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Wednesday, June 23rd, 2010
8:45am (EST)
Takin’ It Back to Toto time, the bulls had to be thinking of holding the line as they watched the bears run over them for the second straight day. The market got off to a good start on Tuesday, slipped after an unexpected drop in existing home sales, but resumed its uptrend while we were working on our 1pm update.
Stocks were range-bound as we went to press, and we could tell the bulls were struggling to keep a grip on things as a few high beta names started to break down. The bears went to work right before 2pm and had their eyes on one goal…reclaiming the 200-day moving average on the S&P 500. “Hold the line!” was the commander-in-chief’s challenge to the bulls.
Those words fell on deaf ears as the bulls ran for cover.
The Dow surrendered 149 points, or 1.4%, and finished at 10,293 with volume spiking higher as the selling pressure intensified in the final hour of trading. All but two of the Dow’s 30 stocks ended the session in red; Johnson & Johnson (JNJ, $59.16, up $0.03) and Merck (MRK, $35.13, up $0.01) were up pennies. The index fell below the 10,400 level and right near its 200-day moving average.
The S&P 500 tanked 18 points, or 1.6%, to close at 1,095 and below the psychologically critical 1,100 level. The break below the 200-day moving average of 1,108 was more crucial, but the talking heads like to focus on round numbers. We said in Tuesday morning’s update that if the bears could claim this level then it would be huge, and it might prove last week was indeed a “head fake.”
The Nasdaq fell 27 points, or 1.2%, to 2,261 and appears to be headed towards its own battle with the 200-day moving average. The Nasdaq’s 200-day MA is currently in the 2,240-2,250 area. The “flash crash” low was 2,185 and on May 7th the index closed at 2,265. Folks, look at the numbers. We closed below the May 7th low yesterday.
If the Nasdaq fails its 200-day support and closes below 2,240 today then all hell could break loose.
As we head to press, Dow futures are up 41 points to 10,274 while the S&P 500 futures are higher by 4 points to 1,094. The Nasdaq 100 futures are showing a 9 point pop to 1,887. Today’s market moving event will come at 2pm when the Fed gives us an update on interest rates.
Tags: JNJ, Johnson & Johnson, Merck, momentum options trading, mrk, option picks, options alerts, stock options trading
Posted in Company Commentary, Market Analysis, Market Commentary | Comments Off
Tuesday, October 13th, 2009
9:10am (EST)
Johnson & Johnson (JNJ, $62.53) reported earnings this morning that beat Wall Street’s expectations but their sales number missed. The company earned $3.35 billion, or $1.20 a share, on sales of $15.1 billion. The Street has been expecting earnings of $1.13 and revenue of $15.2 billion for the latest quarter. In early trading, shares are down 94 cents to $61.59.
I have been telling you that this earnings quarter will be all about the revenues numbers and in the early going, companies are falling short. JNJ initially got a higher bid when the results were released this morning but it seems the market is looking for higher revenue numbers going forward.
Gold is also getting another pop as the dollar hovers at a 14-month low. Gold rose to a record high of $1,063.60 an ounce earlier this morning as the dollar continues to slip against the euro. The dollar index, a measure of the greenback’s value against six currencies, was at 76.25, just off the low of 75.76 hit last week.
Futures were pointing towards a slightly higher open but are basically unchanged after weaving in and out of “fair value”. Of course, we are watching a few stocks and current subscribers can find the trade updates in the Members Area.
Tags: Johnson & Johnson, option picks, options blog, options trading strategies
Posted in Company Commentary, Earnings, Market Commentary | Comments Off
Tuesday, July 14th, 2009
9:15am (EST)
We have a lot going on this morning and most of the news coming out before the bell has been positive. This has helped lift futures which are pointing to a slightly higher open.
Of course, all eyes have been on Goldman Sachs (GS, $149.44) which absolutely crushed Wall Street’s estimates. The company reported earnings of $4.93 a share and revenues came in at $13.8 billion. The Street had forecast earnings of $3.54 per share for the quarter on revenue of $10.7 billion. In pre-market trading the stock is at $148.
Elsewhere, Johnson & Johnson (JNJ, $57.72) also beat estimates as it stated the company earned $3.2 billion, or $1.15 a share, in the quarter on sales of $15.2 billion. J&J put a cherry on top when it also confirmed its 2009 guidance, saying earnings for 2009 would be between $4.45 and $4.55 a share.
