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Monday, November 19th, 2012
9:00am(EST)
“We said last week there was a good chance the mini trading range the market had been in was about to crack and all signs were favoring the bears. The move lower from the previous 5-week trading range served as serious resistance and the breakdown from the current trading range could lead to a possible correction if the zombies aren’t careful.
Of course, the big worry as soon as the Presidential Election ended was the Fiscal Cliff and the rhetoric that would come on Friday. The Republicans have made it clear they are against raising taxes on individuals and businesses making more than $250,000 because of the impact it will have on future economic growth. They argue 7 million jobs will be lost.
The Democrats want to raise taxes, implement ObamaCare which is already forcing companies to cut back on employee hours so they won’ t have to offer healthcare benefits, and increase taxes on capital gains and dividends.
Needless to say, this is going to get nasty and it won’t be solved anytime soon. If the zombies can’t come to agreement on nearly $600 billion in spending cuts and tax increases by yearend, the talk is the U.S. economy will go into another recession. Unemployment could surge above 9% by the end of next year, or 20% if you count the people who have given up working that the government doesn’t count.
We aren’t Vegas, but the odds of the zombies pushing the U.S. off the cliff are running at 5-to-1, or 20%, but could increase if Congress drags its feet. There are talks scheduled for this Friday at the White House (Monday or Tuesday was just way too soon we suppose) and Thanksgiving is next week. Given the lines in the sand that were drawn this past Friday, this leaves the earliest we see something getting done is December.
This leaves the bulls in a volatile situation which is only likely to pick up from here on out until these issues are resolved.
As the rest of the world watches our soap opera play out, headlines from across the pond could also come back into play. There were more riots in Greece last week after the country approved additional austerity measures to ensure an upcoming aid payment. The country continues to blow through cash and will try to raise 3 billion euros on Tuesday in an attempt to sell debt through bonds. Why any investor would buy these bonds or why Greece continues to get more money baffles us because they can’t ever pay it back.
Same deal with Spain. The country so far has refrained from asking for an “official” bailout that would trigger bond purchases from the European Central Bank but it could be coming. We aren’t sure how the markets will react to this news that could also hit this week but the ECB wants Spain to ask for a handout so that it will reduce the yields on their bonds.
The fight over money, taxes, and power between the zombies will weigh on the market over the near-term as earnings wind down and the holiday’s comes around. However, we did mention the week before Thanksgiving is usually bullish and the indexes are due for a bounce. It is also November options expiration week and it will only add to the volatility.
Over the past 18 years, the Dow has traded higher for the week in 15 of them. However, Monday’s have been bearish 7 out of the last 12 during November option expiration week with a nasty loss of nearly 3% in 2008. The index fell from 8,497 to 8,273 which would be roughly 350 Dow points at current levels.
Friday November expiration has seen the Dow rally 7 out of the last 9 years with 2008 showing jaw dropping gains. The blue-chips surged nearly 500 points, or 6.5%, after moving from 7,552 to 8,046. We mentioned on Friday some of the wild price swings the Dow endured in 2008 and while we don’t believe the index will see a 3% or 6% single-day drop, it could happen over the next few weeks if there is continued weakness and the finger-pointing becomes middle fingers between the Republicans and Democrats.
While we have penciled in a possible rebound, we still believe our 5% targets for all of the indexes will trigger and we often remind you that once there is a breakout or breakdown out of a trading range there are fluff targets.
From our 10/28/12 Weekly Wrap:
“There are a ton of fund managers that are underperforming the market and some of them have been caught on the wrong side of the recent volatility trying to make up for lost ground. At some point, there could be a bottom and strong rally but we have to be prepared for both cases. It was good to break out of the trading range to the downside but they too can sometimes get “stretched” at the top and at the bottom so we have to realize this as well.
So how low could the indexes go if the 200-day MA’s break and there is panic selling?
The Dow touched a low of 12,035 in early June and the mid-July low was 12,492. The June 4 low for the S&P 500 was 1,266 while the July low was 1,325. The Nasdaq lows were 2,726 and 2,837 in June/ July while the Russell 2000 kissed 729 and 765, respectively”. (END) (from11/11/2012 Weekly Wrap/ Monday Morning Outlook)…
The market started the week off in a tight range and ended flat for the session. It was the calm before the storm as the bears spent the next 2 days hammering the bulls. The major indexes easily tested our mid-October downside targets of Dow 12,600; S&P 1,350; Nasdaq 2,900; Russell (2000) 780 and as you can see from our aforementioned comments from above, our “fluff” targets.
