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Thursday, May 19th, 2011
1:45pm (EST)
The bulls got off to a good start this morning after hearing initial unemployment claims decreased by 29,000 to 409,000 for the week. The news came before the bell and was better than the 420,000 number that had been expected.
The market then came off its highs after hearing Existing Home Sales for April fell nearly 1% to 5 million units. Meanwhile leading economic indicators fell 0.3%, versus expectations for an increase of 0.1%. The Philadelphia Fed’s manufacturing survey was a shocker, coming in at 3.9 and significantly lower than the expected reading of 20.
Despite the mixed economic news, the market is once again pushing its highs for the day.
The Dow is up 44 points to 12,604 while the S&P is higher by 4 points to 1,344. The Nasdaq is showing a 12 point pop and is at 2,827.
Wall Street had a warm welcome for its latest initial public offering (IPO) as LinkedIn (LNKD, $104.00, up $59.00) made its official debut by ringing the opening bell on the New York Stock Exchange this morning. As you can see, the offering was well accepted as shares have nearly doubled in their first few hours of trading as investors are snapping up shares of the online networking company.
Due to strong demand, LinkedIn’s pricing for the IPO was raised to $45 a share following Wednesday’s close which was well above the initial target of $32 to $35 a share. A current prices, LinkedIn has a market value of nearly $10 billion, the highest for a U.S. Internet company since Google (GOOG, $533.41, up $3.60) went public nearly 7 years ago.
Of course, there are no options available on LinkedIn, yet, but this is a name we will be trading down the road. The volatility will likely continue for a few months and when the options list, we will let you know.
Our current trades are getting some nice pops today so let’s get to the action. Subscribers, check the Members Area for the updates.
Tags: call options, high beta stocks, Hot stocks, LinkedIn IPO, LNKD IPO, momentum options, Momentum stocks, NASDAQ:LNDK, option tips, options, options trading course, stock market options, strangle option trades, weekly options
Posted in Hot Stocks, IPOs | Comments Off
Thursday, May 19th, 2011
9:00am (EST)
The bulls continued their bounce off Tuesday’s lows despite a sluggish start to power their way back above key support levels on Wednesday.
The Dow added 80 points, or 0.7%, to close at 12,560. The index made a steady climb back above the 12,500 level and will look to challenge 12,700-12,800 by week’s end. The bears are targeting 12,350.
The S&P 500 advanced 12 points, or 0.8%, to finish at 1,340. The 1,350 area will need to be cleared if the bulls want to test 1,375 again while 1,325-1,300 is serving as short-term support.
The Nasdaq led the charge higher by surging 32 points, or 1.1%, to settle at 2,815. Tech made a strong move back above 2,800 after holding support on Monday and Tuesday.
SodaStream International (SODA, $53.99, up $10.26) had an outstanding day as shares surged nearly 24% after the company announced better-than-expected earnings. Revenues increased 50% to $64 million and here were our thoughts 6 months ago (quotes from that day):
From November 5, 2010:
“We wanted to profile one stock this morning before we hit the Members Area which could be worth watching going forward. SodaStream International (SODA, $30.00, up $5.88), which makes home beverage carbonation systems, surged 25% yesterday after an initial public offering (IPO) on Wednesday.
The company raised $110 million in its debut by selling 5.5 million shares which were priced at $20 a share and the top end of its estimated range. The underwriters have a 30-day option to buy up to an additional 800,000 shares to cover any excess demand which could raise another $20 million.
We aren’t 100% sure if this stock is the next Green Mountain Coffee Roasters (GMCR, $33.88, down $0.41), which revolutionized the coffee industry with its k-cups and made our life easier, but there are some similarities.
SodaStream’s home beverage carbonation system allows you to convert tap water into carbonated soft drinks and sparkling water. Green Mountain made coffee making easy selling the machines that their simple k-cups go in. SodaStream (also) sells the machines and the mix which is “a smarter way to enjoy soda” according to the company’s slogan.
You can choose from 4 different home soda makers that range in price from $79.95-$199.95. The refills cost $4.99 and can make 12 liters of soda, or 33 cans. The machines are being sold in thousands of stores and if they are selling well, the stock could be headed for further gains.” (END)
Well, although we predicted higher prices for SodaStream, we blew it on the options. We did an update a few weeks ago on SodaStream for our Weekly Wrap and said the options were thinly traded. Open interest has been low, until yesterday, which can cause wide bid/ask prices. We mentioned both of these issues in our update.
