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Wednesday, December 2nd, 2009
It’s as if the Dubai news never happened…
The market picked up more momentum on Tuesday, as the Dow added 126 points to close at 10,471. We mentioned in the Weekly Wrap there was evidence of “baby bulls” when we were talking about Friday’s market correction…
“The Dow was pressured right from the jump and at one point sank to a low of 10,230 before finishing the day with a 154 point decline. We had factored in a drop to 10,100 but during the panic, the “baby” bulls stepped-in and lifted the market. The Dow had started the week at 10,318 and we ended at 10,309. The fact this level held while Wall Street was on vacation was impressive given the curve ball we got.” (END)
If you remember, the first reports of the Dubai World debacle had the debt at $60 million and whispers were calling for as much as $80 million in the hole. The fact that they are working to restructure a smaller debt ($26 billion) has put the event in Wall Street’s rear-view mirror.
In fact, the bulls pushed the Dow above 10,500 for the first time since October of last year. We have been calling for Dow 10-8 and given the trend it seems like that target could be reached.
However, let Friday’s “warning” ALWAYS be a reminder that you should try to have both call AND put options in your portfolio. If you will look at all of our trades from 2009, month-to-month, you will notice we like to follow this rule. Sometimes we get caught too and we were stopped out of some nice trades but don’t let these “events” scare you.
We want momentum, either up or down. In other words, we want action. The bulls have been pretty much unstoppable since March and we will top out at some point. Until then, all we can do is play the trend because after all, the trend is your friend…
The dollar continues to get pounded like a porn star and at some point, it too, will rebound. The current trend has been a weaker dollar and a higher stock market. This pattern that has played out for months and we will have to wait and see at what point this doesn’t work anymore.
And Gold…we are already hearing cat calls of $1,600 and Gold $2,000. That worries us but at the same time we continue to watch the gold stocks go bananas. Barrick Gold (ABX, $46.07, up $3.38) jumped another 8% yesterday and set a 52-week high in the process.
We spotted the potential breakout in Barrick Gold back in November and for those of you who have yet to see our Members Area; here was the trade on 11/3/09 that returned our subscribers 38% in two days. (Quotes are from that day)
“Barrick Gold (ABX, $38.97, up $2.46)
Buy to OPEN November 40 calls (ABXKH, $1.20, up $0.73)
These calls have been exploding this morning. They OPENED at 40 cents and we started watching them at 60 cents. These calls could make a run to $2.00 and they are moving fast. Do not pay over $1.30-$1.35 for them. This will only be a one or two day trade and the stock appears to be headed to over $40. Its 52-week high is $42.10.” (END)
If you will notice, our trade setup was for a one or two day window and we followed our trading plan to a “T” by closing the call options for $1.65. We should have stayed on the action and maybe we should have rolled some of those profits into the December 45 calls (ABXLI, $2.20, up $1.49) which zoomed 200% yesterday but we didn’t see the continued breakout in the stock.
We still don’t know how high gold goes but one thing is clear, it is on a roll right now.
Tags: Barrick Gold, momentum stock option trading, option trading online, option trading picks, options mentoring, options newsletters, options track record, support and resistance levels, triple-digit option trades
Posted in Gold, Hot Stocks, Market Analysis, Market Commentary, Option Trades, Trading Psychology | Comments Off
Tuesday, December 1st, 2009
1:10pm (EST)
The bulls have pushed the market back to pre-Thanksgiving highs as the Dow is enjoying a 118 point gain and now stands at 10,463. The S&P 500 is back over 1,100 and is up 12 to 1,108 while the Nasdaq is up 31 points to 2,175.
We got a couple of mixed economic reports at 10am, but the news still gave the bulls confidence.
The Institute for Supply Management number came in at 53.6 in November from 55.7 in October. Not a good number as we had mentioned that Wall Street was looking for double nickels (55).
We got a huge housing number surprise. The National Association of Realtors said sales agreements rose 3.7% in October from September. It was the strongest level in over 3 years and a gain of over 30% from a year earlier. Many on Wall Street had expected the index would fall but we have been telling you that there may be a trade in the sector.
Gold continues to hit record highs and has topped $1,200 an ounce today. The yellow metal continues to be a safe haven and is up another $15 on a weaker dollar and policy comments from the Bank of Japan.
