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Friday, November 6th, 2009
9:15am (EST)
We were expecting the Dow to trade pretty close to 10,000 going into Thursday’s close as we said it would be the level the bulls and bears do battle at. The Dow added over 200 points to close at 10,005 yesterday after a better-than-expected jobless claims report and the earnings beat from Cisco Systems (CSCO, $23.93). It may have been a great day for the bulls but it appears it will be short lived.
We have been saying all week that Friday could be a big day for the market and that we expected the volatility to remain high. The bulls have a 3-to-1 lead this week but it looks like the bears are going to win today’s session.
Drum roll, please…
Wall Street was expecting the unemployment rate to come at 9.9% with a loss of 175,000 jobs. We got the news at 8:30am this morning and it wasn’t good. The report showed employers slashed 190,000 jobs in October, driving the unemployment rate to 10.2%, the highest since 1983.
Dow futures were flat going into the report and are now down 52 to 9,902 and instantly turned negative once the numbers were released.
We were expecting the worse and we reduced our exposure yesterday by closing a few trades ahead of the news. We saw no reason to risk the 30% gains we had in Imax (IMAX, $10.89) or the 38% return we had in Barrick Gold (ABX, $40.71). We also closed a profitable put option position in Apollo Group (APOL, $56.47) for a 50% return.
Now that the news is out it’s time to go shopping. We did profile a new option trade yesterday and it could get off to a good start with the negative sentiment this morning. There are a few other trades we are looking but we want to see how the market opens and how some of these stocks we are following react.
We will keep you updated on our thoughts and if we see a trade we will be back at 1pm with the details. Current Subscribers can check the Members Area for the trade updates.
Tags: Cisco Systems, Imax Posted in Earnings | Comments Off
Thursday, November 5th, 2009
9:15am (EST)
Cisco Systems (CSCO, $23.29, up $0.38) does it again. It shouldn’t come as a surprise the company beat earnings because it has always been known as the “penny beater” on Wall Street. But this time was different.
For the quarter, Cisco said it earned $1.8 billion, or $0.30 a share, which was down nearly 20% from last year’s number of $2.2 billion, or $0.37 a share, a year earlier. That are the headline numbers but the company really earned $0.36 a share when you back out stock-option compensation, acquisitions and other write-downs. Wall Street estimates were for $0.31.
Everybody will be jumping on the Cisco Bandwagon today but we already played this fiddle back in June when we said it would be a $25 stock by October. Shares printed $24.83 on October 19th. Our subscribers did well buying the October 20 call options options back in June and cashing out three weeks later for gains up to 80%. We still like Cisco as a company and think it is one of the better Tech stocks but we don’t see an option trade for this one right now. Cisco is up 84 cents, to $24.13, before the bell…
At some point today, the Cisco news will wear off and everyone will be focused on Friday’s Jobs Report. The Department of Labor will release the October employment report and we could get some clear market direction once we get the news. Today is a tossup and we could see a tight range as bulls and bears take their positions.
Wall Street is looking for a contraction of 150,000 jobs which will look GREAT compared to last month’s job loss of 263,000 but how will the market react if we print 10%? The jobless rate is expected to come in around 9.9%, which puts us within spitting distance of the all important double-digit mark. If we get a 10% reading, the bears could make a charge.
The potential of Friday’s report has us locking in profits and looking for new trades based on the response to the employment news on Friday. Current Subscribers can check the Members Area for the trade updates.
Tags: Cisco Systems Posted in Company Commentary, Earnings, Market Analysis, Option Trades | Comments Off
Monday, October 12th, 2009
8:30am (EST)
The bulls took the ball and ran with it as the market headed higher throughout the week and finished strong on a number of positive developments. Things got rolling on Monday when the Dow popped 113 which was followed up with a 132 point gain on Tuesday. By the close of Friday the Dow added another 78 to finish at 9,864, up 377 points, or 4%, for the week.
Alcoa (AA, $14.24, down $0.11) kicked off 3Q earnings season with better-than-expected earnings and actually made a profit as Wall Street was expecting a loss for the quarter. This week we really get things rolling as quite a few of the Financial companies will be reporting. The banks have reported solid back-to-back quarters and we will need to see more of the same or there could be a slight sell-off in the sector.
Tech was also hot as the Nasdaq and S&P 500 both gained 4.5% for the week. The Naz finished at 2,139, up 91 points, while the S&P 500 added 46 and settled at 1,071.
