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Thursday, April 29th, 2010
9:05am (EST)
The bulls were back on track yesterday following Tuesday’s sell-off after another batch of good earnings and some reassuring comments from the Fed kept the bears at bay. However, it wasn’t all smooth sailing.
The market was holding steady but was dealing with another downgrade from Standard & Poor’s. This time the credit agency slashed its rating on Spain, predicting “a more protracted period of sluggish activity” than they previously assumed. The reaction was far quieter than on Tuesday, when the market plunged on news that S&P slashed its credit ratings on Greece and Portugal. All we need now is a cut on Ireland’s debt to complete the sweep on the downgrade of the PIGS.
The Fed’s decision to keep interest rates stable for an “extended period” provided some relief and helped offset other headwinds the market is facing. Although the Fed’s statement did say that employers are still reluctant to hire they also mentioned the labor market is showing signs of improvement and they noted that housing starts have edged up.
As a result, the Dow managed to move higher by 53 points, or 0.5%, and settled at 11,045. Bank of America (BAC, $17.78, up $0.31) and JPMorgan Chase (JPM, $43.46, up $1.05) led the blue chip Financial rebound and it was a good sign to see the bulls reclaim the 11,000 level following Tuesday’s drubbing.
The S&P 500 added nearly 8 points, or 0.7%, to finish at 1,191 while the Nasdaq finished with only a slight gain and basically ended the day flat at 2,471. We would have liked to have seen more follow through here but the bulls did well by holding ground.
In M&A news, Hewlett-Packard (HPQ, $53.28, up $0.03) announced after the market closed yesterday that it is acquiring Palm (PALM, $4.63, down $0.02) for $1.2 billion.
HP has agreed to pay $5.70 a share for Palm. The total value of the deal is really worth $1.4 billion but they are paying a little less after factoring in Palm’s cash and debt. We aren’t sure if this will be a match made in heaven or a one-night stand in Vegas that doesn’t turn out so good.
In pre-market trading Palm shares are at $5.82.
In earnings news, Buffalo Wild Wings (BWLD, $42.30, down $8.71) got clipped on National Wing Day after announcing a disappointing outlook despite beating estimates by a penny.
Shares dropped 17% after the company said it earned $10.6 million, or $0.58 a share, versus $8.5 million, or $0.47 a share, a year ago. Wall Street was expecting earnings of $0.57 a share.
Revenue came in at $152 million, a nice 15% jump, but fell short of estimates for $154 million.
The backbreaker came when the chicken wing chain said the current quarter would very likely be weaker than expected because of declining April same-store sales. The company said same-store sales at company-owned restaurants fell 3.7% and 2.4% at franchised locations for the month.
We often like to profile some of the returns that call and put options can make so when new option traders read us they know that the returns you can see with options is real.
Although we did not get into the trade, the BWLD May 40 puts (BWLD10052200045000, $4.00, up $3.20) soared 400% yesterday and could have been picked up for 80 cents on Tuesday.
We were, however, in another earnings trade that should do rather well this morning after the company beat estimates last night and gave a rosy outlook. We talk about that trade in our Members Area this morning. Shares were up 9% in after-hours trading last night and those gains are holding this morning which means good news for the call options we recommended.
As we head to press, Dow futures are up 33 to 11,048 while the S&P futures are showing a 7 points pop to 1,197. The Nasdaq futures are higher by 12 to 2,019.
Tags: bac, BWLD, HPQ, JPM, option picks, option signals, options alerts, Palm, stock options trading
Posted in Company Commentary, Earnings | Comments Off
Monday, April 12th, 2010
1:00pm (EST)
The market has been stuck in a tight trading range although the trend has been higher today. There has been little in the way of news to spur any major moves as Wall Street appears to be waiting for the beginning of the earnings season which starts after the bell.
As we head to press, the Dow is up 18 points to 11,015 while the S&P 500 is higher by 3 to 1,197 but has yet to take out the 1,200 level. The Nasdaq is showing a 5 point pop to 2,458.
