Seeking Alpha

Momentum Option...'s  Instablog

Momentum Options Trading
Send Message
We are a poweful option trading newsletter that focuses on momentum stocks. Momentum can be used to the upside or downside to play call and put options on stocks that are in a clear trend. We target triple-digit returns for all option trades while trying to keep losses at 50%. We have 6-year... More
My company:
Momentum Options Trading LLC
View Momentum Options Trading's Instablogs on:
  • Orexigen (OREX) Up 125% Before the Bell

    There was a bull stampede that started on Tuesday's open as the market ran higher to start the session on news the Bush tax cuts were going to be extended.  However, the bears were the first to cross the finish line after the Democrats waffled on signing off on the cuts while in the same breath saying there was more work to do.

    Against this uncertainty, the bulls failed to hold the momentum that had been so strong at the start but the good news is the breakout is intact.  All three of the major averages we follow finished flat but not before touching fresh two-year highs.

    The Dow fell 3 points to close at 11,359.  We mentioned 3M's (MMM, $84.19, down $2.69) downbeat forecast yesterday which accounted for 20 points to the negative for the index.   The blue-chips traded to a high of 11,450 but the late day shenanigans pushed the Dow below our 11,400 closing target.  Support is at 11,200-11,000.

    The S&P 500 gained a point and settled at 1,223 but surged to a high of 1,235.  We were looking for a close above 1,230 but the breakout confirmed we should trend to 1,250 over the near-term.  Support is 1,200.

    The Nasdaq added 3 points and finished at 2,598 but rallied to 2,623 before finishing just below our 2,600 target once again.  We still feel a run to 2,700 is still possible with an outside shot at 3,000.  The bears are focused on getting Tech back down below 2,500.

    Orexigen Therapeutics (OREX, $4.67, HALTED) is going to have a huge open this morning after a Food and Drug Administration (FDA) panel recommended approval for Contrave, a weight loss drug that will help fight the battle against obesity.

    We first profiled Orexigen, along with Vivus (VVUS, $7.80, up $0.75) in early 2008 and we have been keeping track of these two companies ever since.  Long time subscribers know we tend to favor Vivus more because we think their “diet” drug, Qnexa, is safer and has less side effects. Vivus also has a stronger pipeline.Look for both stocks to hit double-digits today as Orexigen is trading at $11+ in pre-market while Vivus is pushing $10.

    Futures are pointing towards a slightly higher open this morning. Dow futures are up 6, S&P 500 futures are up 2 while the Nasdaq 100 futures are higher by 7 points.

    We have a ton of information to cover in our Members Area this morning, including our thoughts on Research In Motion (RIMM, $62.12, down $1.21), which we added to our Watch List this morning. Subscribers, check for the updates.

    Dec 08 9:12 AM | Link | Comment!
  • Bulls Break Resistance
    12:45pm (EST)

    The bulls are beating up the bears today but there is love in D.C. as Democrats and Republicans have extended the Bush-era tax cuts which have helped lift the market to new annual highs. The Bush tax cuts have been extended to everyone for two years, payroll taxes have been cut for one year from 6.4% to 4.2%, AND unemployment benefits have been extended for 13 months.  The news still has to be signed off on but will cost us $900 billion. Imagine that.

    The news has been a relief and we said in our Weekly Wrap it would be the next catalyst that the bulls would be banking on to push the market through resistance. Bingo.

    The Dow has broken above our first target of 11,400 and is currently up 45 points to 10,408. There is slight resistance in the 11,450 area but we are expecting a run up to 11,600-11,700.

    The S&P was trapped in our 1,220-1,225 range for a few days and is showing an advance of 7 points to 1,230. This was the number we outlined this morning and we would like to see a close above it for confirmation of a run to 1,250.

    The Nasdaq is higher by 16 points to 2,611. The index traded to a high of 2,623 and we are watching for a run to 2,661. If cleared, we will easily see 2,700 with a shot at 3,000 down the road for Tech.

    As far as stocks, it’s official.

    The U.S. Treasury has sold its remaining stake in Citigroup (C, $4.58, up $0.13) which gets the bank one step closer to freedom. The sale netted $10.5 billion for taxpayers as shares were sold at $4.35. The Boys on the Hill still own $800 million of preferred shares and warrants but this is a nice overhead cloud that is clearing for Citigroup.

    Elsewhere, 3M Company (MMM, $84.47, down $2.41) is down 3% after updating Wall Street on its forecast for 2011. The company said it expects to earn $5.90-$6.10 a share in 2011, while analysts were looking for a profit of $6.24 a share.  3M also reiterated its 2010 outlook for earnings of $5.59- $5.63 a share and said it will continue to look for acquisitions to grow the business.

    As we head into the close, we would like to see Dow 11,400 hold, while a close above 1,230 would be nice for the S&P 500. We would like to see the Nasdaq close above 2,600, naturally, but we are hoping for 2,625.

    That’s all we have for the outside today. Inside our Members Area is where all the action is. Subscribers, check for the updates!

    If you are reading this today, we would like to offer you a FREE 1-week membership to our website.  We currently have 15 open OPTION trades with 75% of them showing strong gains.  The few that are down slightly, we expect a rebound.
    Please email us if you would like a free membership.
    Dec 07 1:00 PM | Link | Comment!
  • Tax Breaks Extended, Bulls Should Break Resistance
    9:10am (EST)

    The bulls and bears battled to mixed results on Monday as both sides looked for the next catalyst to cling to but there were none as economic news was light and earnings were a non-event. We mentioned trading would probably be lackluster, and it was, although there was a little action in Tech which we covered in the afternoon.

    The Dow fell 20 points, or 0.2%, to finish at 11,362 but made a run to 11,392 which is just under our 11,400 target we have outlined as resistance.  A break here could carry the Dow to 11,600-11,700.  Support is at 11,200.

    The S&P 500 slipped 2 points, or 0.1%, and settled at 1,223.  The index stayed in our 1,220-1,225 zone but the bulls are looking for a charge to 1,250.  A break above 1,230 would be bullish.  There is a floor of support at 1,200 with 1,170-1,175 providing back-up.

    The Nasdaq managed to end with a slight gain of 4 points, or 0.1%, and went out at 2,594.  The index touched a new 52-week high of 2,599.19 and we have been calling for a print of 2,600-2,700 since early November.  Specifically, the index has a shot at its January 2008 high of 2,661 and we only need a 3% move to get there by the end of the year? Book it.

    One stock we want to highlight before roll out this morning is DryShips (DRYS, $6.21, up $0.33) which jumped nearly 6% yesterday and 12% on Friday. Shares are getting new life as interest in the company’s deep water drilling unit starts to gain momentum.

    The stock does trade options and we show you two that surged 40% and 35%, respectively, on yesterday’s move inside our Members Area. Better yet, these options could return up to 300% if DryShips can get to double-digits in 2011!

    hink about that folks. The stock is cheap enough to buy at current levels and we think shares can easily run to $8-$9 in 2011 but that would only be a 50% return from current levels. While owning a stock is always a safer trade than owning an option on a stock, we think there is a chance for a homerun here. A 50% return is a single but a 300% return is a grand-slam homerun. We haven’t taken a shot at the fences, yet, but we are in the batter’s box and have them on our Watch List.  We still want to do some more research.

    As we head to press, the Dow futures are up 87 points to 11,440 while the S&P futures are higher by 12 points to 1,234. The Nasdaq 100 futures are showing a 26 point pop and are at 2,216.

    It’s should be a GREAT day for our current trades. Subscribers, check for the updates.
    Dec 07 9:14 AM | Link | Comment!
Full index of posts »
Latest Followers


More »
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.