The bears kept the pressure on into Thursday but lower levels of support came into play as there was a slight bounce off the July lows heading into Friday’s Fiscal Cliff talks. The zombies gave the bulls something to nibble on as they acknowledged a deal could be in the works but can the market trust them is the question.
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If you are not a subscriber but would like to read more please click here. We are one of the fastest growing stock options trading advisors on the internet and we are doing well for 2012. We offer 2-3 powerful call or put option trades each week (depending on market conditions) aimed at triple-digit returns for our Daily newsletter and our Weekly Wrap Covered Call Portfolio strides for double-digit returns on a monthly basis and is 26-0. Together, we are 146-54 (73% win rate) for both newsletters and we doubt you will find a better options trading service.
Tags: About options trading, option trading, stock and option, stock exchange, stock to buy, stock trading, trade online, trading futures, trading online, trading system, what are stock options, what is a call option, what is option trading
Posted in Company Commentary, Economic News, Market Analysis, Market Commentary | Comments Off
Monday, October 15th, 2012
9:00am (EST)
“The first clue we were looking for last week was the close on Monday. The bears had won 3-straight Friday/ Monday’s but that streak was snapped as the Dow and S&P 500 were up 0.5%, on average, Monday. This past Friday was negative but the blue-chips were up and the VIX closed lower. The Monday win was only the second in 4 months for the bulls and if this Monday is negative then we can still use the closes as clues money is still moving out of the market.
Shares of Alcoa (AA, $9.09, up $0.02) were up for the week but we wanted to see a close past $9.20 as indication the company might report better-than-expected earnings. Alcoa has beaten Wall Street’s estimates the last 2 quarters, and they still might, but after opening higher, shares finished lower for the session back in July. They will confess on Tuesday after the bell.
As far as the overall 3Q earnings picture, the suit-and-ties are looking for quarterly earnings to decline by 2%. The biggest sectors that could drag down results are the oil and gas companies. Many of the pencil-pushers have said overall earnings would be up 2%, if not for their weaker-than-expected results. However, there were some big Tech names that have already warned which makes this a treacherous earnings season to trade.
In some cases, the bar has been lowered from the previous quarter so companies could surprise to the upside. There will also be a few high profile companies who didn’t warn over the past week or two that could miss by a penny or three. These companies could see their stock prices hammered if they miss estimates by a mile and investors’ wonder why they didn’t warn.
We have also said the Financial stocks needed to show some strength and over the past few weeks they have. JPMorgan Chase (JPM, $41.71, down $0.11) and Wells Fargo (WFC, $35.48, down $0.13) will report their numbers on Friday so watch how they trade this week.
The biggest development we saw on Friday was how Apple (AAPL, $652.59, down $14.21) traded. We profiled 2 sweet option trades for the Daily last week using Apple call options as we said to watch for the $650 level to hold last Tuesday. Shares made a run to $675 two days later which we said was resistance and where to close the trade at. The 2 call option trades made 100% and 50%, respectively, in 48 hours. We are thinking about playing Apple this week but we could be playing it to the downside if $650 doesn’t hold.
Apple is a big component of the market and any weakness trickles down to the major averages just like it does when shares are rallying. Apple shares make up 20% of the Nasdaq so a test back to $620 would spell trouble for Tech and the market, overall. If $650 holds and Apple announces the iPad mini this week like we have predicted then shares could push $675 or even $700 again. Monday could be a big swing day and we will be watching the stock like a hawk at the open.
Europe will be back in the news this week, specifically Greece and Spain. There were rumors Spain would ask for a bailout over the weekend but they will likely wait a couple of more weeks before doing so. Greece wants the European Central Bank (ECB) to give them more money or forgive more debt so this situation is only worsening and could be in the headlines this week.
The charts are bullish and if the bulls can hold or advance the flag to start the week, we could see a push towards our upper end price targets. The fundamentals do not support a further rally but we have to trade what is in front of us and respect the wall of worry. At the same time, we are preparing for some sort of pullback, perhaps major, and when we will get defensive.
We said last week to respect October’s history but we also know you can’t fight the trend or the Fed which is why we have done well with call options over the past couple of months. We still have some defensive positions open in our Daily for protection and if the market continues higher we should get called away from a few more trades in our Weekly.
