Tag Archives: Call option

Week Ahead for Stocks, March 30 – April 3, 2009

Weekly Recap (March 16 – 20, 2009): Stocks made some historic progress …. gained for three weeks in a row, the largest move since 1938.  It was a huge 3-week rally.  However, markets stuttered a little bit on Friday heading into the weekend mostly from profit taking.

On Friday, the Dow fell by 148 points or 1.9% to end at 7776.  The S&P 500 fell 16 points or 2% to end at 815, while the Nasdaq lost 41 points or 2.6% to end at 1,545.

Index

Started Week

Ended Week

Change

% Change

YTD %

DJIA

7278.38

7776.18

497.80

6.8

-11.4

Nasdaq

1457.27

1545.20

87.93

6.0

-2.0

S&P 500

768.54

815.94

47.40

6.2

-9.7

For the week, the Dow rallied 6.8%, the S&P 500 gained 6.2% and the Nasdaq rose 6%.  For the month so far, the Dow is up 10.1%, the S&P is up 11% and the Nasdaq added 12.2%.  The S&P 500 is now up 22.4% from its March 6 low of 666.8 points.

The bulk of the gains however were made on Monday with the major indices gaining over around 6% on the news of Treasury Dept releasing details on its plan to remove troubled assets from the balance sheets of banks.The gains continued, albeit modestly through rest of the week, building on some better than expected data from the housing sector, February durable goods, and final 4th quarter GDP.

Believe it or nor, the treasury auctions usually a non-market event, turned out to be a major market mover this week due to some saber rattling by China by its negative comments on US debt.

Tim Geithner and Ben Bernanke appeared before Congress during the week.  Geithner also appeared on Sunday morning media circuit touting administration’s ideas and plans to jump start the economy.  Geithner is looking more and more confident, and markets are slowly warming up to the new Treasury secretary.

In the end, all ten sectors posted solid gains for the week.  Financials advanced 12.2% , industrials gained 10.5% and consumer discretionary advanced 8.8%.

TaurusTrader had a phenomenal week.  Seven positions in the swing portfolio achieved profit targets, ranging from 8.6 to 47.4%.  The positions that hit profit target, hence closed were – TCK, MELI, BMC, RY, CPRT, BX, and WSM.  Also, the April 12.50 call option in WDC (WDCDV) was also closed netting 100% profit. Please refer to my earlier posts for details.  None were stopped out.  TaurusTrader also had several successful day trade opportunities for 2 to 5% profit per trade in several recommended equities – FAS, MS, WFC, TNA, and BAC.

At the end of the week, TaurusTrader was long in – WNR, AGU, AMR, MBT, FCN, MDR, HNT, RIO, HON and BAC.

Week Ahead, March 30 – April 03, 2009: Markers are in oversold condition. Some pull back is possible, especially at the opening on Monday.  Like in previous weeks, markets will mostly be driven by news coming out of DC on auto industry bailout and banking regulations.   The G-20 meeting of finance ministers on April 2 is another media event that could have some impact on currencies.  We may need to keep an eye on how the bond and treasury auctions go. There will  be a hearing on mark to market accounting which could impact the markets.  Fed Chair, Ben Bernanke and Vice Chair Don Kohn are scheduled to speak on Friday in separate events.  On the earnings front, 52 companies are scheduled to report this week – the last week before the “official” start of 1st quarter earnings.  Some important reports that I would be watching are:

  • Monday:  CALM, LAYN, SNP, CHT
  • Tuesday: APOL, BGP, GIGM, LEN, SAH
  • Wednesday: WOR
  • Thursday: AYI, MDRX, LNN, MU, MON, RIMM
  • Friday:  AZZ

For details on earnings calendar, please visit: http://www.zacks.com/commentary/10445/Earnings+Preview+for+Mar+30+-+Apr+3

Economic Calendar: Following economic news might have impact on the markets –

For details, please refer to:   http://online.barrons.com/public/page/barrons_econoday.html

