The Bully in oil is back! GDP really hurt the optimistic vibe on the stock market but Fed’s have positive attitude.
I see ENERGY being bullish. It had 2 big pull backs and recently with the Fed’s notes saying Energy is still profitable with current inflation oil should go back up including gas prices. Technically it also shows a broken downward trend creating 3 white soldier candles up. Companies you can note that have really been bought up at lower prices are SWN, EOG, and OIH. OIH expecially has ran from $120 to now $138! You are probably thinking that is a huge move and money will be taken off the table which it will, but I believe its only up half way. If oil is now bullish and with Fed backing it up to still be profitable investors buying back in OIH will go back up to $150-160 range still leaving a large margin profitable for any option trading investor. I plan to get back into OIH once I am out of two of my biggest trades ever. I could be totally wrong about them, but I am willing to take that type of gun slinger chance. I am in my biggest position AMAT with 650 JAN $22.5 CALLS. Yes, call me crazy because I am. AMAT earnings is November 15, 2006. I plan to sell out before earnings if my sell price is executed if it isn’t I do not have anything to lose since the option is currently today worth $0. But if I am write it will be around a $18,000 profit for holding the option for 1 month. Simular circumstances with MSO 300 contracts for DEC 30 CALLS. I really believe in Martha Stewart Living. MSO will be the next company story even if they don’t beat earnings because they are still growing again I know they will surprise anaylst and investors creating upward movement in the stock enough to profit me another $30,000. MSO earnings are Oct 31. Only 2 trading days away! If I’m wrong then I’m wrong. No biggie. Yes its a big loss, but I look at it as making an educated guess with research and facts and conviction that I believe it will go up in price. Plus Martha Steward herself is the bomb (cool). Even though she isn’t CEO anymore she means business and not any business but quality products and services in her business and that is what will make her company come alive again and become profitable.
As for the GDP saying it slowed down the company very much if you read into it you will notice the public already knew this. Fed Bernake said it would be -1.1% less because of the hit in the housing market. It was already pre-known which is a good example that this is just a minor pull-back. I believe the market can go down for the next couple of days because of the scare, but the Fed’s said it is a positive “soft landing” and we are getting great better than expected earnings from major corporate companies.
My mother told me about her GOOGLE.com (GOOG) play she was in. She believes it will goto $550 and I do too. I only don’t trade it because the options are as much as a stock price. I like to trade options priced $1 to $8. I’m currently in many options trading under $1 and that is bad. I’m only trading way out of the money because I bought time and letting the stock move up all the way before its earnings release. For some stocks I have traded through earnings like Apple Computer (AAPL). Anyway about GOOG. She was up $800 today and could of sold out but didn’t. She is right by telling me to sell out of my position up $6000 and I didn’t when I could of this morning. I feel I trade better if I just wait for the stock to do its “own thing” and be patient if I am confident the company is doing well and is going to beat earnings (before its earnings). In this case the stock options were GRMN 60 NOV Calls which only have 20 days left and now only up $2850. I’m sure you are saying sell sell sell! I have a conviction and confidence that Garmin will hit $70 before Nov 31th and I better be right. It’s earnings is Nov 1st. Only 3 market days away starting next week. GRMN has already been upgraded by 2 major anaylst. It took a big 4% hit today with GDP news. Bummer for me. The past 2 mondays have been bullish instead of mixed. With this nervous GDP report this monday could definitely be mixed which wouldn’t help me out wanting to sell GRMN by Oct 31st. I plan on holding my options through earnings and selling the next day either immediately at a profit or loss (if uptick after hours trading then sell at opening high bid where I should be still profitable).
Well that’s enough on trading stock options today. I’ll blog next week after both earnings annoucements on MSO and GRMN. I guess should be getting anxious and stressed out but I’m really not. Every bit of money I put into my account to trade is money I’ve saved with extreme measures. You have no idea how extreme. I shall go into extreme saving money ideas in another blog on another day. I put my money in there and if I lose it all I positively know I can make it all back on a couple hundred dollars. I’m know expert and I’m not even really that good a trader yet, but I feel I can adapt to stocks real quick and understand where they are short-term going.
I also wanted to point out Starbucks (SBUX) is just popping up EVERYWHERE. When they meant they were growing double the amount of stores this year they were SERIOUS. In Hawaii SBUX is a regular shop in every strip and people go there like mad crazy to get their “fix” to make them feel happy. It’s a company I’m seriously interested in buying super long calls on that could possible be my biggest contract trade ever.
Later – Paul