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Monday, December 13th, 2010
12:45pm (EST)
The market got off to a good start this morning after China fooled everyone and kept its interest rates unchanged (for now) which has helped the bulls extend last week’s breakout. We felt there was a slight chance this could happen but we are more interested in the much-debated tax agreement here at home. The Democrats are pushing the Republicans to raise the proposed tax rate on estates but we don’t think it’s going to be a deal breaker. We would like to see a new deal this week, and we expect a new agreement by yearend, either way, which will be bullish for the market.
Although there were no major economic reports today, Tuesday is full of updates with the November producer price index (PPI), November retail sales, and October business inventories on tap. Also, the Federal Open Market Committee (FOMC) will be making a decision on U.S. monetary policy, with many analysts expecting the central bank to hold steady on interest rates.
As far as the rest of the week, on Wednesday the market will get a look at the November consumer price index (CPI), November industrial production, the December Empire State manufacturing index and the National Association of Home Builders’ housing market scoreboard.
On Thursday, Wall Street gets a briefing on weekly jobless claims, November housing starts, and the Philly Fed’s December manufacturing index while Friday ends the week with a peak at the Conference Board’s leading indicators for November.
Gold is getting a lift on the China news, as well as other metals, and is up $14 to $1,399 an ounce. Gold is facing short-term resistance at the $1,400 level and had traded to a low of $1,380 before rebounding.
The Spiders Gold Shares (GLD, $136.47, up $1.06) are up 1% and is an exchange-traded fund (ETF) we like to track when following the yellow metal. The 52-week high is $139.54 but we are still shying away from the sector. It’s not that we don’t like Gold, it just feels like a bubble that could get blown bigger before popping.
The U.S. dollar is down about 1% and was slipping $0.80 to $79.43 while the euro is up 1% to $1.33 vs. the dollar.
There are a few stocks worth mentioning this afternoon.
Shares of Adobe Systems (ADBE, $28.19, down $0.52) have fallen below their 50-day moving average, which was at $28.40. We did a bullish write-up on the Adobe last night in our Weekly Wrap but the charts have been telling us that a break below support could happen. This is normally a bearish event which could get worse as the next level of support comes in at $27.50. However, we know these levels can get stretched but it bears watching.
We mentioned last night that the company reports earnings next week and Adobe could be setting up for a nice strangle option trade. A negative earnings report could push shares below $26 while a positive, earnings beat and raised forecast could push the stock past $30. We are watching both call and put options for Adobe but remain on the sidelines.
Elsewhere, JDS Uniphase (JDSU, $14.31, up $0.88) got an upgrade this morning and shares are higher by 5% after the Piper (Jaffary) raised its rating on the stock from “Neutral” to “Overweight”. The brokerage firm was a little late to the party as shares have jumped 12% since November 8, which is where we spotted an opportunity.
We slapped a $15 price target on the stock at the time and told our subscriber’s shares were a bargain. Even better, the call options we recommended have now hit a triple-digit return.
As we head to press, the Dow is up 43 points to 11,453 while the S&P is advancing 5 to 1,245. The Nasdaq is higher by 2 points to 2,639.
We will be back in the morning with another full update but current subscribers can check the Members Area for the latest thoughts on our current trades.
Tags: ADBE, Adobe's earnings, ETF: GLD, GLD, JDSU, NASDAQ: ADBE, NASDAQ: JDSU, Spider Gold Shares
Posted in Hot Stocks, Market Commentary | Comments Off
Tuesday, February 24th, 2009
Research In Motion (RIMM, $38.99, up $1.57) is up 4% today and has made a run back to $40. This morning, I sent out a blog before the market opened to make sure that you set stops on the RIMM positions to protect your profits.
I had mentioned to also close the position on Monday if you got the gains back from Friday. The reason I seem to keep repeating myself is that I want you to understand the importance of placing stops and how the are so important in your everyday trading.
The March 40 puts (RUPOH, $3.50, down $1.20) were profiled at $2.15 last Wednesday and hit a high of $4.15 by Friday and $4.75 on Monday. The return on the trade was over 100%. If you still have the trade open, then you have given back nearly 50% of your profits because of greed. These puts opened at $4.50 this morning and had a stop of $4.30 which protected your 100% return.
The March 35 puts (RUPOG, $1.37, down $0.71) were recommended at 85 cents and traded as high as $1.90 on Friday and $2.15 yesterday. I said to set stops at $1.90 and the puts opened at $1.95. Since then, they have dropped 30%.
The Spider Gold Shares (GLD, $97.80, up $2.03) are another example of a trade that reached our outlined goals and we got out when the returns hit 100%. The trade was based on gold hitting $1,000 and this ETF hitting $100. This trade was closed last Friday when the March 99 calls (GLDCU, $2.15, down $1.28) hit $4.10. The calls were profiled at $2.05 and hit a high of $4.20 on Friday. Now look at them. They are almost right back at our entry level price.