Although the company’s earnings announcement didn’t show up on our radar until after the fact, there was a trade that would have returned a windfall overnight.
Shares were just under $44 going into Tuesday’s close and a 10% move, which we like to factor in for our earnings trades, would have pushed SodaStream up towards $50.
This would have led us to look at the 50 call strike prices for May and June although the May options expire this Friday. Both options did really well.
The May 50 calls (SODA110521C00050000, $4.00, up $3.60) were going for 40 cents and surged 900% yesterday. Open interest was under 1,000 contracts going into Wednesday but traded nearly 3,000 contracts. The June 50 calls (SODA110618C00050000, $6.20, up $4.10) traded nearly 1,000 contracts versus 3 times open interest.
As you can see, the power of options is incredible. A $400 trade on 10 contracts was worth $4,000 in less than 24 hours. Now you know why we spend countless doing research.
We were also smiling when we heard Jim Cramer nearly quote us word-for-word when he said SodaStream could be the next Green Mountain Coffee Roasters.
Well, it’s something we already knew because SodaStream basically copied GMCR’s business model except they did it with soda. Brilliant!
We have a lot to cover in our Members Area today and futures are pointing towards a higher open. Dow futures are up 50 points, S&P futures are up 5 points, and the Nasdaq futures are up 8 points. Subscribers, check for the updates.
Tags: call options, high beta stocks, Hot stocks, momentum options, Momentum stocks, NASDAQ: SODA, option tips, options, options trading course, SODA, stock market options, strangle option trades, weekly options
Posted in Hot Stocks, Market Commentary | Comments Off
Wednesday, May 18th, 2011
1:00pm (EST)
Vivus (VVUS, $8.40, up $0.32) is back in the spotlight but this time it’s not for news concerning its diet drug, Qnexa. We have mentioned the battle between Vivus and others to be the first company to get a diet pill approved but Vivus also has plans to get into the erectile dysfunction (ED) market.
The company announced positive results from a pivotal phase 3 clinical trial for Avanafil which helps with erectile dysfunction. The study met all primary endpoints and indicated that successful intercourse was achieved as early as 15 minutes.
We have been mentioning Vivus since early 2008 when shares were near $5 and we have maintained Vivus is the best speculative play on the obesity market. Since then, we have also been bringing you regular updates on their good wood drug, Avanafil, and have said that they have a stronger pipeline than Arena Pharmaceuticals (ARNA, $1.29, up $0.01) and Orexigen Therapeutics (OREX, $2.96, up $0.02) – the other two players trying to gain approval for a diet drug.
While Pfizer (PFE, $21.07, down $0.07), which hit a 52-week high yesterday, remains the 800-pound gorilla in the ED space, Vivus should find a niche with its fast-acting action pill. The market for erectile dysfunction grew nearly 5% in 2009 and roughly 7% in 2010 to over $5 billion in sales so there is room for Vivus to make some decent profits if the drug does hit the market.
Vivus has a market cap of only $665 million and we doubt Avanafil will be a billion dollar a year drug for them. However, Qnexa could easily be a billion dollar a year drug which makes Vivus a great acquisition candidate while shares are cheap. If the company can get through the FDA’s hurdles for their diet drug, then Vivus will easily trade to the upper teens on any positive developments.
Vivus is a current trade in both our Weekly Wrap and Daily publications.
As far as the market, the action is favoring the bulls today who have a slight lead as we head into the second half of trading. The Dow is up 37 points to 12,516 while the S&P is higher by 7 points to 1,336. The Nasdaq is showing a 19 point pop and is at 2,802.
The bulls are looking to take back key support levels so the close should be interesting. We will be back in the morning with a full update. Subscribers, check the Members Area for the current trades comments. Also, we have added a possible earnings trade or two for you to look at today although we will probably stay on the sidelines.
Special Notice: We may also release a NEW TRADE for our Weekly Wrap later this afternoon. We have 3 positions that might get “called away” on Friday for profits ranging from 10%-35% so we are looking to replace them with some new candidates.
Tags: call options, high beta stocks, Hot stocks, momentum options, Momentum stocks, option tips, options trading course, stock market options, strangle option trades, Vivus, Vivus Phase 3 results, VVUS, weekly options
Posted in BioTech | Comments Off
Wednesday, May 18th, 2011
9:05am (EST)
The market went on another wild ride on Tuesday as the battle between the bulls and bears heats up. We mentioned last week the market could experience some extra volatility due to options expiration week which is this Friday for the May contracts.
