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Friday, January 13th, 2012
12:40pm (EST)
The bulls were working on a solid week following Tuesday’s surge as the rest of the days have been relatively flat…until today. We were watching the overseas markets early this morning and futures were up when the European markets opened (3am EST). We hit the rack knowing JPMorgan Chase (JPM, $35.51, down $1.41) would weigh on the market but little did we know Standard & Poor’s would be the alarm clock that woke the market up.
The Financial stocks have been on a nice run over the last few weeks and the bar was set high for JPMorgan so we knew a breakout or pullback for the sector would come depending on what the company said about its Q4 numbers. JP reported earnings of 90 cents a share which matched expectations but revenue fell short at $22.2 billion versus expectations for $23 billion.
Jamie Dimon, JP’s top man said, “We believe these returns were reasonable given the environment, although the return for the fourth quarter was modestly disappointing.”
We weren’t expecting a homerun from the company but we were holding out hope they might beat by a penny. No such luck.
The bears also got a bonus after Standard & Poor’s said it might follow through on warnings it gave back in December that it would cut the credit rating on countries that use the euro. The timing was impeccable wouldn’t you say?
As a result the market is pulling back but is off its lows after testing support.
Next week is a shortened week as the market will be closed on Monday for MLK day. However, next week could also be the turning point on if the market does challenge the July highs or if it falls back into a trading range.
There are a lot of pros still calling for a “correction” but we think the market is cheap at current levels so we aren’t sure if there will be one or not. Sure, we might get a back test to lower support levels but if you have been studying our longer-term charts, you would know we have a ways to go before the TREND turns bearish.
This doesn’t mean we aren’t planning for a pullback. If our upper-end targets are reached, we do expect the market to come back and retest support (which was prior resistance) in February which is when we may use some put options. However, mid-January hasn’t been kind to the bulls in recent years and we were hoping this year would be different. We will have to see.
We are respectful of the bears because they can attack from nowhere and with a 3-day weekend ahead of us, we have taken profits this week in some of our current option trades…just in case. Earnings season will hit second gear next week and so far they haven’t been impressive. The bar was already lowered after 3Q’s numbers and we have seen some high profile warnings over the past few weeks. Despite what the talking heads say, it still is, and has been a stock picker’s market which we have proven.
We saw some low hanging fruit to end 2011 when the indexes pulled back in November (following a huge run from September thru October) and we took advantage of it. The bears challenged support but we have used the upside momentum since to play a number of stocks making new 52-week highs. We have already locked-in one triple-digit trade this year and we are close to adding a few more. We have also started nibbling on some put options as there are a few stocks folding like cheap lawn chairs as we look ahead to February.
Our point is, we have been in a zone with reading the market’s direction and with most of our trade recommendations but we are still in a volatile environment. We have mentioned over the years the bulls like to climb a wall of worry and we said the pros have missed the pop higher this year because they were on vacation for the last two weeks of 2011.
Today’s pullback has them on the clock.
We will be doing a video this weekend and for those of you who took advantage of the 1-year deal and are current members to our option mentoring trading program. We were going to do one last weekend but decided this weekend would be better with Monday’s holiday so look for it then along with the Weekly Wrap.
Remember, we are running a special on the Daily and Weekly Wrap where a 1-year subscription is only slightly more than our Daily for $995 (a 50% discount with the bonus). This package also includes our option trading course, How to Trade Options on Momentum Stocks (an $895 value) and the Momentum Stocks Watch List which breaks down the sectors and hundreds of stocks you can trade. The special comes with the videos which cover charting, current trades, and special situations. These videos are done on a monthly/ bi-monthly basis and have been a huge hit with our subscribers.
Our 2012 Portfolio is off to a hot start as we are 6-1 on closed trades, and 4-0 on half profit taken trades which will get us to 10-1 once the other halves are closed. We are showing over $8,000 in profits and we are only thru the first two weeks of January.
We DON’T compound our results because everybody’s trading account starts at different levels. In other words, if you started an options trading account with $5,000 and made $8,000 your return would be 160%. If you started with $10,000 and made $8,000 your return is 80%. The key is that all option traders should have a set amount for each trade or a set numbers of contracts.
