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Tuesday, December 13th, 2011
1:40pm (EST)
The bulls are trying to power ahead following Monday’s pullback and got off to a good start despite more shaky comments from across the pond. Today’s rhetoric comes from German Chancellor, Angela Merkel, who said he was opposed to increasing the size of Europe’s bailout fund. The current ESM (European Stability Mechanism) has $500 billion euros which isn’t enough to cover Spain and Italy if they were to default. We have mentioned before if the EU can get this to $1 trillion it would do wonders for the market.
Here at home, Retail Sales were no help as they were up only 0.2% versus estimates for growth of 0.5% for November. Retail Sales less autos were also up 0.2% compared with forecasts for a 0.4% rise for the month.
Best Buy (BBY, $24.85, down $3.23) is down 12% after disappointing Wall Street with its quarterly numbers. The company reported a profit of $154 million, or $0.42 a share, versus $217 million, or $0.54 a share, for the year ago period. Revenue came in at $12 billion, up from $11.9 billion, for the same period. The suit-and-ties were looking for $0.52 a share on $12.1 billion.
We thought this could be a turnaround quarter for the company but they haven’t done anything exciting and continue to disappoint. Our chart work from the weekend showed Best Buy nearing resistance and an earnings beat could have gotten shares past $30. However, with the 10-cent miss, shares appear headed to the low $20’s where it still might not be a “Buy”. In other words, the company’s Best days could be over until it reinvents itself.
In IPO news (initial public offerings), Jive Software (JIVE, $15.00, up $0.03) priced 13.4 million shares at $12 and is showing a nice pop in its first day of trading. This is one of the “better” IPO’s coming public this week and, believe it or not, there is already takeover chatter surrounding the company.
Jive has a unique user platform and could be a good fit for IBM (IBM, $193.43, up $1.25), Microsoft (MSFT, $25.99, up $0.48), Oracle (ORCL, $31.32, flat) and SAP (SAP, $56.78, down $0.51), according to one analyst.
Elsewhere, one brokerage firm, Sterne Agee, couldn’t wait for Zynga (Proposed Ticker: ZNGA) to come public. The stock will make its debut on Friday, but they decided to jump the gun and initiated coverage of the stock with an “Underperform” rating. Yikes!
We will keep you updated on some of the other IPO’s coming out this week but we won’t be able to trade options on them until 2012 and they will be expensive. We aren’t sure if these two IPO’s will make our Watch List, but as you can see, analysts have already penciled in different expectations for the companies going forward.
As we continue to churn through this trading range, we are staying patient until we get the “all clear” sign from the bulls, or the bears. The upside resistance targets we have outlined or downside support levels we have gone over will come into play soon.
We will be adding some new option trade candidates to our Watch List tonight as we get ready for our next new batch of trades and we will be listing both call and put options. For those of you just joining us, stay patient as well.
As far as today’s action, the Dow is currently up 77 points to 12,098 while the S&P 500 is higher by a six-pack to 1,242. The Nasdaq is up a deuce to 2,614. Subscribers, check the Members Area for the updates.
Tags: BBY, Best Buy Earnings, IPOs, JIVE, ZNGA
Posted in Earnings, IPOs, Market Analysis | Comments Off
Wednesday, July 14th, 2010
1:00pm (EST)
When we shut our eyes this morning around 2am, the Dow futures were up 70 points and it appeared as though the bulls were going to have a huge day. However, when we woke up this morning and were doing the finishing touches to our 9am update, futures were slipping which lead to a muted open for the market.
The Nasdaq showed strength on the heels of Intel’s (INTC, $21.69, up $0.68) blowout quarter but the mood quickly soured after Wall Street got the latest Retail Sales numbers. The Commerce Department said June sales fell 0.5% which was worse than the expected 0.2% decline most economists had expected.
As a result, the market is hanging near the breakeven level but is showing positive results. The Dow is up 16 points to 10,381 while the Nasdaq is higher by 14 points to 2,256. The S&P 500 is up by 2 points to 1,097.
Although we listed higher targets for the Dow this morning, the index is still running into resistance at 10,400. We have also been a repeating parrot on the 1,100 level for the S&P and the 2,240-2,250 level for the Nasdaq but the momentum does not appear to be there from the bulls to take these levels out today. We aren’t saying they can’t, we are just pointing out the market is near the top of the ranges again and any stalled rally will likely lead to a retreat and more hair pulling.
The jobless claims number could be another catalyst for Thursday’s trading and we also get a look at the health of the Financial sector as JPMorgan (JPM, $40.21, down $0.27) will announce earnings before the bell.
Turning to IPO’s, there are a number of initial public offerings that will be coming to the market over the next few days as activity seems to be picking up.
