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Financial Stocks with Bullish Option Activities
Following financial stocks had heavy Calls activity today.
1 – AIG – Reports earnings on 11/1/2012 – AMC
2 – C – Reports earnings on 10/15/2012 – BMO
3 – JPM – Reports earnings on 10/12/2012 – BMO
4 – PNC – Reports earnings on 10/16/2012 – BMO
5 – GS - Reports earnings on 10/16/2012 – BMO
Two Stocks With Notable Option Activity
Today two stocks saw heavy option activity:
1 – ABT on Calls Side
2 – BBY on Puts Side
ABT – Jan 45 volume Call volume was 807,500. Other strikes also had huge volume. ABT closed at $70.37 today.
BBY – Nov 17 Puts strike had 30,790 volume and 18 strike had 15,069. Dec 17 Puts had about 29,963. BBY closed at $17.80
AAPL and GOOG
AAPL fell below 50 day moving average today (October 8th, 2012). It closed at $638.17, dropped $14.42. History of AAPL tells us that when AAPL falls below 50-day moving average it has the tendency to move back above 50-day moving average pretty fast. In fact it could rise as much as 2 percent in a week and 8-9% by end of December. My target on AAPL is $750 to be achieved at or before end of December 2013.
GOOG reports its third quarter earnings on October 18th after market close. Based on the history of its earnings for third quarter GOOG gaps up 2.75% and goes down 1.15% from open to close. This means if a trader is holding Calls in GOOG before earnings announcement it is better to sell at open as GOOG has higher chance of drifting lower after gapping up.
However, there is always an exception and trader should be mentally prepared for exception.
Noshee – Your Trading Buddy
S&P, Dow Jones and NASDAQ Update
The media was talking about correction in the month of September. I had mentioned in my earlier post that we will not see any correction in September. It did not happen. On Friday, October 5th Dow Jones and S&P hit resistances levels mentioned in my last Sunday post and pulled back. S&P resistance level mentioned was 1465-1471. S&P closed at 1461. So now S&P has to try once again to conquer 1465-1471 level and close above 1471. S&P support still 1442 but before 1442 there is another important support at 1450-1453 level which it should hold.
This year S&P has gained 14.6% in the first 9 months. If we look back to 1980-2011 for S&P performance we come to know that if S&P is up during first 9 months of the year it tends to continue its upward journey. There are however two instances where S&P went down. These two years are 1983 and 1987. In 1983 S&P went down 0.70% in the last quarter. Whereas in the year 1987 market had crashed and S&P dropped 23.23%. If we consider year of 1987 as anomaly then average gain in S&P during the last quarter of the year comes to 5.12%. S&P closed at 1440 on the last trading day of September and based on projected 5.12% further gain in the last quarter S&P could go to 1515.
Another point we must be aware of is that on September 14th – one day after QE3 announcement Dow Jones hit high of 13,653 and S&P hit a high of 1474.51 and pulled back. In order for the market to move up both of these highs must be taken out together. Therefore, it is important that next week S&P and Dow Jones both try to break through this resistance and move up.
However, NASDAQ is the weakest among these three indices. AAPL is not moving up rather came down after hitting high of $705. AAPL closed at 652.59 on Friday. It is sitting at strong support so we should be seeing an up move in AAPL. The other beast in NASDAQ is GOOG. GOOG closed at 767.65 on Friday. It is expected to move towards 800-815 level. These two beasts can take NASDAQ higher. For now NASDAQ is the laggard. Russell 2000 and 3000 indexes are also lagging.
The month of October is the most volatile month for the stock market. This means lot of quick money making opportunities for traders. The second volatile month is the month of November.
AA starts the earnings season on October 9th (Tuesday). Lot of companies reports earnings till November 1st. Besides AA, the other notable companies which are reporting earnings this week are YUM, COST, GOOG, JMP and WFC. The positive earnings from these companies could set the tone for the market.
There is a possibility that S&P hit 1485 by October 16th-19th and then come back down to test 1471-1475 level and make another run up to hit 1500 either just before election or few days after the election. It all depends how slow or fast S&P moves to the upside. The three days after the election are very important from the trading point of view.
$S&P
In the previous post http://financialmarketswizard.com/blog/archives/2027
two important numbers for S&P were mentioned, 1442 and 1430 as support. On September 25th, S&P dropped big but closed at 1442. Next day it went down further and touched 1430 and bounced upward. Friday it closed at 1440.67. 1430 was important number for the month of September on close basis. Since S&P closed above 1430 in the month of September, therefore, I expect S&P to rise upward towards 1490-1525 level.
In its journey towards 1500 S&P will meet resistance at 1452-1455 level, 1465-1471 level and then at 1485. Market should start rising from October 3rd as this is an important turn date.
