and GDP numbers, and that the economy is in better shape than before.
Well, we can’t say we aren’t surprised because somebody needed to tell the truth.
The talking heads are panicking and seemed confused on the downgrade but they have been out of the loop for a while. Gold and silver rallied on the news. Gold has traded up to $1,500 an ounce while silver has topped $43 an O on the market’s 2% plunge.
The Dow is down 216 points, or 1.8% to 12,125 while the S&P 500 is lower by 21 points, or 1.6%, to 1,298. The Nasdaq is showing a decline of 49 points, or 1.8%, to 2,715. All three indexes are testing the near-term support levels we went over this morning.
This week is big for earnings as they hit second gear but today’s S&P downgrade has overshadowed any good news that is being reported. As far as the bad, Citigroup (C, $4.47, up $0.05) said it earned $3 billion, or $0.10 a share, versus $4.4 billion, or $0.15 a share, in the year ago period. Revenue came in at $19.7 billion. Although it was the company’s fifth-straight quarterly profit, revenues dropped as they incurred higher compensation and legal costs.
Analysts were looking for profits of $0.09 a share on revenue of $20.8 billion. Despite the revenue miss, shares are trading slightly higher today. Remember, on May 6, Citigroup plans to do a 10-for-1 reverse stock-split which will reduced its outstanding shares from 29 billion to less than 3 billion.
We have a lot of news to cover in our Members Area but watch the 1,300 level for the S&P 500. If the index closes below this level, the bears could take a shot at the March lows of 1,250. Subscribers, check for the updates.
Tags: call option trades, chicken trades, momentum options, Momentum stocks, options trading course, put options, S&P Revises U. S. Debt to “Negative”, stock market options, stocks that trade weekly options, strangle option trades, weekly options
Posted in Earnings, Market Analysis | Comments Off
Monday, April 18th, 2011
8:45am (EST)
Although the bears won last week’s battle to make it two-in-a-row, you could tell by the bulls’ efforts that they aren’t going down without a fight. The real action occurred in one day, on Tuesday, which is when the bears roared loudest. Friday’s gains helped cut the week’s losses to less than half but the major averages still finished lower for the week.
The Dow started the week at 12,380 and gained 57 points on Friday to finish at 12,341. The index traded to a high of 12,369 but fell 0.3% for the week after touching a low of 12,137 on Thursday. Our upside targets have been 12,500-12,600 for the blue-chips but the Dow will need a close above 12,350 to challenge these levels. Near-term support remains at 12,200 and then 12,000.
The S&P was at 1,328 at the beginning of Monday’s session and added 5 points to settle at 1,319. The index closed below 1,325 on Monday and reached a low of 1,302 during the week. The bulls were looking to make a run to the 1,350 level but tested both near-term support targets of 1,325 and 1,300.
The Nasdaq began the week at 2,780 but quickly closed below 2,750 on Tuesday. On Friday, the index gained over 4 points and ended the week at 2,764 after testing a low of 2,733 on Thursday. The index had trouble with the 2,800 level the prior week which still represents near-term resistance. Support remains at 2,700-2,650 going forward.
Oil pushed back to nearly $110 a barrel while Gold surged to record highs and closed at $1,486 for the week. Silver is at 31-year highs and finished at $42+, up another 5% for the week. On the other hand, Copper fell over 5% in five days, to $4.26, after closing at $4.50 the week before.
The Dow is up 20 points for April while the S&P 500 is down 6 points. Tech is down about 17 points. So far, April has not delivered the results the bulls have been hoping for as the crosswinds have slammed us back into a trading range. If we pencil in the historic 2% April average gains for the indexes then we get Dow 12,500; S&P 1,355; and Nasdaq 2,820 by month end.
Yes, we do a lot of homework and chart work but it’s pretty crazy how that last paragraph just comes together and makes a compelling argument for one last bull charge as we head into May which happen to be our upside targets. However, a 2% move the other way puts the S&P below 1,300.
Earnings get thicker this week and we spent the weekend licking our chops as we get ready for the action this week. The current crosswinds have given mixed signals as to which way the market is going to break. The bulls averted disaster following Google’s (GOOG, $530.70, down $47.81) 8% plunge on Friday. We predicted a 5% move but we were a little surprised to see a drop of nearly $50.
The April options expired Friday but we wanted to show you how expensive options are on stocks that trade over $300, $500 or more.
Google was at $578 going into Thursday’s close and a $25 pop got the stock to over $600 or near $550 which was our prediction. We weren’t too bullish on the company beating expectations but we weren’t going to bet against the company either.
