Incometraderblog

Updated throughout the week
Wednesday’s Close for July 20th, 2011
Written by: Mike Coval

The lack of follow through on the market was a grim reminder of just how volatile and scared this economic recovery, or lack thereof, really is. We had a fantastic rally on Tuesday and yet no one was able to carry it through which would indicate a bullish stance. Until the August 2^nd deadline rolls around for the debt limit vote, we are likely going to see just as many down days as up.
The Dow closed lower by 16 points to 12,572 while the Nasdaq finished down 12 at 2,814.

Energy: Oil has been trading in a very tight trading range for the past two weeks and today only managed to fall slightly. Late in the day, the price of crude futures were trading down $0.22 at $98.26 a barrel. Track the price of crude with the Oil ETF, USO.

Economic News: Fitch Ratings said on Wednesday it will decide next month whether the United States deserves to keep a stable outlook on its AAA credit rating as it concludes a review of the country’s economic and fiscal outlook.

David Riley, Fitch’s main analyst for the United States, said the decision will take into account a final budget agreement in Washington to reduce the country’s deficit in the medium to long term. "To some extent we are a little bit on hold because we want to see what comes out from the current negotiations," Riley told Reuters in an interview, welcoming the apparent progress being made by a group of six Democrat and Republican senators to cut the deficit by $3.7 trillion.

Both Moody’s and Standard & Poor’s have put the ratings on review for a possible downgrade.

Technology: Intel Corp, INTC, trimmed its forecast for 2011 personal computer unit sales, warning of softness in mature markets which caused its shares to fall $0.07.

The top maker of microprocessors for PCs now expects 8 to 10 percent growth in unit shipments of computers this year, down from the low double-digits it had stuck to earlier in defiance of fears that market momentum was decelerating. The news canceled out the better than expected revenue numbers released the night before.

If you’re considering buying the stock for some covered call writing then you might try selling the August $22.00 put for $0.40 giving you a nice cost basis of $21.60 if you are assigned.

Financials: If you like the thought of making money off of debt then take a look at American Express, AXP. The New York-based company posted quarterly earnings for common shareholders of $1.32 billion, or $1.10 a share, compared with $1.00 billion, or 84 cents a share, in the same quarter last year.

Average spending on the company’s cards for the quarter rose 15 percent to $3,767 from the same period a year ago and the number of outstanding American Express cards rose 6 percent to 94 million.

What about buying the Sept $50.00 call for $3.40 and then selling the Sept $50.00 put for $1.30 giving you a debit of $2.10. Your breakeven price is then with the stock at $52.10 or higher and with the stock already trading at $52.09 it shouldn’t take too long.

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Updated throughout the week
Monday’s Close for July 11th, 2011
Written by: Mike Coval

Much of the news I’ve heard today seemed to be geared to a bit of shock over the severity of the selling, only 8 stocks in the S&P 500 managed to close higher. After 8 straight days of buying should we really be surprised to see some profit taking, especially in the current economic turmoil? Much of the selling was triggered by the high yields in Greece’s bonds indicating the chance of default is increasing. Is this news to anyone? Certainly not to Germany…
The Dow closed lower by 151 points to 12,506 while the Nasdaq finished down 57 at 2,803.

Energy: Oil finally hit the skids and saw some downside movement. Late in the day, the price of crude futures were trading down $1.05 at $95.15 a barrel. Track the price of crude with the Oil ETF, USO.

Financials: This segment of the market was hit hard by selling as investors feared a possibly default in Greece would carry over to Spain and Portugal and ultimately into U.S financial institutions that have global investments. Citi Group, CIT fell $2.54 on extremely heavy selling to close just above its 7 month support of $40.00.

Technology: Novellus Systems, NVLS, said its second-quarter profit rose to $64.7 million, or 79 cents a share ($0.03 higher than expected), from $63.3 million, or 66 cents a share, in the year-ago period. Revenue rose to $350.2 million from $321.4 million last year. The news was bullish, the stock is undervalued and I have to think selling an August $33.00 put for $0.90 or greater would lead to an excellent entrance for someone wanting a quality stock for writing covered calls.

Basic Materials: Typically the stock to kick off earnings season is Alco and as Alco goes, generally the rest of the stocks go. Alcoa, AA, closed down $0.47 on heavy trading. After the closing bell the company reported a second-quarter profit of $322 million, or 28 cents ($0.33 was expected) a share, up from $136 million, or 13 cents a share, a year earlier. Revenue rose to $6.59 billion from $5.19 billion a year ago.

