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Thursday, September 13th, 2012
9:00am (EST)
The bulls dodged a bullet yesterday after Germany agreed to support more bailouts as Wall Street now shifts its focus on today’s Fed news. The bears managed to trim a little off the top but the market showed continued strength as it pushed new highs.
The Dow added 10 points, or 0.07%, to finish at 13,333. The blue-chips kissed 13,373 and a fresh 52-week high after busting through our 13,350 target which now sets the stage for a pop to 13,500-13,600.
The S&P 500 advanced 3 points, or 0.2%, to settle at 1,436. The index traded up to 1,439 which was also a 1-year high and remains on track for 1,450.
The Nasdaq gained 10 points as well, or 0.3%, to close at 3,114. Tech failed to take out last Friday’s yearly high of 3,139 but if Apple (AAPL, $669.79, up $9.20) can make another run at $700 then the Nasdaq could trigger 3,200-3,250 on momentum.
The Russell 2000 was up 3 points, or 0.4%, to end at 845. The small-caps are within a field goal of breaking their 52-week high 847.92 and 5 points away from our near-term target of 850.
The S&P Volatility Index ($VIX, 15.80, down 0.61) fell nearly 4% and traded down to 15.43.
The FOMC is scheduled to release it policy decision at 12:30pm (EST) so we can expect some volatility leading up to and after the announcement. If The Bernanke can manage to deliver what the market wants to hear then the bulls could continue to rally to new highs and push our “fluff” targets. If not, the bears could go on the attack.
Futures are showing a slightly lower open and look like this: Dow (-18); S&P 500 (-2); Nasdaq 100 (-7). Subscribers, check the Members Area for the updates. We expect another busy day as far as possible Trade Alerts and maybe New Trades so stay on your toes.
Tags: option trading strategies, options trading, stock options consultant, stock trading advisors
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Tuesday, September 11th, 2012
9:00am (EST)
It was another typical Monday for the bears as the market ended the session lower. If we count last Tuesday as a Monday, the Dow has now fallen 14-out-of-15 days to start the week but the bulls have been holding support.
Getting off to a good start to any race is always feels good but it’s how you finish that matters. The bulls did push positive territory shortly after the open and into the afternoon but the selling pressure picked-up in the last hour of trading which gave the bears the win.
The Dow fell 52 points, or 0.4%, to finish at 13,254. The blue-chips ended near their low for the session but held 13,250 and traded to a high 13,324. The 73-point trading was expected but a break below 13,200 could get some bulls nervous. A close above 13,300 could be a good sign going into Wednesday and Thursday’s fireworks.
The S&P 500 dropped 9 points, or 0.6%, to end at 1,429. The index made a new high of 1,438.74 shortly after the open before tumbling in the final hour but held 1,425. The bulls are still trying to push 1,450, possibly 1,500, and should be okay as long as support holds.
The Nasdaq declined 32 points, or 1%, to settle at 3,104. Tech kissed a low of 3,102 and was able to hold 3,100 into the close which is very short-term support. There could be a dip to 3,075 and a break below this level would bring 3,050 back into play. The bulls are still eyeing a move above 3,200-3,250 over the short-term but were unable to move the flag forward as the Nasdaq backtracked all day.
The Russell 2000 gave back 3 points, or 0.3%, to close at 839. The small-caps showed a little strength midday after reaching a high of 844 and the bulls did well by keeping losses to a minimum. A break above 850 could open the flood gates for some buying activity while a close below 830 could signal the recent rally has peaked.
The S&P 500 Volatility Index ($VIX, 16.28, up 1.90) jumped 13% and closed at its high. The VIX stayed below 17.50 which was slightly bullish but a move above this level could get 20 in play quickly which would be bearish.
Futures are showing a higher open as we head to press: Dow (+43); S&P 500 (+5); Nasdaq (+8). We should get a moment of silence this morning before the open to remember the victims of September 11. Join in if you can.
Subscribers, check the Members Area for the updates and stay on the lookout for possible Trade Alerts if we take action or open New Trades.
Tags: option trading strategies, options trading, stock options consultant, stock trading advisors
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Monday, September 10th, 2012
9:00am (EST)
“We factored in a possible 1%-2% move for the market on Friday based on what Bernanke did or didn’t say and at one-point the indexes were up nearly 1.5%. There was plenty of volatility at the open and once the fireworks began but the trend was higher after Big Ben said the Fed WILL print more money, we mean, provide more stimulus.
Here is the money sentence that gave the bulls the green light:
“Taking due account to the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.” (END)
The knee jerk reaction was expected but Big Ben basically checked the pot back to Mario Draghi which gave him two more weeks to see what Europe does. The Fed and its members should be mum until they meet again on September 12 as there is technically a week-long blackout period ahead of the meeting.
