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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
Tuesday, September 28th, 2010
8:55am (EST)
Although futures favored the bulls to start the week, the market stayed in a tight range after the open on Monday with most of the action in the red. The bears were trying their best to push the market back below recent resistance and were having trouble gaining momentum until the final hour of trading.
The Dow fell 48 points, or 0.4%, and settled at 10,812. The index managed to stay above the 10,800 level, which had been prior resistance, and is still looking to test its April highs. Two of the Dow’s members showed a little more weakness than others as Bank of America (BAC, $13.24, down $0.36) and JPMorgan Chase (JPM, $39.08, down $0.67) led the Financial stocks lower.
The Nasdaq slipped a dozen points, or 0.5%, and finished at 2,369. The index traded to a high of 2,386 but we said to look for gains to be capped in the 2,400 region while 2,350 would provide short-term support.
Since the S&P 500 is the most widely followed index, we wanted to give you a picture of what COULD happen over the next few weeks.
The S&P 500 fell 7 points, or 0.6%, to close at 1,142 yesterday but once again failed the 1,150 level.
We cannot stress how important this level is because it represents a lot of resistance that has now been filled. The index topped out at 1,219 in late April and quickly fell to 1,065 on the “flash crash” lows (May 6). In a WEEK, folks, the index tanked 150 points, or 13%! Did we mention – in a WEEK?
By mid-May, the index rallied right back to the 1,150-1,160 area (within a week) before selling off again which is kind of where we are at now. Or where we could be…
If the S&P does managed to break 1,150 then we could see a run to 1,160 and possibly 1,175. Above 1,175, we would have to turn bullish as it becomes clear the S&P would challenge new highs. But until then, there are still some serious headwinds that could force this market sharply lower or an unknown curveball that could derail the current momentum.
Everybody, we mean everybody is bullish. And, why not? The market is up 8% in September. This scares us but it doesn’t mean we can’t be bullish because we are currently in some call option trades. However, we are also in some put options as we head into October.
We do a lot of technical analysis and this is what we are currently seeing. We also need to see a quick turnaround in the Financial stocks which have seriously lagged the bull run before we put on our horns.
As we head to press, the Dow futures are up 20 points to 10,770 while the S&P 500 futures are higher by 2 points to 1,140. The Nasdaq 100 futures are showing a gain of 8 points to 2,015. The S&P/CaseShiller Index for July will be out in 5 minutes and the September reading on consumer confidence is due at 10:00am (EST).
Subscribers, check the Members Area for the updates.
Tags: bac, explain the concept of options, JPM, momentum options trading, option picks, option trading blog
Posted in Financial Stocks, Market Analysis | Comments Off
Monday, August 9th, 2010
12:50pm (EST)
The bulls have kept the market in positive territory for the majority of the session although the bears sniffed red shortly after the open. The Dow and S&P 500 briefly slipped into negative ground but quickly bounded off their lows and are challenging key resistance levels once again.
The Dow is currently up 35 points to 10,688 and has traded as high as 10,696. The S&P is up 4 points and is trading at 1,125 while the Nasdaq is higher by 10 points to 2,298.
The Dow could challenge 10,800 if it can get above 10,700. If the S&P can clear 1,125-1,130 then there is an air pocket up to 1,150 which is the upper end of our current target for the index. The Nasdaq is trying to clear 2,300 and make a run at 2,350 but continues to struggle with this level.
We still believe any sustained rally will depend on how the financial stocks trade and the trend is still lower for the sector. Bank of America (BAC, $13.84, down $0.12) is near its 52-week low of $13.30; Morgan Stanley (MS, $27.42, down $0.23) and JPMorgan Chase (JPM, $40.04, down $0.40) both continue to trade lower…
McDonald’s (MCD, $73.03, up $1.29) is up nearly 2% after reporting great same-store sales numbers and posting its biggest monthly increase in U.S. sales in more than a year.
The company said sales jumped 5.7% in the U.S. and Europe sales were strong as they rose 5.3%. Overall, global sales climbed 7%. Mickey D’s is benefitting from its new fruit smoothies and frappes which seem to be going over well with customers during these hot summer months.
