Simply stated, the rally continues.
Nothing, and I mean absolutely nothing can hold this market down.
Numerous downgrades from Fitch, Moody’s the S&P and more importantly the World Bank, more European woes, news of inevitable Greek default, financial sector struggles, among bearish technical and seasonal readings hasn’t helped the bears at all during 2012.
As a result, the market has managed to advance on ten of the past twelve trading days leading to gains of 4.6% in the S&P 500, 4.1% in the Dow and a staggering 7.0% in the Nasdaq – in three weeks, yes, three weeks.
If you tack on the gains since December 19th, when this rally started, the gains are . . .
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This week I will share an options play that we are taking in advance of tomorrow’s earnings announcement by AAPL. If you think it is a good idea, you will have to place the trade before the market closes Tuesday, January 24, 2012.
Options Tip Of The Week
Expectations are sky high for Apple. The company reports earnings for the 4th quarter tomorrow, and Christmas sales are rumored to be through the roof. People have reported long lines for a month at Apple retail stores.
Demand is so high for iPhones in China that hordes of country dwellers have been hired to take a train to a city to buy a single iPhone (payment $16 for a day’s “work”) but the stores don’t have enough products so many people were turned away. A riot broke out and the stores were eventually closed (the website stills sells their products, but you wonder why they hire buyers if consumers can buy online).
It is always a good sign for a company when the biggest obstacle to success is making enough of the products rather than selling them.
On a fundamental basis, AAPL is trading at less than 11 times forward earnings, an extremely low number for a company growing at 39% a year (although it may be more than this amount – we will know tomorrow).
So will the stock skyrocket on Wednesday after the earnings announcement? The answer is . . .
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Most of the time, we talk about the wonderful aspects of investing in options. I am proud that the new strategy we set up five weeks ago has now had five consecutive weeks of gains (averaging over 5% a week), but today I would like to discuss some of the negatives in trading options. Unfortunately, there are a few.
A Look at the Downsides of Option Investing
1. Taxes. Except in very rare circumstances, all gains are taxed as . . .
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