S&P Update
Last week was a tight range week and market did not move enough either up or down. There was some weakness in the market on September 20th and September 21st. S&P on Friday closed at 1460.15. It is trapped in between support and resistance which is 1442 and 1471. If S&P breaks 1442 then could fall to 1430. If S&P breaks 1471 then it will move higher towards 1500 target. The September 20th move of S&P was bullish as it went down to 1449 and later in the day bounced off 1449 and closed at 1460. However, on Friday – September 21st, the move was bearish as it failed to conquer the resistance of 1468. It went to 1467 and closed at 1460. It seems investors/traders are not making any further move in the market. They are being cautious.
Dow Jones support is at 13,445 and target is 13,750.
NASDAQ 100 support is at 2828 and target is 2887 and 2950.
Markets Update
Last week markets moved up with brutal force and S&P took out some sheer resistance at 1455. Not only S&P took out 1455 resistance it hit my target of 1465 and closed exactly at 1465.77 (Please read my post dated Sunday, September 9th).
S&P now is in overbought condition and it should not come as a surprise to anyone if S&P pulls back 30 points (1435) from the close of Friday. However, there is a nice support at 1443. The target for S&P is 1525.00
Dow Jones closed at 13,593 and took out the resistance at 13,339. Dow Jones should head towards 13,750. In case it pulls back then there is a nice support right at 13,375 – 13,360 range.
NASDAQ 100 closed at 2855.23 The support for NASDAQ 100 is way below at 2785.
Gold target given was 1765 and it will face resistance at 1765. However, I had also mentioned that if Gold crosses 1770 then would move towards 1845 and eventually to 2000. Gold closed at 1773 and it looks like Gold will further accelerate upward quite fast towards 1845. Since 1845 is resistance therefore, Gold may stall out at 1835, take a breather and then move upward towards 2000.
Markets Update
Markets moved up sharply on September 6th and broke resistances. In my September 3rd post I had mentioned along with the chart that $VIX had gone above the Bollinger band but next day fell inside the band. When this happens $VIX continue to come down and market rises upward. This is exactly happened last week. Here is the link for September 3rd post http://financialmarketswizard.com/blog/archives/1966
In my August 26th post I had mentioned that Shanghai Composite index is at double bottom support and it could rise upward. What happened last week was that this index broke support – trapped all bears and then rose sharply upward. Chart of Shanghai Composite ($SSEC) is at the bottom of this post for your review.
On August 26th I had also given the target for S&P to be 1435-1440 range. S&P closed at 1437.92 on Friday September 7th. Now we need to watch S&P carefully for its next move. There are two possible scenarios. Whatever the scenario the market is in uptrend. Here is the link for August 26th post http://financialmarketswizard.com/blog/archives/1930
First Scenario
S&P pulls back towards 1415 (previously this was resistance and mentioned in my blog) and then rise upward again and take out the close of 1437.92 and rise upward towards 1455 in zig-zag fashion. The ultimate target for S&P is 1465. However, S&P could stall at 1455. So trader must watch the behavior of S&P when it is trading between 1455-1465.
Second Scenario
S&P continues its upward journey towards 1455 as 1455 is just 17 points away. Once S&P hits 1455 it pulls back to 1440 and then rise again and takes out 1455 and heads towards 1465. At 1465 we could see the correction.
We will find out which scenario will unfold next week. The strong support for S&P is 1396 which is far from 1438 (Friday close of S&P).
My target for S&P is 1525 and it could reach by March of 2013. We need to see where S&P closes by September 30th. If it closes above 1440 then target of 1525 is achievable.
NASDAQ 100 took out the resistance level of 2810-2815 which I had mentioned in my previous blog posting. It closed at 2825. The support levels are 2782 and 2740. The target for NASDAQ 100 is 2990-3000 and this could hit while S&P hitting 1465.
Dow Jones closed at 13,306.64 on Friday and facing resistance of May 1st 2012 for 13,339. The support for Dow Jones is at 13239. Dow Jones has formed Inverse Head and Shoulder Pattern and facing some serious resistance near 13,339. I would watch IBM, CAT and CVX for the move in Dow Jones. There is good news from China regarding CAT so CAT should be moving up. It bottomed at $82 level last week. CVX is facing double top and should be breaking out. IBM facing resistance near $200 and should break it.
I expect markets to rise another three weeks.
In my post of August 26th I had mentioned Gold target of 1735. On Friday September 7th Gold closed at 1737. I had also posted the charts of Gold and Silver. I am posting updated charts of Gold and Silver for you to see. What goes up does not necessarily mean continue to go up. Gold may top out in this range 1750 – 1765 and retrace back towards 1685 – 1670 range, therefore caution is advised now. However, if Gold moves above 1770 then it has very high probability of taking out previous high of 1845 and running towards 2000.
$SSEC Chart
$INDU Chart – Inverse Head & Shoulder
$Silver Chart
Gold Chart