The bulls were looking good this morning ahead of the bell as futures were pointing towards a higher open and economic news came out Aces. Although there has been some positive developments concerning Greece, Wall Street has quickly put that scene on its side-view mirror while it now eyes Italy in its rear-view mirror.
The Commerce Department said Durable Goods Orders increased 1.9% in May after falling 2.7% in April. The other bit of “good news” was that the economy grew at an annual rate of 1.9% in the first quarter, up from a previously estimated 1.8%.
As far as stocks, Oracle (ORCL, $31.11, down $1.05) and Micron (MU, $7.30, down $1.13) are dragging Tech down but there are a few standouts.
Peet’s Coffee & Tea (PEET, $55.36, up $0.50) is at double-nickels after hitting a 52-week high of $56.26. Krispy Kreme Doughnuts (KKD, $9.33, up $0.23) is within spitting distance of its 52-week high of $9.47 after trading up to $9.43.
We have been following Peet’s for quite some time and we mentioned earlier this month that we felt shares were headed to $70. We have tried playing options on the stock but they are thinly traded without much open interest and usually carry wide bid/ ask prices. For instance, the August 60 calls (PEET110820C00060000, $1.30, up $1.15) have a “bid” of $1.05 which is what you would get if you sell the options, while the “ask” is $1.45. Only 2 contracts traded today which represents the open interest.
We usually try to split the difference when we see this by using limit prices and in this case we would use $1.25 to try to establish positions if we were officially entering a trade. We have thought about it but we have decided to sit on the sidelines. Consider it a “freebie” if it does well. In any event, we will revisit the PEET story in mid-August and see where they are at.
We often find stocks that look like great investments but there are times where some stocks don’t trade options or in PEET’s case, they are thinly traded. This is one of the reasons we started the Weekly Wrap because money is money and if you can make 20% or 50% by owning a stock then count us in.
Speaking of which, here is an update for our fast-growing publication:
WEEKLY WRAP CLOSED TRADES for 2011: DNDN +9%, PCX +13%, SGEN +26%, TIVO +34%, REDF +11%.
Remember, if you order a 1-year subscription to the Weekly Wrap (or our Daily newsletter) then we will send you a copy of our trading manual, How to Trade Options on Momentum Stocks, at no charge (an $895 value!). All you have to do is sign-up and we ship it to your doorstep, anywhere in the world.
Back to the market…
The key levels to watch into the close are:
Dow 12,004; S&P 1,271; Nasdaq 2,616.
Anything above that, the bulls win. A close below those levels, the bears win the week.
As we head to press, the Dow is down triple-digits, or 106 points to 11,943 while the S&P is lower by 14 points to 1,269. The Nasdaq is off 30 points to 2,656.
We have extended our stay outside and need to get inside to our Members Area. We have a few trades that are doing rather well as our hot streak for June continues. We will be back Sunday night but in the meantime, subscribers, check for the updates.