Navivest offers a free no obligation two week trial to its Options Capitalist trading advisory service for options traders.  The Options Capitalist is published twice a week and with each trade, we target a fifteen to twenty percent return on each trade.

Recent trades include Kohl’s (KSS) September 55 puts that we recommended on 08/15 at $4.80 and exited on 08/19 at $6.50 for a 35% gain and Anadarko Petroleum (APC) which we recommended on 08/19 at $2.15 and exited on 08/28 at $3.60 for a 67% gain.

Today 08/28/08, we recommended the Boeing September 65 puts after the stock ran up more than 2 points intraday.  We see the bullish triple digit gains in the Dow today as a bear market rally and stocks that moved up strongly today will give some if not all those gains back which is why we are recommended puts on Boeing. We got in the options at $1.35 and expect to close out in a few days for a nice profit as well.

If you would like a free two week trial to The Options Capitalist, click here and fill out the short form.

 tags: options trading

Sears Holdings (SHLD) this morning, reported Q2 2008 net income of $65 million, or diluted EPS of $0.50 compared to net income of $173 million, or diluted EPS of $1.15 for the same period last year. The $0.50 included a one time special $0.29 gain. So diluted EPS would have come in at $.21 otherwise. Net revenues for the period declined 4.1% to $11.76 billion.

Tiffany (TIF), the venerable high-end jeweler also this morning, reported that net income for Q2 2008 was $80.8 million, or $0.63 per share, compared to the $40.5 million, or $0.29 cents, in the same period last year. Net sales for the period grew 11% to $732.4 million. On a constant-exchange-rate basis, worldwide net sales rose 7% and comparable store sales declined 1%.

Sales in the Americas region increased 3% to $422.4 million in the second quarter and 4% to $796.0 million in the first half, sales in the Asia-Pacific region increased 17% to $214.2 million in the second quarter and 19% to $436.3 million in the first half and sales in Europe in the second quarter increased 35% to $71.0 million and 36% to $131.1 million in the first half.

Dell will be releasing its second quarter earnings after the close of the stock market today. Analysts are looking for a profit of revenues of $15.95 billion and EPS of $0.36. The earnings are being eagerly anticipated, as it is expected that the company might beat expectations.

dell earnings

Stocks are being called higher, as stock futures rally after the GDP number for the second quarter 2008 was revised upwards to show a gain of 3.3% for the U.S. economy. The numbers were revised upwards from the 1.9% growth that was initially reported in July.

Again, strong exports continue to play a dominant role, so with the dollar having taken a turn for the better of late, if that continues, its interesting to see how exports will fare over the intermediate term.

Before the GDP revision numbers, stocks were looking to open lower, but turned around decidedly on the release. However, oil prices continue to surge and are now up $1.60 putting oil over $119 per barrel. This might put pressure on stocks during the day.

tags: economy

The orders for durable goods (goods that last three years or more) for July were released at 8:30 AM ET, and they showed a surprisingly strong gain of 1.3% that vastly exceeded the 0% - 0.2% gain that economists had been forecasting. This matched the same 1.3% rise in orders for durable goods in June.

As recently released earnings numbers from U.S based multinational companies have already shown, exports which continue to rise, as a result of the falling dollar (recent gains against other currencies not withstanding) are helping to combat the economic weakness we are experiencing within our borders.

Capital spending, which is spending by businesses for durable goods, rose 2.6%, against a forecasted decline for the month of 0.1%

With orders for transport related goods such as aircrafts taken out, we still saw a rise of 0.7%, compared to the decline of 0.5% that economists were forecasting.

The numbers are helping stock futures to rebound a bit although we seem to be still headed for a lower open. As we stated in an earlier post today, we might see active oscillations between negative and positive territories today as countervailing forces act upon stocks today.

tags: durable goods orders  economic calendar

With Gustav looking like it will be the worst storm so far this year, in terms of the impact it might have on the oil producing Gulf of Mexico region, oil is having a bullish week and looks to extend those gains again today. As of 7:30 AM ET, oil is up $1.06 to $117.33.

With oil up, the stocks are looking to open lower as indicated by stock market futures. However, we may see very active oscillations between negative and positive territories, as we will have some countervailing forces acting on stocks.

Lehman (LEH) might be trading higher on expectations that it will sell its asset management division. The company is also looking at setting up a new company with outside investors that will buy its asset backed securities that are currently a drag on the balance sheet. If Lehman (LEH) does move up for these reasons, it will pull up shares of the other brokers and maybe the financial sector as a whole.

Some of the news we are expecting today, that could move the markets include Durable Goods orders at 8:30 AM ET, Crude (as well as gasoline and distillates) Inventories for week ending 08/23/08 at 10:35 AM ET and Chicago Fed Midwest Manufacturing Index for July.

stocks

Big Lots (BIG), which sells brand name items that it buys on closeouts for resale in its stores, this morning, reported Q2 2008 earnings that bested Wall Street expectations. Income for the period was $26.1 million, which translated into a diluted EPS of $0.32. This compares to income in the same period last year of $22.1 million, or a diluted EPS of $0.21.

