12:40pm (EST)
The bulls were working on a solid week following Tuesday’s surge as the rest of the days have been relatively flat…until today. We were watching the overseas markets early this morning and futures were up when the European markets opened (3am EST). We hit the rack knowing JPMorgan Chase (JPM, $35.51, down $1.41) would weigh on the market but little did we know Standard & Poor’s would be the alarm clock that woke the market up.
The Financial stocks have been on a nice run over the last few weeks and the bar was set high for JPMorgan so we knew a breakout or pullback for the sector would come depending on what the company said about its Q4 numbers. JP reported earnings of 90 cents a share which matched expectations but revenue fell short at $22.2 billion versus expectations for $23 billion.
Jamie Dimon, JP’s top man said, “We believe these returns were reasonable given the environment, although the return for the fourth quarter was modestly disappointing.”
We weren’t expecting a homerun from the company but we were holding out hope they might beat by a penny. No such luck.
The bears also got a bonus after Standard & Poor’s said it might follow through on warnings it gave back in December that it would cut the credit rating on countries that use the euro. The timing was impeccable wouldn’t you say?
As a result the market is pulling back but is off its lows after testing support.
Next week is a shortened week as the market will be closed on Monday for MLK day. However, next week could also be the turning point on if the market does challenge the July highs or if it falls back into a trading range.
There are a lot of pros still calling for a “correction” but we think the market is cheap at current levels so we aren’t sure if there will be one or not. Sure, we might get a back test to lower support levels but if you have been studying our longer-term charts, you would know we have a ways to go before the TREND turns bearish.
This doesn’t mean we aren’t planning for a pullback. If our upper-end targets are reached, we do expect the market to come back and retest support (which was prior resistance) in February which is when we may use some put options. However, mid-January hasn’t been kind to the bulls in recent years and we were hoping this year would be different. We will have to see.
We are respectful of the bears because they can attack from nowhere and with a 3-day weekend ahead of us, we have taken profits this week in some of our current option trades…just in case. Earnings season will hit second gear next week and so far they haven’t been impressive. The bar was already lowered after 3Q’s numbers and we have seen some high profile warnings over the past few weeks. Despite what the talking heads say, it still is, and has been a stock picker’s market which we have proven.
We saw some low hanging fruit to end 2011 when the indexes pulled back in November (following a huge run from September thru October) and we took advantage of it. The bears challenged support but we have used the upside momentum since to play a number of stocks making new 52-week highs. We have already locked-in one triple-digit trade this year and we are close to adding a few more. We have also started nibbling on some put options as there are a few stocks folding like cheap lawn chairs as we look ahead to February.
Our point is, we have been in a zone with reading the market’s direction and with most of our trade recommendations but we are still in a volatile environment. We have mentioned over the years the bulls like to climb a wall of worry and we said the pros have missed the pop higher this year because they were on vacation for the last two weeks of 2011.
Today’s pullback has them on the clock.
We will be doing a video this weekend and for those of you who took advantage of the 1-year deal and are current members to our option mentoring trading program. We were going to do one last weekend but decided this weekend would be better with Monday’s holiday so look for it then along with the Weekly Wrap.
Remember, we are running a special on the Daily and Weekly Wrap where a 1-year subscription is only slightly more than our Daily for $995 (a 50% discount with the bonus). This package also includes our option trading course, How to Trade Options on Momentum Stocks (an $895 value) and the Momentum Stocks Watch List which breaks down the sectors and hundreds of stocks you can trade. The special comes with the videos which cover charting, current trades, and special situations. These videos are done on a monthly/ bi-monthly basis and have been a huge hit with our subscribers.
Our 2012 Portfolio is off to a hot start as we are 6-1 on closed trades, and 4-0 on half profit taken trades which will get us to 10-1 once the other halves are closed. We are showing over $8,000 in profits and we are only thru the first two weeks of January.
We DON’T compound our results because everybody’s trading account starts at different levels. In other words, if you started an options trading account with $5,000 and made $8,000 your return would be 160%. If you started with $10,000 and made $8,000 your return is 80%. The key is that all option traders should have a set amount for each trade or a set numbers of contracts.
Our Weekly Wrap trades could jump to 10-0 by the end of next week with average profits of double-digits. Add it to last year’s 16-0 record and we could be 26-0, in a blink of an eye.
We have been long-winded today because we feel it is important that you make 2012 a profitable year and we want you to take advantage of our special offers that will only last a few more weeks.
As far as the current action, the Dow is down 110 points to 12,360 while the S&P 500 is lower by 13 points to 1,282. The Nasdaq is showing a loss of 24 points to 2,700. If the whistle blew right now, the bulls would win the week.
Subscribers, we do have action to take on some of our current trades so make sure you read the Members Area carefully. One of our trades has hit a 105% return despite a nasty market and we want to lock-in profits on half. We have another two positions that were stopped out for gains of 38% and 16% so we have done pretty well this week as the market could end flat after 5 days of churning. Not bad. Not bad at all.
We will be back on Monday night with the Weekly Wrap and the video which will cover the market, current trades, and possibly new earnings trades. Until then, have a great weekend everyone!