We would love to talk about more today but we want to get our subscribers into the Members Area. We have plenty to talk about with our current trades and there may be a couple more trades in the morning that we may add…
Tags: momentum stock option trading, option trading online, option trading picks, options mentoring, options newsletters, options track record, support and resistance levels, triple-digit option trades
Posted in Economic News, Market Analysis, Market Commentary | Comments Off
Tuesday, December 1st, 2009
9:10am (EST)
The market managed to end the month of November with a slight gain as the Dow added 35 points yesterday and finished at 10,344. The Dow and the S&P 500 rose more than 5% in November, their biggest monthly gain since July.
The S&P 500 closed at 1,095, up 4 points yesterday while the Nasdaq closed at 2,144, up 6. The market got its second wind in the afternoon when Dubai World said that its talks with banks revolve roughly $25 billion in debt, a number that is much smaller than the $60-$65 billion that has been floating around.
As a result, the Financial stocks traded higher and closed at their best levels in yesterday’s trading. Bank of America (BAC, $15.85, up $0.38), JPMorgan (JPM, $42.49, up $1.16) and American Express (AXP, $41.83, up $0.99) all had gains of over 2%.
On the flip side, American International Group (AIG, $28.40, down $4.90) dropped 15% yesterday and we were able to get our subscribers into an AIG trade that netted them nearly 50% on half of their positions in just a few hours. We update the trade this morning in the Members Area.
As far as today, we will be watching for the Institute for Supply Management (ISM) number which is due out at 10am. U.S. manufacturing activity is likely to show continued growth in November as Wall Street is expecting a reading of 55 in November, compared with 55.7 reading in October. A reading above 50 indicates growth which is what we would like to see.
Also at 10am, we get a look at construction spending. Economists expect construction spending to have declined 0.5% in October following a 0.8% rise in September. The National Association of Realtors will also release its pending home sales index for October.
As we head to press, the Dow futures are up 63 points to 10,397. S&P 500 futures are higher by 8, to 1,103, while the Nasdaq 100 futures are up 17, to 1,784. Current subscribers, please check the Members Area for the trade updates.
Tags: momentum stock option trading, option trading online, option trading picks, options mentoring, options newsletters, options track record, support and resistance levels, triple-digit option trades
Posted in Economic News, Financial Stocks, Market Analysis, Market Commentary | Comments Off
Monday, November 30th, 2009
1:00pm (EST)
It’s been another battle today as both bulls and bears struggle to gain momentum. The Dow opened with a slight loss and traded to a low of 10,273 before bouncing back and touching a high of 10,364. As Wall Street gets ready for the 2nd half of today’s action, the Dow is currently down 30 points to 10,280.
The market got a lift after the November Chicago PMI came in at 56.1, which was better than the 53 estimate that had been expected and is up from the 54.2 number we got last month. It looks like business activity in the U.S. Midwest is picking up.
As far as specific stocks we are following today…
Dendreon (DNDN, $27.33, up $0.09), which is frequently mentioned here at MomentumOptionsTrading.com, is getting a little bump today on rumors that AstraZeneca (AZN, $44.59, down $0.70) is looking at acquiring the company for $40 a share. We have been following this stock for nearly three years now and we have repeatedly said that we think Dendreon is a takeover candidate.
We have also mentioned the market potential of the company’s Provenge drug could be as high as $2.5 billion. The company will also host an Investor Conference on Tuesday from London. Hmmm…it’s too early to draw conclusions but the CEO himself has said they are looking to partner with someone overseas.
Other water-cooler talk we are hearing…Illumina (ILMN, $28.56, down $0.06) could be on Johnson & Johnson’s (JNJ, $62.57, down $0.32) list as an acquisition target. There are rumblings that JNJ could offer up to $38 a share for the company. Illumina has been a potential takeover target for months now and there are several firms on Wall Street who believe the same thing.
It looks like we missed the big move in American International Group (AIG, $29.30, down $4.00) this morning. We have a history with this company as well. In July, we profiled two bearish trades in AIG that made our subscribers 70% and 130%, respectively, on put options. We have been hesitant to go back to the well because of the volatility and the fact that the stock had been making new highs. In August the stock traded to a high of $55.
We had noticed the consolidation in the $35 area recently but today’s break below $30 has our attention. Today’s 12% drop in the shares have been a windfall for option traders. We think there could be further weakness and we take a look at some put options in the Members Area that are up a whopping 360% today!
Tags: American International Group, AstraZeneca, Dendreon, Illumina, momentum stock option trading, option trading online, option trading picks, options mentoring, options newsletters, options track record, support and resistance levels, triple-digit option trades
Posted in Company Commentary, Market Analysis, Trading Tips, Watch Lists | Comments Off
Monday, November 30th, 2009
9:05am (EST)
Futures are pointing to a lower open this morning as Wall Street tries to balance concern about fallout from Dubai’s debt crisis against good Black Friday news. Dubai’s market, which was opened today for the first time since the news announcement, fell nearly 6%.
