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Housing Starts Drops Market

Tuesday, October 20th, 2009

1:00pm (EST)

The bears took advantage of a weak housing report today and have crashed the earnings party the bulls were ready to have.  The Commerce Department said applications for home building permits, a measure of future construction, fell in September by the largest amount in five months.  Not a good sign for the housing industry which has been struggling to recover this year.

We mentioned Apple’s (AAPL, $199.00, up $9.14) earnings this morning and we knew $200 would be the new battle ground for the stock.  Shares are now trading at a ”premium” according to some analysts and could fall over the near-term now that all of the hoopla is out.  And that could be the case but we tend to shy away from buying Apple put options because it is such a strong company.  It looks ripe for a short at these levels but I don’t think I’d sleep easy betting against Apple no matter how high shares have run.

I was sure hoping the company would announce a stock-split but that didn’t happen.  A 3-for-1 split would put shares at $67 and make it affordable for the retail investor to purchase the stock again.  The smartphone market will get even more intense over the next several quarters but Apple is head and shoulders above the competition.  And Mac sales are set to EXPLODE. 

Caterpillar (CAT, $59.00, up $1.15) also came in with a great report as the company posted earnings of $0.64 a share, blowing-out Wall Street’s estimate of just $0.06 a share.  Shares have traded to a high of $61 and the outperformance was attributed to the foreign exchange, lower tax rates and accounting.  Revenues came in at $7.3 billion, versus estimates of $7.5 billion but Caterpillar believes the worst is behind us.  Quote…the company’s CEO now sees “encouraging signs that indicate a recovery may be underway.”

Yahoo (YHOO, $16.95, down $0.26) reports after the bell and Wall Street is looking for earnings of $0.07 a share on revenue of $1.1 billion.  For the second quarter, Yahoo did 16 cents a share and easily doubled 8 cents the Street was looking for.  The November 17 calls (YHQKR, $0.85, down $0.10) have traded over 7,000 contracts compared with 3,500 contracts of the November 17 puts (YHQWR, $0.90, up $0.20).  That is a 2-to-1 ratio for the bulls and the action is suggesting an 8%-10% move up or down on Wednesday.  We’d love to play this one but we are going to sit on the sidelines. 

As we head to press, the Dow is down 87 points to 10,005, the S&P 500 is off by 10 to 1,087 while the Nasdaq is lower by 21 points and is trading at 2,155.  We have profiled a new trade today and it is in the retail sector.  If you are a current subscriber, please check the Members Area NOW for the 1pm Update.

Bulls Ready to Run

Monday, October 19th, 2009

9:00am (EST) 

MARKET COMMENTARY

Futures are pointing towards a higher open this morning after reversing course overnight.  There are a number of companies reporting earnings this morning as the bulk of 3Q reports get underway this week.

Hasbro (HAS, $29.52) said it earned $150 million, or $0.99 a share, versus $138 million, or $0.89 a share, a year ago.  Wall Street had estimates pegged at $0.93 a share. 

Gannett (GCI, $13.00) saw its third-quarter profits fall 53% but results still beat Wall Street’s expectations.  The company earned $74 million, or $0.31 a share, compared with a profit of $158 million, or $0.69 a share, in the year-ago period.

As we head to press, Dow futures are higher by 45, to 9,969. S&P 500 futures are up 5, to 1,088, while the Nasdaq 100 futures are showing a 10 point pop to 1,742.

About 25% of the S&P 500 will report earnings this week so we are expecting some volatility.  Subscribers, check the Members Area for the trade updates…

EARNINGS

Monday:  Apple (AAPL, $188.05, down $2.51), BB&T (BBT, $28.25,down $0.36), Boston Scientific (BSX, $10.02, down $0.08), Eaton (ETN, $60.42, up $0.23), Gannett (GCI, $13.00, down $0.19), Hasbro (HAS, $29.52, up $0.83), Jefferies (JEF, $29.91, down $0.45), Lincare Holdings (LNCR, $31.75, up $0.27) and Texas Instruments (TXN, $22.75, down $0.50). 

Tuesday:  Biogen Idec (BIIB, $49.20, down $0.59), BlackRock (BLK, $225.55, down $0.61), Brinker International (EAT, $16.50, up $0.36), Coach (COH, $34.11, down $0.60), Coca-Cola (KO, $55.01, up $0.09), Cree (CREE, $40.33, up $0.06), DuPont (DD, $34.10, down $0.47), Forest Laboratories (FRX, $29.66, down $0.52), Gilead Sciences (GILD, $46.17, down $0.46), Intuitive Surgical (ISRG, $255.43, down $3.90), Lexmark International (LXK, $22.15, down $0.44), optionsXpress Holdings (OXPS, $18.17, down $0.09), Peabody Energy (BTU, $41.90, down $0.35), Pfizer (PFE, $17.77, up $0.11), SanDisk (SNDK, $20.98, down $1.02), Sherwin-Williams (SHW, $62.65, down $0.45), Sonic (SONC, $11.04, up $0.30), State Street (STT, $52.92, down $1.83), United Technologies (UTX, $64.89, up $0.49), Western Union (WU, $19.78, down $0.08) and Yahoo (YHOO, $16.81, up $0.29).

