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Random Thoughts

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

Bulls Push Market Higher, Nvidia Trade, Close BofA August Call Options

Monday, August 3rd, 2009

1:10pm (EST)

The Dow has come off its high of 9,288 and is currently up 83 to 9,255. After such a strong open we are seeing a slight pullback which will help us determine just how serious the bulls are this week.

The S&P 500 briefly touched 1,000 and is at 999, up 11. The Nasdaq also broke 2,000 and is up 19 to 1,997. On 7/19, here was my fearless prediction:

“With the Dow at 8,734 and the S&P 500 at 940, I’d say the bulls are going to do something special or we will fall back into a trading range once again. That wouldn’t be so bad but it would set-up a bigger stage for a more explosive move either up or down. However, given the momentum, it appears the bulls are in firm control and willing to push us to new highs. Dow 9,000? S&P 1000? Nasdaq 2,000? Those are the targets on the scope and we have enough meaningful earnings this week to make a run at those levels.” (END)

Now that we are here, this week takes on even more meaning.

We have seen great results with some of our positions this morning and I will do a complete wrap tonight. Cisco Systems (CSCO, $22.32, up $0.31), Bank of America (BAC, $15.53, up $0.74) and Ford (F, $8.49, up $0.49) are all higher and there is another trade I’d like to add to the mix. But before I do, close the BofA August 15 calls (BYOHO, $0.94, up $0.44) RIGHT NOW. There is some news leaking as I type…

The other company is Nvidia (NVDA, $13.10, up $0.17) and they manufacture graphic chips. Nvidia has long been the best of breed in this lucrative market and its stock price is nearing its 52-week high of $14.12. The one thing that I don’t like is the fact that the company will report earnings on Thursday.

The August 13 calls (UVAHM, $0.80, up $0.09) could do well if Nvidia can make it past its high but there may be an opportunity for a quick trade BEFORE earnings. I like positions at current levels and would set $1.00 as an initial exit. If you buy 10 contracts it would cost you about $800, or if you did 20 contracts, it would be around $1,600. You are only looking to day trade these options up until earnings and we are only looking to make a 20%-30% return.

These call options have already traded over 2,000 contracts so they are pretty liquid.

Rick@OptionsMentoring.com

Futures Pointing Towards Big Open

Monday, August 3rd, 2009

9:00am (EST)

Futures are sharply higher this morning as broad gains in the overseas markets have helped put Wall Street in a buying mood this morning. Ahead of the bell, the Dow futures are up 78, to 9,205. The S&P 500 futures are up 9, to 994, while the Nasdaq 100 index futures are up 19, to 1,621.

Ford (F, $8.00) reports July auto sales at 11am this morning. Surging demand from the “cash for clunkers” program has helped lift the company to its first monthly auto sales increase in two years. For those of you who have just signed on, we are long Ford and in pre-merket trading the stock is up 52 cents to $8.52. The December and August call options we are following should get a nice pop at the open.

Earnings are still coming in and the big one this week will be Cisco Systems (CSCO, $$22.01). I’ve been saying the bulls have been looking for a catalyst and this could be one but all eyes will be on Friday’s jobs report. As far as corporate earnings, here is a list of the companies reporting this week:

Monday: Anadarko Petroleum (APC, $48.20), Carmike Cinemas (CKEC, $9.50), Chesapeake Energy (CK, $21.44), Clorox (CLX, $61.01), FirstEnergy (FE, $41.20), Humana (HUM, $32.85), Loews (L, $30.03), Pulte Homes (PHM, $11.37) and Tyson Foods (TSN, $11.43).

Tuesday: Allegheny Energy (AYE, $25.21), Boston Beer Company (SAM, $31.19), Cephalon (CEPH, $58.65), Coinstar (CSTR, $33.23), Diebold (DBD, $27.72), Electronic Arts (ERTS, $21.47), HealthSpring (HS, $12.63), IntercontinentalExchange (ICE, $94.06), Jack in the Box (JACK, $21.10), Kraft Foods (KFT, $28.34), Onyx Pharmaceuticals (ONXX, $35.92), Stanley (SXE, $30.74) and ValueClick (VCLK, $11.50).

Wednesday: 99 Cents Only Stores (NDN, $14.65), Agrium (AGU, $46.19), AmeriCredit (ACF, $15.69), Blackboard (BBBB, $33.97), Cisco Systems (CSC), $22.01), Devon Energy (DVn, $58.09), Foster Wheeler (FWLT, $23.10), Healthsouth (HLS, $14.40), Nationwide Health Properties (NHP, $29.02), Owens Corning (OC, $18.38), Procter & Gamble (PG, $55.51), Prudential Financial (PRU, $44.27), Sunoco (SUN, $24.69) and Transocean (RIG, $79.54).