Bank of America (BAC, $18.79, up $0.20) is getting a nice bump after reporting its biggest monthly gain in mortgage changes. In the past month, the bank added about 12,000 borrowers who completed mortgage modifications under the federal government’s assistance program for homeowners struggling to meet their payments.
Elsewhere, Palm (PALM, $6.02, up $0.86) is surging 17% after putting itself up for sale. We wouldn’t use April options to play this one but there is some type of trade with the May options if you like super risky trades.
We are staying away from this one because we have quite a few other, safer trades that we just initiated coverage of. We have updated all of our current trades and we have added an earnings trade to today’s update as well.
Tags: bac, option picks, option signals, options alerts, Palm, stock options trading
Posted in Hot Stocks | Comments Off
Monday, April 12th, 2010
9:05am (EST)
Futures were pointing towards a slightly higher open this morning, helped by optimism over a bailout package for Greece. The euro-zone nations agreed over the weekend to lend Greece 30 billion euro ($40 billion) though Greece still has to “ask” for the money for the plan to be activated.
The International Monetary Fund would contribute another 10 billion euro ($13.5 billion) if needed and the loans would carry interest rates below what private lenders had been demanding in recent days to hold Greek debt.
Of course, the main focus this week will be on earnings, which kicks off with Alcoa (AA, $14.39, down $0.48) after the close of trading today. Reports on inflation, retail sales, manufacturing and housing will also be released throughout the week..
A couple of stocks making a move before the bell: Palm (PALM, $5.16, up $0.51), which has reportedly put itself up for sale and is seeking bids as soon as this week, is up 45 cents to $5.61 while Boots & Coots (WEL, $2.35, down $0.03) is getting some action after Halliburton (HAL, $31.57, down $0.09) said it will buy the company for $3 a share, or $1.73 in cash and the rest in Halliburton stock.
As we head towards the start of trading, Dow futures are down 4 points to 10,943 while the S&P 500 futures have edged lower by 2 points to 1,191. Meanwhile, the Nasdaq 100 futures are off by a point to 1,991. Futures were positive earlier this morning and have come down from those levels but we still think the market heads higher today.
We have a lot to cover this morning in our Members Area so let’s get to it.
Tags: HAL, option picks, option signals, options alerts, Palm, stock options trading, WEL
Posted in Company Commentary, Earnings | Comments Off
Thursday, April 8th, 2010
9:00am (EST)
Things could get interesting…
Wednesday was whacky and the battle between the bulls and bears is starting to heat up a bit. The market was facing a lot of headwinds yesterday and we figured trading would be tepid heading into the 10-year note auction. That was well-received but after battling back to near even, the bulls got a curveball from one of the Fed members who said interest rates needed to go to 1% sooner rather than later.
The best email that came across our desk yesterday from an obvious bull…
“Hoenig is an a%$hole.”
There were renewed concerns about Greece’s debt and the market got a nasty slider when consumer borrowing came in lower than expected.
Greece’s borrowing costs hit a new high which spooked overseas markets on concerns the country could default on its debt. Meanwhile, consumer borrowing declined by $11.5 billion in February as Wall Street had expected a modest gain of $500 million.
It was just too much for the bulls to overcome as all three major indexes ended the day in the red. The Dow lost 73 points, or 0.7%, to settle at 10,897 after trading to a low of 10,845. The index broke below its 10-day moving average for the first time in two months so we will have to watch this carefully.
The S&P 500 fell 7 points and closed at 1,182 and traded to a low of 1,177. We needed the index to hold 1,175 which was a good sign. The Nasdaq slipped 6 points, or 0.2%, to finish at 2,423 and easily held the 2,400 level.
Palm (PALM, $4.62, up $0.77) rebounded in a big way yesterday, gaining 20%, on renewed speculation that it will be rescued by someone. The latest marriage is to the Chinese company, Lenovo. “Sunday, Bloody Sunday” could be an appropriate theme song for this hookup.