The biggest of the bunch will be private equity firm Kohlberg Kravis Roberts (KKR) will make its debut on Thursday on the New York Stock Exchange. The offering is worth about $2 billion but KKR is a partnership not a corporation so this one is a little funky in the way it is being done. In any event, stay clear of this one as it has a checkered past.
RealD (RLD) is expected offer nearly 11 million shares in a range of $13-$15 apiece. The company is trying to capture a little of the magic in the 3D wave that has hit us over the last 6 months. RealD supplies projectors for 3-D cinema screens and glasses for viewers but is a sketchy offering because the company’s bottom line bleeds red.
SMART Technologies (SMT) is a Canadian company that makes interactive white boards that could replace the days of chalkboards (finally!) that many of us grew up with. It seems these new “smart boards” are catching on as they have the power of a computer and the ease of a whiteboard.
Users can share applications, access the internet and write in digital ink. The company also acquired NextWindow in April which makes touch screens for electronic displays. We haven’t seen a board, yet, but they sound pretty cool. The company plans to raise $600 million with 35 million shares being offered in the $16-$18 range.
Finally, Qlik Technologies (QLIK) is a provider of business intelligence software. Their software analyzes costs and organizes and finds information. Qlik supports an impressive client base and expects to bring in about $100 million with its offering.
We like SMART a lot and RealD could get a pop because of its brand name but finding the diamond in the rough is a little easier when you do a little research.
Although we are big fans of the 3-D rave that has been hot over the last six months, those stocks are starting to cool and we question how long people are going to pay an extra $3-$5 to watch a 3-D movie. [Update: Imax (IMAX, $13.50, down $0.20) is down from its 52-week high of $21.30.]
That leaves SMART as the one to watch going forward.
We have a lot to cover in our Members Area as we have added a couple of names to our Watch List. We are slowly setting up for the market’s next move and we think there are a number of great setups coming our way. Subscribers, check for the updates.
We will be back in the morning with another full update and hopefully some breaking news on Vivus (VVUS, $12.74, up $0.30) which could get some good news concerning its drug Qnexa. We also have Vivus on our Watch List so some of you could be setting up for a nice payday…
Tags: dndn, IPOs, JPMorgan, Vivus, VVUS
Posted in IPOs, Market Analysis, Market Commentary | Comments Off
Wednesday, June 16th, 2010
1:20pm (EST)
The bulls are taking a breather from yesterday’s strong rally, and the bears are trying to recover. The market has traded lower for much of the session but did venture into positive territory earlier in the day. There is a bunch of headlines news, some good and some bad, and we will try to cover a few of them with today’s update.
In economic news, we mentioned this morning Housing Starts were down 10% and came in at 593,000 units versus estimates for 650,000. Elsewhere, Industrial Production increased 1.2% in May, while the capacity utilization rate came in at 75%. The Producer Price Index dropped 0.3% month over-month in May versus expectations of a 0.5% decline.
International Game Technology (IGT, $18.56, down $1.03) is getting a 55 haircut after Goldman Sachs (GS, $137.58, up $0.68) downgraded the stock to “Sell” from “Neutral”. Goldman downgraded its price target from $21 to $17 after seeing no improvement in slot machines sales until 2012. Casino stocks have been rallying, but the news is not all good for the sector.
FedEx (FDX, $80.47, down $2.54) is down 3% after telling Wall Street it earned $419 million, or $1.33 a share compared to last year’s loss of $876 million, or $2.82 a share. Analysts were looking for of $1.32 a share. Revenue was up 20% to $9.4 billion which was higher than the forecasts of $7.9 billion, on average.
In IPO news, CBOE Holdings (CBOE, $32.51, up $0.02) is slightly higher in its second day of trading as a public company. Shares of the largest U.S. options market closed at $32.49 yesterday after pricing at $29 a share late Monday.
IPO’s can be fun, and some of them can be lucrative investments, Google (GOOG, $503.28, up $5.29) always comes to mind of course, but premium brand names can often be priced pretty fairly based on future growth. CBOE Holdings has that and we will likely be playing options on this stock at some point. We have added the stock to our Watch List, but the options haven’t started to trade, yet.
Although CBOE is a new issue, be careful of buying this one as there is already litigation risk ahead. In early July, a court will decide if CBOE can continue licensing some of its higher margin products that they have exclusive rights to, and the SEC (Securities and Exchange Commission) is thinking of placing fee caps on them.
CBOE makes one-third of its transaction fees from these proprietary index options that they own rights on and their revenues would take a hit if others are allowed to join the party.
As we head to press, the Dow is off by 16 points to 10,388 while the S&P 500 is lower by a point and is at 1,114. The Nasdaq is flat at 2,306.
We will be back in the morning with another full update.