Thursday: Alliant Energy (LNT, $26.16), American Italian Pasta (AIPC, $31.46), Beazer Homes (BZH, $3.22), Blue Nile (NILE, $46.23), California Pizza Kitchen (CPKI, $16.50), Dollar Tree Stores (DLTR, $46.12), Emulex ($9.13), K-Swiss (KSWS, $10.84), Public Storage (PSA, $72.57), Speedway Motorsports (TRK, $15.96) and VeriSign (VRSN, $20.44).

Friday: Cimarex Energy (XEC, $35.78), Edison International (EIX, $32.32), LifePoint Hospitals (LPNT, $27.66), Mirant (MIR, $18.06) and Sun Communities (SUI, $15.30).

Rick@MomentumOptionsTrading.com

Halftime Hits

Friday, July 31st, 2009

12:10pm (EST)

The Dow is on track for its best month in decades and the S&P 500 and Nasdaq are back at last October’s highs. We still have a couple of hours of trading left in the day but it’s time to start looking towards next week.

The bulk of earnings hit the market this week and will start to taper off from here on out. I’ve mentioned the bulls will be looking for the “next” catalyst to take us higher and maybe they have already found one. The talking heads were calling for a pullback and were preparing for a pullback before yesterday’s huge rally.

Now, there will be a pullback or drops here and there but keep the technicals and fundamentals in focus. We have come a long way from the March lows and just like the sell-off was overblown this rally could have legs that run too far to the upside as well. The point is there will be jostling between the bulls and bears but the back half of the year is looking pretty bullish.

Near term we can continue to enjoy the rally and there is more money on the sidelines than Wall Street thinks. Things are improving but unemployment is at double-digits and we still have to be careful of the land mines out there. We are taking quick profits and our trading strategies are tight. We are banking 100% gains and moving on to other trades.

This is still a trader’s market and nobody knows where the market will be at next Friday or next month. All we can do is make educated guesses and play what we are seeing. I’ll be back Sunday night with an update unless I’m late getting back in town. I try to do the Weekly Wrap every Sunday but I may skip this week. If so, I’ll see you Monday morning.

Ford (F, $7.91, up $0.52) continues to push $8 and is looking golden to hit $10 by year-end if not sooner.

Rick@MomentumOptionsTrading.com

Market Opens Higher

Friday, July 31st, 2009

10:15am (EST)

I wanted to see how we opened this morning before posting so I could get a feel for how things may play out today. The Dow is currently up 13 points to 9,167. The bulls will be taking aim on S&P 500 1,000 and right now the index stands at 991, up 5. Nasdaq 2,000 is the other target for the bulls and at 1,995 they have pushed it up 10 points this morning.

A close above these levels will be another clear victory for the bulls.

Ford (F, $7.61, up $0.22) continues to shine and I wish I would have added some August 7 calls (FHJ, $0.77, up $0.19) to the portfolio this week. Ford closed last Friday at $6.78 and had a big Monday. We are in the December 6 calls (FLI, $2.00, up $0.15) and the December 7 calls (FLJ, $1.38, up $0.17) which have done well so we can’t complain.

Bank of America (BAC, $14.31, up $0.34) is back above $14 and has made higher highs all week. Nice. The August 15 calls (BYOHO, $0.32, up $0.07) have traded over 15,000 contracts thus far and they would have been a sweet play this week as well. We have already established positions back in June but watch these call options today and next week. If BAC can break $15 by early next week they are a double.

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    REGINA L.
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    Rick & Team, GREAT Call on NKE for my two trading accounts:
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    I see that you took a loss on some of these. It’s all good. I look to trade your “ideas” not your exact calls. I THANK YOU! For your ideas and commentary. Keep up the good work. And keep those ideas coming.

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    SHAUN
    Aloha Rick - Thank you so much for the great CL pick. I am not sure if there was buy-out/merger news or what but at 3PM today Colgate-Palmolive absolutely EXPLODED to the upside, and my calls turned into green candy when they went from 1.40 to 3.8 in a matter of seconds! I even sold a few for over 4.0! Much thanks and keep the solid picks up my friend, honestly. Only a fool would scoff at 267% gains... Peace!

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    “Hi Rick, thanks for the encouragement to play the dendreon calls! did freaking great! Got in the first lot at $1.44 on 3-24-09, sold at $2.45, 70% not bad. Bought it back at $2.30 on 4-7-09 closed out on 4-14-09 for 454% gain! Wow! I love it when that happens. So, thanks the encouragement to get back in when others were saying sell, sell, sell. Keep up the good work.”

    TERENCE
    “Rick – Thanks for Dendreon – it has made all the headlines today! I missed on RIMM earlier, but I’ve been holding onto DNDN calls since 3rd week March. Of course today it all paid off today, as DNDN rocketed up.”

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