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Tuesday, May 17th, 2011
9:05am (EST)
The bears picked up where they left off on Friday as they hit the bulls early and kept the pressure on for much of Monday’s session. There was a brief rally just before lunch as the bulls mounted a comeback but Tech was the weakest link and held back the momentum.
Commodities tried to recover from last week’s steep declines but continued to slip with oil, gold, and silver closing lower while the dollar finished flat after some early weakness.
The downside targets we mentioned in our Weekly Wrap and on Monday morning came into play but held. We also listed additional support levels if they were tested so let’s see where we are at.
The Dow fell 47 points to finish at 12,548 and touched a low of 12,530. If the 12,500 level is taken out than there is further risk down to 12,350. Resistance is now at 12,700-12,800.
The S&P gave back 8 points to settle at 1,329. The close below 1,334 brings 1,325 into play with the index touching an intraday low of 1,327. If this area is penetrated, then expect a test down to 1,300. Resistance is now at 1,345-1,350.
The Nasdaq got whacked for 46 points, or 1.6%, and closed at 2,782. The index kissed a low of 2,779 and stayed in the red for the entire session. The bears easily sliced their way through the 2,800 level and will now target 2,750. This area will be a huge battleground and could determine a change in the trend if violated. Resistance is now 2,825-2,850 over the short-term.
The continued test of resistance appears to wearing on the bulls as they struggle for a breakthrough without any clear leadership. Tech carried the market higher thru the end of April but is leading the way lower. Apple (AAPL, $333.30, down $7.20) and Google (GOOG, $518.42, down $11.13) fell 2% while Amazon.com (AMZN, $192.51, down $10.05) got shellacked for a 5% loss.
We did expect to see some selling pressure going into Monday’s session but we certainly didn’t like the close. We talked about watching for lower Friday/ Monday closes but yesterday’s selloff in the Nasdaq was pronounced and bears watching. Pun intended. Although the S&P and Dow’s losses were kept to a minimum, Tech looked awful.
One of the reasons we are using a mixture of calls and puts for our current batch of trades is because of this reason. If you will notice, many of our short-term puts are in Tech and commodities with a few bullish trades in Healthcare and Consumer Staples. They are working out well. The other bullish trades are dependent on a market breakout but because we expected weakness, we went longer out with a few trades that have August and September expiration dates.
Of course, the market could stay in its current trading range as it continues to test support and resistance, but the longer it does, the more volatile the move up or down will be.
The S&P Volatility Index (^VIX, 18.24, up 1.17) jumped 7% yesterday and we said if 20 is tested than we should see our downside targets come into play. We aren’t there, yet, but Wall Street is getting nervous. Subscribers, check the Members Area for the trade updates.
Tags: AAPL, call options, GOOG, high beta stocks, Hot stocks, momentum options, Momentum stocks, option tips, options trading course, stock market options, strangle option trades, VIX, weekly options
Posted in Market Analysis, Market Commentary | Comments Off
Monday, May 16th, 2011
12:25pm (EST)
After a lower open, the market is trying to recover and is mixed as we head into the second half of trading. Tech has been weak but the Financial stocks have shown some strength following Friday’s pounding.
Earnings are winding down and this week Wall Street will focus on the Retailer sector as a number of high profile companies are expected to report. J.C. Penney (JCP, $38.03, down $0.31) got the ball rolling this morning and reported better-than-expected numbers although shares are slightly lower after opening near $41.
In economic news, the Empire State Manufacturing Survey for May came in at 11.9, which was well below estimates for a print of 18. This was nearly half the reading from April’s 21.7 posting and weighed on futures before the open.
Despite the headwinds, the Dow is up 20 points to 12,615 while the S&P 500 is higher by a point to 1,339. The Nasdaq is lower by 17 points to 2,811.
Although the Financial sector has lagged, now might be a good time to go bottom fishing. Bank of America (BAC, $11.99, up $0.06) broke below $12 a share on Friday and is on its way of testing its 52-week low of $10.91. At some point folks, this is a $20 stock but it might take a few years to get there. Most of the financial websites will list the “book value” of Bank of America at $20 which means shares are trading at half their book. However, we like to look at the “tangible” book value which for BofA is $12-$13.
The tangible book value is what shareholders can expect to receive if Bank of America goes bankrupt and its assets are liquidated. The higher the tangible book value, the better, as it provides shareholders with more insurance. At some point, the Financial stocks will bounce back but we are hoping shares of BofA can come down a little more.
At $10, we might start backing the truck up.
We have updated our current trades and we are seeing some decent action today. We are in a stock picker’s market and one where you need to hedge your bets. We have a mixture of calls and puts that we are using to play the market’s short-term and long-term moves as we wait for the next breakout (or breakdown). Subscribers, check the Members Area for the trade updates.
Tags: bac, Bank of America’s book value, call options, high beta stocks, Hot stocks, JCP, momentum options, Momentum stocks, NYSE: BAC, option tips, options trading course, stock market options, strangle option trades, weekly options
Posted in Financial Stocks, Market Commentary | Comments Off
Monday, May 16th, 2011
8:15am (EST)
The “sell in May and go away” theory has been tested this month but the bulls are doing their best to keep the losses to a minimum. Commodities were a major eyesore for the market as they continued to sell-off but there are pockets of strength that is helping the bulls keep their run intact. We will cover some of the developments we are watching but first let’s look at the numbers…
To continue reading, please click here.
Futures are pointing towards a lower start this morning: Dow (-36), S&P (-4) and Nasdaq (-3).
We have 14 charts we are going to cover this morning which include our current option trades and the ones on our Watch List which was on fire last week. Subscribers, check the Members Area for the updates.
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
Friday, May 13th, 2011
1:30pm (EST)
The market has been trending lower for much of today’s session as the bears try to even things up going into the weekend. We’ve had a busy day and here is how we look going into the second half of trading.
