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,

Updated late Tuesday and Friday nights
Tuesday’s Close for July 14th, 2009
Written by: Mike Coval

It looked so promising on Monday as the S&P 500 rallied all the way back to 900 where it parked itself. The hopes were strong that we might be able to see a continued rally but no luck, just another trick to get us all excited and then leave us hanging. There is a bright note however; the Volatility Index is rolling back to the downside indicating some upside.

To watch a video of Tuesday’s market action, along with my thoughts, Click here. The DOW closed up 28 points at 8,349 while the NASDAQ closed up 7 to finish the day at 1,800.

Energy: Energy prices have burned out lately with the price of oil now trading back down under $60.00. Late in the day, the price of crude futures was trading up slightly at $59.75 a barrel. Track the price of crude with the Oil ETF, USO

It’s not about whether you win or lose; it’s all about how you look getting there.

Economic News: Stocks wavered after the release of a May jobs report revealed an unexpectedly soft drop in payrolls, but also a disappointing rise in the unemployment rate.

Financials: Big old BOA gave the markets a last minute rally as their analysts called an end to the global recession.

A report published Tuesday afternoon by Michael Hartnett, head of the bank's research investment committee, said recovery will take time and require sustained government support, but that "our global economists believe the recession ended in Q2 2009 and a fragile recovery has begun."

Goldman, GS, reported earnings of $4.93 a share, compared to earnings of $4.58 a share in the same quarter a year ago. It was expected to earn $3.48 a share.

Consumer Cyclicals: Johnson & Johnson, JNJ, gained $0.51 on increased volume as it continues its uptrend and nears the $60.00 resistance. The company beat expectations, earning $1.15 a share, compared to $1.17 a share in the second quarter of 2008. Forecasters had expected earnings of $1.11 a share.

Not a lot of room for option traders here so would a covered call on JNJ legging into the August $60.00 calls work?

Two other stocks up on increased buying volume Yum Brands, YUM, up $0.56 and Altera, ALTR up $0.19 also reported earnings after the close but were up on heavy buying prior to the close.

Technology: Intel, INTC gained $0.34 on heavy buying and is up again in after hours after reporting better than expected results, losing 7 cents a share for the quarter due to a fine from the European Commission. Absent the charges, it would have earned 18 cents a share, down from 26 cents in the year-ago period. Street analysts expected profit of 8 cents a share. As of 5:04 p.m., Intel was up 7% in electronic trading.　

Cheers,
Mike

Updated late Tuesday and Friday nights
Friday’s Close for June 5th, 2009
Written by: Mike Coval

We end the week on a flat note but overall the gains outweighed the losses for the 13th week in a 15 week period. So what do we do from here? Will the gains just keep on coming? Until they do stop I’ll trade slightly more neutral since we are still so overbought.

To watch a video of Friday’s market action, along with my thoughts, Click here. The DOW closed up 12 points at 8,763 while the NASDAQ closed flat to finish the day at 1,849.

Energy: Energy prices turned flat after the employment report. Late in the day, the price of crude futures was trading down $0.41 at $68.41 a barrel. Track the price of crude with the Oil ETF, USO.

The fat cats are coming after us from all sides…

Economic News: Stocks wavered after the release of a May jobs report revealed an unexpectedly soft drop in payrolls, but also a disappointing rise in the unemployment rate.

The economy lost 345,000 jobs last month, far fewer than the 520,000 economists had been expecting. The job loss was roughly half the average monthly decline for the last six months, the Labor Department said. The jarring change could suggest the labor market has reached a bottom.

The bad news: the unemployment rate, which ballooned to 9.4% in May, up from 8.9% in April and a bit above economists’ estimates.

Technology: So is Sandisk giving us a picture of a potential pullback before moving hiring again or would selling a July $15.00 put for $1.08 (naked put) give us an excellent cost basis on the stock to use for covered calls if we were assigned the stock?

Good and or bad stocks to watch: RIMM, POT, AMZN, CTSH

Cheers,
Mike Coval

Updated late Tuesday and Friday nights
Friday’s Close for May 8th, 2009
Written by: Mike Coval

And it still keeps trending higher. We are however, starting to see a chink in the armor, the tech stocks and more specifically the semi conductor stocks have been heading lower despites the Big Board’s advances. Could this signal a potential top? I think so especially since it comes when the markets are near their Jan highs.

To watch a video of Friday’s market action, along with my thoughts, Click here. The DOW closed up 165 points at 8,575 while the NASDAQ closed higher by 23 to finish the day at 1,739.

Energy: Oil prices were up for a second day reaching short term highs. Late in the day, the price of crude futures was trading up $1.82 at $58.53 a barrel. Track the price of crude with the Oil ETF, USO.

A little hard work and practice and you can accomplish just about anything.

So why the rally today? A surprising jobs report brought the bulls back out, helping close the eighth week out of the last nine in positive territory.The latest jobs report hinted that the labor market may have found a bottom and the government's stress tests of financial firms gave traders some insight into the state of the banking system.

Economic News: Traders cheered the April jobs report, which showed non-farm payrolls fell last month by 539,000, well below the 699,000 jobs lost in March and far fewer than economists had been expecting. The data suggest the labor market could be stabilizing.

Earlier this week, Federal Reserve Chairman Ben Bernanke said the economy should begin to grow again before the end of the year but warned that labor market would continue to get worse before it got better.

Technology: Activision Blizzard, ATVI, shares rose 7.4%. The video-game publisher beat Wall Street's earnings targets for the first quarter on strong sales of its video-game franchises. For the quarter ended March 31, the company reported net income of $189 million, or 14 cents a share. Revenue came in at $981 million. The stock broke up above its $11.10 resistance on strong volume with the MACD’s and Stochastics turning higher. There has to be a bullish trade in this one somewhere?

Financials: In finance, the Federal Reserve suggested ten of the nation's top 19 financial institutions must raise their capital levels by a cumulative sum of $74.6 billion to adequately prepare themselves for another downward swing. The Fed also warned all 19 banks' losses could total $599 billion by the end of the year. Traders appeared to welcome the results, which ended at least some speculation over the fate and steadfastness of those firms.

American Express, AXP, charged up some profits with a $2.43 gain. The company is seeking permission to repay the government $3.4 billion in bailout funds that was handed over as part of the Troubled Asset Relief Program. The decision comes after the Federal Reserve said the firm has "no capital need."

AIG moved back up above $2.00 per share as the company recorded its sixth straight quarter in the red, however, in a sign that conditions may be improving, the insurer's loss narrowed to $4.4 billion, 44% below that of the year-ago period.

Energy: This sector was hearting up with plenty of investor buying. AES rose 18%. The electricity generator and distributor's earnings dropped to $218 million, or 33 cents a share, down from $233 million, or 34 cents, earned in first three months of 2008. The consensus of three analysts surveyed by FactSet Research had been for AES to earn 26 cents a share. The energy sector ETF, XLE moved up on the news.

Consumer Cyclicals: No good news for the autos. Toyota, TM fell $1.77, from its 7 month high. The company, recently anointed the world's largest automaker, predicted an annual loss of $8.6 billion, as a sharp decline in sales weighed on guidance. The firm also said it expects global sales to drop 14% during the current fiscal year. MACD’s and Stochastics are rolling down as well.

Good and or bad stocks to watch: TTES, EBAY, BEAV, VAR, CAL, FNF

Homework: None Today

Cheers,
Mike