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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, September 15th, 2010
9:00am (EST)
The bulls got a curve ball before the closing bell and had their four-session winning streak snapped as the market ended Tuesday mixed. We covered the major resistance levels yesterday which kept a lid on things as the bears mounted a small comeback in the final hour of trading.
The Dow ended the day with a loss of 18 points, or 0.2%, to close at 10,526. The S&P slipped a point, or 0.1%, to settle at 1,121 while the Nasdaq went out at 2,289, up 4 points, or 0.2%.
The Dow traded to a high of 10,588 and within spitting distance of hitting our target of 10,600. Yesterday’s close favored the bears and they will target 10,400 today.
The S&P 500 maxed out at 1,127 which was slightly higher than our 1,125 target and still closed below resistance. A shot at 1,150 is still in the mix but the bears still have their eyes on 1,100.
As far as the Nasdaq, the index touched 2,302 and broke the 2,300 barrier but the bulls were unable to hold this level. This will be a huge hurdle to clear and hold. Although the Cisco Systems (CSCO, $21.45, up $0.19) news provided some enthusiasm, the bulls struggled to hold their gains while shares of Cisco ended the day with only a slight pop after touching a high of $22.17.
Speaking of Cisco, we mentioned yesterday the company was going to start paying a dividend with the $40 billion they have in their coffers. The news broke at an analyst meeting and shares jumped 5% after their CEO said the company would start paying the dividend next year. There were no specifics but analysts are expecting a payout of up to 2% per year.
We knew of this “analyst meeting” last week but we weren’t sure if Cisco was going to say something good or bad. With earnings season around the corner, this is usually the time that companies will “pre-announce” or give a lower (or higher) outlook on current earnings.
Cisco obviously surprised everyone and the September 21 calls (CSCO100918C00021000, $0.59, up $0.13) exploded to a high of $1.20 on the news before settling with a 30% win. The calls closed at 46 cents on Monday and opened at 50 cents Tuesday morning.
In Biotech news, Arena Pharmaceuticals (ARNA, $4.13, down $2.72) fell 40% after the Food and Drug Administration (FDA) said the company’s weight loss pill, Lorcaserin, produced minimal weight loss while raising concerns about heart damage, depression and other problems. This was a major blow as many drug analysts had predicted the drug would win FDA approval thanks to a sweet looking safety profile.
On Thursday, the FDA will ask a panel of experts to assess Lorcaserin’s effectiveness and safety. Although the group is not required to follow the panel’s advice, it often does, which means Arena will have to go back to the drawing board.
We have been following this company for nearly two years and we were hopeful the company might win approval for the drug. However, we should have known Arena was going to have a tough time after Vivus (VVUS, $5.98, down $0.16) failed to win approval with its diet drug, Qnexa, back in July.
Options traders targeted the Arena September 5 puts (ARNA100918P00005000, $1.85, up $0.90) which nearly doubled yesterday on the news. The puts opened at $1.20.
Oh, and how could we not mention gold? The yellow metal closed at an all-time high yesterday of $1,270 an ounce, up $22.
As we head to press, Dow futures are off by 35 points to 10,428 while the S&P 500 futures are lower by 5 points to 1,111. The Nasdaq 100 futures are down 8 points to 1,914. Subscribers, check the Members Area for the trade updates.
Tags: ARNA, CSCO, diet drug, explain the concept of options, momentum options trading, option picks, option trading blog, Vivus, VVUS
Posted in Company Commentary, Market Analysis | Comments Off
Friday, July 16th, 2010
9:00am (EST)
We’ve got a long way to go and a short time to get there…
There is so much news to cover this morning we feel like Smokey and the Bandit. We have a number of interesting tidbits to go over and the opening bell rings in 30 minutes…but we will get you there in time and tell you what to watch for today.
The Dow fell 7 points on Thursday to close at 10,359 while the Nasdaq slipped a point to settle at 2,249. Bye, bye seven-session winning streaks. The S&P 500, however, squeezed out a point to settle at 1,096.
The market ended flat after being down for much of the session. There were a number of events shaping up nicely for the bears but by the end of the day they couldn’t gain any momentum to hold the market at its lows. The main reason were the rumors surrounding Goldman Sachs (GS, $145.22, up $6.16) which hit the market late in the day. With about 30 minutes left in trading, the indexes made a nice reversal after the market caught wind of the company reaching a possible settlement with the SEC.
