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Wednesday, August 4th, 2010
9:00am (EST)
The bulls struggled all day on Tuesday as the market stayed in the red and were unable to build on Monday’s gains. Weak earnings and a round of disappointing economic news put a halt to the current rally but the bulls did well by holding losses to less than 0.5%, on average, for the major indexes.
The Dow finished with a 38 point loss and closed at 10,636 after touching the 10,600 level. Procter & Gamble (PG, $59.94, down $2.12) had the biggest impact on the Dow as it fell over 3% and accounted for 16 negative points for the index. Pfizer (PFE, $16.34, up $0.86) bucked the trend after reporting a strong quarter and added 7 points to the Dow after popping over 5%.
The S&P 500 slipped 5 points and settled at 1,120. The index is still battling the 1,125 mark which was yesterday’s high. A possible run to 1,150 is in the cards, but the index could be trending back towards the critical 1,100 level.
Finally, the Nasdaq dropped a dozen points and ended the session at 2,283 after failing to crack the 2,300 level, yet again. This area has been tough to clear for the bulls, but the index is still above its 200-day moving average.
It is still too early to tell, but the market could be setting up like it did last week where we saw nice gains to start the week then the indexes faded on the back half. Of course, it’s hard to predict what type of curveballs or surprises the market might get from now until Friday (which is when the jobs report comes out), and we will get more economic news before then that could have an impact on trading. Either way, the bulls have got to be frustrated that there has been no real follow-through while the bears remain on the mat in a chokehold.
Earnings have been strong and we have a few more weeks before the majority of companies are done and over with. So far, they are beating estimates, and on many accounts they are beating both the top and bottom line numbers. The one thing that seems to be holding this market back is the Financial stocks, but they could be bottoming and will have to be the catalyst for the next leg higher. The bulls will need their help if they are going to break resistance.
We are watching Bank of America (BAC, $14.34, down $0.10), Goldman Sachs (GS, $153.19, up $0.45) and American Express (AXP, $44.60, down $0.39) which are starting to show signs of life with BAC being our favorite. We have some call options listed on our Watch List and at some point we will be pulling the trigger on a trade.
Bank of America tested $20 in April and is down 30% from those highs. The 52-week high is $19.86 and we think shares will be at $22 by 2012, or 18 months from now. This would equal a 50% from current levels if you bought the stock, but the call options we are looking at could be worth a 200% return if Bank of America hits our target price. And, you would only have to put up a fraction of the cost.
One thousand shares at current prices would cost you over $14,000 to own Bank of America. However, you can CONTROL 1,000 shares of Bank of America until 2012 for $1,500 with call options. When you figure in the capital and time frame, ask yourself, would you rather make $8,000 on $14,000 or $3,000 on a $1,500 investment by waiting 18 months?
We know which door we are picking, and we are just waiting for confirmation. These options are ready for action.
We will be back in the afternoon with a look at a few companies that knocked the cover off of the earnings ball last night and this morning. We will also get some economic data that will influence direction and we will bring you those figures as well.
As we head to press, Dow futures are higher by 17 points to 10,611 while the S&P 500 futures are up 2 points to 1,120. Nasdaq 100 futures are showing a gain of 7 points to 1,900. Futures were pointing towards a slightly lower open but turned positive after the ADP report showed the private sector added more jobs than expected.
Tags: bac, call options, GS, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, PG, put options, stock options trading, volatile options
Posted in Earnings, Financial Stocks, Market Commentary | Comments Off
Tuesday, August 3rd, 2010
12:55pm (EST)
The bulls are having trouble extending Monday’s gains as most of the news today has been disappointing and not up to expectations. Futures were pointing towards a lower open after Procter & Gamble (PG, $59.62, down $2.44) and Dow Chemical (DOW, $25.75, down $2.58) both missed Wall Street’s expectations and the market extended it losses after lousy economic reports on consumer spending and factory orders. However, the market has come off its lows and is trying to get back to even as we head into the second half of trading.
The boring stuff first…
The Commerce Department said June personal income was flat, as expected, while consumer spending was flat, as well. A slight increase to 0.1% has been expected.