Draghi has cried wolf more times than we care to count and he will take center stage again on Thursday (September 6) as the European Central Bank (ECB) meets. The market is expecting the ECB to announce some kind of bond-buying program but there is, believe it or not, a chance they delay an announcement until next week on September 12 which is when Germany is expected to vote on the European Stability Mechanism (ESM).
To review, the ESM provides “financial assistance”, or bailouts, to the members of the eurozone who need financial aid. We have mentioned all summer long Germany has grown tired of flipping the bills for the struggling counties like Greece and Spain and is expected to vote on the treaties that were established for the fund. Back in July, a German court looked into the complaints of the constitutionality of the ESM and this vote could be crucial in if the euro gets saved or not. If Germany does give the okay for the ESM to establish a permanent bailout fund, the markets should rally, but again, this news isn’t expected until next week although there has been a leak. Germany’s Finance Minister, Wolfgang Schaeuble, has gone on record saying that he does not see the Constitutional Court blocking the established treaties so Draghi could be safe if he gives the market something to nibble on.
The Dow Transportation Average showed signs of life on Friday and will need to break out of its downtrend if the bulls expect to test new highs. The index trended lower all summer before the August bounce and pullback which is in danger of falling below the uptrend line. A close below 4,950 on the Dow Transports could spell lights out for the bulls. A close above 5,050 would be bullish.
Commodities also made a nice move and we mentioned midweek gold and silver were on the verge of breaking out:
This week has the potential to be bullish as the charts favor the bulls. The Tuesday after Labor Day is usually bullish and it is the first trading day of the month. With the suit-and-ties coming off their August vacations, they will be anxious, or forced, to buy stocks if the market gets off to a strong start and the rally resumes.
There are several U.S. economic reports slated for the week with Friday’s Nonfarm Payroll report and Unemployment numbers which could help or hinder any momentum. This week’s headlines will likely get the market back at resistance or short-term support. This means the indexes would again be at crucial levels heading into the following week which will also be packed with Tech news.” (from 9/3/2012 Weekly Wrap/ Monday Morning Outlook)…
The bulls made a run at new highs after the European Central Bank (ECB) promised unlimited QE (Quantitative Easing) by targeting bonds of the struggling nations in the eurozone. Mario Draghi, president of the ECB, delivered exactly what the markets around the world wanted to here.
Friday’s unemployment news was a disaster but the market inched higher as Wall Street now expects The Bernanke to spring into action as soon as this week. The bears are left with few options as they try to hold down the last layer of resistance and this week will be crucial with Germany voting on the constitutionality of the bailouts and the FOMC Rate Decision on tap. (continued…)
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Posted in Economic News, European Union (EU), Gold, Market Analysis, Market Commentary | Comments Off
Friday, September 7th, 2012
12:50pm (EST)
The market is mixed heading into the second half of trading following a disappointing jobs report. Nonfarm Payrolls came in at 96,000 for August following a 141,000 increase in July which was revised down from 163,000. The suit-and-ties were expecting a number north of 125,000.
The unemployment rate dropped to 8.1%, from 8.3%, in July but was still above 8% which is where unemployment has been at for 4 years. The real unemployment rate came in at 14.7% which includes discouraged workers and those that are working part-time due to the sluggish economy.
Of course, this has put QE3 back into the picture and the FOMC will meet next week.
One stock we want to mention today is Smith & Wesson Holding (SWHC, $10.45, up $1.45) which is up 16% after smashing earnings estimates. The company reported a profit of $18.9 million, or $0.28 a share, versus $2.3 million, or $0.04 a share, in the year-earlier period. Revenue for the quarter was $136 million. Analysts were looking for profits of $0.18 a share on sales of $129 million.
Looking ahead, Smith & Wesson expects to earn full-year profits of 85-90 cents a share on revenue of $530-$540 million, up from a previous estimate of 60-65 cents on sales of $485 million.
We wished we would have put this stock on our Daily Watch List this week because we have been following it since $5. We knew they would be reporting earnings this week from the research we did for our Weekly Wrap but with so much going on, we dropped the ball on a sweet option trade.
The Smith & Wesson September 9 calls (SWHC120922C00009000, $1.50, up $0.75) are up 100% and have traded to a high of $1.95 today.
Given the strong results, shares look like they could push $15 over the next 3-6 months, especially if Obama wins reelection. We won’t talk politics today but it sure looks as though people are protecting themselves given all the chaos in the world.
As we head to press, the Dow is down 10 points to 13,281 while the Nasdaq is lower by 3 points to 3,132. The S&P 500 is showing a gain of 3 points and is at 1,435. We have some last minute updates for our current trades so let’s go check the tape.
We will be back on Sunday night with our Weekly Wrap and our next issue of the Daily will be out Monday morning. Until then, have a great weekend everyone!
