Get RSS Feed
3:45pm (EST)
Special Note: We are sending today’s Weekly Wrap early. I am away on travel and hope to be back in the office by Monday morning. In case I’m not, this is Monday Morning’s Update. There is a NEW TRADE for Monday morning, Pepsico (PEP, $60.90, up $2.44), that is profiled in the Members Area. Our latest trade, Abercrombie & Fitch (ANF, $30.62, down $1.08) is up 50% in less than a week and we are hoping for the same returns, if not more, for the Pepsico trade. To read the latest update on all of our trades you must be a premium member which gives you full access to our Members Area. Our last closing trade in Nike (NKE, $62.02, down $0.48) netted our subscribers profits of up to 200%….
Market Commentary
It was no bull and all bear last week as the market fell 2% on average. Friday was setting up to be an explosive day as the Dow futures were down over 100 BEFORE the opening bell rang. However, the drop was marginal and although the bulls lost the week, Friday’s battle was a huge victory. The fact that the Dow lost only 20 points is clear indication the bulls aren’t going anywhere.
For the week, the Dow lost 177 points, or 1.8%, and closed at 9,487. The Nasdaq finished the week at 2,048, down 43 points, or 2%. The S&P 500 dropped 19 points, or 1.8%, and settled at 1,025.
The market was hit with a bunch of disappointing economic news and Friday’s unemployment report was suppose to be a canon ball going through paper for the bears. The fact that the bulls held their ground gives further indication there are buyers on the sidelines. It doesn’t matter if the market is overvalued or undervalued, it never does.
The market doesn’t care about our personal wins and losses and although we may be overbought at these levels you can’t deny the action and aggressiveness of the bulls since the March lows. The thing Wall Street forgets to realize is that the market came down from a much higher level as the Dow was standing at 14,000 in 2007…
A 50% drop in the Dow which is where we were in March when the Dow was at 6,500 would mean over a 100% return to get back to the 14,000 level. We certainly know that isn’t going to happen this year but I think it is important for us to remember where we came from. So I don’t buy into that “we have come too far, too fast” spit that we have been hearing. Those same pundits were calling for a “bounce” BEFORE we bottomed at 6,500 because they couldn’t believe the sell-off. Now it’s the opposite.
Third-quarter earnings should give us a better sense of whether companies managed to grow their revenues to produce earnings growth or if we see continued cost-cutting. This helped with 2Q earnings but the same theme might not work this time around.
The bears got a “little taste” of the bulls last week so you know they aren’t going anywhere either. We are still in a volatile, nervous market which means we could get some really big moves in October.
As we head to press, the Dow futures are down 36, S&P 500 futures are off by 6 while the Nasdaq 100 futures are lower by 8. Of course, the overseas markets will affect those numbers and things could change by Monday morning but it appears we could start the week slightly lower.
Subscribers don’t forget to check the Members Area for the latest trade and updates. The update is posted under the Monday, October 5th link.
Earnings
Monday: Mosaic (MOS, $46.18, down $0.25), Robbins & Myers (RBN, $22.60, down $0.41), RPM International (RPM, $18.08, up $0.20) and Team (T, $16.77, down $0.03).
Tuesday: AngioDynamics (ANGO, $13.80, up $0.05), Chattem (CHTT, $64.59, down $0.31), Pepsi Bottling Group (PBG, $37.25, up $0.76) and Yum! Brands (YUM, $33.15, up $0.02).
Wednesday: Acuity Brands (AYI, $30.98, down $0.18), Alcoa (AA, $12.82, down $0.10), Costco Wholesale (COST, $56.47, up $0.78), Family Dollar (FDO, $26.63, down $0.21), Helen of Troy (HELE, $18.83, up $0.13), Monsanto (MON, $74.93, down $0.18), Ruby Tuesday (RT, $7.89, up $0.13) and Wolverine World Wide (WWW, $24.14, down $0.07).
Thursday: International Speedway (ISCA, $27.09, down $0.16), Marriott International (MAR, $25.61, down $0.75) and Pepsico (PEP, $60.90, up $2.44).
Friday: Cantel Medical (CMN, $15.29, up $0.15) and Infosys Technologies (INFY, $47.85, up $0.60).
Is Apple Due For A Split?
Friday, October 9th, 2009
8:40am (EST)
We all know that stock-splits don’t mean much in monetary value when a company announces a 2-for-1 split. It means you own twice as many shares as before but at half the price. We haven’t seen too many of these events lately because of what the market has been through over the past several years but they do happen. Green Mountain Coffee Roasters (GMCR, $72.60, up $0.72) is a recent example as they did a 3-for-2 split back in June. They also did a 3-for-1 split back in July 2007.
In the past, when stock-splits were more frequent, a company would always seem to split their stock when it got to a certain price. Then again, there are some companies like Berkshire Hathaway (BRK.A, $100,401.50, up $1.50) and Google (GOOG, $514.18, down $3.36) who plan to never split the outstanding shares. Yes, that quote for the Class A shares for Mr. Buffet’s empire is correct. For 100g, you too, can own ONE share of Berkshire…
Anyway, with Apple (AAPL, $189.27, down $0.98) approaching $200, I did some research to see when they might announce a split. Apple has split its stock 3x since 1987 and each time it was a 2-for-1 deal when the stock was trading at $80-$100. Judging by history, Apple is overdue.
I cover stock-splits and how to play them in the Momentum Options Trading Manual (which is almost complete and will be available soon) but it remains to be seen what Apple does. Normally you see a run into the split and a little after, then a sell-off, then another rally.
Of course, old market principles have been thrown out the window but it will be interesting if Apple were to announce a split. And what better way when the company reports earnings on October 19th?
Apple continues to push 52-week highs and by splitting the stock, it makes it “cheaper” for the investment world to buy shares at $100 (2-for-1) or $65 (3-for-1) instead of $200. Apple is known for making a splash and what better way to do it when the company has center stage once again in two weeks?
It may not happen but don’t be surprised if it does…
Quick Note: We are pleased to announce that we are upgrading our servers this weekend to allow us to send UNLIMITED emails to our subscribers. Many of you wanted this service because you told us you could not check the website daily (or at work, sly grin) and it was a GREAT idea. Because of this, the website may work slow over the weekend or at times may be down but we will be back to normal by Monday.
We also have the CURRENT TRADES update for this morning so please check the MEMBERS AREA for the latest and greatest.
Tags: Apple, Berkshire Hathaway. Google, Green Mountain Coffee Roasters, Imax, momentum options, Momentum stocks, option blog, option track record, Option Trades
Posted in Apple, Company Commentary, Earnings, Google, Hot Stocks, Market Analysis, Option Trades, Strategies | Comments Off