That was hardly even what I would call a bounce…
Once again, if you take out energy stocks, we are looking at a loss for the day and, if you don’t take out energy stocks soon, the price of oil will destroy the rest of the market.
Gold was actually fairly weak (just under $560) in light of a declining dollar, the same goes for oil which was flat but at a nose bleeding $68.
Cash was indeed comforting today as the Dow went up 80 points by noon and then back down to finish with a 20 point gain. The other indexes followed suit and the day’s action left the traders non-plussed for the day. The only positive indicator was that advancers beat decliners 2 to 1.
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Google had an interesting day with an expected flurry of upgrades sending all the poor retail sheep in for the slaughter. Why is it that people can resist a marked down item in a store but will fall for a marked down stock every time? It’s the same stock it was on last week when nobody would buy it for 4 straight days – what changed?
We’ll see tomorrow but I did take a bunch of $410 puts as I thought today’s buying was way overdone (I trade wrong on Google more often than any other stock by the way!). The stock is resting right above the 50 dma of $425 but today’s volume was close to half of Friday’s so I am not convinced this stock will really recover this week. Earnings are next Tuesday though so this will be one wild month for Google regardless!
For Google to hit its numbers next week, it needs to sell 90% more ads than it did last year (400% more than it did in ’03) and actually increase margins in order to hit the forecast 150% increase in earnings (10x more than ’03).
With a forward p/e of 50, the stock will have to double every third year in order to justify $500 – that will mean $12Bn in sales by 2008. Yahoo has been in business over 10 years and has $5Bn in sales. Since Google doesn’t give guidance, quite a lot is riding on hitting that earnings number next week! Essentially, Google must outsell Yahoo this quarter in order to justify its pricing.
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JNJ was well up into earnings tomorrow morning. I was hoping they would announce a buy of Guidant and drop their stock into the toilet but they are too smart for that it seems! They have until 9:30 tomorrow to make that mistake so I’m crossing my fingers…
TOTDs FRE and FNM gave us nice entry points and were weak all day, they both have to raise money on Wednesday by selling a combined $8.5Bn in bills and any problems there will really move these stocks lower.
NAK was up another 3.5% today. If gold goes over $560, this is just a warm up.
BVN is still lagging the gold sector by a mile. The stock is at the same price it closed out 2003 with when it had 25% less earnings. The mine in Yanacocha that BVN shares with NEM is expected to decline in output by 20% or more but the price does not take into account a 40% rise in the price of gold over the same period (2005 – 2007).
I hope you got a slice of Apple today, it went straight up out of the gate before pulling back to a nice 2% gain.
This morning’s NKE $85 puts were fantastic as long as you weren’t greedy. They went from $2.10 to $4.50 in less than 2 hours before trading back up the rest of the day to $2.40. I said this was a day trade and it could have worked both ways but you have to be happy with 100%!
MCD had a flat day today on another Mad Cow scare up in Canada. The fact that it ended up flat is a real indication of strength in the stock.
TXN had great earnings but not so great guidance so we will see how that shakes out tomorrow. I really like this stock but I was scared off it by Intel’s awful performance.
GM exceeded my expectations and I am in with the $20 put (got them for .90).
Two time (11/14 and 12/9) TOTD PD is on the mend, bouncing nicely off the 50 dma of $140 with a 5% gain for the day. With copper prices rising, there is no reason this stock can’t retake it’s high of $156.
CY had a very nice day with a 2.7% gain. This was very unusual as SPWR dropped 4% today on news of a competitive technology (nanosolar) coming down the pike.
It turns out the ELN calls we sold were, as I noted, too expensive, the stock went up 3% but the calls dropped 20% leaving that trade sitting very pretty!
MFE is getting decimated (-14%) in the after hours on a projected earnings miss. We will find out next week if SYMC is beating them or if the whole virus industry is in decline.
OLED is on the move again! This stock was unjustly dropped for raising needed capital back in December but they have technology that could make them the next leader in flat-panel TV’s.
PFE is still holding up well.
We got out of the DIA $110 put with a very nice 270% profit (ignoring what we spent on the $111 call). If we are really lucky, the calls will close in on $1 some time this month, locking in additional profits.
Friday’s builder picks continue to go down, shorts on this group are up 5% since we called it. Don’t be greedy!
I finally broke down and picked up TM July $100s today. I will be looking to sell the $105s for a quick 20-25% (as long as we stay above $100 for the month).
