9:10am (EST)
The bulls made it 4-in-a-row following Thursday’s break past resistance after the U.S. Federal Reserve and the ECB (European Central Bank) led the latest efforts to save Greece. A group of five major central banks (Bank of England, Bank of Japan and the Swiss National Bank are the other 3) said they would provide the European banks with “unlimited dollar loans” to support Europe’s financial system which ignited a global rally.
There have been worries all week that the banks could take a hit from their holdings of Greek government bonds and other struggling countries like Portugal, Ireland, Italy and Spain (PIIGS) but each day the news seems to be improving. The news helped lift the Financial stocks which were strong all day and may have made a key reversal.
Bank of America (BAC, $7.33, up $0.28) jumped 4%, Goldman Sachs (GS, $107.97, up $3.43) added 3% while Morgan Stanley (MS, $16.59, up $1.11) surged 7%. Our favorite of the group, JPMorgan Chase (JPM, $33.81, up $1.01), rallied 3% but is still down over 30% from its 52-week high of $48.36.
Of course, the big news we want to talk about before we go over the major indexes is Research in Motion (RIMM, $29.54, down $0.18) which tanked nearly 20% in extended trading last night after reporting earnings.
The company missed expectations by 7 cents after announcing a profit of $419 million, or $0.80 a share, on revenue of $4.17 billion. Analysts were expecting revenue of $4.47 billion.
RIMM’s Playbook and its answer to the iPad never was or will ever be a threat after shipping only 200,000 units. Expectations were for at least a half-mill (500,000) which Apple (AAPL, $392.96, up $3.66) sells in 3 days.
No need to go over the numbers any further because we have been telling our subscriber since last week that a drop back to the low $20’s could be in the cards.
Wall Street gave us a gift on this one when shares made a move back above $30 by the end of August. We knew resistance at $32 would be strong and with earnings coming up we used the opportunity to recommend put options to our subscribers. We should get a nice, fat payday this morning as we will look to close half of the trade into weakness.
This morning in pre-market action, shares are down $6.96 to $22.58. Ka-ching!
In May, we recommended shorting RIMM in the $40’s and our subscribers made 60% in 3 weeks. Two days later, we told our subscribers to go back to the well and recommended July 32.50 puts which returned 357% 2 weeks later.
Our current trade for RIMM was recommended last Tuesday and we should make triple-digits on the put options at the open. Subscribers, pay close attention to the specific details this morning on how to maximize our profits.
As far as the major indexes, we loved the moved past our first level of resistance and we have been saying all week the bulls would be looking to push the top of the current trading range. From here it gets interesting…
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