That’s it for today but a word of caution though, the market still has some more selling to take place before it completes its retracement and gives back some of the fantastic rally we had in late June and early July. So until you see a couple of neutral days and then some positive market wide news, it may be best to keeps your trade a little more neutral.

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Updated throughout the week
Tuesday’s Close for July 7th, 2011
Written by: Mike Coval

So with all the recent positive trading days, is the market slump over? Have we accepted the high unemployment, the Greek and Portugal fallout and the current housing market? Is it safe to say we’ve been cured and now only seeing blue sky ahead? Probably not but we can accept the bullishness over the past 2 weeks be happy with what we have. The Dow closed higher by 93 points to 12,719 while the Nasdaq finished up 39 at 2,873.

Economic News: Thursday’s boost came with encouraging news about U.S. employment and retail sales, suggesting the economic recovery might be on more stable ground. Automatic Data Processing’s June jobs survey showed U.S. private-sector jobs rose by 157,000 last month, well outstripping economists’ forecasts for a gain of below 100,000.

Energy: Oil continues to rally with another strong move up. Late in the day, the price of crude futures were trading up another $0.12 at $98.89 a barrel. Track the price of crude with the Oil ETF, USO.

Financials: J.P. Morgan Chase & Co, JPM, gained $0.76 after its private-investment arm agreed to buy outsourcing-services company APAC Customer Services Inc. for $470 million. JPM has a Fair Value price of $58.20 and an Average Analyst’s Target price of $55.80

Retail: A few stores reported month over month store sales today with most of the news to the upside. Costco Wholesale Corp. COST, exceeded same-store sales estimates. Initially the stock moved higher on the news but faded slightly. With support at $81.50, a conservative investor might want to look at the August $80.00/$77.50 Bull Put Spread.

Technology: KLA Tencor KLAC, closed up $2.79 on heavy institutional buying after UBS upgraded the semiconductor equipment maker to Buy from Neutral. Lots of volume today on the July $42 calls, perhaps investors are thinking the momentum will continue into next week’s expiration. With the current July $42 call costing $1.45 leaving you a breakeven stock price of $43.45, perhaps a better trade would be to sell the July $41.00 put for $0.50 leaving you a breakeven price of $40.50. Any close above that would then be a profit.

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Tuesday’s Close for April 19th, 2011
Written by: Mike Coval

We’ll take a day of some moderate buying. Not much though but enough to give the markets a rest from the bad news, S&P downgrades and earnings. The Dow closed higher by 65 points while the Nasdaq finished up 10 at 2,744.

So what is it that will finally cause our markets to continue a selling spree vs. the choppy reactions we’re experiencing now? It’s certainly not news of a downgrade on our U. S. government credit rating from Standard & Poor’s

Energy: Oil continues to be in play with another move up. Late in the day, the price of crude futures were trading up another $0.12 at $108.40 a barrel. Track the price of crude with the Oil ETF, USO.

Economic News: U.S. home construction in March bounced back from the previous month’s low levels, though overall numbers for the sector remained weak.

Consumer Staples: Two names must be better than one, or at least that’s how investors took the news on Johnson& Johnson, JNJ. The stock gained $2.23, or 3.7%, to $62.69, after the blue-chip health-care and consumer-products company beat first-quarter earnings expectations and raised its full-year earnings outlook. How about a covered call, or better yet, how about buying the October $50.00 call and then selling the Mat $62.50 calls for a sweet diagonal trade?

Basic Materials: Forging higher, materials stocks were in the news. Steel makers U.S. Steel, X and AK Steel Holding, AKS gained ground each after Steel Dynamics, STLD reported a surge in profit, thanks in part to rising prices for the metal. AKS has earnings scheduled for release on April 26^th. Today the stock bounced up off support on good buying volume. How does selling a naked May $15.00 put sound for anyone thinking of a bullish trade?

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Updated throughout the week
Thursday’s Close for April 14th, 2011
Written by: Mike Coval

Flat, flat, flat, flat, flat… That is unless you are thinking of trading some of the commodities, like gold or oil. If it’s the stock side you’ve been watching then you’re likely to be just a bit bored as you wait for a real signal to jump back in. The Dow closed up a measly 14 points while the Nasdaq finished down 1 at 2,760.

