Get RSS Feed
9:10am (EST)
The market got off to a strong start on Monday and the bulls are looking to follow-up on that momentum this morning. The Dow rallied 79 points to finish at 10,403, as 26 of its 30 components finished higher. It was only the second time since January that the Dow has closed above the 10,400 level which was nice to see on a technical level.
The S&P 500 added 11 points to settle at 1,115 and finished above its 50-day moving average for the first time since mid-January. The Nasdaq put in the most work yesterday as it soared 35 points, or 1.6%, to close above the 2,250 level for the first time since January.
NASDAQ Composite Index
There is little in the way of economic reports due out but automakers will report monthly sales throughout the day. Meanwhile, General Motors joined the list of “uh oh” by announcing the recall of 1.3 million cars over power-steering trouble. The auto industry is expected to have its worst month since September 2008 due to the recall trouble at Toyota Motor (TM, $73.64, down $1.19) as well as bad weather.
There is an old school saying on Wall Street that when a falling stock becomes a “screaming buy” because it cannot conceivably drop further, try to buy it 30% lower. Toyota is down from a 52-week high of $91.97 and looks tempting at these levels. There seems to be good support at these levels but a 30% haircut gets shares down to the $50’s. Just saying…
As we head to press, Dow futures are higher by 50, or 0.4%, to 10,435. The S&P 500 futures are up 6, or 0.5%, to 1,121, while the Nasdaq 100 futures are showing a 10 point pop, or 0.5%, to 1,853.
We have a lot to cover in our Members Area this morning including a possible NEW TRADE if we can get our limit price so let’s get to it…
General Motors Turns A Profit
Tuesday, May 18th, 2010
9:05am (EST)
The bulls got off the mat on the 9 count after a barrage of punches thrown by the bears had them reeling on Monday. However, they were able to win the round as all three of the major indexes finished in the green as the Euro bounced off its lows.
The Dow was experiencing its “normal” triple-digit swing and tumbled nearly 185 points to 10,436 while we were doing our midday update. However, the index rebounded off the lows to settle with a gain of 6 points, or 0.1%, and closed at 10,625.
The S&P 500 finished a little over a point higher, or 0.1%, and settled at 1,137 after falling to 1,115 intraday. Meanwhile, the Nasdaq led the charge higher as it advanced 7 points, or 0.3%, and was last seen at 2,354.
We mentioned this is option expiration week so the volatility will likely have some extra spice. The CBOE Market Volatility Index (VIX, 30.84, down 0.40) traded between 30-35 yesterday and has doubled since hitting a low of 15 in April. Basically, “fear” in the market place has exploded which is why the index keeps ticking up.
Speaking of scary stuff, General Motors is back from the dead after declaring bankruptcy last year and posting a profit. It was the company’s first quarterly win in 3 years and sets the table for them to becoming a publicly traded company again. The stock offering would repay the $50 billion the government (and us) shelled out last year to save them.
GM reported earnings of $865 million, or $1.66 a share, versus a loss of $6 billion, or $9.78 a share, in the year ago quarter. Revenue surged 40% to nearly $32 billion.
Look for the initial public offering (IPO) later this year.
It’s hard to believe we just wrote that because anyone who held previous GM shares has got to be ticked-off after being wiped out while GM emerges from bankruptcy protection. The Obama administration plans to get back the remaining $43 billion of the $50 billion we shelled out by selling its stake once shares start to trade.
As we head to press, the market looks like it will open higher this morning. Dow futures are up 71 points to 10,670 while the S&P 500 futures are higher by 10 to 1,144. The Nasdaq 100 futures are showing a 14 point gain and are at 1,928.
Tags: General Motors, option picks, option signals, options alerts, stock options trading, VIX
Posted in Company Commentary, Market Commentary, Mergers and Acquisitions | Comments Off