There are still a number of headwinds, both positive and negative, facing the market but by the end of the week, we should see one side emerge from the current 3-week trading range. The bulls have shown strength all year long but the bears might growl once more before they go in hibernation for the rest of the year.” (from 10/7/2012 Weekly Wrap/ Monday Morning Outlook)…
The market had its worst week in nearly 5 months as the bears scored a -2+% win. The downside targets we set last week were all in play on Friday as the bulls held support for the most part. The pullback lasted all week long as the bears pulled a clean sweep to run their winning streak to 6-straight sessions. The question is will Wall Street buy the dip or will the bears’ growl grow louder as we head into the heart of 3Q earnings season.
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If you are not a subscriber but would like to read more please click here. We are one of the fastest growing stock options trading advisors on the internet and we are doing well for 2012. We offer 2-3 powerful call or put option trades each week (depending on market conditions) aimed at triple-digit returns for our Daily newsletter and our Weekly Wrap Covered Call Portfolio strides for double-digit returns on a monthly basis and is 24-0. Together, we are 135-45 (75% win rate) for both newsletters and we doubt you will find a hotter options trading service.
Tags: Covered Calls, JPM, JPM earnings, option trading
Posted in Financial Stocks, Market Analysis, Market Commentary, Strategies | Comments Off
Sunday, October 7th, 2012
11:30pm (EST)
1. Market Summary
2. Vale S.A. (VALE) – Approaching Value
3. Earnings
4. Weekly Wrap Portfolio Update
5. Week Ahead
(To view the charts, please log into the Members Area and go to the Weekly Wrap Premium section. We have a ton of charts to go over so please look at them to get the clues on where this market is headed. Also, we are running a little late so please give us about an hour to get the charts loaded to the site.)
= = = = = = = = = = = = = = =
If you are not a subscriber but would like to read more, please click here.
We are one of the fastest growing stock options trading advisors on the internet and we are doing tremendously well for 2012. Since mid-August, we have closed 19-out-of-21 winning recommendations. We offer 2-3 powerful call or put option trades each week (depending on market conditions) aimed at triple-digit returns for our Daily newsletter and our Weekly Wrap Covered Call Portfolio strides for double-digit returns on a monthly basis and is 24-0. Together, we are 133-45 (75% win rate) for both newsletters and we doubt you will find a hotter options trading service.
Tags: About options trading, option trading, stock and option, stock exchange, stock to buy, stock trading, trade online, trading futures, trading online, trading system, what are stock options, what is a call option, what is option trading
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Tuesday, October 2nd, 2012
9:00am (EST)
The bulls got off to an impressive start on Monday but the bears held down resistance and were able to grab some of the market’s pie by the closing bell. There were a couple of upgrades before the open that helped the blue-chips hold their steady gains but Tech and the small-caps were showing some weakness by midday which kept the rally in check.
The Dow advanced 78 points, or 0.6%, to finish at 13,515. General Electric (GE, $22.81, up $0.10), International Business Machines (IBM, $210.47, up $3.02) and Travelers (TRV, $69.07, up $0.81) were dancing with 52-weeks high for much of the session which helped the blue-chips pushed a high of 13,598 shortly after the open. However, the 161 point gain was cut in half by the close as resistance at 13,600 continues to be a headache. The index was able to hold 13,500 which was bullish but still faces risk down to 13,350.
The S&P 500 gained 4 points, or 0.3%, to settle at 1,444. The index reached a peak of 1,457 and was able to clear the 1,450 level but also gave up the majority of its gains as the session wore on. The close below resistance was slightly bearish and keeps 1,425 in play but the index held positive territory all day long which was slightly bullish.
The Nasdaq slipped 3 points, or 0.1%, to close at 3,113. Tech fell just short of clearing 3,150 as the high came in at 3,146.99 but by lunch, the index was in negative territory. The low for the session came in at 3,103 and it will be important for the bulls to hold 3,100 this week. A close above 3,150 keeps 3,200 in play.
The Russell 2000 added 3 points, or 0.3%, to end at 840 while the S&P Volatility Index ($VIX, 16.32, up 0.59) ended with a 4% gain after trading to a low of 15.13. The fact that the VIX stayed above 15 on the 1% pop at the open was slightly bearish as the index went out near its high.
Financial stocks held up well and if the bulls are going to rebound and challenge new highs, this sector will have to continue to show some strength (along with Tech). We have listed one of our favorite Financial Stocks on our Watch List this morning for a possible option play but we want a little more confirmation before going long.
