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Tuesday, March 20th, 2012
1:15pm (EST)
The bears are trying to get on the scoreboard after yielding points to the bulls for 3-straight sessions. Much of today’s action can be blamed on concerns over China’s economy slowing as some are saying and some of the mining stocks such as BHP Billiton (BHP, $72.77, down $2.74) are reporting iron ore demand is weakening.
Economic news here at home came in mixed which has contributed to today’s slide. Housing Starts fell 1.1% during the month of February versus estimates for a 0.1% increase. Meanwhile, Building Permits jumped 5.1% versus expectations for a pop of 0.6%. This week’s economic data is all about the Housing sector and KB Home (KBH, $11.60, down $0.29) will end the week by briefing Wall Street with its latest earnings on Friday morning.
Disney (DIS, $43.29, down $0.15) is weighing on the blue-chips after saying it will take a $200 million hit due to poor sales for its “John Carter” movie. We haven’t seen the flick but the trailers weren’t that compelling and there was no buzz building up to the release of the movie. Usually when you spend a quarter-billion dollars on a film, it better be a hit. In Disney’s case and for its unproven director, JC has quickly become a major flop. The expected loss was way worse than the $120-$160 million forecast.
The good news for Disney down the road is that “Avengers” and Pixar’s “Brave” could become blockbusters. However, you don’t buy Disney’s stock based on movie hits. We would buy the stock at current levels for its ESPN division, parks and cruise lines businesses.
As far as the market, the Dow is lower by 70 points to 13,169 while the S&P is off 7 points to 1,403. The Nasdaq is down 20 points to 3,058. We have a few trades in play today as some of our Hard Stops are close to being triggered.
We also have a NEW TRADE we are trying to get into so let’s go check the tape. Subscribers, hit the Members Area for the updates.
Tags: Avengers movie, BHP, DIS, KB Home earings
Posted in Company Commentary, Earnings | Comments Off
Wednesday, February 9th, 2011
1:00pm (EST)
The bears haven’t been much of a factor over the past 7 weeks and at some point they will wake up (which could be next week or not), but for now, the bulls are putting them to bed. The market got off to a slow start and losses were limited at the open as Wall Street prepared for Ben Bernanke’s comments who was speaking before the House Budget Committee.
The major indexes were slightly lower but as his comments were being digested, the Dow turned positive. However, they remained flat until the drilling began. Republicans asked Big Ben some tough questions but he seemed calm and his voice was as smooth as a breath mint. QE2 was the main point of interest but he also answered questions on the economy, inflation and interest rates.
Turning to earnings, Walt Disney (DIS, $43.53, up $2.35) is up 6% after reporting profits of $1.3 billion, or $0.68 a share, versus $844 million, or $0.44 a share, in the year ago period. The suit-and-ties were looking for $0.56 a share. Revenue came in at $10.7 billion, up from $9.7 billion and ahead of estimates for $10.5 billion.
It seems the Marvel Entertainment acquisition is paying off well and we were impressed with Disney’s ad revenue. We liked the Disney call options yesterday but stayed on the sidelines as we get our earnings trade tonight, after the closing bell, which is listed inside our Members Area.
We also said Buffalo Wild Wings (BWLD, $52.58, up $5.19) could move 8%-10% today and we nailed that forecast as shares are zoning in on their 52-week high of $52.99. We said a “strangle” option trade would be a great way to play Buffalo’s earnings and although we didn’t release any “official” trade recommendations we feel like we went 2-for-2 yesterday. However, we have had some subscribers who have emailed us this morning who said they took the trades based on our comments.
Shares of Buffalo Wild Wings were at $47.39 going into yesterday’s close and you could have played the February 50 calls (BWLD110219C00050000, $2.70, up $1.75) for 85 cents and the February 45 puts (BWLD110219P00045000, $0.05, down $0.95) for $1.00. The call options have soared over 185% while the puts have tanked 95%. The total cost of both options would have been $1.85 and at currents prices both options are worth $2.75. This gives you a return of 49%.
A 50% double-digit return in ONE day is a nice gain AND it was basically a risk free trade. However, the beauty of the trade is that you could close the calls and leave the puts open until next Friday. You would only be risking 5 cents and if they expired worthless you would still make 46% on the trade. Shares will probably not slide back below $45 before next week’s expiration date but they could.
