9:00am (EST)
The bulls and bears traded blows once again on Thursday, this time the bulls won yesterday’s round as the two sides head into today’s rubber match. Things didn’t look too good for the bulls before the open but futures turned on a dime and the bulls never looked back.
The Dow added 423 points, or 4%, to finish at 11,143. The index traded to a high of 11,278 and closed just below our 11,200 target as expected. The next level of resistance will be 11,350-11,400 while support remains 10,800, then 10,600.
The S&P jumped 52 points, or 4.6%, to settle at 1,172. The index easily breezed thru 1,140 and 1,160 and traded to a high of 1,186. Heading into today’s session, the bulls will try to reclaim the 1,175-1,200 levels while the bears eye support at 1,125-1,100.
The Nasdaq zoomed 112 points, or 4.7%, to end at 2,492. Tech was able to trade above the 2,500 level, to a high of 2,516 but ended just south of this region. This area will serve as slight resistance with 2,525-2,550 being the next hurdle. Support is strong at 2,350.
Despite the market’s overall solid performance, one stock we often talk about got hammered, SodaStream International (SODA, $45.56, down $23.25) as shares fizzled nearly 35%. The company reported earnings before Thursday’s bell and traded to a low of $40.90 yesterday after keeping its 2011 forecast in-line.
SodaStream reported profits of $7.3 million, or $0.35 a share. Excluding write-offs, the company would have reported earnings of $0.42 a share. Revenue surged nearly 40% to nearly $77 million.
The suit-and-ties were expecting earnings $71 million, or $0.28 a share, for the quarter.
Despite solid results and sweet growth, shares were slammed after SodaStream held guidance for the current quarter after raising it last quarter.
We peaked at the options on Wednesday but the premiums, especially on the calls, would have cost an arm-and-leg. We thought about the put options as a strangle trade but growth has been so strong we figured the company would announce a blow-out quarter.
Too bad. The August 45 puts (SODA110820P00045000, $3.00, up $2.30) soared 328% and were going for 70 cents at Wednesday’s close.
We aren’t sure if the stock is now a “Buy” or a “Blue-Light Special” but we will keep watching for another opportunity to go long or short. The company’s home beverage carbonated systems are selling well and we have a feeling management is sandbagging their numbers because the second half of the year in sales is normally SodaStream’s bread-and-butter. However, costs are increasing and it has yet to be determined if their system is a viable long-term product or just a passing fad.
As we head to press, Dow futures are up 84 points to 11,168 while the S&P 500 futures are advancing 10 points to 1,178. The Nasdaq futures are showing a pop of 12 points to 2,170.
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