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Monday, April 19th, 2010
9:00am (EST)
Futures are pointing towards a slightly lower open as the bulls try to get up off their feet following Friday’s knockdown punch from the real Slim Shady, Goldman Sachs (GS, $160.70, down $23.57).
There will be 135 S&P 500 companies reporting earnings this week, which, if you do the math, is nearly a quarter of the index. Wall Street has penciled in an earnings pop of nearly 40% from year ago levels with revenues getting a 10% pop versus last year’s results.
Here is a look at the companies reporting (quotes are from Friday’s close):
Monday: Alleghany (Y, $300.06, down $1.95), Arch Coal (ACI, $26.00, down $0.67), Bank of Hawaii (BOH, $48.60, down $0.44), BJ Services (BJS, $21.65, down $0.70), CF Industries (CF, $90.00, flat), Citigroup (C, $4.56, down $0.25), Eli Lilly (LLY, $36.54, down $0.18), Halliburton (HAL, $31.64, down $0.88), Hasbro (HAS, $39.85, down $0.29), Park National (PRK, $64.85, down $0.45), Raymond James (RJF, $29.41, down $0.85) and SunPower (SPWRA, $18.29, down $0.38).
Tuesday: Apple (AAPL, $247.40, down $1.52), AK Steel Holding (AKS, $21.60, down $0.61), Bank of New York Mellon (BK, $31.57, down $0.45), Biogen Idec (BIIB, $53.64, down $0.77), Brinker International (EAT, $20.38, down $0.33), Coach (COH, $42.31, down $0.68), Coca-Cola (KO, $54.97, up $0.71), Cree (CREE, $82.12, down $0.73), Eaton (ETN, $79.39, down $0.93), Forest Laboratories (FRX, $27.80, down $0.41), Goldman Sachs (GS, $160.70, down $23.57), Harley-Davidson (HOG, $33.08, down $0.19), Illinois Tool Works (ITW, $49.01, down $0.54), Jefferies (JEF, $27.40, down $0.58), Johnson & Johnson (JNJ, $65.02, down $0.49), Juniper Networks (JNPR, $31.21, down $0.77), Nabors Industries (NBR, $19.52, down $0.54), Parker Hannifin (PH, $69.07, down $1.14), Supervalu (SVU, $16.98, down $0.18), U.S. Bancorp (USB, $27.45, down $0.81), VMware (VMW, $56.39, down $0.04) and Yahoo (YHOO, $18.17, down $0.80).
Wednesday: Abbott Laboratories (ABT, $52.26, down $0.10), Altria Group (MO, $20.87, down $0.23), Amgen (AMGN, $60.72, up $0.08), AT&T (T, $25.93, down $0.31), Chipotle Mexican Grill (CMG, $124.05, down $1.03), eBay (EBAY, $26.33, down $0.65), Freeport-McMoRan Copper & Gold (FCX, $81.18, down $3.04), Intersil (ISIL, $16.59, down $0.22), Kinder Morgan Energy Partners (KMP, $66.43, down $0.36), Lockheed Martin (LMT, $82.99, down $0.23), McDonald’s (MCD, $69.03, down $0.13), Morgan Stanley (MS, $29.16, down $1.72), Netflix (NFLX, $85.31, down $1.52), Piper Jaffray (PJC, $43.04, down $0.79), SanDisk (SNDK, $37.74, down $0.89), St. Jude Medical (STJ, $40.88, down $1.06), Starbucks (SBUX, $24.96, down $0.17) and Wells Fargo (WFC, $32.56, down $0.95).
Thursday: Amazon.com (AMZN, $142.17, down $3.65), BB&T (BBT, $33.76, down $0.42), Capital One Financial (COF, $43.49, down $1.66), Cheesecake Factory (CAKE, $28.74, flat), DeVry (DV, $70.86, up $0.21), Ford (F, $13.42, down $0.34), Greenhill (GHL, $87.50, up $0.62), L3 Communications (LLL, $94.80, down $0.22), Marriott International (MAR, $33.88, down $0.15), Microsoft (MSFT, $30.67, down $0.20), Nokia (NOK, $14.94, down $0.32), Philip Morris International (PM, $50.74, down $0.85) and RadioShack (RSH, $23.32, down $0.40).
