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Tuesday, September 7th, 2010
12:50pm (EST)
The bears are trying to get back Friday’s triple-digit win by the bulls and so far they are doing a pretty good job. Futures were already pointing towards a lower open and the market has been a steady decline since the open. The euro is weaker on the bank “stress test” news while China, the world’s largest producer and user of steel, said it is temporarily cutting its steel production.
The Financial and Energy sectors are seeing some increased selling pressure as both are trading lower. U.S. Financial stocks are down nearly 2% due to the weakness in the European Bank stocks, which tumbled on concerns about the health of their balance sheets. Bank of America (BAC, $13.25, down $0.25), Capital One (COF, $39.45, down $1.24) and Wells Fargo (WFC, $25.25, down $0.59) are all trading lower as a result.
China halted its production of steel during the seasonally busy September-October period as the use of electrical power slipped due to efficiency goals. The move has been a lift to U.S. Steel stocks today as some analysts feel “spot product pricing” will be good for steel manufacturers going forward. U.S. Steel (X, $47.79, up $1.80) is up nearly 4% on the news and is making a run at breaking out above its 200-day moving average.
Meanwhile, President Obama plans to introduce a $50 billion infrastructure package and an extension of the research and development tax credit by as early as Wednesday. He is expected to propose a $200 billion tax credit for businesses spending on new plant and equipment with write-offs up to 100%.
As we head to press, the Dow is down 84 points, to 10,363. The S&P 500 is down 6 ticks to 1,095 while the Nasdaq down 20 points to 2,213.
Gold is up $8 to $1,259/ ounce while oil is slipping 72 cents and is at $73.88 a barrel.
This week is shaping up to favor the bears and the sentiment is negative. The key levels to watch for today will be Dow 10,350; S&P 1,095; Nasdaq 2,200. If these levels fail then we could see a quick test back to support levels.
We have added a few more stocks to our Watch List with possible option trades as we look to capitalize on the current volatility. Although we are currently “full” with current trades, we do see some opportunities for some quick ones as there are a couple of earnings announcements we are following closely.
Subscribers, check for the updates on all of our current trades and we will see everyone on Tuesday morning at 9am (EST) sharp.
Tags: option picks, stock options trading, U.S. Steel, x, X takeover rumors
Posted in Earnings, Market Analysis | Comments Off
Tuesday, July 27th, 2010
12:50pm (EST)
The market is mixed after getting off to a good start but less than stellar economic news has cooled the enthusiasm. Earnings continue to dominate the headlines but the bulls are having trouble breaking through the upper resistance levels we outlined in the morning update.
The consumer confidence report came in at 50.4 for July which was only slightly below expectations of 51 but down from last month’s reading of 54.3. However, to put things in perspective, the decline follows last month’s nearly 10-point drop, from 62.7 in May. This report takes a pulse of the American consumer on how they feel about the economy, jobs and their outlook and it clearly shows they are still holding back on spending.
Elsewhere, the Standard & Poor’s/Case-Shiller 20-city home price index posted a 1.3% increase in May from April as 19 of 20 cities showed price gains month over month. Of course, this was helped by the federal tax incentives which attracted some buyers into the market but we expect prices to remain flat or down for housing over the next six months.
Turning to earnings, Dupont (DD, $40.52, up $1.53) is up 4% after reporting better-than-expected results. The company said profits came in at $1.2 billion, or $1.26 a share, versus $417 million, or $0.41 a share, in the year-ago period.
Revenue jumped 25% to $8.6 billion while analysts were expecting $8.3 billion/ $0.94 a share. DuPont also raised its 2010 earnings forecast to $2.90-$3.05 a share, up from $2.50-$2.70 and above Wall Street’s expectations of $2.64 a share.
U.S. Steel (X, $45.93, down $2.96) is getting pounded and is down 6% today after reporting a negative numbers for its most recent quarter. Before the open, the company reported a loss of $25 million, or $0.17 a share, versus a loss of $392 million, or $2.92 a share, in the year-ago period. Revenue rose to $4.7 billion from $2.1 billion. Excluding items, U.S. Steel would have earned $0.45 a share but blamed the weakening of the euro against the dollar during the quarter for the miss.
And this just in, Apple (AAPL, $262.69, up $3.41) plans to sell an unlocked iPhone 4 in Canada starting on Friday. The company is moving in Research In Motion’s (RIMM, $53.82, down $1.71) own backyard and plans to allow customers to shop around for a service plan.
As we head to press, the Dow is currently holding a slight gain of 27 points and is at 10,552 while the S&P 500 is up a point to 1,116. The Nasdaq is lower by 4 points and is at 2,292. Upside targets are Dow 10,600; S&P 1,125; and Nasdaq 2,300. To the downside look for Dow 10,400, S&P 1,100; and Nasdaq 2,250.
We will be back in the morning with another full update at 9am. We have updated our current trades as we have one company reporting earnings before the bell on Wednesday. Subscribers, check the Members Area for our latest comments.