We explain how to do strangle and “straddle” option trades in our trading manual, How to Trade Options on Momentum Stocks and some subscribers used our course materials which explained how to put this trade on. At any rate, our subscribers are enjoying their gains and that is what our manual is intended to do.
Despite the headwinds, the indexes are holding up pretty well. The Dow is currently at 12,222, down 10 points. The S&P 500 is off by 5 points to 1,319 while the Nasdaq is lower by 6 points to 2,791. The good news is that we have ANOTHER trade that is approaching a triple-digit return. Subscribers, check the Members Area for the important trade updates.
Tags: best option trader, best trading signals, BWLD earnings, call options, chicken trade, Covered Calls, DIS, financial options advice, momentum options, Momentum stocks, NYSE, option mentoring, option signals, option trading, options broker, options newsletter, put options, stock broker, strangle option trade, winning option trades
Posted in Earnings, Market Commentary | Comments Off
Wednesday, May 12th, 2010
9:00am (EST)
The bulls failed to carry Monday’s momentum over into Tuesday as the market started lower and struggled for much of the day. The market slipped as optimism waned following the $1 trillion European rescue package. We didn’t have a triple-digit close on the Dow for the first time in five trading sessions although the index did move within a 200 point range.
The bulls did manage to push the market into positive territory for a few hours and trading was choppy going into the close before the bears pulled out the victory by taking two out of the three indexes.
The Dow traded to a high of 10,874 before falling back to close with a loss of 37 points, or 0.3%, to finish at 10,748. The index is trading a little above the 10,800 level we are watching and did finish the day below it. Sometimes you will see a stock or index “stretch” their support or resistance lines but the action is telling us Dow 10,200-10,250 is in the cards. A break below this level means we are going back under 10K.
The S&P 500 fell 4 points, or 0.3%, and settled at 1,155 after reaching a high of 1,170. We said in yesterday’s morning update the index could run to 1,170 and that is where the door was slammed. The bulls are trying to push past this second wave of resistance but once we fall below 1,150 we think the index could test 1,075 over the short-term.
The Nasdaq ended the day fractionally higher but by less than a point and closed at 2,375. The index reached a high of 2,405 but slipped at resistance once again despite an upbeat earnings forecast from Intel (INTC, $22.28, down $0.27). We can see 2,200-2,100 on the horizon.
Tech did manage to hold up but if you are a current bull then you had to be disappointed that Intel finished in the red. The company said that they expect revenue and earnings per share to grow at a double-digit rate as the market for personal computers continues to be robust. Intel went on to say that most of the growth will come from China and India.
Turning to earnings, Walt Disney (DIS, $35.76, up $0.47) is trading lower this morning despite posting better-than-expected results. The company posted a profit of $953 million, or $0.48 a share, versus $613 million, or $0.33 a share, in the year ago quarter. Revenue rose 6% to $8.6 billion. Analysts were looking for revenue of $8.4 billion and $0.45 a share.
Wall Street must have felt shares were a little overpriced and obviously they are a little disappointed that Disney’s media networks didn’t perform as well as their movie studios. Shares are lower by 3% this morning and are at $34.65, down $1.11, in pre-market trading.
As we head to press, the bulls are showing a little life this morning as futures are pointing towards a slightly higher open. Dow futures are up 34 points to 10,743 while the S&P 500 futures are up 5 to 1,158. The Nasdaq 100 futures are advancing 10 points to 1,945.
Tags: call options, DIS, INTC, option picks, option signals, options alerts, put options, stock options trading, Walt Disney earnings
Posted in Earnings, Market Analysis, Market Commentary | Comments Off
Thursday, April 15th, 2010
9:00am (EST)
Let the stampede begin…
Yesterday should have been convincing enough that something real is happening in the market right now. There has been a vast majority of Wall Street analysts, talking heads, hedge fund and mutual fund managers, and chief market strategists who have called for a market pullback over the past month. They have been dead wrong as they told you that the market has “gone up too far too fast”, or “we are due for a pullback.”
Of course, a pullback or correction is in the cards down the road, but we have been spot on since late February about this current market rally. Picking the market’s direction isn’t easy, but if you go through our history of archives you will find we have been pretty accurate in calling the market’s direction for a few years now.