Our Weekly Wrap trades could jump to 10-0 by the end of next week with average profits of double-digits. Add it to last year’s 16-0 record and we could be 26-0, in a blink of an eye.
We have been long-winded today because we feel it is important that you make 2012 a profitable year and we want you to take advantage of our special offers that will only last a few more weeks.
As far as the current action, the Dow is down 110 points to 12,360 while the S&P 500 is lower by 13 points to 1,282. The Nasdaq is showing a loss of 24 points to 2,700. If the whistle blew right now, the bulls would win the week.
Subscribers, we do have action to take on some of our current trades so make sure you read the Members Area carefully. One of our trades has hit a 105% return despite a nasty market and we want to lock-in profits on half. We have another two positions that were stopped out for gains of 38% and 16% so we have done pretty well this week as the market could end flat after 5 days of churning. Not bad. Not bad at all.
We will be back on Monday night with the Weekly Wrap and the video which will cover the market, current trades, and possibly new earnings trades. Until then, have a great weekend everyone!
Tags: covered call trading, euro, JPM, JPM earnings
Posted in Earnings, Market Analysis, Market Commentary | Comments Off
Wednesday, September 7th, 2011
9:00am (EST)
The bulls and bears each had their 15 minutes of fame on Tuesday but it was the grizzlies who got the better of Wall Street.
Following a 3-day weekend, the bears were back in the driver’s seat as they won their 3rd straight session as more concerns from overseas helped drag the market lower. Of course, the global reaction on the U.S. jobs front from last Friday had a lingering affect to start yesterday’s trading but more protests in Italy and the nation’s pending austerity measures also caused some nervousness.
Futures were already pointing towards a nasty open and we knew once the market started trading our downside targets would be tested. In fact, with futures spiraling out of control before the bell on Europe’s selloff, the NYSE actually invoked Rule 48 which could have led to a delayed open or “reopening” on a halt. This is usually done to speed up and help facilitate trading during highly volatile days. However, things went smooth so the story was never really mentioned by the talking heads.
The Dow easily took out the 11,000 level at the start of trading and fell to a low of 10,932, down 306 points, within 15 minutes. The blue-chips surged to the upside in the final 15 minutes of trading which helped cut the losses to less than half but the index still fell 100 points, or 0.9%, to end at 11,139. We mentioned strong support at 10,800 which remains support if 11K doesn’t hold while 11,200 then 11,350 are near-term resistance levels.
Side Note: The Financial stocks got hammered and have backed off their recent highs. Two blue-chippers, Bank of America (BAC, $6.99, down $0.26) and JPMorgan Chase (JPM, $33.44, down $1.19), each fell aver 3% and are either getting “attractive” again -or- there is more damage to be done. We are trying to get BAC into our Weekly Wrap portfolio for $5 (or less) but still don’t see the rush to add the stock. However, it’s great for day trading…
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Tags: bac, bears, blue-chip stocks, bulls, Dow, Dow quotes, gold quotes, JPM, momentum, momentum options, Nasdaq, option mentoring, option trading course, S&P 500, VIX
Posted in Market Analysis, Market Commentary, Trading Tips | Comments Off
Wednesday, April 13th, 2011
12:50pm (EST)
After a strong open, the bulls once again find themselves giving up ground. Futures were pointing towards a beautiful start to today’s trading but the bulls retreated after testing Monday’s lows which isn’t a good sign.
Let’s start with the boring stuff first. In economic news, Business Inventories for February increased by 0.5% versus expectations for a 0.8% increase. Retail Sales for March increased 0.4%, but fell short of the 0.5% that had been penciled in. However, if we dummy it down further, less autos, retail sales rose 0.8% which was better-than-expected by 0.1%. And finally, MBA purchase applications for the week fell 4.7%.
The Financial stocks have shown no leadership despite JPMorgan (JPM, $46.27, down $0.37) reporting solid 1Q earnings as Wall Street found something wrong with it. The company netted profits of $5.6 billion, or $1.28 a share, versus $3.3 billion, or $0.74 a share, in the year ago period. Revenue came in at $25.8 billion.
