Get RSS Feed
8:15am (EST)
I wanted to send today’s update early because there are a lot of things I’m looking at as we head into this morning’s Jobs Report.
If you have been following the market this week then you already know we are watching a scary movie. You know, the ones that always have the “idiot” who goes after the bad guy. If you’re watching the movie, they always show US both sides of the story but it always ends up bad for the hero.
Better yet, it feels like Wall Street is standing in front of a bear cave with a flashlight asking, “you going in?”
I often look at my notes to get a snapshot of the market which really helps me with market direction. I do it daily, weekly, monthly and sometimes, yearly. That is why I quote myself here in the blog often so that I can remind myself of events, emotions and what is hot or what’s not.
This week, I’ve been talking how the bears have been winning the battles and that I didn’t want to be long (meaning bullish) heading into Friday’s unemployment report. We knew there was going to be volatility this week and it felt like the bulls were going to run until Thursday once we kicked things off but we also knew the bears would show up. The bulls were begging them into the ring. Well, be careful what you wish for.
The Dow fell 203 points on Thursday and finished the session at 9,509. The 2% drop was a death by a thousand cuts because nothing worked yesterday unless you were short. And we were (sly grin) with Abercrombie & Fitch (ANF, $31.70, down $1.18). That trade is off to a good start…up 20%.
The point is we are still “trading” the market and all week I have used the words “historic”, “battle”, and “volatility”. Even when we took the Nike (NKE, $62.50, down $2.20) trade and subscribers made mad money of up to 200%, I was cautioning to close the trade and use the stop because I didn’t want to be “long” going into Friday. I even mentioned Nike could “fill in the gap” from $60 to $64 after jumping nearly $5 on Wednesday.
I don’t even feel nervous with the Abercrombie trade because it feels like this market is headed lower. I’ve been saying “if we print 10%” on unemployment then it could get ugly. The Dow may have fell 2% but the real carnage was going on in the Nasdaq. The drop of 65 points, to 2,057, was 3%.
It has been over 25 years since the unemployment rate has hit 10%. Wall Street is expecting the rate to come in at 9.8%, from 9.7% in August. Employers are forecast to have cut 180,000 jobs, which would be the fewest since August 2008 but there are whisper numbers that this number could come in at 250,000. Yikes!
If you can’t hear the bears growling then you are deaf.
Now here is where I LOVE the market. Let’s say we get a 10.1% number (I’m not predicting this but I do feel it is going to be bad) and the market starts to tank from the open. If we are down 100 points, then 200, then 300…everyone will be panicking and all you have to do is be calm and buy put options.
Which ones? Well, you will have to read the Members Area for today’s trades because we will have some opportunities today.
The possibility of a surprise exists and I have also planned to buy call options if we get a HUGE rally. The unemployment numbers could come in at 9.5% (again, not predicting) and the bulls could “blow the roof” off. Dow 10,000 would easily be in the rear view mirror.
If you are a seasoned optioned trader then this isn’t your first rodeo. As options traders, we live this stuff and it is like our SuperBowl. It’s exciting, scary, fun and dangerous which is why we play the game…
Subscribers, check the Members Area for the playbook. If it is your first rodeo, then come on in and join us.
As we head to press, Dow futures are down 28, Nasdaq 100 futures are down 5 while the S&P 500 futures are down 3. These will change at 8:30am (EST) once the Jobs Report is released.
Rick@MomentumOptionsTrading.com
Nike Options Getting Plenty Of Action
Tuesday, September 29th, 2009
12:30pm (EST)
The market got off to a good start this morning but has been weaker after the Consumer Confidence numbers were released. The Conference Board said the consumer confidence index fell to 53.1 in September, down from 54.5 in August and much lower than the magical 57 number that Wall Street had been predicting.
Most people are still worried about their jobs and seem to be cautious about spending. Consumer confidence has been a key focus for the bulls in recent months, and this is something to watch. Most economists believe a ”true turnaround” in the economy can’t occur until people start spending money and employers create more jobs. Makes sense, huh?
Friday’s unemployment report will be a biggie and could give us a clear indication on where the market is headed going into earnings season.
Currently, the Dow is down 30 points to 9,759 while the S&P 500 is off by 2 to 1,060. The Nasdaq is lower by 11 points to 2,120.
Nike (NKE, $59.50, up $0.50) will report earnings after the bell today and there is heavy volume in the option pits. The company is expected to report earnings of $0.97 a share, or 6 cents below what the company earned during the first quarter of last year. The market is pricing in an 8%-10% move in the stock and it looks like the options are confirming that notion. If so, that will place the stock at $54 or $66. A Nike October 60 straddle option trade is currently priced at $5.50 which is a good indication of how much the market is expecting the stock to move.
I think there is an great way to play this action while at the same time being safe.
Current subscribers, check the Members Area for the trade.
Rick@MomentumOptionsTrading.com
1:05pm (EST) UPDATE!
Imax (IMAX, $9.40, up $0.60) is up nearly 7% today. The stock has been building a good base in the $8-$$9 range has traded $10 this month. We currently have an Imax trade on that should rebound strong today.
Tags: Nike options, options newsletter, options trading picks
Posted in Company Commentary, Earnings, Economic News, Hot Stocks, Market Analysis | Comments Off