Well, the first choice would have been the April 550 puts (GOOG110416P00550000, $20.70, up $17.40) which closed at $3.30 on Thursday. The 500% return would have been beautiful on Friday but a 10 contract trade would have cost $3,300. If Google would have soared on better-than-expected numbers, then the puts would have expired worthless.
The Google April 600 calls (GOOG110416C00600000, $0.00, down $4.90) were near $5 and did expire worthless.
This would have been the PERFECT strangle option trade, of course, because you still would have doubled your money if you had taken both trades and paid $8.20. The problem is that if shares would have stayed between $600 and $550 or moved less than 5% then both options would have expired worthless.
We actually looked at this trade but we don’t like paying more than $2 for an option contract. Of course, we do recommend options from time-to-time that are in the $1.50-$2.00 range but we usually go 6-12 months out to give the trade plenty of time to develop.
We wanted to show the power of strangle trades because we do believe going forward that these types of plays offer a little more safety in a choppy and range bound market. We know we got side tracked but we wanted to show you how to buy some protection in case there isn’t one last run by the bulls.
Futures were down 0.2% for much of early morning hours and have gotten worse as we head towards the opening bell. Futures are down 0.5%.
Dow futures are lower by 66 points to 12,237 while the S&P 500 futures are down 8 points to 1,311. Nasdaq 100 futures are off 11 points to 2,299.
We have 12 charts we are showing today inside our Members Area that cover our current trades and ones that are on our Watch List. These charts make the technical picture a little easier to understand and you will know exactly what we are to expect if a stock breaks below or above resistance.
Tags: call option trades, chicken trades, GOOG, Google, momentum options, Momentum stocks, options trading course, put options, stock market options, stocks that trade weekly options, strangle option trades, weekly options
Posted in Market Analysis, Market Commentary | Comments Off
Friday, April 15th, 2011
12:50pm (EST)
There has been a slight battle between the bulls and bears today as both sides try to square up their positions for the week. There has been a ton of economic data so let’s get that out of the way, first.
The Consumer Price Index (CPI) was up 0.5% for March, less food and energy, CPI gained 0.1%. The consumer sentiment index level for April was 69.6 while the Empire State manufacturing survey for April came in at 21.7. Industrial production increased 0.8% for March.
The market got a pop after the University of Michigan Consumer Confidence reading came in at 69.6 but choppy trading returned soon afterwards. However, there could be a charge today into the close.
The Dow went into today’s session down 95 points for the week and the bulls are chipping away at the deficit. The blue-chips are up 70 points to 12,350 but it’s possible we see a triple-digit rally going into the close.
The S&P needed 14 points to get back to good and is up 7 points t0 1,321. The index broke below support this week at 1,325 and the test down to 1,300 has got our attention. However, we remain in this range between these two targets.
The Nasdaq needed a 20 spot to breakeven for the week and the drop below 2,750 on Tuesday did some technical damage. The index is currently up 5 points to 2,765 after touching a low of 2,743 so expect some see-saw action into the closing bell.
The domino effect over the past two weeks has now put the trend in the bears favor and we talked about the fundamental breakdowns we are starting to see. Earnings season hits second gear next week and we will be spending ALL weekend trying to find some of the best option trades that can return us triple-digit profits.
We will be updating all of our track records at the close of today’s trading. For our Daily 2011 track record, it looks like we will be at a 65%-70% win rate for our recommendations.
The Weekly Wrap 2011 Portfolio was started in late 2010 and is mainly used for finding undervalued stocks or ones with momentum for covered call candidates. We have profiled 7 stocks and 6 are showing profits. The one recommendation that is lower by 7% should rebound which is the beauty of writing covered calls. Since you own the stock, you get to collect the premiums from selling monthly (or WEEKLY) calls against your position while waiting for a bounce.
Folks, if you want to see a safe way we are trying to make 10%-20% or more a year for EACH trade by using call options, or selling put options, then we urge us to join our Weekly Wrap. We cover two in-depth stories a week on up-and-coming stocks or ones that we feel could breakout or are undervalued.
On average, the trades are up 10%-12% for the Weekly portfolio, but it has only been 4 months. If you times that by 3 then you are on track for annual gains of 25%+. If you are serious about learning more about our Weekly Wrap or how these stock and option strategies will help you, then please email us this weekend.
Next week will super exciting as we plan to get aggressive with the expiration of April options today. We took two on the chin but we are started to see a trend which means we may be playing WEEKLY options again as soon as next week.
