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Friday, January 8th, 2010
9:10am (EST)
We often talk about Abercrombie & Fitch (ANF, $32.67, down $3.54) and Apollo Group (APOL, $63.94, up $0.24) in a negative light when we report the news on these two companies and there is a reason why. We don’t trust them.
As an option trader, you will learn there are quite a few stocks that you will love and hate and often times when you trade them it’s either call or put options. If you follow a company for a couple of years you will learn its price movements and trading ranges which allows you to make better trades.
Abercrombie dropped 10% yesterday when most Retail stocks rose after reporting upbeat sales for December. No, not Abercrombie.
We have talked about how stubborn the company is in slashing prices which has cost them business in a tough economic environment. The teen retail space is always a struggle but Abercrombie also has questionable business practices and lawsuits out the wazoo.
These two factors alone were the main reasons why we didn’t go long or buy call options in Abercrombie last year. The company reported that December sales dropped a whopping 19% versus Wall Street’s expectations for a dip of 12%.
Instead, in 2009 we profiled put options when the stock reached certain resistance levels and our subscribers banked profits of 25% and 120%, respectively.
Apollo actually made a slight gain yesterday and reported their earnings after the bell last night. Although they painted a pretty picture for Wall Street, the stock was down $3.20, to $60.74, in after-hours trading last night.
The company reported earnings that beat estimates by a penny but once again, the way they run their accounting department has raised some concerns. We made 4 trade recommendations on Apollo last year, all put options, and the returns were 100%, -15%, 50%, and -17%. Apollo is a volatile stock and we cut our losses once we saw a pattern reversal. Overall, our record was 2-for-4 for Apollo but very, very profitable.
The bottom line with these two stocks is that we never trusted them to go long in 2009 and we still don’t trust them now. We missed some double digit returns with Abercrombie yesterday but there may be a day trade in Apollo…
As we head to press, the jobs report was not that good and it is weighing on the market. Dow futures are lower by 18, S&P 500 futures are off by 3 while the Nasdaq futures are down 7 points. Current subscribers, check the Members Area for the trade updates.
Tags: alternative investments, asset management, blog Wall Street, buying call options, buying put options, call option trading, chicken option trades, Covered Calls, financial, financial investment, funds, future option trading, futures trading, gold investing, guide to investment, guide to options, guide to options trading, hedge fund, hedge funds, how to invest, income, index funds, index options, invest, invest money, investing for dummies, investing market, investment, investment advisor, investment management, investment services, investment strategy, investments, journal Wall Street, momentum stock option trading, mutual investing, new Wall Street, on Wall Street, online option trading, online trading system, option call, option exchange, option investment, option price, option selling, option trade, option trade picks, option trading online, options, options blog, options expiration, options mentoring, options newsletters, options track record, options trade, options trading, options trading strategies, private equity, put option trading, Rick Rouse, software options, stock, stock exchange, stock investment, stock market, stock market options, stock option trade pick service, stock option trading, stock price, stock quotes, stock share, stock trading, straddle option trades, strangle option trades, strategies options, support and resistance levels, the Wall Street, trading, trading option, trading options, triple-digit option trades, wall st, Wall Street, Wall Street article, Wall Street blog, Wall Street history, Wall Street online, wealth management
Posted in Company Commentary, Earnings, Economic News, Market Commentary | Comments Off
Thursday, January 7th, 2010
1:00pm (EST)
And your hands upon the wheel…we’re going to the roadhouse and we’re going to have a real..good time…
Folks, the market will get its first big test tomorrow when the unemployment news hits the wire. The Dow is currently up 4 points 10,577 and the S&P 500 is up a half-point to 1,137. The Nasdaq is off by 9 points and is at 2,292.
We have mentioned how tight of a range the market has been in but that should loosen up on Friday and starting next week. There is no clear signal as we way the market is headed so we have built our portfolio with calls and puts. Some of our call options are longer-term because we are lacking direction and the put trade is a guard against a downturn from here.
