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Wednesday, March 23rd, 2011
1:35pm (EST)
The market continues to trade in narrow range as it did all day yesterday. The bears pushed the indexes lower at the start but the bulls have turned the tables and have the lead as we head towards the second half of trading.
The bears failed to take advantage of a weak housing report as new home sales for February fell to 250,000 versus expectations for 288,000. Despite the poor results, Homebuilding stocks like Pulte Group (PHM, $7.34, up $0.20), Lennar (LEN, $19.52, down $0.01), and KB Home (KBH, $13.23, flat) have held up well.
The Dow traded to a low of 11,972 but has reclaimed 12,000 as it is up 25 points to 12,043. The S&P 500 is up down a point to 1,292 while the Nasdaq is up 3 points to 2,688.
We aren’t surprised to see a pause in the action as there are very few catalysts at the moment for the bulls to feed off of. The next “big’ event that could get the market out of its current trading range will be first quarter earnings which start in April. However, we like the flat action and we still think the bulls can push upper resistance from mid-February until earnings season. From there, let the fireworks begin.
Tech is still looking weak so we will need the Financial stocks to lead the next leg higher. Cree (CREE, $43.18, down $5.81) came out this morning and cut its guidance for the upcoming quarter sending shares down 12%.
Discover Financial Services (DFS, $23.27, up $1.02) is up nearly 5% after beating Wall Street’s estimates and raising its dividend. The company reported a profit of $465 million, or $0.84 a share, versus a loss of $104 million, or $0.22 a share, in the year ago period. Revenue came in at $1.73 billion, up from $1.69 billion a year earlier.
Analysts were expecting 60 cents a share on revenue of $1.64 billion.
We think some of the Financial stocks look really cheap but we still don’t trust them, yet. We have been watching the near-term April options for a couple of trades but we may move out to June or July to give this sector enough time to rebound. However, we may still take a shot with an April or May call option if there is a quick bounce over the next few weeks.
Tags: KB Home, KBH, LEN, Lennar, NYSE: DFS, reverse stock splits, straddle and strangle option trades
Posted in Earnings | Comments Off
Monday, March 21st, 2011
1:00pm (EST)
The bulls have continued last week’s late push on merger-and-acquisition (M&A) news which has helped push the major indexes back towards resistance. The market is off its session highs but only slightly despite some nasty housing numbers. Existing home sales for February came in at 4.88 million units, which was less than the 5.05 million that had been expected.
The news was released shortly after the market opened but the bulls ignored it and have even pushed the Homebuilding sector higher today. KB Home (KB, $13.31, up $0.22), which reports earnings this Friday, and Lennar (LEN, $19.79, up $0.12) have come off their highs but are seeing some action.
As far as M&A news, AT&T (T, $28.37, up $0.43) and Deutsche Telekom AG got the ball rolling early as they announced a $39 billion, cash-and-stock deal on Sunday in which AT&T will acquire T-Mobile from the company. In return, Deutsche Telekom will now own 8% of AT&T but the merger could face some headwinds with regulatory approval which is expected to take up to a year.
Elsewhere, Charles Schwab (SCHW, $17.44, down $0.11) has agreed to buy optionsXpress (OXPS, $17.70, up $2.37) for $1 billion as Chuck looks to expand his company’s options. Schwab will pay a little over 1 share of its common stock for each share of optionsXpress stock which, based on Friday’s closing price, gets the bid up to $17.91. Both brokerage firms will initially retain their separate brand identities and the deal is expected to close in the third quarter.
As far as the market, things are also looking up although the bulls need to close above resistance to keep the momentum going this week.
The Dow is up triple-digits, or 182 points, to 12,040 while the S&P 500 is higher by 19 points to 1,298. We are looking for a close above 12,000 for the Dow and 1,300 for the S&P. The Nasdaq is showing a 48 point gain and is at 2,691. The index has traded up to 2,699.70 but has once again failed to clear 2,700.
We have a lot to cover in our Members Area today, including a NEW TRADE! We think we have found a “safe” trade that should do well through this market volatility as shares continue to set new 52-week highs.
Tags: Charles Schwab, KB Home, NYSE< KBH, optionsXpress, OXPS
Posted in Market Commentary, Mergers and Acquisitions | Comments Off
Wednesday, November 25th, 2009
11:10am (EST)
We were betting on a good housing number this morning and we got it.
