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Friday, October 8th, 2010
9:05am (EST)
In was a flat day on Wall Street yesterday although the market zigzagged on both sides of the ledger before ending mixed. It seemed as if both the bulls and bears were hesitant ahead of last night’s “official” kick-off of the third quarter earnings season and knowing this morning’s nonfarm payroll numbers for September would be out. We cover both below.
The bulls were able to push the major averages near resistance (again) after hearing better-than-expected retail sales figures, as well as upbeat jobless numbers from the Labor Department. However, the bears kept things in check as they held resistance going into the close.
The Dow peaked near 11,000 shortly after the start of trading, but spent the rest of the session near the 10,950 level before finishing with a loss of nearly 20 points to close at 10,948.
The S&P 500 slipped 2 points to finish at 1,158 but below 1,160 while the Nasdaq added 3 points and settled at 2,383 and below our breakout target of 2,400.
Turning to earnings, Alcoa (AA, $12.20, down $0.17) reported a profit of 9 cents a share which was 3 cents better than the analysts’ estimates of 6 cents a share. Revenue rose nearly 15% to $5.3 billion, versus calls for $4.95 billion.
The futures are pointing towards a lower open after the latest unemployment report hit the Street. September nonfarm payrolls fell by 95,000, which was worse than the 5,000 loss that was expected. Private payrolls increased 64,000, which was less than the 74,000 increase that had been widely expected while the unemployment rate remained unchanged at 9.6%.
As we head to press, the Dow futures are lower by 25 to 10,887 while the S&P 500 are showing a loss of 3 points to 1,154. The Nasdaq 100 futures are down 7 points to 2,007.
Special Note: Adobe (ADBE, $28.69, up $2.96) surged nearly 12% yesterday after speculation Microsoft (MSFT, $24.53, up $0.10) could be targeting the company in a takeover attempt following a ”closed door” meeting between the two companies.
Shares of Adobe were briefly halted yesterday after a circuit breaker was triggered around 3pm (EST) or an hour or so before the market closed.
We recently profiled a strangle option trade for Adobe in late September to where our subscribers have already banked a 200% profit. The put options returned 525% while the call options were left for dead.
Yes, the call options were trading for a penny…a penny…before the news hit. In other words, these options gained 3,800% yesterday which adds even more gravy to the trade.
Subscribers, check the Members Area for the important update as we tell you exactly how to play our current position out. And remember, we teach these kind of option strategies in our new trading manual “How to Trade Options on Momentum Stocks” which is available NOW with a FREE 1-month membership included (a $129 value).
Tags: Adobe (ADBE), explain the concept of options, Microsoft, momentum options trading, option picks, option trading blog, option trading course, option trading courses, straddle option trades, strangle option trades, triple-digit options returns
Posted in Economic News, Hot Stocks, Market Analysis, Market Commentary | Comments Off
Wednesday, June 16th, 2010
9:00am (EST)
Tuesday was a big day for the bulls and the market, overall, after the latest rally pushed the major indexes past current resistance levels. There were a number of positive catalysts the bulls used to run the market higher, and now that they are king of the hill again, it will be interesting to see how things shake out. More on that in a minute.
There has been tremendous pressure on the euro, but debt offerings in Spain and Ireland went rather well yesterday ahead of the U.S. markets opening. This propelled futures higher, and from there the bulls took over. The euro traded to $1.234 after falling to a four-year low of $1.188 last week and could trade back up to $1.25 over the short-term.
In economic news, the New York Fed’s Empire State manufacturing index rose to 19.6 as regional manufacturing expanded for an 11th straight month. Meanwhile, U.S. import prices slipped 0.6% in May. A 1.2% decline had been expected which means inflation remains relatively in check.
Tech got a big boost after a research firm raised their forecast for personal computer shipments for 2010. Shipments are now expected to come in up 20% after a recent forecast of a 15% increase made in April. Microsoft (MSFT, $26.59, up $1.09) and Hewlett Packard (HPQ, $47.98, up $1.10) jumped 4% and 2%, respectively.
After all was said and done, the Dow managed to post a gain or 215 points, or 2.1%, to settle at 10,404. All 30 stocks that make up the index finished in the green as the index closed above its 200-day moving average (MA).
The Nasdaq soared a whopping 62 points, or 2.8%, and settled above its 10 and 20-day MA’s while closing at 2,305. However, the index failed to break its 200-day MA.
The S&P 500 added 26 points, or 2.4%, and finished at 1,115. This index was our main focal point as we were watching the 1,100 level. More specifically, the 200-day MA stood at 1,108 and that has been cleared.
So now what?
To start, let’s just say the bears have been caught with their pants down. However, there are a couple of things to keep in perspective. First, volume was low once again. Trading volume on the Big Board was under 1.2 billion shares, which the average over the past 50 trading sessions has been 1.5 billion shares. Second, although the technical indicators may have changed the fundamental outlook for the market remains weak.
