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Monday, January 23rd, 2012
9:00am (EST)
Well, Europe didn’t flare up and 4Q earnings came in halfway decent for some, not so good for others. These were the 2 catalysts that we said would move the market higher or lower last week and the results favored the bulls who were able to push another layer of resistance.
It was a shortened week for the market but the indexes moved higher on Tuesday following good news out of China but gave back half the gains after the Financial sector ended mixed. Citigroup (C, $29.64, up $0.31) and Wells Fargo (WFC, $30.54, up $0.39) missed and beat Wall Street’s estimates after announcing earnings to start the week.
There was follow through on Wednesday as the major averages ended the session with 1% pops, on average. eBay (EBAY, $31.93, up $0.42) posted better-than-expected results on the strength of their PayPal business which is going gang-busters globally.
We were expecting a flat to down Thursday as we weren’t sure what kind of numbers the jobs market would post before the bell and a number of Tech’s heavy-hitters were reporting earnings after the close. Thankfully, Initial Claims fell to their lowest level (351,000) in 4 years which put the bulls in a good mood and took some of the pressure off of Tech – which ended up leading the way higher. Bank of America (BAC, $7.07, up $0.11) gave the Financial stocks a lift after beating expectations.
Friday’s action was all about “old” Tech versus “new” Tech as Google (GOOG, $585.99, down $53.58), Intel (INTC, $26.38, up $0.75), International Business Machines (IBM, $188.52, up $0.08) and Microsoft (MSFT, $29.71, up $1.59) weighed-in with their numbers, which were good for the most part. The ugly duckling was Google which dropped 8% after missing Wall Street’s estimates. Intel, IBM and Microsoft accounted for 78 blue-chip points.
As a result, the Dow gained 96 points, or 0.8%, to end at 12,720. The blue-chips dipped to a low of 12,620 at the open but held new short-term support at 12,600 which was prior resistance. We could not have called this much better as we said a break above 12,600 would lead to a test up to 12,750-12,800…(read more)
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If you are not a subscriber but would like to read more please click here. We are one of the fastest growing stock options trading advisors on the internet and we are one of the very few option newsletters which posted a powerful 2011 return. In fact, we have NEVER had a losing year since forming in 2007. We are off to a fast 14-1 start for 2012 and our subscribers have already closed 3 triple digit winning trades for gains of 124%, 100%, and 131% and another call option trade for 82%.
We offer 2-3 powerful call or put option trades each week (depending on market conditions) aimed at triple-digit returns for our Daily newsletter. Our Weekly Wrap Covered Call Portfolio strides for double-digit returns on a monthly basis and went 16-0 for 2011 and is 8-0 so far in 2012 after the trades we closed on Friday. Sign-up now and receive access instantly to our stock options trading recommendations!
If you are missing these juicy profits come give us a try. Get your password to our Members Area instantly when you sign up TODAY! One profitable trade will easily pay for your membership. You can request our 2008-2011 Track Records by sending us an email or filling out the box to the right.
Tags: c, eBay, GOOG, IBM, INTC, MSFT, wfc
Posted in Earnings, Market Analysis, Market Commentary | Comments Off
Wednesday, June 8th, 2011
8:45am (EST)
The bulls were looking good for much of Tuesday’s session as they started strong out of the gate and held their gains for much of the session. Although there was some slippage as the day wore on, the possibility of ending a 4-session losing streak was right there at the finish line. However, we warned of Ben Bernanke’s speech just before the close and in the final hour of trading the bears started to make a move.
Bernanke has done all he can do with the printing presses but said the U.S. economy has not grown as quickly as the Fed has been expecting. He went on to say that he expects the economy to pick up steam in the back half of the year (naturally) and there are no plans for another round of quantitative easing (poker face?).
Of course, Big Ben also blamed temporary setbacks such as the earthquake in Japan and higher gas prices for the weakening U.S. economy but overall his comments were a drag and did nothing to help the bulls’ case.
The Dow was up nearly 90 points after the open and reached a peak of 12,178 before falling 19 points by the close to end at 12,070. We had expected a run up to 12,200 but we kind of felt early on the rally would fade. The market went out on its lows and is with spitting distance of breaking down below 12,000. These two areas will be crucial today as far as momentum. The blue-chips have now fallen for five-straight outings, their longest losing streak since August.
The S&P slipped a little over 1 point and settled at 1,285 but never really managed a threat to take back the 1,300 level. The index traded to a high of 1,296 but a test down to 1,275 and then 1,250 appear to be on the bears’ agenda.
