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Tuesday, April 5th, 2011
9:00am (EST)
We were hoping for a little more momentum on Monday following last week’s push to the top of resistance, but the market was choppy all day and stayed in a tight range to end mixed.
The bulls were hoping Ben Bernanke would provide a spark but he was tight-lipped and did not make any comments on the Fed’s $600 billion government bond-purchase program. We were hoping he would at least say something about the U.S. economy in his speech but not a word was mentioned about the 8.8% unemployment rate or the 216,000 jobs that were added.
Despite the lack of backup, the bulls managed to make a small push higher without giving up ground which was a good sign.
The Dow managed to close at a 52-week high by adding 23 points and finished at 12,400. It was the blue-chips first close above 12,400 since June 2008. Our near-term target remains 12,500-12,600 while support comes in at 12,200.
The S&P 500 was up a half-point and settled at 1,332.87 but faced resistance at 1,334 which represents a double off the March 2009 low. The index traded as high as 1,336 but we are watching this level carefully for clues on a push to 1,350. Support is at 1,325 so we are right in the middle of a breakout or breakdown.
The Nasdaq failed to clear and close above 2,800 again and ended with a half-point loss at 2,789. Our near-term target remains 2,850 but Tech is struggling.
After the bell yesterday, Texas Instruments (TXN, $34.11, down $0.12) said it would be acquiring National Semiconductor (NSM, $14.07, down $0.16) for $6.5 billion, or $25 a share. The deal is one of the industry’s largest in years and could lead to further consolidation. Shares of NSM closed at $24.30 in after-hours trading and nets shareholders a 75% premium versus Monday’s closing price.
Other chips stocks rallied in extended trading; Nvidia (NVDA, $17.55, down $0.65) was up 45 cents to $18 while Broadcom (BRCM, $38.08, down $0.28) was also higher by 2.5% to $39.02.
Despite the M&A news, futures are pointing towards a lower open. Dow futures are down 23 points to 12,314 while the S&P 500 futures are lower by 4 points to 1,325. The Nasdaq 100 futures are showing a decline of 15 points and are at 2,326.
Tags: call option trades, chicken trades, momentum options, Momentum stocks, NSM, put options, stock market options, stocks that trade weekly options, strangle option trades, TXN, weekly options
Posted in Market Analysis, Mergers and Acquisitions | Comments Off
Friday, September 10th, 2010
1:00pm (EST)
Trading is flat today as both the bulls and bears pay respect to tomorrow’s 9/11 anniversary. The market has been in a tight range and the headlines have been mildly positive.
The Commerce Department reported wholesale inventories rose 1.3% in July, which was well ahead estimates and the best performance since July 2008. Sales at the wholesale level increased 0.6%, which was double what most economists were looking for and the best showing since April.
In corporate news, Texas Instruments (TXN, $23.40, down $0.44) narrowed its sales and earnings forecast for the current quarter after the bell last night. The company said it now expects revenue in the range of $3.6 billion to $3.8 billion, compared with a previous range of $3.55 billion to $3.85 billion. As far as earnings per share, the chip-maker gave a range of 66-72 cents, versus previous estimates of 64-74 cents.
In earnings news, Lululemon Athletica (LULU, $39.90, up $4.06) shares are up 11% after beating analysts’ expectations. The company reported a profit of $22 million, or $0.30 a share, versus $9 million, or $0.13 a share, in the year earlier period. Revenue came in at $152 million, up from $98 million. Wall Street was looking for earnings of $0.24 a share on revenue of $146 million.
Here is another great example of a great straddle or strangle option trade and we had factored in a 10% move for the stock. We were watching the October 30 puts (LULU101016P00030000, $0.20, down $0.50) and the October 40 calls (LULU101016C00040000, $2.15, up $1.30) and before the close yesterday these two options would have cost you a total of $1.55. The put options were at 70 cents while the call options were at 85 cents before the shut the lights off yesterday in the option pits.
A 10 contract trade would have cost you $1,550 and today the total position would be worth $2.35. The calls are at $2.15, the puts at 20 cents gets us this total. Folks, this is a return of 52% in less than a day. Not bad.
We have to be honest, our website says we don’t do strangles and straddles but it has been killing us by not profile them as protection. In any event, we are going to start profiling a few of these trades in our Weekly Wrap. These types of options plays are working in this range bound market and we haven’t covered them because the “experts’ say they are too hard to learn.
We have added some new writers to our research team who have been bringing you great stories over the past few months. Our goal is expand our Weekly Wrap to provide you with more coverage on growing your wealth with different option strategies. We will go into covered call writing, debit/ credit spreads, and of course, straddles and strangles option trades. With covered call writing, we will be adding stocks as well which is why we are trying to cover two unique companies a week.
We think you will be excited about our changes and we look forward to bringing more option trades. We will have more details in this weekend’s edition.
