I hope I’m not writing this in vain as I have been unable to post any comments all morning.
Asia is mixed, Europe is generally down a bit and our futures are down a bit too. Nothing worse looking than consolidation at the moment but there is disturbing news from China as they are blocking some US investments (payback for Unical?).
Let’s expect and be happy with a consolidation day today. All we ask is that we hold our new floors: S&P – 1,300, Dow – 11,200, Nasdaq – 2,300. As usual, it will be the Nasdaq that has the toughest time today and it is pretty much all up to Microsoft. After trading 146M shares yesterday you would think everyone who wants out got out but the company has 9Bn shares outstanding so it will take about a week to see what the major shareholders really think about the company. The big danger is a downgrade but, like Intel, this delay is a blip on a blip to the earnings and will only serve to make next year stronger.
We get an honest reading on energy supply today with the natural gas inventories. If nat gas is under $7 that is bad for CHK, ECA, BTU and especially ACI who are sitting right on their 200 dma of $69.50. If ACI breaks below, then all are good shorts.
Copper is flying up ($235) but other metals are flat and oil is attempting to rally above $62 – going into the weekend I don’t think we’ll be getting a downward move this week but let’s keep our eye on VLO as the volatility is now through the roof on this one. Copper is higher today than it was on 2/5 when PD flew to $81 (now at $72).
Gold meanwhile is off 4% since 1/31 but NEM, NAK and ABX are down 25% – this will be a great play if gold turns back up but, like I said previously, silver is sucking up all the gold money at the moment.
Since I was so right about fund activity yesterday I’ll go out on a limb and say that today you will see a lot of the laggards being picked up, look for slow movers in strong sectors to suddenly get a lift.
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YHOO finally broke away from tracking Google yesterday which is huge so I’m liking the May $30s for $2.20 (a $1.45 premium), giving us a look into earnings. After bottoming out at $30 last March, Yahoo rallied to $38.95 by mid-May.
http://finance.yahoo.com/q/bc?s=YHOO&t=5d&l=on&z=m&q=l&c=goog
Bad news for BCRX, bird flu may not be that contagious for humans as it lodges deep in the lungs and doesn’t tend to get spread by normal coughing or sneezing. This was a $10 stock pre bird flu and may run into some serious trouble on this news so I like the $17.50 puts for .55. This stock has been very good to us on the way up but companies that live by the momentum die by it too!
GSK is very screwed by this because their Tamiflu alternative Relenza has a very short shelf life and if people even think that they have been making a lot of it, this stock will drop back down to $51ish. I’m pretty confident in the $55 puts for $1.65 (a .65 premium) here.
MLS is now getting a formal SEC accounting probe. That means subpoenas and investigators crawling around and reporters jumping all over them… Darn, we should have shorted them!
CEPH is halted due to FDA news. I think their Sparlon approval is in trouble and I have heard buzz about “psychotic events” in children and “seious rashes” which was not enough to act on and I was waiting to play the momentum when the bottom fell out last week so I just moved on but yesterday’s $8 run-up into today’s halt will make for a very interesting day. I now have a feeling that the guy who dumped this thing down to $64 in yesterday’s pre-market may have been on the right track! I will try to buy some $70 puts for $3-5 if the news is bad but they may be tough to pick up and I’m not going to chase it.
CAG had a 10% beat today, thoroughly confusing the 8 out of 9 analysts who rated the stock a sell or hold even after it has dropped 27% this year on 5% growth. With a p/e of 13.5 I should have been on this sooner but the stock is a very slow mover and the $20s should be gettable for about .80 (expect a .30 premium – don’t pay more!).
GIS also had a nice beat, too late to play them but further evidence that consumers are still in the game.
TASR got another order from the Mounties and a great study yesterday showing that anyone who dies from a TASR is just a big wimp and not Taser’s fault! I caught that one just as the market closed by taking the $10 calls for .80 but this stock is often punished as soon as it sticks its head up so I would only play this as a pure gamble. Last April the stock topped out at $12.50 before taking a long hard road down to $5 so I think that may be my limit of expectations in the short run.
I was wrong not to be more patient with LGF as it has had a great move this week and looks very strong. We first picked it at $9.50 and now it has solidly broken $10 and looks poised to make the move I was looking for 2 weeks ago.
SCHL says it’s worse than you think. Without Harry Potter (which was a disappointment last year anyway) this stock is a sinking ship but I think we are too late on this one as the pre-market has already taken it down $4 (20%). I will hope for a rebound to $27.50 then look to short back to $25.
I keep saying either NVDA will come down or ATYT will go up – it looks like we’re getting both as NVDA crashed yesterday and today ATYT will overreact to being included in a Fujitsu notebook (do you know ANYONE who has one?). Nonetheless, I like the $15 calls for .80 at this spot.
Look for Cramer pump SVI to make it to just over $11 today as they bought Jamba Juice for $265M. If you believe in the product this could be a great and painful long-term hold as the company will rename itself Jamba, Inc. and may get an IPO like push with the publicity or it may be a terrible idea and you end up with a $7 stock for 3 years…
INTU (Turbo Tax, Quicken) should benefit from HRBs problems and they really don’t deserve to be priced the same as Dec ’04 anyway so I like the May $55s for $1.25.
It’s been too strange lately but I like PD at this point with the $75s going for $2.25 once it gets back over the 50 dma at $72.50. Watch PCU as a trading pair.
Speaking of me being a genius, remember way back in time on 2/13 for TOTD when I said: GE collapsed in the tech crash in 2001 and again following 9/11 and really never recovered. Out of 10Bn shares outstanding only 39M shares are shorted so don’t expect any surprising rallys but, as a long-term hold, this stock is without compare and, at $4 less than Dec 2004, it should work in the short run as well.
I got bored tracking it as it was a very long term hold but the timing was great and GE is just about to pop again so I thought I’d point out that the Jan ’08 $30s are now $6.90 (up 20%) and the Jun $32.50s are $2.55 (up 40%) and you ain’t seen nothin’ yet!
Jun $35s are still being given away for .85 considering the stock is up $3 in the last 45 days but I still would find the Jan ’08 $35s more relaxing for $3.80 as there is bound to be a pullback sometime.
