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Tuesday, October 4th, 2011
9:00am (EST)
We mentioned yesterday we were excited about the market going lower because A) it proved our homework back in August was about to pay off and B) our subscribers have made a wheelbarrow full of money over the past few weeks following our option recommendations. Of course, 2011 has been a hard market to trade considering all the major events that have taken place and the recent 8-week trading range has been just as much of a headache. However, one thing our students know is that the longer a market, or stock, stays in at trading range the bigger the breakout or breakdown becomes.
We knew going into last week the bulls had a lot of work to do and once they failed to clear short-term resistance, we knew the trading range was about to crack – to the downside. We also got a hard date on when Greece’s fate would be determined which also lead us to believe there would be more anxiety as push comes to shove. Yesterday’s technical damage was exactly what we wanted to see, as the decline pushed the major averages to new 52-week closing lows.
Even good news here at home continues to take a back seat to Europe’s woes, as Greece admitted that it does not expect to hit its deficit target. Also weighing on the market was the data from overseas which pointed to a slowdown in manufacturing.
Bankruptcy rumors spooked Wall Street and Airlines stocks as AMR (AMR, $1.98, down $0.98) fell 33% on water-cooler talk they might need to higher some Chapter 11 lawyers. In the company’s defense, they did state they were not seeking a prepackaged bankruptcy but often times where there’s smoke, there’s fire. United Continental Holdings (UAL, $17.11, down $2.27) gave back 12% while JetBlue Airways (JBLU, $3.49, down $0.60) tumbled 15%. We saw some cracks in the sector back in August but we failed to give our UAL put option trade enough time to take advantage of yesterday’s debacle.
Elsewhere, Financial stocks took a beating as they suffered the worst loss of any major sector by falling 4.5%. Bank of America (BAC, $5.53, down $0.59), Morgan Stanley (MS, $12.47, down $1.04), Goldman Sachs (GS, $90.08, down $4.47) and JPMorgan Chase (JPM, $28.65, down $1.47) all hit new bottoms and could go even lower.
We have been warning our readers of Goldman’s troubles and we have said BAC was going to $5 but neither looks like a buy quite yet. In fact, we now have a triple-digit profit (+145%) in our Goldman Sachs put option from last week and all we have to do now is protect our gains. In pre-market action, Golden Slacks is trading in the $80’s.
As far as the market, let’s go over the numbers and more downside targets because it’s going to get worse…
The Dow dropped 258 points, or 2.4%, and ended at 10,655. There was strong support at 10,800 (which is now resistance) but this level acted like a wet paper towel trying to stop a cannonball…
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If you are not a subscriber but would like to read more and check our chart work for the indexes and our current trades, please click here. Futures are pointing towards another nasty open which is good news for us. Dow futures are lower by 96 points to 10,443 while the S&P futures are off by 11 points to 1,075. Nasdaq 100 futures are down 16 points to 2,050. We have quite a few trades that are up triple-digits so we have set HARD STOPS to protect our profits. However, with the futures tanking, it looks like we could see continued gains for our trades.
Tags: About options trading, Airline stocks, BAC puts, Goldman Sachs, JPMorgan Chase, option trading, stock and option, stock exchange, stock to buy, stock trading, trade online, trading futures, trading online, trading system, what are stock options, what is a call, what is option trading
Posted in Financial Stocks | Comments Off
Friday, August 6th, 2010
12:45pm (EST)
The bulls put up a good fight as they held the market’s slide at the open and were pushing their way towards even before succumbing to the pressure. The bears are trying to break key technical levels ahead of the weekend and have come close to doing so.
The unemployment numbers were horrible but the President will tell you we added private sector jobs every month for 7 straight. Give us a break. Businesses are still reluctant to hire and are running lean and mean. Many companies are still outsourcing work and are only hiring on an “as needed” bases.
We could go on and on but what is the point? Things move slow in Washington and no matter how you spin it, unemployment is going to bust 10% again.
Naturally, the markets are lower on today’s news but the bears still have work to do.
The Dow is down 140 points, or 1.3%, to 10,534 and has fallen below the 10,600 level. The S&P 500 is off by 15 points, or 1.4%, to 1,110 and 1,100 will be the battle ground going into the close. The Nasdaq is lower by 30 points, or 1.3%, to 2,263 and 2,250 should be where the party is at.