Friday: Ingersoll-Rand (IR, $37.16, down $0.66), Johnson Controls (JCI, $32.69, down $0.79), Patriot Coal (PCX, $21.90, down $1.57) and Travelers Companies (TRV, $52.14, down $0.74).
As we head to press, Dow futures are down 54 points to 10,930 while the S&P 500 futures are off by 7 to 1,183. The Nasdaq 100 futures are lower by 8 points to 2,002.
As far as economic news, we get the March index of leading economic indicators (LEI) shortly after the open this morning. Analysts are expecting the index to have risen 1% after rising 0.1% in the previous month.
Federal Reserve Chairman Ben Bernanke will also chime in today with his latest thoughts and comments. Subscribers, check the Members Area for the trade updates.
Tags: stock option picks, stock option signals, weekly earnings reports
Posted in Company Commentary | Comments Off
Wednesday, April 7th, 2010
9:05am (EST)
Two out of three isn’t bad…
The bulls were down but not out for much of Tuesday as Wall Street waited for clues from the Federal Open Market Committee’s (FOMC) minutes. It always comes down to the language the Fed uses but the bottom line is that interest rates will remain low and any rate hike will depend on how well the economic recovers.
The Fed can’t afford the dangers of a premature rate hike but they will raise rates if the economy showed signs of picking up substantially or if inflation kicks in.
The Dow struggled for most of the day but at one point the index managed a trip to the green before finishing with a small 3 point loss to settle at 10,969. The Dow traded as high as 10,987 on Tuesday and remains within a stone’s throw of breaking 11,000.
The S&P 500 added a couple of points and closed at 1,189 while the Nasdaq showed the most strength as it finished with a 7 point win to settle at 2,436. The Tech-heavy index hit an intraday peak of 2,443 before settling at its highest close since August, 2008.
Futures are pointing towards a lower open this morning and trading could be choppy ahead of the Treasury’s auction of $21 billion of 10-year notes today at 1pm.
As we head to press, the Dow futures are off by 24 to 10,889 while the S&P 500 futures are lower by 4 points to 1,182. The Nasdaq 100 futures are off by 6 and stand at 1,973.
As far as earnings, Family Dollar (FDO, $37.79, up $0.30) reported a profit of $112 million, or $0.81 a share, versus $84 million, or $0.60 a share, in the year earlier period. Wall Street was expecting earnings of $0.78 a share.
The company also said it expects earnings of 71-76 cents a share for 3Q, above Wall Street’s forecast of 70 cents a share. Shares are up $1.75 in pre-market action.
We have a lot to cover in our Members Area this morning so let’s get on it.
Tags: Family Dollar, FDO, option trading signals, stock option picks
Posted in 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
Tuesday, March 30th, 2010
1:00pm (EST)
We haven’t mentioned Netflix (NFLX, $74.84, up $0.94) in a while, but it is stock we watch every day. In fact, we wanted to talk about it today for a reason and to give those of you who aren’t subscribers a look inside our exclusive Members Area.
Sometimes in option trading when the market is flat or hard to read it’s easier to look for trades six months to a year out which are often referred to as LEAPs.
In November 2009, we profiled a Netflix call option trade and here were our initial thoughts (quotes are from 11/13/09):
“Netflix (NFLX, $58.19, down $1.25) is a company we are watching now because it has the look and feel of a stock that wants to go to $100. Right now it’s at 52-week highs and we are waiting for a break above $60. Nice round number huh? Well, the exact 52-week high is $59.89 and a break above $60 could lead to more momentum.
For high risk traders, you could play the November calls for a day trade or longer but realize these options expire next Friday. The safer play would be to look at the December calls. If Netflix does break $60 then we may send out an alert based on market conditions.
One interesting thing and here is where our new trade comes into play.
If Netflix could manage to make a run to $100 by June 2010 then we will do very well with this trade. The big reason we think the stock could go to $100 by next summer is due the serious sense it makes for someone to buy them.
Microsoft (MSFT, $29.36, up $24) already has a partnership with Netflix and would be the most logical choice. Combining the xBox with Netflix’s Roku box seems like a match made in internet heaven.