Wednesday’s bounce was further proof that sometimes even the smartest guys on Wall Street can’t see what is happening around us.
They said M&A (merger and acquisition activity) was dead. Walt Disney (DIS, $36.20, up $0.36) bought Marvel Entertainment and there were a slew of other deals that got done in 2009. This has carried over into 2010, and now that there have been even more of them the talking heads will tell you “things are picking up.”
They told you the IPO market was dead, yet we have five great candidates that will still track from 2009 on our Watch Lists. (We like to label IPOs as such for a year until we can get a solid chart on how the stock will trade in future years.) A123 Systems (AONE, $14.26, down $0.35), Rosetta Stone (RST, $25.98, up $0.90) and ChangeYou.com (CYOU, $33.51, up $1.80) are a few big names from last year.
They have told you consumer spending was dead and dining out meant dining in, but the analysts forgot to check with Best Buy (BBY, $45.57, up $0.88) and Chipotle Mexican Grill (CMG, $125.97, up $0.43) or Yum! Brands (YUM, $41.68, up $0.73) who just reported a sweet quarter this morning.
We have seen stock-splits, stock buybacks, clean balance sheets, higher gross margins, and a rebound in technology and corporate spending. And people are gambling. All of this has led to a higher market, but as more people jump on the bandwagon we need to be the rats on the ship on the way down.
We think 2010 will be a banner year for the market, and we recently raised our targets for all of the major indexes to factor in the extra fluff from the current rally. We were pretty aggressive with our target of Dow 11,300-11,400 in our Sunday night Weekly Wrap over the near-term, and we are already halfway there.
As far as Wednesday’s action, the Dow added a triple-digit gain to its current 5-session win streak by advancing 104 points, or 0.9%, to close at 11,123. Bank of America (BAC, $19.40, up $0.73), JPMorgan Chase (JPM, and Intel (INTC, $23.52, up $0.75) are members of the Dow 30 and helped power the index to its highest close since September, 2008.
The S&P 500 finished with a double-digit gain by popping 13 points, or 1.1%, and settled at 1,210. The real story was the Nasdaq which was the clear winner once again. Our target of 2,550-2,600 is within spitting distance. The index soared 39 points, or 1.6%, and closed at 2,504.
 NASDAQ We aren’t sure how much longer the current rally will last but remember, the Dow was at 14,000 in 2007 and traded 13,000 in 2008. There is no reason why we can’t go to 12,000 by the end of 2010 if the recovery is real.
The S&P was at 1,500 in 2007 and 1,400 in 2008. We can see 1,350 by yearend. The Nasdaq was at 2,800 3 years ago and could break those levels by hitting 3,000 this year.
These are things to remember when the market pundits tell you stocks have moved too far, too fast but we also realize nothing goes straight up forever. However, we’ll play Jack as long as the beanstalk keeps growing.
We added two new trades yesterday along with the other half-dozen or so we are currently following. Subscribers, check the Members Area for the updates.
Tags: AONE, bac, BBY, CMG, CYOU, DIS, INTC, JPM, option picks, option signals, options alerts, RST, stock options trading, YUM
Posted in Earnings, Market Analysis, Market Commentary, Trading Psychology | Comments Off
Monday, March 8th, 2010
9:00am (EST)
Futures are trading in a narrow range this morning as we get ready for the upcoming week. There is little economic data due out during the first half of this week and earnings are coming to a crawl so Wall Street will be looking for other cues to give the market direction.
Asian markets surged last night in their first trading session following the upbeat U.S. jobs report but the European markets fell slightly.
The good news, if you are bullish, is that there are a lot of upgrades on stocks this morning that could get the bulls in a buying mood.
Research In Motion (RIMM, $69.50, down $0.48), Yahoo (YHOO, $16.06, up $0.25) and U.S Steel (X, $58.90, up $2.26) all got upgrades and are showing higher bids in pre-market trading.
M&A (mergers and acquisitions) activity continues to pick up… American International Group (AIG, $28.08, up $1.37) is selling one of its major foreign subsidiaries (Alico) to MetLife (MET, $38.92, up $0.81) for $15.5 billion. It is the second major sale for AIG this month as the company tries to get leaner and meaner.
