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Tuesday, February 22nd, 2011
12:45pm (EST)
The market opened sharply lower this morning as crude prices soared while protests in Libya have caused some nervousness on Wall Street. The rising political turmoil in the Middle East has pushed oil to $94.48 per barrel, up $4.77, today while a weaker-than-expected S&P Case-Shiller number put the bulls behind the 8-ball early. The home-price index fell 4.1% from the prior year as prices in 18 of 20 cities were down but this didn’t stop the bulls. They immediately stepped in after the bell and lifted the market off its lows as they held support.
The bulls also got some help after the Richmond Fed manufacturing survey came in better-than-expected. Wall Street got a print of 25 versus expectations for 18. Meanwhile, Consumer Confidence came in at 70.4 versus forecasts for 65.5. This helped the bulls stabilize the chaos but trading continues to be choppy and volatile.
The Dow opened with a triple-digit loss and fell to 12,270 (- 120 points) before rebounding to off its lows to cut looses in half. However, the index is currently down 107 points to 12,283. We said to look for 12,200 to hold so if we retreat into the closing bell this will be the first level the bulls look to protect.
The S&P 500 is lower by 18 points at 1,325 and has traded down to 1,323 which is where to said the first level of support should come in at. There is further support at 1,300 which would make things interesting but let’s hope the bulls can hold 1,325 today.
The Nasdaq is showing a decline of 53 points and is at 2,780. The index has traded to a low of 2,779. We are looking for 2,700-2,750 to hold. Tech will be the most volatile on market swings but we expect the bullish trend to remain intact.
Turning to earnings, Wal-Mart Stores (WMT, $53.62, down $1.76) is down 3% after reporting a profit of $6.06 billion, or $1.70 a share, versus $4.76 billion, or $1.25 in the year ago period. Excluding items, Wal-Mart would have earned $1.34 a share. Revenue came in at $115.6 billion which was below expectations as sales for stores opened at least a year declined be nearly 2% and were lower for the seventh straight month.
Wall Street was looking for $1.31 a share on sales of $117.5 billion.
Looking ahead, Wal-Mart said it expects current quarter earnings of $0.91-$0.96 a share, and 2011 earnings of $4.35-$4.50 a share. Analysts are expecting profits of $0.96 a share and full-year profits of $4.45.
The news hasn’t been all that bad for our portfolio. Although some of our trades have taken slight hits today, others have done extremely well. We were stopped out of one trade for a gain of 83% after closing half a few weeks ago. This brings our 2011 track record to 14-out-of-16 winning trades. We also have another trade that has surged on silver’s move and is showing a triple-digit gain of 130%.
Subscribers, check the Members Area for the important trade updates.
Tags: best option trader, best trading signals, call options, chicken trade, Covered Calls, financial options advice, momentum options, Momentum stocks, NYSE: WMT, option mentoring, option quotes, option signals, Option Trades, option trading, options broker, options newsletter, options prices, put options, stock broker, stock price, stock quotes, strangle option trade, winning option trades, WMT, WMT earnings
Posted in Earnings, Market Analysis, Market Commentary | Comments Off
Monday, September 27th, 2010
1:00pm (EST)
The market is trading lower as we head into the second half of action today despite the flood of merger and acquisition (M&A) news. With the lack of economic news and little in the way or earnings, the bulls seem content on holding recent support levels as they map there next move.
The Dow is currently down 25 points to 10,835 while the S&P 500 is lower by 4 points to 1,145. The Nasdaq is off by 8 points to 2,373.
The Dow pushed through our 10,800 target on Friday which should provide support over the near-term while resistance will come in at the 10,900-11,000 level.
We said on Friday to watch the 1,150 level on the S&P and it is the one key technical hurdle that has yet to be taken out. The index opened just a shade below Friday’s close but is once again having trouble overcoming this area. This level would become “support” if broken but remains resistance.
The Nasdaq will face resistance at 2,400-2,450 while support is currently at 2,350.
In M&A activity, the Airline stocks are getting a pop after Southwest Airlines (LUV, $13.54, up $1.26) agreed to buy AirTran Airways (AAI, $7.35, up $2.80) for about $1.4 billion. The deal has already been approved by both companies’ boards and we wouldn’t be surprised to see more deal making in the sector.
