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Wednesday, July 21st, 2010
12:50pm (EST)
The bulls are ready to add to yesterday’s gains as the market is trading slightly higher ahead of today’s “big event”. There have been a few positive earnings announcements this morning as a number of companies beat expectations on the top and bottom lines. There have also been some earnings duds.
Wall Street will be watching Fed Chairman, Ben Bernanke, as he gives the boys on the hill an update in about an hour or so. The market will be looking for any hints on what the Fed might do to stimulate growth or if he sees any signs of an economic slowdown in the second half.
Big Ben will also do a follow-up on Thursday. His tone and body language will be crucial on how we close out the day. He has been known to shine at times for the bulls but he has also made the bears look brilliant when he wallows.
Yahoo (YHOO, $13.93, down $1.27) is trading at 52-week lows after missing Wall Street’s numbers. The company seems to be stuck in the mud so we won’t go over the results.
As we head to press, the Dow is higher by 14 points to 10,244 while the S&P 500 is up by 1 to 1,084. The Nasdaq is bucking the trend and is down 2 points at 2,220.
We will be back in the morning with a full update but look for the S&P to run into resistance at 1,100 if the bulls can muster up a rally. If the bears wake-up, look for 1,050 to be tested again.
Tags: call options, 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, volatile options, Yahoo, YHOO
Posted in Company Commentary, Earnings, Market Analysis | Comments Off
Wednesday, October 21st, 2009
9:15am (EST)
Futures are pointing towards a lower opening on Wall Street this morning as 3Q earnings reports once again set the market’s mood. There are quite a few companies that continue to post better-than-expected results but one thing that is worrisome is that the market is not making HUGE moves. One thing we haven’t seen is the big 300 and 400 point moves the Dow is capable of making and earnings have been super.
Our near-term targets remain 2,275 on the Nasdaq and 1,175 for the S&P 500 and 10,400 for the Dow. However, we are getting a little choppy up here and 3Q earnings have been coming in better-than expected. Perhaps the market has already priced in these super earnings but one thing for certain is that we are entering a crucial phase for the market over the next few weeks.
Yahoo (YHOO, $17.17), Morgan Stanley (MS, $32.52) and Wells Fargo (WFC, $30.46) all reported better-than-expected earnings yet futures are pointing towards a lower open? Apple (AAPL, $198.76), Google (GOOG, $551.72) and Intel (INTC, $20.18) reported monster quarters but we are not seeing the sizzle from their solid earnings reports.
As we head to press, Dow futures are lower by 38, to 9,962. S&P 500 500 futures are off by 4 to 1,083, while the Nasdaq 100 futures are off 7, to 1,751. Subscribers can check the Members Area for the current trade updates…
Tags: Google, mentoring stocks, momentum options, momentum plays, Morgan Stanley, option trade picks, options mentoring, options track record, options trading blog, Wells Fargo, Yahoo
Posted in Earnings, Financial Stocks, Market Commentary, Option Trades | Comments Off
Tuesday, October 20th, 2009
1:00pm (EST)
The bears took advantage of a weak housing report today and have crashed the earnings party the bulls were ready to have. The Commerce Department said applications for home building permits, a measure of future construction, fell in September by the largest amount in five months. Not a good sign for the housing industry which has been struggling to recover this year.
We mentioned Apple’s (AAPL, $199.00, up $9.14) earnings this morning and we knew $200 would be the new battle ground for the stock. Shares are now trading at a ”premium” according to some analysts and could fall over the near-term now that all of the hoopla is out. And that could be the case but we tend to shy away from buying Apple put options because it is such a strong company. It looks ripe for a short at these levels but I don’t think I’d sleep easy betting against Apple no matter how high shares have run.
I was sure hoping the company would announce a stock-split but that didn’t happen. A 3-for-1 split would put shares at $67 and make it affordable for the retail investor to purchase the stock again. The smartphone market will get even more intense over the next several quarters but Apple is head and shoulders above the competition. And Mac sales are set to EXPLODE.
Caterpillar (CAT, $59.00, up $1.15) also came in with a great report as the company posted earnings of $0.64 a share, blowing-out Wall Street’s estimate of just $0.06 a share. Shares have traded to a high of $61 and the outperformance was attributed to the foreign exchange, lower tax rates and accounting. Revenues came in at $7.3 billion, versus estimates of $7.5 billion but Caterpillar believes the worst is behind us. Quote…the company’s CEO now sees “encouraging signs that indicate a recovery may be underway.”
