Mylant's Money Blog

WEEKLY OPTIONS ANALYSIS: EEM

ETF EEM Emerging Markets Weekly Options Analysis

Technically Speaking-

Direction- the EEM Emerging Markets ETF, is bearish in nature with a slight upward turn that looks like a penant.

Bollinger Bands- the ETF EEM has consolidated to the point where it is looking for a way to break out. It ended the day Friday at the bottom of the Bollinger Bands. If the same formation continues, it looks as if it is ready to move up again.  But we are watching to see if it is ready to break through and form the second flag pole.

RSI- the EEM is following the same flag pattern as the stock. It shows a bullish support but let us not forget we are in a bearish formation as we consolidate so we cannot read much from here. Be cautious here.

MACD- as with the RSI, mirrors the EEM stock chart. Both the MACD & MACD Histogram are showing higher highs and higher lows. This indicates a breakout eventually—soon in one direction or another. We are lightly bullish but we are getting ready to break out in a continued southward move

Chart- the Flags and Pennants can be categorized as continuation patterns. They usually represent only brief pauses in a dynamic stock. They are typically seen right after a big, quick move. The stock then usually takes off again in the same direction. Research has shown that these patterns are some of the most reliable continuation patterns

Bearish flags are comprised of higher tops and higher bottoms. "Bear" flags also have a tendency to slope against the trend. Their trend-lines run parallel as well. Flagpole: The flagpole is the distance from the first resistance or support break to the high or low of the flag/pennant. The sharp advance (or decline) that forms the flagpole should break a trend line or resistance/support level. A line extending up from this break to the high of the flag/pennant forms the flagpole.

Flag: A flag is a small rectangle pattern that slopes against the previous trend. If the previous move was up, then the flag would slope down. If the move was down, then the flag would slope up. Because flags are usually too short in duration to actually have reaction highs and lows, the price action just needs to be contained within two parallel trend lines.

Making a play on the EEM Emerging Markets ETF should be positioned for a bearish move.

John Mylant is CEO of EmpoweredInvestingNow.com. He is in high demand as an Investment Trainer. Coaching traders all over the world how to grow their portfolio, he uses Option Strategies that are safe, conservative, and allows for quick steady growth with limited liability. Interested in successfully growing your portfolio using options—safely, efficiently, and quickly? Trade Weekly Options now....

Weekly Options Trade Analysis: Alcoa AA

AA Alcoa

Weekly Options Trade Analysis

Direction— AA is attempting to push herself into bullish territory but may be forming a trading range it will stay in.

Bollinger Bands— having touched the top of the Bands, AA rests on the top of the middle Band as of Friday. This may be a sign of strength if we can get her to continue moving up. The upper resistance and lower support will clarify the strength AA has in this move when we come to those lines.

RSI— AA has found support with RSI. It continues to show bullish movement; so one would think to design a weekly option strategy that is bullish. Not so quickly, for the RSI shows strength but the support is weak. We have yet to reach the ‘50’ level in this move. Be cautious.

MACD— the MACD, like the RSI shows bullish support but it is also weak. AA is trying to push up, but is having a hard time moving into bullish territory. Therefore we are extremely cautious when recommending Bullish Weekly Option Plays. There is just too much weakness here.

Chart— We seem to be building a rising wedge. This is continually showing us reversal patterns, so we are waiting for AA to become bearish very soon.

Trade Recommendations— AA is not giving us any signs of strength in this movement. It is more of a struggle to move up. For this reason, any weekly option strategy should take into account a bullish move to about 13.5 and then hit resistance and move back down. Look for a very short bullish run an then a longer bearish walk. Create your option strategy accordingly.

John Mylant is CEO of EmpoweredInvestingNow.com. He is in high demand as an Investment Trainer. Coaching traders all over the world how to grow their portfolio, he uses Option Strategies that are safe, conservative, and allows for quick steady growth with limited liability. Interested in successfully growing your portfolio using options—safely, efficiently, and quickly? Click here to learn more.

Interested in learning an Options Strategy that can net you 3% per week safely?

http://optionsweekly.org/

Watch for Huge Swings in the Market this Week

Watch Wild Market Swings

Good morning friends. Today is Monday, March 7 the year 2011.as we start out our trading week we need to keep some things in mind that are still going to influence the market. Rising oil prices and the violence in Libya continuing to escalate, add to the problem and then on top of that we have some warnings of Greece might default on its debts.

When oil goes up in price, it has a bad effect upon price of stocks and we know stocks— at least the prices, are leading indicators or perceptions of economic growth. The unrest in Libya has pushed oil prices so high that traders have little reason to buy equities at all.

Since we have this problem developed in the Middle East we can look at the SPY and if we look at 60 minute chart we see a nicely form symmetrical triangle. I believe this is the reason we have seen wild swings on particular days in the markets. So be aware that if you start this week may not be uncommon for the market to make a big move on any particular day.

 

S&P 500 ETF (SPY) Finds a Bottom (sort of)

We might have finally built in Libya's influence on the markets today. The SPY appeared to continue to be headed down into nowhere's ville. But about mid-day it got some buts and built a nice foundation. We are looking at 130.46 as a good area to build around.

But toward the end of the day we hit 131.45 for a strong resistance point also. Fromthere we bounced back to end the day.

Tomorrow we will see if we continue on our downward trend or if we can bounce back yet. Oil has topeed $100 a barrel. Now we will see its' influence on the markets tomorrow.

SPY Bull Put Spread!

Nice Bull Put Spread on the SPY!

Sell 127 & buy 126 for an expiration date of this Friday.  3% profit.

Is the SPY going to fall 4.68 points in the next 3 days? No, Libya has already been factored into the markets.

