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Thursday, October 14th, 2010
General Electric (NYSE:GE) reports earnings tomorrow before the open. GE has been a leader in the recent rally and has been a major influence on the price of the Dow Jones Industrial Average (DJIA) to the upside along with Caterpillar (NYSE:CAT). GE does not tend to be a volatile stock when compared to its Dow Jones peers. Even though GE is not an extremely volatile stock (relatively speaking) earnings reports can spur abnormal volatility.
Fundamental Analysis
GE obviously has its hands in many different pies spanning across several industries. This can make the shares hard to value, as can the sheer enormity and complexity of the company itself. (more…)
Tags: Earnings, GE, General Electric, Risk Reversal, Synthetic Stock
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Thursday, October 14th, 2010
Google (NASDAQ:GOOG) is one of my favorite stocks to trade, simply because I know it well and its high stock cost makes it a great potential candidate for option strategies. You should get to know any stock before placing a trade. The more intimate you are with a stock, the more prepared you will be.
GOOG, in typical fashion, reports earnings today, just before October expiration tomorrow. For some traders, using October options to trade GOOG just ahead of the report can be a way for them to speculate on the movement (or lack thereof) in the tech giant. This front-month action can be a risky proposition and will tend to give traders a more binary result, with little or no time to spare.
For most of us, having a little bit of breathing room when it comes to days until expiration may be the preferred choice, if we are not looking for a dramatic (and nearly immediate) resolution. (more…)
Tags: Bull Call Spread, GOOG, Google, Ratio Put Spread
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Friday, October 8th, 2010
Wednesday on CNBC’s Fast Money Halftime Report, we focused a good amount of time on the “cloud computing” sector. More specifically, we discussed the pummeling many of these stocks were taking on the day.
I think the phrase “cloud computing” now is analogous to “.com” in the late nineties. Back then, we knew the Internet was going to be big and would change many of our lives. What we didn’t know was which companies were going to be instrumental in not only bringing the net into our homes and workplaces, but also which companies would be able to leverage themselves the most through this new way of connecting the world. (more…)
Tags: Cloud Computing, Google, Internet, Salesforce.com
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Thursday, October 7th, 2010
Volkswagen may not be all “sexy” just yet, but the German car maker is making an impressive push. VW hopes to not only conquer America’s GM and Ford Motor (NYSE:F) (Ford has been gaining ground in 2010) but to surpass Toyota Motor (NYSE:TM) as the number-one selling vehicle in the world by 2018, according to The Wall Street Journal.
Global Sales
In 2009, the top-ten vehicle manufacturer groups, according to the total number of vehicles produced, were as follows:
- Toyota: 7,234,439 (2008: 1st place, 9,237,780)
- General Motors (GM): 6,459,053 (2nd, 8,282,803)
- Volkswagen: 6,067,208 (3rd, 6,437,414)
- Ford: 4,685,394 (4th, 5,407,000)
- Hyundai: 4,645,776 (8th, 2,777,137)
- PSA Peugeot Citroen: 3,042,311 (7th, 3,325,407)
- Honda: 3,012,637 (5th, 3,912,700)
- Nissan: 2,744,562 (6th, 3,395,065)
- Fiat: 2,460,222 (10th, 2,524,325)
- Suzuki: 2,387,537 (9th, 2,623,567)
The 2008 International Organization of Motor Vehicle Manufacturers’ ranking and sales total are in parentheses. Note that BMW and Mercedes (a division of Daimler AG) didn’t even make the cut. Also take a look at Hyundai’s jump from 8th place to 5th.
(more…)
Tags: Auto Industry, Ford Motor, Toyota Motor, Volkswagen
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Friday, October 1st, 2010
Let’s flash back to May 2006, when gold prices were behaving in a similar fashion as today. The yellow precious metal saw almost a 40% rally over the course of a couple weeks.
The SPDR Gold Trust (NYSE: GLD) – an ETF that trades at about one-tenth the price of gold and actually holds gold in a trust – saw its share price surge from $52 to almost $72 in a matter of two months. Many called this a “parabolic move” at the time.