Sure enough, after the bell sounded, Goldman announced that it would pay $550 million to settle civil charges after saying they didn’t have their clients’ best interests by selling mortgage securities that were shaky. These CDO’s were “secretly” put together by a hedge-fund to take advantage of the housing market’s collapse and Goldman was betting against those securities. It was the largest fine ever paid by Wall Street but it gets a big monkey off Goldman’s back.
Also, after the close, Google (GOOG, $494.02, up $2.68) reported earnings that fell short of Wall Street’s bar causing shares to drop $20 in extended-trading last night. The company reported a profit of $1.8 billion, or $5.71 a share, versus $1.5 billion, or $4.66 a share in the year ago period. Google took some write-offs due to acquisitions but actually earned $6.45 a share. Analysts were looking for $6.52 so they missed by 7 cents.
As we head to press, Google shares are down $19, to $475.
Turning to Biotech, Vivus (VVUS, $12.11, flat) was halted all of yesterday as it awaited word on a panel’s recommendation concerning its drug Qnexa. The news wasn’t good.
The FDA’s advisory panel board voted 10-6 to reject the company’s obesity drug on safety concerns. This was a bit of a shock to most experts because the drug does work. However, the risks of depression, memory-loss and potential birth defects outweighed the rewards of getting people down to size.
This was tough for us to watch because we sat this one out although we are glad we did. We brought you coverage on this stock at the beginning of 2009 when shares were around $5 and we have slowly watched them double for 18 months now. We have also played call options on Vivus in the past but we decided to hang on the sidelines for this event due to the expensive nature of the options.
The news concerning Qnexa isn’t an official slam-dunk “no” because the FDA will still decide the drug’s fate sometime in October. Vivus also said it expects to have more data from a longer study that could help its case for getting Qnexa approved but they are now probably losing the weight-loss race as two other companies also have obesity drugs waiting approval.
The talk was that Qnexa would gain approval but that there would be some negative votes. In fact, one FDA official said he was surprised by the outcome. Either way, shares are getting walloped as they are down $6.76, or 56%, to $5.35, in early action.
We also got some earnings news from Bank of America (BAC, $15.39, down $0.28) and Citigroup (C, $4.16, down $0.05) this morning. We will touch base on those two companies in our afternoon update. Both stocks are lower before the bell.
Don’t forget today is July option expiration day. If you have any call or put options that are “in-the-money” make sure you close them out. Of course, if they are “out-of-the-money” then you can let them expire worthless.
As we get ready for the open, futures are showing a mixed open. Dow futures are down 23 points, S&P 500 futures are off by 2 and the Nasdaq 100 futures are showing a 3 point pop.
Tags: call options, GOOG, Google, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, Vivus, volatile options, VVUS
Posted in BioTech, Earnings, Market Analysis | Comments Off
Thursday, July 15th, 2010
1:00pm (EST)
The bulls are having a tough day and you don’t need us to tell you the market may have reached a temporary “top” again. There is a bevy of news that is happening today AND tomorrow so we will do some quick hits today.
The Dow is currently down 88 points, or 0.8%, to 10,279 while the S&P is down 9 points, or 0.9%, to 1,085. The Nasdaq is off by 18 points, or 0.7%, and is at 2,231. It was a rough open for the bulls and upside resistance remains 10,400 for the Dow; 1,100 for the S&P 500; and 2,250 for the Nasdaq.
To the downside, support for the Dow will come in at 10,200 and 10,000; the S&P could test the 1,075 then the 1,050 area again while the Nasdaq level to watch is 2,150.
JPMorgan (JPM, $39.47, down $0.88) reported earnings this morning and they were spectacular. However, we are seeing a classic “sell the news event” as the stock opened 1% higher and is now down 2%. The company earned $4.8 billion, or $1.09 a share, versus $2.7 billion, or $0.28 a share, in the year earlier period. Wall Street was looking for $0.67 a share.
JP’s trading results were down given the tough market environment which hurt profits but their loan book continues to shrink which means they are being very “selective” with whom they loan money too. Bingo. We have said credit is still tight and small businesses continue to complain they can’t get a loan. They want to expand and hire but they can’t borrow. Consumers can’t get loans from banks, so JP is following the trend.
