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Thursday, May 27th, 2010
9:00am (EST)
The bulls put on a good show for much of yesterday’s session, but the lack of follow-through has been apparent for a few weeks now. Despite some robust economic news, the bears were able to erase all of the gains their counterparts had made and scored a huge win after the euro fell in late trading.
We mentioned yesterday in our 1pm update we didn’t think the rally would hold, and when word spread that China was reviewing its holdings of European bonds, well, things turned south. Folks, if China starts losing faith in the euro and starts selling some of its Euro bond holdings then we could see new lows for the currency which is already at a 4-year bottom.
As a result, the Dow gave back a triple-digit gain of 135 points to finish Wednesday at 9,974, a loss of 69 points, or 0.7%. The index had only closed below 10,000 once this year which was back on February 8th when it closed at 9,908. Since then, it has traded below that psychological level a number of times but has managed to close above it. Not yesterday.
The S&P 500 fell a half-dozen points, or 0.6%, to settle at 1,067 while the Nasdaq gave back 15 points, or 0.7%, to finish at 2,195. It was also the first time since mid-February that Tech has closed beneath the 2,200 level. This is the exact target we told you to watch for and yesterday’s close confirmed our beliefs that the Nasdaq will take out the 2,000 level.
On a positive note, we thought we would roll out the red carpet for Apple (AAPL, $244.11, down $1.11) this morning after the company passed Microsoft (MSFT, $25.01, down $1.06) as the #1 “Tech” company as far as market cap.
This is a rather important event, but even more glaring is the hidden message Microsoft’s stock price is telling us. Shares have folded like a cheap lawn chair since last week after basing in the $28-$31 area since mid-February. The next level of support for the stock is at $23 and if that is broken then Microsoft could be headed to $20.
Apollo Group (APOL, $53.40, down $1.66) and Moody’s (MCO, $20.88, down $0.36) are on the move this morning and were two recent trades that we recommended.
We took a 16% hit on Apollo after the parameters of the trade were broken but we have been warning our subscribers to stay away from this dog for years. Justice might not have been served on our recommended option trade, but the 52-week low of $52.20 looks like it will fall today.
We didn’t like the volatility when shares shot up to $60 last Thursday on some bogus rumor so we got our subscribers out. However, we should have listened to our gut as the stock looks poised to fall below $50 today.
Moody’s is another joke of a company that we have been all over like grass on dirt. Our subscribers took advantage of the commentary inside the Members Area and were able to turn a put option trade into an 80% winner. We were telling readers to take “half’ position profits in this choppy market, and we ran out of halves as we closed this trade last Tuesday. Shares are poised to sink below $20 this morning and we have said this stock was headed to the teens.
We have been talking about the “faded rallies,” and as we head to press this morning futures are showing a huge open. It’s a busy Thursday, but the Dow futures are up a whopping 154 points to 10,075 this morning which means we are going to have a HUGE open. The Dow futures were up over 200 points but gave a little back after jobless claims came in higher than expected.
We have loaded up our Watch List to take advantage of another faded rally this morning.
Tags: AAPL, APOL, Apollo Group, Apple, MCO, Microsoft, Moody's, MSFT, option picks, option signals, options alerts, stock options trading
Posted in Company Commentary, Market Analysis, Market Commentary | Comments Off
Tuesday, May 11th, 2010
1:00pm (EST)
All pun is intended from today’s title to Moody’s (MCO, $22.20, up $0.43) since the company received a “Wells Notice” from the SEC on Monday. Shares fell 7% yesterday but have bounced back a little today as the SEC plans an administrative review of Moody’s ratings procedures.
Finally! Somebody in the SEC is getting it. Here were our thoughts on March 15, just under two months ago (quotes from that day):
“Moody’s (MCO, $28.22, down $0.04) said the risks are growing for some of the world’s largest triple-A-rated countries: Germany, France, the U.K. and the U.S.
And…?
Moody’s has gotten everything wrong, and we honestly don’t know why anyone would care what the firm has to say. They missed so many calls during the subprime and financial crisis that it’s hard to believe the company is still in business. Even harder to believe is the fact shares are trading near $30…” (END)
Moody’s played a major role in the housing bubble and was a walking zombie when it came to reviewing mortgages adequately. SEC investigators are calling some of the company’s procedures on its debt ratings “false and misleading”…two words you don’t want on your right and left shoulder.