The Dow started the week at 12,638 the low was 12,537. The index is currently down 105 points to 12,590 after briefly trading over 12,700.
The S&P was at 1,340 to start Monday’s session and traded to a low of 1,332 yesterday. The index is off 10 points and is at 1,338.
The Nasdaq stood at 2,827 and traded up to 2,874 on Wednesday but is currently lower by 30 points to 2,833.
We mentioned this morning’s upside targets which could come into play next week but it appears the bears are making Friday the 13th an unlucky day for the bulls.
We are looking for the S&P to close above or at 1,334 today as a sign the rally continues into next week.
We have a lot to cover in our Members Area, including the 2 new trades we just released so we have to cut it short today. We will be back Sunday night with our Weekly Wrap for those of you who want a head start for next week.
Remember, we are running a short-term special where you can get a copy of our option trading manual, How to Trade Options on Momentum Stocks, which includes our monthly videos, if you order a 1-year subscription to either our Daily newsletter or the Weekly Wrap.
This deal won’t last long so for those of you looking to upgrade your account or looking to get a great deal on our option trading course, now is the time to do both. See you Sunday night and have a great weekend.
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 Analysis, Market Commentary | Comments Off
Friday, May 13th, 2011
9:00am (EST)
The bears were going into Thursday’s session with a slight lead for the week on the Dow but the bulls had a grip on the S&P and Nasdaq. Afterwards, they had a firm hold on all three major indexes.
The Dow hit a low of 12,537 yesterday before finishing with a gain of 65 points to close at 12,695. The blue-chips reached a high of 12,718 which was nearly a 200-point swing for the session but remained short of our 12,800 target. There is a chance 13,000 comes into play next week if we close above this level today.
The S&P also had an impressive rebound after gaining 6 points to settle at 1,348. The index kissed 1,351 but finished just shy of this level. Once cleared on a close, the bulls have a good shot at making a run to 1,375 again with 1,400 on the radar.
The Nasdaq jumped 18 points and closed at 2,863 after looking at 2,819 in the morning. The bears threw everything but the kitchen sink at the bulls and maybe they should have. The index held our 2,800 downside target on Wednesday and Thursday which were good signs. The close above 2,850 was a bonus package.
What more can you say about Tech? It takes more hits than kids at a Cypress Hill concert, including Cisco’s Systems (CSCO, $16.93, down $0.85) 5% plunge, and is still rocking. The index led the way higher yesterday and is on a mission to take out 3,000.
Futures are pointing towards a flat to slightly higher open. Dow futures are up 8 points, the S&P futures are up 2 points while the Nasdaq futures are lower by a point. We have a lot to cover in our Members Area this morning so let’s get to it. Subscribers, check for the updates.
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 Analysis | Comments Off
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Bears Gaining Momentum
Tuesday, May 17th, 2011
9:05am (EST)
The bears picked up where they left off on Friday as they hit the bulls early and kept the pressure on for much of Monday’s session. There was a brief rally just before lunch as the bulls mounted a comeback but Tech was the weakest link and held back the momentum.
Commodities tried to recover from last week’s steep declines but continued to slip with oil, gold, and silver closing lower while the dollar finished flat after some early weakness.
The downside targets we mentioned in our Weekly Wrap and on Monday morning came into play but held. We also listed additional support levels if they were tested so let’s see where we are at.
The Dow fell 47 points to finish at 12,548 and touched a low of 12,530. If the 12,500 level is taken out than there is further risk down to 12,350. Resistance is now at 12,700-12,800.
The S&P gave back 8 points to settle at 1,329. The close below 1,334 brings 1,325 into play with the index touching an intraday low of 1,327. If this area is penetrated, then expect a test down to 1,300. Resistance is now at 1,345-1,350.
The Nasdaq got whacked for 46 points, or 1.6%, and closed at 2,782. The index kissed a low of 2,779 and stayed in the red for the entire session. The bears easily sliced their way through the 2,800 level and will now target 2,750. This area will be a huge battleground and could determine a change in the trend if violated. Resistance is now 2,825-2,850 over the short-term.
The continued test of resistance appears to wearing on the bulls as they struggle for a breakthrough without any clear leadership. Tech carried the market higher thru the end of April but is leading the way lower. Apple (AAPL, $333.30, down $7.20) and Google (GOOG, $518.42, down $11.13) fell 2% while Amazon.com (AMZN, $192.51, down $10.05) got shellacked for a 5% loss.
We did expect to see some selling pressure going into Monday’s session but we certainly didn’t like the close. We talked about watching for lower Friday/ Monday closes but yesterday’s selloff in the Nasdaq was pronounced and bears watching. Pun intended. Although the S&P and Dow’s losses were kept to a minimum, Tech looked awful.
One of the reasons we are using a mixture of calls and puts for our current batch of trades is because of this reason. If you will notice, many of our short-term puts are in Tech and commodities with a few bullish trades in Healthcare and Consumer Staples. They are working out well. The other bullish trades are dependent on a market breakout but because we expected weakness, we went longer out with a few trades that have August and September expiration dates.
Of course, the market could stay in its current trading range as it continues to test support and resistance, but the longer it does, the more volatile the move up or down will be.
The S&P Volatility Index (^VIX, 18.24, up 1.17) jumped 7% yesterday and we said if 20 is tested than we should see our downside targets come into play. We aren’t there, yet, but Wall Street is getting nervous. Subscribers, check the Members Area for the trade updates.
Tags: AAPL, call options, GOOG, high beta stocks, Hot stocks, momentum options, Momentum stocks, option tips, options trading course, stock market options, strangle option trades, VIX, weekly options
Posted in Market Analysis, Market Commentary | Comments Off