Updated throughout the week
Monday’s Close for July 26th, 2010
Written by: Mike Coval

If you’re a bullish investor the move up, which left the S&P above 11,000 for the second straight day was a bullish one. For those still in some bearish positions, there’s no need to throw in the towel just yet.

To watch a video of Monday’s market action, along with my thoughts, Click here. The DOW closed up 101 points at 10,525 while the NASDAQ closed higher by 27 to finish the day at 2,296.

Energy:  Oil was down just a bit as was the dollar. Late in the day, the price of crude futures were trading down $0.09 at $78.98 a barrel. Track the price of crude with the Oil ETF, USO.

Economic News: It was on light trading volume but a jump in new-home sales and enthusiasm over second-quarter earnings helped investors carry over last week's stock-market momentum.

Providing some relief from the recent stream of weak economic data, new-home sales jumped 23.6% in June from the previous month, much better than the 3.7% gain expected by forecasters.

Communications: I guess you could say someone was home to answer the call after Sprint, S, gained $0.36 on heavy institutional trading volume to close near its high on the day after the government ruled that owners of Apple's iPhone and other smartphones will be allowed to use their devices on rival networks and download software applications on the handsets not approved by the manufacturer when lawfully obtained.

For all you new covered call traders, you might consider this lower priced stock as a great way to learn from an actual trade. Buying the stock at the current price and selling the Aug $5.00 call would net a 4.5% return if the stock closed above $5.00 on the Aug expiration day.  

Services: FedEx, FDX, reversed its downtrend as the shipping giant closed up $4.43 on strong buying after boosting its earnings predictions for the fiscal first quarter and the rest of the year, saying express and round volumes have been higher than it anticipated. How about an August $80/$75 bull put spread for those of you who think the stock will now stay above $80.00?

Homework: None today, but we will finally get a chance to finish the Bond series we have been working on later this week.

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If you have a trading question, please leave it in the Comments section below and I'll do my best to answewr it.  

Updated throughout the week
Monday’s Close for May 17th, 2010
Written by: Mike Coval

Live training with live trading in Dallas Texas, June 3rd and 4th.

It started to look a little ugly early on but then the markets pulled it out into the close to end the day flat. Had we had another down day we would have been really close to breaking back down below supports and sending us into a new downtrend.

To watch a video of Monday’s market action, along with my thoughts, Click here. The DOW closed up 6 points at 10,626 while the NASDAQ closed higher by 7 to finish the day at 2,354.


Energy: Oil is still selling off, largely from the strength of the dollar. This may be the course for a while until the Euro finds some stability. Late in the day, the price of crude futures were trading down $1.41 at $70.48 a barrel. Track the price of crude with the Oil ETF, USO.

Shares of BP, seemed to have stabilized after the oil giant was able to successfully insert a tube into the broken pipe leaking oil into the Gulf of Mexico. The stock was done only $0.30.

Healthcare: Universal Health Services, UHS gained $3.10 after saying it will buy psychiatric facility operator Psychiatric Solutions, PSYS for $2 billion, or $33.75 a share. Shares of UHS rose, while Psychiatric Solutions slipped in early trading. To see the company that is buying another jump to the upside on heavy trading is a positive signal. Perhaps waiting for a drop under $40.00 here will be a nice entrance for buying an October $40.00 call option?



Economic News: The Federal Reserve Bank of New York's Empire Manufacturing survey showed business conditions improved for manufacturers in the area for the 10th consecutive month, but at a slower pace than in April. The business conditions index moved to a reading of 19.1 in May, lower than the reading of 30.7 expected by economists.

Financials: Man Group of the U.K. said it will buy New York-listed hedge-fund manager GLG Partners, GLG for $1.6 billion, or $4.50 a share, which is a 55% premium to Friday's close. The start of more mergers is a positive sign in the financial markets indicating bottom line company strength.

Consumer Staples: Lowe's, LOW fell $0.81 but managed to close above its $25.00 support after the home improvement retailer reported a 3% profit rise but issued second-quarter guidance below Wall Street's views. Keep an eye on this one if it breaks $25.00 it will have then completed lower highs and lower lows.

Communications: Sprint, S, was up $0.13 to close at its high for the day, and its 8 month high. The current trend is strengthening and may be a good covered call candidate for those looking at the lower priced stocks?

Homework: We are now up to part 3 of our series on Bonds. In this section I cover the different types of bonds and which are traded tax free, which are safer and which bonds generally have higher returns.
Bonds, part 3 click here

Each of the two previous Bond articles are also archived within in the Incometrader Homework Archives.