The Nasdaq also fell 1 point and finished at 2,701 after leading the pack for much of Tuesday’s trading. Tech reached a high of 2,723 but folded like a cheap lawn chair into the close. The index did manage to hold 2,700 but there is still risk down to 2,650-2,625 over the near-term if this level fails.
The Financial sector once again rolled over and we have been saying all year their lack of leadership could hurt the bulls. After an initial pop in the morning, many of the familiar names we often discuss continued lower. Bank of America (BAC, $10.65, down $0.18), another 52-week low. Wells Fargo (WFC, $25.77, down $0.49) looks to be headed below its 52-week low of $23.
Futures are pointing towards a lower start this morning following yesterday’s weak close. Dow futures are down 50 points to 12,022 while the S&P futures are off by 6 points to 1,279. Nasdaq futures are off by 16 points to 2,257.
We may release a trade shortly after the open that is on our Watch List. If we can get our price, look for a Trade Alert before our regularly scheduled 1pm update. Subscribers, check the Members Area for the updates.
Tags: bac, call options, high beta stocks, Hot stocks, momentum options, Momentum stocks, option tips, options, options mentoring, options trading course, stock market options, weekly options, wfc
Posted in Financial Stocks, Market Commentary | Comments Off
Tuesday, August 31st, 2010
9:05am (EST)
The bulls took another two steps backwards on Monday after failing to capitalize on Friday’s one step forward. We knew last week at some point there would be a “dead cat” bounce or a “short covering” rally but we didn’t expect one before the weekend. However, we had a feeling it would be hard for the bulls to carry forward any meaningful rally given the current trend.
The futures were pointing towards a slightly lower open yesterday but the selling pressure intensified late into the session which took the market to new lows. Volume was extremely light; in fact, it was one of the lowest volume days of the year as Wall Street takes the last of its summer vacations. This is usually a popular week to hit the beach so we are expecting much of the same with an increase in volatility. Hurricane Earl could also be a factor this week.
As a result, the Dow dropped 141 points, or 1.4%, to finish at 10,009. The bulls didn’t give back all of Friday’s gains and they still managed to hold the 10,000 level but it wasn’t pretty as the Dow got slammed in the last 15 minutes of trading. The bears will try to push for 9,800 and then 9,500 while the bulls try to hold support.
The S&P 500 fell 16 points, or 1.5%, and settled at 1,048. The index closed below our 1,050 target and will likely trade down to 1,020 if 1,040 is taken out. From there, we could eventually see the S&P at 950 by October.
The Nasdaq tanked 34 points, or 1.6%, to finish at 2,119. Tech remains the most volatile and support will come in at 2,100 and then 2,050 but we think a test to 1,900 could be on the way.
There is a ton of economic news due out over the next few days, including Friday’s monthly employment report, and the market will likely react violently to any surprisingly bad news.
Financial stocks continue to look weak and we have been saying the bulls cannot have a sustained rally without them. Wells Fargo (WFC, $23.25, down $0.75) is in a nosedive, Bank of America (BAC, $12.32, down $0.32) hit a fresh 52-week low and Goldman Sachs (GS, $136.66, down $2.74) is breaking key support levels.
Although some names in the sector are starting to look like real bargains, there is probably some more exposure to the downside before the group turns around. We are looking at some attractive LEAPs on a few Banking stocks but we think there is a chance we can get them cheaper. You can buy call options on stocks as far as a year or two out and we will be covering more about LEAPs in the Weekly Wrap in the future.
We wanted to take some time to talk about a strangle option trade this morning that we were going to cover over the weekend but didn’t. The stock we were going to cover is a good candidate because we are expecting shares to move at least 10% or more over the next few weeks.
To find an attractive candidate, you need volatility and Freeport-McMoRan (FCX, $70.36, down $0.84) fits the bill. The strangle option trade can be used for a stock that you feel will be making a big move but you are unsure of the direction.
If you look at a chart for FCX, you will notice shares are easily capable of moving $10 in a week and that is the action we are looking for. The company is mainly a Copper ETF but has some exposure to gold and although we are in a downtrend, we would use call options to protect us if the stock moved higher.
September options expiration is only 18 days away, so you could use the September 65 puts (FCX100918P00065000, $0.81, up $0.08) and the September 75 calls (FCX100918C00075000, $0.95, down $0.25) as a way to play a big move in the stock. If we let this trade run down to the wire we would need shares of FCX to be under $64 or over $76 for us to make a decent return. The goal would be to make enough on one side of the trade to offset the other side of the trade.