Tags: CBOE Holdings, FDX, FedEx earnings, GOOG, GS, IGT, initial public offerings, IPOs, momentum options trading, option picks, options alerts, stock options trading
Posted in Earnings, IPOs, Market Analysis, Market Commentary | Comments Off
Thursday, May 13th, 2010
1:00pm (EST)
The market has been in a tight range today as the bulls look tired and the bears are trying to take advantage of a weak jobs report.
The latest unemployment claims report disappointed Wall Street as the Labor Department said first-time claims for jobless benefits fell to 444,000 last week from an upwardly revised 448,000 the previous week. The pencil pushers were looking for 440,000.
We have mentioned that jobs growth will be the key to any sustained rally and high unemployment remains a major obstacle to a strong economic recovery. The unemployment rate is just under 10% but needs to get in the 7%-8% range if the Dow is going to make a push to 12,000 this year.
We are seeing some action in the IPO market as a couple of companies tested the waters to go public.
Express (EXPR, $17.00, flat) sold 16 million shares and raised over $270 million in its debut. The specialty retailer is the sixth largest apparel brand in the U.S. and had planned to sell shares for $18-$20 each.
Roadrunner Transportation Systems (RRTS, $14.00, flat) netted nearly $150 million after offering a little over 10 million shares at $14 apiece, the bottom of its expected range. Beep-Beep is a transportation logistics company.
Noranda Aluminum (expected ticker symbol: NOR) got nervous and has yet to price after cutting the size of its deal. The company is now offering 10 million shares for $8-$9 each, which would raise about $85 million, but we have not seen a print.
Look for China Green (expected ticker symbol: CHGN) soon which is offering 1 million shares at $5.
As we head to press, the Dow is down 22 points to 10,874 while the S&P 500 is off by 4 to 1,167. The Nasdaq is lower by 10 points to 2,414.
Tags: CHGN, EXPR, IPOs, option picks, option signals, options alerts, RRTS, stock options trading
Posted in Company Commentary, IPOs, Market Commentary | Comments Off
Wednesday, October 21st, 2009
12:30pm (EST)
In August, we listed a group of IPO’s that were coming out and in September and many of them have made their debut. From September 25th (quotes are from that day):
“There were a number IPO’s (Initial Public Offerings) yesterday and quite a few secondary offerings. This week’s IPOs have been the most since 2007, and today, Shanda Games (GAME, $11.93, down $0.57) got initiated on the Nasdaq.
The other IPO’s that went public this week include: A123 Systems (AONE, $19.00, down $1.29), Artio Global Investors (ART, $26.69, down $0.56) and Colony Financial (CLNY, $19.39, down $0.11).” (END)
Well, out of the group, A123 Systems (AONE, $24.63, up $0.11, current price) is the one we want to start watching…like a hawk. Its 52-week high is $28.20.
A few things we like to see is volume and volatility and this stock has both. The average daily volume is over 5 million shares and the option pits are pretty liquid.
The company makes lithium-ion batteries and had high hopes over a year ago as they thought they were closing in on a Chevy Volt contract but eventually lost out. However, they signed a deal to supply Chrysler with batteries for its cars. And the market for these types of batteries is HUGE.
Besides cars, think smartphones and other products…every iPod, iPhone and Apple laptop has a lithium-ion battery. The “new” battery is smaller, more energy efficient, longer lasting, and are effectively replacing the previous generation of nickel metal hydride batteries.
Of course, there is competition in the space but with other car manufacturers joining the race for electric cars, and the transition over to these batteries have dramatically improved the potential market. However, many other would-be competitors have not even begun mass production yet which will play into A123’s hand once demand starts to peak.
A123 will likely play a big role for temporary energy storage for utilities and they were recently awarded a $250 million grant from the Department of Energy to build a manufacturing plant.
On the negative side, the stock could see some selling pressure once their “lock-up period” is up. Typically, when a company goes public, its insiders can’t sell their shares for a certain period of time which is usually 90 days to a year. If a company is full of smoke-and-mirrors or has some skeletons in its closet, company insiders who know about them can’t act on this “inside” knowledge until after the lock-up period has ended. They will start to sell stock before the public learns of any bad news hoping to get out at the top.
Now, I’m not saying A123 is shady or anything, I’m just explaining how the IPO market works.
A123 appears to be a boom or bust company and from the way it has been trading it has become clear there is action in the stock. The key for us will be to watch for an opportunity to get into some options. We might go long, we might go short, or we might do a straddle or strangle trade. However, we have to wait for our opportunity.
Keep this one on your Watch List and when we see a trade, we will alert our subscribers.
