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Friday, July 9th, 2010
1:00pm (EST)
The market has traded in a tight range although the bulls are still the fat kid on the see-saw. The major indexes are showing slight gains as traders seem tentative to build positions ahead of 2Q earnings.
The Dow is up 5 points to 10,144 while the S&P 500 is higher by 2 points and is at 1,071. The Nasdaq is showing a 5 point pop and is at 2,180.
The talking heads like to say Alcoa (AA, $10.80, up $0.08) kicks-off earnings season and on Monday they will, but, we are here to say Intel (INTC, $20.03, down $0.07) will officially handle those duties on Tuesday.
Shares of Intel are down 18% from its 52-week high of $24.37 and the low is $15.86 so shares are pretty much in the middle. Intel has a nice history of beating earnings, but a few analysts have been downgrading the stock ahead of earnings. The options market is pricing a 5% move in the stock when the company announces so we can expect a slight move up or down. However, if Intel happens to miss earnings then it could get nasty for shareholders.
This week was light on news and the rally has come on light volume. That worries us. It’s okay to say maybe we didn’t call an “exact” bottom, but we did call for the pullback that started in May.
Just like any battle, we like to wait for our next move which is why we are letting our current trades play out. We have been building a nice Watch List, and we will be back in action next week with some high reward/ medium risk trades. We are going to cover quite a few trades that have homerun potential including another look at two Biotech companies, Dendreon (DNDN, $31.86, up $1.56) and Vivus (VVUS, $11.90, up $0.21) which we are close to adding.
We have followed these stocks and alerted our subscribers when shares were under $5 for both of these companies. In fact, there is a major news announcement coming for Vivus, and Dendreon is making the rounds as a takeover candidate again. We are looking for huge price swings in both of these companies, but we want to do some more research over the weekend before pulling the trigger on a trade.
We are excited as we look forward to the next few weeks and months, and we think there will be a ton of great opportunities to go both long and short this market. It will just take more homework with the volatility being taken up a notch.
We will be back on Sunday night with the Weekly Wrap, but subscribers can check the Members Area for one last update before we go.
See you Sunday night, and have a great weekend everyone!
Tags: call options, Dendreon, dndn, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, Qnexa drug, stock options trading, Vivus, volatile options, VVUS
Posted in BioTech, Company Commentary, Earnings | Comments Off
Friday, June 18th, 2010
1:00pm (EST)
The market is trading in a tight range as the bulls try to push the Dow higher for a fourth straight session. The index’s 3-day winning streak has been its first since April as the bulls also look to take the market to higher ground for the second straight week.
At halftime, the Dow is up 11 points, or 0.1%, and is at 10,445. The index has touched a high of 10,483 so far and the next level of resistance will come in at 10,500-525.
The S&P is higher by 2 points, or 0.1%, and is at 1,117. The index has traded to a high of 1,121 and faces resistance at 1,125.
The Nasdaq has just turned lower by 2 points, or 0.1%, and is at 2,304. The Tech-heavy index has made a high of 2,321 today but has a hurdle at 2,350.
There isn’t much in the way of “breaking” headline news (well, we take that back, BP (BP, $32.08, up $0.37) JUST announced its CEO is passing off his duties) but a couple of Drug stocks we have on our Watch List are moving in opposite directions today.
We first profiled Vivus (VVUS, $10.03, down $0.57) when it was a $5 back in January 2009. Check our archives to the left of the home page for the original article.
The company has a potential blockbuster drug with Qnexa, a treatment for obesity that could get FDA approval by the end of October. Late-stage clinical trials went well but the stock has slipped some this week after a few Wall Street analysts raised concerns about how U.S. regulators will view the safety of the weight loss drug.
Next month will be important as an outside panel makes its recommendation to the FDA. The latest concerns are that the FDA may get tougher on cardiovascular safety testing on new drugs for obesity.
Vivus is the best bet to capture this lucrative market as Wall Street believes Qnexa could be the next “Billion Dollar Baby” based on the weight loss observed in clinical testing. We don’t like playing options on stocks under $10 but we have played Vivus in the past.