When factoring the impact of the company’s discontinued operations, Q2 net income came in at $26.0 million for a diluted EPS of $0.32, compared to $23.4 million for $0.22 per diluted EPS in the same period in 2007.

Net sales for the period climbed almost 2 percent to $1.1 billion from $1.08 billion in the comparable period last year. Wall Street’s forecast was for revenues of $1.1 billion and EPS of $0.27.

The company also gave positive guidance that should further boost the stock today. For Q3, Big Lots (BIG) expects diluted EPS to come in at $0.15 to $0.19 compared to the $0.14 earned in Q3 of 2007.

For Q4, the company expects a diluted EPS of $1.02 to $1.09, compared to income from continuing operations (non-GAAP) for Q4 07 of $0.93 per diluted share.

For the full year 2008, Big Lots (BIG) is forecasting income of $1.90 to $2.0. This would represent an increase of 35% to 42% respectively and compares to income from continuing operations of $1.41 for 2007.

The current economic environment has been very good for Big Lots (BIG). Being a closeout retailer, the company offers savings on brand name items and consumers who’ve had to tighten belts are flocking to the company’s stores. As a result, the shares have been well rewarded.

At the current price of $33.06, the company’s stock is up 106.75% for the year, the best performer in the S&P 500. The stock will no doubt be adding to those gains today.

tags: big lots earnings

After a precipitous fall yesterday on continued credit concerns, stock market futures are indicating that the markets will rebound and open higher today. However, traders need to make sure they do not get caught in a bear trap by buying on a fake rally.

Any gains we get in early trading might all evaporate by 10 AM, as news from the economic front kicks in. At that time, we will be getting both the August Consumer Confidence numbers from the Conference Board, which gives us an insight into the mindset of the American consumer as well New Home Sales from The Commerce Department’s Census Bureau. We will also be getting the minutes from the last Federal Open Market Committee meeting on August 5. Unfortunately however, that’s not until 2 PM.

Its not likely that the consumer’s confidence is increasing and with regards to home sales, even though existing home sales for July, which were reported yesterday rose 3.1% against a forecasted 1.6% rise, we don’t expect New Home Sales to fare as well. The strong rise in existing home sales was due to the continued fall in home prices and the desperation of home sellers.

While homebuilders are also having a tough time, new homes do not have as much leeway in pricing as do existing homes, so the numbers should continue mirroring the weakness we are experiencing in the housing markets. So all things considered, the markets should move to the downside after the numbers.

Should the indicated gains hold when stocks start trading, traders might want to take the opportunity to lock in any gains if any on their existing short-term trades, or look for stocks to short among those that might shoot up in early trading.

We are in a bear market and we need to be constantly cognizant of that fact. You can buy on dips, but be sure to take profits when presented with the opportunity. For instance, with the drop in stocks yesterday, towards the close of the day, we sent out an alert to subscribers of our Options Capitalist trading advisory service, to buy the Apple September 175 calls. We expect to be out of those by next Monday at a nice profit. Apple was down $4.24 from Friday’s close and the decline was a good buying opportunity.

After climbing just $0.52 yesterday in regular trading, oil is down in early trading today – off $1.76 to $113.35 on a strengthening dollar, and that could provide impetus for a bullish day in stocks, but wait for the economic calendar to play out and if getting into the market, tread carefully and remember to lock in profits when you get them.

tags: new home sales FOMC minutes oil prices

After a very negative tone all morning, stocks have now increased their rate of decline to trade at session lows and the Dow is off 248.90 points to 11,379.16, for a loss of about 2%

Existing home sales were released at 10 AM, which showed that the number of homes sold in July rose 3.1% as homes become much more cheaper. Economists were forecasting a rise of 1.6%. With July’s number, we are now on an annualized pace for five million homes sold this year.

The number of homes for sale did continue to rise however. A rising inventory of homes will continue to depress prices, increasing Wall Street’s concern that the end is not near.

Financials are also weighing on the markets, with AIG (AIG) the biggest percentage loser in the Dow. The stock is now trading at $18.77, down $1.10 or 5.54%. JP Morgan (JPM) is the second biggest percentage loser, currently trading at $36.56, down $1.11 or 2.95%.

AIG  JPM  JP morgan

Stocks market futures are indicating that the markets will open lower, although the futures are now off the lows they hit earlier. The market is facing downward pressure from oil, which is up about $0.83 and trading at 115.42, as well as a lower dollar.

At 10:00 AM, we will be getting Existing Home Sales report for July, from The National Association of Realtors. There is anecdotal evidence that shows home sales might be picking up ever so slightly, as prices continue to fall, making homes more available. But with access to credit getting more and more restricted, no one is expecting a very positive number.

The financials are once again under pressure as credit concerns looks to be an issue today. In addition to a falling dollar and rising crude oil prices, financials will definitely drag stocks downward. Investors are again focused on whether the government will need to bail out Fannie Mae (FNM) and Freddie Mac (FRE). Additionally, Lehman Brothers (LEH), which was up earlier in pre-market trading, on news over the weekend that the Korean Development Bank is interested in Lehman Brothers (LEH) is now down on news that banking regulators in Korea would frown on the purchase by KDB, of such a troubled company.

tags: stocks lehman

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