Futures were higher as we headed to press last night. The Dow futures were up over 50 points but are now up only 18 after being lower by 10 earlier this morning.
There is worry that a $60 billion Dubai debt default could touch off a new round of credit market worries, which plagued stocks last year as Lehman Brothers collapsed and banks stopped lending to each other. Wall Street will be watching these developments and we are sure there are other fallouts to come from this.
One thing that could help the market today is the holiday shopping season. Preliminary figures show sales rose 0.5% on Friday, and online sales jumped 11% Thursday and Friday.
Gold is down $4 to 1,170 an ounce.
The market is showing mixed signals but we still like a couple of trades for today. Both are covered in the Members Area this morning…
Tags: momentum stock option trading, option trading online, option trading picks, options mentoring, options newsletters, options track record, support and resistance levels, triple-digit option trades
Posted in Company Commentary, Market Analysis, Market Commentary | Comments Off
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MomentumOptionsTrading.com Morning Update for 12/02/09
Wednesday, December 2nd, 2009
It’s as if the Dubai news never happened…
The market picked up more momentum on Tuesday, as the Dow added 126 points to close at 10,471. We mentioned in the Weekly Wrap there was evidence of “baby bulls” when we were talking about Friday’s market correction…
“The Dow was pressured right from the jump and at one point sank to a low of 10,230 before finishing the day with a 154 point decline. We had factored in a drop to 10,100 but during the panic, the “baby” bulls stepped-in and lifted the market. The Dow had started the week at 10,318 and we ended at 10,309. The fact this level held while Wall Street was on vacation was impressive given the curve ball we got.” (END)
If you remember, the first reports of the Dubai World debacle had the debt at $60 million and whispers were calling for as much as $80 million in the hole. The fact that they are working to restructure a smaller debt ($26 billion) has put the event in Wall Street’s rear-view mirror.
In fact, the bulls pushed the Dow above 10,500 for the first time since October of last year. We have been calling for Dow 10-8 and given the trend it seems like that target could be reached.
However, let Friday’s “warning” ALWAYS be a reminder that you should try to have both call AND put options in your portfolio. If you will look at all of our trades from 2009, month-to-month, you will notice we like to follow this rule. Sometimes we get caught too and we were stopped out of some nice trades but don’t let these “events” scare you.
We want momentum, either up or down. In other words, we want action. The bulls have been pretty much unstoppable since March and we will top out at some point. Until then, all we can do is play the trend because after all, the trend is your friend…
The dollar continues to get pounded like a porn star and at some point, it too, will rebound. The current trend has been a weaker dollar and a higher stock market. This pattern that has played out for months and we will have to wait and see at what point this doesn’t work anymore.
And Gold…we are already hearing cat calls of $1,600 and Gold $2,000. That worries us but at the same time we continue to watch the gold stocks go bananas. Barrick Gold (ABX, $46.07, up $3.38) jumped another 8% yesterday and set a 52-week high in the process.
We spotted the potential breakout in Barrick Gold back in November and for those of you who have yet to see our Members Area; here was the trade on 11/3/09 that returned our subscribers 38% in two days. (Quotes are from that day)
“Barrick Gold (ABX, $38.97, up $2.46)
Buy to OPEN November 40 calls (ABXKH, $1.20, up $0.73)
These calls have been exploding this morning. They OPENED at 40 cents and we started watching them at 60 cents. These calls could make a run to $2.00 and they are moving fast. Do not pay over $1.30-$1.35 for them. This will only be a one or two day trade and the stock appears to be headed to over $40. Its 52-week high is $42.10.” (END)
If you will notice, our trade setup was for a one or two day window and we followed our trading plan to a “T” by closing the call options for $1.65. We should have stayed on the action and maybe we should have rolled some of those profits into the December 45 calls (ABXLI, $2.20, up $1.49) which zoomed 200% yesterday but we didn’t see the continued breakout in the stock.
We still don’t know how high gold goes but one thing is clear, it is on a roll right now.
Tags: Barrick Gold, momentum stock option trading, option trading online, option trading picks, options mentoring, options newsletters, options track record, support and resistance levels, triple-digit option trades
Posted in Gold, Hot Stocks, Market Analysis, Market Commentary, Option Trades, Trading Psychology | Comments Off