This is one of those cases if you wanted some action you could play it a number of ways. As a stock play, you could nibble here at these levels with a tight stop set at $8 and a target of $13+ which is where its 52-week high is. As an option trade, we are going to take a look this weekend at what the risks are with doing a straddle or strangle option trade on Vivus. We will let you know what we find out on Sunday night with the Weekly Wrap.
Elsewhere, Amylin Pharmaceuticals (AMLN, $19.00, up $2.49) got a huge jump at the open this morning after Roche said it ran into a speed bump with its diabetes drug, Taspoglutide. Amylin’s drug, Byetta, faced some competition but is already generating revenues for the company.
That’s all we have for today so we will see you Sunday night! Subscribers, check the Members Area for the latest QUOTE updates on the current trades.
Tags: BP stock, BP testimony, Gulf Oil spill, momentum options trading, option picks, options alerts, stock options trading, Vivus, VVUS
Posted in BioTech, Company 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
Tuesday, January 5th, 2010
9:05am (EST)
The market got off to a good start for 2010 as the Dow rallied 155 points to close at 10,583. In the process, the index made a 52-week high and was followed by strong gains in the Nasdaq (up 39 points to 2,308) and the S&P 500 (up 18 to 1,132).
The bulls got all the ammo they needed after a strong start as the ISM Manufacturing Index for December exceeded Wall Street’s forecast of 54.3 by improving to 55.9. This was up from 53.6 in November and helped keep the bulls in a buying mood.
Other economic news showed construction spending dropped slightly by 0.6% for November; Wall Street was looking for a 0.5% decline.
Elsewhere, oil prices jumped 3% yesterday to $81.50/ barrel and broke $80 for the first time since November. Gold was up $3.30 to $1,121 an ounce while Platinum surged $57 to $1,509. We normally don’t follow Platinum but we were curious.
There were also other juicy stories unfolding in the market yesterday.
One stock which we have followed for years is starting to show tremendous volatility again. Rambus (RMBS, $23.23, down $1.17) was all over the map and went on a wild ride after our 1pm update on Monday.
The stock opened at $24.80 after closing at $24.40 last Thursday. Then, shortly after 1pm, shares tanked to a low of $16. We weren’t sure of why the reversal was happening but we knew it was litigation news.
Rambus has an antitrust case against several memory chip companies that is scheduled to go to trial on this Friday. We won’t rehash the entire litigation history but you can research some of our past articles on the company from our archives. One thing for sure…the stock will be in focus in the coming days and weeks.
Another stock we are watching for future profits down the road is Vivus (VVUS, $9.44, up $0.24).
The company has a potential blockbuster drug with Qnexa, a treatment for obesity that will be available in early 2010. The company said two late-stage clinical trials went well and asked regulators to approve its drug a week ago.
Vivus has some competition as other “diet’ pills are also expected to debut. Arena Pharmaceuticals (ARNA, $3.52, down $0.03) has also asked the FDA to take a look at their obesity drug, Lorcaserin, while Orexigen Therapeutics (OREX, $7.12, down $0.32) is pushing Contrave by the first half of 2010.
Vivus is the best bet to capture this lucrative market as Wall Street believes Qnexa could be the top go-getter based on the weight loss observed in clinical testing.
Arena’s weight loss drug is safer but Qnexa is also being used in Phase 2 trials to treat diabetes. Talk about two-for-the-money…imagine the cost savings of having the luxury to manufacture one drug to do two things.
It doesn’t stop there either. Vivus also has a drug, Avanafil, which is in phase 3 trials to treat erectile dysfunction and Luramist which is in phase 2 studies for the treatment of hypoactive sexual desire disorder in women.
The 52-week high for Vivus is $12.88 which was hit on September 10, 2009. We think the stock challenges this level again so file this one away. There will be a trade down the road…
As we head to press, Dow futures are slightly lower by a point but have been in positive territory. Current subscribers, check the Members Area for the trade updates and possibly a NEW trade.