Bank of America (BAC, $15.12, down $0.55) and Citigroup (C, $4.09, down $0.12) report earnings before the bell on Friday…
Financial regulation reform is still trying to push its way through Congress and that has also clouded the outlook for the Financials. The Democrats have the 60 votes needed so things could come to fruition by the end of the day or tomorrow. Even if the bill is signed, financial reform will still have to work its way through the system as other agencies (Treasury Department, SEC, etc.) will have to incorporate their own rules and also implement them into the financial system.
Let’s not forget we will be getting word on Europe’s bank stress tests by next Friday.
The bulls are also having trouble digesting some disappointing economic news which offered mixed signals on the health of the U.S. economy.
Initial jobless claims fell by 29,000 to 429,000 last week; the producer price index (PPI) fell 0.5%; and the Empire State Index tanked to 5.08 in June from a reading of 19.57 a month – economists were looking for a number of 18.5 and this report is the one weighing heaviest on the bulls.
All eyes will be on Google (GOOG, $488.63, down $2.71) after the bell as the company gives Wall Street its quarterly results. Shares have dropped over $100 since April and we think the stock will make at least a $30 move one way or the other in after-hours trading.
And one more story we are following closely, Vivus (VVUS, $12.11, flat), which is halted pending news on its obesity drug, Qnexa. We don’t know if shares will open up for trading today but the news will be out sometime in the next few hours. We expect Qnexa will get a good recommendation from the panel for the FDA to consider the drug but it probably won’t be unanimous.
We will be back in the morning with a full update on things.
Tags: call options, how to trade options, JPMorgan, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, Vivus, volatile options, VVUS
Posted in BioTech, Earnings, Market Analysis, Market Commentary | Comments Off
Wednesday, July 14th, 2010
1:00pm (EST)
When we shut our eyes this morning around 2am, the Dow futures were up 70 points and it appeared as though the bulls were going to have a huge day. However, when we woke up this morning and were doing the finishing touches to our 9am update, futures were slipping which lead to a muted open for the market.
The Nasdaq showed strength on the heels of Intel’s (INTC, $21.69, up $0.68) blowout quarter but the mood quickly soured after Wall Street got the latest Retail Sales numbers. The Commerce Department said June sales fell 0.5% which was worse than the expected 0.2% decline most economists had expected.
As a result, the market is hanging near the breakeven level but is showing positive results. The Dow is up 16 points to 10,381 while the Nasdaq is higher by 14 points to 2,256. The S&P 500 is up by 2 points to 1,097.
Although we listed higher targets for the Dow this morning, the index is still running into resistance at 10,400. We have also been a repeating parrot on the 1,100 level for the S&P and the 2,240-2,250 level for the Nasdaq but the momentum does not appear to be there from the bulls to take these levels out today. We aren’t saying they can’t, we are just pointing out the market is near the top of the ranges again and any stalled rally will likely lead to a retreat and more hair pulling.
The jobless claims number could be another catalyst for Thursday’s trading and we also get a look at the health of the Financial sector as JPMorgan (JPM, $40.21, down $0.27) will announce earnings before the bell.
Turning to IPO’s, there are a number of initial public offerings that will be coming to the market over the next few days as activity seems to be picking up.
The biggest of the bunch will be private equity firm Kohlberg Kravis Roberts (KKR) will make its debut on Thursday on the New York Stock Exchange. The offering is worth about $2 billion but KKR is a partnership not a corporation so this one is a little funky in the way it is being done. In any event, stay clear of this one as it has a checkered past.
RealD (RLD) is expected offer nearly 11 million shares in a range of $13-$15 apiece. The company is trying to capture a little of the magic in the 3D wave that has hit us over the last 6 months. RealD supplies projectors for 3-D cinema screens and glasses for viewers but is a sketchy offering because the company’s bottom line bleeds red.
SMART Technologies (SMT) is a Canadian company that makes interactive white boards that could replace the days of chalkboards (finally!) that many of us grew up with. It seems these new “smart boards” are catching on as they have the power of a computer and the ease of a whiteboard.
Users can share applications, access the internet and write in digital ink. The company also acquired NextWindow in April which makes touch screens for electronic displays. We haven’t seen a board, yet, but they sound pretty cool. The company plans to raise $600 million with 35 million shares being offered in the $16-$18 range.
Finally, Qlik Technologies (QLIK) is a provider of business intelligence software. Their software analyzes costs and organizes and finds information. Qlik supports an impressive client base and expects to bring in about $100 million with its offering.
We like SMART a lot and RealD could get a pop because of its brand name but finding the diamond in the rough is a little easier when you do a little research.