A parabolic move essentially means that the price of a security (or a commodity) makes a sharp, fast rise, usually out of a basing pattern and thus becomes overextended, usually within shorter durations (two weeks or less). Often, when a security makes a parabolic move, the amount that it rallies is beyond its “typical” behavior. (more…)
Tags: Commodities, GLD, Gold, Precious Metals, Silver, Technical Analysis
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Tuesday, September 28th, 2010
I mentioned the need for infrastructure in this country a couple weeks ago. One of the companies that could potentially benefit from this would be ole’ CAT tractor … Caterpillar Inc. (NYSE:CAT).
Caterpillar, the agriculture and construction machinery giant, maker of everything from pavers to excavators and even turbines for energy generation, continues on its breakout to the upside after eclipsing its last resistance point of $72.00. Though the stock was down slightly in Monday’s trading, the long-term upside prospects still hold from a technical and fundamental standpoint. The stock was resilient in Monday’s session as the broad market moved lower in late-session trading. (more…)
Tags: Blue-Chips, CAT, Caterpillar, Dow Jones Industrial Average
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Friday, September 24th, 2010
Taking a much-needed quasi-vacation in Las Vegas, I couldn’t help but offer a couple words on strategy, risk, and probability. Walking through the casino last night, I couldn’t help but observe the throngs of tourists … some sober, but many partaking in the free alcoholic beverages offered by the house.
What a bighearted gesture by the casino, right? Anyone (over the age of 21) can sit down, bet a couple bucks, and get what would normally be a $12.00 drink for free. As many of you know, there is no such thing as a free lunch or in this case, a free drink.
What the casino is hoping is that you partake in as many of those as you can handle (without passing out of course) because as you imbibe those libations, your ability to manage your money (control your risk) is being depleted. Even though you may have started with a rational plan, you are now out of control and the result is usually not positive. (more…)
Tags: Money Management, options trading, Probability, Risk
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Tuesday, September 21st, 2010
President Barack Obama gave us another chance yesterday to witness his eloquent, seemingly Switzerland-like delivery and response to some fairly direct and tough comments and questions. Deflect, deflect, deflect (and maybe spin a little).
I happen to respect the man greatly for his intelligence and his ability to handle situations. I also think his job in office has certainly been better than I could ever do, but certainly not one that deserves acclaim.
This opinion was shared by a devout Democrat who was a CFO and mother of two kids headed off to college, when she expressed her disappointment in the actions (or lack thereof) of the current administration. She was hoping for change, but like many of us has had yet to see it. I understand that changing the economic health and sentiment of a nation takes time, so maybe it’s the grand promises that were made that are now blossoming into disappointments. (more…)
Tags: Bailout, Ford Motor, General Motors, Housing Market, President Obama, U.S. Economy, Unemployment
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Thursday, September 16th, 2010
After Steve Claussen and I wrapped up our weekly webinar on expiration risks , I thought it might be helpful to highlight what we discussed and offer a couple of other important pointers to remember for this monthly (and now weekly and quarterly) event. Expiration for professional traders is a time to reduce risk and unwind any trades that could be “unknowns” going into expiration Friday.
The third Friday of each month is also a time to look ahead to what positions will be kept open through Monday morning. Finally, it is the time to make decisions on whether to “roll” open trades. This basically means buying or selling a spread to extend an open position to the next month (or beyond). (more…)
Tags: Expiration Friday, Options Expiration, options trading, Pin Risk, Short Calls
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Wednesday, September 15th, 2010
About a year ago – on September 18, 2009 – I wrote about a company called Universal Display (NASDAQ:PANL), which is at the center of the blossoming OLED technology sector and its derivatives. OLED stands for organic light emitting diode and is a relatively inexpensive, high-efficiency method of producing light and images.
PANL’s focus is more on the development of new technologies within the OLED space and patents as opposed to distributing the actual products to consumers themselves. I bring this up not to gloat about the tremendous year the stock has had, but to remind you about hidden gems that are usually just out of sight when it comes to investing. (more…)
Tags: AAPL, Apple, Galaxy Tab, iPad, iPhone, Samsung, Skyworks
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