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Weekly Wrap for 9/27/09

Sunday, September 27th, 2009

11:40 pm (EST)

Market Commentary

The bears finally made some noise last week as they sent the market down 2%, on average. The bulls were making a run at Dow 10,000 and by Wednesday the index rallied to a high of 9,937 shortly after the Fed news. That is exactly when the bears stepped-in and made some noise. It remains to be seen if this is their entry point or just another whimper before the bulls power higher.

For the week the Dow dipped 155 points, or 1.6%, to finish at 9,665. The Nasdaq fell 42 points, or 2%, and ended at 2,090 while S&P 500 skidded 24, or 2.2%, and settled at 1,044. We had some crummy economic news that weighed on the market; a disappointing Durable Goods Report and a lousy Home Sales report.

September was supposed to be a down month if you were listening to the talking heads but I had mentioned that you have to trade the tape. Yeap, the rally has fooled a lot of investors since March and the bears may finally be gathering some confidence as we head into earnings season.

We will have to wait for the next leg to develop which should be this week. The market has traded much like we had planned and on August 23rd, I had this to say:

“The market has had an incredible run and the key levels we are watching are as follows.

For the Dow (currently 9,505), watch for 9,625 which was the November high. A run above this level clears the way for…dare I say it….Dow 10,000. There is support at 9,000 but a break below 8,900 would send up a warning signal.

As for the Nasdaq (2020), it looks like 2,100 is smooth sailing as long as the bulls continue to run this week. Above that, we get choppy but we could get a run to 2,275. Support is at 1,930 and further down at 1,800 or so. A break below that could lead to 1,600.

The S&P 500 (1,026) could easily make a stab at 1,100 now that it has surged past 1,000 but 979 will be key support near-term. There is really nothing stopping the index from hitting 1,150-1,175 which is where headwinds will pick up.” (END)

Last week, the Dow tagged 9,937, the Nasdaq traded to a high at 2,067 while the S&P hit 1,080. That was the road map we drew up in August and now we have to wait for the “shakeout”.

I mentioned on Friday that Alcoa (AA, $13.08, down $0.43) would kick off earnings season on October 7th. The key for 3Q earnings will be the revenue numbers. Most companies beat 2Q earnings by aggressive cost cutting but revenues were coming in a little lighter than expected.

I don’t think that will pass this go around.

There are a slew of economic reports due out this week which will influence the market and we have a few earnings reports that should provide some insight ahead of 3Q earnings.

We will also get an update on home prices, manufacturing, consumer confidence, construction spending, and factory orders. The big one though will be Friday’s unemployment report.

Both bulls and bears will be jockeying for position ahead of next week’s launch of 3Q earnings. The bulls are loaded with cash and there is even more on the sidelines while the bears will target unemployment and the lack of revenue growth.

Earnings (quotes are from Friday’s close):

Monday: Cal-Maine Foods (CALM, $27.78, up $0.10), Craftmade International (CRFT, $3.28, down $0.17) and TRC Companies (TRR, $3.80, up $0.01).

Tuesday: Allscripts-Misys Healthcare Solutions (MDRX, $18.35, down $0.22), Darden Restaurants (DRI, $35.60, up $0.16), Jabil Circuit (JBL, $11.87, down $0.66), Micron Technology (MU, $8.10, down $0.01), Nike (NKE, $58.64, up $0.47) and Walgreen (WAG, $33.68, up $0.03).

Wednesday: Actuant (ATU, $15.60, up $0.08), Diamond Foods (DMND, $29.40, flat) and Lawson Software (LWSN, $6.35, down $0.05),

Thursday: Accenture (ACN, $36.12, up $0.16), Constellation Brands (STZ, $15.30, down $0.17), CRA International (CRAI, $27.62, up $0.41), Global Payments (GPN, $44.76, down $0.70), Immucor (BLUD, $17.26, down $0.16) and Resources Global Professionals (RECN, $17.31, up $0.52).

Friday: None worth mentioning.

Subscribers, please check the Current Trades in the Members Area for the updates. They are listed under Monday, September 28, 2009.

Rick@MomentumOptionsTrading.com

Tags: Market Commentary, option picks, option trading blog, Stock Market Blog
Posted in Company Commentary, Earnings, Economic News, Market Analysis, Market Commentary, Option Trades | Comments Off

Market Opens Higher

Tuesday, November 25th, 2008

The market is extending its gains this morning after the government announced it is willing to provide up to $800 billion to help the market for consumer debt and mortgage loans. The goal is to help make loans cheaper and more available for the companies that issue credit cards, make student loans and finance car purchases so that they can get the credit markets going. Credit lenders have been charging higher rates and are being more stringent in making loans.

