Trading Range Holds/ Jim Beam (NYSE:BEAM) Goes Global
Futures were pointing towards a slow start when we wrapped up our homework last night but turned positive ahead of this morning's open.
There were a ton of talking heads that said yesterday was the start of a correction but we said not so fast as we still saw bullish signs despite yesterday's pullback.
The bulls needed to hold the bottom of the trading ranges and the 20-day MA's (moving averages) and so far they have. The second half of trading and the close will be crucial today to extend the 4-week trading range.
Shares of Beam (BEAM, $83.20, down $0.22) are flat today following yesterday's nearly 25% surge on new the company would be acquired by Japanese's Suntory Holdings for $13.6 billion. The merger will create the world's third largest spirits group.
It was a bold but good move for Suntory despite the debt concern as they get a classic, premium American brand to go along with their current lineup up booze.
We played BEAM call options a few times last year and we should have kept the stock on our Watch List. Whiskey stocks have been hot and BEAM was cheap in the $60's but we missed the gravy train on this one.
The January 70 calls (BEAM140118C00070000, $13.10, down $0.20) closed at 17 cents last Friday and zoomed 7,723% on Monday.
The February 70 calls (BEAM140222C00070000, $13.05, down $0.20) soared 1,375% after closing last Friday at 90 cents.
As we head to press, the Dow is up 81 points to 16,339 while the S&P 500 is higher by 16 points to 1,835. The Nasdaq is advancing 58 points to 4,171 and the Russell 2000 is gaining a dozen points to 1,160. The S&P 500 Volatility Index ($VIX, 12.09, down 1.19) down 9%.