We mention these things not to toot our horn but to show you possible trade setups for the future. We took our eye off the stock for a moment and it cost us a sweet put option trade.
It has been hard to short Moody’s because it is a government sponsored entity and seems to have staying power in the $20’s. However, these latest developments are serious and we wouldn’t be surprised to see shares trade into the teens over the next month or two. We have listed a trade on our Watch List in the Members Area that we have ready to deploy should shares bounce back up to $23-$24.
As we head to press, the market has rebounded off this morning’s lows and is in positive territory. The Dow is up 48 points to 10,833 while the S&P 500 is higher by 6 points to 1,166. The Nasdaq is showing a 21 point pop and stands at 2,395.
BTW, Gold is at a new high and is trading at $1,220/ ounce, up $20. Also, shares of Walt Disney (DIS, $35.82, up $0.53) are trading higher ahead of the company’s second quarter earnings release, expected after the market closes today.
We will be back in the morning with another full update.
Tags: MCO, Moody's, option picks, option signals, options alerts, stock options trading, Walt Disney earnings report, Wells Notice
Posted in Company Commentary, Earnings, Market Analysis, Market Commentary | Comments Off
Thursday, May 6th, 2010
9:05am (EST)
The volatility continued on Wednesday as debt worries from overseas continued to be the market’s main focal point. Things really looked ugly before the open as futures were down significantly and the wave of riots in Greece were being shown on every news channel.
No need to rehash the drama that is going on over there because we always like to look at the brighter picture. However, it could get worse if sketchy ratings agency Moody’s (MCO, $24.58, up $0.12) downgrades Portugal’s government bonds.
It was amazing to see the bulls hold the support levels that we have outlined for the past few weeks and we mentioned how we are bouncing around in this trading range. What is different about this range though is the volatility.
Once again, the Dow experienced a triple-digit move to the downside but fought back to slightly positive before ending the day lower.
The Dow traded to a low of 10,814 (-122) and to a high of 10,946 before finishing the day at 10,866, down 60 points, or 0.6%. We said to look for 10,800 to hold and the bulls did.
The S&P 500 fell 7 points, or 0.7%, and closed at 1,165. The index fell to a low of 1,158 but held the 1,150 level. Meanwhile, the Nasdaq fell a double deuce (22 points, or 0.9%) and was last seen stumbling at 2,402.
The one thing that worried us was the Nasdaq not holding the 2,400 level and the fact that it was unable to find green. The index stayed in the red all day and fell below its 50-day MA (moving average).
We think the big reason that support held was the fact that the bulls got some good employment data ahead of Friday’s nonfarm payrolls report. We have been telling you this report from the Labor Department will be a game changer and that is why the volatility is picking up.
If we could paint a picture, just imagine the bulls and bears playing chicken but their cars are getting closer. One of them has to get out of the way or they hit head on. It’s much like a Hollywood ending where we know one side is going to get out of the way but the end result is going to hurt someone.
As we prepare for this event, it’s really is hard to say where the market goes but we do feel the Dow could move 400 or 500 points over the next few weeks. For the S&P 500 it could mean a 50 point move. And if Tech falls apart (which we cannot see) then that index could also move several hundred points.
The bulls got a clue yesterday after the ADP Employment Report for April showed a slightly greater-than-expected 32,000 private payroll additions. As far as other economic news, the April ISM Service Index came in at 55.4, which was just below the 56.0 number that had been expected by the Street.
We haven’t talked much about the oil spill down in the Gulf but we are watching the developments closely. What a mess.
BP (BP, $50.99, up $0.63) has taken responsibility for the disaster and said that it has stopped the flow of oil from one of the three existing leaks on the damaged well.
Predictions are easily calling for a $10 billion cleanup bill and BP leased the rig from Transocean (RIG, $72.76, up $0.02).
We aren’t sure who pays what but it’s a major reminder on why we need to switch to cleaner fuels.
As we head to press, Dow futures are down 52 points to 10,782 while the S&P 500 futures are down 7 to 1,157. The Nasdaq 100 futures are off by 14 points and are at 1,945.