Elsewhere, Unilever (UL, $28.98, up $0.42) went after Alberto Culver (ACV, $37.72, up $6.24) with a $3.7 billion cash offer while Wal-Mart Stores (WMT, $53.78, down $0.30) went abroad and got in on the buying by making a bid to acquire South Africa-based Massmart Holdings for a little over $21 a share, or $4.3 billion. Wal-Mart may have gotten the best deal as it only paid a 10% premium to acquire Massmart and South Africa is a growing market.
We expect the remainder of the day to favor the bears as the bulls stand pat following a fourth-straight week of gains. As we head into October, which starts Friday, look for the volatility to pick up. The CBOE Market Volatility Index (VIX, 22.61, up 0.90) is up 4% today to and continues to hold the 21-22 area. The VIX soared nearly 11% in August on the market sell-off and has sold-off in September as the market has rallied. We are watching for signs of a break below 20 (which would be bullish) or a break over 24-25 (which would be bearish).
We are also watching the 1,150 level on the S&P 500 as well as the action in the Financial sector. For any sustained rally to stick, the Financial stocks will have to show more strength.
We will be back Tuesday morning with a full update at 9am.
Tags: AAI, ACV, explain the concept of options, LUV, momentum options trading, option picks, option trading blog, UL, VIX, WMT
Posted in Company Commentary, Mergers and Acquisitions | Comments Off
Tuesday, August 17th, 2010
1:20pm (EST)
The bulls are trying to run today and have taken the market higher despite a downbeat report on housing. Other economic news has helped take the spotlight off the sector and merger and acquisition (M&A) news is also keeping the bears at arm’s length.
The market also got some decent earnings from Wal-Mart Stores (WMT, $51.37, up $0.96) and Home Depot (HD, $28.65, up $1.27) which has also put Wall Street in a buying mood.
Housing starts for July increased 1.7% month-over-month to 546,000 units, but was less than the 555,000 units analysts had been expecting. Building permits for July fell 3.1% to 565,000 and below the 573,000 number that had been penciled in.
The Labor Department reported the Producer Price Index for July showed a 0.2% monthly increase, as expected, and was the first increase since March. Excluding food and energy costs, the index rose 0.3% in July.
And finally, Industrial production jumped 1% in July, which was double the 0.5% growth forecast prediction.
Now to the good stuff…
In M&A news, Potash (POT, $140.45, up $28.30) rejected an unsolicited takeover proposal from BHP Billiton (BHP, $70.45, down $1.49) this morning and its shares are on fire. The company said the $130-a-share bid from BHP was not enough and that its bid was “grossly inadequate”.
This is always the normal, first reaction from a company and its board members when they get a takeover bid. At $130 a share, the offer by BHP represented only a 15% premium over Potash’s closing price on Monday so it was kind of a slap in the face. We have been following Potash for years and as matter of fact, we recently had some call option listed on them last week.
For those of you who haven’t been inside our Members Area, in addition to trade recommendations, we also have a Watch List where we focus on stocks and options that are about to breakout or breakdown. Sometimes we are waiting for a certain price to trigger point before we initiate the trade as we are waiting for a move below support or resistance. Other times, we list stocks and options on sectors that are on the move.
We listed the Potash August 120 calls (POT100821C00120000, $21.00, up $20.70) last Tuesday in our Members Area and at the time the options were going for 95 cents. Since the market was in a downdraft last week, it didn’t make sense to purchase these cheap out-of-the-money options since 70% of stocks move overall that the direction the market is going. As you can see though, the August call options have zoomed to the moon today and are up over 7,650% after closing at 30 cents yesterday!
We were also going to list the Potash September 120 calls (POT100918C00120000, $20.60, up $18.20) as a possible play and they have surged nearly 760%.
Of course, we can’t take credit for these being official trades but we did have some subscribers who did their homework and used our Watch List to their advantage.
Here was an email from this morning:
“Once again, thank you!
I trade POT almost every option expiration and had 20 options this morning. Just cashed in for $47.7K.