Futures are showing a higher open this morning as we head to press. Dow futures are up 39 points to 13,476 while the S&P 500 futures are higher by 7 points to 1,443. The Nasdaq 100 futures are advancing 13 points to 2,801.
Tags: option trading, stock and option, stock exchange, stock to buy, stock trading, trade online, trading futures, trading online, trading system, what are stock options, what is a call option, what is option trading
Posted in Market Analysis, Market Commentary | Comments Off
Thursday, September 27th, 2012
9:00am (EST)
The bears continued their assault on the next wave of support as they extended their rally to 5-straight sessions. Although there was as light bid under the market that held for much of the day, it disappeared in the final hour of trading.
The Dow dipped 44 points, or 0.3%, to close at 13,413. We have mentioned 13,350 as the next wave of support and yesterday’s low was 13.406. The high was 13,480 as prior support at 13,500 has now become near-term resistance. A move below 13,350 could get 13,250 here, quickly.
The S&P 500 gave back 8 points, or 0.6%, to settle at 1,433. The low for the day came in at 1,430 leaving the bears within spitting distance of our 1,425 target. A breech below this level gets 1,400 in play. The bulls will attempt to keep 1,450 in play but it is becoming an uphill battle.
The Nasdaq declined 24 points, or 0.8%, to finish at 3,093. Tech slipped just below our 3,100 support target which now gets 3,050 in play. This, along with 1,400 on the S&P, were major battle grounds back in August and into early September before the bulls ran wild.
The Russell 2000 fell 5 points, or 0.6%, and went out at 833.93. The small-caps tested 831 and 830 held but a break below this level gets 820 in play. The S&P 500 Volatility Index ($VIX, 16.81, up 1.38) jumped another 9%. The VIX traded up to 17.08 and we warned coming into the week that on a move above the 15 level, 17.50 could be tested. From there, a trip to 20 on some nastiness could be in the mix.
We closed another winning trade yesterday for a nice double-digit profit which has given us a recent streak of 17-out-of-19 winners since mid-August. This includes 3 triple digits winners:
+193% on WellPoint (WLP) put options in 9 days
+113% on Monster Beverage (MNST) put options 8 days
+160% on Green Mountain Coffee Roasters (GMCR) call options in 24 hours
We also had 4 winners that have produced 50+% in a short period of time.
We do realize, however, that the market could become choppy in October which isn’t always the best environment to trade in, but we do believe next month will give us the clues on how the rest of the year plays out.
We will cover more of this over the weekend but for now let’s roll with what the market is giving us. We may have action to take this morning on a few of our current trades as we look to lock-in profits as well as NEW TRADES. We have some low hanging fruit on our Watch List that could be ripe for the picking.
Futures are showing a nice rebound today and look like this as we head to press: Dow (+58); S&P 500 (+7), Nasdaq (+9). The bulls will need to hold their gains today to trip the recent trend.
Subscribers, check the Members Area for the updates.
Tags: a chance." About options trading, option trading, stock and option, stock exchange, stock to buy, stock trading, trade online, trading futures, trading online, trading system, what are stock options, what is a call option, what is option trading
Posted in Market Analysis, Market Commentary, Strategies, Trade Update | Comments Off
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Bulls Ready to Rebound
Monday, November 19th, 2012
9:00am(EST)
“We said last week there was a good chance the mini trading range the market had been in was about to crack and all signs were favoring the bears. The move lower from the previous 5-week trading range served as serious resistance and the breakdown from the current trading range could lead to a possible correction if the zombies aren’t careful.
Of course, the big worry as soon as the Presidential Election ended was the Fiscal Cliff and the rhetoric that would come on Friday. The Republicans have made it clear they are against raising taxes on individuals and businesses making more than $250,000 because of the impact it will have on future economic growth. They argue 7 million jobs will be lost.
The Democrats want to raise taxes, implement ObamaCare which is already forcing companies to cut back on employee hours so they won’ t have to offer healthcare benefits, and increase taxes on capital gains and dividends.
Needless to say, this is going to get nasty and it won’t be solved anytime soon. If the zombies can’t come to agreement on nearly $600 billion in spending cuts and tax increases by yearend, the talk is the U.S. economy will go into another recession. Unemployment could surge above 9% by the end of next year, or 20% if you count the people who have given up working that the government doesn’t count.