You want to know why Blockbuster (BBI, $0.83, up $0.02) is closing shops faster than a beach bar going into winter. If you have a Netflix mailing plan you can get unlimited streaming of 50,000 movie and TV shows by getting this Roku box. Just go to your computer, find the movie/show you want and enjoy it as soon as you get to the couch.
Come to think of it, Apple (AAPL, $201.99, down $1.26) would make a good fit too. Either way, even without a buyout offer, Netflix could have the muscle to make it to $100 in 8 months on its own. We would love to see the stock come back down to $55-$56 which is where short-term support lies but we will also be watching for the break above $60.” (END)
Here were out thoughts two weeks later after we were stopped out on the Dubai news. We had a tight stop on this trade and here were our comments outside the Members Area before the open (quotes are from 11/27/09):
“After pushing the major averages to new highs for the year, the bulls will be in trouble today as the bears looked poised for a HUGE market correction today. We were up late checking the futures market and shortly after midnight the Dow futures we down a whopping 247 points to 10,195. The S&P 500 futures are off by 32 to 1,076 while the Nasdaq 100 futures are lower by 54 points to 1,740.
There is news out of Dubai that shook the Asia markets and there was a heavy sell-off as investors worried about banks’ exposure to Dubai World’s debt. Dubai World is the city state’s largest corporate entity and has asked creditors for as six-month stay on debt repayments of nearly $60 billion.”
Inside our Members Area that day:
2010 June 80 calls (QNQFP, $1.40, down $0.25)
Entry Price: $1.65 (11/13/09)
Exit Target: Closed at $1.25 on (11/27/09)
Action: Netflix got hammered at the open and traded to a low of $54.71 shortly after. Needless to say we were stopped out on both trades.
We did pretty well today by cutting our losses and taking the emotion out of our trades. Yes, some of the positions bounced back but we feel a lot better going into the weekend with a clean slate for next week.
It is rare a risk event this big hits the market but they do happen. As an option trader, it doesn’t matter how much you like a certain trade…just take your lumps and regroup. We target 100% returns on our trades which gives us the luxury of having two 50% losing trades for every winner. Our success rate is much better than that of course as we have been able to hit on 8 out 10 trades on average for 2009.
However, there are times when the market will whipsaw us out of some great trades and you just have to go back to the drawing board and figure out what it all means. That is what we will be doing this weekend and we will be back with an update on Sunday night.” (END)
The point we want to make is that the Netflix June 80 calls (QNQ100619C00080000, $3.50, up $0.47) have now doubled which showed our research was spot on. Although we had a “tight stop” on this trade sometimes it pays not to have one and go with your instincts.
This trade ended up getting ridiculously cheap as Netflix dropped to a low of $48 by mid-January. However, the stock jumped 13 points when Netflix announced earnings and closed above $60. The company is also working on becoming a global force in the near future which really got Wall Street excited.
It’s important to keep these things in mind when looking for new trades or waiting for stocks to breakout but we should have revisited the story once shares broke through our $60 resistance level.
As far as the market, the bulls are struggling to hold the morning gains as the Dow is up 5 points to 11,900. The S&P 500 is flat at 1,172 while the Nasdaq is higher by 2 points to 2,405.
We are profiling another NEW TRADE in today’s write-up so let’s get to the Members Area…
Tags: Netflix, NFLX, option picks, option signals, options alerts, stock option picks, stock options trading
Posted in Hot Stocks | Comments Off
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Bulls Will Be Tested
Monday, April 19th, 2010
9:00am (EST)
Futures are pointing towards a slightly lower open as the bulls try to get up off their feet following Friday’s knockdown punch from the real Slim Shady, Goldman Sachs (GS, $160.70, down $23.57).
There will be 135 S&P 500 companies reporting earnings this week, which, if you do the math, is nearly a quarter of the index. Wall Street has penciled in an earnings pop of nearly 40% from year ago levels with revenues getting a 10% pop versus last year’s results.
Here is a look at the companies reporting (quotes are from Friday’s close):
Monday: Alleghany (Y, $300.06, down $1.95), Arch Coal (ACI, $26.00, down $0.67), Bank of Hawaii (BOH, $48.60, down $0.44), BJ Services (BJS, $21.65, down $0.70), CF Industries (CF, $90.00, flat), Citigroup (C, $4.56, down $0.25), Eli Lilly (LLY, $36.54, down $0.18), Halliburton (HAL, $31.64, down $0.88), Hasbro (HAS, $39.85, down $0.29), Park National (PRK, $64.85, down $0.45), Raymond James (RJF, $29.41, down $0.85) and SunPower (SPWRA, $18.29, down $0.38).