The March 100 calls (GLDCV, $1.90, down $1.20) were recommended at $1.90 and traded to $3.80 which also marked a 100% return. Today, they are down 40% after opening at $2.90.
The General Electric (GE, $8.55, down $0.30) March 7.50 puts (GEWOU, $0.70, up $0.07) traded as high as 73 cents and the exit on them was at 75 cents. Close enough, close the trade.
I just wanted to point these things out because a lot of option traders fail to use stops or hold on to positions for too long after making big gains. By using stops, you take emotions out of the trade and you have measures in place to protect your profits. These are three classic examples of how stops and targets are used and how to manage your trades.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Research in Motion, Spider Gold Shares
Posted in Option Trades, Strategies | No Comments »
Friday, February 20th, 2009
Gold has topped $1,000 an ounce this morning, rising $23.80, or 2.4%, to $1,000.30. The last time gold topped $1,000 was last March when the price reached a record $1,033.90 an ounce. Gold is up nearly 50% from its low of $681 in October and that $1,033 record appears likely to be broken.
The Spider Gold Shares (GLD, $97.77, up $2.00) continue to make a run towards $100 which has meant good things for our call options. The March 99 calls (GLDCU, $3.60, up $0.90) were profiled at $2.05 on February 2 and the March 100 calls (GLDCV, $3.15, up $0.65) were entered at $1.90.
Research in Motion (RIMM, $40.20, down $1.89) fell below $40 earlier in the session. On Wednesday, I mentioned RIMM could be headed back into the $30′s and we now have some decent profits on the put options I profiled.
The March 40 puts (RUPOH, $3.10, up $0.75) were profiled at $2.15 and have hit a high of $3.50 this morning. The March 35 puts (RUPOG, $1.33, up $0.40) were profiled at 85 cents. Let’s see how the rest of the day unfolds before we close this one out. I really don’t trust them over the weekend but they may be worth holding.
The Dow Jones Industrial Average Index (DJX, 73.65, down 1.01) trade is also working well for us. We entered the March 75 puts (DJXOW, $3.85, up $0.45) at $3.10 on Wednesday and the March 74 puts (DJXOV, $3.50, up $0.50) at $2.75. The Dow continues to weaken and we could be headed below 7,300.
I’m thinking of closing the Bank of Amercia (BAC, $3.39, down $0.54) trades for a loss. With the possibility of nationalization hanging in the balance, BofA could be headed even lower. The two call options, the March 6 calls (BYOCF, $0.25, down $0.05) and the March 7 calls (BYOCG, $0.17, down $0.02) were entered at 90 cents and 60 cents, respectively, on 2/12. There is plenty of time left for the calls to bounce back but we may be better off closing them today.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Add new tag, Bank of Amercia, Dow Jones Industrial Average Index, Research in Motion, Spider Gold Shares
Posted in Option Trades | No Comments »
Thursday, February 19th, 2009
The Dow has struggled all morning to stay positive and is currently down 56 points to 7,499.
Research in Motion (RIMM, $41.87, down $0.23) is trading lower again this morning and has hit a low of $40.97. I had mentioned yesterday that the stock looks headed below $40 but sometimes its nerve racking when you have a short position in a well-known and popular stock that is capable of explosive moves.
The March 40 puts (RUPOH, $2.60, up $0.05) were profiled at $2.15 and closed yesterday at $2.55. The put options have hit a high of $2.95 this morning.
The March 35 puts (RUPOG, $1.02, up $0.02) were profiled at 85 cents and returned over 15% by the closing bell. They have traded as high as $1.20 today.
Elsewhere, the Spider Gold Shares (GLD, $96.26, down $0.65) are rolling this week although they are down slightly today. No worries.
The March 99 calls (GLDCU, $3.00, down $0.60) were profiled at $2.05 on February 2 and had returned 75% before today’s dip.
The March 100 calls (GLDCV, $2.70, down $0.70) were entered at $1.90 and they were also up over 75% before today.
I still like both positions but realize the Spider’s are at a 50% return if you wanted to close half of the position and take a little off the table. As far as Bank of America (BAC, $4.00, down $0.57) we still have plenty of time with the March call options but they have gotten off to a rough start…
Rick Rouse
Rick@OptionsMentoring.com
Tags: Bank of America, Research in Motion, Spider Gold Shares
Posted in Uncategorized | No Comments »
Tuesday, February 17th, 2009
The Dow opened with a quick 150-point loss and that nearly doubled as the index hit a low of 7,560 earlier in the session. We are currently at a 240 point loss and with the Dow right at 7,600 the November lows could come into play this week. That was almost a given and you can thank the European banks for today’s weakness.