Tags: option trading strategies, options trading, stock options consultant, stock trading advisors
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Friday, September 7th, 2012
9:00am (EST)
All Aboard!!! Ha, ha, ha….
We played a classic at the office headquarters this morning to get our day started and there was no introduction needed after the bulls pushed new multi-year and decade highs yesterday. Mario Draghi and the European Central Bank (ECB) said exactly what the market wanted to hear which lead to a bull jailbreak.
The Dow zoomed 245 points, or 1.9%, to close at 13,292. The index easily cleared 13,200 and challenged 13,300-13,350 which is the last line of resistance before new 52-week highs.
The S&P popped 29 points, or 2%, to settle at 1,432. The index went out at its high after clearing our 1,425 target which sets up a run to 1,450. Yesterday’s close was also a 52-week and 4-year high for the S&P.
The Nasdaq soared 67 points, or 2.2%, to finish at 3,135. We mentioned once 3,100 cleared there could be a push to 3,150 which is less than a half-percent away. Tech closed at an 11-year high.
The Russell 2000 added 17 points, or 2%, to end at 838. Here were our thoughts Wednesday morning as we could feel something in the air from Tuesday’s close:
“The big story for the day that the talking heads failed to mention was the Russell 2000 which was up 10 points, or 1.2%, and closed at 822. The move above 820 was super bullish and gets 830 back in play which was last seen on May 1. The small-caps traded to a high of 823.77 after testing 807 in the morning.”
We mentioned in our Weekly Wrap the charts were bullish for this week and that the Wall Street pros could be forced to buy stocks after coming back from vacation if there was a rally to resistance and a flood of buying. Bingo.
Of course, we gave you an early clue on Wednesday there was a strong bid in the market but with everyone all of a sudden rushing to one side of the boat we now have to be careful over the short-term. While there may be a continued rally, yesterday felt a little like a bullish capitulation day and Germany still has to approve the ECB’s plans next week.
Futures are showing a positive open despite a worse-than-expected Nonfarm Payrolls number which we will cover this afternoon. Dow futures are up 22 points to 13,297 while the S&P futures are higher by 3 ticks to 1,434. Nasdaq 100 futures are down a half-point to 2,825.
Subscribers, check the Members Area for the updates.
Tags: option trading strategies, options trading, stock options consultant, stock trading advisors
Posted in European Union (EU), Market Analysis, Market Commentary, Sectors | Comments Off
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Bears Take Another Monday
Tuesday, September 11th, 2012
9:00am (EST)
It was another typical Monday for the bears as the market ended the session lower. If we count last Tuesday as a Monday, the Dow has now fallen 14-out-of-15 days to start the week but the bulls have been holding support.
Getting off to a good start to any race is always feels good but it’s how you finish that matters. The bulls did push positive territory shortly after the open and into the afternoon but the selling pressure picked-up in the last hour of trading which gave the bears the win.
The Dow fell 52 points, or 0.4%, to finish at 13,254. The blue-chips ended near their low for the session but held 13,250 and traded to a high 13,324. The 73-point trading was expected but a break below 13,200 could get some bulls nervous. A close above 13,300 could be a good sign going into Wednesday and Thursday’s fireworks.
The S&P 500 dropped 9 points, or 0.6%, to end at 1,429. The index made a new high of 1,438.74 shortly after the open before tumbling in the final hour but held 1,425. The bulls are still trying to push 1,450, possibly 1,500, and should be okay as long as support holds.
The Nasdaq declined 32 points, or 1%, to settle at 3,104. Tech kissed a low of 3,102 and was able to hold 3,100 into the close which is very short-term support. There could be a dip to 3,075 and a break below this level would bring 3,050 back into play. The bulls are still eyeing a move above 3,200-3,250 over the short-term but were unable to move the flag forward as the Nasdaq backtracked all day.
The Russell 2000 gave back 3 points, or 0.3%, to close at 839. The small-caps showed a little strength midday after reaching a high of 844 and the bulls did well by keeping losses to a minimum. A break above 850 could open the flood gates for some buying activity while a close below 830 could signal the recent rally has peaked.
The S&P 500 Volatility Index ($VIX, 16.28, up 1.90) jumped 13% and closed at its high. The VIX stayed below 17.50 which was slightly bullish but a move above this level could get 20 in play quickly which would be bearish.
Futures are showing a higher open as we head to press: Dow (+43); S&P 500 (+5); Nasdaq (+8). We should get a moment of silence this morning before the open to remember the victims of September 11. Join in if you can.
Subscribers, check the Members Area for the updates and stay on the lookout for possible Trade Alerts if we take action or open New Trades.
Tags: option trading strategies, options trading, stock options consultant, stock trading advisors
Posted in Market Analysis, Market Commentary | Comments Off