Next week 4Q earnings report will start to hit Wall Street and all eyes will be on Alcoa (AA, $16.48, down $0.48) which reports earnings on Monday. Next week is also option expiration week and there is a boatload of action in the January option pits.
Alcoa just set a 52-week high of $17.06 yesterday and got slapped with a downgrade this morning. Option expiration week offers the opportunity to make upwards of 300% on the right call or put options so we are keeping Alcoa and others on our Watch List.
As we roll out of some profitable trades and into news ones, we still have to be careful with market direction so some trades could get caught in the mix. Overall, we know the stories that will drive these stocks higher or lower and we can’t wait until earnings roll in.
We still think there are some safe pockets in the market and we look at another new trade today in our Members Area. We think the stock could jump 50% by summertime and possibly double by year-end. If you are not yet a subscriber, we think you owe it to yourself to check out the story.
Tags: alternative investments, asset management, blog Wall Street, buying call options, buying put options, call option trading, chicken option trades, Covered Calls, financial, financial investment, funds, future option trading, futures trading, gold investing, guide to investment, guide to options, guide to options trading, hedge fund, hedge funds, how to invest, income, index funds, index options, invest, invest money, investing for dummies, investing market, investment, investment advisor, investment management, investment services, investment strategy, investments, journal Wall Street, momentum stock option trading, mutual investing, new Wall Street, on Wall Street, online option trading, online trading system, option call, option exchange, option investment, option price, option selling, option trade, option trade picks, option trading online, options, options blog, options expiration, options mentoring, options newsletters, options track record, options trade, options trading, options trading strategies, private equity, put option trading, Rick Rouse, software options, stock, stock exchange, stock investment, stock market, stock market options, stock option trade pick service, stock option trading, stock price, stock quotes, stock share, stock trading, straddle option trades, strangle option trades, strategies options, support and resistance levels, the Wall Street, trading, trading option, trading options, triple-digit option trades, wall st, Wall Street, Wall Street article, Wall Street blog, Wall Street history, Wall Street online, wealth management
Posted in Company Commentary, Earnings, Market Analysis, Market Commentary | Comments Off
Thursday, January 7th, 2010
9:00am (EST)
It is amazing the price swings stocks and options can go through. The best part about being an option trader is that there is always a trade out there. With so many sectors and ways to use options, the possibilities are endless as sectors get hold or cold and investors rotate money around. That is all there is to it, folks.
The key of course is figuring out where the money is going before the rest of the crowd…
We knew the start of 2010 would be a make or break month for the market and after a big pop on Monday, we have been flat for two days. The Dow finished Wednesday with a 2 point gain and closed at 10,573 while the S&P 500 added 1 point to settle at 1,137. The Nasdaq finished with a 7 point decline and went to bed at 2,301.
Despite the “lack of action” in the overall market there are several stocks making new highs and interesting stories developing in others. We keep a lot of notes and sometimes we find trades that look good on paper but don’t start off quite the way we would like.
For instance, we profiled a U.S Steel (X, $60.40, up $2.47) option trade back on September 28, 2009 when the stock was at $46 and when of our first sentences were “There are conflicting reports on just how strong demand is for steel but August showed steel output actually increased.”
We were trying to get a jump on an option trade because we felt U.S. Steel would set new highs by January 2010. However, we knew the road would be rocky.
The trade was slightly profitable but we shut it down because of Goldman Sachs came out and downgraded the sector the very next day. U.S. Steel was pushing $47. Here is what we told our subscribers in our Members Area:
“Folks, we got bit by the Goldman Sachs whammy as they downgraded the steel sector on Monday. I did not see the news until late in the afternoon. It was just a few weeks ago Goldman loved U.S. Steel and had a price target of $50 for the stock which was hit last week several times. It seems although production was up like I had mentioned, prices are falling.