As far as the market today, the Dow is up 18 points to 10,433 while the S&P 500 is higher by 2 points to 1,106. The Nasdaq is down 5 points to 2,231.
We will be back Sunday afternoon with the Weekly Wrap and next week should provide more clues as to which way the market will break. For the record, we think there will be one Tech company which could either light a fire under the bulls or be the one high-Tech name that gives the bears some ammo to punish this market. We are entering the crucial point where companies usually warn of earnings misses and we have seen a few signs of that this week. Third quarter earnings start in October so the next two weeks should be very interesting.
Subscribers, we have added a few charts to some of current trades, so, if you just read our email alerts, check the Members Area for a great snapshot of what we are looking at.
Have a good weekend everyone and thanks to the men and women who protect our butts day in and day out!
Tags: LULU earnings, option picks, stock options trading, TXN
Posted in Company Commentary, Earnings, Strategies | Comments Off
Wednesday, August 11th, 2010
9:00am (EST)
The bears got a little leverage following Tuesday’s big Fed announcement but the bulls also got a lift when the Federal Reserve left interest rates unchanged. Moreover, the FOMC also indicated they would reinvest principal payments from mortgage-backed securities to buy longer-term Treasuries.
In the end, the Fed met both sides in the middle but the market still succumbed to selling pressure. The Fed maintained the target range for the federal funds rate at 0.0%-0.25% and said the pace of the economic recovery and employment has slowed in recent months than previously expected. Duh.
The Central Bank will be spending up to $10 billion a month on 2-year and 10-years Treasuries but it won’t make much difference.
The Dow started the session with a triple-digit loss but recovered some and stabilized ahead of the Fed’s update. The market then rallied for an hour before succumbing to selling pressure.
The Dow ended Tuesday’s session with a double nickel loss (55 points, or 0.5%) and at one point was down nearly 150 points. The low was 10,551 while the high was 10,700. The Dow still faces resistance at 10,700-10,800 while support is at 10,400.
The S&P 500 fell 7 points, 0.6%, and closed at 1,121. The index briefly dipped below its 200-day moving average (MA) after touching a low of 1,111. The index almost made it into positive territory and traded to a high of 1,127, a level it continues to have trouble with. There is still the possibility of a test up to 1,150 but the bears have 1,100 and 1,070 in their sites.
The Nasdaq fared the worst, giving up 29 points, or 1.2%, and finished at 2,277. The index is also flirting with its 200-day MA and the weakness in Tech can be attributed to the drop in the Chip sector.
Intel (INTC, $,19.82, down $0.83) fell 4%, Advanced Micro Devices (AMD, $6.83, down $0.59) tanked 8%, Applied Materials (AMD, $11.53, down $0.34) dropped 3% and Texas Instruments (TXN, $25.35, down $0.35) slipped 2%. These four stocks make up nearly 60% of the Semiconductor HOLDRS (SMH, $27.19, down $0.98) which declined over 2%.
This morning’s headlines are all about China. To start, inflation is on the rise as China reported a 3.3% spike in consumer prices as the recent flooding caused a disruption in food supply. Food costs spiked 7% which was a main reason for the jump. The other bit of worrisome news was China’s producer price index (PPI) which grew 4.8% year-over-year in July but was 1.6% lower than June’s reading.
There are some other China tidbits worth noting but we are more interested in the open. It is going to be ugly again today which is exactly what the doctor ordered for our current put option trades.
Dow futures are down 147 points to 10,471 while the S&P 500 futures are off by 18 points to 1,101. The Nasdaq 100 futures are getting punished and are showing a decline of 28 points to 1,868.
Tags: China PPI, INTC, option picks, stock options trading, TXN
Posted in China, Company Commentary, Market Analysis | Comments Off
Tuesday, July 20th, 2010
9:00am (EST)
The bulls managed to take the market higher on Monday, but they will likely give back all of those gains today and then some. Futures are pointing towards a nasty open after International Business Machines (IBM $129.79, up $1.76) missed on their revenue number.
Yesterday, the Dow Jones added 57 points, or 0.6%, to finish at 10,154. The index traded to a high of 10,187 but ran into resistance which is currently at the 10,200 level. If futures hold and selling pressure picks up then we could see a drop below 10,000 today.
The S&P 500 gained 6 points, or 0.6%, and closed at 1,071 but ran into trouble at the 1,075 level as the index touched a high of 1,074. The next level of support will come in at 1,050 but that will fall if the bears have their way.
The Nasdaq added nearly 20 points, or 0.9%, to settle at 2,198 but once again had trouble with the 2,200 level. The index traded to a high of 2,201 but will could take a huge bath if Tech tanks.
Of course, the big story this morning is IBM’s earnings which were pretty good despite the revenue miss. The company reported a profit of $3.4 billion, or $2.65 a share, versus $3.1 billion, or $2.34 a share, in the year ago period. Analysts were expecting $2.58 a share.