Factory orders for June fell 1.2% which was worse-than-expected 0.5% decline that had been forecast. Pending home sales slipped 2.6% month-over-month which was better than the 5% drop that was predicted.
Turning to earnings, the exciting news…
Procter & Gamble reported a profit of $2.2 billion, or $0.71 a share, versus $2.5 billion, or $0.80 a share, in the year ago period. Revenue came in at $18.9 billion. Both numbers were below Wall Street’s estimates as analysts were expecting $0.73 a share on $19.1 billion in sales. Shares are down 4% which is a big move for this slow moving stock.
Dow Chemical reported earnings of $566 million, or $0.50 a share, compared to a loss of $486 million, or $0.47 a share, a year earlier. Revenue jumped 20% to $13.6 billion but analysts were expecting $0.56 a share on sales of $13.7 billion. Shares are down 9% on double the average daily trading volume.
Despite the negative headlines, the bulls are battling back as we head to press.
The Dow is lower by 30 points to 10,644 and bounced right off the 10,600 level as it tries to make it into positive territory. The S&P 500 is down by 5 points to 1,121 after touching a low of 1,116 while the Nasdaq is off by 9 points to 2,286.
It wouldn’t be surprising to see the bulls battle back as it appears the market could be setting up to follow last week’s pattern. We expected a pullback at these levels and Friday actually could end up being a flat day when the unemployment numbers are released. We don’t expect the 9.5% rate to change, and how the market behaves after hearing the news will depend on what the private sector says or how many jobs it added.
Our favorite beer company will announce earnings after the close. Boston Beer (SAM, $66.40, down $1.20) recently set a 52-week high of $74.52 back in June and we have mentioned it quite a few times in our Members Area. It isn’t the best stock to play options on because of the liquidity and low open interest. However, it would have been a sweet LEAP option trade as we have been covering this one in the $40’s since February.
We will be on the sidelines when Boston Beer reports but we might pop one open if they beat expectations.
Tags: Boston Beer, call options, dndn, Dow, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, PG, put options, SAM, stock options trading, volatile options
Posted in Earnings, Economic News, Market Analysis, Market Commentary | Comments Off
Friday, May 7th, 2010
9:00am (EST)
Yesterday was one of the craziest days we have ever witnessed on Wall Street.
The Dow dropped a stunning 1,000 points during a breathtaking 15 minutes of trading on Thursday and we loved every minute of it. The drubbing was so bad that it briefly sent the index below the 10,000 level.
The midday swing of nearly 10% had the bulls doing their best Linda Blair imitation and was a painful reminder that the market often falls faster on the way down then on the way up.
The Dow touched a low of 9,869 but pared its losses to finish with a nasty decline of 348 points, or 3.2%.
The S&P 500 fell below the critical 1,150 level and traded to a low of 1,065 before bouncing back to close at 1,128, a loss of 38 points, or 3.2%
Tech broke down like a rented mule as the Nasdaq fell a staggering 83 points and closed at 2,319, or 3.4% lower. The index fell to a low of 2,185 which was our second wave of support once 2,400 was taken out. However, we thought it would take a few weeks to hit that target, not 15 minutes.
Some of yesterday’s selling pressure was due to ongoing concerns about Greek’s debt but things kicked into overdrive when a trader made a mistake entering an incorrect amount of shares in a Procter & Gamble (PG, $60.75, down $1.41) trade.
We all know the big difference between a million and a billion but that mistake was made and the order triggered a massive sell-off in the stock as it touched a low of $39.37.
Whatever the catalyst, there was fear and panic and Wall Street witnessed its biggest intra-day decline ever. Most investors hate a down market because they don’t know how to make money by shorting stocks or buying put options. We do and we are here to tell you that you can make just as much to the downside as you can to the upside
Bank of America (BAC, $16.28, down $1.25) led the Financial stocks lower as it fell over 7% and was one of the worst performers among the blue chips.
Of course, all sectors were weak except for gold which has surged during the recent turmoil. The Spider Gold Shares (GLD, $118.49, up $3.40) popped 3% and gold stocks such as Barrick Gold (ABX, $436.68, up $0.80), Newmont Mining (NEM, $54.64, up $1.12) and Goldcorp (GG, $43.40, up $0.74) each added 2% for the day.