International Business Machines (IBM, $125.93, up $3.64) finally broke through a heavy wall of resistance and I have been talking about what a huge event this would be. The October 125 calls (IBMJE, $2.90, up $1.75) zoomed 150% on Friday and opened at $1.30. The October 130 calls (IBMJF, $0.84, up $0.57) soared over 200% and opened for three dimes.
The stock could make a run to $130 which represents another area of resistance and an ALL-TIME high for the stock. The company reports earnings on Thursday and they have been knocking the cover off the ball all year. Somewhere I can hear the Allman Brother’s singing “you’re my blue sky, you’re my sunny day”…
As you know, I have been making the call for Dow 10,000 since early summer and have been the bull’s biggest cheerleader since March when we started going long the market when everybody was still selling. We used longer-term options to see the forest through the trees and we were well rewarded.
If the news this week is good, the Dow may well pass 10,000 for the first time in over a year. What? You think it’s a coincidence that IBM, Intel (INTC, $20.17, up $0.29), Cisco Systems (CSCO, $24.03, $0.36) and Apple (AAPL, $190.47, up $1.20) are all approaching 52-week highs…
Earnings will be big this week but we will also have some economic reports that we will need to monitor. The Federal Reserve will release their meeting minutes from their September 22-23 gathering and Wall Street likes to look for the devil in the details. The minutes will be out Wednesday and could give us clues about the Fed’s plans for pulling back on its stimulus measures, including near-zero interest rates.
The Commerce Department will report Retail Sales for September and Business Inventories for August, on Wednesday as well. Other key reports will be the Consumer Price Index on Thursday and a preliminary reading on Consumer Sentiment will come out on Friday.
As we head to press, Dow futures are up 43 to 9,850. Subscribers, check the Members Area this morning for the trade updates.
Tags: Alcoa, Cisco Systems, IBM, Intel, momentum options, momentum options trading, Momentum stocks, option trade picks, options track record Posted in Earnings, Financial Stocks, Market Analysis, Market Commentary, Option Trades, Sectors | Comments Off
Tuesday, August 11th, 2009
10:45am (EST)
There’s not a lot of green out there as the bulls are taking a breather ahead of the FOMC fireworks. I was pushed for time this morning which is why I posted right at the opening bell. I have been busy with a couple of projects which I will talk about tonight.
The Dow is currently down 87 points to 9,250. Stocks I’m watching today…
Cisco Systems (CSCO, $21.14, down $0.50) continues to slide and if we get back to $20 or even $18 we will be going long again.
Ford (F, $7.83, up $0.11) is rebounding today after getting crushed on Monday, falling over 3% and back below $8. Now you can see why stops are so important. We were long the December 6 and 7’s call options but were stopped out last week for 100% and 75% gains, respectively. The trade had run its course but it doesn’t mean we can’t keep watching the stock or options…
The Financials are taking a hit this morning although Bank of America (BAC, $16.48, down $0.20) was positive to start the session and Visa (V, $69.09, up $0.21) keeps kidding itself on a break above $70.
Rick@MomentumOptionsTrading.com
Tags: Bank of America, Cisco Systems, Ford, Visa Posted in Company Commentary, Option Trades, Strategies | No Comments »
Tuesday, August 11th, 2009
9:30am (EST)
Bank of America (BAC, $16.68, up $0.26)
November 17.50 calls (BYOKZ, $1.50, up $0.10)
Entry Price: $1.25 (8/10/09)
Exit Target: $2.50
Return: 20%
Stop: 60 cents
November 20 calls (BYOKT, $0.70, up $0.04)
Entry Price: $0.50 (8/10/09)
Exit Target: $1.00
Return: 40%
Stop: 25 cents
Cisco Systems (CSCO, $21.64, down $0.55)
October 20 calls (CYQJD, $2.13, down $0.51)
Entry Price: $1.50 (6/2/09)
Exit Target: $3.00 (8/4/09 1/2 the trade was closed)
Return: 80%
Stop: $2.50 (CLOSED)
Action: The call options opened at $2.45 so our stop on the other half was hit on the open. Tech looked weak on Monday…
Visa (V, $68.88, down $0.29)
August 70 calls (VEHHN, $1.00, down $0.20)
Entry Price: $1.60 (7/27/09)
Exit Target: $3.20
Return: -38%
Stop: 80 cents
Action: We could get stopped out of this one today. You could set stops at 75 cents to buy a little more wiggle room but $70 is proving to be a brick wall.
