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E*Trade On The Block

Tuesday, January 19th, 2010

9:10am(EST)

Futures are mixed as we head towards the opening bell this morning.  Dow futures are lower by 20, S&P 500 futures are off by 2 while the Nasdaq futures are up 4 points.

There was plenty of action in E*Trade Financial (ETFC, $1.84, up $0.11) last Friday as over 60 million shares traded hands.  There was a report that the company is in “advanced” talks regarding a sale.

It’s hard to get excited about a company who once dominated the online brokerage industry and a share price at less than $2.  From 1998 through 1999 this was one of the highest of flying stocks as two-for-one splits were common and shares made new highs daily.

There has been a lot of speculation as to who might buy the troubled brokerage firm but E*Trade has brand awareness which should account for some kind of premium.  TD Ameritrade (AMTD, $18.32, up $0.10) and Charles Schwab (SCHW, $19.00, down $0.18) have been in the mix as possible acquirers of E*Trade but we really don’t see an option trade with this one.

Option volume was brisk and the stock already trades like one.  However, we are avoiding options on stocks that trade under $5.00 because of the risk.  That still didn’t stop traders from placing huge bets on the February 2 calls (EUSBF, $0.12, up $0.07) which opened at 4 cents and returned 200% by the closing bell.  Over 10,000 contracts traded.

The April 2 calls (EUSDF, $0.20, up $0.05) traded 3,000 contracts after opening at 14 cents.  Considering this has been an ongoing rumor for some time and the fact that it would be safer to buy the stock, these two call options could expire worthless if no bid comes.  Stay away…

We have updated the Members Area for our current trades and there a few trades we are watching this morning.  If we see something, we will send out an alert.

MomentumOptionsTrading.com Weekly Wrap for 1/18/10

Monday, January 18th, 2010

8:00pm (EST)

It was a tough Friday for the bulls as the market suffered its worst decline for 2010 despite some solid earnings reports.  

The Dow fell 100 points for the day, erasing all of its gains for the week to close at 10,609.  The index reached a high of 10,767 and came thisclose to hitting our target of 10,800 which we set in August 2009.  For the week, the Dow lost 9 points…

The Nasdaq fell 1.2%, or 29 points, to close at 2,288.  The index had already blown past our target of 2,275, and for the week, the Tech-heavy index fell 30 points after touching a high of 2,326.

The S&P 500 fell 12 points, or 1.1%, and settled at 1,136.  We had set a target of 1,175 in August and the index reached a high of 1,150 this past week. 

Folks, we mention all of this for a reason (not to toot the horn) because it defines some of our trading strategies.  We have done well for our subscribers with the bull market rally that started in March 2009 and at some point the market will correct.  It may be 5%, 10%, or even 20% but no one knows when that will be.  When that happens there will be a time to buy put options and we saw some things on Friday that has made us cautious but it will take more than a 100 point drop to get any real “fear” in the bulls.    

We knew coming into the week there was the possibility of the market heading higher and we where there heading into Friday.  The two companies that we were counting on to take us past our target levels were Intel (INTC, $20.80, down $0.68) and JPMorgan Chase (JPM, $43.68, down $1.01). 

Both companies reported incredible earnings…Intel posted its highest gross profit margins ever, at 65% and JPMorgan earned a $3.3 billion profit in its latest quarter.  The fact that these two market heavyweights blew past Wall Street’s numbers and we could not get a nice rally was very discouraging for the most part.

We still think there’s a chance of a decent pop over the next few weeks as the heart of earnings season will get underway starting on Tuesday but a lot will depend on this week’s action. 

Here is a look at the earnings calendar (quotes are from Friday’s close):

Tuesday:  (Before the bell)  Citigroup (C, $3.42, down $0.09), Fastenal (FAST, $45.86, down $0.44), Parker Hannifin (PH, $58.56, down $0.23), Precision Castparts (PCP, $113.75, down $1.59), TD Ameritrade Holding (AMTD, $18.32, up $0.10). 

(After the bell)  Cree (CREE, $54.01, down $3.84), CSX (CSX, $50.04, down $0.51), International Business Machines (IBM, $131.78, down $0.53), NuVasive (NUVA, $30.68, down $0.28), Tessco Technologies (TESS, $17.51, up $0.25).   