If you would like the freshest copy of our 2011 Track Record, don’t forget to email us about that subject either. We have one last update inside our Members Area for today and we will be back Sunday night with the Weekly Wrap with two hot stocks that have made big moves this year.
Have a great weekend everyone!
Tags: call option trades, chicken trades, momentum options, Momentum stocks, options trading course, put options, stock market options, stocks that trade weekly options, strangle option trades, weekly options
Posted in Covered Calls, Market Analysis, Market Commentary | Comments Off
Friday, April 15th, 2011
8:50am (EST)
The bulls got their second straight win on Thursday but the margin of victory matched Wednesday’s slight gains. The bears dominated the early action after hearing initial jobless claims rose by 27,000 week-over-week to 412,000. Wall Street was looking for 385,000 and the jump back over 400,000 was the headline shocker. This was the first time in more than a month initial claims exceeded 400K which caused the weakness at the open.
Financial stocks also broke down (again), after rallying past their 50-day moving averages last week. The lack of leadership from this sector is really starting to weigh on the bulls and we mentioned yesterday that it will take another quarter or two before they bottom or start to rebound. We took a chance that there would be a slight rally but we got punched in the face by JPMorgan (JPM, $44.97, down $1.28) which told us to wake up.
Oil was also up and closed above $108 a barrel but somehow, someway, the bulls got a “W”.
The Dow added 14 points to finish at 12,285 but traded to a low of 12,163. The index did reach a high of 12,305 which was prior support but is now acting like resistance. The break below 12,200 has our attention as it appears 12,000 could come into play as early as next week.
The S&P was up less than a point and remained at 1,314 after trading down to 1,302. We mentioned on Monday the close below 1,325 spelled 1,300 for the index. More importantly, a break below 1,300 leads way to 1,275-1,250.
The Nasdaq was down a point and closed at 2,760 but made another “lower, low” after falling to 2,733. We have outlined 2,700-2,650 as the bears next near-term target area.
There are a few major earnings reports we will cover today but let’s focus on Google (GOOG, $578.51, up $2.23) which announced their numbers after the close yesterday. The company was expected to earn $8.11 but profits came in at $8.08 a share.
Revenue surged 27% to $8.6 billion but after commissions to its ad partners, Google’s revenue came in at $6.54 billion. This was still ahead of analysts’ estimates for revenue of $6.33 billion but expenses have ballooned at the company which is on a hiring spree and included a sweet 10% raise the company gave to ALL its employees at the beginning of the year.
Google has its fingers in a lot of pies so it makes sense that the company wants to attain the best and brightest workers to grow their business but Wall Street is impatient.
We said last night shares would be at $600 or $550 in after-hours and they were. Although it’s only a 5% move, the headline will be Google is down $30 at the open.
Futures are pointing towards a flat start this morning. The Dow futures are lower by 2 points t o 12,226 while the S&P 500 futures are up a fraction to 1,310. The Nasdaq 100 futures are down 2 points to 2,298.
We have added some new names to our Watch List and we may release a trade today for either our Daily newsletter or Weekly Wrap. If so, expect a Trade Alert before noon and after 10am. Subscribers, check the Members Area for the updates.
Tags: call option trades, chicken trades, GOOG, momentum options, Momentum stocks, options trading course, put options, stock market options, stocks that trade weekly options, strangle option trades, weekly options
Posted in Google, Hot Stocks, Market Analysis | Comments Off
Thursday, April 14th, 2011
1:25pm (EST)
It’s all about the notes…
We have been busy today, folks, and there are a lot of good stories to talk about so we are going to be quick because we have a lot to go over in our Members Area.
The bears dominated the early action this morning but the bulls have fought back as we head towards the second half of trading.
The Dow is down 13 points to 12,257 while the S&P is off by 3 points to 1,311. The Nasdaq is lower by 14 points to 2,747.
Google (GOOG, $577.00, up $0.72) announces earnings after the bell. We will be listening to the company’s conference call with a Bob Segar classic in the background…Turn the Page. All eyes will be on the company’s CEO, Larry Page, who recently took back the gig to run Google.
Google doesn’t make the dramatic moves like past years after posting their numbers but this time could be different. If we had to guess, we think shares hit $600 or trade down to $550 in after-hours trading.
We will be back in the morning with a full update.