  • Monday: None
  • Tuesday: 1) 9:00 am, Mar. Consumer confidence (27.0 up from 25.0);  2)  9:00 am, Jan. S&P/Case-Shiller home price index, (unchanged -18.5%);   3) 9:45 am,  Mar. Chicago PMI (34.7, up from 34.2);
  • Wednesday: 1) 8:15 am, ADP employment change; 2) 10:00 am, Feb. Construction Spending (-1.6% up from -3.3%);  3) 10:00 am, Mar. ISM index (36.5 up from 35.8)   4) 10:00 a.m. Feb.  pending Home sales (-2.0% vs -7.7%);   5) 10:30 am, US Energy Dept Oil Inventories For Mar 27;  6) 2:00 pm. Mar. Auto sales.
  • Thursday: 1) 8:30 a.m. Initial Jobless Claims For Mar 28 Week;  2) 10:00 am, Feb. factory Orders (-0.3% vs -1.9%;
  • Friday: 1) 8:30 am, Mar. Av. work week (33.3 unch.); 2) 8:30 am. Mar. Hourly earning (0.2% unch.);  3) 8:30 am, Non-farm payroll (650 K); 4) 8:30 am, Mar. Unemployment rate (8.5% vs 8.1%); and 4) 10:00 am, Mar. ISM services index (42 vs 41.6).

Picks for Monday, March 30: The big question on every ones mind on Monday would be “whether the rally of the past 3-weeks is real, can I jump in or wait on the side lines”.  No major economic data or earnings releases are slated for Monday.  So, it would be somewhat challenging to predict how the markets would react.  I thought  Geithner did OK with his media appearances over the weekend.  But, it may not be enough to move the markets.  I’m going to wait it out.  I’ll not have any picks for Monday for our swing portfolio.  I’ll watch my positions with tight stops.

I will keep the following stocks on my radar through out the week for possible inclusion in swing portfolio or for day trading opportunities:

ORLY, NFLX, DRYS, DSX, IPI, MOS, MON, RIMM, AXP, BWLD, AMZN, WDC, MELI, FAS, WFC, BAC, MTH, IYT, COV, HUM, DE, ARO, FOSL, and GME.  Also, Gold (GLD, DZZ or DGP) and Gold mining stocks (XME, GOLD, AUY).  I expect some accelerated “directional” movement to occur with Gold and Gold related stocks in the next few days.

As in past few weeks, I expect considerable volatility associated with financial stocks.  So, I’ll be looking at the following for day trade opportunities:  FAS, WFC, BAC, and MS.

If there are questions or comments, please do post …..

Have a great week and happy trading.

TaurusTrader

http://www.taurustrader.wordpress.com

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WDC sold for 11.8% profit ….

TaurusTrader sold position in WDC for $17.10 for a nice 11.8% profit in a little over 2 days!!  WDC was bought on 3/10/2009 for $15.30.

The call option position, WDCDV (WDC April 12.50 call) is also appreciating nicely, and is up over 67%.  Last time I checked it was trading at $5.00.  The call was bought on 3/6/2009 for less than $3.00 per contract.

It is a nice day in the market …. hope you are having a great day too …

I’ll post the market recap and my picks for tomorrow later in the evening!

TaurusTrader

Stocks to Watch for Thursday, March 12, 2009

Wednesday’s Recap:  A gain is a gain however small it is.  In a rather choppy trading, major indices eked out small gains to close in positive territory two days in a row in over a month!   Dow closed up 4 points, S&P gained 1.7 points, and Nasdaq fared slightly better gaining 13.4 points.  Dow failed to clear 7000, ending at 6930, S&P closed at 721.4, and Nasdaq stood at 1371.6 by the end of the day.  The financial and technology sectors held up OK, while the energy sector gave up as crude dropped 7.4%.

TaurusTrader again had a great day!  MS gapped up at open, way surpassing our target exit price.  I closed MS position immediately after open at $22.68 for a profit of 20.1% in less than 24 hours.  BIG received an upgrade this morning, and our April 15 call (BIGCC) hit our target of $5.10, for a net gain of 70%  in 4 trading sessions.  I suggested buying BIGCC on Friday the 6th, for less than $3.00. 