As a result all the indexes have opened higher but the bulls have got to be frustrated. Before the announcement, the futures had been pointing to a lower open and while they will take it, the bulls have to be worried that the only reason the market has been rallying is because of bailout news.

In early action, the Dow is up over 120 points to 8,564. The index is up 1,000 points from last Thursday’s close of 7,552 but there have been no other real catalysts that have helped fuel the market higher.

The S&P 500 is up 18 points, to 866.20 while the Nasdaq is higher 5 points, to 1,477.

The government’s latest effort to jump start the economy is being cheered by the market but we can’t ignore the fact consumers slashed spending by the most in nearly 30 years. The nation’s overall economic output shrank in the July-September quarter faster than initially estimated and it shows that we are all hoarding cash.

Maybe some of this “savings” will flow in the marketplace but I really don’t expect consumers to be spending as much on the holidays like years past. In fact, I think the retail numbers will be lousy when companies start to report earnings in January.

Rick Rouse
Rick@OptionsMentoring.com

Tags: Consumer Spending, Market Commentary, Retail Sales
Posted in Market Analysis | No Comments »

Option Expiration Week Could Bring Added Volatility

Monday, November 17th, 2008

The market looks to have an uphill battle this week as it tries to break a two-week losing streak. After ending Friday’s session with a 338 point loss, the Dow is at 8,497 but bulls have to feel deflated after Thursday’s 550 point gain in the Dow did not carry over.

There will be key economic and earnings reports due out this week but the direction we go from here could hinge on what happens with the auto makers. There is talk that they will get a $25 billion rescue package but that is not going to be enough to save them. Even if a bill is rushed through the House and the auto’s get some relief, I still think they are in trouble. Nobody is buying cars these days.

There is some chatter that if General Motors (GM, $3.01) doesn’t get a bailout then the Dow is headed much lower. That really wasn’t hard to figure out because the Dow has been trending lower since the election was settled. The charts have been right on and as we witnessed last week, a test of the lows is inevitable.

The problem with the market is that it has to make a low on its own and the bailout package has just delayed the process of old companies dying and new ones coming aboard. The auto makers are a dying breed and instead of giving them the money for a bailout package, give to the companies who are on the leading edge of technology.

Last week, the Dow lost 5%, while the S&P 500 dropped 6%. The Nasdaq was hit the hardest as the index fell nearly 8%. For the year, the Dow is down 36%, while the S&P 500 is off by 40%. The Nasdaq is down 43%.

Good news will be hard to find and I expect us to start the week lower. November options expire this Friday so there will be plenty of battle grounds being tested.

Rick Rouse
Rick@OptionsMentoring.com

Tags: General Motors, Market Commentary
Posted in Market Analysis | No Comments »

Market Down Sharply Ahead of Vote

Monday, September 29th, 2008

The market is down sharply this morning as concerns related to the government’s $700 bailout package continue. Congress and the White House did reach an agreement over the weekend but it seems that Wall Street is disappointed that is still has to go to vote. The House is slated to vote later today and there is some nervousness in the market.

This is a difficult vote because it comes in an election year and there is a chance that the unpopular bailout package is not approved. President Bush was cheer-leading lawmakers to pass the bill, saying it is needed to “keep the crisis in our financial industry from spreading” across the economy.

There are many provisions that are unknown but one that is known is that the government will be authorized to purchase the assets from some of these financial firms and will help financial institutions to resume lending to individuals and businesses.

There is some heavy skepticism with this bill and that is why the market is being jittery. The Dow is down 275 points to 10,868. The Nasdaq is slipping 85 to 2,100 while the S&P 500 is lower by 40 points and is at 1,172. We should know something in a couple of hours concerning the status of the bill but I don’t expect we are going to see the big rebound everyone was hoping for. In fact, if the bill fails we could get a huge drop in the market.

Rick Rouse
Rick@OptionsMentoring.com

Tags: $700 bailout package, Market Commentary
Posted in Market Analysis | No Comments »

Market Recap

Monday, May 19th, 2008

The market bounced back with a solid week despite the fact that oil prices nearly reached a record-high of $128 a barrel. The price of oil seems to be the biggest dominating factor in holding the market down and preventing it from setting new highs. Oil hit $127.82 a barrel on Friday after Goldman Sachs said prices could continue to rise through the end of the year due to thin supply.

There is a bevy of factors that is influencing the price of oil but it still comes down to supply and demand. With larger countries like China and India getting into the mix the demand has helped push prices to record levels. Who knows when oil will retreat but one thing to keep in mind…Memorial Day marks the start of the summer driving season.

