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Monday, July 23rd, 2012
9:00am (EST)
“July option expiration is Friday and over the past decade, the third Friday in July has been bearish 70% of the time. In 2002, the Dow lost nearly 5%, falling from 8,409 to 8,109. In 2010, the blue-chips lost 2.5% after dropping from 10,359 to 10,097.
The Dow closed at 12,777 on Friday. If we factor in a 3% drop from current levels it would equate to a decline of 400 points. The Dow made a 200+ point swing intraday last week so a 3% move overall this week is entirely possible. This would put the blue-chips right at the 12,350 level and at the point of a possible trend change on a move lower. A 3% move higher would get the Dow to the 13,200 level and at a possible breakout point.
The other wild-card for the week will be Bernanke who will be speaking to the zombies on Tuesday (and again on Wednesday) about the recent FOMC Minutes. If you recall, Wall Street was a little disappointed following last Wednesday’s Fed statement and if Big Ben mumbles those same thoughts, the market will tank. If by chance, he hints at some type of QE3 or stimulus plan, the bulls could be running again.
The charts are showing a major move is coming and the earnings cycle will be picking up steam this week. Add in Friday’s July option expiration and the makings are there for some explosive moves this week. The 2-month long trading range we have been in could be on the verge of expanding so it will be interesting to see how the week unfolds.” (from 7/15/2012 Weekly Wrap/ Monday Morning Outlook)…
Wall Street came into the week with all eyes on earnings and Ben Bernanke. The bears got off to a good start on Monday and into Tuesday as Big Ben started talking about the economy, QE3, and the recent LIBOR scandal. The Fed Chairman seemed nervous but subdued as he dodged questions and gave vague answers on his first day of testimony but the bulls were able to rebound and pushed resistance into the close. The intraday 200-point swing in the Dow was a clue the bulls were going to make another push to the top of the trading range.
Wednesday’s action was all about Intel (INTC, $25.52, down $0.54) and their numbers which beat Wall Street’s estimates. Mr. Bernanke was back in action and continued to say the Fed stood ready to “do something” if the economy falters but would not provide specific clues. This teased the bulls but the fact that he was hinting of possible QE3 relief was enough to keep the momentum going. After the close, International Business Machines (IBM, $192.45, down $2.89) reported a fantastic quarter and raised estimates which carried over into Thursday’s action.
As expected, the bulls were able to push the top of the current trading ranges as the market went out near its highs for the day. They got a bonus package after the bell when Microsoft (MSFT, $30.12, down $0.55) and Google (GOOG, $610.82, up $17.76) announced better-than-expected quarterly results but futures actually traded lower Thursday evening which was another good clue the market could be peaking.
By Friday’s open, futures had gotten progressively worse on some fresh Spain worries which lead to a lower open. As the day progressed, there was no buying the dips as the bears pushed support which was prior resistance for the bulls. It seems traders were a little nervous being long over the weekend and the move pushed the market right back into its trading range following Thursday’s fluff.
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If you are not a subscriber but would like to read more please click here. We are one of the fastest growing stock options trading advisors on the internet and offer 2-3 powerful call or put option trades each week (depending on market conditions) aimed at triple-digit returns for our Daily newsletter. Our Weekly Wrap Covered Call Portfolio strides for double-digit returns on a monthly basis. Together, we are 105-31 for 2012.
Tags: IBM, INTC earnings, stock options trading advisors
Posted in Earnings, Market Analysis | Comments Off
Thursday, July 19th, 2012
12:35pm (EST)
The market got a slight bid at the open as the bulls added some fluff to yesterday’s gains but the action has been choppy as we head into the second half of trading. Economic news favored the bears this morning which slowed the 2-day momentum and tomorrow’s July option expiration day could be tricky.
Initial Claims rose 34,000 to 386,000 following last week’s drop of 24,000 to 352,000 but this was expected as the auto plant retooling winds down. Continuing Claims rose by 1,000 to 3.314 million. Existing Home Sales were a disaster, dropping 5.4% in June and well below expectations. The Philly Fed came in at -12.9, up from June’s negative reading of -16.6. And finally, Leading Indicators fell 0.3% to 95.6 in June following a May reading of 95.9.
We have talked about the recent 2+ month trading range which has seen both the bulls and bears push support and resistance with some fluff. We have given you the price targets to watch for on all of the indexes to confirm a breakout or breakdown and while we thought there might be a slim chance the blue-chips tested 13,000 today, they haven’t.
International Business Machines (IBM, $195.75, up $7.75) is up 4% and has accounted for 53 positive Dow points but American Express (AXP, $56.43, down $1.86) (-17 Dow points), Wal-Mart Stores (WMT, $71.62, down $1.23) and Verizon (VZ, $44.88, down $1.01) have snuffed out half those gains and the other 26 Dow stocks are mixed.
eBay (EBAY, $44.17, up $3.71), which should be a Dow component, is zooming 9% after reporting another sweet quarter on the heels of its PayPal unit. We talked about earnings this week in the video we did for our trading course members on Sunday night. The only possible trade we really liked was eBay as we said shares could surge past $40 based on the strength PayPal continues to show.
We should have taken it a step further and profiled the August 40 calls (EBAY120818C00040000, $4.20, up $2.10) which are up 100% today. The July 40 calls (EBAY120721C00040000, $3.90, up $2.30) would have been super risky as they expire tomorrow but they are up 145% and have traded to a high of $4.45
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If you are not a subscriber but would like to read more please click here. We are one of the fastest growing stock options trading advisors on the internet and offer 2-3 powerful call or put option trades each week (depending on market conditions) aimed at triple-digit returns for our Daily newsletter. Our Weekly Wrap Covered Call Portfolio strides for double-digit returns on a monthly basis. Together, we are 105-21 for 2012.