Our picks for today, DRYS and MBT did not hit the entry limit, hence were not bought.

As of the end of March 11,  TaurusTrader swing portfolio had following positions:

1.  CPRT – filled on March 10 @ $27.60, closed today at $28.19 for an unrealized gain of  2.1%.  Target $30.30

2.  WDCDV (WDC April 12.50 call) – filled on March 6 @ <3.00, today’s close $4.30, gain 43%.  Target $6.00

3.  WDC – filled on March 10 @ $15.30, closed today at $16.57.  Unrealized gain 8.4%.  Target $17.10

4.  SOHU – filled on March 10 @ $46.17, closed today at $49.06.  Unrealized gain 6.3%.  Target $50.50

5.  BMC – filled on February 24 @ 29.46, closed today at $28.53.  Unrealized gain -3.2%.  Target 32.00

In the past few days, we closed out MS (twice), C, SWHC, JOYG, BIGCC, WFC, and MELI for some hefty gains.  At the same time we also took some losses from UYG, PALM, PBR and ATHR after being stopped out (Please refer to my earlier blog posts).

Focus list for Thursday, March 12:  Next couple of days will be pivotal that might determine the direction of the markets for the short run.  Number of market influencing events will be taking place – 1) Traders will be watching the congressional debate tomorrow on mark to market accounting practice, 2) Treasury secretary Tim Geithnerwill be testifying before senate budget committee tomorrow, 3) advance retail sales for February are due tomorrow, along with January business inventories, and weekly jobless claims data, and 4) G-20 meeting on financial crisis and to devise coordinated efforts to mitigate the crisis.

I’ll be watching the following stocks to add to TaurusTrader swing portfolio:

1.  FCN – buy above $47.80, Target $52.00, Stop $45.15

2. MDR – buy above $13.40, Target $16.00, Stop $11.50

3.  BX – Buy above 6.31, Target $7.50, Stop $5.40

Energy stocks might see some volatility heading in to OPEC meeting over the weekend.  Technology stocks are expected to gain more on advances already made.  Banking stocks might fluctuate widely during and after the mark to market congressional hearing.  Ag and fertilizer stocks are on tear, and I expect it to continue.  So, I’ll be concentrating on following stocks for quick day trade and swing trade opportunities:

HP, HPQ, MELI, WFC, JPM, UYG, MON, AGU, and IPI.

If there are questions or comments, please do post …

Happy trading ….

TaurusTrader

http://www.taurustrader.wordpress,com

Stock to Watch for Tuesday, March 10, 2009

Monday’s Recap:Markets ended lower again, ninth time in 10 days, not withstanding news of multi-billion dollar mega merger in pharma. World Bank painted a very gloomy picture for world economy, and indicated that the world economy would shrink for the first time in 2009 since World War I. It also predicted that the global industrial production would fall by 15% over 2008 levels. Mr. Warren Buffet, the Oracle of Omaha, also painted a negative picture by saying that the economy “has fallen off a cliff”. In the end, it was too much negativity for the markets to shake off. By day’s end, Dow was down by 1.21% or 90 points and closed at 6547. S&P lost 6.85 or 1% to close at 676.53. Nasdaq ended the day at 1268.6 after losing 1.95% or 25.2 points.

There is M&A excitement in Pharma sector. MRK just inked a $41.1 billion merger deal with SGP. This follows two other mega deals between PFE and WYE, and Roche and DNA. Of course, this has sparked rumors about other potential M&As in this sector. This might potentially impact stock price of companies involved in the rumor mill. JNJ, BMY, SNY, LLY, AMGN, and NVS are some names that might buy others or be bought!

Energy and banking sectors gained, while basic materials and technology were losers. Big names like IBM, AAPL, MSFT, GOOG and HPQ ended in red and were a drag on major indices.