The suit-and-ties were looking for earnings of $1.16 a share on revenue of $25.5 billion. Although JP’s profits surged 67%, shares are trading lower after a run up to $47.37.
We were hoping for a bigger pop in the stock at the open because the company is still one of the top ten banks in the world and their numbers were good on the surface. The bulls were hoping the company’s recent announcement of a dividend boost to 25 cents from 5 cents and the fact that they authorized a $15 billion share buyback would be enough for shares to make a run at its 52-week high of $48.36.
The one concern analysts’ shared was that the bank’s retail services business which took a $1 billion hit after its mortgage unit reported negative revenue and wrote-off what it could.
We have talked until we are blue in the face that the Financial stocks would need to participate in the market’s next leg up but there is no confidence in this sector right now. In time, there will be, but we have said that the bulls would need their help and when you can’t count on JP for backup, who else is there?
Next up will be Bank of America (BAC, $13.34, down $0.13) which reports earnings before the bell on Friday.
The market was up as we started our afternoon update but is mixed as we go to press as the bears are once again in control.
The Dow is down 33 points to 12,230 while the S&P is lower by 5 points to 1,309. The Nasdaq, however, is up 2 points to 2,747.
We have a ton to talk about and some interesting plays on our Watch List. As the market continues to gyrate, one this is for certain. This is truly becoming a “stock picker’s” market. Subscribers, check the Members Area for the important updates.
Tags: call option trades, chicken trades, JPM, momentum options, Momentum stocks, options trading course, put options, stock market options, stocks that trade weekly options, strangle option trades, weekly options
Posted in Earnings, Financial Stocks, Market Commentary | Comments Off
Wednesday, April 13th, 2011
8:55am (EST)
The bears took another step towards cracking major support levels as they spent all of Tuesday pounding the bulls into a corner. In round 2-out-of-5 this week, the bears scored their second consecutive win, but more important, they did some serious technical damage as both the Nasdaq and S&P 500 dipped below their 50-day moving averages.
The Dow dropped triple-digits, or 117 points, to settle at 12,263 but traded to a low of 12,233. This was slightly above our 12,200 downside target and another breakdown could lead to 12,000.
The S&P 500 fell 10 points, or 0.8%, to close at 1,314. The index never had a shot of retaking the 1,325 level yesterday and we said to watch for a test down to 1,300. The index dipped to an intraday low of 1,309 but we didn’t see any “panic selling” and we were looking for 1,310 to hold.
The Nasdaq tanked 27 points, or 1%, and is folding like a cheap lawn chair. We mentioned yesterday that the “high beta” stocks are taking a lashing and yesterday’s 1% drop put the Nasdaq at 2,744. We were looking for the 2,750 level to hold but the index tumbled to a low of 2,737.
We have talked about the possibility of the market testing its February highs as it was waiting for earnings season to begin but we now know some companies are going to have an uphill battle. We have spent a lot of time trying to explain the current market conditions because the charts are giving us mixed signals.
We said yesterday things feel bearish but our hope was to have one more test to the top and some fluff that could take out February’s highs. Either way, this market is still gyrating and we expect wilder price swings until another clear trend is established.
In earnings news, JPMorgan (JPM, $46.64, down $0.22) came in with good numbers which we will cover in our afternoon update. Futures are up strong - Dow (+89), S&P 500 (+10), Nasdaq 100 (+19) – as we head to press.
Subscribers, check the Members Area for the trade updates.
Tags: call option trades, chicken trades, JPM, JPM earnings, momentum options, Momentum stocks, options trading course, put options, stock market options, stocks that trade weekly options, strangle option trades, weekly options
Posted in Earnings, Market Commentary | Comments Off
Tuesday, January 4th, 2011
9:00am (EST)
Although it was a brief holiday, we managed to take a day or two off to check in on the Casino industry over the weekend. The playgrounds in AC were slow until New Year’s because of the snow but the craps tables were full over the weekend and let’s just say we heard our fair share of “7 come 11″.