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Updated throughout the week
Thursday’s Close for May 13th, 2010
Written by: Mike Coval

We all saw or felt the quick selloff last week and now we’ve seen a fast bounce back to the upside. The real question we should be asking ourselves is whether or not it was a onetime occurrence or are we destined to head right back down?

To watch a video of Thursday’s market action, along with my thoughts, Click here. The DOW closed down 113 points at 10,783 while the NASDAQ closed lower by 31 to finish the day at 2,394.


Energy: Oil has been selling off for the past 2 weeks and once again closed lower, much of it having to do with the strengthening dollar. Late in the day, the price of crude futures were trading down $1.81 at $73.84 a barrel. Track the price of crude with the Oil ETF, USO.

Transocean, RIG fell $1.45 as it continues to base at the $65.00 level. The owner and operator of the Deepwater Horizon drilling rig that burned and sank last month unleashing a massive oil leak into the Gulf of Mexico, will file in federal court a petition to limit its liability to just under $27 million.　

Economy: The Labor Department said the number of U.S. workers filing new claims for jobless benefits fell by 4,000 to 444,000 in the week ended May 8, in line with the expectations of economists surveyed by Dow Jones Newswires.　

Financials: Several major Wall Street banks slipped after a probe into whether the banks misled investors about their role in mortgage-bond deals. The preliminary criminal probe conducted by federal prosecutors, working with securities regulators, now includes JPMorgan Chase, JPM,　Citigroup, C,　Deutsche Bank, DB, and UBS, UBS. The probe already includes Goldman Sachs, GS　and Morgan Stanley, MS.
An investor thinking this will continue to hurt the sector might consider selling a June $44/$45 bear call spread for a $0.22 credit on a $0.78 investment for a potential 28% return.



Technology: Cisco Systems, CSCO, dropped $1.21 after the networking giant reported a 63% profit jump but also projected fiscal fourth-quarter sales growth in line with analyst estimates. The news was positive, the heavy selling was bad but a pullback to the $24.50 level may be an interesting place to start accumulating the stock.

The previous homework example I started a new series on bond investing. We started with a basic outline of what a bond is and who might want to use them. Today I’m going to cover the most important topic (or at least I think so) on bonds, how bond prices work. It takes a few minutes to wrap your head around it but once you do the rest will seem pretty straight forward.

Each of these articles in this series is also archived within in the Incometrader Homework Archives.

Bonds, part 2 click here

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Updated throughout the week
Friday’s Close for January 8th, 2010
Written by: Mike Coval

Live training with live trading in Fort Myers Florida, Feb 18th and 19th. 

Just a little bit at a time, we continue to make the new highs but nothing exciting telling us the movement is string. It seems that the days the markets close up, we do so on just a few points at a time. Perhaps we all got used to the 100 point Dow gains and 30 point Nasdaq gains, now only a fraction of that but still the trend is positive.

To watch a video of Friday’s market action, along with my thoughts, Click here. The DOW closed up 11 points at 10,618 while the NASDAQ closed higher by 17 to finish the day at 2,317.

Energy: Oil is trying to make another run to the upside but caution at these levels (currently at the October resistance) might be the smarter trade. Late in the day, the price of crude futures were trading up $0.08 at $82.83 a barrel. Track the price of crude with the Oil ETF, USO.

Economic News: On Friday the Labor Department reported that U.S. nonfarm payrolls fell by 85,000 last month, compared with a revised 4,000 gain in November. Economists surveyed by Dow Jones Newswires had expected a payroll decrease of just 10,000. The November figure originally showed an 11,000 drop in payrolls.

Additionally, the share of the population that is under-employed -- either unemployed or only able to find part-time work -- grew in December to 17.3%, up from 17.2% in November.

Services: Apollo Group, APOL, fell $3.44 on heavy selling after the company received a Department of Education report regarding concerns about its handling of federal funding. Apollo reported late Thursday that its profit surpassed Street expectations. Another drop on Monday would indicate continued institutional selling giving the stock a downside target of $55.00.

Basic Materials: Alcoa, AA gained $0.42 on active trading and closing at the high for the day as it prepares for next week’s earnings numbers. Alcoa has a history of outperforming expectations and has the privilege of leading off earnings season. I’m sure some active investor can find a bullish trade here?

Technology: Intel, INTC also closed near its high for the day and is also reporting earnings next week, (Thursday). The company is expected to show profits rallied from the year-ago quarter and also post an increase in overall sales. If the company does announce strong numbers, you can expect it to give a boost to the tech sector as a guide to the rest of the earnings season. A break above $21.00 should indicate a buy.