Wednesday:  (Before the bell)  Bank of America (BAC, $16.26, down $0.56), Brinker International (EAT, $15.18, down $0.27), Coach (COH, $36.79, down $0.71), Jefferies Group (JEF, $25.48, down $0.34), M&T Bank (MTB, $73.16, down $2.18), Manpower (MAN, $57.06, down $1.88), U.S. Bancorp (USB, $24.62, down $0.71), Wells Fargo (WFC, $28.08, down $0.91). 

(After the bell)  Dr Reddy’s Laboratories (RDY, $26.98, down $0.14), eBay (EBAY, $22.47, down $0.41), F5 Networks (FFIV, $51.39, down $0.75), Kinder Morgan Energy Partners (KMP, $63.45, down $0.38), Seagate Technology (STX, $17.77, down $0.57), Starbucks (SBUX, $23.27, down $0.28). 

Thursday:  (Before the bell)  Charles Schwab (SCHW, $19.00, down $0.18), Fairchild Semiconductor (FCS, $8.77, down $0.45), Freeport McMoRan Copper & Gold (FCX, $84.30, down $0.78), Goldman Sachs (GS, $165.21, down $3.32), Morgan Stanley (MS, $30.38, down $0.82), PNC Financial Services Group (PNC, $56.68, down $1.16), Southwest Airlines (LUV, $11.28, down $0.18), United HealthGroup (UNH, $33.75, up $0.43), Xerox (XRX, $8.84, down $0.05).

(After the bell)  Capital One Financial (COF, $41.13, down $0.54), Deckers Outdoor (DECK, $108.72, down $0.37), Google (GOOG, $580.00, down $9.85), Intuitive Surgical (ISRG, $308.58, up $0.58).

Friday:  BB&T (BBT, $27.76, down $0.76), Exelon (EXC, $48.60, down $48.60, down $0.48), General Electric (GE, $16.44, down $0.26), Harley-Davidson (HOG, $25.08, down $0.65), Johnson Controls (JCI, $29.31, down $0.53), Kimerbly-Clark (KMB, $62.22, down $0.80), McDonalds (MCD, $62.28, down $0.37), Schlumberger (SLB, $70.83, down $0.46).

As you can see, some of the bigger names will be eBay, IBM, General Electric, Goldman, Google and the Financial stocks.  It is hard to say how the financials will trade over the near-term as Obama is trying to get as much as $120 billion from them as a fee or tax.  

Economic news:  Building Permits, PPI, and Housing Starts on Wednesday and Crude Inventories; Thursday Wall Street gets numbers on Initial Claims, Leading Indicators, and the Philly Fed.

We will be back in the morning with the trade updates and a fresh outlook.  We have updated the 2010 portfolio in the Members Area and hope to have a short video that will be ready on Tuesday as well.

As we head to press, Dow futures are up 32, Nasdaq futures are higher by 10 while the S&P 500 futures are getting a 4 point bump.

Dow Down Triple-Digits

Friday, January 15th, 2010

1:15pm (EST)

The odds were not in the bulls favor today…

We didn’t expect much from the market and mentioned this morning that January expiration day has not been a good day to be long in recent years.  We said the Dow has traded lower on 9 of the last 11 and today’s 1.3% decline has proved history is repeating itself once again.

The Dow is currently down 143 points to 10,567 and has given back all of its gains for the week.  The S&P 500 is off by 15 to 1,133 while the Nasdaq is getting hit for 33 point loss and is trading at 2,283.

There have been some solid earnings reports and economic news hasn’t been all that bad today but the market is struggling with the swift words from President Obama.  It seems the government is ticked off at the huge bonuses that the Financials firms are paying out…We won’t open that can of worms but that seems to be the negativity weighing on the market today.

We have mentioned our targets for the indexes and from our camp it looks like the market is nearing a top which makes it harder to trade.  It’s possible we rally for a few more weeks but once we get to February we think there’s a chance of a 5%-10% pullback.

One stock that is holding up well today is A123 Systems (AONE, $20.80, up $0.40).  We were looking at another option trade yesterday but the stock gapped at the open and was at $22.65 shortly after the opening bell.  Shares trended lower afterwards and came back down to the $20 level.

This looks like good support and we may be look at another trade for next week.  The last time out we booked a 119% return…

We have updated the Members Area once again today and we will be back Sunday or Monday night with the Weekly Wrap.  The market is closed on Monday.  Also, we will be releasing a short video in the Members Area this weekend so look for an email when we post it.