In craps, there is a “come” line and a “pass” line. To make a long story short, you make a “come” bet after the point has been established on the “pass” line. The first roll on the “come” bet is “come point” and this is where the dice thrower wants to roll a 7 or 11 as it is an automatic winner. (At least this was how it was explained to us.) Of course, we didn’t gamble (sly grin) but that is exactly what we were wishing for come Monday morning.
It must have been an omen because wouldn’t you know it? The Dow traded to a high of 11,711 on Monday.
The bulls got a nice jump on 2011 after getting more good news about the economy. The Institute of Supply Management’s (ISM) index of manufacturing activity came in higher for the 17th straight month in December while Construction Spending also came in better-than-expected.
Earnings were light, and will be all week, but volume was strong. Speaking of earnings, Alcoa (AA, $15.80, $0.41) and JPMorgan Chase (JPM, $43.58, $1.16), both members of the Dow, jumped over 2% ahead of their earnings reports next week. Alcoa reports next Monday and will be the “pace car” while JP will announce the following Friday as earnings season gets underway.
Against this backdrop, it was easy to see why the bulls had a banner day.
The Dow gained 93 points, or 0.8%, to settle at 11,670. Our “zone” has been 11,600-11,700 and the index blew past both before settling between the two. The Dow closed above 11,600 for the first time since September 2008 as Bank of America (BAC, $14.19, up $0.85) led the blue-chip charge. Shares soared over 6% and past strong resistance which was at $14. Next stop: Dow 12,000.
The S&P 500 surged 14 points, or 1.1%, and closed at 1,271. The index traded to a high of 1,276, which was a point above our 1,275 target, and closed at its highest levels since September 2008. The bulls will now target 1,300 over the next few weeks.
The Nasdaq was the best-performer as it rallied 39 points, or 1.5%, to close at 2,691. The index traded to a high of 2,704 and cleared our target of 2,700 which means Tech could make a push towards 3,000. Monday’s close is the highest level for the index since December 2007.
Although the major indexes closed slightly below our targets, it was nice to see that those levels were broken on the first day of the year. We would love to see a close above them today, or this week, and futures are pointing towards a higher open so we shall see.
Here are the numbers: Dow futures (+32); S&P 500 futures (+3); Nasdaq 100 futures (+6).
Despite the fact that we didn’t step up to the craps table to enjoy some glorified air, Dow “Seven come Eleven” was good news for our current portfolio and our subscribers continue to enjoy our hot roll on options. Yesterday was an incredible day as many of our trades made strong gains. Check for the updates…
Tags: bac, call option, JPM, momentum options, Momentum stocks, NYSE: BAC, NYSE: JPM
Posted in Market Analysis | Comments Off
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Bulls Give Back Gains
Friday, January 13th, 2012
12:40pm (EST)
The bulls were working on a solid week following Tuesday’s surge as the rest of the days have been relatively flat…until today. We were watching the overseas markets early this morning and futures were up when the European markets opened (3am EST). We hit the rack knowing JPMorgan Chase (JPM, $35.51, down $1.41) would weigh on the market but little did we know Standard & Poor’s would be the alarm clock that woke the market up.
The Financial stocks have been on a nice run over the last few weeks and the bar was set high for JPMorgan so we knew a breakout or pullback for the sector would come depending on what the company said about its Q4 numbers. JP reported earnings of 90 cents a share which matched expectations but revenue fell short at $22.2 billion versus expectations for $23 billion.
Jamie Dimon, JP’s top man said, “We believe these returns were reasonable given the environment, although the return for the fourth quarter was modestly disappointing.”
We weren’t expecting a homerun from the company but we were holding out hope they might beat by a penny. No such luck.
The bears also got a bonus after Standard & Poor’s said it might follow through on warnings it gave back in December that it would cut the credit rating on countries that use the euro. The timing was impeccable wouldn’t you say?
As a result the market is pulling back but is off its lows after testing support.