Energy: Oil is still trying to trend higher. Late in the day, the price of crude futures were trading up another $0.43 at $108.11 a barrel. Track the price of crude with the Oil ETF, USO.

Consumer Staples: Not all news was tasteless, SuperValu, SVU, gained $1.53 on strong institutional buying after The company reported a drop in fiscal fourth-quarter earnings that was smaller than analysts had expected and projected results for the new year that topped Wall Street’s view.

Consumer Cyclicals: Toy maker Hasbro, HAS, reported some bad news, sending its stock price down $1.39 after its first-quarter earnings fell 71%, missing analysts’ estimates.

Technology: A strong stock had some strong selling, Fairchild Semiconductor International, FCS shares dropped 5% after the chip maker said the crisis in Japan has not yet translated into any new business. The selling was great news to those who have been waiting to buy into this high flyer. A pullback to the $17.00 level should provide an excellent entrance.

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Wednesday’s Close for Feb 2nd, 2011
Written by: Mike Coval

For all of you bullish investors out there, this week to date, has to feel pretty good. I especially like what we saw on Tuesday with both the Dow and S&P moving above resistance levels. Now were just waiting on the Nasdaq. The S&P 500 closed down 4  while the Nasdaq closed down 2.

Middle East protests continued even after  Egyptian President Hosni Mubarak announced he would not seek re-election this fall. Traders are concerned unrest could prompt closure of the Suez Canal or spread to other countries. Oil was up slightly. Late in the day, the price of crude futures were trading up $0.18 at $90.95 a barrel. Track the price of crude with the Oil ETF, USO.

Mattel Inc.’s, MAT, shares advanced 1% after the toy maker reported improved sales across its major divisions and increased its dividend by 11%, raising the quarterly payout to 23 cents a share, the overall trends lends the stock to a potential covered call candidate.

How sweet it is… Hershey, HSY, shares gained 3.7% after the candy maker reported that its fourth-quarter earnings rose 6.9%. as it posted sharply lower restructuring charges, while sales and margins both improved.

A couple of stocks that I’m keeping my eye on are SanDisk, SNDK, this one is starting to rally up from its oversold $45.00 support and Trina Solar, TSL which is bouncing up off a $26.00 support on increased volume.

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Wednesday’s Close for Jan 12th, 2011
Written by: Mike Coval

We’re seeing some continued buying at the highs indicating the institutions are still bullish on the overall outlook. This means we must be slightly more bullish as well, however I’m still waiting for a slight retracement before looking at buying any calls. The S&P 500 closed up 11.48 while the Nasdaq closed up 20.50.

We are into earnings season and plenty of big name stock coming out with this week and next. Be careful with your trades as any of these larger companies could induce a bit of profit taking with some negative news, especially at these overbought levels. A few of the larger ones to watch include INTC, INFY on Thursday and JPM on Friday.

A couple of stocks that are gaining some momentum and might be worth checking out are Lithia Motors, LAD and Ingram Micro, IM.

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Monday’s Close for Dec 20th, 2010
Written by: Mike Coval

We started with a bit of selling but then the market participants decided that the day should ultimately end flat and non directional. The S&P 500 closed up 3.17 while the Nasdaq closed up 6.59. The rest of the week may be similar to today’s move as the holiday season is likely to keep many investors away from their trading screens. For those of you who are determined to trade, selling time, and not buying time, is the preferred way to trade with all the market closes and ½ days.

A couple of stocks that might be worth checking out are MGM Resorts International, MGM and Ford (ascending triangle pattern), F.

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Wednesday’s Close for Dec 14th, 2010
Written by: Mike Coval

The day started with some buying and it even looked like we were going to see some buying across all sectors but the Fed came out at 2:15 and said the economy was still sluggish (meaning unemployment is going to remain high) and that it will take some time before any real economic recovery would be seen. Reading between the lines tells us that conservative trading is best for now.

A couple of stocks that might be worth checking out are AutoDesk, ADSK and Iron Mountain, IRM.

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Wednesday’s Close for Dec 8th, 2010
Written by: Mike Coval

I wish there was a bit of good news or even some bad news to write about for today but the day was flat and uneventful. Four days now and now clear direction as to what the market will do next. I am expecting to see some gains however between now and the end of the year. A couple of stocks that might be worth checking out are Costco, COST and Ruddick, RDK.

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