The Entertainment stocks could get a pop after seeing “Alice in Wonderland ” bring in a whopping $116 million in its opening weekend – a record for a 3-D film. We knew Alice would be a hit and the total easily surpassed all other films in release and gave Walt Disney (DIS, $33.22, up $0.65) an even bigger opening than “Avatar.” Imax (IMAX, $13.72, up $0.40) also benefitted as their theaters were packed all weekend long.
Earnings:
Monday: Casey’s General Stores (CASY, $31.86, up $0.21), Kronos Worldwide (KRO, $15.69, down $0.27), ResCare (RSCR, $9.53, up $0.34), TiVo (TIVO, $17.50, up $0.97) and Value Line (VALU, $25.42, up $0.45).
Tuesday: Boston Beer Company (SAM, $50.54, up $0.74), Dick’s Sporting Goods (DKS, $25.19, up $0.83), J. Crew Group (JCG, $45.61, up $1.55), Kroger (KR, $22.74, up $0.05), Overstock.com (OSTK, $13.43, up $0.35) and Tootsie Roll (TR, $28.17, up $0.87).
Wednesday: American Eagle Outfitters (AEO, $16.74, up $0.01), Bon-Ton Stores (BONT, $11.78, up $0.68), Elbit Systems (ESLT, $60.58, up $0.09), Gymboree (GYMB, $45.15, up $0.40), Hot Topic (HOTT, $6.71, up $0.08), Men’s Wearhouse (MW, $25.17, up $0.74) and Vail Resorts VPFG, $15.48, up $0.18).
Thursday: Aeropostale (ARO, $25.56, up $0.56), Goldcorp (GG, $40.37, up $0.80), National Semiconductor (NSM, $14.67, up $0.04), Pall Corp (PLL, $41.32, up $0.68), Piedmont Natural Gas (PNY, $26.74, up $0.35) and Smithfield Foods (SFD, $19.09, down $0.36),
Friday: AnnTaylor Stores (ANN, $18.50, up $0.53), Citi Trends (CTRN, $29.50, up $0.13) and Kirkland’s (KIRK, $18.81, up $0.81),
As we head to press, Dow futures are up 7 points, S&P 500 futures are up a point while the Nasdaq 100 futures are up 2. Current subscribers, check the Members Area for the updates.
Tags: AIG, DIS, met, option picks, option signals, options alerts, RIMM, stock options trading, x, YHOO
Posted in Company Commentary, Earnings, Market Analysis, Market Commentary | Comments Off
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Bears Growl, Bulls Holding Support
Tuesday, March 20th, 2012
1:15pm (EST)
The bears are trying to get on the scoreboard after yielding points to the bulls for 3-straight sessions. Much of today’s action can be blamed on concerns over China’s economy slowing as some are saying and some of the mining stocks such as BHP Billiton (BHP, $72.77, down $2.74) are reporting iron ore demand is weakening.
Economic news here at home came in mixed which has contributed to today’s slide. Housing Starts fell 1.1% during the month of February versus estimates for a 0.1% increase. Meanwhile, Building Permits jumped 5.1% versus expectations for a pop of 0.6%. This week’s economic data is all about the Housing sector and KB Home (KBH, $11.60, down $0.29) will end the week by briefing Wall Street with its latest earnings on Friday morning.
Disney (DIS, $43.29, down $0.15) is weighing on the blue-chips after saying it will take a $200 million hit due to poor sales for its “John Carter” movie. We haven’t seen the flick but the trailers weren’t that compelling and there was no buzz building up to the release of the movie. Usually when you spend a quarter-billion dollars on a film, it better be a hit. In Disney’s case and for its unproven director, JC has quickly become a major flop. The expected loss was way worse than the $120-$160 million forecast.
The good news for Disney down the road is that “Avengers” and Pixar’s “Brave” could become blockbusters. However, you don’t buy Disney’s stock based on movie hits. We would buy the stock at current levels for its ESPN division, parks and cruise lines businesses.
As far as the market, the Dow is lower by 70 points to 13,169 while the S&P is off 7 points to 1,403. The Nasdaq is down 20 points to 3,058. We have a few trades in play today as some of our Hard Stops are close to being triggered.
We also have a NEW TRADE we are trying to get into so let’s go check the tape. Subscribers, hit the Members Area for the updates.
Tags: Avengers movie, BHP, DIS, KB Home earings
Posted in Company Commentary, Earnings | Comments Off