Asia is up a bit but Europe is a bit weak and despite AMD and GE having great earnings, the futures are all down. If GE doesn’t go up there is no hope for the markets and the oil patch may drive the whole thing down but retail sales are very strong and retail pricing is in check so there is every reason for a rally today.
Remember, if oil is down (OGX, OIH) but the markets are up anyway, that’s a nice strong rally but more likely oil will drag down the markets again.
Oil has pulled back but is holding above $68 but the interesting thing of the day is that refiner TSO gave a disastrous warning that earnings are going to be 20% below expectations due to high oil prices and poor hedging decisions. It will be interesting to see how much they are punished for this and how much Valero suffers from spillover concerns.
The best thing is this ought to serve to remind traders what a dangerous game the oil business is and how quickly things can go the wrong way!
Interest rates already crossed 5% overnight as high oil sparks inflation fears which sparks fears of additional fed tightening all fueled by the fact that we got 30% less foreign participation than usual in this weeks bond sale.
Gold is maintaining the $597-602 range and I would expect it to close above going into the weekend but we’ll see what oil does as the markets are sending another message to OPEC that $70/barrel will indeed lead to demand destruction.
Cash cash cash except we may want to consider some oil puts but only for day trades. The key to watch will be to see if it holds $68 and if VLO holds $63.
There are so many overbought oil companies it is killing me not to short them all but this Iran thing could blow up (literally) at any time and it could be suicide going into a 3 day weekend so I’ll just hope they don’t pick today to crash.
CNBC is in day 3 of walll to wall oil pumping, now telling us that Africa is a bigger problem than we thought (and we thought it was a huge problem!).
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If GE is doing well then C is lending money to someone to buy the $30Bn worth of stuff they sold! Earnings are Mondy and the $47.50 calls are just .55 so worth a shot.
YHOO has earnings on Tuesday and you can kiss the Nasdaq goodbye if they disappoint anyway so I think I’ll go out with a bang and risk the $32.50s for .60.
APPL reports Wednesday but their option pricing is irrational so I will just watch with interest.
I told you MCD was doing well! They just announced same store sales are up 6% y/y which is astounding for such a big company (and a sign of a slowing economy if you ask me). I got out of those May $35s yesterday but I like them again for $1.10.
EBAY will be another biggie on Wednesday and on that one I’m risking (big risk) the May $40s for $1.20.
If GE doesn’t go up, something is very wrong with the markets. The company had a 9% rise in earnings and a says orders are up 33%. A 9% rise in GE’s earnings is the total of Google’s earnings! Google is “worth” $121Bn and GE ($359Bn) certainly deserves at least a 10% bump for that doesn’t it? Guidance for the year is not raised (“only” up 13-17%) so it might not get the love it deserves. I would jump all over the May calls if I trusted the market but I don’t so I hope GE gets beaten down for no reason so I can buy it later.
I’d be happier if we had one more day this week for GOOG because if it doesn’t go past $415 today I will be very concerned. With earnings a week away it will be very telling to see if traders feel they need to have Google before the weekend.
SNDK got its S&P addition announcement yesterday. Congrats to Vic who timed it just right! If you have the calls, it may be a good idea to sell into the morning’s spike as the sky will seem to be the limit until it pulls back.
TSO should at least rest at the 5% rule ($68.75ish) and the key will be to see what it does from there. There is no technical resistance until $64.50 and below that is the 200 dma at $60 (it was at $62 last options expiration). TSO’s trading pair VLO (4/25) can’t help but suffer some today but if TSO dips below $68 then VLO will not be able to escape its gravity (unless they specifically hold a conference to say this didn’t happen to them). VLO has $62.50 puts that might make a great play but wait until TSO really heads south!
http://finance.yahoo.com/q/bc?t=3m&s=VLO&l=on&z=m&q=l&c=tso
SNE should get a pop (but nothing is certain in this market) as they are buying out Michael Jackson’s extensive publishing interests at a very cheap price. Add that to very good mobile phone sales with partner Ericsson and the May $50s make sense for .55.
Now I really like MDT and I’m going to take the Jan $55s for $1.90 and I will buy more on a dip!