As far as specific stocks, Goldman Sachs (GS, $154.64, down $1.28) has been making some noise this week and hit a high of $157 on Wednesday which is strong resistance. We mentioned before financial regulation was passed that banks would figure out a way around Washington if it would cut into their profits.
It was almost a given “Golden Slacks” would be the first to make waves.
The company plans to spin-off part of its prop trading operations as early as today to grow earnings. The new laws limit banks from playing with their own money in the financial markets which controls risk but limits profits. Goldman saw the writing on the wall and it was a no-brainer they would eventually do this. Look for others to follow.
Tesla Motors (TSLA, $19.70, down $0.75) is back below $20 after announcing earnings this week. The recent IPO reported a loss of $39 million, or $5.04 per share, versus a loss of $11 million, or $1.56 per share, a year ago. Revenue came in at $28 million.
Tesla makes the Roadster, a car that costs over $100,000. The company isn’t expected to turn a profit for a few years, if then, and the next car (a sedan) it plans to build will run you $60,000. Big price tags to go green that the consumer won’t be able to afford.
The continued losses will eventually catch up the stock. Shares are volatile and have traded to a low of $14.98 since going public. The 6-week high is $30.42 and the option pits are usually pretty active. We think there could be a trade here.
We have a lot to cover in our Members Area and we are going to add a NEW TRADE today. We have closed out two winners this week and some of our other trades are showing signs of life. We are still in a choppy market but August is shaping up to favor the bears and they could be on the verge of waking up.
We will be back over the weekend with our Weekly Wrap which will be out Sunday afternoon.
Tags: call options, Goldman Sachs, GS, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, Tesla Motors, volatile options
Posted in Financial Stocks, Market Analysis, Market Commentary, Option Trades | Comments Off
Thursday, June 10th, 2010
1:00pm (EST)
The bulls are pushing the market higher today on some good China news and a “decent” report on jobless claims. The euro is higher and gold is down, but we are here to put things in perspective.
Futures got a lift this morning after China said exports rose nearly 50% in May, while imports jumped about the same. Europe is China’s largest trade partner so there was a sigh of relief when these numbers turned up strong. Turning to the euro, the currency is up 0.013 to 1.211 after the European Central bank (ECB) said they would keep interest rates unchanged.
And in economic news, the Labor Department reported new claims for unemployment fell by 3,000 to 456,000. The pencil pushers were looking for a drop to 448,000, but the silver lining was this the number of total claims was the biggest drop in a year as total unemployment benefit fell over 250,000 to 4.5 million.
As a result, the Dow is enjoying a 189 point pop, or 1.9%, and is at 10,089 while the S&P 500 is at 1,076, up 21 points, or 2%. The Nasdaq is higher by 36 points, or 1.7%, and is trading at 2,196.
The SEC will be announcing later today the “circuit breakers” we have been telling you about could go in effect as soon as tomorrow. These types of stops were in place years ago, and we aren’t sure why they ever went away in the first place.
The full implementation could come next week, and the circuit breakers are designed to stop the bleeding of a stock when it drops 10% in a 5-minute period. If they trigger, shares would be halted for 5 minutes to get some liquidity on the buy side. This rule will only apply to stocks in the S&P 500 index (for now?).
Goldman Sachs (GS, $133.73, down $3.07) is getting some bad vibes, and we have said we expect shares to fall to $120. Perhaps, another warning sign?
 Goldman Sachs 15-minute Chart The major averages are still running into resistance and we have gone over them in our Weekly Wraps which come out every Sunday night. The Dow has resistance at 10,200-10,300 while the S&P is right at the 1,075 level we have pegged. The Nasdaq is running right into the 2,200 brick wall and we still think the index gets hit the hardest.
The huge rallies back to resistance are exactly what we have been telling you to expect so don’t get sucked in to believing this rally has legs. Next week is option expiration week and right now it could go either way on what impact it has on the market. However, we still think the market will set fresh lows over the next month.
We have a lot to cover in our Members Area and we have added another name to our Watch List for the future. It is a LEAP option and shares are currently at $40-ish. We think they will be at $100 within a year.
