1. Commentary 2. Palm Continues To Surge 3. Precision Trading Tools & Tactics Live Webinar 4. Earnings 5. Current Trades 6. Closing Thoughts ************************************************** 1. Commentary The market made a lot of investors nervous last week as the bears took control on Monday after the World Bank cut its global GDP forecasts. The Dow closed at 8,300 that day and the bears mingled around until Wednesday. That is when the bulls decided to show up and provide support. The big news for the week was Ben Bernanke and his role in Bank of America’s (BAC, $12.75, up $0.40) takeover of Merrill Lynch. He was making headlines right before the FOMC was to announce their decision on interest rates and some circles were accusing of him of a “cover-up.” He was grilled on Thursday and the Wall Street love poured in as the Dow rallied. I have to admit I was impressed with the way he handled himself and you could tell there was a lot he wanted to say but held back. We got some pretty decent earnings reports from Oracle (ORCL, $21.24, down $0.39), Bed Bath & Beyond (BBBY, $31.03, down $0.05) and Palm (PALM, $16.22, up $2.20) but others disappointed like Nike (NKE, $50.84, down $0.44) and Monsanto (MON, $75.25, down $0.41). Existing home sales increased 2.4% according to the National Association of Realtors which was a good sign for the housing sector. Although this number was slightly below Wall Street’s estimates, the market took it as a positive. Lennar (LEN, $9.18, down $0.01) got a 15% pop mid-week after it said orders for new homes leapt over 60% from the previous quarter. This didn’t help KB Home (KBH, $13.42, down $1.35) on Friday though. The home builder missed expectations but narrowed its loss year-over-year. The company did go on to say that they expect a “strong” fourth-quarter. File it. I think the real key for the market bouncing off its lows was the great 7-year note auction we got on Thursday. It was only the 5th such auction ever and the first in like 20 years. It was the best one yet according to some and it provided a backdrop for the bulls to take over the stage. The Dow finished the week down 101 points and closed at 8,438, down 1.2%. The S&P 500 slipped 2 points and finished at 918, or 0.3% lower. It could have been worse but the Nasdaq, however, managed to squeak out an 11 point gain and finished out the week at 1,838, up 0.6%. ************************************************** 2. Palm Continues To Surge Palm (PALM, $16.22, up $2.20) continued its rocket recovery from a 52-week low of $1.14 as it gained another 15% on Friday. The company reported earnings Thursday after the bell and investors loaded up on the stock the minute the market opened. We knew the Pre was going to be a huge hit and the smart-phone has put Palm back on the map. The latest quarter wasn’t anything to write home about, in fact, the firm reported a 4Q loss. However, the loss was less than what Wall Street had expected and analysts are predicting some huge numbers going forward. Most pencil pushers think the company can return to profitability sooner rather than much later. Palm is just one of many players in the smart-phone market and many thought we would get a pullback to $12 when the company announced earnings. They were wrong and one of the biggest reasons was the “short-squeeze” going on. There were a number of heavily traded options in Palm and the most active strike price for the July chain were the July 17 calls (UPYGT, $0.85, up $0.55). These options jumped 180% from their previous close of 30 cents but you still could have made a double on Friday if you were actively following these call options. The July 17’s opened at 50 cents and traded as high $1.05 when the stock reached a high of $16.59. Nimble traders did well spotting the move. It remains too been seen if Palm’s stock can add to its gains in the coming weeks and months but investors have been waiting for a pullback to get in the stock. Many have now piled in and that can be a dangerous game given the other players in the ring (Apple and RIMM) and Palm will need to prove it’s not a one-trick pony. The easy money has been made already in the options and there will be an opportunity for a trade down the road but not now. We have been in and out of Apple (AAPL, $142.44, up $2.58) and Research In Motion (RIMM, $70.66, up $1.36) trades in the past but Palm is one I have been watching from the sidelines. We may have missed the train on the way up but that doesn’t mean there won’t be a trade on Palm in the future. Big things are happening at Palm and if all goes well the company could push for more market share. However, if things don’t go all that well, there may be a chance to buy some put options if there appears to trouble ahead. ************************************************** 3. Precision Trading Tools & Tactics Live Webinar I wanted to take some time this week to tell you about an upcoming event that we have planned in July. To start, a lot of people ask me how I come up with trades or what do I look for and my response each and every time is “price action”. Picking an option trade and