Yahoo (YHOO, $16.95, down $0.26) reports after the bell and Wall Street is looking for earnings of $0.07 a share on revenue of $1.1 billion. For the second quarter, Yahoo did 16 cents a share and easily doubled 8 cents the Street was looking for. The November 17 calls (YHQKR, $0.85, down $0.10) have traded over 7,000 contracts compared with 3,500 contracts of the November 17 puts (YHQWR, $0.90, up $0.20). That is a 2-to-1 ratio for the bulls and the action is suggesting an 8%-10% move up or down on Wednesday. We’d love to play this one but we are going to sit on the sidelines.
As we head to press, the Dow is down 87 points to 10,005, the S&P 500 is off by 10 to 1,087 while the Nasdaq is lower by 21 points and is trading at 2,155. We have profiled a new trade today and it is in the retail sector. If you are a current subscriber, please check the Members Area NOW for the 1pm Update.
Tags: Apple, Caterpillar, Momentum stocks, option trade picks, options mentoring, options trade picks, Yahoo
Posted in Company Commentary, Earnings, Market Analysis, Market Commentary, Option Trades | Comments Off
Wednesday, April 22nd, 2009
8:40am (EST)
I’ve been talking about the Tech rally for over a month now which has helped the Nasdaq post a 6% gain YTD. Sure, some stocks deserve to trade at higher multiples than other Tech stocks but when you have good companies getting punished for great earnings while bad companies get rewarded for lousy earnings, it can be frustrating.
That’s exactly how I feel with Yahoo (YHOO, $14.38, up $0.72) right now. It’s a pretty tough job trying to outsmart the market and finding trades that work but when you get a market in transition, funny things happen.
As an option trader, one of the best ways to see if a new “trend” is developing is by looking over your trading history. For instance, in January and February I was recommending both calls and put options as the market came screaming into the New Year and started fading. Then, at the beginning of March, the call buying picked up and it has only been recently that I have thrown in a few put option plays.
After March 6th, I have profiled about 50 option trades and the win/loss record has been fantastic. In fact, there were only 10 trades for a loss which means we were right 80% of the time. In options trading, that kind of track record is what you are striving for. Actually, if that number is only 60% or 70%, then you are on well on your way to a successful option portfolio.
Of those 48 trades since the first week of March, only 3 have been put options. One of them was a put option on the PowerShares QQQ ETF (QQQQ, $32.69, up $0.45) which was stopped out at a 50% loss and the other was a Toyota Motor (TM, $76.47, up $0.68) trade which slapped us in the face for a two-day loss of 50%.
The point being is that the market is in transition while we are trying to figure which way the next move will be. Usually when that happens, I limit my exposure until we get clearer signs.
I said yesterday we are still in a trader’s market but these are the times where you have to be careful. That means tighter stops and quicker profits.
That being said, we were stopped out of Onlin (OLN, $14.14, down $0.64) yesterday. Now I know why the stock dropped 7% on Monday. In the Sunday night Weekly Wrap I had set entry prices on the May options well-below the closing price of where they had been on Friday. With Monday’s drop we were in by default. Then, on Tuesday we get another 4% drop. An analyst who covers the stock said its chemical business was hurtin’ for certain and the “chemical margins” were something I had baked into the lowered entry prices and talked about Sunday night.
When putting the trade together over the weekend, I had set an entry price of $1.20 for the May 15 calls (OLNEC, $0.50, down $0.40) which at the time was 25% lower than the $1.60 closing price from where there were on Friday. When I did the Monday morning blog, they were at 90 cents so stops should have been set at 50-60 cents.
The May 17.50 calls (OLNEW, $0.15, down $0.07) had an entry price target of 30 cents which was a 40% discount from where they had closed on Friday. So stops should have been set at 10-15 cents.
Look, these things happen and when I did the update I said we might be catching a falling knife. That was two trades on my win-loss record and I’m not happy about it. I felt good when I did the research over the weekend and how the company had reaffirmed the higher range of earnings but this “research note” was a whammy. When the news finally hit the tape, this analyst’s clients had been dumping shares for much of the past few days.
