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E*Trade On The Block

Tuesday, January 19th, 2010

9:10am(EST)

Futures are mixed as we head towards the opening bell this morning.  Dow futures are lower by 20, S&P 500 futures are off by 2 while the Nasdaq futures are up 4 points.

There was plenty of action in E*Trade Financial (ETFC, $1.84, up $0.11) last Friday as over 60 million shares traded hands.  There was a report that the company is in “advanced” talks regarding a sale.

It’s hard to get excited about a company who once dominated the online brokerage industry and a share price at less than $2.  From 1998 through 1999 this was one of the highest of flying stocks as two-for-one splits were common and shares made new highs daily.

There has been a lot of speculation as to who might buy the troubled brokerage firm but E*Trade has brand awareness which should account for some kind of premium.  TD Ameritrade (AMTD, $18.32, up $0.10) and Charles Schwab (SCHW, $19.00, down $0.18) have been in the mix as possible acquirers of E*Trade but we really don’t see an option trade with this one.

Option volume was brisk and the stock already trades like one.  However, we are avoiding options on stocks that trade under $5.00 because of the risk.  That still didn’t stop traders from placing huge bets on the February 2 calls (EUSBF, $0.12, up $0.07) which opened at 4 cents and returned 200% by the closing bell.  Over 10,000 contracts traded.

The April 2 calls (EUSDF, $0.20, up $0.05) traded 3,000 contracts after opening at 14 cents.  Considering this has been an ongoing rumor for some time and the fact that it would be safer to buy the stock, these two call options could expire worthless if no bid comes.  Stay away…

We have updated the Members Area for our current trades and there a few trades we are watching this morning.  If we see something, we will send out an alert.

Intel on Deck

Thursday, January 14th, 2010

1:45pm (EST)

All eyes will be on Intel (INTC, $21.30, up $0.34) after the bell.  Wall Street expects $0.30 a share and revenue is expected to rise to $10.2 billion from $8.2 billion last year. 

Economic News…For retail sales, Wall Street was expecting an increase of 0.5%, weaker than November’s 1.3% increase.  We came in worse than expected…retail sales for December decreased 0.3%.

For weekly jobless claims, Wall Street had penciled 430,000 new claims, off slightly from last week’s 434,000.  We totaled 444,000.  The latest tally marked a week-over-week increase of 10,000.  Meanwhile, continuing claims retreated to 4.6 million from an upwardly revised 4.8 million.

As we head to press, the Dow is up 21 points to 10,702.  As far as our current trades, they have been updated in the Members Area. We will be back in the morning with a full update.

Google Makes A Stand

Wednesday, January 13th, 2010

9:10am (EST)

We told you the volatility pick up…

The market was setting up for a steep decline yesterday but managed to bounce back in the last couple of hours after bullish traders stepped in and bought off the lows.

This is options expiration week and the kick-off of earnings season so we expected some movement.  We were impressed by the bulls ability to fight off a serious attack but the bears did do some damage to the Tech sector.

The Dow finished Tuesday with a 37 point loss and ended at 10,627 after being down as much as 95 points.  The S&P 500 got clipped for an 11 points and closed at 1,136 while the Nasdaq fell 30 points, or -1.3%, and settled at 2,282.  It was the biggest point and percent drop for the Nasdaq since the end of November.

If the bears were really serious about slowing down the ongoing rally then they would have applied more pressure yesterday.  Maybe they did and the bulls camp is just still too strong right now.

There are no heavy-hitters coming up with earnings today but on Thursday we get reports from Charles Schwab (SCHW, $19.09, down $0.02) and Intel (INTC, $20.61, down $0.34) which we will be listening to carefully.  We also have an interest in Shuffle Master (SHFL, $8.26, down $0.42) which could give us clues on how strong the recovery is or isn’t for the Casino industry.

Google (GOOG, $590.48, down $10.63) is down $9 in pre-market trading after saying it is considering pulling its search engine out of China after a series of cyber-attacks on its system aimed at identifying human-rights activists.  The company said it discovered e-mail accounts held by human-rights advocates had been accessed by third parties.