Tuesday: Apple (AAPL, $247.40, down $1.52), AK Steel Holding (AKS, $21.60, down $0.61), Bank of New York Mellon (BK, $31.57, down $0.45), Biogen Idec (BIIB, $53.64, down $0.77), Brinker International (EAT, $20.38, down $0.33), Coach (COH, $42.31, down $0.68), Coca-Cola (KO, $54.97, up $0.71), Cree (CREE, $82.12, down $0.73), Eaton (ETN, $79.39, down $0.93), Forest Laboratories (FRX, $27.80, down $0.41), Goldman Sachs (GS, $160.70, down $23.57), Harley-Davidson (HOG, $33.08, down $0.19), Illinois Tool Works (ITW, $49.01, down $0.54), Jefferies (JEF, $27.40, down $0.58), Johnson & Johnson (JNJ, $65.02, down $0.49), Juniper Networks (JNPR, $31.21, down $0.77), Nabors Industries (NBR, $19.52, down $0.54), Parker Hannifin (PH, $69.07, down $1.14), Supervalu (SVU, $16.98, down $0.18), U.S. Bancorp (USB, $27.45, down $0.81), VMware (VMW, $56.39, down $0.04) and Yahoo (YHOO, $18.17, down $0.80).
Wednesday: Abbott Laboratories (ABT, $52.26, down $0.10), Altria Group (MO, $20.87, down $0.23), Amgen (AMGN, $60.72, up $0.08), AT&T (T, $25.93, down $0.31), Chipotle Mexican Grill (CMG, $124.05, down $1.03), eBay (EBAY, $26.33, down $0.65), Freeport-McMoRan Copper & Gold (FCX, $81.18, down $3.04), Intersil (ISIL, $16.59, down $0.22), Kinder Morgan Energy Partners (KMP, $66.43, down $0.36), Lockheed Martin (LMT, $82.99, down $0.23), McDonald’s (MCD, $69.03, down $0.13), Morgan Stanley (MS, $29.16, down $1.72), Netflix (NFLX, $85.31, down $1.52), Piper Jaffray (PJC, $43.04, down $0.79), SanDisk (SNDK, $37.74, down $0.89), St. Jude Medical (STJ, $40.88, down $1.06), Starbucks (SBUX, $24.96, down $0.17) and Wells Fargo (WFC, $32.56, down $0.95).
Thursday: Amazon.com (AMZN, $142.17, down $3.65), BB&T (BBT, $33.76, down $0.42), Capital One Financial (COF, $43.49, down $1.66), Cheesecake Factory (CAKE, $28.74, flat), DeVry (DV, $70.86, up $0.21), Ford (F, $13.42, down $0.34), Greenhill (GHL, $87.50, up $0.62), L3 Communications (LLL, $94.80, down $0.22), Marriott International (MAR, $33.88, down $0.15), Microsoft (MSFT, $30.67, down $0.20), Nokia (NOK, $14.94, down $0.32), Philip Morris International (PM, $50.74, down $0.85) and RadioShack (RSH, $23.32, down $0.40).
Friday: Ingersoll-Rand (IR, $37.16, down $0.66), Johnson Controls (JCI, $32.69, down $0.79), Patriot Coal (PCX, $21.90, down $1.57) and Travelers Companies (TRV, $52.14, down $0.74).
As we head to press, Dow futures are down 54 points to 10,930 while the S&P 500 futures are off by 7 to 1,183. The Nasdaq 100 futures are lower by 8 points to 2,002.
As far as economic news, we get the March index of leading economic indicators (LEI) shortly after the open this morning. Analysts are expecting the index to have risen 1% after rising 0.1% in the previous month.
Federal Reserve Chairman Ben Bernanke will also chime in today with his latest thoughts and comments. Subscribers, check the Members Area for the trade updates.
Tags: stock option picks, stock option signals, weekly earnings reports
Posted in Company Commentary | Comments Off