Hey, sometimes these things happen so we will see where this one ends up for bragging rights.
As far as the other positions; NetApp (NTAP, $18.04, up $0.25) is up 30% and ValueClick (VCLK, $9.87, up $0.59) is flat. We are going to give IBM (IBM, $102.31, up $1.88) and Yahoo a little more time. Yahoo is a mess but there is buzz about a takeover. The stock jumped in after-hours but gave back some gains by the 8pm cut-off. This morning, shares are higher by 35 cents in pre-market trading.
Of course, Dendreon (DNDN, $19.74, up $0.22) continues to perform well and Amazon.com (AMZN, $78.74, up $1.17) reports earnings on Thursday. Some of you wrote me and said you got in the Amazon May 90 calls (ZQNER, $1.60, up $0.05) at $1.40-$1.50 on Monday so I will keep track of the trade. The target was $1.30 but some of you couldn’t resist. The calls hit a high of $1.80 yesterday but I would set stops at your entry points and close at least half of the position before earnings if you are up.
As the market decides its next move, we may have to start using straddles or strangle option trades to help with the volatility.
Oh, before I forget, we are working hard on getting all of the trades from 2008 and 2009 from the blog into a PDF file. Once we have everything ready, I will let you know. When the portfolio is available you can go by the dates of the trades and follow why I was bullish or bearish on a stock by accessing the blog archives on the right of the page.
Stay tuned….
Rick Rouse
Rick@OptionsMentoring.com
Tags: Dendreo, Onlin, PowerShares QQQ ETF, Toyota Motor, Yahoo
Posted in Hot Stocks, Market Analysis, Option Trades | No Comments »
Monday, April 20th, 2009
10:40am (EST)
Amazon.com (AMZN, $77.95, down $0.10) opened higher this morning after an upgrade but has given back most of its gains since. I mentioned in the Weekly Wrap last night to set limit prices of $1.30 on the May 90 calls (ZQNER, $1.43, up $0.05). The options opened at $1.43 but it appears the shares have lost momentum as the Dow is down over 200 points.
If Amazon keeps falling, lower the entry price to $1.10 or less and wait for a rebound.
We had limit prices of $1.10 on the Yahoo (YHOO, $13.78, down $0.61) May 14 puts (YHQQP, $1.27, up $0.23) so those should have been filled.
Hopefully we aren’t catching a falling knife but Olin (OLN, $14.88, down $1.09) is down 7%. We were watching the May 15 calls (OLNEC, $0.90, down $0.80) and the May 17.50 calls (OLNEW, $0.25, down $0.30) and both options have hit our targeted entry prices of $1.20 and 30 cents.
Dendreon (DNDN, $19.66, up $1.67) continues to do well.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Amazon.com, Yahoo
Posted in Uncategorized | No Comments »
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Big Ben’s Comments Could Sway Market; Yahoo (YHOO) Hits New Lows
Wednesday, July 21st, 2010
12:50pm (EST)
The bulls are ready to add to yesterday’s gains as the market is trading slightly higher ahead of today’s “big event”. There have been a few positive earnings announcements this morning as a number of companies beat expectations on the top and bottom lines. There have also been some earnings duds.
Wall Street will be watching Fed Chairman, Ben Bernanke, as he gives the boys on the hill an update in about an hour or so. The market will be looking for any hints on what the Fed might do to stimulate growth or if he sees any signs of an economic slowdown in the second half.
Big Ben will also do a follow-up on Thursday. His tone and body language will be crucial on how we close out the day. He has been known to shine at times for the bulls but he has also made the bears look brilliant when he wallows.
Yahoo (YHOO, $13.93, down $1.27) is trading at 52-week lows after missing Wall Street’s numbers. The company seems to be stuck in the mud so we won’t go over the results.
As we head to press, the Dow is higher by 14 points to 10,244 while the S&P 500 is up by 1 to 1,084. The Nasdaq is bucking the trend and is down 2 points at 2,220.
We will be back in the morning with a full update but look for the S&P to run into resistance at 1,100 if the bulls can muster up a rally. If the bears wake-up, look for 1,050 to be tested again.
Tags: call options, 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, volatile options, Yahoo, YHOO
Posted in Company Commentary, Earnings, Market Analysis | Comments Off