1:05pm (EST)
The looming U.S. Congressional vote to overhaul the U.S. healthcare system this weekend is putting a huge drag on the market as Wall Street prepares for the outcome. The market has fallen to session lows and it’s hard to say how this impacts Wall Street come Monday.
The concern from our camp is how the U.S. can pay for such a massive bill and the effects it will have on corporate America. Wall Street is not happy about the bill and you can see the nervousness as traders are locking in profits ahead of the weekend.
From a technical view, here is where we are.
The Dow is currently down 60 points to 10,719 after reaching a high of 10,819. As you know, we have been pounding the table on Dow 10,800 and as soon as we hit it the index today we faded. We are hoping for a close above this level and a push towards 11,000 but that looks unlikely today.
The S&P 500 is off by 7 points and is trading at 1,159 after reaching 1,169. Our targets are 1,175 and then 1,200 for the index but we also faded at that first level of resistance. The key level to watch to the downside is 1,150. A break below this level could lead to more selling pressure.
The Nasdaq is at 2,370, down 21 points, and has traded to a high of 2,396. We have been calling for 2,400 and this level was hit on Wednesday. The fact that we keep running up to this level and falling back is a little troublesome but we haven’t given up hope on a push towards 2,500.
Despite the concern over the health plan bill, the market can still go higher. All of the talking heads are calling for a huge pullback but they have missed the rally over the last 3 weeks. However, go by “feel” and all signs were pointing to a retest of the January highs.
Although the market faces serious headwinds and next week is a toss-up as far as direction, there are a number of positive catalysts that can carry us higher. First quarter earnings will start to roll in at the beginning of April and we think the numbers are going to be fantastic. We also have a shot at a better-than-expected jobs report in April and these two events could prove the economy is back on track and gaining strength.
As far as specific stocks today, HealthCare shares are having a good day. The group is up almost over 2% and is being led by Aetna (AET, $34.40, up $1.16), Cigna (CI, $37.56, up $1.72) and Wellpoint (WLP, $65.54, up $1.72).
The HealthCare sector has lagged the rest of the market for the past two months and a positive vote could remove some of the uncertain overhang from the stock of managed care companies. We expect to see a “buy the news” situation versus the “sell the news” we often talk about and we are seeing a little of that today.
Elsewhere, Palm (PALM, $4.42, down $1.23) is down over 20% and we wanted to follow-up on a couple of options we profiled this morning. The March 5 puts (UPY100320P00005000, $0.48, up $0.31) closed at 17 cents yesterday and are up 180% today. The April 5 puts (UPY100417P00005000, $0.90, up $0.45) have doubled.
We didn’t pull the trigger on these options but we have done well with some of our other trades this week. We were able to close two trades for winners this week so we can’t complain. Our subscribers booked nearly a 200% gain with Nike (NKE, $73.38, down $1.28) as they were stopped out of the other half of the trade this morning and over a 40% gain in Qualcomm (QCOM, $39.87, down $0.56) yesterday. We aren’t too worried about what the outcome of the health bill will be because we can trade any kind of market.
If it looks like the market heads lower or is going to tank then we will start looking at put options. And this is the way you should think. Look, we will play the market higher if that is the case but most investors are scared to play in the market when it is going down. Don’t be.
You can make just as much money in a down market as you can in an up market.
All of our 2010 CLOSED trades will be updated after the bell today so look for an update over the weekend for those of you who haven’t joined us. For our current subscribers, let’s get to the Members Area for the updates…
We will be back with our Weekly Wrap Sunday Night and it is one you won’t want to miss. Hopefully, we will have the healthcare news by the time we go to press and what you can expect come Monday morning.
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Wall Street Braces for HealthCare Vote
Friday, March 19th, 2010
1:05pm (EST)
The looming U.S. Congressional vote to overhaul the U.S. healthcare system this weekend is putting a huge drag on the market as Wall Street prepares for the outcome. The market has fallen to session lows and it’s hard to say how this impacts Wall Street come Monday.
The concern from our camp is how the U.S. can pay for such a massive bill and the effects it will have on corporate America. Wall Street is not happy about the bill and you can see the nervousness as traders are locking in profits ahead of the weekend.
From a technical view, here is where we are.
The Dow is currently down 60 points to 10,719 after reaching a high of 10,819. As you know, we have been pounding the table on Dow 10,800 and as soon as we hit it the index today we faded. We are hoping for a close above this level and a push towards 11,000 but that looks unlikely today.
The S&P 500 is off by 7 points and is trading at 1,159 after reaching 1,169. Our targets are 1,175 and then 1,200 for the index but we also faded at that first level of resistance. The key level to watch to the downside is 1,150. A break below this level could lead to more selling pressure.
The Nasdaq is at 2,370, down 21 points, and has traded to a high of 2,396. We have been calling for 2,400 and this level was hit on Wednesday. The fact that we keep running up to this level and falling back is a little troublesome but we haven’t given up hope on a push towards 2,500.
Despite the concern over the health plan bill, the market can still go higher. All of the talking heads are calling for a huge pullback but they have missed the rally over the last 3 weeks. However, go by “feel” and all signs were pointing to a retest of the January highs.
Although the market faces serious headwinds and next week is a toss-up as far as direction, there are a number of positive catalysts that can carry us higher. First quarter earnings will start to roll in at the beginning of April and we think the numbers are going to be fantastic. We also have a shot at a better-than-expected jobs report in April and these two events could prove the economy is back on track and gaining strength.
As far as specific stocks today, HealthCare shares are having a good day. The group is up almost over 2% and is being led by Aetna (AET, $34.40, up $1.16), Cigna (CI, $37.56, up $1.72) and Wellpoint (WLP, $65.54, up $1.72).
The HealthCare sector has lagged the rest of the market for the past two months and a positive vote could remove some of the uncertain overhang from the stock of managed care companies. We expect to see a “buy the news” situation versus the “sell the news” we often talk about and we are seeing a little of that today.
Elsewhere, Palm (PALM, $4.42, down $1.23) is down over 20% and we wanted to follow-up on a couple of options we profiled this morning. The March 5 puts (UPY100320P00005000, $0.48, up $0.31) closed at 17 cents yesterday and are up 180% today. The April 5 puts (UPY100417P00005000, $0.90, up $0.45) have doubled.
We didn’t pull the trigger on these options but we have done well with some of our other trades this week. We were able to close two trades for winners this week so we can’t complain. Our subscribers booked nearly a 200% gain with Nike (NKE, $73.38, down $1.28) as they were stopped out of the other half of the trade this morning and over a 40% gain in Qualcomm (QCOM, $39.87, down $0.56) yesterday. We aren’t too worried about what the outcome of the health bill will be because we can trade any kind of market.
If it looks like the market heads lower or is going to tank then we will start looking at put options. And this is the way you should think. Look, we will play the market higher if that is the case but most investors are scared to play in the market when it is going down. Don’t be.
You can make just as much money in a down market as you can in an up market.
All of our 2010 CLOSED trades will be updated after the bell today so look for an update over the weekend for those of you who haven’t joined us. For our current subscribers, let’s get to the Members Area for the updates…
We will be back with our Weekly Wrap Sunday Night and it is one you won’t want to miss. Hopefully, we will have the healthcare news by the time we go to press and what you can expect come Monday morning.
Tags: health care vote, Nike call options, NKE options, Obamacare vote, option picks, option signals, options alerts, QCOM, Qualcomm call options, stock options trading
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