We aren’t Vegas, but the odds of the zombies pushing the U.S. off the cliff are running at 5-to-1, or 20%, but could increase if Congress drags its feet. There are talks scheduled for this Friday at the White House (Monday or Tuesday was just way too soon we suppose) and Thanksgiving is next week. Given the lines in the sand that were drawn this past Friday, this leaves the earliest we see something getting done is December.
This leaves the bulls in a volatile situation which is only likely to pick up from here on out until these issues are resolved.
As the rest of the world watches our soap opera play out, headlines from across the pond could also come back into play. There were more riots in Greece last week after the country approved additional austerity measures to ensure an upcoming aid payment. The country continues to blow through cash and will try to raise 3 billion euros on Tuesday in an attempt to sell debt through bonds. Why any investor would buy these bonds or why Greece continues to get more money baffles us because they can’t ever pay it back.
Same deal with Spain. The country so far has refrained from asking for an “official” bailout that would trigger bond purchases from the European Central Bank but it could be coming. We aren’t sure how the markets will react to this news that could also hit this week but the ECB wants Spain to ask for a handout so that it will reduce the yields on their bonds.
The fight over money, taxes, and power between the zombies will weigh on the market over the near-term as earnings wind down and the holiday’s comes around. However, we did mention the week before Thanksgiving is usually bullish and the indexes are due for a bounce. It is also November options expiration week and it will only add to the volatility.
Over the past 18 years, the Dow has traded higher for the week in 15 of them. However, Monday’s have been bearish 7 out of the last 12 during November option expiration week with a nasty loss of nearly 3% in 2008. The index fell from 8,497 to 8,273 which would be roughly 350 Dow points at current levels.
Friday November expiration has seen the Dow rally 7 out of the last 9 years with 2008 showing jaw dropping gains. The blue-chips surged nearly 500 points, or 6.5%, after moving from 7,552 to 8,046. We mentioned on Friday some of the wild price swings the Dow endured in 2008 and while we don’t believe the index will see a 3% or 6% single-day drop, it could happen over the next few weeks if there is continued weakness and the finger-pointing becomes middle fingers between the Republicans and Democrats.
While we have penciled in a possible rebound, we still believe our 5% targets for all of the indexes will trigger and we often remind you that once there is a breakout or breakdown out of a trading range there are fluff targets.
From our 10/28/12 Weekly Wrap:
“There are a ton of fund managers that are underperforming the market and some of them have been caught on the wrong side of the recent volatility trying to make up for lost ground. At some point, there could be a bottom and strong rally but we have to be prepared for both cases. It was good to break out of the trading range to the downside but they too can sometimes get “stretched” at the top and at the bottom so we have to realize this as well.
So how low could the indexes go if the 200-day MA’s break and there is panic selling?
The Dow touched a low of 12,035 in early June and the mid-July low was 12,492. The June 4 low for the S&P 500 was 1,266 while the July low was 1,325. The Nasdaq lows were 2,726 and 2,837 in June/ July while the Russell 2000 kissed 729 and 765, respectively”. (END) (from11/11/2012 Weekly Wrap/ Monday Morning Outlook)…
The market started the week off in a tight range and ended flat for the session. It was the calm before the storm as the bears spent the next 2 days hammering the bulls. The major indexes easily tested our mid-October downside targets of Dow 12,600; S&P 1,350; Nasdaq 2,900; Russell (2000) 780 and as you can see from our aforementioned comments from above, our “fluff” targets.
The bears kept the pressure on into Thursday but lower levels of support came into play as there was a slight bounce off the July lows heading into Friday’s Fiscal Cliff talks. The zombies gave the bulls something to nibble on as they acknowledged a deal could be in the works but can the market trust them is the question.
***********************************
If you are not a subscriber but would like to read more please click here. We are one of the fastest growing stock options trading advisors on the internet and we are doing well for 2012. We offer 2-3 powerful call or put option trades each week (depending on market conditions) aimed at triple-digit returns for our Daily newsletter and our Weekly Wrap Covered Call Portfolio strides for double-digit returns on a monthly basis and is 26-0. Together, we are 146-54 (73% win rate) for both newsletters and we doubt you will find a better options trading service.
Tags: About options trading, option trading, stock and option, stock exchange, stock to buy, stock trading, trade online, trading futures, trading online, trading system, what are stock options, what is a call option, what is option trading
Posted in Company Commentary, Economic News, Market Analysis, Market Commentary | Comments Off