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Trader Comments:

    REGINA L.
    I just want you to know that I love the way you write and explain everything. I am new to this, and have lost 50% of my account until I met you guys. Iit is slowly coming back. I will be calling to set up a year
    of membership rather than the one quarter. Thanks again, and LOVE YOU ALL.

    STEVE T.
    Rick, I appreciate the advice. I think I will just sit back and utilize your selections only for awhile. This will obviously save me a great deal of money in commissions. I have gone thru your entire site including the video on money management. This has brought me to the stark realization that I have been trading too much for too little. I definitely have not been "swinging for the fences", but I also think I have been getting impatient with trades and getting out too fast. This has no doubt caused me too trade too much. I like, and definitely agree on, the advice on money management. Thanks for the help.

    SCOTT H.
    Thank you!!! I held on to the NFLX position since Nov. 13 at a cost of $1.89. Sold ½ on April 14th for a 540% return and the other ½ upon earnings for 702% return. Total profit of $11,615 a 621% return. Keep the recommendations coming and thanks to you and your team for the service you provide.

    PETER G.
    Rick & Team, GREAT Call on NKE for my two trading accounts:
    1) Entry at .65, out at 1.45, 1.55 Profit = $415
    2) Entry at .60, out at 1.75, 1.50 Profit = $485

    LAWRENCE O.
    Hey Rick! Here is an update on what your picks have done in my accounts.

    1) Great call on the JoyG March 55. I bought when you said, then bought again on one of the dips. Booked 80+% profit. Made enough to pay for your service for years to come.

    2) Also booked profits on your Berk Feb 74 (80%) and threw a major chunk of change at the March 75’s (190+%). I would have never known that Buffet's stock had split if it weren’t for your service. Bought the shares also for the long haul. Won’t look at them for another 20 years. Great job on getting us in before the indexes did.

    3) Took profit on your Imax March 12.5. 20 cent trailing stop at 1.90 yesterday. Not sure what the profit on that was, but profit is profit.

    I see that you took a loss on some of these. It’s all good. I look to trade your “ideas” not your exact calls. I THANK YOU! For your ideas and commentary. Keep up the good work. And keep those ideas coming.

    C.J.
    Loving this subscription so far! I got into the BRK feb 76 calls the day you talked about right before the split...now up over 300% (0.70 to 2.475)! Keep the good picks coming and let's see some OSIS and EMC upside soon! Just wanted to share my positive enthusiasm on your newsletter...it gives us individual investors great ideas on not only the options market, but also the broader equity market! Case in point is BRK...I can't always read the breaking business news but its easy to read your twice daily updates on my smartphone...helped me get some BRK shares immediately after the split which I will hold for the long haul! Thanks again!

    SHAUN
    Aloha Rick - Thank you so much for the great CL pick. I am not sure if there was buy-out/merger news or what but at 3PM today Colgate-Palmolive absolutely EXPLODED to the upside, and my calls turned into green candy when they went from 1.40 to 3.8 in a matter of seconds! I even sold a few for over 4.0! Much thanks and keep the solid picks up my friend, honestly. Only a fool would scoff at 267% gains... Peace!

    MICHAEL K.
    I like the fact that you ask for comments from subscribers. Good customer service. By the way, am enjoying the service so far. Some good
    profitable calls. Keep up the good work.

    PARAG P.
    Woo hoo! Out for 50% on WMT this am. Making up for my depression for getting out of pcln for a 30% gain monday :( you the man! any word on the manual? My friend Mike ( who I sent to your service) told me he emailed you about your integrity in reporting fills. I echo that sentiment big time.. keep it up! Cheers!

    JAY P.
    Hi Rick, as a new member all I can say is, 'show off' LOL, with PCLN.

    MIKE
    Rick, I am a new subscriber to your service, and I want to say I am impressed. I am impressed by your results, but more than that I am impressed by your reporting of your fills. You could have easily said you got that Wal-Mart call today for 80 cents, instead you reported 98 cents! Good job and keep it up, I watched the reporting of the fills first, and then I subscribed. Thank You.

    TRISH D.
    Hi, good morning. I jumped the gun a little on this one (PCLN). But still made $1,675.00 profit!! Very happy!! Keep up the good work!! Thanks.

    MIN L.
    Hi there, I have joined recently, and I am very happy to tell you that I am up over $10,000 on your picks in a month. I started on 10/7 with the Intel pick. I'll be your member for life. Please don't quit on us. Also, I am learning a lot about options. I didn’t get in your recent APOL and that gold trade and only had one loss on CHK. I appreciate all the DD you do. I enjoy your market commentaries. Best advice site period, and I have tried a few here and there. Again, you guys rock!