We also got some good economic news as PPI rose 1.8% in June. Most economists had were factoring a rise by 0.1%. Retail sales popped a better-than-expected 0.6% and was the strongest sales report since January’s 1.7% increase.
You would think with all of the good news, futures would be a lot higher…Dow futures are up 29, S&P 500 futures areup 2 while the Nasdaq futures are slightly lower by 2. It should be an interesting open but from the looks of things the open isn’t going to be as strong as hoped.
Rick@MomentumOptionsTrading.com
Tags: Goldman Sachs, Johnson & Johnson
Posted in Company Commentary, Earnings | No Comments »
Wednesday, April 8th, 2009
9:00 am (EST)
As we head towards the opening bell, the market is trying to open on a higher note despite the Alcoa (AA, $7.79, down $0.12) news. Dow futures are currently up 11 points, S&P futures are up by 3.5 while the Nasdaq futures are up 11. We were looking at a sharply lower open as the Dow futures were down over 100 points earlier this morning but things turned around after the market learned that Pulte Homes (PHM, $10.77, down $0.80) was acquiring Centex (CTX, $7.62, down $0.67) for $1.3 billion.
It has been all bears this week as the Dow has lost much of its steam after a four-week rally. However, the wild card today could be the uptick rule news which could provide some momentum. The SEC will consider 3 or 4 proposals to restrict short selling and restoring the uptick rule is one of them. A “bid test” and a “circuit breaker” rule is also being considered.
The uptick rule was eliminated in 2007 after a study showed it did little to prevent the manipulation of share prices. As a short-seller, you had to wait for a stock to make an “uptick” before you could sell the shares short. With the rule gone, many on Wall Street felt this was why short sellers crushed it and made a lot of money in 2008. Without the uptick rule, short-seller’s had an easy time driving share prices down to the single digits so many feel this rule will help stabilize the market.
I don’t normally comment on such issues but this is one where I feel I need to. Why should there be an uptick rule? Just because smart investors who know how to short a stock made some money, Wall Street is calling it unfair. Well, if we have an uptick rule, we should have a “downtick” rule as well.
If you are a bearish by nature and you like to short stocks then why shouldn’t you have the same advantages as someone who is bullish? If, back in the day when Google (GOOG, $358.65, down $9.59) was making 40 and 50 point gains and you were short – wouldn’t you want a downtick rule to help you out? That means before bulls can buy the stock, they would have to wait for it to trade lower.
That’s my two cents for what it’s worth but we don’t have to worry about it anyway because we are option traders.
When we get some details on what could be in store with the uptick rule, the market could rally and we are a lot better off than where we were earlier this morning. It would be nice to see the Dow push back above 8,000 before the holiday and hold. That would give the bulls some hope with some powerful names on deck next week for earnings. Intel (INTC, $15.45, down $0.41) and Johnson & Johnson (JNJ, $51.36, down $0.84) report on Tuesday and they could have something good to say. Then again, the bar is so low that companies are going to have to say something really spectacular to get this rally started again.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Alcoa, Centex, Intel, Johnson & Johnson, Pulte Homes
Posted in Market Analysis | No Comments »
Thursday, October 16th, 2008
After taking one big step forward, the market took two steps back on Wednesday as the Dow fell 733 points, or 7.9%, to close at 8,577. Of course, we are not surprised because we have been preparing for it. Yesterday’s downfall was blamed on bad retail sales data as September sales tumbled 1.2% month-over-month. Biggest drop in three years. The news was a shocker for Wall Street as it was a larger than expected drop. Know-it-alls predicted a decline of 0.7%.
As far as the indexes, the Nasdaq took a 8.5% hit and finished lower by 150 points at 1,628. The S&P was hit harder than a Vegas hangover, falling 9%, or 90 points, and closed at 907.
The Dow’s low last Friday was 7,773. For the Nasdaq it was 1,542 and for the S&P it was 839. So far we’ve been right-on in calling this market and we have prepared for a bottom, played the bounce, and now we must get ready for the possibility of testing those lows again. Remember, I keep telling you October will continue to be like this. That is why we are taking half positions over the short-term/ long-term and cashing in on profits by keeping tight stops.
As far as the bounce, it was good for a quick trade in Microsoft (MSFT, $22.66, down $1.44), Google (GOOG, $339.17, down $23.54) and Johnson & Johnson (JNJ, $60.54, down $3.46), Morgan Stanley (MS, $18.13, down $3.81) and Goldman Sachs (GS, $113.15, down $8.75). Keep an eye on the calls I have mentioned. Some of them are still higher but they may get cheaper. So here is the game plan.