figuring out where a stock needs to be for you to break even on a call or put option is easy. Figuring what your potential profits could be is also easy but the key ingredient you need is price movement. Each trader is different and everybody has their own tools and charts they like to use. However, if you are new to options trading, how do you go about learning these things? Well, you find a mentor and listen to every word he speaks. One of our traders, Mike Albright, is going to be doing such a seminar and I’m personally inviting you to attend. I have known Mike for a few years and we talk often about the market and the students we have. He is super bright (hence, the last name) and is very easy going. You will enjoy talking with him. I can tell you he is excited to be putting on this course and I’m so excited I even signed up to sit in. Here is a short introduction from Mike: “As you already know we make our living on price movement. Being able to know when price is going to change direction is everything. And I love what Todd’s already taught you about this, but I’ve got a few other ‘trading tools’ I believe you must learn to make you an even better trader. When you learn how to use internal and external Fibonacci and extension lines along with floor trader pivots and support and resistance lines off of multiple time frames you will be able to create very powerful areas of confluence. Once ‘price’ gets into these zones all you need to do is use one of the price and volume patterns that I will teach you to take the trade – you will then be amazed at the accuracy, consistency and profitability of these trade set-ups. That’s it. As you already know price moves because of the shift in supply and demand. I will personally show you how to recognize these shifts so YOU too will be able to trade them successfully”. His quote to me folks was that he could “make a baby understand charting” if it signed up for this webinar. The stuff Mike will be teaching you is being offered at an incredible rate and you should really give him a call. I’m telling you, even if you just call him, you will convinced of his trading methods that you won’t be able to wait for the webinar which will be on July 11 & 12. We are offering this on a weekend because we know many of you have full-time commitments during the week. Even if you can’t attend the weekend session, you can still sign up and watch the video and presentation at your convenience. Like I said, I plan on being there and I asked him if I could offer everybody who reads the blog the same rate students get. I’m going to provide a link but please make sure when you call, you say you are a reader of the blog or “Rick said that I could get the special rate”. The general public will not get this rate so make sure you mention me or the blog. The link is good for the discount and give Mike a call before signing up. He can explain the webinar in greater detail and he is fun to talk too. His number is 360.697.1573. Thanks everybody and make sure you give Mike a call. I want his phone ringing off the hook Monday morning. (I always razz him because he is on the West coast so the market opens at 6:30am. I’m always up because the market opens at 9:30am here on the right coast)… ************************************************** 4. Earnings Monday: Apollo Group (APOL, $68.50, up $1.18) and H&R Block (HRB, $15.42, down $0.07). Tuesday: Investors Real Estate (IRET, $8.75, up $0.13), Schnitzer Steel Industries (SCHN, $61.36, up $1.16) and Sealy (ZZ, $2.02, down $0.02). Wednesday: Constellation Brands (STZ, $12.28, down $0.22), General Mills (GIS, $55.28, down $0.67), Lindsay (LNN, $33.82, up $1.20) and UniFirst (UNF, $37.40, up $0.43). Thursday: Acuity Brands (AYI, $29.28, up $0.26), Methode Electronics (MEI, $6.94, up $0.06) and MSC Industrial Direct (MSM, $34.90, up $0.37). Friday: Market CLOSED. ************************************************** 5. Current Trades & Closed Trades I will update this section on Monday. ************************************************** 6. Closing Thoughts The Dow finished the week at 8,438 and I echoed the “floor of support” at 8,250 on Monday morning before the opening bell and the Dow closed at 8,300 that day. On Tuesday and Wednesday, the Dow hit a low of 8,239 and 8,246. Then we got a bounce. If it holds then it means we are reading the map right. I have mentioned key levels we are watching for the major indexes in the blog and so far the support and resistance have been right on point. Investors and talking heads blew things out of perspective when the market showed signs of breaking down at the beginning of the week but we held support. I’ve been on the soapbox saying we should see some fireworks in July and not because of the 4th but because of earnings season. The one thing I am seeing is even if 2Q earnings fail to impress Wall Street, the backend of the year is going to be very bullish. If we hold and go higher, we could start to see “new money” come into play which could be bullish for the summer. If not, we drift lower and play the put side of things until the bulls make another charge.]]>