As a result, Google’s possible exit from China would be a windfall for Baidu’s (BIDU, $386.49, down $14.08) which is seeing its shares zoom this morning before the bell.  Baidu is up $59 to $445 in pre-market trading.

We have mentioned this is option expiration week but do you want to see something crazy this morning?  WATCH the Baidu January 400 calls (BPJAT, $1.60) at the open.  Folks, they will open at $45 which means if you would have bought 10 contracts yesterday for $1,600 you would be waking up to $45,000 this morning…

As far as economic news, the Federal Reserve’s Beige Book report comes out at 2pm (EST).  The report can offer clues about the Fed’s thinking on interest rates and monetary policy but we don’t expect any changes as far as a hike.  

That is all we have for now.  Current Subscribers, check the Members Area for the latest trade updates.

Market Retesting Lows

Tuesday, January 12th, 2010

1:05pm (EST)

The market is testing the lows we got this morning after trying to battle back from a nasty open.  The Dow started with a 72 point loss and fell to a low of 10,591, then recovered most of the losses but is currently down 65 to 11,598.

The S&P 500 is off by 12 points to 1,134 while the Nasdaq is taking one for the team.  The index is down 33, or -1.4%, and is trading at 2,279 as we head to press.

There are pockets of strength and one sector that continues higher is the Casino stocks.  MGM Mirage (MGM, $11.76, up $0.86) is up 8% after getting an upgrade this morning.  Goldman Sachs (GS, $167.43, down $4.13) came out and upped the shares to ”Buy” from “Neutral” and slapped a $16 price target on the stock.  Sorry, Goldman, you are a little late to the party.

Our Atlantic City trip was a win-win as we went behind the scenes to see what was up during the holidays.  We didn’t come away with the feeling that the industry has turned around overnight but we took notice in the action the casinos were getting.

It was good to get away and when we got back, we profiled a trade in Las Vegas Sands (LVS, $18.50, up $0.13) that has paid off in spades.  Last Tuesday, our subscribers placed their bets on some call options and they have nearly doubled their money a week later.  

Las Vegas Sands was under $17 when we told our subscribers ”LVS has been a solid past performer in our portfolio and has a shot at $20 if the casino stocks can rally over the next month or so.”

Folks, here is the power of options if you pick the right ones.  As you can see, the stock has made a $2 move in a week which is 12% from $17 to $19.  If you would have bought 100 shares of the stock it would have cost you $1,700.  Today you would have a $200 profit.  Not bad.

Now, take a look at what options can do for you.  That $1,700 would have bought you 17 call option contracts that were trading for around a $1 last Tuesday.  Today, those same call options are standing at $1.85.

If you do the math, 17 x 1.85 gets us 31.45 which means your $1,700 is now worth $3,145 or 95%.  Hmmm.  An 8% return with the stock or a 95% return by playing options.

We have updated this position in the Members Area…

Another stock we had recent success with is Amazon.com (AMZN, $128.03, down $2.28).  We recently profiled a trade that returned our subscribers over 50% but shares are getting hit again today after touching a high of $142 before the end of 2009.  We caught some of that action on the way up and recommending closing the trade after looking at the charts.  Since then the stock has been torched but has come back down to serious support levels.  We are doing the legwork now to see if there is another trade in Amazon…

Also getting our attention is A123 Systems (AONE, $20.75, up $0.05) which has made a huge bounce of its support areas.  The stock recently made a run from $14 to $23 in a little over a month and we got some of that action as well.  Our subscribers made nearly a 120% return as we had a target of $23-$24 and got out at the top.

See, it does pay to do your homework folks but that is why you have us.  We are still on the fence with A123 but we wouldn’t be surprised to see a quick run back to $23.

That is all we got for today and for those of you who care…Kid Rock at the Borgata in Atlantic City on Valentine’s Day and Jay-Z in March.  Be there or be square!  The Members Area is updated…

Alcoa Misses Mark, Shares Tank

Tuesday, January 12th, 2010

9:10am (EST)

Futures are pointing towards a nasty open this morning after Alcoa (AA, $16.15, down $1.30) disappointed Wall Street with its earnings report.  After the bell on Monday, the company reported a $277 million loss for its most recent quarter, or $0.28 a share, compared with a profit of 6 cents a share that Wall Street had been looking for. 

