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1. Ambac Financial Options Active
2/6/2009 1:33 PM EST
Ambac Financial Group
( ABK) is seeing unusual options activity as its shares rise 17% on the day.
The stock move is only 19 cents, as ABK is at $1.31 in midday trading after struggling to stay above the $1 mark for much of this week. The options today are active at the March 2.5 strike, where a chunk of nearly 20,000 calls were bought for 15 cents against minimal open interest of 107 contracts. Those calls are now going for 20 cents to 25 cents, according to OptionMonster's proprietary systems, which track unusual options trading in real time.
The action got our attention because it followed earlier activity we cited on Jan. 28, when the May 2.5 calls were trading on heavy volume as the stock traded at $1.23. Those calls, which went for 25 cents and 30 cents back then, are up a tad to 35 cents and 40 cents.
Ambac, which insures bonds, made headlines earlier this week for granting $3 million in cash bonuses to four executives after its stock had fallen 95% in 2008. The company is scheduled to release its fourth-quarter earnings on Feb. 25 before the market opens.
2. My Thoughts on SQNM Here
2/6/2009 12:42 PM EST
is having a rough week (down about 16% for the week at this point) after releasing their much-anticipated data last week. Certainly part of it was just plain sell-on-the-news action, but I think the majority of the selloff was due to more fundamental reasons.
First, the company miscalculated some figures in its release last Thursday. The errors were mathematical in nature and not data related, but nonetheless, the mistakes look very junior varsity, or bush league, if you prefer. I don't have any reason to question the integrity of the data, unless the wool is being pulled over our eyes with plain fraud. But this gave the shorts full cover to fire away as the stock fell into a vacuum.
Second, there has been chatter over the last couple of days surrounding emerging competition. I am less concerned about this. Nonetheless, I am interested to know what the landscape will look like down the road.
After speaking with the CEO yesterday, my questions were answered satisfactorily, and I remain in the stock. I do believe this stock will require patience or a substantial amount of trading, as we are entering a catalyst vacuum for a while. I plan on doing the latter and supplementing it with options trading as well -- most likely writing premium.
3. If at first you don't succeed...
2/6/2009 12:24 PM EST
Icahn sent notice to
that he is nominating four board candidates for election this year.
He was unsuccessful in trying to replace three board members last year (two nominees are repeat candidates this year), and it's unclear to me why things might change in his favor this time around.
Icahn still owns about the same amount (4.8%), and the institutional shareholders look the same. Sure, the stock is down, but that's hardly a good argument in this environment...
Ichan's biggest point of contention last year was that the board botched a sale of the company in 2007. It'll be tough for him to convince other shareholders the time is right to sell this $15 billion EV business in this environment...
4. Job Losses Not Near Peak
2/6/2009 10:11 AM EST
I have seen little evidence suggesting we are near a "peak" in job losses. Corporate earnings have been very weak (as expected) but with few signs of stabilizing in the short-term. Bellwethers
have given little or no guidance, creating even more uncertainty.
Also, stocks are surging today after job data were mostly in line with the whisper numbers. We saw the same outcome yesterday with same-store sales. I get it. But investors should use caution buying into this market where job losses are averaging more than 500,000 per month and same-store sales -- for many retailers -- are in the negative double digits.
Is most of the bad news priced in? Still a tough question, but for
( ERTS) with $8 a share in cash and no debt, the answer heading into the Q was yes. But
turned out to be a value trap. Tough market, but opportunities exist. Just look at
Research In Motion
( RIMM) and
5. Morning Trade
2/6/2009 8:10 AM EST
Thought I would get my levels out early with
National Financial Partners
likely to make things interesting pre-market. Yesterday's market move was impressive and really got into gear once
broke free of 90 ... it continues to be a stock one must keep track of. I would be more confident in continued upside if we hadn't had three days (out of the last four) of sub-100 readings on the index put/call ratio and that insanely low reading yesterday (I initially thought it was a mistake) ... so we are probably due for a whack in the near future.
If the NFP number surprises traders to the upside, we may see the e-mini break free of the 846 and 849/850area. A break of these two areas sends us to (and likely through) weak resistance at 853 and stronger resistance at 856.50. If the e-mini can push through 856.50, it will run into another moderate resistance level at 859.75 ... which I think would exhaust the bulls (at least for today).
If the bears want to take control of this market again they will need to push through initial support at 839.25 and 836.75. A break of the 836.75 area sends us to weak support at 833 and stronger support at 829. Look for the bulls to try and defend this area ... if the market is unable to hold here we could drop down to 822.50 before finding buyers again. My extreme low for the day is 816.
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This article was written by a staff member of RealMoney.com.