If the stock makes a quick 5% move either way, the calls or puts would double and hopefully give you an overall gain of 10% or more. Then you would have the other side of the trade to wait for a rebound and possibly get out of the other side with a profit. That is not often the case but it does happen.
These trades are also known as “chicken trades” or you can use the 70 strike price and make the trade a “straddle” option trade. This trade is not an official recommendation because we don’t like the risk/ reward setup for this one but we will track it to show you why it did work or didn’t. This trade is for educational purposes only.
As we head to press, Dow futures are lower by 35 points to 9,944 while the S&P 500 futures are down 4 points to 1,040. The Nasdaq futures are off by 9 points to 1,760.
We do have current trades that are official recommendations and they are inside our Members Area. Many of them made some nice gains yesterday as we remain on the short side and are using puts to play the current downtrend. Our Watch List also has a couple of earnings trades we are watching and we may be pulling the trigger on one or two of them if we see an opportunity. Subscribers, check for the updates.
Tags: bac, chicken trade, FCX, option picks, stock options trading, wfc
Posted in Company Commentary, Market Analysis, Market Commentary, strangle option trades | Comments Off
Wednesday, August 25th, 2010
12:40pm (EST)
The bears got some more good news after the opening bell when the Commerce Department reported new home sales “unexpectedly” fell 12.4% in July to 276,000. We highlighted “unexpectedly” because the pencil pushers had forecast new home sales would come in unchanged at 330,000.
Are you serious? Unchanged? Anybody who has been watching the housing market knows it is rolling over like Lassie and playing dead. The analysts are always late to the party, or funeral, with their upgrades/ downgrades and are like weather forecasters when it comes to knowing what the heck is going on. That is why you have us.
Despite the double whammy on the economic front today (we mentioned the durable goods numbers this morning), the market is well off its lows for the session as it teeters near the breakeven line heading into the second half of trading.
Financial stocks continue to show weakness and although we aren’t there yet, there will be bargains. We like Bank of America (BAC, $12.48, down $0.16) and we have been watching the move lower since shares broke their 52-week low. In our Members Area we said shares could test the $10-$11 area and we are getting close to adding some attractive LEAP options to our portfolio that could return up to 200% in a year or so.
LEAPs are long-term options that cost much cheaper than the stock itself and BAC will be a bargain here shortly.
Another stock we had targeted for a move lower was Wells Fargo (WFC, $23.22, down $0.42) which has also touched a fresh 52-week bottom. We don’t like the company long-term or anything but back in late May we had a feeling shares would test $25 when they were at $30. We were a couple of months early on that trade but the charts were right.
Shares now look like they could test $22 and a break below there could lead to the high teens. We have been saying the bulls will not be able to break through resistance without the help of the Financial stocks. With the sector setting new lows, it’s hard to imagine a sustained rally taking place.
As we head to press, the Dow is showing off by 13 points and is at 10,027 while the S&P 500 is down 2 points to 1,049. The Nasdaq is up 2 points to 2,126.
We will be back in the morning with a full update.
Tags: bac, option picks, stock options trading, wfc
Posted in Financial Stocks, Market Analysis, Market Commentary | Comments Off
Wednesday, June 30th, 2010
9:00am (EST)
Like a good UFC fight, the bears finally landed the blow we were all waiting to see.
Before we talk about the market, we would like to talk about the emotional stress that comes with option trading. Sometimes it is hard to see the forest through the trees, and we know it has been a rough couple of weeks for many of you as you watched the market move higher last week.
Now, before we get in today’s lesson on “psychology 101″, we want to make something clear. We are not always right. We have losing trades. Again, we have losing trades. However, our overall goal is to win 70% of our trades on a yearly basis. We will get hot, and we will get cold.
The point we want to make is that option trading is harder than stock picking because options are time sensitive. Often times, we can nail a stock’s direction because we still use fundamental analysis and vision, however, when trading options, you are allowed a smaller window because of the time frame.
We also have an uncanny ability to pick the market’s direction as many of you know. Half of the battle with options is getting on the right side of the market with the options you do have. Naturally, if you owned call options yesterday, they got hammered. You will also have times where the market is volatile and NOT trending which means you have to change your strategies.