Imax (IMAX, $9.05, down $0.30)
September 7.50 calls (IMQIU, $1.70, down $0.20)
Entry Price: $1.90 (8/4/09)
Exit Target: $3.00
Return: -11%
Stop: $1.50, lower to $1.00
March 2010 12.50 calls (IMQCV, $0.45, down $0.05)
Entry Price: $0.45 (8/10/09)
Exit Target: $1.00+
Return: 0%
Stop: None
Action: The Imax story has been a topic of the blog for quite some time. I will be running a more detailed story on the company later in the week. We added the March 12.50’s to the portfolio and these calls do not expire until March, 2010.
Imax was a $20 stock back in the 1990’s and it has taken some time for the company to see the fruits of its labor as it rolls out its digital technology. However, the business model could finally be coming together as Imax has the pieces in place to be a powerhouse in the movie industry. New system installations will help build a larger established theater base and the company is sure to get the “cream of the crop” movies for years to come.
There is no stop on the March 12.50’s. This is an all-or-nothing trade and one that you shouldn’t need to watch on a daily basis. If you bought 10 contracts it would have cost you under $500. It is trade that has the potential to return 650% if Imax is at $20 in 8 months. The call options would be worth at least $7.50 if that were the case and you would be looking at $7,500 from a $500 investment.
PowerShares QQQ’s (QQQQ, $39.60, down $0.28)
August 40 calls (QQQHN, $0.50, down $0.13)
Entry Price: $0.65 (8/7/09)
Exit Target: $1.30
Return: -23%
Stop: 30 cents
Action: Keep your fingers crossed.
Two stocks going in opposite directions yesterday…
Research In Motion (RIMM, $73.28, down $3.81) tanked 5% yesterday and option traders were all over the August 70 puts (RFYTN, $0.94, up $0.62) yesterday. I missed the boat on this one as they opened at 46 cents. The company got slapped with a downgrade although the analyst stopped short of saying Apple (APPL, $164.72, down $0.79) is eating RIMM’s lunch.
I did tell you about Priceline.com (PCLN, $150.24, up $18.92) though. Right before the opening bell the stock was up $6. The August 150 calls (PNEHJ, $4.60) opened at $1.75. I didn’t think the stock would move $20 to be honest with you. Maybe $10, but $20 was an incredible pop.
Of course, it is too late to trade either of them but if you see a strong trend developing fo the day, don’t be afraid to pull the trigger on a “day trade”.
Tags: Bank of America, Cisco Systems, Imax, Visa Posted in Company Commentary, Option Trades | No Comments »
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Cisco Beats Street, Stock Up
Thursday, November 5th, 2009
9:15am (EST)
Cisco Systems (CSCO, $23.29, up $0.38) does it again. It shouldn’t come as a surprise the company beat earnings because it has always been known as the “penny beater” on Wall Street. But this time was different.
For the quarter, Cisco said it earned $1.8 billion, or $0.30 a share, which was down nearly 20% from last year’s number of $2.2 billion, or $0.37 a share, a year earlier. That are the headline numbers but the company really earned $0.36 a share when you back out stock-option compensation, acquisitions and other write-downs. Wall Street estimates were for $0.31.
Everybody will be jumping on the Cisco Bandwagon today but we already played this fiddle back in June when we said it would be a $25 stock by October. Shares printed $24.83 on October 19th. Our subscribers did well buying the October 20 call options options back in June and cashing out three weeks later for gains up to 80%. We still like Cisco as a company and think it is one of the better Tech stocks but we don’t see an option trade for this one right now. Cisco is up 84 cents, to $24.13, before the bell…
At some point today, the Cisco news will wear off and everyone will be focused on Friday’s Jobs Report. The Department of Labor will release the October employment report and we could get some clear market direction once we get the news. Today is a tossup and we could see a tight range as bulls and bears take their positions.
Wall Street is looking for a contraction of 150,000 jobs which will look GREAT compared to last month’s job loss of 263,000 but how will the market react if we print 10%? The jobless rate is expected to come in around 9.9%, which puts us within spitting distance of the all important double-digit mark. If we get a 10% reading, the bears could make a charge.
The potential of Friday’s report has us locking in profits and looking for new trades based on the response to the employment news on Friday. Current Subscribers can check the Members Area for the trade updates.
Tags: Cisco Systems
Posted in Company Commentary, Earnings, Market Analysis, Option Trades | Comments Off