Thanks for adding it to your watch list.
Scott H.”
As we head to press, the Dow is showing a gain of 137 points, or 1.3%, and is at 10,439. The index has broken through slight resistance at 10,400 and has hit a high of 10,450 today.
The S&P 500 is higher by 16 points to 1,095, or 1.5%, but is once again fighting the 1,100 level while the Nasdaq is up 33 points to 2,215. Tech has busted out past the 2,200 level and it wil be interesting to see if it holds.
We were thisclose to bagging a big option trade but we are on the cusp of breaking through with others, we can feel it. The market has been choppy but we are still finding sectors and stocks that are hot or about to drop.
In fact, we have a couple of current trades that are on our Watch List that look ready to pop and we are releasing one of them today! Subscribers, check the members Area for the NEW TRADE!
Tags: BHP, hd, option picks, POT, Potash takeover bid, stock options trading, WMT
Posted in Company Commentary, Mergers and Acquisitions, Watch Lists | Comments Off
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Bears Make a Move
Tuesday, February 22nd, 2011
12:45pm (EST)
The market opened sharply lower this morning as crude prices soared while protests in Libya have caused some nervousness on Wall Street. The rising political turmoil in the Middle East has pushed oil to $94.48 per barrel, up $4.77, today while a weaker-than-expected S&P Case-Shiller number put the bulls behind the 8-ball early. The home-price index fell 4.1% from the prior year as prices in 18 of 20 cities were down but this didn’t stop the bulls. They immediately stepped in after the bell and lifted the market off its lows as they held support.
The bulls also got some help after the Richmond Fed manufacturing survey came in better-than-expected. Wall Street got a print of 25 versus expectations for 18. Meanwhile, Consumer Confidence came in at 70.4 versus forecasts for 65.5. This helped the bulls stabilize the chaos but trading continues to be choppy and volatile.
The Dow opened with a triple-digit loss and fell to 12,270 (- 120 points) before rebounding to off its lows to cut looses in half. However, the index is currently down 107 points to 12,283. We said to look for 12,200 to hold so if we retreat into the closing bell this will be the first level the bulls look to protect.
The S&P 500 is lower by 18 points at 1,325 and has traded down to 1,323 which is where to said the first level of support should come in at. There is further support at 1,300 which would make things interesting but let’s hope the bulls can hold 1,325 today.
The Nasdaq is showing a decline of 53 points and is at 2,780. The index has traded to a low of 2,779. We are looking for 2,700-2,750 to hold. Tech will be the most volatile on market swings but we expect the bullish trend to remain intact.
Turning to earnings, Wal-Mart Stores (WMT, $53.62, down $1.76) is down 3% after reporting a profit of $6.06 billion, or $1.70 a share, versus $4.76 billion, or $1.25 in the year ago period. Excluding items, Wal-Mart would have earned $1.34 a share. Revenue came in at $115.6 billion which was below expectations as sales for stores opened at least a year declined be nearly 2% and were lower for the seventh straight month.
Wall Street was looking for $1.31 a share on sales of $117.5 billion.
Looking ahead, Wal-Mart said it expects current quarter earnings of $0.91-$0.96 a share, and 2011 earnings of $4.35-$4.50 a share. Analysts are expecting profits of $0.96 a share and full-year profits of $4.45.
The news hasn’t been all that bad for our portfolio. Although some of our trades have taken slight hits today, others have done extremely well. We were stopped out of one trade for a gain of 83% after closing half a few weeks ago. This brings our 2011 track record to 14-out-of-16 winning trades. We also have another trade that has surged on silver’s move and is showing a triple-digit gain of 130%.
Subscribers, check the Members Area for the important trade updates.
Tags: best option trader, best trading signals, call options, chicken trade, Covered Calls, financial options advice, momentum options, Momentum stocks, NYSE: WMT, option mentoring, option quotes, option signals, Option Trades, option trading, options broker, options newsletter, options prices, put options, stock broker, stock price, stock quotes, strangle option trade, winning option trades, WMT, WMT earnings
Posted in Earnings, Market Analysis, Market Commentary | Comments Off