Revenue came in at $23.7 billion, up from $23.3 billion but was below the $24.2 billion Wall Street had factored in. The company said currency changes cut revenue by $500 million in the quarter.
Shares of IBM are down $6.29, to $123.50 in pre-market action. IBM alone will account for over a 40 point loss on the Dow.
Elsewhere, Texas Instruments (TXN, $25.55, up $0.78) also missed on their revenue number despite profits tripling. The company earned $769 million, or $0.62 a share, versus $260 million, or $0.20 a share, a year earlier.
Revenue came in at $3.5 billion while expectations were for $3.52 billion. Although TI provided some decent numbers going forward, shares are getting clipped this morning. In early action, the stock is down $1.45, to $24.10.
As we head towards the opening bell, Dow futures are off by 74 to 9,986 while the S&P 500 futures are down 9 to 1,054. The Nasdaq 100 futures are showing a loss of 17 points and are at 1,789.
This just in, Goldman Sachs (GS, $145.68, down $0.49) missed on their revenue number. Earnings beat Wall Street’s estimates but they fell a little short in some areas of their business. Shares are down $4 in pre-market action.
Tags: call options, Goldman Sachs earnings, GS, how to trade options, IBM, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, TXN, volatile options
Posted in Covered Calls, Earnings, Market Commentary | Comments Off
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Market Flat Ahead of 9/11 Anniversary
Friday, September 10th, 2010
1:00pm (EST)
Trading is flat today as both the bulls and bears pay respect to tomorrow’s 9/11 anniversary. The market has been in a tight range and the headlines have been mildly positive.
The Commerce Department reported wholesale inventories rose 1.3% in July, which was well ahead estimates and the best performance since July 2008. Sales at the wholesale level increased 0.6%, which was double what most economists were looking for and the best showing since April.
In corporate news, Texas Instruments (TXN, $23.40, down $0.44) narrowed its sales and earnings forecast for the current quarter after the bell last night. The company said it now expects revenue in the range of $3.6 billion to $3.8 billion, compared with a previous range of $3.55 billion to $3.85 billion. As far as earnings per share, the chip-maker gave a range of 66-72 cents, versus previous estimates of 64-74 cents.
In earnings news, Lululemon Athletica (LULU, $39.90, up $4.06) shares are up 11% after beating analysts’ expectations. The company reported a profit of $22 million, or $0.30 a share, versus $9 million, or $0.13 a share, in the year earlier period. Revenue came in at $152 million, up from $98 million. Wall Street was looking for earnings of $0.24 a share on revenue of $146 million.
Here is another great example of a great straddle or strangle option trade and we had factored in a 10% move for the stock. We were watching the October 30 puts (LULU101016P00030000, $0.20, down $0.50) and the October 40 calls (LULU101016C00040000, $2.15, up $1.30) and before the close yesterday these two options would have cost you a total of $1.55. The put options were at 70 cents while the call options were at 85 cents before the shut the lights off yesterday in the option pits.
A 10 contract trade would have cost you $1,550 and today the total position would be worth $2.35. The calls are at $2.15, the puts at 20 cents gets us this total. Folks, this is a return of 52% in less than a day. Not bad.
We have to be honest, our website says we don’t do strangles and straddles but it has been killing us by not profile them as protection. In any event, we are going to start profiling a few of these trades in our Weekly Wrap. These types of options plays are working in this range bound market and we haven’t covered them because the “experts’ say they are too hard to learn.
We have added some new writers to our research team who have been bringing you great stories over the past few months. Our goal is expand our Weekly Wrap to provide you with more coverage on growing your wealth with different option strategies. We will go into covered call writing, debit/ credit spreads, and of course, straddles and strangles option trades. With covered call writing, we will be adding stocks as well which is why we are trying to cover two unique companies a week.
We think you will be excited about our changes and we look forward to bringing more option trades. We will have more details in this weekend’s edition.
As far as the market today, the Dow is up 18 points to 10,433 while the S&P 500 is higher by 2 points to 1,106. The Nasdaq is down 5 points to 2,231.
We will be back Sunday afternoon with the Weekly Wrap and next week should provide more clues as to which way the market will break. For the record, we think there will be one Tech company which could either light a fire under the bulls or be the one high-Tech name that gives the bears some ammo to punish this market. We are entering the crucial point where companies usually warn of earnings misses and we have seen a few signs of that this week. Third quarter earnings start in October so the next two weeks should be very interesting.
Subscribers, we have added a few charts to some of current trades, so, if you just read our email alerts, check the Members Area for a great snapshot of what we are looking at.
Have a good weekend everyone and thanks to the men and women who protect our butts day in and day out!
Tags: LULU earnings, option picks, stock options trading, TXN
Posted in Company Commentary, Earnings, Strategies | Comments Off