The bears started the session with an early lead which easily led to a break below our near-term targets by our afternoon update. However, we said there could be a bounce as buyers started to come in at the lows which helped fuel the rebound into the close.
A weaker dollar and some strength from the Financial sector helped the bulls camp but Tech was the most impressive as it bounced back to finish in the green. We mentioned yesterday that moving averages (MA’s) can get “stretched” which is happening with the Nasdaq and S&P after they fell through their 50-day MA’s yesterday. Major support and resistance levels can be tricky to read which is why you have to factor in other variables.
If the bears had pushed just a little harder, perhaps, we would be having a different conversation. However, they let the bulls get up off the canvas so it’s time to review what the action meant for the rest of the week.
The Dow dropped 69 points and closed at 12,479 and below our near-term support level. We said there was further support down to 12,350 and the index fell to 12,378 intraday. A break below 12,350 triggers 12,200 but you might as well pencil in Dow 12,000 because investors will start jumping ship if this level doesn’t hold. If 12,500 is cleared, resistance will be at 12,700-12,800.
The S&P slipped less than a point to settle at 1,328. The index traded to a low of 1,318 after breaking 1,325 but closed above this level by the bell. Support is at 1,300 with resistance remaining at 1,345-1,350.
The Nasdaq added a point to finish at 2,783. The index went out at its highs for the day after kissing a low of 2,759 but, more importantly, held the 2,750 level. Resistance is at 2,800-2,825.
Futures are slightly higher as we head to press which should lead to a green open.
Tags: call options, high beta stocks, Hot stocks, momentum options, Momentum stocks, option tips, options trading course, stock market options, strangle option trades, weekly options
Posted in Market Commentary | Comments Off
Tuesday, May 17th, 2011
12:45pm (EST)
The markets is continuing its downward drift after a lower open and is testing the bottom of the trading ranges we mentioned in our morning update. The bulls have held ground, to some degree, and made a charge into positive territory before retreating. Tech continues to hold back any momentum the bulls gather and today’s earnings news hasn’t helped.
The latest economic news continues to paint a dismal picture for the housing recovery. With spring season here, many analysts thought there would be a pickup in activity but bad weather and a glut of inventory from the boom days continue to hamper any recovery. Housing Starts fell over 10% in April to 523,000 versus expectations for 575,000. Building Permits fell 4% to 551,000 while new construction, which accounts for nearly 75% of the housing market, fell over 5%, to 394,000.
In earnings news, Hewlett-Packard (HP, $36.11, down $3.69) is down nearly 9% after another disappointing quarter. The company reported profits of $2.3 billion, or $1.05 a share, versus $2.2 billion, or $0.91 a share, from the year ago quarter. Revenue came in at $31.6 billion.
Analysts were expecting $1.21 a share on revenue of $31.5 billion. Making matters worse, HP lowered guidance going forward and is now expecting current quarter profits to come in at $1.08 a share on revenue of $31.2 billion. Wall Street was looking for $1.23 on $31.9 billion in sales.
HP has been a company in transition since their former CEO scandal and departure and doesn’t seem to have a clear direction on where it wants to go. Their new CEO wrote an email to the top brass and asked them to run a tighter ship. The problem was the Wall Street Journal got a copy of the memo so the news was out last night that HP was going to miss their numbers and they reported this morning instead of Wednesday.
As far as the market, the Dow is down 117 points to 12,431 after falling through the 12,500 level. We said there was further support down to 12,350 today and the index has traded to a low 12,383.
The S&P 500 is off by 5 points to 1,324 after breaking below 1,325. The index has kissed a low of 1,318. There is further support at 1,300 but a break below this level could cause panic and a rush to the exits.
The Nasdaq is showing a decline of 11 points to 2,771 and is in danger of falling thru our downside target of 2,750. The index fell to a low of 2,759.
Both the S&P and Nasdaq have broken below their 50-day moving averages (MA) but we know they can get stretched before bouncing back. However, the bears are on the verge of cracking another layer of serious support and we have a feeling the final hour of trading could determine the bulls fate for the rest of the week.
If our aforementioned support levels do hold then we could see a bounce. If not, we will go over our next set of downside targets in tomorrow’s morning update. We have a lot to cover in our Members Area, including a couple of new ideas on our Watch List, so let’s get to the real action. Subscribers, check for the updates.