 PALM Hourly Chart There is a trade for Palm but we aren’t so sure the company deserves a premium. Yes, Palm has a nice OS platform but any company buying them will only be playing catch-up to Apple (APPL, $240.60, up $1.06) and to a lesser degree, Research In Motion (RIMM, $69.83, down $0.26).
To us, it just doesn’t make sense for someone to buy Palm when it’s clear they could be headed for bankruptcy court, maybe, but more than likely a deal will get done sometime this year.
As far our agenda for today, we will be watching the retail reports on same-store sales for March. February sales were strong for some companies and there are a couple of names that are reporting earnings as we go to press. We will go over them in our afternoon update.
There won’t be much market-moving economic data besides what we getting this morning and the bulls will have another uphill battle today. Dow futures are currently down 42 points to 10,807 while the S&P 500 futures are lower by 5 to 1,173. The Nasdaq 100 futures are off by 7 points to 1,967.
Tags: AAPL, option picks, option signals, options alerts, Palm, Research in Motion, RIMM, stock options trading
Posted in Apple, Earnings, Market Commentary | Comments Off
Thursday, April 1st, 2010
9:00am (EST)
We knew going into yesterday’s open the market was going to have a rough session after the bulls after some disappointing economic news. The market started off in the red but the losses were contained as the bulls came in and started buying at the lows shortly after the bell. The rest of the day was a struggle and the bears eventually won out with the market finishing near the bottom end of Wednesday’s range.
The Dow dropped 50 points, or 0.5%, and settled at 10,856. The index managed a quick trip into positive territory at one point and touched a high of 10,907 after dropping to 10,832 shortly after the open.
The S&P 500 slipped 4 points, or 0.3%, to settle at 1,169 after touching a low of 1,165. As long as the index holds 1,150, that’s how long we stay bullish. Meanwhile, the Nasdaq gave up a 12-pack, or 0.5%, and closed just below our 2,400 level at 2,397.
Yesterday was the end of the quarter and we will go over the March and quarterly gains in the Weekly Wrap. We will also give you a scorecard on how well we did as we will be updating the portfolio to reflect our recently closed trades.
The big news after the bell last night was Research In Motion’s (RIMM, $73.97, down $0.95) quarterly report. On Monday, we thought there was a chance the company might wow Wall Street but as the week wore on, and with the Apple (AAPL, $235.00, down $0.85) news yesterday, we kind of felt RIMM was a sitting duck.
RIMM missed estimates and in after-hours last night shares quickly fell to $68 but later recovered to close above $70. The company earned $710 million, or $1.27 a share versus a profit of $518 million, or $0.90 a share, in the year ago period. Wall Street was expecting $1.28.
Revenue came in at $4.08 billion, but fell short of the company’s forecast of $4.2-$4.4 billion and Wall Street’s forecast of $4.3 billion in revenue.
The 5% drop in after-hours has carried over into this morning as shares are trading at $70.25 in early action.
RIMM still grew its subscriber base by 4.9 million, better than the company’s forecast of between 4.4 million and 4.7 million, but we feel they could lose a lot of customers once Apple launches a CDMA phone. Analysts will argue RIMM is still growing globally but even if it is Apple will be too.
RIMM has an overall subscriber base of nearly 41 million users but a recent survey points towards many of them might jumping ship once Apple does come out with a new iPhone. Perhaps the best way for RIMM to attack this problem would be to scoop up Palm (PALM, $3.76, flat) on the cheap.
Palm has a nice operating system and some slick features but even a move like this might not improve RIMM’s chances of holding off Apple. In fact, Palm would likely want a higher price than $7-$8 which would represent a 100% premium and maybe fair value but they would want more considering shares were recently in the teens before the plunge.
This smartphone wars are only beginning and now, with prices coming down, it will only intensify.