Tags: AXP, eBay, IBM, stock options trading advisors, VZ, WMT
Posted in Earnings, Google, Market Analysis | Comments Off
Monday, July 9th, 2012
1:10pm (EST)
The bears are picking up where they left off on Friday as futures were suggesting a lower open throughout the night. Much of this morning’s headlines have come from overseas as the Europe debt crisis continues to be an overhang. The eurozone finance ministers are meeting again today but tension is mounting in the countries that are against increased sharing of the debt load.
There is chatter that some of Europe’s top brass is now planning to give Spain some new leeway measures to meet their deficit targets while others are against it. The uncertainty has pushed the credit yields in both Spain and Italy higher with Spain’s 10-year government bond popping over 7% again. Italy’s 10-year bond is above 6%.
Here at home, the focus will turn to earnings which start after the close of trading. We covered Alcoa’s (AA, $8.67, down $0.06) numbers this morning and where the stock could be headed in after-hours trading. We mentioned an earnings miss would not set a good tone for the rest of the week and estimates are for the company to earn 5 cents a share. The stock is a Dow component but accounts for only 0.5% of the weighted index so it won’t move the Dow a huge amount either way. JPMorgan Chase (JPM, $33.85, down $0.06), which reports Friday accounts for 2% of the percentage weight. For you trivia buffs, International Business Machines (IBM, $189.03, down $2.38) makes up 11% of the Dow’s weight and reports their quarterly results on July 18.
As far as the major indexes, the downside momentum has picked up as we head into the second half of trading. The Dow is down 74 points to 12,698 while the S&P 500 is off by a six-pack to 1,348. The Nasdaq is showing a decline of 15 points and is at 2,922.
A close below Dow 12,700; S&P 1,350; and Nasdaq 2,925 would favor the bears heading into tomorrow’s open.
We released a new trade earlier this morning and we have done some chart work to show you our expectations on where we think the stock (and our put options) are headed. Subscribers, check the MA for the updates.
Tags: AA, Alcoa Earnings, IBM, JPM
Posted in Earnings | Comments Off
Wednesday, April 18th, 2012
1:00pm (EST)
IBM (IBM, $201.63, down $5.82) and Intel (INTC, $27.91, down $0.56) are weighing on the market after reporting earnings after the close on Tuesday. IBM beat estimates but missed on revenues while Intel is trading lower after reporting lower gross margins for the quarter.
The Dow is currently down 60 points to 13,055 as IBM has accounted for 43 negative Dow points while Intel was worth a 4 point hit on the index.
The S&P 500 is lower by 5 points to 1,386 while the Nasdaq is off 12 points to 3,030.
The market rallied on Spain’s successful bond auction yesterday but the real test will come on Thursday when they try to sell 2 and 10-year bonds. Earnings will be heavy after the bell and on Thursday with Bank of America (BAC, $8.95, up $0.03), eBay (EBAY, $35.99, down $0.09) and Qualcomm (QCOM, $66.79, down $0.44) set to report over the next 24 hours.
Subscribers, check the Members Area for the trade updates and we will back in the morning with a full briefing.
Tags: BAC earnings, IBM, INTC, Intel earnings
Posted in Earnings, Market Analysis | Comments Off
Wednesday, March 28th, 2012
9:00am (EST)
“Although this week is historically bearish, we could see some “window-dressing” by the fund managers which means they will be buying stocks early in the week. We still feel the market is close to peaking but we wouldn’t be surprised to see one last run at our near-term targets (Dow 13,500; S&P 1,425-1,450; Nasdaq 3,250; Russell 850) if there is a rush to buy this week.
We could also see a trading range this week before we get the surge in April which is typically one of the best months of the year for the market. Over the past decade, the indexes have gained 2%, on average, in April and if support holds this week, there is a good chance history repeats itself. However, we aren’t too bullish on 1Q earnings which will start to come in during the second week of April.” (3/25 Weekly Wrap and Monday morning outlook)
So far the market is following our road map for the week following Monday’s big surge. There was a little follow through on Tuesday as some of the large-cap stocks like International Business Machines (IBM, $207.18, down $0.59), Home Depot (HD, $50.04, down $0.09), Walt Disney (DIS, $44.15, down $0.23) hit new 52-week highs before pulling back as the follow through rally fizzled late in the day.
The Dow gained 44 points, or 0.3%, to close at 13,197. The blue-chips traded to a high of 13,265 but closed below the 13,200 level which is becoming the new favorite playground for the bulls and bears this week. Dow component, Pfizer (PFE, $22.50, up $0.34) managed to hit a new 52-week high of $22.80 but it wasn’t enough to keep the index out of the red.
The S&P 500 slipped 4 points, or 0.3%, to end at 1,412. The index traded to a high of 1,419 at the open, its loftiest level since May 2008, and fell just short of kissing our near-term target of 1,425.
The Nasdaq dipped 2 points, or 0.1% to settle at 3,120. Tech traded to a high of 3,134 late in the day but went out near its low by the closing bell. Apple (AAPL, $614.48, up $7.50) tried to keep the index in the green and did its part after setting a fresh all-time high of $616- and change. The Apple March 610 calls (AAPL120330C00610000, $7.75, up $2.65) opened at $4.65 before adding 50% for the day. It’s been years since we have played options on Apple but now that the stock trades WEEKLY options, we have found a cheaper way to play the stock.
Futures are favoring the bears this morning as we head to press and look like this: Dow (+35); S&P 500 (+4); Nasdaq (+8). Subscribers, check the Members Area for the updates as we have moved a couple of Hard Stops up to protect profits.
Tags: AAPL, hard stop, IBM, option hard stop, Walt Disney stock
Posted in Hot Stocks, Market Analysis, Sectors | Comments Off
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