I am normally not this quick to pull the trigger on a trade but Goldman’s words carry weight and that could send the stock back under $45. As such, raise the stop and lower the exit target. We may not reach $3 and if you can get out with a small gain or break even, CLOSE the trade. If the call options get cheaper, we may revisit the story.” (END)
A week later the stock was at $40 so we made the right call by getting out of the trade. It got even worse for U.S. Steel as the stock dropped to a low of $33 by the first week of November.
At the time, we profiled the January 55 calls (XAK, $5.85, up $2.30) which were at $2.55 but soared a whopping 70% yesterday as the stock set a new 52-week high. The options were probably under 50 cents and left for dead back in November but as you can see, options can and do go on wild price swings over the life of their expiration.
Steel got hot, then cold, and now it’s white hot again. Wall Street will take us out of some great trades from time to time but if you know how the system works then you can use it to you advantage. By that we mean sectors are always falling in and out of favor with the Street and the analyst’s upgrades and downgrades do move them. Sometimes these ratings help your trades and sometimes they don’t. We may have missed a double on our option trade but it just proves our “thesis” was right on.
Another stock waking up from the dead is JDS Uniphase (JDSU, $8.92, up $0.43) which also set a 52-week high yesterday. The company makes communications equipment and testing instruments, as well as optical components for machines such as photocopiers and scanners.
Ten years ago this stock would hit hit triple-digits and split like clockwork. Well, we don’t think it will hit triple-digits anytime soon but we do see double-digits. We are looking at a possible option trade for JDSU this morning but we want to do some more research before jumping in.
We already have quite a few open trades in our 2010 portfolio that are doing well but we don’t want to lose sight of a possible good trade…
A couple of drug stock making some noise this morning…Vivus (VVUS, $9.23, down $0.09) is up nearly 7% in pre-market trading to $9.90 and Dendreon (DNDN, $29.41, up $1.27) is over $30 again.
Dendreon’s 52-week high is $30.42 which has been hit twice meaning the “double-top” that has formed over the past six-months could be broken. The stock has traded between $25-$30 since April, after exploding from $4, and is due another breakout.
We have been mentioning the drug candidates for Vivus and we said this stock could hit double-digits quickly based on its strong pipeline. That could happen today.
Retailers will also be on the move as retail sales came in better-than-expected.
As we head to press, Dow futures are lower by 22 points to 10,494. Current subscribers, check the Members Area for today’s important trade updates.
Tags: alternative investments, asset management, blog Wall Street, buying call options, buying put options, call option trading, chicken option trades, Covered Calls, Dendreon, financial, financial investment, funds, future option trading, futures trading, gold investing, guide to investment, guide to options, guide to options trading, hedge fund, hedge funds, how to invest, income, index funds, index options, invest, invest money, investing for dummies, investing market, investment, investment advisor, investment management, investment services, investment strategy, investments, JDS Uniphase, journal Wall Street, momentum stock option trading, mutual investing, new Wall Street, on Wall Street, online option trading, online trading system, option call, option exchange, option investment, option price, option selling, option trade, option trade picks, option trading online, options, options blog, options expiration, options mentoring, options newsletters, options track record, options trade, options trading, options trading strategies, private equity, put option trading, Rick Rouse, software options, stock, stock exchange, stock investment, stock market, stock market options, stock option trade pick service, stock option trading, stock price, stock quotes, stock share, stock trading, straddle option trades, strangle option trades, strategies options, support and resistance levels, the Wall Street, trading, trading option, trading options, triple-digit option trades, U.S. Steel, Vivus, wall st, Wall Street, Wall Street article, Wall Street blog, Wall Street history, Wall Street online, wealth management
Posted in Company Commentary, Hot Stocks, Market Analysis, Market Commentary, Oil, Option Trades, Sectors, Trading Tips | Comments Off
Wednesday, January 6th, 2010
1:00pm (EST)
It looks like Wall Street is waiting on Friday to do battle. The Dow is currently down 4 points to 10,567 while the Nasdaq is off 6 points to 2,303.
We are running a little behind as we have spent much of the morning monitoring our positions. We currently have six open trades and we just closed one out today where our subscribers banked a 120% return. We have five open trades that currently have returns of 11%, 51%, 61%, 52% and 40%, respectively. Our other trade is showing a loss but we are confident it will rebound by April which is how far out we went with the options.