Tags: AAPL, Apple, call options, Canada iPhone, DD, Dupont, how to trade options, iPhone 4, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, Research in Motion, RIMM, stock options trading, U.S. Steel, volatile options, x
Posted in Apple, Company Commentary, Earnings | 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
Monday, September 28th, 2009
12:30 pm (EST)
The bulls are in charge today as they have taken a number of positive developments to move the market higher. Mergers and acquisitions are the rave today as Abbott (ABT, $49.00, up $1.67) announced that it will acquire Solvay’s pharmaceuticals business for $6.6 billion ($4.5 billion euro) in cash.
Xerox (XRX, $7.41, down $1.56) has made a pitch for Affiliated Computer Services (ACS, $53.35, up $6.10). It is a cash and stock deal valued at $63.00 per share or $6.4 billion as of the closing price of Xerox’s stock price from last Friday. ACS shareholders will receive a total of $18.60 per share in cash plus nearly 5 Xerox shares for each ACS share they own.
There were plenty of upgrades today that have also given the market a lift. Barclays upgraded Cisco (CSCO, $23.83, up $1.21) from “Equal Weight” to “Overweight” and raised its price target from $24 to $28.
ViroPharma (VPHM, $9.75, up $0.80) got an upgrade from “Perform” to “Outperform” and a new price target of $13.
Accenture (ACN, $37.79, up $1.67) is up 5% after it got upgraded from “Hold” to “Buy” with a $45 price target.
General Dynamics (GD, $64.42, up $1.43) was raised from “Hold” to “Buy”, as well, with a target of $78.
And finally, U.S. Steel (X, $47.09, up $0.46) has turned positive after spending much of the morning in the red. Current subscribers can check the Members Area for the latest option trade for U.S Steel.
Rick@MomentumOptionsTrading.com
Tags: Abbott, ABT, Accenture, ACS, CSCO, GD, options picks, options trading strategies, U.S. Steel, ViroPharma, VPHM, Xerox
Posted in Company Commentary, Hot Stocks, Market Analysis, Market Commentary, Mergers and Acquisitions, Option Trades | Comments Off
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Apple (AAPL) Moving In On RIMM’s Turf
Tuesday, July 27th, 2010
12:50pm (EST)
The market is mixed after getting off to a good start but less than stellar economic news has cooled the enthusiasm. Earnings continue to dominate the headlines but the bulls are having trouble breaking through the upper resistance levels we outlined in the morning update.
The consumer confidence report came in at 50.4 for July which was only slightly below expectations of 51 but down from last month’s reading of 54.3. However, to put things in perspective, the decline follows last month’s nearly 10-point drop, from 62.7 in May. This report takes a pulse of the American consumer on how they feel about the economy, jobs and their outlook and it clearly shows they are still holding back on spending.
Elsewhere, the Standard & Poor’s/Case-Shiller 20-city home price index posted a 1.3% increase in May from April as 19 of 20 cities showed price gains month over month. Of course, this was helped by the federal tax incentives which attracted some buyers into the market but we expect prices to remain flat or down for housing over the next six months.
Turning to earnings, Dupont (DD, $40.52, up $1.53) is up 4% after reporting better-than-expected results. The company said profits came in at $1.2 billion, or $1.26 a share, versus $417 million, or $0.41 a share, in the year-ago period.
Revenue jumped 25% to $8.6 billion while analysts were expecting $8.3 billion/ $0.94 a share. DuPont also raised its 2010 earnings forecast to $2.90-$3.05 a share, up from $2.50-$2.70 and above Wall Street’s expectations of $2.64 a share.
U.S. Steel (X, $45.93, down $2.96) is getting pounded and is down 6% today after reporting a negative numbers for its most recent quarter. Before the open, the company reported a loss of $25 million, or $0.17 a share, versus a loss of $392 million, or $2.92 a share, in the year-ago period. Revenue rose to $4.7 billion from $2.1 billion. Excluding items, U.S. Steel would have earned $0.45 a share but blamed the weakening of the euro against the dollar during the quarter for the miss.
And this just in, Apple (AAPL, $262.69, up $3.41) plans to sell an unlocked iPhone 4 in Canada starting on Friday. The company is moving in Research In Motion’s (RIMM, $53.82, down $1.71) own backyard and plans to allow customers to shop around for a service plan.
As we head to press, the Dow is currently holding a slight gain of 27 points and is at 10,552 while the S&P 500 is up a point to 1,116. The Nasdaq is lower by 4 points and is at 2,292. Upside targets are Dow 10,600; S&P 1,125; and Nasdaq 2,300. To the downside look for Dow 10,400, S&P 1,100; and Nasdaq 2,250.
We will be back in the morning with another full update at 9am. We have updated our current trades as we have one company reporting earnings before the bell on Wednesday. Subscribers, check the Members Area for our latest comments.
Tags: AAPL, Apple, call options, Canada iPhone, DD, Dupont, how to trade options, iPhone 4, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, Research in Motion, RIMM, stock options trading, U.S. Steel, volatile options, x
Posted in Apple, Company Commentary, Earnings | Comments Off