Get RSS Feed
Bulls Give Back Gains
Friday, January 13th, 2012
12:40pm (EST)
The bulls were working on a solid week following Tuesday’s surge as the rest of the days have been relatively flat…until today. We were watching the overseas markets early this morning and futures were up when the European markets opened (3am EST). We hit the rack knowing JPMorgan Chase (JPM, $35.51, down $1.41) would weigh on the market but little did we know Standard & Poor’s would be the alarm clock that woke the market up.
The Financial stocks have been on a nice run over the last few weeks and the bar was set high for JPMorgan so we knew a breakout or pullback for the sector would come depending on what the company said about its Q4 numbers. JP reported earnings of 90 cents a share which matched expectations but revenue fell short at $22.2 billion versus expectations for $23 billion.
Jamie Dimon, JP’s top man said, “We believe these returns were reasonable given the environment, although the return for the fourth quarter was modestly disappointing.”
We weren’t expecting a homerun from the company but we were holding out hope they might beat by a penny. No such luck.
The bears also got a bonus after Standard & Poor’s said it might follow through on warnings it gave back in December that it would cut the credit rating on countries that use the euro. The timing was impeccable wouldn’t you say?
As a result the market is pulling back but is off its lows after testing support.
Next week is a shortened week as the market will be closed on Monday for MLK day. However, next week could also be the turning point on if the market does challenge the July highs or if it falls back into a trading range.
There are a lot of pros still calling for a “correction” but we think the market is cheap at current levels so we aren’t sure if there will be one or not. Sure, we might get a back test to lower support levels but if you have been studying our longer-term charts, you would know we have a ways to go before the TREND turns bearish.
This doesn’t mean we aren’t planning for a pullback. If our upper-end targets are reached, we do expect the market to come back and retest support (which was prior resistance) in February which is when we may use some put options. However, mid-January hasn’t been kind to the bulls in recent years and we were hoping this year would be different. We will have to see.
We are respectful of the bears because they can attack from nowhere and with a 3-day weekend ahead of us, we have taken profits this week in some of our current option trades…just in case. Earnings season will hit second gear next week and so far they haven’t been impressive. The bar was already lowered after 3Q’s numbers and we have seen some high profile warnings over the past few weeks. Despite what the talking heads say, it still is, and has been a stock picker’s market which we have proven.
We saw some low hanging fruit to end 2011 when the indexes pulled back in November (following a huge run from September thru October) and we took advantage of it. The bears challenged support but we have used the upside momentum since to play a number of stocks making new 52-week highs. We have already locked-in one triple-digit trade this year and we are close to adding a few more. We have also started nibbling on some put options as there are a few stocks folding like cheap lawn chairs as we look ahead to February.
Our point is, we have been in a zone with reading the market’s direction and with most of our trade recommendations but we are still in a volatile environment. We have mentioned over the years the bulls like to climb a wall of worry and we said the pros have missed the pop higher this year because they were on vacation for the last two weeks of 2011.
Today’s pullback has them on the clock.
We will be doing a video this weekend and for those of you who took advantage of the 1-year deal and are current members to our option mentoring trading program. We were going to do one last weekend but decided this weekend would be better with Monday’s holiday so look for it then along with the Weekly Wrap.
Remember, we are running a special on the Daily and Weekly Wrap where a 1-year subscription is only slightly more than our Daily for $995 (a 50% discount with the bonus). This package also includes our option trading course, How to Trade Options on Momentum Stocks (an $895 value) and the Momentum Stocks Watch List which breaks down the sectors and hundreds of stocks you can trade. The special comes with the videos which cover charting, current trades, and special situations. These videos are done on a monthly/ bi-monthly basis and have been a huge hit with our subscribers.
Our 2012 Portfolio is off to a hot start as we are 6-1 on closed trades, and 4-0 on half profit taken trades which will get us to 10-1 once the other halves are closed. We are showing over $8,000 in profits and we are only thru the first two weeks of January.
We DON’T compound our results because everybody’s trading account starts at different levels. In other words, if you started an options trading account with $5,000 and made $8,000 your return would be 160%. If you started with $10,000 and made $8,000 your return is 80%. The key is that all option traders should have a set amount for each trade or a set numbers of contracts.
Our Weekly Wrap trades could jump to 10-0 by the end of next week with average profits of double-digits. Add it to last year’s 16-0 record and we could be 26-0, in a blink of an eye.
We have been long-winded today because we feel it is important that you make 2012 a profitable year and we want you to take advantage of our special offers that will only last a few more weeks.
As far as the current action, the Dow is down 110 points to 12,360 while the S&P 500 is lower by 13 points to 1,282. The Nasdaq is showing a loss of 24 points to 2,700. If the whistle blew right now, the bulls would win the week.
Subscribers, we do have action to take on some of our current trades so make sure you read the Members Area carefully. One of our trades has hit a 105% return despite a nasty market and we want to lock-in profits on half. We have another two positions that were stopped out for gains of 38% and 16% so we have done pretty well this week as the market could end flat after 5 days of churning. Not bad. Not bad at all.
We will be back on Monday night with the Weekly Wrap and the video which will cover the market, current trades, and possibly new earnings trades. Until then, have a great weekend everyone!
Tags: covered call trading, euro, JPM, JPM earnings
Posted in Earnings, Market Analysis, Market Commentary | Comments Off