Tags: call option trades, chicken trades, GOOG, momentum options, Momentum stocks, options trading course, put options, stock market options, stocks that trade weekly options, strangle option trades, weekly options
Posted in Google | Comments Off
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Bears Looking to Keep Slight Momentum
Monday, April 18th, 2011
8:45am (EST)
Although the bears won last week’s battle to make it two-in-a-row, you could tell by the bulls’ efforts that they aren’t going down without a fight. The real action occurred in one day, on Tuesday, which is when the bears roared loudest. Friday’s gains helped cut the week’s losses to less than half but the major averages still finished lower for the week.
The Dow started the week at 12,380 and gained 57 points on Friday to finish at 12,341. The index traded to a high of 12,369 but fell 0.3% for the week after touching a low of 12,137 on Thursday. Our upside targets have been 12,500-12,600 for the blue-chips but the Dow will need a close above 12,350 to challenge these levels. Near-term support remains at 12,200 and then 12,000.
The S&P was at 1,328 at the beginning of Monday’s session and added 5 points to settle at 1,319. The index closed below 1,325 on Monday and reached a low of 1,302 during the week. The bulls were looking to make a run to the 1,350 level but tested both near-term support targets of 1,325 and 1,300.
The Nasdaq began the week at 2,780 but quickly closed below 2,750 on Tuesday. On Friday, the index gained over 4 points and ended the week at 2,764 after testing a low of 2,733 on Thursday. The index had trouble with the 2,800 level the prior week which still represents near-term resistance. Support remains at 2,700-2,650 going forward.
Oil pushed back to nearly $110 a barrel while Gold surged to record highs and closed at $1,486 for the week. Silver is at 31-year highs and finished at $42+, up another 5% for the week. On the other hand, Copper fell over 5% in five days, to $4.26, after closing at $4.50 the week before.
The Dow is up 20 points for April while the S&P 500 is down 6 points. Tech is down about 17 points. So far, April has not delivered the results the bulls have been hoping for as the crosswinds have slammed us back into a trading range. If we pencil in the historic 2% April average gains for the indexes then we get Dow 12,500; S&P 1,355; and Nasdaq 2,820 by month end.
Yes, we do a lot of homework and chart work but it’s pretty crazy how that last paragraph just comes together and makes a compelling argument for one last bull charge as we head into May which happen to be our upside targets. However, a 2% move the other way puts the S&P below 1,300.
Earnings get thicker this week and we spent the weekend licking our chops as we get ready for the action this week. The current crosswinds have given mixed signals as to which way the market is going to break. The bulls averted disaster following Google’s (GOOG, $530.70, down $47.81) 8% plunge on Friday. We predicted a 5% move but we were a little surprised to see a drop of nearly $50.
The April options expired Friday but we wanted to show you how expensive options are on stocks that trade over $300, $500 or more.
Google was at $578 going into Thursday’s close and a $25 pop got the stock to over $600 or near $550 which was our prediction. We weren’t too bullish on the company beating expectations but we weren’t going to bet against the company either.
Well, the first choice would have been the April 550 puts (GOOG110416P00550000, $20.70, up $17.40) which closed at $3.30 on Thursday. The 500% return would have been beautiful on Friday but a 10 contract trade would have cost $3,300. If Google would have soared on better-than-expected numbers, then the puts would have expired worthless.
The Google April 600 calls (GOOG110416C00600000, $0.00, down $4.90) were near $5 and did expire worthless.
This would have been the PERFECT strangle option trade, of course, because you still would have doubled your money if you had taken both trades and paid $8.20. The problem is that if shares would have stayed between $600 and $550 or moved less than 5% then both options would have expired worthless.
We actually looked at this trade but we don’t like paying more than $2 for an option contract. Of course, we do recommend options from time-to-time that are in the $1.50-$2.00 range but we usually go 6-12 months out to give the trade plenty of time to develop.
We wanted to show the power of strangle trades because we do believe going forward that these types of plays offer a little more safety in a choppy and range bound market. We know we got side tracked but we wanted to show you how to buy some protection in case there isn’t one last run by the bulls.
Futures were down 0.2% for much of early morning hours and have gotten worse as we head towards the opening bell. Futures are down 0.5%.
Dow futures are lower by 66 points to 12,237 while the S&P 500 futures are down 8 points to 1,311. Nasdaq 100 futures are off 11 points to 2,299.
We have 12 charts we are showing today inside our Members Area that cover our current trades and ones that are on our Watch List. These charts make the technical picture a little easier to understand and you will know exactly what we are to expect if a stock breaks below or above resistance.
Tags: call option trades, chicken trades, GOOG, Google, momentum options, Momentum stocks, options trading course, put options, stock market options, stocks that trade weekly options, strangle option trades, weekly options
Posted in Market Analysis, Market Commentary | Comments Off