11:45am (EST)
We were pretty long-winded this morning and we talked a lot about next week, ranges, geopolitical events and trading instincts. So what would change our mind about NOT having a rocky expiration week? S&P 1,325 today.
We all knew the market was opening lower this morning but even with today’s slight drop at the open, we never really felt support would be tested.
We said yesterday morning going forward we will be watching Dow 12,100-12,000; S&P 1,307-1,300; and Nasdaq 2,750-2,700 for support.
To the upside we still expect Dow 12,300-12,350; S&P 1,325-1,350; and Nasdaq 2,850-3,000.
Folks, sometimes you can almost taste these numbers and say them in your sleep but these levels are so important right now. Needless to say, we should have a VERY interesting close today and will figure it all out on Sunday when we do our chart work for the Weekly Wrap.
For those of you who don’t know about our WEEKLY publication, the Weekly Wrap is designed for the investor who likes both stocks and options or just stocks. Some of our subscribers are new to options and use the publication to trade stocks while learning about options.
We profile covered call option trades which are intended to reduce your cost in a stock by writing monthly options to collect the premium. We are using stocks that we feel are “undervalued” or ones that are showing momentum to build a solid portfolio. This newsletter is for the “long-term” investor and aims for double-digit profits on a monthly basis.
The Weekly Wrap is also a great way to start your research as we profile two different companies each week. This past Sunday we profiled eBay (EBAY, $34.19, down $0.30) at $32 and said we loved their PayPal business AND their upcoming IPO for Skype. Wouldn’t you know it, two analysts on Wall Street came out with upgrades but we were a step ahead.
In fact, here were our opening comments as we think shares could double from current prices over the next year (quotes from 2/6/11):
“We wanted to take a quick look at eBay (EBAY, $32.21, up $0.16) which owns Skype, and is one of the fastest growing voice-over-internet (VOIP) services out there. The company has been planning to spin-off its Skype unit for years, and now might be the time they can cash in.
But EBay is more than just Skype. They own PayPal, which now has been accepted in China. The company has also released an app for Paypal making it easy to buy stuff from its website from iPhones and smartphones. This opens a huge opportunity for the EBay, makes it easy for people to get great deals online, and increase PayPal’s bottom line.
Their price to book ratio is about half of the industry’s average. Thus, could the stock be selling for half off? Let’s look at the technical picture.” (END)
On January 30, we took a look at Green Mountain Coffee Roasters (GMCR, $42.95, up $0.99) and said in our Members Area the stock could go to $40 (quotes from that day):
“Green Mountain Coffee Roasters (GMCR, $33.76, down $0.91) reports first quarter earnings Wednesday February 2, after the bell. The company will host a conference call at 5:30pm (EST). Investors can tune in at http://investor.gmcr.com/events.cfm or call (802) 882-2899 to arrange to listen to the conference call by telephone. Despite conflicting views, it seems that the company will beat expectations.
There are a lot of analysts who are concerned about the high P/E, high margin, and increasing inventories. Speculation is that the high profit margin won’t continue and growing inventories are expected to squeeze margins. Others gurus of the stock have noted that the increasing price of coffee beans will squeeze profits and let’s not forget last September’s announcement of the company’s accounting irregularities which has led to investor lawsuits.” (END)
On January 16 we profiled Atmel Corporation (ATML, $15.93, down $0.16) at $13.91 and said this:
“Shares were trading in the $5-$6 back in August and have more than doubled since then. The all-time high is just north of $25 which was set back in the dot.com bubble of March 2000. If shares can clear $15 over the short-term then there is a chance for a run to the upper-teens. We would have a tight stop of $12 on it if you are interested in “trading” this name.” (END)
The key to finding great option trades is research and you can never get enough of that. Our Daily newsletter and Weekly newsletters are great ways to start. We also mentioned our trading manual, How to Trade Options on Momentum Stocks, and our videos. Why are we doing all of this?
Well, because THIS weekend only, we will be offering our trading course for free (a $599 value including FREE shipping) if you purchase a one-year subscription to either our Daily newsletter which comes out twice a day or our Weekly Wrap which comes out on Sundays.
We have a ton of new subscribers and we thought we would offer this deal because we haven’t done it in a while. You can read more about our option trading course here.
Also, we wanted to remind you we have another new auto-trading partner. We are looking forward to working with Stifel Nicolaus and we have some contacts for you if you are seriously interested in them doing all of the work for you. In other words, if you want to trade our picks but are busy during market hours, they will do all the work for you.
The auto-brokerage firms we use get the same emails our subscribers do and they place all of the trades instantly. And don’t worry about fill prices, our trades are placed within seconds of them getting the trade and it is usually right on, give or take a few pennies, and sometimes at better prices.
We know we have thrown the kitchen sink at you today but as you can tell, we are really excited about this market and we want you on board. We want to teach you how to play up markets but more importantly we want you to be able to play down markets, volatility, and trading ranges as well.
There is no better time to join us as you can see and at an incredible offer. We hope you make the commitment.
And this just in, the S&P has broken 1,325!
Egypt’s Vice President has said that Mubarak has resigned. Wow. Ding-dong the witch is dead, the witch is dead and Egypt is rocking.
We are going to press early because we have a NEW TRADE and some IMPORTANT trade adjustments and here are the numbers:
The Dow up 12 points to 12,240 while the Nasdaq is higher by 7 points to 2,797.
The S&P 500 is showing a pop of 4 points and is at 1,325!
We will be back Sunday night and enjoy your weekend. Monday and next week should be interesting. A number of our trades are getting a pop on the breakout…
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