Tags: BP, MCO, Moody's, option picks, option signals, options alerts, RIG, stock options trading, Transocean
Posted in Company Commentary, Market Commentary | Comments Off
Friday, April 23rd, 2010
9:00am (EST)
The Dow continued its winning ways on Thursday as the bulls battled back from a 1% drubbing to take the Dow higher for the 4th straight day. The bears were doing some damage as the market started with a quick trip into negative territory with disappointing forecasts from eBay (EBAY, $24.78, down $1.51) and Qualcomm (QCOM, $39.33, down $3.30) fueling the fire.
Qualcomm beat on earnings and raised their dividend but gave weak guidance going forward while eBay echoed the same latter comments. However, the bulls used other good earnings news and forecasts to lift the market higher as Sandisk (SNDK, $42.22, up $4.63) and Starbucks (SBUX, $27.25, up $1.86) reported outstanding results.
There were a couple of economic reports that also helped the bulls’ case.
The Department of Labor said the number of Americans filing new claims for unemployment fell to 456,000 last week from 484,000 in the previous week.
Meanwhile, the National Association of Realtors reported existing home sales rose 7% to a 5.35 million units from a 5.02 million. Wall Street was expecting sales to come in at 5.28 million.
As a result, the market finished with slight gains asthe Dow ended at 11,134, up 9 points. The S&P 500 added 3 points to finish at 1,208 while the Nasdaq added two touchdowns and settled at 2,519.
Selling was intense for much of yesterday after Moody’s (MCO, $26.06, up $0.37) downgraded Greece’s debt ratings (after the fact) while President Obama preached to America about how terrible Wall Street is.
It’s Friday, so we are going to take a jab.
Wall Street shouldn’t take the brunt of the financial woes…it was everybody in America who got in when the gettin’ was good. Wall Street didn’t write all of the subprime loans and 2nd mortgages that brought the housing market to its knees. Does Washington realize how many mom and pop realtors popped up and the real estate agents and appraisers who worked the deals? Did ALL of them work for Wall Street? Didn’t think so.
Was it really realistic that someone who made $8 an hour was able to afford a $300,000 home? No. Yet, realtors we selling them a home based on “no doc” loans. Credit rating below 500? No problem. Anybody could get a loan and if you didn’t make enough you could get a loan based on what you thought you would make in the future.
Back in the day you had to work you butt off to get a house (we did) and the process took months. At the height of the housing bubble, deals were done in a day or so.
So, in the end it was all of us from around the world who caused this mess, not just Wall Street.
We said a few weeks ago that Washington is smarter than Wall Street but wanted to set the facts straight… at least from our point of view.
Moody’s is a joke but that is for another day. If you get bored over the weekend, use our “Search” feature to scan the archives for our two cents on the company.
Some of our trades are making some nice moves so we want to get our subscribers in the Members Area. As we head to press, Dow futures are up 4 points to 11,072 while the S&P 500 futures are higher by 2 to 1,203. Nasdaq 100 futures are up 8 to 2,044.
Tags: eBay, MCO, option picks, option signals, options alerts, QCOM, SBUX, SNDK, stock options trading
Posted in Company Commentary, Earnings, Market Commentary | Comments Off
Thursday, October 1st, 2009
9:00am (EST)
The bulls and bears are having a battle this week and the action has been intense. On Wednesday, heavy punches were thrown and by the end of the day, the bears had made it 2-to1 for the week.
On Monday, the Dow rallied 124 points, Tuesday the Dow fell 47 after being down 84 points. Yesterday, the bears took the Dow down to 9,583, a loss of nearly 160 points, before the bulls brought us back to positive territory shortly after 1pm. We got some more selling pressure by 3pm and the bears pulled out the victory as the Dow closed down 30 points and settled at 9,712.
Friday is setting up to be “historic” and we should see a big break either way.
A couple of notes for this morning…
Moody’s (MCO, $20.46, down $0.35) fell to $19 and we were whip-sawed out of a recent trade but I still think it’s headed to $15.
Dust off your Queen albums as CIT Group (CIT, $1.21, down $0.99) looks like it will be the next one to “Bite the Dust”. The company appears to be headed for bankruptcy.
Bank of America’s (BAC, $16.92, down $0.24) CEO, Ken Lewis, can ditto that. He was last seen singing backup vocals as he gave up the head gig after coming back from vacation. This ought to be pretty good news for the stock today. We have had some great success trading BofA this year and although the timing is now right, the stock should be in the $20′s sometime in early 2010.