If you are not getting these kind of returns from your investment newsletter then we invite you to join us…
Current subscribers, check the Members Area for the updates.
Tags: alternative investments, asset management, blog Wall Street, buying call options, buying put options, call option trading, chicken option trades, Covered Calls, financial, financial investment, funds, future option trading, futures trading, gold investing, guide to investment, guide to options, guide to options trading, hedge fund, hedge funds, how to invest, income, index funds, index options, invest, invest money, investing for dummies, investing market, investment, investment advisor, investment management, investment services, investment strategy, investments, journal Wall Street, momentum stock option trading, mutual investing, new Wall Street, on Wall Street, online option trading, online trading system, option call, option exchange, option investment, option price, option selling, option trade, option trade picks, option trading online, options, options blog, options expiration, options mentoring, options newsletters, options track record, options trade, options trading, options trading strategies, private equity, put option trading, Rick Rouse, software options, stock, stock exchange, stock investment, stock market, stock market options, stock option trade pick service, stock option trading, stock price, stock quotes, stock share, stock trading, straddle option trades, strangle option trades, strategies options, support and resistance levels, the Wall Street, trading, trading option, trading options, triple-digit option trades, wall st, Wall Street, Wall Street article, Wall Street blog, Wall Street history, Wall Street online, wealth management
Posted in Company Commentary, Option Trades | Comments Off
Wednesday, January 6th, 2010
9:00am (EST)
The bulls managed to stage a late comeback yesterday as they pulled the market from its lows and managed to take two-out-of-three “rounds” from the bears.
The S&P 500 managed a 3.5 gain to settle at 1,136 while the Nasdaq posted a half-point to close at 2,308. The Dow opened with the slight gain but spent 99% of Tuesday’s session in the red. The index lost 12 points and finished at 10,572.
We got a mixed bag of economic news yesterday. The Commerce Department reported factory orders rose 1.1% easily beating the 0.5% forecast Wall Street was expecting.
Meanwhile, the National Association of Realtors said its index of pending home sales fell a whopping 16% which caught the market by surprise. It was the first drop after nine months of gains. Some decline had been expected as buyers rushed in to grab homes ahead of the tax credit deadline, but that was later extended so the number was a little bit disappointing.
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As far as specific stocks, Apple (AAPL, $214.38, up $0.37) looks like it will hit $250 sometime soon. There are higher price targets out there on the stock but we wouldn’t be surprised if our target is hit by the end of the month. The company continues to plow over the competition and we are hearing Apple has a major product announcement set for January 27.
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It is no secret Apple will announce a tablet product of some kind and whatever it is and does…it will better than anything currently out there. We would love to play some options on Apple but the premiums are rich and we can get more bang for our buck buying options on stocks under $100.
The ADP National Employment Report came out this morning and is often used as a forecast for the unemployment report. The ADP report was expected to show a loss of 73,000 jobs in December and we got a number north of 80,000. That’s far better than the 169,000 jobs lost in November and futures did improve a little.
As we head to press though, it looks like the market is going to open slightly lower this morning. However, Dow futures are only down 6 so the bulls could come in after the bell.
We have some important updates as far as our option trades this morning. We also profile another NEW trade. Current Subscribers, check the Members Area for the updates.