Updated throughout the week
Tuesday’s Close for Dec 29th, 2009
Written by: Mike Coval

I’m not sure we had anything different than that which was expected. No real action, bullish or bearish over the past few trading days. Investors seem content to wait until the new year before making portfolio changes.

To watch a video of Tuesday’s market action, along with my thoughts, Click here. The DOW closed down 2 points at 10,545 while the NASDAQ closed lower by 3 to finish the day at 2,288.

Energy: Oil prices were mostly flat and may be closing in on a top at $80.00. Late in the day, the price of crude futures were trading up $0.02 at $78.79 a barrel. Track the price of crude with the Oil ETF, USO.

FuelCell Energy, FCEL, rallied 16%, along with shares of other clean-technology firms, as the Washington Times reported industry players are calling for more support from the U.S. government. Some of the other players in the industry include Ballard Power, BLDP and China Bak Battery, CBAK. Legging into this industry might be a long term approach for those looking at some of the lower priced long shots.

Economic News: The consumer confidence index increased to 52.9 in December. That was roughly in line with expectations. The November reading of the index was revised up to 50.6. The Consumer Staples and Retail sectors were flat on the news.

In housing, the S&P/Case-Schiller composite index of home prices in 20 metropolitan areas was unchanged in October after a 0.4% uptick in September. Economists had expected a 0.2% rise. The annual rate of decline slipped to 7.3%, an improvement from an annual rate of 9.3% in the prior month.

Consumer Staples: H and R Block, HRB received an upgrade to "Outperform" from Barrington Research. This up trending stock has just broken out of its upper BollingerBand on increased volume as the MACD’s and Stochastics have turned up.

I really there was more for me to write about but it was and extremely boring trading day with not a lot happening. This is likely to continue over the next week.

Homework: Today we start a new series on Bonds (We’ll end the series with a live trade) and how we as investors can use them in our portfolio. Whether it be T-Bills, Bond ETF’s or some hybrid, there’s likely to be something for us all to invest in. Each of these articles in this series will also be archived in the Incometrader Homework Archives.

Bonds, part 1 click here

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Updated throughout the week
Thursday’s Close for Dec 24th, 2009
Written by: Mike Coval

So we go into the holiday with a slight drift higher, nothing spectacular but still a light volume move to the upside.

To watch a video of Monday’s market action, along with my thoughts, Click here. The DOW closed up 44 points at 10,511 while the NASDAQ closed higher by 14 to finish the day at 2,284.

Energy: Oil prices were up slightly and appear to be forming a bottom at the $72.00 level. Late in the day, the price of crude futures were trading up $0.54 at $77.21 a barrel. Track the price of crude with the Oil ETF, USO.

Economic News: The Labor Department said initial claims for jobless benefits dropped by 28,000 to a seasonally adjusted 452,000 in the week ended Dec. 19, from an unrevised 480,000 the previous week. Economists surveyed by Dow Jones Newswires had expected claims would fall by just 10,000 to 470,000. The last time initial claims were lower was the week of Sept. 6, 2008, when they stood at 447,000.

Healthcare: The Senate approved health-care legislation sending the sector lower. Managed-care companies WellPoint, WLP, Humana, HUM and Aetna, AET were among the health-care sector's decliners.

Consumer Services: Silgan Holdings Inc. SLGN gained $2.81 on heavy volume after the Stamford, Conn., maker of packaging for consumer goods announced it will join the S&P Mid-Cap 400 Index after trading closes on Dec. 31.

Homework: Next week I’ll start a new homework series on bond ETF’s, explaining what they are and how an investor might use these in their account to balance out their portfolio. All articles will then be archived in the Incometrader.com homework section.

Cheers,
Mike

Updated throughout the week
Friday’s Close for July 31st, 2009
Written by: Mike Coval

Still no significant retracement but we are starting to see the indexes top out with only slight moves in either direction. This should be followed by a large volatility day and then we should see the profit taking kick in. The news has been positive, economic reports and earnings so this is keeping the markets strong but the logic is saying it’s time to lock in profits now that we are at resistance levels and the recent gains have been strong.

To watch a video of Friday’s market action, along with my thoughts, Click here. The DOW closed up 17 points at 9,172 while the NASDAQ closed down 6 to finish the day at 1,979.

Energy: Oil prices fell after both European and U.S. oil companies reported some disappointing earnings numbers. Late in the day, the price of crude futures were trading down $0.24 at $69.21 a barrel. Track the price of crude with the Oil ETF, USO.