Do you Know how to Lose Money in the Stock Market?

Do you lose as much money as you want in the stock market or do you lose more than you want to? Most people are baffled when I ask them this question, but at the same time, most people say they lose more money than they want to. To that I say—then you do not know how to lose money properly.

Think about it…if you ask someone if they are making as much money as they want to in the stock market and they say no, what would happen if you asked them why? They would more than likely say it is because they do not know how to make the money they wish to make. It only goes to show that if you are not making as much money as you want to in the market it is because you do not
know how to make enough money. After the same manner, people who lose “more” money than they want to, do so because they do not know how to lose their money properly.

We all lose money in the stock market. There is no one who is perfect. It only makes sense that if we know we are going to lose money, we should learn how to lose it, so we lose as little as possible. There is an art to losing money. And if you learn to do it properly you will have more money to invest in the long run so that you make more.

There are a whole lot of “how to” books and programs available out there that teach you how to invest, painting the picture of how you can make boat loads of money with their secret formula. What people do not take into account is the ability they have to lose money also. Trades go bad and it is very easy to lose a lot more money in the markets a whole lot faster than you make. The markets drop faster than they go up and your money disappears a lot faster than you make it. It leaves a bad taste in everyone’s mouth. More people steer away from investing when they experience their first loss.

This does not have to be the case though. Find someone who can teach you how to lose your money properly so you lose as little as possible. It is going to happen. You are going to lose money, so learn to lose as little as possible.

Are you losing to much money? contact mer, let's see if we can do something about it! info@empoweredinvestingnow.com          

S&P 500 Sector Analysis for February 2011

Patriot Coal Corp. (PCX)- Nice Bull Call Spread Option Play

Patriot Coal Corp. (PCX)

Options traders are placing bullish and bearish bets on the coal company today with roughly one week remaining before the firm reports fourth-quarter earnings ahead of the opening bell next Tuesday. One bullish player hoping to see PCX shares gravitate toward the January 14, 2011, 52-week high of $27.35, initiated a near-term call spread.

• The investor picked up approximately 4,700 now in-the-money calls at the February $24 strike for an average premium of $1.58 each
• Sold about the same number of calls at the higher February $27 strike at an average premium of $0.67 apiece
• Net premium paid to establish the bullish spread amounts to $0.91 per contract

Thus, the trader starts to make money if Patriot's shares rally another 3.6% over the current price of $24.05 to surpass the average breakeven price of $24.91 by February expiration.

CA Inc Earnings Review

by Zach Investments (Guest Article)

CA Inc. (CA) is scheduled to announce its third quarter 2011 results on January 25, 2011 and we do not see too much variation in analyst estimates at this point.

Second Quarter Overview

The company reported decent second quarter 2011 numbers, with earnings per share (EPS) of 46 cents, exceeding the Zacks Consensus Estimate of 44 cents.

CA delivered $1.110 billion in earnings, up 5.0% from $1.067 billion reported in the year-ago quarter. Revenue growth was noticed across all business segments except Subscription & Maintainance.

Within the geographical segments both North America and other International segments made major contributions. Total bookings in the second quarter were $1.018 billion, up 10.0% from $934.0 million reported in the prior-year period.

Operating income for the second quarter stood at $307.0 million (28.0% of revenue), down 9.43% from $339.0 million (32.0% of revenue) reported in the year-ago quarter. Moreover, CA is cash rich and exited the quarter with cash and cash equivalents of $2.525 billion, up from $2.470 billion.

During the first quarter conference call, management projected fiscal 2011 revenue growth in the range of 3% to 5% translating to revenue of $4.45 billion to $4.55 billion. Earnings per share on a GAAP basis are expected to grow in the range of 5% to 13%, two percentage points higher than the previous guidance, which translates to earnings per share of $1.54 to $1.66, while non-GAAP earnings per share are expected in the range of $1.85 to $1.97.

Agreement of Analysts

Out of the ten analysts providing estimates for the third quarter, fiscal years 2011 and 2012 only one has lowered estimates, while three analysts raised their estimates in the last thirty days. The unchanged estimates also point to the fact that there were no major catalysts during the quarter that could have a major impact on the results. Consequently, the analysts more or less stuck to their estimates.

Cloud computing is the area in which the company is investing much of its financial and human resources and we agree that prospects in this segment are bright. However, the stiff competition that CA is up against should also be kept in mind. The space is slowly becoming crowded with big players, which temper CA’s growth prospects in our opinion.

Some analysts believe that the company has attained much stability in free cash flow generation. Others have mentioned that the valuation is attractive considering its strong fundamentals.

Moreover, analysts believe that the company is in the early phase of adopting new computing architectures, which are expected to push top-line growth from the low single digits to the high single digits and keep earnings growth rates more or less in the same range.

Magnitude of Estimate Revisions

The magnitude of revisions is also minimal since the company reported its second quarter results. Overall, estimates for the upcoming quarter have moved up 1 cent over the last 90 days to 46 cents, with no changes in the Zacks Consensus Estimate over the past 30 days.

For fiscal 2011, Zacks Consensus Estimates have inched up to $1.81 from $1.80, 90 days ago. No change in estimates was noticed over the past 30 days. For 2012, the Zacks Consensus Estimate has moved up from $1.91, 90 days ago to $1.96, with an improvement of a penny over the last 30 days.

Recommendation

We are optimistic about the company’s positive outlook for fiscal year 2011, its enhanced product portfolio, growing customer base and a revival in the macroeconomic scenario.

On the other hand, we are a bit concerned about the intense competition in the software and cloud computing space from big players such as International Business Machines (IBM) and Hewlett-Packard Company (HPQ).