Nonetheless the market did manage to put up some decent numbers. The Dow added 240 points, or 1.9% to close at 12,986. The S&P 500 jumped 2.7%, or 37 points, to finish at 1,425. The Nasdaq was the clear winner though, adding 3.4%, or 83 points to finish at 2,528. For the year, the Nasdaq is down 4.7%, the S&P is down 2.9% while the Dow has cut its losses to 2.1%.

Once again, key resistance lies at 1,450 for the S&P 500, 2,600 for the Nasdaq and 13,500 for the Dow. These levels are becoming increasingly difficult to break and some fear a market “correction” is just around the corner. I can’t say I see a “correction” in the cards near-term but I am keeping an eye on the VIX (16.47, up 0.17).

Rick Rouse
Rick@OptionsMentoring.com

Tags: market anaylsis, Market Commentary
Posted in Market Analysis | No Comments »

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PETER G.
Rick & Team, GREAT Call on NKE for my two trading accounts:
1) Entry at .65, out at 1.45, 1.55 Profit = $415
2) Entry at .60, out at 1.75, 1.50 Profit = $485

LAWRENCE O.
Hey Rick! Here is an update on what your picks have done in my accounts.

1) Great call on the JoyG March 55. I bought when you said, then bought again on one of the dips. Booked 80+% profit. Made enough to pay for your service for years to come.

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3) Took profit on your Imax March 12.5. 20 cent trailing stop at 1.90 yesterday. Not sure what the profit on that was, but profit is profit.

I see that you took a loss on some of these. It’s all good. I look to trade your “ideas” not your exact calls. I THANK YOU! For your ideas and commentary. Keep up the good work. And keep those ideas coming.

C.J.
Loving this subscription so far! I got into the BRK feb 76 calls the day you talked about right before the split...now up over 300% (0.70 to 2.475)! Keep the good picks coming and let's see some OSIS and EMC upside soon! Just wanted to share my positive enthusiasm on your newsletter...it gives us individual investors great ideas on not only the options market, but also the broader equity market! Case in point is BRK...I can't always read the breaking business news but its easy to read your twice daily updates on my smartphone...helped me get some BRK shares immediately after the split which I will hold for the long haul! Thanks again!

SHAUN
Aloha Rick - Thank you so much for the great CL pick. I am not sure if there was buy-out/merger news or what but at 3PM today Colgate-Palmolive absolutely EXPLODED to the upside, and my calls turned into green candy when they went from 1.40 to 3.8 in a matter of seconds! I even sold a few for over 4.0! Much thanks and keep the solid picks up my friend, honestly. Only a fool would scoff at 267% gains... Peace!

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Hi Rick, as a new member all I can say is, 'show off' LOL, with PCLN.

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Rick, I am a new subscriber to your service, and I want to say I am impressed. I am impressed by your results, but more than that I am impressed by your reporting of your fills. You could have easily said you got that Wal-Mart call today for 80 cents, instead you reported 98 cents! Good job and keep it up, I watched the reporting of the fills first, and then I subscribed. Thank You.

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TODD F.
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NOEL
“Limit order was set at 1.60 on RIMM so it sold. I may have left some money on the table but you can't go broke making a profit. That was a fun trade. Thank you. Good call. I’ve been watching and trading Rick's advice since March. It’s usually a fun ride, but I give him heck when it's wrong to. :) ”

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“I did follow a lot of your trades with 1-2 contracts per trade and YTD I’m up 108%. I try not to follow blindly by not entering all of your trades and sometimes entering the ones you don’t. I entered AIG a few weeks ago against recommendation – that one hurt.”

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“I have really enjoyed the past month since finding your blog. You have made some great calls. I would appreciate info. on the new options mentoring program. Thanks.”

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GARETT
“Hi Rick, thanks for the encouragement to play the dendreon calls! did freaking great! Got in the first lot at $1.44 on 3-24-09, sold at $2.45, 70% not bad. Bought it back at $2.30 on 4-7-09 closed out on 4-14-09 for 454% gain! Wow! I love it when that happens. So, thanks the encouragement to get back in when others were saying sell, sell, sell. Keep up the good work.”

TERENCE
“Rick – Thanks for Dendreon – it has made all the headlines today! I missed on RIMM earlier, but I’ve been holding onto DNDN calls since 3rd week March. Of course today it all paid off today, as DNDN rocketed up.”

Posts Tagged ‘Market Commentary’

Weekly Wrap for 9/27/09

Market Opens Higher

Option Expiration Week Could Bring Added Volatility

Market Down Sharply Ahead of Vote

Market Recap