    JOE G.
    Thanks be to Momentum Options Trading for providing me with some fantastic wins. I just started with this service and am up nearly 50% in less than a month. There have been losses, but if I manage them properly, I will continue the best efforts given on the blog (in which there are no complaints). What a great cause for humanity. I feel more confident about my trades and continue to play the wins. Best of all, I am now keeping my regular paychecks in the bank! Thank you!

    GREG F.
    Rick - I wanted to say thanks for getting me started on the right foot with your service. I have made six trades since starting on October 22, 2009. Five are winners and One loser netting me $6,245. Thanks again and keep the trade recommendations coming.

    NOEL
    I got into the Nike 60 Call at 1.85, sold at 5.00, also bought a 55 put at 1.05, but got stopped out at .35. What a ride! $2830.00 in the black even with the put. It's right at 100% return. I hope earnings season coming up is going to look like this trade.

    TODD F.
    Nice call on Nike. I think I'll go buy a pair with my profits! : ) I did the straddle for safety but still made 62% on the trade. Not bad for less than 24 hours. If Goldman is right, then the Nov 70s or 75's could be a steal today.

    PAUL H.
    What a sweet way to get introduced to Momentum. My first trade based on your picks and it a 2X. Thank you!

    NOEL
    “Limit order was set at 1.60 on RIMM so it sold. I may have left some money on the table but you can't go broke making a profit. That was a fun trade. Thank you. Good call. I’ve been watching and trading Rick's advice since March. It’s usually a fun ride, but I give him heck when it's wrong to. :) ”

    CHRISTIAN
    “Your service rocks! I made bank on Dendreon last week! The other thing I have to say is that it took me quite a while to find a REAL options trading service like yours. Most of what’s out there is 99% scam and very sketchy. Momentum Options Trading is the first service I found that I can trust and seriously make money with.”

    JOHN
    “I made $420.00 on ANF in 2 days. Thanks for the trade and updates on getting out of the trade.”

    CHARLES M.
    “I did follow a lot of your trades with 1-2 contracts per trade and YTD I’m up 108%. I try not to follow blindly by not entering all of your trades and sometimes entering the ones you don’t. I entered AIG a few weeks ago against recommendation – that one hurt.”

    BRYAN C.
    “I have been following you for several months and am interested in the new service. I hate to see the free service go away but as they say, “all good things must come to an end”. My ability to join will be greatly influenced by the monthly fee so I’m very curious to see the new prices. Thanks for making April a great month for me and my family.”

    JOHN H.
    “I have really enjoyed the past month since finding your blog. You have made some great calls. I would appreciate info. on the new options mentoring program. Thanks.”

    JEFFREY
    “Hi Rick, I have been following your blog for several months now and I would like to be including on the list for your new service and to receive more information about it. And yes I was a Dendreon winner with your tips. Turned $280 into $7700, and literally saved my butt.”

    ED
    “I made over 6k on your Dendreon trade, and I’m very interested in learning how you pick and trade options. Sign me up.”

    GREG
    “Rick – Wow what a day! I got in at the Dendreon calls at $2.25. Thanks to for your advice. I appreciate that. This company has a lock on this type of therapy and no one else in the world is close. Kind of reminds me of the type of companies that Peter Lynch and Warren Buffet suggest that investments be made in. Companies that can build a moat around their business model, that allows them to charge a premium for their product or service. In other words - a monopoly.”

    KEN
    “Hi Rick, Thank you so much for the Dendreon trade, I made almost $10,000 with that trade with a little over $2,000 investment. You have shown me the power of options trading. Again, thank you so much for all your inputs.”

    GARETT
    “Hi Rick, thanks for the encouragement to play the dendreon calls! did freaking great! Got in the first lot at $1.44 on 3-24-09, sold at $2.45, 70% not bad. Bought it back at $2.30 on 4-7-09 closed out on 4-14-09 for 454% gain! Wow! I love it when that happens. So, thanks the encouragement to get back in when others were saying sell, sell, sell. Keep up the good work.”

    TERENCE
    “Rick – Thanks for Dendreon – it has made all the headlines today! I missed on RIMM earlier, but I’ve been holding onto DNDN calls since 3rd week March. Of course today it all paid off today, as DNDN rocketed up.”

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