I am in a GREAT mood today!
TSO missed! I knew they would miss (see last 50 posts!) and I knew I would regret being forced out of my $120 puts yesterday but we redeployed the capital to great effect on longer puts and a spread (thanks OPtrader!). Business Week has a nice article about the refiners which follows up nicely on my theme of "If you make money every time your refinery catches fire do you invest in fire extinguishers or matches."
I'm not going to gloat about TSO until it goes below $110, where I first started saying it was totally out of control but hopefully I'll be gloating at the open! This one may surpass IBM as our biggest turnaround victory of the year but, as I said yesterday, I will be thrilled to get my money back and we would all do well to remember that this morning…
Productivity was up 1.7% for Q1 and that's a good thing and jobless claims went down. It's OK for wages to go up if the workers are more productive (attention France!) so I see this as a great thing for the economy and it eases concerns about wage inflation.
The Asian markets that were open as Australia, Singapore, Malaysia, Indonesia and New Zealand rose to records but, to some extent that may be due to the lack of investment opportunity in the much larger Chinese and Japanese markets. Money never sleeps and it gets very restless when it has nowhere to go!
Europe's E must have drawn the short straw as our predicted Rent-A-Rebel attack that hit just about 3am, just in time for the open of European trading. This was the second time in a year that workers have been kidnapped from this platform as none of the $8,981,305,000 in profits the company made last year could be spared for a guard (or even a sturdy lock on the door).
Obviously (see picture) no oil platform in the middle of the ocean could fend off an attack from a ferocious rebel attack as their outboard motor putters up to the rig at speeds of up to 17 miles an hour! If only Luke Skywalker had had such an easy time attacking the Death Star. How could a company with $88Bn in annual revenues possibly defend itself against a dozen armed men as they climb 100 feet up from sea level? ATTENTION MSM – WAKE UP TO THIS SCAM!!!
RDS.A joined the global profit party by offsetting higher costs and lower production by simply charging you MUCH, MUCH more money. European stocks were mixed this morning as rising crude put a damper on the market but the fundamentals are going to get crude and I doubt natural gas inventories will save them this morning. ZMan predicts a withdrawal in gas of 65 to 90Bcf but I'm going to take the under this morning and ZMan saved our day yesterday with his very brilliant call to hedge TSO with VLO so mega-kudos to him!
INTC should give tech a good boost at the open with analyst day already off to a very positive start and expectations for the year being raised. I don't know why I have no INTC in my folder so I'm back in the Jan $22.50s at .50 (maybe a bit more at the open). We should have a good open in the least but I am still stopping out when I have to:
|
|
|
Day's |
Must |
Comfort |
Break |
Next |
|
Index |
Current |
Move |
Hold |
Zone |
Out |
Goal |
| Dow | 13,211 | 75 | 12,468 | 12,600 | 13,000 | 13,500 |
| Transports | 2,874 | 32 | 2,825 | 2,900 | 3,000 | 3,250 |
| S&P | 1,495 | 9 | 1,430 | 1,460 | 1,500 | 1,550 |
| NYSE | 9,718 | 78 | 9,218 | 9,465 | 9,600 | 10,000 |
| Nasdaq | 2,557 | 26 | 2,454 | 2,500 | 2,600 | 2,750 |
| SOX | 498 | 4 | 477 | 490 | 500 | 560 |
| