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Google Makes A Stand

Wednesday, January 13th, 2010

9:10am (EST)

We told you the volatility pick up…

The market was setting up for a steep decline yesterday but managed to bounce back in the last couple of hours after bullish traders stepped in and bought off the lows.

This is options expiration week and the kick-off of earnings season so we expected some movement.  We were impressed by the bulls ability to fight off a serious attack but the bears did do some damage to the Tech sector.

The Dow finished Tuesday with a 37 point loss and ended at 10,627 after being down as much as 95 points.  The S&P 500 got clipped for an 11 points and closed at 1,136 while the Nasdaq fell 30 points, or -1.3%, and settled at 2,282.  It was the biggest point and percent drop for the Nasdaq since the end of November.

If the bears were really serious about slowing down the ongoing rally then they would have applied more pressure yesterday.  Maybe they did and the bulls camp is just still too strong right now.

There are no heavy-hitters coming up with earnings today but on Thursday we get reports from Charles Schwab (SCHW, $19.09, down $0.02) and Intel (INTC, $20.61, down $0.34) which we will be listening to carefully.  We also have an interest in Shuffle Master (SHFL, $8.26, down $0.42) which could give us clues on how strong the recovery is or isn’t for the Casino industry.

Google (GOOG, $590.48, down $10.63) is down $9 in pre-market trading after saying it is considering pulling its search engine out of China after a series of cyber-attacks on its system aimed at identifying human-rights activists.  The company said it discovered e-mail accounts held by human-rights advocates had been accessed by third parties.

As a result, Google’s possible exit from China would be a windfall for Baidu’s (BIDU, $386.49, down $14.08) which is seeing its shares zoom this morning before the bell.  Baidu is up $59 to $445 in pre-market trading.

We have mentioned this is option expiration week but do you want to see something crazy this morning?  WATCH the Baidu January 400 calls (BPJAT, $1.60) at the open.  Folks, they will open at $45 which means if you would have bought 10 contracts yesterday for $1,600 you would be waking up to $45,000 this morning…

As far as economic news, the Federal Reserve’s Beige Book report comes out at 2pm (EST).  The report can offer clues about the Fed’s thinking on interest rates and monetary policy but we don’t expect any changes as far as a hike.  

That is all we have for now.  Current Subscribers, check the Members Area for the latest trade updates.

Market Retesting Lows

Tuesday, January 12th, 2010

1:05pm (EST)

The market is testing the lows we got this morning after trying to battle back from a nasty open.  The Dow started with a 72 point loss and fell to a low of 10,591, then recovered most of the losses but is currently down 65 to 11,598.

The S&P 500 is off by 12 points to 1,134 while the Nasdaq is taking one for the team.  The index is down 33, or -1.4%, and is trading at 2,279 as we head to press.

There are pockets of strength and one sector that continues higher is the Casino stocks.  MGM Mirage (MGM, $11.76, up $0.86) is up 8% after getting an upgrade this morning.  Goldman Sachs (GS, $167.43, down $4.13) came out and upped the shares to ”Buy” from “Neutral” and slapped a $16 price target on the stock.  Sorry, Goldman, you are a little late to the party.

Our Atlantic City trip was a win-win as we went behind the scenes to see what was up during the holidays.  We didn’t come away with the feeling that the industry has turned around overnight but we took notice in the action the casinos were getting.

It was good to get away and when we got back, we profiled a trade in Las Vegas Sands (LVS, $18.50, up $0.13) that has paid off in spades.  Last Tuesday, our subscribers placed their bets on some call options and they have nearly doubled their money a week later.  

Las Vegas Sands was under $17 when we told our subscribers ”LVS has been a solid past performer in our portfolio and has a shot at $20 if the casino stocks can rally over the next month or so.”

Folks, here is the power of options if you pick the right ones.  As you can see, the stock has made a $2 move in a week which is 12% from $17 to $19.  If you would have bought 100 shares of the stock it would have cost you $1,700.  Today you would have a $200 profit.  Not bad.

Now, take a look at what options can do for you.  That $1,700 would have bought you 17 call option contracts that were trading for around a $1 last Tuesday.  Today, those same call options are standing at $1.85.

If you do the math, 17 x 1.85 gets us 31.45 which means your $1,700 is now worth $3,145 or 95%.  Hmmm.  An 8% return with the stock or a 95% return by playing options.

We have updated this position in the Members Area…

Another stock we had recent success with is Amazon.com (AMZN, $128.03, down $2.28).  We recently profiled a trade that returned our subscribers over 50% but shares are getting hit again today after touching a high of $142 before the end of 2009.  We caught some of that action on the way up and recommending closing the trade after looking at the charts.  Since then the stock has been torched but has come back down to serious support levels.  We are doing the legwork now to see if there is another trade in Amazon…

Also getting our attention is A123 Systems (AONE, $20.75, up $0.05) which has made a huge bounce of its support areas.  The stock recently made a run from $14 to $23 in a little over a month and we got some of that action as well.  Our subscribers made nearly a 120% return as we had a target of $23-$24 and got out at the top.

See, it does pay to do your homework folks but that is why you have us.  We are still on the fence with A123 but we wouldn’t be surprised to see a quick run back to $23.

That is all we got for today and for those of you who care…Kid Rock at the Borgata in Atlantic City on Valentine’s Day and Jay-Z in March.  Be there or be square!  The Members Area is updated…

Alcoa Misses Mark, Shares Tank

Tuesday, January 12th, 2010

9:10am (EST)

Futures are pointing towards a nasty open this morning after Alcoa (AA, $16.15, down $1.30) disappointed Wall Street with its earnings report.  After the bell on Monday, the company reported a $277 million loss for its most recent quarter, or $0.28 a share, compared with a profit of 6 cents a share that Wall Street had been looking for. 

If you exclude one-time items and special charges, Alcoa actually reported a penny a share profit but they still missed estimates by a mile.  We said yesterday the market was pricing in a 7%-8% move in the shares and at pre-market levels Alcoa is down 7.5%.  

As we head to press, Dow Jones futures are down by 66 points to 10,538.  The S&P 500 index futures are off by 9, to 1,133, while the Nasdaq 100 index futures are lower by 17 to 1,866.

We have much more to talk about this morning in the Members Area and we are short on time out here.  Current subscribers, please check for the trade updates as we have raised our exit targets on some positions to lock in profits. 

In Like Flynn

Monday, January 11th, 2010

1:00pm (EST)

The market started off on a strong note but has given back some of its gains as Wall Street awaits Alcoa’s (AA, $17.25, up $0.23) earnings report.  The Dow is currently up 10 points to 10,628 while the S&P 500 is off by 3 points to 1,142.  The Nasdaq is showing a decline of 13 points and is trading at 2,304 as we head to press.

The VIX is down 0.56 to 18.36, Oil is up fractionally at $82.75 and Gold is up $16 to $1,155 an ounce.

Alcoa will report earnings after the bell and Wall Street is looking for a profit of 6 cents a share on revenue of $4.8 billion.  In the year ago quarter the company reported a loss of 28 cents a share on revenue of $5.7 billion.

The options pits are exploding with traders placing bets but we are staying on the sidelines with this one.  The January 17.50 calls (AAAT, $0.53, up $0.25) are up 90% and have traded nearly 30,000 contracts while the January 17.50 puts (AAMT, $0.77, down $0.22) have dropped over 20%.  This means the market is pricing in a 7%-8% move in the stock and a straddle trade would cost you $1.30 at current prices.  No thanks, we’ll pass.

We have been busy updating our portfolio positions this morning and we were able to get into two NEW trades at the open.  We are also CLOSING one trade for a slight profit to make room as we like the prospects a little better on our newer trades.

Current subscribers, please check the Members Area for the important updates.

MomentumOptionsTrading.com Weekly Wrap for 1/10/10

Sunday, January 10th, 2010

11:00pm (EST)

The bulls won the first week of 2010 as they took the market higher despite a weak unemployment report on Friday.  The Labor Department said employers slashed 85,000 jobs in December while Wall Street had forecast a slight decline of 8,000 job losses. 

The one silver lining was the government revised November’s unemployment figures to a gain of 4,000 jobs, marking the first monthly increase in almost two years.  Although the unemployment rate remained at 10% last month, the bulls managed to blow off the report and finish the week on a high note.

All three indexes posted gains for the day and for the week which could mean good news if you believe in market history.  Usually if the Dow is up in the first week of January it leads to a good month and year so goes the theory. 

The Dow added 11 points on Friday and 190 for the week to close at 10,618.  Our near-term target remains 10,800 and this could be the week we take it down.

The S&P 500 gained 3 points to close at 1,145 and for the week the index added 30.  In August, we set our target at 1,175 so we are within spitting distance…

As far as the Nasdaq, we clearly saw the strength in Tech back in the summer and set a year-end 2009 target of 2,275 for the index.  That level was taken out before Christmas.  On Friday, the Nasdaq displayed its muscle once again and had the biggest percentage gain as it added 17 points to close at 2,317.

We remain bullish and our portfolio has consisted of mainly call options since March 2009.  We have added put options as “insurance” along the way but we still feel like the market moves higher from here.  Of course, once our targets are hit that could all change but the beauty of getting a pulse on the market is that it allows you to change accordingly.

If and when we reach those aforementioned targets, we either, continue higher, stay flat, or retreat to lower levels.  The cards to figuring out the next six months on where the market could be headed are being dealt right now.  A lot of investors and traders will be ready to pay the ”big blind” this week as 4Q corporate earnings start to come in.  We will go over this more on Monday morning.   

There is one stock we wanted to cover again tonight before we sign-off…

We have mentioned OSI Systems (OSIS, $31.64, up $2.75) a lot lately and we should have already been in this trade to be honest.  Sometimes there are trades that just stare you in the face and they have to slap you to get your attention.

Well, OSI is punching us in the gut and we are gasping for air.

The alleged failed boxer bomber has heated up the talk of faster deployment of full-body-imaging machines at airports around the world.  Talk about blowing up the family jewels…Our thoughts from December 31st (quotes are from that day):

OSI Systems (OSIS, $27.46, up $2.40) is up 10% as investors rushed into the stock starting on Monday.  The company makes these “body scanners” that could be used in airports that would allow tighter, faster security and the machines are selling for $150,000 a pop.  Needless to say, the market is enormous and some people think they should be in every airport in every city RIGHT NOW.

The shares have rallied following last weekend’s failed terrorism attack and last Thursday they closed at $22.  On Monday morning they opened at $23.04 and hit a high of $24.97.  Usually these types of trades fade but we underestimated this story and it cost us a sweet call option trade.

Yesterday, the OSIS January 25 calls (UOJAE, $2.95) easily doubled and were under $1 on Monday.  OSIS and others have been put on our short-term Watch List. (END)

Folks, the January 25 calls are now at $6.60!  The January 30 calls (UOJAF, $2.10, up $1.55) soared a whopping 280% on Friday after opening at 95 cents. 

Despite reservations from Congress, privacy advocates and airlines we think this movement has legs and we will take a look at a possible option trade in this one on Monday morning before the bell.  We will also have an update on all of our current trades which will be on the move this week.

As we head to press, Dow futures are showing strong gains as they are up 36 to 10,602.  S&P 500 futures are up 5 to 1,146 while the Nasdaq futures are higher by 8.  The first trading day of “January Expiration Week” is usually bullish, which is one reason we left most of our option trades open. 

Also, we have been seeing higher closes on Friday’s followed by solid Monday’s which leads us to believe the bulls are fully committed to taking the market higher. 

One important factor on if the market is at a top or continues higher will come on Friday.  January options will expire and over the past decade this has been a terrible day for the market.  If the bulls can lift this curse then we could be off to the races again.

Portfolio Update:  Our 2010 portfolio track record is posted in our Members Area and had been updated as of Friday’s close.  There are 3 closed trades with two of them showing triple-digit gains; A123 Systems (AONE, $21.51, down $0.65) is profiled showing our subscribers banked a 119% gain; a 90% profit in Imax (IMAX, $14.13, down $0.29); and a 150% return in Green Mountain Coffee Roasters (GMCR, $81.85, up $0.27).

We still have 6 open trades but some will be closed for double-digits gains while we roll new trades in.  That is what we love most about the market…there is always a trade. 

The 2010 portfolio is viewable in the Members Area at the bottom of the page.  We will start releasing the closed trade results to the public at the end of the month and they will be updated as we close them out but we wanted to give you a sneak peak before then. 

We will be busy all week and will be back in the morning with the playbook.  If you are not yet a subscriber you can still catch all of the action before the opening bell if you signup now!

See you in the AM…

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Trader Comments:

    REGINA L.
    I just want you to know that I love the way you write and explain everything. I am new to this, and have lost 50% of my account until I met you guys. Iit is slowly coming back. I will be calling to set up a year
    of membership rather than the one quarter. Thanks again, and LOVE YOU ALL.

    STEVE T.
    Rick, I appreciate the advice. I think I will just sit back and utilize your selections only for awhile. This will obviously save me a great deal of money in commissions. I have gone thru your entire site including the video on money management. This has brought me to the stark realization that I have been trading too much for too little. I definitely have not been "swinging for the fences", but I also think I have been getting impatient with trades and getting out too fast. This has no doubt caused me too trade too much. I like, and definitely agree on, the advice on money management. Thanks for the help.

