Asian markets picked up our torch and headed for the basement last night but Europe seems to have shrugged it off this morning but the indexes are led by oil and gas, which is not my favorite kind of rally.
Levels to watch are the 50 dmas of the majors: Nasdaq 2,275, S&P 1,275 and Dow 10,900 – Only the Dow is well above the line while the other 2 are right at the edge of a nasty precipice. Most other indices are in the Dow’s position, with quite a bit of room to spare so we need to look at the S&P and the Nasdaq, which treated 2,275 as a solid floor yesterday, for direction.
The S&P has had 2 solid rejections at 1,295 and looks tenuous so this rally will need to be led (just like I’ve said for a month) by the Nasdaq, which needs to break 2,335 to confirm an uptrend.
Oil is heading back towards $62 with a small build expected (600K) and very minor drawdowns (-500K) in refined products predicted at 10:30. Traders feel that the drawdown will be larger as “Summer driving season is upon us” (any excuse to raise prices) and international tensions are still high so we could break $62 is there is any sort of drawdown.
On the other hand, a build of more than 1M barrels could drop us back towards $60 so be prepared to play oil either way if you are inclined to day trade them, paying close attention to the Valero Rule! The problem with a drop in oil stocks is that it will drag the markets down and they are jittery enough today so be very, very careful out there!
I’m not too wild about buying today until we get past the oil report and see how that affects the general markets. Remember, 25 Dow points is a lame bounce and 50 Dow points is just a retracement from yesterday, we need to climb back over 11,150 to take this seriously.
Quote of the day by our beloved leader as he stood at the airport surrounded by the armed gunmen that patrol the streets: “People all over the world are watching the experience here in Afghanistan” Like he’s in friggin Epcot! This just after “2 door gunners on a press helicopter (in Mr. Bush’s chopper entourage) fired off a short burst of machine-gun fire at unknown targets as the aircraft flew low and fast over barren countryside.”
======================================
Google says they’re sure there are lots of ways to make more money, somehow, some day, maybe soon… Here’s the press release they issued to staunch the bleeding caused by Reyes’ morning statements:
“We would like to clarify and provide further information on these statements. As we have stated before, monetization improvements will continue to be a key factor in driving future revenue growth. We still see significant opportunities to improve monetization and intend to continue to focus our efforts in this area.”
“Moreover, as we have stated in our SEC filings, our revenue growth rate has generally declined over time and we expect that it will continue to do so as a result of the difficulty of maintaining growth rates on a percentage basis as our revenues increase to higher levels.”
Well, I certainly feel like spending $362 a share now, don’t you? Remind me never to hire these guys to be my spin doctors… And don’t forget the disclaimer at the bottom:
“This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding future revenue growth and opportunities to improve monetization. Actual results may differ materially from our expected results. Factors that could cause actual results to differ from our expectations include competition, our ability to innovate, the growth of the market for internet advertising, our ability to penetrate foreign markets and general economic conditions.”
While I know every company has to put that sort of thing on a statement, I always had a rule in my company that the press release should have at least twice as many words as the disclaimer – you need to see it on paper to realize how silly this looks!
If “THEY” can’t move Google up today then we may be approaching a real meltdown for the stock. The only reason I’m not jumping on it is because 40M shares traded yesterday, that’s 22% of the float so one might think that everyone who wanted to sell may have sold already. So it’s either that or there is another 40M shares that were just too shell shocked to hit the trigger yesterday but may just be waiting for that last straw to abandon ship.
The reward/risk of shorting is greatly diminished at this point, especially with the strong bounce off the 200 dma at $340 (heck, at $300 I’ll buy the thing!) while the 50 dma is way up at $410 and has little resistance now that 40M selling shares have been cleared out.
I am hoping the stock can make it back to $399 (but not $400) and be rejected again for a great shorting opportunity but, other than that, it will only be good for swing trading – at least until tomorrow’s conference!
=====================================
COST Apr $52.50s for $1.20 is my favorite trade from yesterday but Cramer convinced me that this is a great long-term play as well so I also like the Jan ’08 $45s for $10.60, selling the April $55s for $1 or more (but don’t sell the call into earnings). You might want to take the $50 puts for .60 for insurance as this will be a long term play if you want to be cautious.
Don’t forget that .03 is a great day for NT so you haven’t missed anything there!
PLAY is a long-time favorite and I think it’s buying time again. The May $27.50s for $1.85 give us a look at earnings and the hope that their cool new laptop preview screens (like on your phone when it’s closed) will catch on. Hold off until AAPL comes back though as this stock has unfairly become a trading pair:
http://finance.yahoo.com/q/bc?s=PLAY&t=3m&l=on&z=m&q=l&c=aapl
BA is pulling back and soon will be a great buy, maybe under $70 or lower if we’re lucky.
Other pullbacks on potential trades that were gifts yesterday: ANF, SHFL, CME, CMCSA, MSFT, TXN, IACI, CHIR, BCRX, INFY, UNH, PD, LNUX, SHLD…
BOOM had a nice quarter, up 40% on 16% more revenue (my favorite!). Last Tuesday I said: “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.” After flirting with $34, the stock settled in at $32.70 (+6.5%) comfortably above the 50 dma (very good sign).
I am still long-term bullish on AAPL but it looks like the battle scene in Braveheart the way the bears are hitting this stock! Still I increase my position another 10% today on the Jan $65s even though they seem like kind of a rip-off at $14. Due to the ridiculous premium, I am forced to make a quick decision on selling the April $70s for $4.30 but I will try to hold out to sell the $72.50s for the same price. Rumor is that Apple’s announcement was lame because of a second delay of Apple TV. If they get this right, they will jump right up with Sony and Co. as a serious choice for flat screens.
MTU Aug $12.50s at $3.20 are up 50% from our initial pick 3 weeks ago but are still a good buy!
=====================================
I haven’t had time to check it out yet but TradeKing.com claims that it trades options contracts for $4.95 per trade as a base + .65 per option contract. This is good for buying penny stocks and large option blocks but I so love the execution and service at optionsxpress I would be hard pressed to switch.
Still not going into anything except for perhaps little 10% of goal positions and I am maintaining 1/2 cash at all times and essentially day trading (taking profits off the table asap).
This one is too good to pass up, the stock got hammered yesterday on a “Research Report” conducted by Piper Jaffray (who should stick to tech) where 60% of doctors said Tysabri should not return to the market. With the FDA meeting next week to decide the fate of the drug, this study’s timing is odd to say the least.
The fact of the matter is that people with MS have already said, in very loud and consistent voices, that they do not consider the possible risks associated with the drug to be enough of a reason to continue to suffer on a daily basis.
First of all, BIIB is not a one trick pony. Second, the stock is trading $25 below (35%) where it was before the withdrawl, 3rd it bounced hard off the 50 dma (and the 5% rule) at $46 (recovering half it’s loss), 4th the forward p/e of the company without Tysabri is 20 (down from 100), 5th the FDA just OK’d Rituxan for Rheumatoid Arthritis…
Anyway, suffice to say I like this company. We cleaned up with the Apr $45s a couple of weeks ago today so we can celebrate the anniversary with the Jan $45s for $8.40.
A spread can also be played by selling the April $50s for $2.50 and buying the Mar $45 puts for $1.25 in case the ruling goes against them but you will be crying if everything goes well! I am, of course looking toward this as an income producer and will start selling calls after the FDA decision although selling the April $50s provides a great return and protection at the current price.