If you exclude one-time items and special charges, Alcoa actually reported a penny a share profit but they still missed estimates by a mile.  We said yesterday the market was pricing in a 7%-8% move in the shares and at pre-market levels Alcoa is down 7.5%.  

As we head to press, Dow Jones futures are down by 66 points to 10,538.  The S&P 500 index futures are off by 9, to 1,133, while the Nasdaq 100 index futures are lower by 17 to 1,866.

We have much more to talk about this morning in the Members Area and we are short on time out here.  Current subscribers, please check for the trade updates as we have raised our exit targets on some positions to lock in profits. 

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Trader Comments:

    REGINA L.
    I just want you to know that I love the way you write and explain everything. I am new to this, and have lost 50% of my account until I met you guys. Iit is slowly coming back. I will be calling to set up a year
    of membership rather than the one quarter. Thanks again, and LOVE YOU ALL.

    STEVE T.
    Rick, I appreciate the advice. I think I will just sit back and utilize your selections only for awhile. This will obviously save me a great deal of money in commissions. I have gone thru your entire site including the video on money management. This has brought me to the stark realization that I have been trading too much for too little. I definitely have not been "swinging for the fences", but I also think I have been getting impatient with trades and getting out too fast. This has no doubt caused me too trade too much. I like, and definitely agree on, the advice on money management. Thanks for the help.

    SCOTT H.
    Thank you!!! I held on to the NFLX position since Nov. 13 at a cost of $1.89. Sold ½ on April 14th for a 540% return and the other ½ upon earnings for 702% return. Total profit of $11,615 a 621% return. Keep the recommendations coming and thanks to you and your team for the service you provide.

    PETER G.
    Rick & Team, GREAT Call on NKE for my two trading accounts:
    1) Entry at .65, out at 1.45, 1.55 Profit = $415
    2) Entry at .60, out at 1.75, 1.50 Profit = $485

    LAWRENCE O.
    Hey Rick! Here is an update on what your picks have done in my accounts.

    1) Great call on the JoyG March 55. I bought when you said, then bought again on one of the dips. Booked 80+% profit. Made enough to pay for your service for years to come.

    2) Also booked profits on your Berk Feb 74 (80%) and threw a major chunk of change at the March 75’s (190+%). I would have never known that Buffet's stock had split if it weren’t for your service. Bought the shares also for the long haul. Won’t look at them for another 20 years. Great job on getting us in before the indexes did.

    3) Took profit on your Imax March 12.5. 20 cent trailing stop at 1.90 yesterday. Not sure what the profit on that was, but profit is profit.

    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.

    C.J.
    Loving this subscription so far! I got into the BRK feb 76 calls the day you talked about right before the split...now up over 300% (0.70 to 2.475)! Keep the good picks coming and let's see some OSIS and EMC upside soon! Just wanted to share my positive enthusiasm on your newsletter...it gives us individual investors great ideas on not only the options market, but also the broader equity market! Case in point is BRK...I can't always read the breaking business news but its easy to read your twice daily updates on my smartphone...helped me get some BRK shares immediately after the split which I will hold for the long haul! Thanks again!

    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!

    MICHAEL K.
    I like the fact that you ask for comments from subscribers. Good customer service. By the way, am enjoying the service so far. Some good
    profitable calls. Keep up the good work.

    PARAG P.
    Woo hoo! Out for 50% on WMT this am. Making up for my depression for getting out of pcln for a 30% gain monday :( you the man! any word on the manual? My friend Mike ( who I sent to your service) told me he emailed you about your integrity in reporting fills. I echo that sentiment big time.. keep it up! Cheers!

    JAY P.
    Hi Rick, as a new member all I can say is, 'show off' LOL, with PCLN.

    MIKE
    Rick, I am a new subscriber to your service, and I want to say I am impressed. I am impressed by your results, but more than that I am impressed by your reporting of your fills. You could have easily said you got that Wal-Mart call today for 80 cents, instead you reported 98 cents! Good job and keep it up, I watched the reporting of the fills first, and then I subscribed. Thank You.