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Tags: alternative investments, asset management, blog Wall Street, buying call options, buying put options, call option trading, chicken option trades, Covered Calls, financial, financial investment, funds, future option trading, futures trading, gold investing, guide to investment, guide to options, guide to options trading, hedge fund, hedge funds, how to invest, income, index funds, index options, invest, invest money, investing for dummies, investing market, investment, investment advisor, investment management, investment services, investment strategy, investments, journal Wall Street, momentum stock option trading, mutual investing, new Wall Street, on Wall Street, online option trading, online trading system, option call, option exchange, option investment, option price, option selling, option trade, option trade picks, option trading online, options, options blog, options expiration, options mentoring, options newsletters, options track record, options trade, options trading, options trading strategies, private equity, put option trading, Rick Rouse, software options, stock, stock exchange, stock investment, stock market, stock market options, stock option trade pick service, stock option trading, stock price, stock quotes, stock share, stock trading, straddle option trades, strangle option trades, strategies options, support and resistance levels, the Wall Street, trading, trading option, trading options, triple-digit option trades, wall st, Wall Street, Wall Street article, Wall Street blog, Wall Street history, Wall Street online, wealth management
Posted in Apple, Economic News, Hot Stocks | Comments Off
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Abercrombie, Apollo Can’t Be Trusted
Friday, January 8th, 2010
9:10am (EST)
We often talk about Abercrombie & Fitch (ANF, $32.67, down $3.54) and Apollo Group (APOL, $63.94, up $0.24) in a negative light when we report the news on these two companies and there is a reason why. We don’t trust them.
As an option trader, you will learn there are quite a few stocks that you will love and hate and often times when you trade them it’s either call or put options. If you follow a company for a couple of years you will learn its price movements and trading ranges which allows you to make better trades.
Abercrombie dropped 10% yesterday when most Retail stocks rose after reporting upbeat sales for December. No, not Abercrombie.
We have talked about how stubborn the company is in slashing prices which has cost them business in a tough economic environment. The teen retail space is always a struggle but Abercrombie also has questionable business practices and lawsuits out the wazoo.
These two factors alone were the main reasons why we didn’t go long or buy call options in Abercrombie last year. The company reported that December sales dropped a whopping 19% versus Wall Street’s expectations for a dip of 12%.
Instead, in 2009 we profiled put options when the stock reached certain resistance levels and our subscribers banked profits of 25% and 120%, respectively.
Apollo actually made a slight gain yesterday and reported their earnings after the bell last night. Although they painted a pretty picture for Wall Street, the stock was down $3.20, to $60.74, in after-hours trading last night.
The company reported earnings that beat estimates by a penny but once again, the way they run their accounting department has raised some concerns. We made 4 trade recommendations on Apollo last year, all put options, and the returns were 100%, -15%, 50%, and -17%. Apollo is a volatile stock and we cut our losses once we saw a pattern reversal. Overall, our record was 2-for-4 for Apollo but very, very profitable.
The bottom line with these two stocks is that we never trusted them to go long in 2009 and we still don’t trust them now. We missed some double digit returns with Abercrombie yesterday but there may be a day trade in Apollo…
As we head to press, the jobs report was not that good and it is weighing on the market. Dow futures are lower by 18, S&P 500 futures are off by 3 while the Nasdaq futures are down 7 points. Current subscribers, check the Members Area for the trade updates.
Tags: alternative investments, asset management, blog Wall Street, buying call options, buying put options, call option trading, chicken option trades, Covered Calls, financial, financial investment, funds, future option trading, futures trading, gold investing, guide to investment, guide to options, guide to options trading, hedge fund, hedge funds, how to invest, income, index funds, index options, invest, invest money, investing for dummies, investing market, investment, investment advisor, investment management, investment services, investment strategy, investments, journal Wall Street, momentum stock option trading, mutual investing, new Wall Street, on Wall Street, online option trading, online trading system, option call, option exchange, option investment, option price, option selling, option trade, option trade picks, option trading online, options, options blog, options expiration, options mentoring, options newsletters, options track record, options trade, options trading, options trading strategies, private equity, put option trading, Rick Rouse, software options, stock, stock exchange, stock investment, stock market, stock market options, stock option trade pick service, stock option trading, stock price, stock quotes, stock share, stock trading, straddle option trades, strangle option trades, strategies options, support and resistance levels, the Wall Street, trading, trading option, trading options, triple-digit option trades, wall st, Wall Street, Wall Street article, Wall Street blog, Wall Street history, Wall Street online, wealth management
Posted in Company Commentary, Earnings, Economic News, Market Commentary | Comments Off