And finally, Nike (NKE, $64.70) had a banner day and thanks to all of you who emailed us to tell us your good fortunes. A lot of you made upwards of 200% and a lot of you banked up to 75% by playing it safe. This trade felt so good when I was typing it that I knew it was going to be golden. In fact, my fingers are tingling now as I have another trade ready for you this morning. Subscribers, check the Members Area for a New Trade on Abercrombie & Fitch (ANF, $32.88, down $0.39) and for the Current Trade Updates.
As we head to press, Dow futures are down 28, S&P 500 futures are down 4 while the Nasdaq 100 are down 6.
Rick@MomentumOptionsTrading.com
Tags: Abercrombie & Fitch, anf, bac, Bank of America, CIT, CIT Group, MCO, Moody's, Nike, NKE, options picks
Posted in Hot Stocks | Comments Off
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Smoke-N-Mirrors Can’t Save Bulls
Thursday, May 27th, 2010
9:00am (EST)
The bulls put on a good show for much of yesterday’s session, but the lack of follow-through has been apparent for a few weeks now. Despite some robust economic news, the bears were able to erase all of the gains their counterparts had made and scored a huge win after the euro fell in late trading.
We mentioned yesterday in our 1pm update we didn’t think the rally would hold, and when word spread that China was reviewing its holdings of European bonds, well, things turned south. Folks, if China starts losing faith in the euro and starts selling some of its Euro bond holdings then we could see new lows for the currency which is already at a 4-year bottom.
As a result, the Dow gave back a triple-digit gain of 135 points to finish Wednesday at 9,974, a loss of 69 points, or 0.7%. The index had only closed below 10,000 once this year which was back on February 8th when it closed at 9,908. Since then, it has traded below that psychological level a number of times but has managed to close above it. Not yesterday.
The S&P 500 fell a half-dozen points, or 0.6%, to settle at 1,067 while the Nasdaq gave back 15 points, or 0.7%, to finish at 2,195. It was also the first time since mid-February that Tech has closed beneath the 2,200 level. This is the exact target we told you to watch for and yesterday’s close confirmed our beliefs that the Nasdaq will take out the 2,000 level.
On a positive note, we thought we would roll out the red carpet for Apple (AAPL, $244.11, down $1.11) this morning after the company passed Microsoft (MSFT, $25.01, down $1.06) as the #1 “Tech” company as far as market cap.
This is a rather important event, but even more glaring is the hidden message Microsoft’s stock price is telling us. Shares have folded like a cheap lawn chair since last week after basing in the $28-$31 area since mid-February. The next level of support for the stock is at $23 and if that is broken then Microsoft could be headed to $20.
Apollo Group (APOL, $53.40, down $1.66) and Moody’s (MCO, $20.88, down $0.36) are on the move this morning and were two recent trades that we recommended.
We took a 16% hit on Apollo after the parameters of the trade were broken but we have been warning our subscribers to stay away from this dog for years. Justice might not have been served on our recommended option trade, but the 52-week low of $52.20 looks like it will fall today.
We didn’t like the volatility when shares shot up to $60 last Thursday on some bogus rumor so we got our subscribers out. However, we should have listened to our gut as the stock looks poised to fall below $50 today.
Moody’s is another joke of a company that we have been all over like grass on dirt. Our subscribers took advantage of the commentary inside the Members Area and were able to turn a put option trade into an 80% winner. We were telling readers to take “half’ position profits in this choppy market, and we ran out of halves as we closed this trade last Tuesday. Shares are poised to sink below $20 this morning and we have said this stock was headed to the teens.
We have been talking about the “faded rallies,” and as we head to press this morning futures are showing a huge open. It’s a busy Thursday, but the Dow futures are up a whopping 154 points to 10,075 this morning which means we are going to have a HUGE open. The Dow futures were up over 200 points but gave a little back after jobless claims came in higher than expected.
We have loaded up our Watch List to take advantage of another faded rally this morning.
Tags: AAPL, APOL, Apollo Group, Apple, MCO, Microsoft, Moody's, MSFT, option picks, option signals, options alerts, stock options trading
Posted in Company Commentary, Market Analysis, Market Commentary | Comments Off