The Fed will talk on Tuesday so look for the indexes to continue to test resistance or trend lower for the rest of the session. Subscribers, check the Members Area for the latest updates.
Tags: bac, call options, GS, how to trade options, JPM, MCD, momentum options trading, Momentum stocks, MS, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, volatile options
Posted in Company Commentary, Financial Stocks, Market Analysis, Market Commentary | Comments Off
Thursday, April 29th, 2010
9:05am (EST)
The bulls were back on track yesterday following Tuesday’s sell-off after another batch of good earnings and some reassuring comments from the Fed kept the bears at bay. However, it wasn’t all smooth sailing.
The market was holding steady but was dealing with another downgrade from Standard & Poor’s. This time the credit agency slashed its rating on Spain, predicting “a more protracted period of sluggish activity” than they previously assumed. The reaction was far quieter than on Tuesday, when the market plunged on news that S&P slashed its credit ratings on Greece and Portugal. All we need now is a cut on Ireland’s debt to complete the sweep on the downgrade of the PIGS.
The Fed’s decision to keep interest rates stable for an “extended period” provided some relief and helped offset other headwinds the market is facing. Although the Fed’s statement did say that employers are still reluctant to hire they also mentioned the labor market is showing signs of improvement and they noted that housing starts have edged up.
As a result, the Dow managed to move higher by 53 points, or 0.5%, and settled at 11,045. Bank of America (BAC, $17.78, up $0.31) and JPMorgan Chase (JPM, $43.46, up $1.05) led the blue chip Financial rebound and it was a good sign to see the bulls reclaim the 11,000 level following Tuesday’s drubbing.
The S&P 500 added nearly 8 points, or 0.7%, to finish at 1,191 while the Nasdaq finished with only a slight gain and basically ended the day flat at 2,471. We would have liked to have seen more follow through here but the bulls did well by holding ground.
In M&A news, Hewlett-Packard (HPQ, $53.28, up $0.03) announced after the market closed yesterday that it is acquiring Palm (PALM, $4.63, down $0.02) for $1.2 billion.
HP has agreed to pay $5.70 a share for Palm. The total value of the deal is really worth $1.4 billion but they are paying a little less after factoring in Palm’s cash and debt. We aren’t sure if this will be a match made in heaven or a one-night stand in Vegas that doesn’t turn out so good.
In pre-market trading Palm shares are at $5.82.
In earnings news, Buffalo Wild Wings (BWLD, $42.30, down $8.71) got clipped on National Wing Day after announcing a disappointing outlook despite beating estimates by a penny.
Shares dropped 17% after the company said it earned $10.6 million, or $0.58 a share, versus $8.5 million, or $0.47 a share, a year ago. Wall Street was expecting earnings of $0.57 a share.
Revenue came in at $152 million, a nice 15% jump, but fell short of estimates for $154 million.
The backbreaker came when the chicken wing chain said the current quarter would very likely be weaker than expected because of declining April same-store sales. The company said same-store sales at company-owned restaurants fell 3.7% and 2.4% at franchised locations for the month.
We often like to profile some of the returns that call and put options can make so when new option traders read us they know that the returns you can see with options is real.
Although we did not get into the trade, the BWLD May 40 puts (BWLD10052200045000, $4.00, up $3.20) soared 400% yesterday and could have been picked up for 80 cents on Tuesday.
We were, however, in another earnings trade that should do rather well this morning after the company beat estimates last night and gave a rosy outlook. We talk about that trade in our Members Area this morning. Shares were up 9% in after-hours trading last night and those gains are holding this morning which means good news for the call options we recommended.
As we head to press, Dow futures are up 33 to 11,048 while the S&P futures are showing a 7 points pop to 1,197. The Nasdaq futures are higher by 12 to 2,019.
Tags: bac, BWLD, HPQ, JPM, option picks, option signals, options alerts, Palm, stock options trading
Posted in Company Commentary, Earnings | Comments Off
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Futures Pointing Towards Strong Open
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