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Monday, October 15th, 2012
9:00am (EST)
“The first clue we were looking for last week was the close on Monday. The bears had won 3-straight Friday/ Monday’s but that streak was snapped as the Dow and S&P 500 were up 0.5%, on average, Monday. This past Friday was negative but the blue-chips were up and the VIX closed lower. The Monday win was only the second in 4 months for the bulls and if this Monday is negative then we can still use the closes as clues money is still moving out of the market.
Shares of Alcoa (AA, $9.09, up $0.02) were up for the week but we wanted to see a close past $9.20 as indication the company might report better-than-expected earnings. Alcoa has beaten Wall Street’s estimates the last 2 quarters, and they still might, but after opening higher, shares finished lower for the session back in July. They will confess on Tuesday after the bell.
As far as the overall 3Q earnings picture, the suit-and-ties are looking for quarterly earnings to decline by 2%. The biggest sectors that could drag down results are the oil and gas companies. Many of the pencil-pushers have said overall earnings would be up 2%, if not for their weaker-than-expected results. However, there were some big Tech names that have already warned which makes this a treacherous earnings season to trade.
In some cases, the bar has been lowered from the previous quarter so companies could surprise to the upside. There will also be a few high profile companies who didn’t warn over the past week or two that could miss by a penny or three. These companies could see their stock prices hammered if they miss estimates by a mile and investors’ wonder why they didn’t warn.
We have also said the Financial stocks needed to show some strength and over the past few weeks they have. JPMorgan Chase (JPM, $41.71, down $0.11) and Wells Fargo (WFC, $35.48, down $0.13) will report their numbers on Friday so watch how they trade this week.
The biggest development we saw on Friday was how Apple (AAPL, $652.59, down $14.21) traded. We profiled 2 sweet option trades for the Daily last week using Apple call options as we said to watch for the $650 level to hold last Tuesday. Shares made a run to $675 two days later which we said was resistance and where to close the trade at. The 2 call option trades made 100% and 50%, respectively, in 48 hours. We are thinking about playing Apple this week but we could be playing it to the downside if $650 doesn’t hold.
Apple is a big component of the market and any weakness trickles down to the major averages just like it does when shares are rallying. Apple shares make up 20% of the Nasdaq so a test back to $620 would spell trouble for Tech and the market, overall. If $650 holds and Apple announces the iPad mini this week like we have predicted then shares could push $675 or even $700 again. Monday could be a big swing day and we will be watching the stock like a hawk at the open.
Europe will be back in the news this week, specifically Greece and Spain. There were rumors Spain would ask for a bailout over the weekend but they will likely wait a couple of more weeks before doing so. Greece wants the European Central Bank (ECB) to give them more money or forgive more debt so this situation is only worsening and could be in the headlines this week.
The charts are bullish and if the bulls can hold or advance the flag to start the week, we could see a push towards our upper end price targets. The fundamentals do not support a further rally but we have to trade what is in front of us and respect the wall of worry. At the same time, we are preparing for some sort of pullback, perhaps major, and when we will get defensive.
We said last week to respect October’s history but we also know you can’t fight the trend or the Fed which is why we have done well with call options over the past couple of months. We still have some defensive positions open in our Daily for protection and if the market continues higher we should get called away from a few more trades in our Weekly.
There are still a number of headwinds, both positive and negative, facing the market but by the end of the week, we should see one side emerge from the current 3-week trading range. The bulls have shown strength all year long but the bears might growl once more before they go in hibernation for the rest of the year.” (from 10/7/2012 Weekly Wrap/ Monday Morning Outlook)…
The market had its worst week in nearly 5 months as the bears scored a -2+% win. The downside targets we set last week were all in play on Friday as the bulls held support for the most part. The pullback lasted all week long as the bears pulled a clean sweep to run their winning streak to 6-straight sessions. The question is will Wall Street buy the dip or will the bears’ growl grow louder as we head into the heart of 3Q earnings season.
**************************************
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 we are doing well for 2012. We offer 2-3 powerful call or put option trades each week (depending on market conditions) aimed at triple-digit returns for our Daily newsletter and our Weekly Wrap Covered Call Portfolio strides for double-digit returns on a monthly basis and is 24-0. Together, we are 135-45 (75% win rate) for both newsletters and we doubt you will find a hotter options trading service.
Tags: Covered Calls, JPM, JPM earnings, option trading
Posted in Financial Stocks, Market Analysis, Market Commentary, Strategies | 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
Friday, June 22nd, 2012
3:10pm (EST)
The bulls are bouncing back following their second-worst beating of the year as the market is up 0.5% heading into the final hour of trading. The opening gains by the major indexes are simply a retest to resistance which just served as short-term support.
Much of the strength has come from the Financial stocks which are getting a pop despite a downgrade from Moody’s (MCO, $34.19, up $0.83) which lowered the credit ratings on 15 global banks. Of course, Moody’s has been warning of the news and Wall Street has been expecting it so the sector is actually rallying on the news as the “overhang” is lifted.
