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1:00pm (EST)
The market has traded in a tight range although the bulls are still the fat kid on the see-saw. The major indexes are showing slight gains as traders seem tentative to build positions ahead of 2Q earnings.
The Dow is up 5 points to 10,144 while the S&P 500 is higher by 2 points and is at 1,071. The Nasdaq is showing a 5 point pop and is at 2,180.
The talking heads like to say Alcoa (AA, $10.80, up $0.08) kicks-off earnings season and on Monday they will, but, we are here to say Intel (INTC, $20.03, down $0.07) will officially handle those duties on Tuesday.
Shares of Intel are down 18% from its 52-week high of $24.37 and the low is $15.86 so shares are pretty much in the middle. Intel has a nice history of beating earnings, but a few analysts have been downgrading the stock ahead of earnings. The options market is pricing a 5% move in the stock when the company announces so we can expect a slight move up or down. However, if Intel happens to miss earnings then it could get nasty for shareholders.
This week was light on news and the rally has come on light volume. That worries us. It’s okay to say maybe we didn’t call an “exact” bottom, but we did call for the pullback that started in May.
Just like any battle, we like to wait for our next move which is why we are letting our current trades play out. We have been building a nice Watch List, and we will be back in action next week with some high reward/ medium risk trades. We are going to cover quite a few trades that have homerun potential including another look at two Biotech companies, Dendreon (DNDN, $31.86, up $1.56) and Vivus (VVUS, $11.90, up $0.21) which we are close to adding.
We have followed these stocks and alerted our subscribers when shares were under $5 for both of these companies. In fact, there is a major news announcement coming for Vivus, and Dendreon is making the rounds as a takeover candidate again. We are looking for huge price swings in both of these companies, but we want to do some more research over the weekend before pulling the trigger on a trade.
We are excited as we look forward to the next few weeks and months, and we think there will be a ton of great opportunities to go both long and short this market. It will just take more homework with the volatility being taken up a notch.
We will be back on Sunday night with the Weekly Wrap, but subscribers can check the Members Area for one last update before we go.
See you Sunday night, and have a great weekend everyone!
Priceline (PCLN) Pops, Dendreon (DNDN) Pushes $40
Wednesday, August 4th, 2010
1:05pm (EST)
The bulls are trying to hold on to today’s slight gains but are having trouble once again at resistance levels as we head into the second half of trading.
Futures were pointing towards a lower open for much of the morning but turned around an hour before the bell after learning private sector payrolls increased by 42,000 in July. It wasn’t much to write home about but the news was a relief for the Nervous Nellie’s who had been sweating a negative number.
In other economic news, the ISM non-manufacturing index printed 54.3 for July, versus estimates of 53.0.
As a result, the Dow is up 34 points to 10,670 while the S&P 500 is up 4 points to 1,124. The Nasdaq is up 14 points to 2,297. As you can see, the S&P 1,125 and Nasdaq 2,300 levels are a brick wall for the bulls.
Turning to earnings, Priceline.com (PCLN, $282.89, up $52.22) is up 23% after crushing Wall Street’s estimates and is at a new all-time high. The company announced earnings of $158 million, or $3.09 per share, versus $67 million, or $1.38 a share, in the year ago period.
These numbers easily blew away analysts expectations of $136 million, or $2.65 a share. Priceline said sales surged nearly 30% to $767 million while the suit-and-ties had expected $733 million.
The company also raised guidance for the current quarter and now expects to earn $4.78-$4.98 a share on revenue of $1 billion. Analysts were expecting $4.18 a share on $863 million.
Priceline has a history of spanking expectations and last night’s news was no exception. The incredible performance comes just months after the company warned that an erupting Icelandic volcano and the declining euro could hurt profits. At the time, Priceline was just being cautious and if their results were impacted it sure didn’t show.
The travel industry has been steady, to say the least, despite signs of a slowing economic recovery. People are using Priceline for the incredible deals that can be found and are taking “shorter trips” if they have too.
Look, we all need a vacation, and Priceline seems to be gaining more of a wider audience and market share as people find out about the types of deals you can get. It’s been a favorite earnings play of ours in the past but we were a deer in headlights on this one.
Electric Arts (ERTS, $17.33, up $1.15) is also trading higher after reporting a profit after the closing bell yesterday. The video game maker said it earned $96 million, or $0.29 a share, versus a loss of $234 million, or $0.29 a share, a year earlier. Revenue was up to $815 million from $644 million.
The video gaming industry has been struggling with sales but EA has done well by making a big push into digital as it expands sales of downloadable and mobile content.
The company’s digital business rose over 50% in the quarter thanks in part to social networks like Facebook and others. The company said it has over 50 million monthly active users playing social games.
EA is also the top dog on Apple’s (AAPL, $262.50, up $0.57) iPhone and iPad and will only get stronger as more people sign up for smartphones.
And finally, how could we not mention Dendreon’s (DNDN, $39.09, up $6.06) big day? The company gave Wall Street an update on earnings, but more importantly, an update on sales of its prostate cancer drug, Provenge.
We knew Dendreon would report a loss as they ramped up production, sales and manufacturing costs but the good news is that Provenge sales are going to be there and the healthcare providers appear they are going to pick up some of the $90,000 price tag for treatment. Bingo!
July sales were $5 million and the waiting list is growing as Dendreon rolls out its plans for expansion. Shares kissed $40 which is current resistance but could run to $42-$44 if we get a close above this level.
It’s been a busy day and we will be back in the morning with another full update at 9am. We have updated our trades in the Members Area and we are close to recommending a new one or two of them either this week or early next.
Tags: call options, Dendreon, dndn, DNDN earnings, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, Provenge sales, put options, stock options trading, volatile options
Posted in Earnings, Market Analysis, Market Commentary | Comments Off