    TRISH D.
    Hi, good morning. I jumped the gun a little on this one (PCLN). But still made $1,675.00 profit!! Very happy!! Keep up the good work!! Thanks.

    MIN L.
    Hi there, I have joined recently, and I am very happy to tell you that I am up over $10,000 on your picks in a month. I started on 10/7 with the Intel pick. I'll be your member for life. Please don't quit on us. Also, I am learning a lot about options. I didn’t get in your recent APOL and that gold trade and only had one loss on CHK. I appreciate all the DD you do. I enjoy your market commentaries. Best advice site period, and I have tried a few here and there. Again, you guys rock!

    JOE G.
    Thanks be to Momentum Options Trading for providing me with some fantastic wins. I just started with this service and am up nearly 50% in less than a month. There have been losses, but if I manage them properly, I will continue the best efforts given on the blog (in which there are no complaints). What a great cause for humanity. I feel more confident about my trades and continue to play the wins. Best of all, I am now keeping my regular paychecks in the bank! Thank you!

    GREG F.
    Rick - I wanted to say thanks for getting me started on the right foot with your service. I have made six trades since starting on October 22, 2009. Five are winners and One loser netting me $6,245. Thanks again and keep the trade recommendations coming.

    NOEL
    I got into the Nike 60 Call at 1.85, sold at 5.00, also bought a 55 put at 1.05, but got stopped out at .35. What a ride! $2830.00 in the black even with the put. It's right at 100% return. I hope earnings season coming up is going to look like this trade.

    TODD F.
    Nice call on Nike. I think I'll go buy a pair with my profits! : ) I did the straddle for safety but still made 62% on the trade. Not bad for less than 24 hours. If Goldman is right, then the Nov 70s or 75's could be a steal today.

    PAUL H.
    What a sweet way to get introduced to Momentum. My first trade based on your picks and it a 2X. Thank you!

    NOEL
    “Limit order was set at 1.60 on RIMM so it sold. I may have left some money on the table but you can't go broke making a profit. That was a fun trade. Thank you. Good call. I’ve been watching and trading Rick's advice since March. It’s usually a fun ride, but I give him heck when it's wrong to. :) ”

    CHRISTIAN
    “Your service rocks! I made bank on Dendreon last week! The other thing I have to say is that it took me quite a while to find a REAL options trading service like yours. Most of what’s out there is 99% scam and very sketchy. Momentum Options Trading is the first service I found that I can trust and seriously make money with.”

    JOHN
    “I made $420.00 on ANF in 2 days. Thanks for the trade and updates on getting out of the trade.”

    CHARLES M.
    “I did follow a lot of your trades with 1-2 contracts per trade and YTD I’m up 108%. I try not to follow blindly by not entering all of your trades and sometimes entering the ones you don’t. I entered AIG a few weeks ago against recommendation – that one hurt.”

    BRYAN C.
    “I have been following you for several months and am interested in the new service. I hate to see the free service go away but as they say, “all good things must come to an end”. My ability to join will be greatly influenced by the monthly fee so I’m very curious to see the new prices. Thanks for making April a great month for me and my family.”

    JOHN H.
    “I have really enjoyed the past month since finding your blog. You have made some great calls. I would appreciate info. on the new options mentoring program. Thanks.”

    JEFFREY
    “Hi Rick, I have been following your blog for several months now and I would like to be including on the list for your new service and to receive more information about it. And yes I was a Dendreon winner with your tips. Turned $280 into $7700, and literally saved my butt.”

    ED
    “I made over 6k on your Dendreon trade, and I’m very interested in learning how you pick and trade options. Sign me up.”

    GREG
    “Rick – Wow what a day! I got in at the Dendreon calls at $2.25. Thanks to for your advice. I appreciate that. This company has a lock on this type of therapy and no one else in the world is close. Kind of reminds me of the type of companies that Peter Lynch and Warren Buffet suggest that investments be made in. Companies that can build a moat around their business model, that allows them to charge a premium for their product or service. In other words - a monopoly.”

    KEN
    “Hi Rick, Thank you so much for the Dendreon trade, I made almost $10,000 with that trade with a little over $2,000 investment. You have shown me the power of options trading. Again, thank you so much for all your inputs.”

    GARETT
    “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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