 Gold & Silver Sector Index
Things are looking better this morning as the bulls got a great nonfarm payroll number. Futures soared after the initial report showed 290,000 were added, the most in four years. The jobless rate rose to 9.9% as more people started looking for work
The market will likely get a relief rally at the open but we doubt a lot of investors are going long before the weekend. As we head to press, Dow futures are up 66 points to 10,523 while the S&P 500 futures are higher by 9 to 1,131. The Nasdaq 100 futures are showing a gain of 11 points and are 1,897.
Subscribers, check the Members Area for the important updates.
Tags: ABX, bac, GG, GLD, NEM, option picks, option signals, options alerts, PG, stock options trading
Posted in Company Commentary | Comments Off
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Futures Turnaround, Market Set to Open Higher
Wednesday, August 4th, 2010
9:00am (EST)
The bulls struggled all day on Tuesday as the market stayed in the red and were unable to build on Monday’s gains. Weak earnings and a round of disappointing economic news put a halt to the current rally but the bulls did well by holding losses to less than 0.5%, on average, for the major indexes.
The Dow finished with a 38 point loss and closed at 10,636 after touching the 10,600 level. Procter & Gamble (PG, $59.94, down $2.12) had the biggest impact on the Dow as it fell over 3% and accounted for 16 negative points for the index. Pfizer (PFE, $16.34, up $0.86) bucked the trend after reporting a strong quarter and added 7 points to the Dow after popping over 5%.
The S&P 500 slipped 5 points and settled at 1,120. The index is still battling the 1,125 mark which was yesterday’s high. A possible run to 1,150 is in the cards, but the index could be trending back towards the critical 1,100 level.
Finally, the Nasdaq dropped a dozen points and ended the session at 2,283 after failing to crack the 2,300 level, yet again. This area has been tough to clear for the bulls, but the index is still above its 200-day moving average.
It is still too early to tell, but the market could be setting up like it did last week where we saw nice gains to start the week then the indexes faded on the back half. Of course, it’s hard to predict what type of curveballs or surprises the market might get from now until Friday (which is when the jobs report comes out), and we will get more economic news before then that could have an impact on trading. Either way, the bulls have got to be frustrated that there has been no real follow-through while the bears remain on the mat in a chokehold.
Earnings have been strong and we have a few more weeks before the majority of companies are done and over with. So far, they are beating estimates, and on many accounts they are beating both the top and bottom line numbers. The one thing that seems to be holding this market back is the Financial stocks, but they could be bottoming and will have to be the catalyst for the next leg higher. The bulls will need their help if they are going to break resistance.
We are watching Bank of America (BAC, $14.34, down $0.10), Goldman Sachs (GS, $153.19, up $0.45) and American Express (AXP, $44.60, down $0.39) which are starting to show signs of life with BAC being our favorite. We have some call options listed on our Watch List and at some point we will be pulling the trigger on a trade.
Bank of America tested $20 in April and is down 30% from those highs. The 52-week high is $19.86 and we think shares will be at $22 by 2012, or 18 months from now. This would equal a 50% from current levels if you bought the stock, but the call options we are looking at could be worth a 200% return if Bank of America hits our target price. And, you would only have to put up a fraction of the cost.
One thousand shares at current prices would cost you over $14,000 to own Bank of America. However, you can CONTROL 1,000 shares of Bank of America until 2012 for $1,500 with call options. When you figure in the capital and time frame, ask yourself, would you rather make $8,000 on $14,000 or $3,000 on a $1,500 investment by waiting 18 months?
We know which door we are picking, and we are just waiting for confirmation. These options are ready for action.
We will be back in the afternoon with a look at a few companies that knocked the cover off of the earnings ball last night and this morning. We will also get some economic data that will influence direction and we will bring you those figures as well.
As we head to press, Dow futures are higher by 17 points to 10,611 while the S&P 500 futures are up 2 points to 1,120. Nasdaq 100 futures are showing a gain of 7 points to 1,900. Futures were pointing towards a slightly lower open but turned positive after the ADP report showed the private sector added more jobs than expected.
Tags: bac, call options, GS, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, PG, put options, stock options trading, volatile options
Posted in Earnings, Financial Stocks, Market Commentary | Comments Off