This may mean that you will have to use your “gut” feeling as to how long to keep a position open and believe in your original analysis no matter how stupid the market is making you look. We were bullish ALL year until May 5th which is when we started recommending put options. We could see a trend developing, but the volatility has made the trend harder to read. It is that simple folks.
We have been “expecting” a market correction and on June 11 we had this to say:
“Men who can both be right and sit tight are uncommon.” – Jesse Livermore
We used today’s quote for those of you who might be nervous in this kind of market environment. As option traders our job is to speculate on where we think the market is headed and what trades to choose to benefit from the move – up or down.
We have made it no secret that we are expecting a correction, and we have positioned ourselves in the bearish camp (for now). We still think the back half of 2010 will be outstanding as far as the market moving higher, but as traders, we have trained ourselves not to be bullish or bearish. Instead, we look for opportunities when there is volatility and chaos in the market place. We have that right now.
Still, having a trading plan helps to eliminate all of the emotions of not getting nervous about holding your positions. This can be hard when you have a trade that is up 60% one day and then see it at a 17% gain the next day after the market moves against you. Or one that was up 10% is now down 20%. Folks, this is the nature of options and it happens, but the real money is made by staying the course.” (END)
Back to today’s lesson.
You will see “losing streaks” if you look over our three-year track record, and those are the times when the market stayed flat or we got the direction wrong. Some of you asked us how we could sit back and keep recommending put options at the start of June when the market was going up.
Well, we could still be wrong about a further correction, so let’s get that straight. But, with every trade we make, we PLAN for the worst and HOPE for the best. Sounds crazy, but it keeps us in check.
The market owes us nothing, and it can humble you on occasions, but you still have to battle. Which is what we do every day with the bulls and the bears…
The market got crushed yesterday, but all the talking heads were blaming it on a weak consumer confidence number. Folks, it wasn’t just one number, it has been a number of things that has made this market nervous.
Here was another clue we gave you on why we might be headed for a correction. On June 10, our 1pm update was titled “Circuit Breakers Could Be an Omen.”
On Tuesday, the market got the chance to test out its new shiny toys as shares of Citigroup (C, $3.73, down $0.27) were falling off a cliff. Trading in the bank was halted for five minutes while the panic subsided.
The circuit breakers are designed to stop the bleeding of a stock when it drops 10% in a 5-minute period. If they trigger, shares would be halted for 5 minutes to get some liquidity on the buy side.
The end result was a blood bath for the market.
The Dow was hammered for a 268 point loss, or 2.7%, and finished at 9,870. It didn’t take 10,000 long to fall as the index hit 9,999 within 3 minutes of the opening bell. The bulls tried to hold the levy but the flood was too much as the Dow sank to a low of 9,811 for the day. We pegged 9,800 and said a drop below this level could lead to 9,500 so we shall see.
The S&P 500 followed suit and was hit for a 33 point loss, or 3.1%, as it finished at 1,041 for the day. A couple of key points: First, we were watching for the 1,050 level to fall and mentioned that 1,040 would come into play. Second, everybody and their brothers are watching this level and the index traded to a low of 1,035. However, as you can see, we closed above 1,040 which will give the last remaining bulls hope, but the damage is already done.
The Nasdaq was punished the hardest as it fell a staggering 85 points, or 3.9%, to close at 2,135. It was the index’s lowest close since early February. We penciled in 2,150 as the first wave of support and the close below this level isn’t a good sign. The low for Tuesday was 2,122 and our next target is 2,050. A break below here would not be a good sign either.
There are a number of stocks we want to discuss this morning and a couple of them we will point out as ”trades gone bad” because we did have the “timing” wrong and it is part of today’s lesson.
Garmin (GRMN, $29.26, down $1.34) finally dropped below $30 and we have been talking about this dying business for a while. It’s not that the company doesn’t make great products, they do. Other companies are just making their concept cheaper. Garmin has also entered the smart-phone business too late. We doubt there were lines at the stores when they made the splash into this highly competitive market.
In April, we went with the May 32 put options for a buck and got our head handed to us as the stock stayed above $30. Right on direction, wrong on timing.
In late May, we got aggressive and bought the June 25 put options on Wells Fargo (WFC, $25.93, down $1.10) after it broke its 200-day moving average and fell below $30. We looked at the charts, found support, and knew shares were headed to $25. The options expired in less than 3 weeks. Well, the market rallied off then support levels and Wells Fargo went along for the ride until yesterday. Right on direction, wrong on timing.
If we had bought the July 25 puts for Wells Fargo we would still be in the trade and looking good in the ‘hood.
