9:00am (EST)
The market traded in a tight range on Monday as a lack of economic news and a light earnings docket before the bell left little clues for the bulls and bears to go off of. Although the President’s new $3.73 trillion 2012 Budget Plan was announced, it had little to zero impact on the market. Obama’s budget includes a five-year freeze on many domestic spending programs and hopes to cut deficits by$1 trillion over the coming decade. Good luck, Gus.
Given last week’s rally, we kind of penciled in a slow start for the bulls but they were able to pick up 2-outta-3 from the bears as they creep closer to our near-term targets.
The Dow slipped 5 points to settle at 12,268 and made a brief trip into positive territory in the final hours before falling back into the red. The index reached 12,276 and we still expect a run up to 12,350.
The S&P gained 3 points to close at 1,332 and held steady for much of the day. We are expecting a pop up to 1,350 over the near-term after the index busted through 1,325 last Friday.
From the Could’ve, Would’ve, Should’ve Department:
We want to talk about Green Mountain Coffee Roasters (GMCR, $46.35, up $2.89) this morning because the stock has been a favorite of ours and is a regular candidate on our Watch List. We have recommended options on them in the past. The weird thing is that Sunday night we saw the Starbucks (SBUX, $33.58, up $0.23) commercial promoting their instant (single-serve) coffee and instantly thought that a deal could be brewing between the two companies, quickly. In fact, we even wrote up a call option trade on Green Mountain at 10:30am yesterday that failed to make it to press because we wanted to close out a few trades before recommending new ones.
The call options we were following were at 28 cents and volume was at 60 contracts. Before the closing bell, volume had swelled to nearly 3,000 contracts. We aren’t sure if there is still a trade here but we investigate “the situation”. All signs are pointing towards Green Mountain making a run to double nickels ($55).
We talk about the calls options in our Members Area that zoomed from 30 cents to $1.50, or 250%, yesterday and they could go to $5 if Green Mountain climbs to $55 over the near-term. However, we don’t like to chase options after the fact and we missed a sweet opportunity but there is always an option trade just like there is always a bull or bear market, somewhere. We just missed a really, really good one.
As we head to press, futures are pointing towards a slightly lower open.
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