1:20pm (EST)
The market is trending lower once again despite the ”surprise” unemployment rate numbers from the Labor Department this morning. The Dow is well below the 10,000 level and appears headed for its fourth-straight weekly loss.
The bulls got excited when they heard the unemployment rate unexpectedly fell in January to 9.7% from 10%, as Wall Street had pegged a number of 10.1%. That was the good news. The bad news was employers cut 20,000 jobs, more than the 5,000 expected.
As a result, the Dow is down 74 points, or -0.7%, and is currently at 9,928. The S&P 500 is off by 8 to 1,055 while the Nasdaq is getting clipped for a 6 points and stands at 2,120.
Just when we said we needed to see more M&A activity…Air Products and Chemicals (APD, $68.14, down $5.55) has made a $5 billion bid for Airgas (ARG, $60.27, up $16.74) and is willing to go “hostile”, if need be. Shares of Airgas are up 38% but the February 50 calls (ARGBJ, $10.20, up $10.15) (ARG100220C00050000) are up 20,000%. Ah yeah…we wish we would have gotten you in that trade yesterday.
The stock is trading above the offered price of $60 a share which could signal that a higher bid may be needed to get the deal done. A merger would create one of the biggest industrial gas companies in the world and this is the third time Air Products has made an offer as the other two were shot down.
Air Products already knows it may have to dig deeper in its coffers.
If you will notice, we included two different option symbols to reflect the upcoming changes that are going to be taking place in the option pits. With 20+ inches of snow coming our way, we will have no excuse for not getting this information out to you this weekend.
We are old school and we hate to see the change but it should make option trading easier and you really don’t need to worry about all those confusing numbers. We are going to break it down for you on how they work but don’t sweat it.
As we look forward to earnings next week, Hasbro (HAS, $30.73, down $0.53) could be in-play before the market opens on Monday. Wall Street is looking for the company to report a profit of $0.82 cents a share on revenue of $1.3 billion. As far as the options, it looks like put volume is outpacing the call options but traders could be selling the puts as well.
Our checks indicate that the company had a great quarter and they could surprise Wall Street by a few cents. That might not mean anything given the current market environment as the stock could sell-off despite an earnings beat.
We have updated our current trades before we head out and make sure to look for a complete portfolio update over the weekend as well as the options symbol review in the Members Area. When we post them, we will be sure to send out an email.
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Market Rebounds But Looks Weak
Monday, July 19th, 2010
12:20pm (EST)
The bulls are trying to hold onto today’s gains as the major indexes are slightly positive but are trading in a tight range. The market got some more bad news concerning the Housing sector, and there were a couple of mixed earnings announcements it is also digesting.
The National Association of Home Builders reported its seasonally adjusted housing market index fell to 14 in July, which was down from June’s reading of 16. Homebuilders’ confidence in the housing market is now at its lowest level in more than a year and will lead to a fresh round of debates over whether or not the economic recovery is slowing. To put this in perspective, a reading below 50 indicates negative sentiment about the housing market, and the last time the index was above 50 was in April, 2006.
Turning to earnings, Halliburton (HAL, $28.73, up $1.22) turned in a great quarter despite the uncertainty surrounding the future of offshore drilling. The company reported a profit of $480 million, or $0.53 a share, versus $262 or $0.29 a share, in the year earlier period. Analysts were looking for $0.37 a share. Revenue came in at $4.4 billion which was well ahead of forecasts for $4.1 billion.
Elsewhere, Hasbro (HAS, $38.91, down $0.59) came in with numbers of $0.29 a share, versus expectations of $0.24 a share. The company missed on their revenue numbers as they reported $739 million when the Street was looking for $748 million.
We mentioned in our Weekly Wrap last night the revenue numbers will be the main catalysts with earnings analysts will be looking for, and on that end a lot of companies are missing the mark.
As we head to press, the Dow is currently up 5 points to 10,103 while the S&P 500 is is down a half point and is at 1,064. The Nasdaq is higher by a 2 points and is at 2,181.
We have a lot to cover in our Members Area today including a NEW TRADE so we are a little early. Subscribers, check for the updates.
Tags: call options, HAL, HAS, Hasbro, 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, volatile options
Posted in Earnings, Market Commentary | Comments Off