Greenspan’s last FOMC minutes were released for dissection today and, although it didn’t say anything new, there was a hint of inflation but a good general report card on the economy but the possibility of more tightening won out and the markets gave up all hope after 2 pm.
It may not seem like much but, after falling from $68 on 2/1 to $59 in 10 sessions this month, oil was having a lot of trouble breaking back over $61 today. The volatility will probably continue until the 3/6 UN Security Council meeting (not that that will resolve anything but it will give everyone something new to talk about).
My Friday morning call for getting out was well timed and today was a good day to watch how everyone behaved so I’ve lined up a few new positions I feel comfortable with but I stress that it is still time for mostly cash until we get a confirmed change of direction.
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Although we should be out of everything, leftover picks that are working on a bad day like today include: BA, JNJ, ACI, TOTD IMAX, TASR. ACI, CCE (kill that one), HD and SHFL.
Back on 2/9 I said “I hate to turn on SNE after making so much money on it last month but, come on, 50% since Nov. on one good quarter? If the Nasdaq falls and Apple doesn’t recover the Jul $45 puts look good at $2.30.” Well, aren’t I clever! (pat pat) Now we need to think of repercussionsssions for the gaming sector including GME, ATVI, THQI , ERTS…?
AQNT is just about going down after posting a “disappointing” 50% increase in Q4 earnings and revenues. You just can’t make some people happy I guess but even if growth slows down to 25%, this stock is still underpriced. We are still way above the 200 dma of $21 and the recent low of $23.25 so I’ll wait a bit but it will be a buy on any turn in tech, especially media.
Why buy the miners when you can buy the people who make their tools? You know, the ones they break every five minutes!? JOYG has been on a tear through this whole mining bull run but it seems very comfortable at $55. I like the income play on this one by taking the Jan $45s for $16.50 and selling the Mar $55s for $3.50. Q1 comes out on 3/1 and expectations are high so you may want to wait on this one!
I’m taking my LNUX profits and moving sideways into NWRE, who specialize in wiring, managing and servicing Linux networks. They pulled back due to slightly slower than expected Q2 as well as a small secondary offering. The bottom line is that you can buy this stock for the same price as the big boys at $25.25 with a quick 7% by selling the $25 calls for $1.50.
Any time BOOM (2/28) goes on sale it gets my attention, it’s down $8 from its high but coming back fast. No options but a stock that has doubled y/y earnings in the past 3 quarters is only expected to increase Q4 by 20% so I smell a beat.
I like CCJ at this price because of the movement possibility relative to the option price. Bush is saying “nuclear” so often he’s starting to pronounce it correctly and this company took a huge bounce off the 50 dma after a disappointing Q4. The Mar $75s can be owned for $3.30 or sold against the Jan $70s ($16.70) for a quick 20%.
After growing 20% this year INFY is still $70, less than last year’s highs. We are outsourcing homeland security so I doubt this trend will end soon! The July $65s for $9.60 are nicely offset by selling the April $70s for $4.30.
GG (3/6) is looking good if gold breaks back to $570. Mar $27.50s for .60 can fly into the money on a gold rush. NAK is also on sale at $6.25.
PETS Jun $17.50s are reasonable at $2.80 (a $1.70 premium). They have been held back with the drug sector but pets hardly ever sue and someone is bound to realize this at some point between now and June.
LIFC has been consolidating while their sector fell apart this quarter. A little more consolidating time and they’ll be off so own the stock and sell the June $22.50s for $2.55 (12%) while you wait.
TIE is being bought up by the CEO to the tune of $15M which is a good enough buy signal for me on this amazing company. We said to take it last week if BA was moving but let’s jump on this with the $40 calls for $2 but not being greedy!
ESRX has people nervous coming into 2/22 earnings with analysts expecting them to earn a whopping .75, ½ of what they earned in all of 2003! I say they beat it so I’m taking the Jan $90s for $15.20, selling the $95s for $2.65 and buying the $90 puts in case I’m wrong for $2. That’s a .65 profit on free protection!
TALX is a great way to play the labor shortage. It seems to work well for people and they are putting their R&D behind them which is converting nicely into profits. The current $33.38s should do well at $1.05.
CME is now officially better than Google, going from $63 in Oct. ’04 to $411 today. With a p/e of 45 vs. GOOG’s 73 (after the beating) this stock will really fly as long as Google doesn’t totally melt down.