Resistance levels can be “stretched” but the S&P’s strong move could lead to a rally that takes the market back towards its April highs. The key for the bears will be Friday’s option expiration of the June contracts and next week traders will be placing short-term bets on the July options. This could lead to even more volatility.
In economic news this morning, May housing starts were down 10% and May building permits came in down 5.9%. Both numbers were worse-than-expected. FedEx (FDX, $53.01, up $1.54) beat earnings estimates this morning, but shares are at $80 in pre-market trading after the company offered a disappointing outlook.
Dow futures are lower by 60 points to 10,272 while the S&P 500 futures are off by 7 to 1,101. Nasdaq 100 futures are down 13 to 1,880. Subscribers, check the Members Area for the trade updates.
Tags: FDX, FedEx earnings, Microsoft, momentum options trading, MSFT, option picks, options alerts, stock options trading
Posted in Earnings, Economic News, Trading Psychology | Comments Off
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, December 29th, 2009
8:50am (EST)
Futures are pointing towards another strong open this morning as the bulls try to make it seven in-a-row. Dow futures are currently up 26 points, Nasdaq 100 futures are higher by 4.5 while the S&P 500 futures are up 3.3.
In pre-market trading, shares of A123 Systems (AONE, $20.87, down $0.20) are at $21.50 and could be active today.
Microsoft (MSFT, $31.17, up $0.17) got an upgrade this morning and is also getting some action. We knew once shares broke $30 and held that a move to $35 could be in the works.
Fannie Mae (FNM, $1.27, up $0.22) and Freddie Mac (FRE, $1.60, up $0.24) got a lift yesterday after remarks that the Treasury could lift limits on financial aid to the companies. It’s hard to get excited in stocks that are at a buck and there is a reason why these two stocks are so cheap…stay away!
We have updated all of our trades this morning and have provided fresh updates. We would love to hang out but the action is in the Members Area, folks. Current subscribers, check for the updates…
Tags: A123 Systems, alternative investments, asset management, blog Wall Street, buying call options, buying put options, Fannie Mae, financial, financial investment, Freddie Mac, funds, future option trading, futures trading, gold investing, guide to investment, guide to options, guide to options trading, hedge fund, hedge funds, how to invest, income, index funds, index options, invest, invest money, investing for dummies, investing market, investment, investment advisor, investment management, investment services, investment strategy, investments, journal Wall Street, Microsoft, mutual investing, new Wall Street, on Wall Street, online option trading, online trading system, option call, option exchange, option investment, option price, option selling, option trade, options, options expiration, options trade, options trading, options trading strategies, private equity, software options, stock, stock exchange, stock investment, stock market, stock market options, stock option trading, stock price, stock quotes, stock share, stock trading, straddle option trades, strategies options, the Wall Street, trading, trading option, trading options, wall st, Wall Street, Wall Street article, Wall Street blog, Wall Street history, Wall Street online, wealth management
Posted in Hot Stocks | Comments Off
Sunday, October 25th, 2009
Market Commentary
It was a choppy week of trading as the bulls battled the bears to keep the Dow over 10,000. The market got some solid earnings reports but it wasn’t enough to muster any kind of momentum for the bulls as the lost the battle on Friday. The Dow lost 109 points and ended the week down 24 points to settle at 9,972.
The Nasdaq fell 2 points for the week and closed at 2,154 while the S&P 500 closed at 1,079, down 8 points. The bears didn’t do any real damage but there were a couple of days last week that selling was heavy into the close. That suggests Wall Street is getting nervous and we should get a clear picture on things going forward with another heavy round of corporate earnings this week.
In the earnings section below, we have a number of companies in BOLD and those are the ones that we are watching for clues on the economy. Others are in bold because they will likely move significantly, up or down, when they announce earnings.
We outlined some near-term targets for the market in last week’s Weekly Wrap (Dow, 10,400; Nasdaq 2,275; S&P 500 1,175) but the better-than-expected earnings results have not translated to any big gains for the market. Companies are still doing a great job of cutting costs but by trimming their workforce it continues to weigh on unemployment which in turn hurts consumer spending.
These factors alone have weighed on the market but companies are saying good things. However, the bulls appear tired and we could continue to have choppy trading if the bears take advantage of them resting. This was pretty clear a few days last week when the market plunged in the final hour of trading.
Either way, it should be another interesting week.
Before we get into the list of companies reporting earnings this week, we wanted to talk about Microsoft (MSFT, $28.02, up $1.43) again. In our 1pm update on Friday we talked about playing earnings and we took a look at what would have happened if you had placed your bets on Microsoft before the company announced earnings on Friday.