JPMorgan Chase (JPM, $36.21, up $0.70) is leading the Dow higher and has had a sweet little rally from the June 4 lows. We have to hand it to Jamie Dimon who looked like a Champ against the Keystone Cops that make up the House Financial Services Committee. The knuckleheads, led by Barney Frank, wanted to throw their weight around and looked like idiots when they got to arguing with each other earlier in the week.
One Senator did get it right so we have to give him props as he questioned why they were even there. Jim DeMint, a Republican from SC said “we can hardly sit in judgment of you losing $2 billion when we lose $2 billion every day”.
There were a few zombies who got brownie points with Mr. Dimon as they asked him about how to fix the financial system and the problems plaguing Europe.
We have always been a fan of JPMorgan and have told you they got squeezed when the market figured out their position and started betting against them. The $2 billion loss could turn out to be more and we will know more when they announce earnings in July but the next time Jamie speaks, buy call options for the day.
We thought there would be some headline risk with the stock but Jamie Dimon has proved he can hit it out of the park.
Shares of JPMorgan hit a low of $30.83 on June 4 and have rallied a sweet 20% since. If you bought options after seeing $30 hold, you probably would have done well with some July or September calls.
We were hoping shares would trip the $20’s because it would have been a “back the truck up” BUY for our Weekly Wrap but the market wouldn’t give us a discount.
We are still watching the stock and at some point down the road we will likely add JPMorgan to our covered call newsletter but not right now.
If the market is headed for a 10% drop then JP will follow and maybe we can get in at $30. Shares could push $40 on continued momentum but hopefully the market will give us another discount to pick up one of the best run investment banks on the planet.
As we head into the final hour of trading, the bulls are still pushing. The Dow is higher by 77 points to 12,650 while the S&P 500 is advancing 8 points to 1,334. The Nasdaq is up 28 points to 2,887.
We have some last minute updates for our current trades so we have to roll. We will be back Sunday night with our Weekly Wrap so until then have a great weekend everyone!
Tags: covered call options, JPM, Moody's bank downgrades
Posted in Market Analysis, Market Commentary | Comments Off
Tuesday, April 10th, 2012
12:15pm (EST)
The bulls made a slight push higher at the open but the gains were marginal before the major indexes turned negative. The Nasdaq and the S&P tried to get the Dow going but the blue-chips are rapidly approaching a triple-digit loss as we head into the second half of trading.
Economic news has been light with Wholesale Inventories showing an increase of 0.9% for the month of February. Wall Street was looking for an increase of 0.5%.
Some of the uneasiness can be blamed on 1Q earnings season which unofficially begins today after the closing bell. Analysts have been saying for weeks that most companies will report lousy numbers and there have been a few pre-announcements by some companies who will miss the bar.
Alcoa (AA, $9.38, down $0.21) still has the honor of unofficially kicking things off and will announce their numbers minutes after the sessions ends with a conference call scheduled for 5:00pm (EST). Wall Street has penciled a loss of 4 cents a share on revenue of $5.8 billion, on average. The is a chance for a surprise as the range calls for a loss as high as 12 cents a share versus a profit of 7 cents a share.
Last time out the company posted mixed results as they missed their earnings per share number but beat revenue estimates. Shares have been range bound for 2012, trading in the $9-$10 area and the 52-week low is $8.45. Alcoa is down nearly 50% from a 52-week high of $17.96 and some will argue much of the bad news has been priced into the stock. However, if the company comes in with a wider-than-expected loss, shares could test 52-week lows.
We will be watching Alcoa’s numbers but we are more interested in Google’s (GOOG, $632.62, up $1.78) report which is due out after Wednesday’s close, and, JPMorgan Chase (JPM, $43.11, down $0.78) which will confess Friday morning.
As we hit the turn, the Dow is down 131 points to 12,798 (Bingo!) while the S&P is lower by 17 points to 1,365. The Nasdaq down 42 points to 3,005. While it may be hard for our non subscribers to believe we are rooting for a continued decline, our subscribers know the deal. We loaded up on put options and all of them are doing super swell today.
We are taking profits on another triple-digit winner that is up 136% so pay attention to the trade instructions. Subscribers, check the Members Area for the details.
Tags: AA earnings, Dow support, GOOG, goog earnings, JPM
Posted in Earnings, Market Analysis, Market Commentary | Comments Off
Thursday, February 9th, 2012
1:05pm (EST)
The bulls and bears have traded blows for much of the session as the market has had a bevy of headlines to deal with today. The indexes have traded in a tight range once again and got off to good start after Initial Claims came in at 358,000 versus expectations for a print of 370,000. Continuing Claims came in at 3.5 million which pretty much matched expectations.
Shortly after the open, there was news out that Greece and the European Union have agreed to a level of budget cuts that will give the country another bailout. This will help Greece with their debt payments next month but we doubt the drama is over as the country is expecting riots this weekend.
The lack of details though has caused the market to pull back from its highs but the bulls are holding court as we head into the second half of trading.
Elsewhere, Obama just announced the government has reached a $26 billion settlement over shady foreclosure practices with the five largest mortgage service providers. Ally Financial, Bank of America (BAC, $8.23, up $0.10), Citigroup (C, $34.08, down $0.15), JPMorgan Chase (JPM, $38.00, down $0.30) and Wells Fargo (WFC, $30.43, down $0.23) are all trading slightly lower with the exception being BAC.