    SCOTT H.
    Thank you!!! I held on to the NFLX position since Nov. 13 at a cost of $1.89. Sold ½ on April 14th for a 540% return and the other ½ upon earnings for 702% return. Total profit of $11,615 a 621% return. Keep the recommendations coming and thanks to you and your team for the service you provide.

    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.

    2) Also booked profits on your Berk Feb 74 (80%) and threw a major chunk of change at the March 75’s (190+%). I would have never known that Buffet's stock had split if it weren’t for your service. Bought the shares also for the long haul. Won’t look at them for another 20 years. Great job on getting us in before the indexes did.

    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!

    MICHAEL K.
    I like the fact that you ask for comments from subscribers. Good customer service. By the way, am enjoying the service so far. Some good
    profitable calls. Keep up the good work.

    PARAG P.
    Woo hoo! Out for 50% on WMT this am. Making up for my depression for getting out of pcln for a 30% gain monday :( you the man! any word on the manual? My friend Mike ( who I sent to your service) told me he emailed you about your integrity in reporting fills. I echo that sentiment big time.. keep it up! Cheers!

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

    MIKE
    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.

    TRISH D.
    Hi, good morning. I jumped the gun a little on this one (PCLN). But still made $1,675.00 profit!! Very happy!! Keep up the good work!! Thanks.

    MIN L.
    Hi there, I have joined recently, and I am very happy to tell you that I am up over $10,000 on your picks in a month. I started on 10/7 with the Intel pick. I'll be your member for life. Please don't quit on us. Also, I am learning a lot about options. I didn’t get in your recent APOL and that gold trade and only had one loss on CHK. I appreciate all the DD you do. I enjoy your market commentaries. Best advice site period, and I have tried a few here and there. Again, you guys rock!

    JOE G.
    Thanks be to Momentum Options Trading for providing me with some fantastic wins. I just started with this service and am up nearly 50% in less than a month. There have been losses, but if I manage them properly, I will continue the best efforts given on the blog (in which there are no complaints). What a great cause for humanity. I feel more confident about my trades and continue to play the wins. Best of all, I am now keeping my regular paychecks in the bank! Thank you!

    GREG F.
    Rick - I wanted to say thanks for getting me started on the right foot with your service. I have made six trades since starting on October 22, 2009. Five are winners and One loser netting me $6,245. Thanks again and keep the trade recommendations coming.

    NOEL
    I got into the Nike 60 Call at 1.85, sold at 5.00, also bought a 55 put at 1.05, but got stopped out at .35. What a ride! $2830.00 in the black even with the put. It's right at 100% return. I hope earnings season coming up is going to look like this trade.

    TODD F.
    Nice call on Nike. I think I'll go buy a pair with my profits! : ) I did the straddle for safety but still made 62% on the trade. Not bad for less than 24 hours. If Goldman is right, then the Nov 70s or 75's could be a steal today.

    PAUL H.
    What a sweet way to get introduced to Momentum. My first trade based on your picks and it a 2X. Thank you!

    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. :) ”

    CHRISTIAN
    “Your service rocks! I made bank on Dendreon last week! The other thing I have to say is that it took me quite a while to find a REAL options trading service like yours. Most of what’s out there is 99% scam and very sketchy. Momentum Options Trading is the first service I found that I can trust and seriously make money with.”

    JOHN
    “I made $420.00 on ANF in 2 days. Thanks for the trade and updates on getting out of the trade.”

    CHARLES M.
    “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.”

    BRYAN C.
    “I have been following you for several months and am interested in the new service. I hate to see the free service go away but as they say, “all good things must come to an end”. My ability to join will be greatly influenced by the monthly fee so I’m very curious to see the new prices. Thanks for making April a great month for me and my family.”

    JOHN H.
    “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.”

    JEFFREY
    “Hi Rick, I have been following your blog for several months now and I would like to be including on the list for your new service and to receive more information about it. And yes I was a Dendreon winner with your tips. Turned $280 into $7700, and literally saved my butt.”

    ED
    “I made over 6k on your Dendreon trade, and I’m very interested in learning how you pick and trade options. Sign me up.”

    GREG
    “Rick – Wow what a day! I got in at the Dendreon calls at $2.25. Thanks to for your advice. I appreciate that. This company has a lock on this type of therapy and no one else in the world is close. Kind of reminds me of the type of companies that Peter Lynch and Warren Buffet suggest that investments be made in. Companies that can build a moat around their business model, that allows them to charge a premium for their product or service. In other words - a monopoly.”

    KEN
    “Hi Rick, Thank you so much for the Dendreon trade, I made almost $10,000 with that trade with a little over $2,000 investment. You have shown me the power of options trading. Again, thank you so much for all your inputs.”

    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.”

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