The market is slightly higher at the halfway point. The Dow s up 31 points to 10,072 while the Nasdaq is up 10 to 2,174. The S&P 500 is at 1,096, up 5, and remains within spitting distance of 1,100 which was hit Monday.
As far as our current trades…thumbs up! Imax (IMAX, $11.24, up $0.14) continues to push new 52-week highs and our option trade from August has now reached a double. We still have high hopes for the stock and have a $15 price target on the shares. However, the options we are following will yield another double from current levels if Imax reaches $15 by March 2010.
If you are not a current subscriber, you can quickly become one and get our updates as soon as you signup. Our Members Area is updated every morning with the CURRENT TRADES and are emailed instantly to your email inbox.
Tags: A123 Systems, Artio Global Investors, call options, Colony Financial, IPO option trading, IPOs, option trade picks, options mentoring, options track record, options trading, put options, stock picks
Posted in Company Commentary, Hot Stocks, Market Analysis, Option Trades | Comments Off
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Rally Stalls After Weak Retail Sales
Wednesday, July 14th, 2010
1:00pm (EST)
When we shut our eyes this morning around 2am, the Dow futures were up 70 points and it appeared as though the bulls were going to have a huge day. However, when we woke up this morning and were doing the finishing touches to our 9am update, futures were slipping which lead to a muted open for the market.
The Nasdaq showed strength on the heels of Intel’s (INTC, $21.69, up $0.68) blowout quarter but the mood quickly soured after Wall Street got the latest Retail Sales numbers. The Commerce Department said June sales fell 0.5% which was worse than the expected 0.2% decline most economists had expected.
As a result, the market is hanging near the breakeven level but is showing positive results. The Dow is up 16 points to 10,381 while the Nasdaq is higher by 14 points to 2,256. The S&P 500 is up by 2 points to 1,097.
Although we listed higher targets for the Dow this morning, the index is still running into resistance at 10,400. We have also been a repeating parrot on the 1,100 level for the S&P and the 2,240-2,250 level for the Nasdaq but the momentum does not appear to be there from the bulls to take these levels out today. We aren’t saying they can’t, we are just pointing out the market is near the top of the ranges again and any stalled rally will likely lead to a retreat and more hair pulling.
The jobless claims number could be another catalyst for Thursday’s trading and we also get a look at the health of the Financial sector as JPMorgan (JPM, $40.21, down $0.27) will announce earnings before the bell.
Turning to IPO’s, there are a number of initial public offerings that will be coming to the market over the next few days as activity seems to be picking up.
The biggest of the bunch will be private equity firm Kohlberg Kravis Roberts (KKR) will make its debut on Thursday on the New York Stock Exchange. The offering is worth about $2 billion but KKR is a partnership not a corporation so this one is a little funky in the way it is being done. In any event, stay clear of this one as it has a checkered past.
RealD (RLD) is expected offer nearly 11 million shares in a range of $13-$15 apiece. The company is trying to capture a little of the magic in the 3D wave that has hit us over the last 6 months. RealD supplies projectors for 3-D cinema screens and glasses for viewers but is a sketchy offering because the company’s bottom line bleeds red.
SMART Technologies (SMT) is a Canadian company that makes interactive white boards that could replace the days of chalkboards (finally!) that many of us grew up with. It seems these new “smart boards” are catching on as they have the power of a computer and the ease of a whiteboard.
Users can share applications, access the internet and write in digital ink. The company also acquired NextWindow in April which makes touch screens for electronic displays. We haven’t seen a board, yet, but they sound pretty cool. The company plans to raise $600 million with 35 million shares being offered in the $16-$18 range.
Finally, Qlik Technologies (QLIK) is a provider of business intelligence software. Their software analyzes costs and organizes and finds information. Qlik supports an impressive client base and expects to bring in about $100 million with its offering.
We like SMART a lot and RealD could get a pop because of its brand name but finding the diamond in the rough is a little easier when you do a little research.
Although we are big fans of the 3-D rave that has been hot over the last six months, those stocks are starting to cool and we question how long people are going to pay an extra $3-$5 to watch a 3-D movie. [Update: Imax (IMAX, $13.50, down $0.20) is down from its 52-week high of $21.30.]
That leaves SMART as the one to watch going forward.
We have a lot to cover in our Members Area as we have added a couple of names to our Watch List. We are slowly setting up for the market’s next move and we think there are a number of great setups coming our way. Subscribers, check for the updates.
We will be back in the morning with another full update and hopefully some breaking news on Vivus (VVUS, $12.74, up $0.30) which could get some good news concerning its drug Qnexa. We also have Vivus on our Watch List so some of you could be setting up for a nice payday…
Tags: dndn, IPOs, JPMorgan, Vivus, VVUS
Posted in IPOs, Market Analysis, Market Commentary | Comments Off