Next week is a shortened week as the market will be closed on Monday for MLK day. However, next week could also be the turning point on if the market does challenge the July highs or if it falls back into a trading range.
There are a lot of pros still calling for a “correction” but we think the market is cheap at current levels so we aren’t sure if there will be one or not. Sure, we might get a back test to lower support levels but if you have been studying our longer-term charts, you would know we have a ways to go before the TREND turns bearish.
This doesn’t mean we aren’t planning for a pullback. If our upper-end targets are reached, we do expect the market to come back and retest support (which was prior resistance) in February which is when we may use some put options. However, mid-January hasn’t been kind to the bulls in recent years and we were hoping this year would be different. We will have to see.
We are respectful of the bears because they can attack from nowhere and with a 3-day weekend ahead of us, we have taken profits this week in some of our current option trades…just in case. Earnings season will hit second gear next week and so far they haven’t been impressive. The bar was already lowered after 3Q’s numbers and we have seen some high profile warnings over the past few weeks. Despite what the talking heads say, it still is, and has been a stock picker’s market which we have proven.
We saw some low hanging fruit to end 2011 when the indexes pulled back in November (following a huge run from September thru October) and we took advantage of it. The bears challenged support but we have used the upside momentum since to play a number of stocks making new 52-week highs. We have already locked-in one triple-digit trade this year and we are close to adding a few more. We have also started nibbling on some put options as there are a few stocks folding like cheap lawn chairs as we look ahead to February.
Our point is, we have been in a zone with reading the market’s direction and with most of our trade recommendations but we are still in a volatile environment. We have mentioned over the years the bulls like to climb a wall of worry and we said the pros have missed the pop higher this year because they were on vacation for the last two weeks of 2011.
Today’s pullback has them on the clock.
We will be doing a video this weekend and for those of you who took advantage of the 1-year deal and are current members to our option mentoring trading program. We were going to do one last weekend but decided this weekend would be better with Monday’s holiday so look for it then along with the Weekly Wrap.
Remember, we are running a special on the Daily and Weekly Wrap where a 1-year subscription is only slightly more than our Daily for $995 (a 50% discount with the bonus). This package also includes our option trading course, How to Trade Options on Momentum Stocks (an $895 value) and the Momentum Stocks Watch List which breaks down the sectors and hundreds of stocks you can trade. The special comes with the videos which cover charting, current trades, and special situations. These videos are done on a monthly/ bi-monthly basis and have been a huge hit with our subscribers.
Our 2012 Portfolio is off to a hot start as we are 6-1 on closed trades, and 4-0 on half profit taken trades which will get us to 10-1 once the other halves are closed. We are showing over $8,000 in profits and we are only thru the first two weeks of January.
We DON’T compound our results because everybody’s trading account starts at different levels. In other words, if you started an options trading account with $5,000 and made $8,000 your return would be 160%. If you started with $10,000 and made $8,000 your return is 80%. The key is that all option traders should have a set amount for each trade or a set numbers of contracts.
Our Weekly Wrap trades could jump to 10-0 by the end of next week with average profits of double-digits. Add it to last year’s 16-0 record and we could be 26-0, in a blink of an eye.
We have been long-winded today because we feel it is important that you make 2012 a profitable year and we want you to take advantage of our special offers that will only last a few more weeks.
As far as the current action, the Dow is down 110 points to 12,360 while the S&P 500 is lower by 13 points to 1,282. The Nasdaq is showing a loss of 24 points to 2,700. If the whistle blew right now, the bulls would win the week.
Subscribers, we do have action to take on some of our current trades so make sure you read the Members Area carefully. One of our trades has hit a 105% return despite a nasty market and we want to lock-in profits on half. We have another two positions that were stopped out for gains of 38% and 16% so we have done pretty well this week as the market could end flat after 5 days of churning. Not bad. Not bad at all.
We will be back on Monday night with the Weekly Wrap and the video which will cover the market, current trades, and possibly new earnings trades. Until then, have a great weekend everyone!
Tags: covered call trading, euro, JPM, JPM earnings
Posted in Earnings, Market Analysis, Market Commentary | Comments Off