9:00am (EST)
The bulls took one more step towards breaking another layer of resistance on Thursday as they made a clean sweep of the major indexes. The action this week has been slow-and-steady as the bears lack any follow-through on negative headlines and seem content on giving up ground.
The Dow gained 42 points, or 0.4%, to close at 11,499 after trading up to 11,514. The index is up 89 points for the week as the bulls look for their third weekly win in-a-row. We are still looking for a run up to 11,600-11,700 while support is at 11,200-11,000.
The S&P 500 spurted higher by 7 points, or 0.6%, and finished at 1,242. The index continues to struggle at 1,245-1,250 but a break above here should easily carry the bulls to 1,275-1,300. Support remains at 1,220-1,200.
The Nasdaq jumped 20 points, or 0.8%, to settle at 2,637 after kissing a high of 2,639. Tech is encountering resistance at 2,640 but we are looking for a break above 2,660 as confirmation the bulls could push 3,000. Support is strong at 2,500-2,450.
After the bell last night, Research In Motion (RIMM, $59.24, up $0.06) reported some impressive numbers but shares were only slightly higher in extended trading last night (up 2%, to $60.50). The company reported a profit of $911 million, or $1.74 a share, compared to $628 million, or $1.10 a share, in the year ago period. Revenue surged 40% to $5.5 billion.
Wall Street was looking for earnings of $1.65 a share, on sales of $5.4 billion.
Going forward, RIMM projected earnings of $1.74-$1.80 a share on revenue of $5.5-$5.7 billion. The pencil-pushers were looking for $1.61 a share on sales of $5.46 billion.
In pre-market action, shares of RIMM are up $1.71, to $60.95.
Elsewhere, Visa (V, $67.19, down $9.75) and MasterCard (MA, $223.49, down $25.73) got pounded for losses or 13% and 10%, respectively, after the Federal Reserve proposed regulation for debit card interchange fees, which included a 12 cent cap on any fee for what the Fed deemed “Alternative 1”. Talk about being run over by the bus, the release of the document on the Fed’s website, blinded-sided the market but put option traders quick on their feet made a huge chunk of change in 2 hours.
The news hit the Street shortly after 2pm (EST) yesterday and the Visa December 70 puts (V101218P00070000, $3.20, up $2.98) zoomed 1,350% yesterday folks, after opening at 14 cents! Over 13,000 contracts traded hands. The Visa January 70 puts (V110122P00070000, $4.75, up $3.80) rocketed 400% on the news as 8,000 contracts swapped hands.
And wouldn’t you know it. We had been profiling a strangle option trade on Visa for months but it had stayed in a tight trading range – which we thought would continue into 2011 – and we watching it from afar. Shares had stayed in the $70’s for much of 2010 after a brief trip to $90 back in April, then a sell-off to the Disco era.
If traders continue to hammer these two stocks, we think we have found an even better candidate to ride their coattails on further weakness.
We have a lot to cover in the Members Area and as we head to press, futures are flat. Subscribers, check for the updates.
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