If you were bullish you got paid. The November 27 calls (MSQKB, $1.40, up $0.75) closed with a 115% gain on Friday and traded as high as $2.40. They closed at 65 cents on Thursday. This is why you SELL into strength the next day after a company announces earnings. If you bought 10 contracts, you gave back $1,000 if you didn’t get out at the high which was achieved in the first 10 minutes of trading.
If you were bearish, they you got your lunch money stolen. The November 26 puts (MSQWA, $0.17, down $0.50) fell 75%.
Now, with Microsoft at $26.50 on Thursday before the closing bell, you could have bought BOTH contracts which is known as a strangle option trade. A straddle is when you buy both a call and put option with the same strike price.
To maximize your returns on the strangle trade you would have had to close the calls at the open and sold the puts at the close, OR, you could have left the puts open in hopes of the stock falling back down over the next few weeks. The put options do not expire until November 20th.
So what would the return have been you ask? Well, the call options were going for 65 cents and the put options were going for 67 cents on Thursday. Together, you were looking at $1.40 for both options or $1,400 for 10 contracts of each.
If you could have managed to get out of the calls at $2.35 and if you would have sold the puts at 15 cents, you would have netted $2.50, or $2,500. That would have been a return of nearly 80% by playing it safe. Of course, for strangle option trades to work you usually need a 5%-10% move or more in the stock AND you have to make sure the option prices aren’t inflated. As you can see, there are numerous ways to trade earnings and we wanted to show you other ways to use options in your portfolio.
We will be back in the morning with the 9am update. The current trades will be covered as well and don’t forget RadioShack (RHS, $15.66, up $0.12) reports before the bell. For those of you who are not current subscribers, you can sign up anytime between now and 8am Monday morning to get the trade updates and any new trades in the comings days, weeks, and months…
EARNINGS for the week (quotes are from Friday’s close):
Monday: Arch Capital Group (ACGL, $68.88, down $0.17), Atlas Air (AAWW, $35.47, down $0.76), Cabot Oil & Gas (COG, $38.90, down $0.85), Corning (GLW, $15.65, up $0.05), Dollar Thrifty Automotive (DTG, $24.81, down $0.83), Flextronics (FLEX, $7.24, down $0.27), Lacrosse (BOOT, $14.75, up $2.00), National Oilwell Varco (NOV, $46.89, down $1.71), PrePaid Legal (PPD, $41.68, down $1.87), RadioShack (RSH, $15.66, up $0.12), Rent-A-Center (RCII, $20.63, down $0.04), SOHU.com (SOHU, $71.35, up $2.61), Verizon (VZ, $28.85, down $0.17) and Winn-Dixie Stores (WINN, $13.55, down $0.09).
Tuesday: Apollo Group (APOL, $74.03, down $0.78), Baidu (BIDU, $435.31, up $19.71), Black Box Network Services (BBOX, $27.59, down $0.06), Buffalo Wild Wings (BWLD, $40.51, down $0.80), Cephalon (CEPH, $53.92, down $0.82), DeVry (DV, $55.50, down $0.19), DreamWorks Animation (DWA, $31.90, down $0.66), Franklin Resources (BEN, $112.93, up $0.69), Group 1 Automotive (GPI, $32.84, down $1.63), Harris (HRS, $39.45, down $0.93), Massey Energy (MEE, $31.64, down $1.08), McKesson (MCK, $60.31, down $0.46), NutriSystem (NTRI, $19.54, up $0.39), Open Text (OTEX, $39.28, down $0.55), Panera Bread (PNRA, $55.95, up $0.36), Rayonier (RYN, $42.86, down $0.40), Under Armour (UA, $31.51, up $0.23), United States Steel (X, $40.87, down $0.76), ValueClick (VCLK, $12.85, down $0.17), Visa (V, $74.12, down $1.57) and Wynn Resorts (WYNN, $62.46, down $0.92).
Wednesday: Akamai Technologies (AKAM, $21.50, down $0.10), Cerner (CERN, $82.02, down $1.33), Churchill Downs (CHDN, $36.92, down $1.42), ConocoPhillips (COP, $51.97, down $0.96), Express Scripts (ESRX, $80.70, down $0.78), First Solar (FSLR, $152.39, down $3.69), Flowserve (FLS, $105.15, down $1.04), GlaxoSmithKline (GSK, $40.24, down $1.30), Goodyear Tire & Rubber (GT, $17.75, up $0.02), Hanesbrands (HBI, $23.20, up $0.08), International Paper (IP, $23.72, down $0.66), Jones Apparel Group (JNY, $18.55, down $0.72), Lazard (LAZ, $40.37, down $0.22), O’Reilly Automotive (ORLY, $35.02, down $0.79), Owens Corning (OC, $23.18, down $0.70), Praxair (PX, $82.68, down $1.81), Ryland Group (RYL, $20.99, down $1.14), StellarOne (STEL, $11.92, down $0.33) and WellPoint (WLP, $46.03, up $0.01).