We know many of you are more comfortable in a bull market but when opportunity knocks, you have to grab the bull by the horns (pun intended). Subscribers, check for the updates.
Tags: Goldman Sachs, GS, momentum options trading, option picks, options alerts, stock options trading
Posted in Company Commentary, Market Analysis, Market Commentary | Comments Off
Friday, May 21st, 2010
12:45pm (EST)
Financial stocks are leading the market higher as the bulls are trying to rally off the lows.
We have a million things to talk about and we will address those in the Weekly Wrap on Sunday but for now we are just going to do a quick update.
At midday, the Dow is up 108 points, to 10,176, while the S&P is advancing 15 points to 1,087. The Nasdaq is showing a pop of 33 points and is at 2,237 as we head to press.
Goldman Sachs (GS, $143.00, up $6.90) is surging on rumors that they could be close to reaching a settlement with the SEC. Also, if the financial reform bill gets passed, look for this one to surge.
 Goldman Sachs (GS) 30-minute Chart The close will be interesting. Will the bulls hold or will there be a sell-off as nobody wants to be long over the weekend?
We are closing a few more trades today to lock in profits and we will look for some fresh plays on Monday. Subscribers, check the Members Area for the important updates.
Have a good weekend everybody and here’s to a GREAT week! Write us with your questions, comments, or concerns and we will get them answered. See ‘yawl Sunday night!
Tags: Goldman Sachs, GS, option picks, option signals, options alerts, stock options trading
Posted in Company Commentary, Market Analysis, Market Commentary | Comments Off
Sunday, May 2nd, 2010
11:20pm (EST)
The volatility is picking up…
Last week the battle between the bulls and bears heated up with both sides throwing haymakers and landed punches at a feverous pace.
The market made some huge point swings as a number of events played key roles in which direction the market swayed. The bears landed the first serious blow on Tuesday when Standard & Poor cut its rating on Greek’s government debt to junk status while downgrading Portugal’s debt by a few notches. The market fell 2% for the day.
The bulls made up more than half of those losses back on Thursday as the market rallied 1% but Friday was another Goldman Sachs (GS, $145.20, down $15.04) headliner. The company could be facing criminal charges on whether they or its employees committed securities fraud.
This, and some sour economic news, sent the market into a tailspin as the indexes finished nearly 2% lower on average.
The Dow dropped 159 points, or 1.4%, on Friday to settle at 11,008. All 30 Dow stocks finished in the red but the bulls did manage to hold the 11,000 level. For the week, the Dow gave up 195 points, or 1.8%, but added 1.4% for the month of April.
The S&P 500 tanked 20 points, or 1.7%, and closed at 1,186 and just below the 1,200 level. For the five days, the index lost nearly 30 points, or 2.5%, but managed to finish April with a 1.5% gain.
The Nasdaq took the worst beating as it plummeted over 50 points, or 2%, to end Friday at 2,461 and under the 2,500 level. For the week, the Tech-heavy index gave up 69 points, or 2.9%, but finished the month up 2.6%.
In our Weekly Wrap last Sunday we talked about the possibility of the market challenging its previous highs or falling back into a trading range. There are numerous headwinds facing the market and the bears seem to have momentum but until the market breaks support we could be stuck in this choppy range for a few weeks.
It’s hard to make a case for the bulls to go much higher because there aren’t any near-term catalysts to take us there unless unemployment and housing start to really pick up and improve. We get another peak at unemployment this Friday.
The ranges we are talking about would be 10,800 to the downside for the Dow and 11,300-11,400 to the upside. The Dow traded as high as 11,308 and to a low of 10,938 which defined that range all week but the hundred and two hundred point swings are telling us a big move is forthcoming.
For the S&P 500 we are looking at 1,250-1,275 as a short-term top and 2,550-2,600 for the Nasdaq. However, with Friday’s drubbing we now have to watch 1,150 to the downside for the S&P 500 and for the Nasdaq we are watching support at 2,400.
We mentioned how volatility is picking up and on Friday’s sell-off the CBOE Market Volatility Index (VIX, 16.52, up $0.29) jumped 20%. The VIX had traded in the mid to upper-teens since late February and last week we popped over 20 several times.