The Commerce Department reported sales rose 6.2% to a seasonally adjusted annual rate of 430,000 from an upwardly revised 405,000 in September. Wall Street had expected a number of 410,000.
The surge in sales was driven mostly by a 23% increase in the South. Sales fell 5% in the West and Northeast, and a whopping 20% in the Midwest but overall, the report was well received. We did our research last night and we were seeing some things that had us pretty bullish.
As a result, most of the homebuilding stocks we follow got a lift. KB Home (KB, $13.87, up $0.13), Lennar (LEN, $13.18, up $0.14), Pulte Homes (PHM, $9.43, up $0.13) and Toll Brothers (TOL, $19.53, up $0.03) are all showing slight gains.
The Dow didn’t quite get the pop we were expecting this morning at the open but the index is still up 24 points to 10,458. The S&P 500 is currently higher by 2 to 1,108 while the Nasdaq is showing a 7 point gain and is at 2,176.
We also note that gold is still hot…the yellow metal is up another $14 to $1,179/ ounce.
We wanted to get today’s update out a little early because we know many of you are headed out for the holidays. We will be back Friday morning with our next update and we hope all of you have a Great Thanksgiving! Stay long and strong…
Tags: KB Home, Lennar, momentum stock option trading, Moody’s, Netflix, option trading online, option trading picks, options mentoring, options newsletters, options track record, Pulte Homes, support and resistance levels, Toll Brothers, triple-digit option trades
Posted in Economic News, Market Analysis | Comments Off
Wednesday, November 11th, 2009
1:00pm (EST)
Toll Brothers (TOL, 21.13, up $2.74) is up 15% today after surprising Wall Street with some rather upbeat comments ahead of its earnings. The company said its new contracts are up over 40%, and that it expects 4Q revenue will top the Street’s expectations.
Revenue for the company is expected to come in at $487 million, well ahead of the market estimate of $386 million. Comments from the CEO:
“We have definitely progressed from one year ago. The shock to the financial system in mid-September 2008 that shut down the capital markets appears to be mostly behind us.
We have been cautious on the sector because we didn’t want to go long or short because of the uncertainty but this is the second straight quarter that Toll Brothers has said something “hot”. Something to keep an eye on…
Toll Brothers is expected to release earnings on November 23rd.
Other stocks in the sector also got a bump; KB Home (KBH, $15.49, up $0.81), Lennar (LEN, $15.09, up $0.79) and Pulte Homes (PHM, $9.95, up $0.49) are all up over 5%.
We also wanted to update our trades one last time before we go today. We got some breaking news on our retail trade that we just sent out. Also, our Priceline.com (PCLN, $197.10, down $7.12) was closed as the $7.50 stop was taken out. The official results for our 2009 portfolio shows a gain of 468%!
Current subscribers, please check the Members Area for the updates.
Tags: KB Home, Lennar, momentum options, option trading picks, options help, options mentoring, options track record, options trading, Priceline.com, Pulte Homes, Toll Brothers, trading options
Posted in Company Commentary, Earnings, Option Trades, Sectors, Stock Earnings, Trading Tips | Comments Off
Tuesday, August 25th, 2009
1:00pm (EST)
The market has hit 10-month highs as the Dow is currently up 80 points to 9,589. The Nasdaq is showing a gain of 15 points and stands at 2,033 while the S&P 500 has jumped 8 and is 1,034.
I mentioned in the Weekly Wrap that economic news would take on more meaning this week as earnings wound down and today’s rally can be attributed to the consumer confidence data and the housing figures. Home prices rose for the 2nd consecutive month and when you throw in the Bernanke bonus it’s easy to see why the bulls have taken this market higher.
Homebuilding stocks (add to you Watch List) are getting a pop as Pulte Homes (PHM, $13.12, up $0.51), Lennar (LEN, $15.27, up $0.70) and KB Home (KBH, $18.15, up $0.65) are up 4%-5%. Lennar was a huge winner on the short side a few years ago. Here were my thoughts two years ago:
Lennar on 07/10/07:
“With the housing market showing no signs of recovery any time soon it may be time to take a look at some of the stocks in the sector that could be headed lower. While we may have arrived to the party late, I certainly don’t think the party’s over as the whole group could see continued new lows. Although it’s hard to predict where the bottom is for some of these stocks, I believe they could still see another 15% to 20% drop. As such, if my forecast is right, Lennar ($34.86, down $1.45) could be headed below $30.”