Folks, we didn’t go “all-in” at the start of June; we started “building” positions.
We know we have been long-winded this morning but we felt it was important to explain the ups and downs of the market and to put our “long-term” trading plan in perspective for you.
Trending markets are easy. Volatile and choppy markets take hours a day to study, but the charts still tell a story.
We have a lot to cover in our Members Area this morning, but for those of you who are nervous about the market or are thinking of getting out, don’t. You can make the same gains on the downside as you do on a market going up.
We spend a lot of hours doing the research for you, and we mean a lot of hours. Success is often dependent on how many hours you put into your research, and the results of your trading business or portfolio are reflective of those long hours.
If anybody tells you any different that hard work and long hours aren’t part of trading then they have no clue on how hard it is to read the market at times.
As we head to press, the Dow futures are showing a pop of 11 points to 9,808 while the S&P 500 futures are up by 2 points to 1,036. The Nasdaq 100 futures are also higher by 2 points to 1,766.
Overtime is calling…subscribers, check for the updates.
Tags: c, Citigroup, momentum options trading, NYSE circuit breakers, option picks, options alerts, stock options trading, Wells Fargo, wfc
Posted in Financial Stocks, Hot Stocks, Market Commentary, Trading Psychology | Comments Off
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Bulls Eye April Highs, Bears Banking on Greece
Monday, January 23rd, 2012
9:00am (EST)
Well, Europe didn’t flare up and 4Q earnings came in halfway decent for some, not so good for others. These were the 2 catalysts that we said would move the market higher or lower last week and the results favored the bulls who were able to push another layer of resistance.
It was a shortened week for the market but the indexes moved higher on Tuesday following good news out of China but gave back half the gains after the Financial sector ended mixed. Citigroup (C, $29.64, up $0.31) and Wells Fargo (WFC, $30.54, up $0.39) missed and beat Wall Street’s estimates after announcing earnings to start the week.
There was follow through on Wednesday as the major averages ended the session with 1% pops, on average. eBay (EBAY, $31.93, up $0.42) posted better-than-expected results on the strength of their PayPal business which is going gang-busters globally.
We were expecting a flat to down Thursday as we weren’t sure what kind of numbers the jobs market would post before the bell and a number of Tech’s heavy-hitters were reporting earnings after the close. Thankfully, Initial Claims fell to their lowest level (351,000) in 4 years which put the bulls in a good mood and took some of the pressure off of Tech – which ended up leading the way higher. Bank of America (BAC, $7.07, up $0.11) gave the Financial stocks a lift after beating expectations.
Friday’s action was all about “old” Tech versus “new” Tech as Google (GOOG, $585.99, down $53.58), Intel (INTC, $26.38, up $0.75), International Business Machines (IBM, $188.52, up $0.08) and Microsoft (MSFT, $29.71, up $1.59) weighed-in with their numbers, which were good for the most part. The ugly duckling was Google which dropped 8% after missing Wall Street’s estimates. Intel, IBM and Microsoft accounted for 78 blue-chip points.
As a result, the Dow gained 96 points, or 0.8%, to end at 12,720. The blue-chips dipped to a low of 12,620 at the open but held new short-term support at 12,600 which was prior resistance. We could not have called this much better as we said a break above 12,600 would lead to a test up to 12,750-12,800…(read more)
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If you are not a subscriber but would like to read more please click here. We are one of the fastest growing stock options trading advisors on the internet and we are one of the very few option newsletters which posted a powerful 2011 return. In fact, we have NEVER had a losing year since forming in 2007. We are off to a fast 14-1 start for 2012 and our subscribers have already closed 3 triple digit winning trades for gains of 124%, 100%, and 131% and another call option trade for 82%.
We offer 2-3 powerful call or put option trades each week (depending on market conditions) aimed at triple-digit returns for our Daily newsletter. Our Weekly Wrap Covered Call Portfolio strides for double-digit returns on a monthly basis and went 16-0 for 2011 and is 8-0 so far in 2012 after the trades we closed on Friday. Sign-up now and receive access instantly to our stock options trading recommendations!
If you are missing these juicy profits come give us a try. Get your password to our Members Area instantly when you sign up TODAY! One profitable trade will easily pay for your membership. You can request our 2008-2011 Track Records by sending us an email or filling out the box to the right.
Tags: c, eBay, GOOG, IBM, INTC, MSFT, wfc
Posted in Earnings, Market Analysis, Market Commentary | Comments Off