The VIX measures “fear” on Wall Street and is one of the indicators we like to follow to try and get a read on the market. For our new subscribers, high readings mean that Wall Street is nervous and bearish. A low reading indicates calm and the Street is bullish.
The VIX has traded as high as 36 to its recent low of 15 over the past year and we called for the VIX to trade to 15 back on March 9th. This, along with our targets having been nearly been reached, is why we are a little cautious.
This is the tricky part and we talked earlier in the week about trying to call market “tops”. The easy bet right now is to call for a pullback or a correction and it does feel like we are walking on eggshells. While we still don’t know if the market has topped, we are using our price targets and the VIX as signs that we may have peaked over the near-term. However, this doesn’t mean the rally is over.
Over the weekend, Greece reached a historic deal with other euro-zone countries and the International Monetary Fund (IMF) for a three-year $145 billion bailout. The loans will help keep the country from defaulting on its debts and should help shore up the euro currency.
This will be a relief for the market come Monday morning and we will also get another batch of noteworthy earnings. The bulls still have low interest rates, solid M&A activity, and encouraging economic news that they can bank on to push us higher so let’s not throw in the towel until we see how this plays out.
We will be back in the morning with a fresh outlook and an update on how we open on Monday.
Tags: Goldman Sachs, option picks, option signals, options alerts, stock options trading, Weekly stock market news
Posted in Market Analysis, Market Commentary, Trading Tips, Weekly Wrap | Comments Off
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Bears Grab Momentum!
Friday, August 6th, 2010
12:45pm (EST)
The bulls put up a good fight as they held the market’s slide at the open and were pushing their way towards even before succumbing to the pressure. The bears are trying to break key technical levels ahead of the weekend and have come close to doing so.
The unemployment numbers were horrible but the President will tell you we added private sector jobs every month for 7 straight. Give us a break. Businesses are still reluctant to hire and are running lean and mean. Many companies are still outsourcing work and are only hiring on an “as needed” bases.
We could go on and on but what is the point? Things move slow in Washington and no matter how you spin it, unemployment is going to bust 10% again.
Naturally, the markets are lower on today’s news but the bears still have work to do.
The Dow is down 140 points, or 1.3%, to 10,534 and has fallen below the 10,600 level. The S&P 500 is off by 15 points, or 1.4%, to 1,110 and 1,100 will be the battle ground going into the close. The Nasdaq is lower by 30 points, or 1.3%, to 2,263 and 2,250 should be where the party is at.
As far as specific stocks, Goldman Sachs (GS, $154.64, down $1.28) has been making some noise this week and hit a high of $157 on Wednesday which is strong resistance. We mentioned before financial regulation was passed that banks would figure out a way around Washington if it would cut into their profits.
It was almost a given “Golden Slacks” would be the first to make waves.
The company plans to spin-off part of its prop trading operations as early as today to grow earnings. The new laws limit banks from playing with their own money in the financial markets which controls risk but limits profits. Goldman saw the writing on the wall and it was a no-brainer they would eventually do this. Look for others to follow.
Tesla Motors (TSLA, $19.70, down $0.75) is back below $20 after announcing earnings this week. The recent IPO reported a loss of $39 million, or $5.04 per share, versus a loss of $11 million, or $1.56 per share, a year ago. Revenue came in at $28 million.
Tesla makes the Roadster, a car that costs over $100,000. The company isn’t expected to turn a profit for a few years, if then, and the next car (a sedan) it plans to build will run you $60,000. Big price tags to go green that the consumer won’t be able to afford.
The continued losses will eventually catch up the stock. Shares are volatile and have traded to a low of $14.98 since going public. The 6-week high is $30.42 and the option pits are usually pretty active. We think there could be a trade here.
We have a lot to cover in our Members Area and we are going to add a NEW TRADE today. We have closed out two winners this week and some of our other trades are showing signs of life. We are still in a choppy market but August is shaping up to favor the bears and they could be on the verge of waking up.
We will be back over the weekend with our Weekly Wrap which will be out Sunday afternoon.
Tags: call options, Goldman Sachs, GS, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, Tesla Motors, volatile options
Posted in Financial Stocks, Market Analysis, Market Commentary, Option Trades | Comments Off