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1. Morning Prep
By Ken Wolff
9:24 a.m. EST
( QQQQ) have already touched above Friday's highs this morning, so the uptrend appears to be intact. SPY has hit $109 so far this morning, and QQQQ broke above $44 earlier.
We have to assume a trend will continue until we see evidence to the contrary, and at the moment I am seeing no reason to believe we will stop climbing anytime soon. So again, I will be watching for minimal early selling, followed by breaks to higher highs. The gaps look pretty uniform among the key stocks I regularly watch, so it appears to be a broader market move.
Nothing is hitting my scanner this morning as far as news plays go, so I will probably be watching for an early QQQQ long, as well as
( TRA) and the usual suspects. It could hit $44.50 if we get another good move up today. Beyond that, the daily chart 50-MA resistance is hanging overhead around $44.70 to watch out for.
2. A Big Day for Fertilizer
By Sham Gad
9:48 a.m. EST
It's only Tuesday, but we've got some very meaningful news on the fertilizer front. Norway's
is buying the nitrogen company
( TRA) for $4.1 billion, or $41 a share, a 24% premium. This price was above the price at which rival
was wanting to buy Terra before abandoning the deal.
At the deal price, Yara is paying a price that is very attractive for the valuation of other fertilizer giants ... and coming after
purchase of fertilizer assets from
, we continue to see the attractiveness of the fertilizer industry.
Speaking of CF Industries, the company reported fourth-quarter profit of $1.04 a share, missing estimates by a few pennies. Shares are up more than 3% as the company expects strong spring market conditions to bolster demand for fertilizer.
By Timothy Collins
10:13 a.m. EST
I am going to close out the earnings trade from
, which was long 1x Feb 110 calls, short 2x February 125 calls around $4.00. Frankly, I am lucky to get out of this with a profit as the stock plummeted after earnings. I like the ag space, and Sham Gad has been all over it with coverage, so I won't rehash, but I am going to take advantage of the
( TRA) news to exit a position that I paid $3.20 for and had little hope of recovery. Also, there is very little time left till expiration, so I don't like the short-term risk vs. reward.
4. Sold Half of Whole Foods and Freeport
By Brian Gilmartin
10:56 a.m. EST
( WFMI) reports after the bell tonight, and although we aren't expecting any issues given that its problems started about a year and a half before the credit crisis and the Wild Oats merger could turn out to be bigger plus than WFMI originally thought, we sold half the position for a 5%-15% gain in front of earnings, and we will see what tonight holds. (Typically, stocks that have rallied hard in front of their recent earnings reports have consolidated after results. WFMI guided down for this quarter in October, thus the stock is still well short of the $34 October high.)
We also took gains on about half our
position this morning. Suddenly we have a lot of press coverage discussing $1 copper (this weekend's
), and with the stronger dollar, we didn't want to take any chances. I believe recent China action regarding bank reserves will actually prolong that country's secular growth, but I've never been a big China bull for other reasons.
Remain long about half of the original WFMI, FCX positions.
5. Southwest Airlines Lifts Off
By Gary Morrow
2:44 p.m. EST
Strong passenger numbers for November are lifting the airline sector. According to the U.S. Bureau of Transportation, the number of people traveling rose 1.6%. The positive news has sparked gains ranging from 1.6% for
to 4.5% for
, with a 3% gain, is the only sector stock trading at new 52-week highs.
LUV is trading above heavy resistance at $12 and is set up for more near-term upside. Volume so far today is running at an average level, but that certainly wasn't the case last week. LUV has attracted heavy trade since hitting support at its 50-day moving average a little over a week ago. The stock has since rallied 15%, taking out the upper trend line of a bullish pennant in the process.
Southwest now has solid support in place running from the December highs of $11.80 to the January highs of $12. A pullback to this area would provide a low-risk buying opportunity. There is quite a bit of overhead resistance in place near the 2005 lows of $13.05; the stock may need a healthy consolidation before that area can be taken out.
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This article was written by a staff member of RealMoney.com.