Europe is flat and Asia is flat to down, the Global markets are pretty much looking to us for direction (talk about the blind leading the blind!). We should be able to recover most of yesterday’s drop so it will be a nice day for some day trading but please take those profits off the table!!!!
The big question of the day is will oil break back below $62 (yes) but I expect it to hold $61. Right now traders are looking for any excuse to keep the prices up and there is no shortage of jitters to point to. Remember, oil pricing is futures so it is always sentiment vs. reality but hopefully tomorrow’s inventory (delayed by holiday) report will serve up a heaping dose of reality for that market.
The big news of today is the CPI which will be critical to a data driven Fed. Unfortunately, in an effort to be more clear, Bernanke has caused more confusion as there is way too much data to try to use any one piece to figure out the Fed. Although the “core” CPI remains a well-behaved .2%, if you include energy you get .7%, quite a bit higher than expected. This means that stocks will have to shrug off oil prices to make real gains today.
Housing numbers should be OK this year, so we’ll take another look at the builders and suppliers.
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GOOG may be moving back up thanks to BIDU’s great numbers. I like the look of buying the Jun $380s for $31 and hoping I’m right enough to sell the $400s for $10.
TASR got spanked on expected low earnings. Hopefully this will be the last quarter severely impacted by legal costs and they will give us another buy opportunity around $8.50.
BTU ran into the 5% rule yesterday and should pull back. I am tempted to take the $95 puts for $3.20 ahead of inventory as just last Wednesday, the stock was at $85. Gotta use the Valero Rule here. Also, keep your eye on ACI which is a trading pair.
GRMN knocked the cover off the ball with earnings. Too late for this one as it will probably open at an all-time high. COBR has been making great progress in GPS and dominates the radar space already so I like owning this non-optioned stock for $11.88 into tomorrow’s earnings.
I mentioned in comments yesterday that I picked up SU $75 puts for $2.50 as the stock ran up way too much early on. I didn’t make a penny yesterday but they will probably open a bit higher and I am inclined to hold on through inventory – closely following the Valero Rule! SU actually made less money on more sales this year. While I think this company will be huge in 2010, I don’t think the environment is patient enough to support the 130% price increase from last year.
HET had those great earnings that look like a miss but were actually a beat! I love how no one can read an earnings report. Unfortunately they have a conference call at 9am so they may explain it to people before we can take advantage of it but I’m going to put a bid on the April $70s for $3 and hope for a nice drop to the 50 dma of $71.
JBX had an OK quarter but raised guidance so it should be taking off today but I will try to grab the $40s for $1.50 if I can.
HOV backs their Q1 guidance (3/1) and I believe them. That means the $45 calls should pay off at $2.50 but you can also spread the $50s and $40s for $.90 and probably do all right.
Homebuilders ready to run on good group earnings are:
- BZH – May $60s for $7.60
- LEN – May $60s for $3.50
- BHS – Not optionable, $49.86
- RYL – $70s for $2.20
- TOL (2/23) – Apr $35 for .75 and Apr $25 for .30