Economic News: Traders on Friday absorbed the latest reading of the gross domestic product, which showed that the recession is worse than many forecasts, but that it's also ending.

Financials: Still in the hot sector for news releases, MetLife, MET gained $0.38 after reporting better-than-expected operating earnings, but posted a $1.4 billion net loss, primarily stemming from derivative losses.

Consumer Cyclicals: Disney, DIS fell $1.10 on some heavy selling after earning $954 million, or 51 cents a share, in its fiscal third quarter, down from $1.3 billion, or 66 cents a share, a year ago. Disney had been expected to earn 51 cents a share. Anyone care to buy the Sept $26.00 puts on this one?

Goodyear Tire & Rubber, GT, rose 7%. The car parts manufacturer showed a second-quarter loss that wasn't as bad as analysts had expected. It reported a loss of $221 million, or 92 cents a share, vs. profit of $75 million, or 31 cents a share. Excluding one-time items, the loss was 35 cents a share. Sales fell 33% to $3.9 billion, reflecting a drop in automaker production cuts. The auto-related stocks sector has jumped 16% in July, making it the third best performer in the S&P 500.

Homework: Time for another homework trade, the last one, just as in the 13 before it was closed out for a nice profit. Today we are going to look at CMI and place a diagonal spread selling the August $43.00 put and buying the September $39.00 put for a $0.40 credit. The goal for this trade is to have the stock close above $43.00 either on the August or the September expiration date. If it does close above $43.00 in August we will also be able to sell the remaining time value in the Sept $39.00 put for some additional income.

We will now follow this trade with Wednesday and Sunday updates, until the trade is closed, in our members section of the Incometrader newsletter.

Cheers,
Mike
                                         

Updated throughout the week
Thursday’s Close for July 23rd, 2009
Written by: Mike Coval

I guess you could say that was unexpected… Although there is always someone that claims to have predicted today’s break of resistance causing a short squeeze. I’ll just be content to accept the trend is bullish. That being said nothing goes up forever and the Nasdaq has now broken a 17 year record for the most amount of updays in a row. I’m thinking a pullback has to be next.

To watch a video of Thursday’s market action, along with my thoughts, Click here. The DOW closed up 188 points at 9,069 while the NASDAQ closed up 47 to finish the day at 1,974.

Energy: Making a move back up were oil prices. In a simplified analysis, oil prices generally move up as the price of equities fall so perhaps energy buyers and jumping back in as they expect the equity market to pullback. Late in the day, the price of crude futures was trading up $151 at $66.91 a barrel. Track the price of crude with the Oil ETF, USO.


Ford announced some positive earnings today. Will GM roll out its new line next?

Consumer Cyclicals: Ford,F, gained $0.60, closing near its high for the day after announcing a smaller-than-expected loss from continuing operations. The company lost $638 million, or 21 cents a share, excluding one-time items. Including gains from debt restructuring, Ford posted a quarterly profit of $2.3 billion, compared to a loss of $2.7 billion a year ago.

EBAY gapped open and closed near its high for the day gaining $2.07 on news it earned $327.3 million, or 25 cents a share, down from $460.3 million, or 35 cents a share, in the year-ago period, the company said. Excluding one-time items and stock option expenses, eBay earned $478.6 million, or 37 cents a share. Analysts had expected the online auctioneer to earn 36 cents a share.

Amazon AMZN, was up $5.08 after signing a deal to buy Zappos.com for $807 million, the company said Wednesday. Primarily known as an online shoe retailer, Zappos also sells handbags, clothing and jewelry.

Economic News: A surprising June rise in the annual rate of existing home sales helped drive the rally. The annual rate grew last month to 4.89 million units sold a year, up from an annual rate of 4.72 million in May and a bit above economists' expectations. Each of the four geographical sectors -- the Northeast, the Midwest, the South and the West -- reported a month-over-month rise in its annual sales rate, suggesting the housing recovery had begun to catch on throughout the country.

Conglomerates: 3M, MMM, added $4.76 on some heavy buying to close up near $70.00. The 52 week high is at $75.00 so there is still some room for further gains after the stocks next pullback. How about selling a put spread on MMM? If the markets do see some profit taking in the next few days, you might be able to sell the August $65.00 puts and buy the August $60.00 puts for a $0.50 credit or a potential 11% 4 week ROI.

Communications: AT&T, T,, closed up above its $25.00 resistance on some strong buying volume after　beating Wall Street estimates,