First, if you take any positions, only start with a half position. What that means is that if you normally buy 10 option contracts at a time, buy five. The market keeps showing signs of another breakdown and to me, that would be the best thing that could happen.
Of course everybody is going to question the bailout package but the market needed to do its own cleansing and needed to make its own low before Congress jumped in. The truth is that Bush didn’t want a crisis and they wanted to jump start the market because it was at multi-year lows. But the reality is the market has to make a bottom on its own.
I studied charts until I was light-headed last night and here is my best/ worst case synopsis. I’ve already been calling for this decline since August before we hit last Friday’s lows. In fact, in the October 7 blog with the Dow at 9,447, here was what I mentioned:
“I’m not making any predictions on how low the Dow can go because on any given day we could get some kind of “miracle news” that takes the Dow higher by 1,000 points but from my study of the chart for the Dow, it looks like we could test 8,300. That’s another 1,000 points lower. From there it gets real ugly.”
Well, we got that and then some, son. I only repeat myself a thousand times because, again, I want to make you aware of what type of market we are in. You have to have a quick trigger and know what is happening. Having said that, there is support at 7,200 for the Dow but that’s another 1,300 points lower.
Although the talking heads thought last Friday’s 7,700 level was “the” bottom, some research will shed a different light on the subject if you are willing to do a little homework. This market can float like a butterfly and sting like a bee, that’s for sure. But it’s up to you to stay on your feet so that you can beat the Street. Don’t fall in love with any positions (yet). We still have earnings and October options expire next Friday.
Drumroll please…it’s possible we test those lows for the Dow (7,200) by next Friday with the hope of the market rallying afterwards.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Goldman Sachs, Google, Johnson & Johnson, Market Analysis, Microsoft, Morgan Stanley
Posted in Company Commentary, Earnings, Google, Market Analysis, Sectors, Yahoo / Microsoft | No Comments »
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Hold The Line
Wednesday, June 23rd, 2010
8:45am (EST)
Takin’ It Back to Toto time, the bulls had to be thinking of holding the line as they watched the bears run over them for the second straight day. The market got off to a good start on Tuesday, slipped after an unexpected drop in existing home sales, but resumed its uptrend while we were working on our 1pm update.
Stocks were range-bound as we went to press, and we could tell the bulls were struggling to keep a grip on things as a few high beta names started to break down. The bears went to work right before 2pm and had their eyes on one goal…reclaiming the 200-day moving average on the S&P 500. “Hold the line!” was the commander-in-chief’s challenge to the bulls.
Those words fell on deaf ears as the bulls ran for cover.
The Dow surrendered 149 points, or 1.4%, and finished at 10,293 with volume spiking higher as the selling pressure intensified in the final hour of trading. All but two of the Dow’s 30 stocks ended the session in red; Johnson & Johnson (JNJ, $59.16, up $0.03) and Merck (MRK, $35.13, up $0.01) were up pennies. The index fell below the 10,400 level and right near its 200-day moving average.
The S&P 500 tanked 18 points, or 1.6%, to close at 1,095 and below the psychologically critical 1,100 level. The break below the 200-day moving average of 1,108 was more crucial, but the talking heads like to focus on round numbers. We said in Tuesday morning’s update that if the bears could claim this level then it would be huge, and it might prove last week was indeed a “head fake.”
The Nasdaq fell 27 points, or 1.2%, to 2,261 and appears to be headed towards its own battle with the 200-day moving average. The Nasdaq’s 200-day MA is currently in the 2,240-2,250 area. The “flash crash” low was 2,185 and on May 7th the index closed at 2,265. Folks, look at the numbers. We closed below the May 7th low yesterday.
If the Nasdaq fails its 200-day support and closes below 2,240 today then all hell could break loose.
As we head to press, Dow futures are up 41 points to 10,274 while the S&P 500 futures are higher by 4 points to 1,094. The Nasdaq 100 futures are showing a 9 point pop to 1,887. Today’s market moving event will come at 2pm when the Fed gives us an update on interest rates.
Tags: JNJ, Johnson & Johnson, Merck, momentum options trading, mrk, option picks, options alerts, stock options trading
Posted in Company Commentary, Market Analysis, Market Commentary | Comments Off