As we head to press, the Dow is up 27 points to 12,910 while the S&P 500 is higher by 3 points to 1,353. The Nasdaq is showing a gain of 10 points and is at 2,926.
We currently have a Bank of America call option trade that we entered on Monday which is nearing a 50% return so let’s go lock-in some more profits! Subscribers, check the Members Area for the details and we will be back in the morning with our next update.
Tags: bac, Bank of America call options, c, JPM, wfc
Posted in Financial Stocks, Market Analysis, Market Commentary | Comments Off
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Bulls Need a Strong Start to the Week
Monday, October 15th, 2012
9:00am (EST)
“The first clue we were looking for last week was the close on Monday. The bears had won 3-straight Friday/ Monday’s but that streak was snapped as the Dow and S&P 500 were up 0.5%, on average, Monday. This past Friday was negative but the blue-chips were up and the VIX closed lower. The Monday win was only the second in 4 months for the bulls and if this Monday is negative then we can still use the closes as clues money is still moving out of the market.
Shares of Alcoa (AA, $9.09, up $0.02) were up for the week but we wanted to see a close past $9.20 as indication the company might report better-than-expected earnings. Alcoa has beaten Wall Street’s estimates the last 2 quarters, and they still might, but after opening higher, shares finished lower for the session back in July. They will confess on Tuesday after the bell.
As far as the overall 3Q earnings picture, the suit-and-ties are looking for quarterly earnings to decline by 2%. The biggest sectors that could drag down results are the oil and gas companies. Many of the pencil-pushers have said overall earnings would be up 2%, if not for their weaker-than-expected results. However, there were some big Tech names that have already warned which makes this a treacherous earnings season to trade.
In some cases, the bar has been lowered from the previous quarter so companies could surprise to the upside. There will also be a few high profile companies who didn’t warn over the past week or two that could miss by a penny or three. These companies could see their stock prices hammered if they miss estimates by a mile and investors’ wonder why they didn’t warn.
We have also said the Financial stocks needed to show some strength and over the past few weeks they have. JPMorgan Chase (JPM, $41.71, down $0.11) and Wells Fargo (WFC, $35.48, down $0.13) will report their numbers on Friday so watch how they trade this week.
The biggest development we saw on Friday was how Apple (AAPL, $652.59, down $14.21) traded. We profiled 2 sweet option trades for the Daily last week using Apple call options as we said to watch for the $650 level to hold last Tuesday. Shares made a run to $675 two days later which we said was resistance and where to close the trade at. The 2 call option trades made 100% and 50%, respectively, in 48 hours. We are thinking about playing Apple this week but we could be playing it to the downside if $650 doesn’t hold.
Apple is a big component of the market and any weakness trickles down to the major averages just like it does when shares are rallying. Apple shares make up 20% of the Nasdaq so a test back to $620 would spell trouble for Tech and the market, overall. If $650 holds and Apple announces the iPad mini this week like we have predicted then shares could push $675 or even $700 again. Monday could be a big swing day and we will be watching the stock like a hawk at the open.
Europe will be back in the news this week, specifically Greece and Spain. There were rumors Spain would ask for a bailout over the weekend but they will likely wait a couple of more weeks before doing so. Greece wants the European Central Bank (ECB) to give them more money or forgive more debt so this situation is only worsening and could be in the headlines this week.
The charts are bullish and if the bulls can hold or advance the flag to start the week, we could see a push towards our upper end price targets. The fundamentals do not support a further rally but we have to trade what is in front of us and respect the wall of worry. At the same time, we are preparing for some sort of pullback, perhaps major, and when we will get defensive.
We said last week to respect October’s history but we also know you can’t fight the trend or the Fed which is why we have done well with call options over the past couple of months. We still have some defensive positions open in our Daily for protection and if the market continues higher we should get called away from a few more trades in our Weekly.
There are still a number of headwinds, both positive and negative, facing the market but by the end of the week, we should see one side emerge from the current 3-week trading range. The bulls have shown strength all year long but the bears might growl once more before they go in hibernation for the rest of the year.” (from 10/7/2012 Weekly Wrap/ Monday Morning Outlook)…
The market had its worst week in nearly 5 months as the bears scored a -2+% win. The downside targets we set last week were all in play on Friday as the bulls held support for the most part. The pullback lasted all week long as the bears pulled a clean sweep to run their winning streak to 6-straight sessions. The question is will Wall Street buy the dip or will the bears’ growl grow louder as we head into the heart of 3Q earnings season.
**************************************
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 we are doing well for 2012. We offer 2-3 powerful call or put option trades each week (depending on market conditions) aimed at triple-digit returns for our Daily newsletter and our Weekly Wrap Covered Call Portfolio strides for double-digit returns on a monthly basis and is 24-0. Together, we are 135-45 (75% win rate) for both newsletters and we doubt you will find a hotter options trading service.
Tags: Covered Calls, JPM, JPM earnings, option trading
Posted in Financial Stocks, Market Analysis, Market Commentary, Strategies | Comments Off