Although we are big fans of the 3-D rave that has been hot over the last six months, those stocks are starting to cool and we question how long people are going to pay an extra $3-$5 to watch a 3-D movie. [Update: Imax (IMAX, $13.50, down $0.20) is down from its 52-week high of $21.30.]
That leaves SMART as the one to watch going forward.
We have a lot to cover in our Members Area as we have added a couple of names to our Watch List. We are slowly setting up for the market’s next move and we think there are a number of great setups coming our way. Subscribers, check for the updates.
We will be back in the morning with another full update and hopefully some breaking news on Vivus (VVUS, $12.74, up $0.30) which could get some good news concerning its drug Qnexa. We also have Vivus on our Watch List so some of you could be setting up for a nice payday…
Tags: dndn, IPOs, JPMorgan, Vivus, VVUS
Posted in IPOs, Market Analysis, Market Commentary | Comments Off
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Futures Pointing Towards Lower Start
Wednesday, September 15th, 2010
9:00am (EST)
The bulls got a curve ball before the closing bell and had their four-session winning streak snapped as the market ended Tuesday mixed. We covered the major resistance levels yesterday which kept a lid on things as the bears mounted a small comeback in the final hour of trading.
The Dow ended the day with a loss of 18 points, or 0.2%, to close at 10,526. The S&P slipped a point, or 0.1%, to settle at 1,121 while the Nasdaq went out at 2,289, up 4 points, or 0.2%.
The Dow traded to a high of 10,588 and within spitting distance of hitting our target of 10,600. Yesterday’s close favored the bears and they will target 10,400 today.
The S&P 500 maxed out at 1,127 which was slightly higher than our 1,125 target and still closed below resistance. A shot at 1,150 is still in the mix but the bears still have their eyes on 1,100.
As far as the Nasdaq, the index touched 2,302 and broke the 2,300 barrier but the bulls were unable to hold this level. This will be a huge hurdle to clear and hold. Although the Cisco Systems (CSCO, $21.45, up $0.19) news provided some enthusiasm, the bulls struggled to hold their gains while shares of Cisco ended the day with only a slight pop after touching a high of $22.17.
Speaking of Cisco, we mentioned yesterday the company was going to start paying a dividend with the $40 billion they have in their coffers. The news broke at an analyst meeting and shares jumped 5% after their CEO said the company would start paying the dividend next year. There were no specifics but analysts are expecting a payout of up to 2% per year.
We knew of this “analyst meeting” last week but we weren’t sure if Cisco was going to say something good or bad. With earnings season around the corner, this is usually the time that companies will “pre-announce” or give a lower (or higher) outlook on current earnings.
Cisco obviously surprised everyone and the September 21 calls (CSCO100918C00021000, $0.59, up $0.13) exploded to a high of $1.20 on the news before settling with a 30% win. The calls closed at 46 cents on Monday and opened at 50 cents Tuesday morning.
In Biotech news, Arena Pharmaceuticals (ARNA, $4.13, down $2.72) fell 40% after the Food and Drug Administration (FDA) said the company’s weight loss pill, Lorcaserin, produced minimal weight loss while raising concerns about heart damage, depression and other problems. This was a major blow as many drug analysts had predicted the drug would win FDA approval thanks to a sweet looking safety profile.
On Thursday, the FDA will ask a panel of experts to assess Lorcaserin’s effectiveness and safety. Although the group is not required to follow the panel’s advice, it often does, which means Arena will have to go back to the drawing board.
We have been following this company for nearly two years and we were hopeful the company might win approval for the drug. However, we should have known Arena was going to have a tough time after Vivus (VVUS, $5.98, down $0.16) failed to win approval with its diet drug, Qnexa, back in July.
Options traders targeted the Arena September 5 puts (ARNA100918P00005000, $1.85, up $0.90) which nearly doubled yesterday on the news. The puts opened at $1.20.
Oh, and how could we not mention gold? The yellow metal closed at an all-time high yesterday of $1,270 an ounce, up $22.
As we head to press, Dow futures are off by 35 points to 10,428 while the S&P 500 futures are lower by 5 points to 1,111. The Nasdaq 100 futures are down 8 points to 1,914. Subscribers, check the Members Area for the trade updates.
Tags: ARNA, CSCO, diet drug, explain the concept of options, momentum options trading, option picks, option trading blog, Vivus, VVUS
Posted in Company Commentary, Market Analysis | Comments Off