A note on Watch Lists. This is how you find trades and this is how you keep track of sectors. We have had a lot of new subscribers this week and I often talk about keeping Watch Lists as a way to keep track of sectors and possible trades. Look, when one sector gets hot, another gets cold. Money moves in, money moves out. It’s an endless game we play and we can go long or short. That is the beauty of it all, folks. It makes what we do the coolest job in the world.
Speaking of which, have you seen the action in Fannie Mae (FNM, $1.88, up $0.18) and Freddie Mac (FRE, $2.14, up $0.09)? Up 20%-30% yesterday on huge volume. These two stocks were also a favorite punching bag of mine on the way down. In fact, if you research this blog from July 2007 you will see where I profiled trades that returned 140%, 150% and even 216%.
I wanted to point some of these things out because the trading manual I have been working on is nearly complete. We are also entering a “trader’s market” and I am almost 100% certain the volatility is going to pick-up even more so. You have seen us take quick gains and it is okay to take a 100% return on half your profits and close the rest when they hit their stops.
You have to remember…there is always a trade and we are all about making money. However, a lot of beginning investors will lose their profits because they don’t have a feel for the market or they think a losing position will come back. On the flip side of that, some investors get a 100% return only to have visions of making 200% or 500% in a week. In the meantime, they start to lose that 100% profit and end up taking a loss on the trade. I’ve seen it time and time again. So watch your stops and take profits a little early if you see something you don’t like.
Rick@MomentumOptionsTrading.com
Tags: Fannie Mae, FNM, FRE, Freddie Mac, KB Home, KBH, LEN, Lennar, options trading strategies, PHM, Pulte Homes
Posted in Company Commentary, Economic News, Sectors, Strategies, Trading Tips, Watch Lists | No Comments »
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M&A Activity Helps Bulls Push Resistance
Monday, March 21st, 2011
1:00pm (EST)
The bulls have continued last week’s late push on merger-and-acquisition (M&A) news which has helped push the major indexes back towards resistance. The market is off its session highs but only slightly despite some nasty housing numbers. Existing home sales for February came in at 4.88 million units, which was less than the 5.05 million that had been expected.
The news was released shortly after the market opened but the bulls ignored it and have even pushed the Homebuilding sector higher today. KB Home (KB, $13.31, up $0.22), which reports earnings this Friday, and Lennar (LEN, $19.79, up $0.12) have come off their highs but are seeing some action.
As far as M&A news, AT&T (T, $28.37, up $0.43) and Deutsche Telekom AG got the ball rolling early as they announced a $39 billion, cash-and-stock deal on Sunday in which AT&T will acquire T-Mobile from the company. In return, Deutsche Telekom will now own 8% of AT&T but the merger could face some headwinds with regulatory approval which is expected to take up to a year.
Elsewhere, Charles Schwab (SCHW, $17.44, down $0.11) has agreed to buy optionsXpress (OXPS, $17.70, up $2.37) for $1 billion as Chuck looks to expand his company’s options. Schwab will pay a little over 1 share of its common stock for each share of optionsXpress stock which, based on Friday’s closing price, gets the bid up to $17.91. Both brokerage firms will initially retain their separate brand identities and the deal is expected to close in the third quarter.
As far as the market, things are also looking up although the bulls need to close above resistance to keep the momentum going this week.
The Dow is up triple-digits, or 182 points, to 12,040 while the S&P 500 is higher by 19 points to 1,298. We are looking for a close above 12,000 for the Dow and 1,300 for the S&P. The Nasdaq is showing a 48 point gain and is at 2,691. The index has traded up to 2,699.70 but has once again failed to clear 2,700.
We have a lot to cover in our Members Area today, including a NEW TRADE! We think we have found a “safe” trade that should do well through this market volatility as shares continue to set new 52-week highs.
Tags: Charles Schwab, KB Home, NYSE< KBH, optionsXpress, OXPS
Posted in Market Commentary, Mergers and Acquisitions | Comments Off