We were stopped out of the Akamai Technologies (AKAM, $17.15, down $0.57) March 17.50 calls (UMUCW, $1.10, down $0.35) at $1.10 this morning. No need in fighting the market. Bank of America (BAC, $5.14, down $0.44) is getting whacked and Wal-Mart (WMT, $48.00, up $1.47) beat estimates.
Wal-Mart held support and I had mentioned the March 42.50 puts (WMTOV, $0.50, down $0.35) in last night’s Weekly Wrap. I would still stay away from these options but if Wal-Mart resumes in downtrend later in the week, these put options could get a little pop. You could do a half position here with exit points at 75 cents and stops at 25 cents if you really want to roll the dice.
The one bright spot continues to be gold and yes, we have our finger in that pie. The Spider Gold Shares (GLD, $95.41, up $2.86) are rallying 3% as gold is up another $30 an ounce this morning to $970.
The March 99 calls (GLDCU, $3.00, up $0.95) are up 45% and the March 100 calls (GLDCV, $2.70, up $0.90) are up 50%. Take note of the huge moves in the options with just a 3% move in the stock. Incredible.
We have been in the Spider trade for a couple of weeks now and today’s gains are hard to ignore. You could take half off the table here and set tight stops with the rest of your position to lock in gains. You would still participate in the move higher with the other half of your position.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Akamai Technologies, Bank of America, Spider Gold Shares, Wal-Mart
Posted in Gold, Option Trades | No Comments »
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Bulls Push Higher, JDS Uniphase (JDSU) Surging
Monday, December 13th, 2010
12:45pm (EST)
The market got off to a good start this morning after China fooled everyone and kept its interest rates unchanged (for now) which has helped the bulls extend last week’s breakout. We felt there was a slight chance this could happen but we are more interested in the much-debated tax agreement here at home. The Democrats are pushing the Republicans to raise the proposed tax rate on estates but we don’t think it’s going to be a deal breaker. We would like to see a new deal this week, and we expect a new agreement by yearend, either way, which will be bullish for the market.
Although there were no major economic reports today, Tuesday is full of updates with the November producer price index (PPI), November retail sales, and October business inventories on tap. Also, the Federal Open Market Committee (FOMC) will be making a decision on U.S. monetary policy, with many analysts expecting the central bank to hold steady on interest rates.
As far as the rest of the week, on Wednesday the market will get a look at the November consumer price index (CPI), November industrial production, the December Empire State manufacturing index and the National Association of Home Builders’ housing market scoreboard.
On Thursday, Wall Street gets a briefing on weekly jobless claims, November housing starts, and the Philly Fed’s December manufacturing index while Friday ends the week with a peak at the Conference Board’s leading indicators for November.
Gold is getting a lift on the China news, as well as other metals, and is up $14 to $1,399 an ounce. Gold is facing short-term resistance at the $1,400 level and had traded to a low of $1,380 before rebounding.
The Spiders Gold Shares (GLD, $136.47, up $1.06) are up 1% and is an exchange-traded fund (ETF) we like to track when following the yellow metal. The 52-week high is $139.54 but we are still shying away from the sector. It’s not that we don’t like Gold, it just feels like a bubble that could get blown bigger before popping.
The U.S. dollar is down about 1% and was slipping $0.80 to $79.43 while the euro is up 1% to $1.33 vs. the dollar.
There are a few stocks worth mentioning this afternoon.
Shares of Adobe Systems (ADBE, $28.19, down $0.52) have fallen below their 50-day moving average, which was at $28.40. We did a bullish write-up on the Adobe last night in our Weekly Wrap but the charts have been telling us that a break below support could happen. This is normally a bearish event which could get worse as the next level of support comes in at $27.50. However, we know these levels can get stretched but it bears watching.
We mentioned last night that the company reports earnings next week and Adobe could be setting up for a nice strangle option trade. A negative earnings report could push shares below $26 while a positive, earnings beat and raised forecast could push the stock past $30. We are watching both call and put options for Adobe but remain on the sidelines.
Elsewhere, JDS Uniphase (JDSU, $14.31, up $0.88) got an upgrade this morning and shares are higher by 5% after the Piper (Jaffary) raised its rating on the stock from “Neutral” to “Overweight”. The brokerage firm was a little late to the party as shares have jumped 12% since November 8, which is where we spotted an opportunity.
We slapped a $15 price target on the stock at the time and told our subscriber’s shares were a bargain. Even better, the call options we recommended have now hit a triple-digit return.
As we head to press, the Dow is up 43 points to 11,453 while the S&P is advancing 5 to 1,245. The Nasdaq is higher by 2 points to 2,639.
We will be back in the morning with another full update but current subscribers can check the Members Area for the latest thoughts on our current trades.
Tags: ADBE, Adobe's earnings, ETF: GLD, GLD, JDSU, NASDAQ: ADBE, NASDAQ: JDSU, Spider Gold Shares
Posted in Hot Stocks, Market Commentary | Comments Off