Thursday: Allergan (AGN, $56.73, down $0.76), Apache (APA, $99.39, down $2.69), Barrick Gold (ABX, $37.57, down $0.36), Chicago Mercantile Exchange Holdings (CME, $319.96, up $2.44), Dynamic Materials (BOOM, $19.48, down $0.71), Expedia (EXPE, $26.36, up $0.48), ExxonMobil (XOM, $73.57, down $0.87), Genworth Financial (GEN, $10.40, down $0.64), Kellogg (K, $50.20, down $0.44), MetLife (MET, $36.95, down $1.14), Mohawk Industries (MHK, $48.02, up $0.42), Moody’s Corporation (MCO, $25.03, down $0.55), OfficeMax (OMX, $11.70, down $1.23), Procter & Gamble (PG, $57.64, down $0.49), Shaw Group (SHAW, $28.86, down $0.50), Stanley (SXE, $25.75, down $0.87), Strayer Education (STRA, $220.95, down $1.05), Timberland (TBL, $14.40, down $0.34) and Waste Management (WM, $30.93, down $0.55).
Friday: Alliant Energy (LNT, $27.47, down $0.42), Black Hills (BKH, $25.29, down $0.40), Chevron (CVX, $76.68, down $0.61), Coventry Health Care (CVH, $18.70, up $0.06), Dominion Resources (D, $35.17, down $0.32), Penske Automotive Group (PAG, $18.35, down $0.42), Regency Centers (REG, $36.05, down $0.19), Sony (SNE, $28.91, down $0.35) and Washington Post (WPO, $467.10, down $9.00).
Tags: Microsoft, MSFT, option trading picks, RadioShack, RHS
Posted in Hot Stocks | Comments Off
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Futures Lower As Unemployment Rate Remains at 9.6%
Friday, October 8th, 2010
9:05am (EST)
In was a flat day on Wall Street yesterday although the market zigzagged on both sides of the ledger before ending mixed. It seemed as if both the bulls and bears were hesitant ahead of last night’s “official” kick-off of the third quarter earnings season and knowing this morning’s nonfarm payroll numbers for September would be out. We cover both below.
The bulls were able to push the major averages near resistance (again) after hearing better-than-expected retail sales figures, as well as upbeat jobless numbers from the Labor Department. However, the bears kept things in check as they held resistance going into the close.
The Dow peaked near 11,000 shortly after the start of trading, but spent the rest of the session near the 10,950 level before finishing with a loss of nearly 20 points to close at 10,948.
The S&P 500 slipped 2 points to finish at 1,158 but below 1,160 while the Nasdaq added 3 points and settled at 2,383 and below our breakout target of 2,400.
Turning to earnings, Alcoa (AA, $12.20, down $0.17) reported a profit of 9 cents a share which was 3 cents better than the analysts’ estimates of 6 cents a share. Revenue rose nearly 15% to $5.3 billion, versus calls for $4.95 billion.
The futures are pointing towards a lower open after the latest unemployment report hit the Street. September nonfarm payrolls fell by 95,000, which was worse than the 5,000 loss that was expected. Private payrolls increased 64,000, which was less than the 74,000 increase that had been widely expected while the unemployment rate remained unchanged at 9.6%.
As we head to press, the Dow futures are lower by 25 to 10,887 while the S&P 500 are showing a loss of 3 points to 1,154. The Nasdaq 100 futures are down 7 points to 2,007.
Special Note: Adobe (ADBE, $28.69, up $2.96) surged nearly 12% yesterday after speculation Microsoft (MSFT, $24.53, up $0.10) could be targeting the company in a takeover attempt following a ”closed door” meeting between the two companies.
Shares of Adobe were briefly halted yesterday after a circuit breaker was triggered around 3pm (EST) or an hour or so before the market closed.
We recently profiled a strangle option trade for Adobe in late September to where our subscribers have already banked a 200% profit. The put options returned 525% while the call options were left for dead.
Yes, the call options were trading for a penny…a penny…before the news hit. In other words, these options gained 3,800% yesterday which adds even more gravy to the trade.
Subscribers, check the Members Area for the important update as we tell you exactly how to play our current position out. And remember, we teach these kind of option strategies in our new trading manual “How to Trade Options on Momentum Stocks” which is available NOW with a FREE 1-month membership included (a $129 value).
Tags: Adobe (ADBE), explain the concept of options, Microsoft, momentum options trading, option picks, option trading blog, option trading course, option trading courses, straddle option trades, strangle option trades, triple-digit options returns
Posted in Economic News, Hot Stocks, Market Analysis, Market Commentary | Comments Off