Wednesday:  Altria Group (MO, $18.27, up $0.02), AmeriCredit (ACF, $16.59, down $0.69), Amgen (AMGN, $61.32, down $0.51), eBay (EBAY, $24.49, down $0.42), Eli Lilly (LLY, $34.44, down $0.06),  F5 Networks (FFIV, $42.63, down $0.95),  Freeport-McMoRan Copper & Gold (FCX, $75.73, down $0.20), P.F. Chang’s China Bistro (PFCB, $34.88, down $0.12), Piper Jaffray (PJC, $55.77, down $1.63), Stanley Works (SWK, $45.75, down $0.09), Tractor Supply (TSCO, $52.37, down $0.08), U.S. Bancorp (USB, $23.41, down $0.60), VMware (VMW, $44.76, down $0.81) and Wells Fargo (WFC, $30.02, down $1.36).

Thursday: 3M Company (MMM, $76.02, down $0.75), Amazon.com (AMZN, $95.32, down $0.69), American Express (AXP, $34.95, down $0.59), AT&T (T, $25.70, down $0.21), Black & Decker (BDK, $50.20, down $1.00), Bristol-Myers Squibb (BMY, $22.88, down $0.33), Broadcom (BRCM, $29.98, down $0.40), Capital One Financial (COF, $36.35, down $1.77), Chipotle Mexican Grill (CMG, $90.53, down $0.50), Greenhill (GHL, $95.12, down $0.37), Interactive Brokers Group (IBKR, $20.33, down $0.60), JetBlue Airways (JBLU, $5.76, up $0.01), Juniper Networks (JNPR, $26.50, down $0.78), Legg Mason (LM, $32,69, down $1.01), McDonald’s (MCD, $58.78, up $0.58), Merck (MRK, $33.21, down $0.09), Netflix (NFLX, $48.99, down $1.36), Philip Morris International (PM, $50.95, up $0.57), PNC Financial Services Group (PNC, $44.71, down $1.09), Potash (POT, $97.40, up $3.21), Schering-Plough (SGP, $29.29, down $0.20), Travelers Companies (TRV, $48.67, up $0.12) and United Parcel Service (UPS, $57.12, down $0.59).

Friday:  Dr. Reddy’s Laboratories (RDY, $20.46, down $0.37), Fortune Brands (FO, $43.18, down $0.43), Honeywell (HON, $37.79, up $0.03), Microsoft (MSFT, $26.50, down $0.21), Schlumberger (SLB, $69.08, up $0.29) and Whirlpool (WHR, $72.73, down $0.67).

Bears Are Growling

Thursday, October 1st, 2009

1:00pm (EST)

If you are a bull today you might as well head back to camp.  The market is taking a beating today as the bears seem to be gaining momentum heading into Friday’s unemployment figures.  The Dow is currently down 140 points to 9,570 and you can blame it on today’s ISM number (Institute for Supply Management’s index).

The report showed manufacturing activity in September slipped to 52.6 from 52.9 in August, well below Wall Street’s expectations of 54.  The bears loved it although the bulls will argue that it was the second month in a row the reading came in above 50.  A reading above 50 indicates growth, and after contracting for 18 months, the bulls will point to the ISM number having back-to-back readings above 50.

Also, adding fuel to today’s sell-off is the fact the Labor Department said new claims for jobless benefits rose more than expected to 551,000.  Not good.  The Street had been expecting claims to rise to 535,000.

It’s been a volatile week but we have done well by playing what the market is giving us.  Nike (NKE, $64.00, down $0.70) has slipped today and our $4.50 stop has been hit.  For those of you just joining us, we profiled a Nike call option trade on Tuesday and closed the other half today for a sweet 173% profit. Others bought insurance and banked upwards of 75%.  Not bad given the current market environment.

We are also off to a good start in the Abercrombie & Fitch (ANF, $31.85, down $1.03) trade that was profiled in the Members Area this morning.  At current levels, the trade has returned 20%.

Friday is shaping up to be war for the bulls and bears.  We should have a clear direction on the market before the opening bell rings.  If we print 10%, it could get ugly and the bears could have their claws ready.  If the unemployment numbers come in better-than-expected than the bulls will lead the next charge higher. 

I expect the last hour of trading is going to be crazy as both sides get ready for the Unemployment Report at 8:30am (EST) on Friday…

Rick@MomentumOptionsTrading.com

Nike Beats Estimates, Stock Up

Wednesday, September 30th, 2009

9:00am (EST)

Nike (NKE, $63.90, up $3.81) is up over 6% in pre-market trading after beating Wall Street’s estimates on Tuesday.  For the quarter, the company earned $513 million, or $1.04 a share, versus $511 million, or $1.03 a share, in the year-ago period.  Analysts were looking for Nike to earn 97 cents a share. 

Although revenue came in slightly lower ($4.8 billion versus $5.43 billion a year earlier), the company did a great job of managing its gross margins and inventory levels.  I mentioned Nike in both updates yesterday and we had the opportunity to go long and strong in yesterday’s afternoon update.  Good thing because we could be looking at a 150%-200% gain on the call options I mentioned. 

In fact, Goldman Sachs (GS, $183.58) came out this morning and slapped a $75 price target on the stock.  Looks like we beat Goldman to the punch on this one.  Subscribers, check the Members Area for the update on this HUGE winner.

As we head towards the opening bell, futures are pointing to a higher open as the GDP (gross domestic product) number came in better-than-expected.  That has helped push the Dow futures higher by 50 to 9,724.  The S&P futures are up 6 to 1,061 while the Nasdaq 100 futures are up 8 to 1,723.

 Rick@MomentumOptionsTrading.com

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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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