Today’s TaurusTrader pick WFC had a great day gaining over 15%. Similarly, from the watch list, BAC also had a phenomenal day (up over 17%). Thursday’s pick, JOYG was triggered and bought today at $18.00 a share. By the end of the day, we were long on WFC, JOYG, and BMC. We also have call options on WDC and BIG.

Picks for Tuesday, March 10: Banking stocks will be interesting to watch. We may see further uptrend through March 12, the date when Congress holds hearing on mark to market accounting practice. The outcome of the hearing will have a tremendous impact on financial stocks. BAC, UYG, and WFC will be on my watch.

Day trade watch list include Ag stocks – MON, AGU and IPI. 

Other than these, I do not have any specific recommendations for tomorrow at this time. But, if I spot any thing, I sure will post immediately.

Good luck trading.

TaurusTrader

http://www.taurustrader.wordpress.com

Watch List for Friday, March 6, 2009

Thursday’s Recap:  So much for that one-day rally on Wednesday …. Things got back on to the downside in a hurry today, recording 5 down days out of past 6 trading sessions.   Historic record for lows kept falling  with both Dow and S&P.  Nasdaq barely closed above November 21, 2008 low.

Bad news were abundant – survival of GM in question, continued worries with GE capital, City trading like a penny stock, banking sector woes getting worse and now spreading to somewhat healthier banks, poor jobs data, deteriorating housing value and mortgage crisis, confusion abound from law makers, Obama administration still mum on banking solution, disappointing news from China on additional stimulus, market wizards on CNBC huffin’ & puffin’,  etc etc etc.  Hardly anything positive.  Result – another day of bloodshed on the street and end to yesterday’s sucker rally. 

Even though the decline was wide spread across sectors, the financial stocks were mercilessly clobbered.  JPM and WFC recorded multi-year lows and City now trades like a penny stock.  The disappointing news from China on additional stimulus did not go well for Basic materials, transportation, energy, and shipping stocks.  They lost way more than what they gained on Wednesday on the heel of positive rumor. 

Dow closed at 6594 (-4.1% or -281.4 points), S&P at 682.5 (-4.3% or -30.3 points), and Nasdaq at 1299.6 (-4.0% 0r 54.1 points).

None of our picks for Thursday (JOYG, MS, MR, SOHU and WDC) triggered.  But, some stocks on watch list had a decent day.  BKE, WMT, and ADBE had nice gains.  We were stopped on PALM (-7.7%).

Picks for Friday, March 6, 2009:  I do not have any stock picks for Friday.  It is too risky to go long before the release of unemployment numbers.  Market is extremely jittery and full of negative sentiments.  DEFENSE is the name of the game.  I still believe that the selling is overdone.  There are a bunch of ‘good’ stocks that got punished unfairly along side some deservedly bad ones.  Sanity will prevail and these stocks will get positive attention eventually.  I’ve PATIENCE, I’ll wait.  I have some defensive plays in the mean time that might pay off while we wait …. I’m going to suggest some ‘option’ plays that would allow us to risk a lower capital.

1.  Buy BIGCC April 15 Call on BIG for $3.00 or less.  Unwind the position if BIG drops below 14.90 by April 3.  Thrifty discount retailer BIG reported great earnings yesterday.  The stock responded well to the report, and it closed at $17.04 today.  The option premium is relatively cheap.  And, there is a good potential for upside move.  My target is 70% before April 3. 

2.  Buy WDCDV April 12.50 call on WDC for $3.oo or less. Unwind the position on April 3 or earlier if WDC drops below $12.50 or you have 100% profit.  The option premium is relatively cheap. WDC closed at $14.50

You may want to look at NLY.  The stochastics on this stock is very oversold.  There is some level of support around $12.00.  NLY closed at $12.50 today.  It was in the positive territory for most of the day before losing steam just before the close.  NLY yields a hefty 15% annually or around $0.50 a share per quarter.  Best strategy is to buy the stock, and write “out of the money” covered call option – collect the premium, and collect that hefty dividend, while you wait for the stock to appreciate. 

Good luck and have a great weekend ….

TaurusTrader

http://www.taurustrader.wordpress.com