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, Rambus, 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, Vivus, wall st, Wall Street, Wall Street article, Wall Street blog, Wall Street history, Wall Street online, wealth management
Posted in Company Commentary, Market Analysis | Comments Off
Tuesday, January 6th, 2009
Orexigen Therapeutics (OREX, $5.89, down $0.10) was up sharply in after-hours trading on news that the company could be announcing something concerning its treatment drug for obesity, Contrave. The company will presenting at a JPMorgan (JPM, $29.25, down $2.10) conference next week which means the rumor mill got started early on what the company will say. The stock was up 20+%, or $1.30, to $7.20 in after-hours trading.
What surprises me is that it took until after the market closed for the stock to make a move as Wall Street seemed to ignore the fact that the company was awarded another patent for Contrave on Monday. It was the fourth patent for the drug which will provide protection until 2024.
Of course, Orexigen isn’t the only outfit trying to rush these new drugs to market. Vivus (VVUS, $5.37, down $0.12) and Arena Pharmaceuticals (ARNA, $4.22, down $0.03) are a couple of others. The race for the next generation of weight-loss drugs is on and all three companies are in phase 3 trials with results due this year. Orexigen appears to have the early lead in this race but there are always risks especially with biotech.
There wasn’t much option activity in Monday’s trading as the January 7.50 calls (QRFAU, $0.80, unchanged) for Orexigen Therapeutics traded only 10 contracts. The bid was at $0.35 while the ask was $1.50. DO NOT try and trade this one because 1) there is not much volume and 2) there will be a huge spread between the bid and ask. Now that the news is out there will be an even bigger discrepancy.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Arena Pharmaceuticals, Contrave, Orexigen Therapeutics, Vivus
Posted in Company Commentary | No Comments »
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Bulls Resting, Will Bears Show Up Next Week?
Friday, July 9th, 2010
1:00pm (EST)
The market has traded in a tight range although the bulls are still the fat kid on the see-saw. The major indexes are showing slight gains as traders seem tentative to build positions ahead of 2Q earnings.
The Dow is up 5 points to 10,144 while the S&P 500 is higher by 2 points and is at 1,071. The Nasdaq is showing a 5 point pop and is at 2,180.
The talking heads like to say Alcoa (AA, $10.80, up $0.08) kicks-off earnings season and on Monday they will, but, we are here to say Intel (INTC, $20.03, down $0.07) will officially handle those duties on Tuesday.
Shares of Intel are down 18% from its 52-week high of $24.37 and the low is $15.86 so shares are pretty much in the middle. Intel has a nice history of beating earnings, but a few analysts have been downgrading the stock ahead of earnings. The options market is pricing a 5% move in the stock when the company announces so we can expect a slight move up or down. However, if Intel happens to miss earnings then it could get nasty for shareholders.
This week was light on news and the rally has come on light volume. That worries us. It’s okay to say maybe we didn’t call an “exact” bottom, but we did call for the pullback that started in May.
Just like any battle, we like to wait for our next move which is why we are letting our current trades play out. We have been building a nice Watch List, and we will be back in action next week with some high reward/ medium risk trades. We are going to cover quite a few trades that have homerun potential including another look at two Biotech companies, Dendreon (DNDN, $31.86, up $1.56) and Vivus (VVUS, $11.90, up $0.21) which we are close to adding.
We have followed these stocks and alerted our subscribers when shares were under $5 for both of these companies. In fact, there is a major news announcement coming for Vivus, and Dendreon is making the rounds as a takeover candidate again. We are looking for huge price swings in both of these companies, but we want to do some more research over the weekend before pulling the trigger on a trade.
We are excited as we look forward to the next few weeks and months, and we think there will be a ton of great opportunities to go both long and short this market. It will just take more homework with the volatility being taken up a notch.
We will be back on Sunday night with the Weekly Wrap, but subscribers can check the Members Area for one last update before we go.
See you Sunday night, and have a great weekend everyone!
Tags: call options, Dendreon, dndn, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put options, Qnexa drug, stock options trading, Vivus, volatile options, VVUS
Posted in BioTech, Company Commentary, Earnings | Comments Off