Tags: call options, Hewlett-Packard earnings miss, high beta stocks, Hot stocks, HP, momentum options, Momentum stocks, option tips, options trading course, stock market options, strangle option trades, weekly options
Posted in Market Analysis, Watch Lists | Comments Off
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SodaStream (SODA) Surges on Earnings Beat
Thursday, May 19th, 2011
9:00am (EST)
The bulls continued their bounce off Tuesday’s lows despite a sluggish start to power their way back above key support levels on Wednesday.
The Dow added 80 points, or 0.7%, to close at 12,560. The index made a steady climb back above the 12,500 level and will look to challenge 12,700-12,800 by week’s end. The bears are targeting 12,350.
The S&P 500 advanced 12 points, or 0.8%, to finish at 1,340. The 1,350 area will need to be cleared if the bulls want to test 1,375 again while 1,325-1,300 is serving as short-term support.
The Nasdaq led the charge higher by surging 32 points, or 1.1%, to settle at 2,815. Tech made a strong move back above 2,800 after holding support on Monday and Tuesday.
SodaStream International (SODA, $53.99, up $10.26) had an outstanding day as shares surged nearly 24% after the company announced better-than-expected earnings. Revenues increased 50% to $64 million and here were our thoughts 6 months ago (quotes from that day):
From November 5, 2010:
“We wanted to profile one stock this morning before we hit the Members Area which could be worth watching going forward. SodaStream International (SODA, $30.00, up $5.88), which makes home beverage carbonation systems, surged 25% yesterday after an initial public offering (IPO) on Wednesday.
The company raised $110 million in its debut by selling 5.5 million shares which were priced at $20 a share and the top end of its estimated range. The underwriters have a 30-day option to buy up to an additional 800,000 shares to cover any excess demand which could raise another $20 million.
We aren’t 100% sure if this stock is the next Green Mountain Coffee Roasters (GMCR, $33.88, down $0.41), which revolutionized the coffee industry with its k-cups and made our life easier, but there are some similarities.
SodaStream’s home beverage carbonation system allows you to convert tap water into carbonated soft drinks and sparkling water. Green Mountain made coffee making easy selling the machines that their simple k-cups go in. SodaStream (also) sells the machines and the mix which is “a smarter way to enjoy soda” according to the company’s slogan.
You can choose from 4 different home soda makers that range in price from $79.95-$199.95. The refills cost $4.99 and can make 12 liters of soda, or 33 cans. The machines are being sold in thousands of stores and if they are selling well, the stock could be headed for further gains.” (END)
Well, although we predicted higher prices for SodaStream, we blew it on the options. We did an update a few weeks ago on SodaStream for our Weekly Wrap and said the options were thinly traded. Open interest has been low, until yesterday, which can cause wide bid/ask prices. We mentioned both of these issues in our update.
Although the company’s earnings announcement didn’t show up on our radar until after the fact, there was a trade that would have returned a windfall overnight.
Shares were just under $44 going into Tuesday’s close and a 10% move, which we like to factor in for our earnings trades, would have pushed SodaStream up towards $50.
This would have led us to look at the 50 call strike prices for May and June although the May options expire this Friday. Both options did really well.
The May 50 calls (SODA110521C00050000, $4.00, up $3.60) were going for 40 cents and surged 900% yesterday. Open interest was under 1,000 contracts going into Wednesday but traded nearly 3,000 contracts. The June 50 calls (SODA110618C00050000, $6.20, up $4.10) traded nearly 1,000 contracts versus 3 times open interest.
As you can see, the power of options is incredible. A $400 trade on 10 contracts was worth $4,000 in less than 24 hours. Now you know why we spend countless doing research.
We were also smiling when we heard Jim Cramer nearly quote us word-for-word when he said SodaStream could be the next Green Mountain Coffee Roasters.
Well, it’s something we already knew because SodaStream basically copied GMCR’s business model except they did it with soda. Brilliant!
We have a lot to cover in our Members Area today and futures are pointing towards a higher open. Dow futures are up 50 points, S&P futures are up 5 points, and the Nasdaq futures are up 8 points. Subscribers, check for the updates.
Tags: call options, high beta stocks, Hot stocks, momentum options, Momentum stocks, NASDAQ: SODA, option tips, options, options trading course, SODA, stock market options, strangle option trades, weekly options
Posted in Hot Stocks, Market Commentary | Comments Off