Despite RIMM’s miss, futures are pointing towards a strong open for Tech as the Nasdaq 100 futures are higher by 10 points this morning. Dow futures are up 70 while the S&P 500 futures are higher by 7.
Tags: AAPL, Palm, Research in Motion, RIMM, stock option picks, stock option signals
Posted in Apple, Earnings, Market Analysis | Comments Off
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HP Pounces On Palm (PALM), Buffalo Wings Gone Wild (BWLD)
Thursday, April 29th, 2010
9:05am (EST)
The bulls were back on track yesterday following Tuesday’s sell-off after another batch of good earnings and some reassuring comments from the Fed kept the bears at bay. However, it wasn’t all smooth sailing.
The market was holding steady but was dealing with another downgrade from Standard & Poor’s. This time the credit agency slashed its rating on Spain, predicting “a more protracted period of sluggish activity” than they previously assumed. The reaction was far quieter than on Tuesday, when the market plunged on news that S&P slashed its credit ratings on Greece and Portugal. All we need now is a cut on Ireland’s debt to complete the sweep on the downgrade of the PIGS.
The Fed’s decision to keep interest rates stable for an “extended period” provided some relief and helped offset other headwinds the market is facing. Although the Fed’s statement did say that employers are still reluctant to hire they also mentioned the labor market is showing signs of improvement and they noted that housing starts have edged up.
As a result, the Dow managed to move higher by 53 points, or 0.5%, and settled at 11,045. Bank of America (BAC, $17.78, up $0.31) and JPMorgan Chase (JPM, $43.46, up $1.05) led the blue chip Financial rebound and it was a good sign to see the bulls reclaim the 11,000 level following Tuesday’s drubbing.
The S&P 500 added nearly 8 points, or 0.7%, to finish at 1,191 while the Nasdaq finished with only a slight gain and basically ended the day flat at 2,471. We would have liked to have seen more follow through here but the bulls did well by holding ground.
In M&A news, Hewlett-Packard (HPQ, $53.28, up $0.03) announced after the market closed yesterday that it is acquiring Palm (PALM, $4.63, down $0.02) for $1.2 billion.
HP has agreed to pay $5.70 a share for Palm. The total value of the deal is really worth $1.4 billion but they are paying a little less after factoring in Palm’s cash and debt. We aren’t sure if this will be a match made in heaven or a one-night stand in Vegas that doesn’t turn out so good.
In pre-market trading Palm shares are at $5.82.
In earnings news, Buffalo Wild Wings (BWLD, $42.30, down $8.71) got clipped on National Wing Day after announcing a disappointing outlook despite beating estimates by a penny.
Shares dropped 17% after the company said it earned $10.6 million, or $0.58 a share, versus $8.5 million, or $0.47 a share, a year ago. Wall Street was expecting earnings of $0.57 a share.
Revenue came in at $152 million, a nice 15% jump, but fell short of estimates for $154 million.
The backbreaker came when the chicken wing chain said the current quarter would very likely be weaker than expected because of declining April same-store sales. The company said same-store sales at company-owned restaurants fell 3.7% and 2.4% at franchised locations for the month.
We often like to profile some of the returns that call and put options can make so when new option traders read us they know that the returns you can see with options is real.
Although we did not get into the trade, the BWLD May 40 puts (BWLD10052200045000, $4.00, up $3.20) soared 400% yesterday and could have been picked up for 80 cents on Tuesday.
We were, however, in another earnings trade that should do rather well this morning after the company beat estimates last night and gave a rosy outlook. We talk about that trade in our Members Area this morning. Shares were up 9% in after-hours trading last night and those gains are holding this morning which means good news for the call options we recommended.
As we head to press, Dow futures are up 33 to 11,048 while the S&P futures are showing a 7 points pop to 1,197. The Nasdaq futures are higher by 12 to 2,019.
Tags: bac, BWLD, HPQ, JPM, option picks, option signals, options alerts, Palm, stock options trading
Posted in Company Commentary, Earnings | Comments Off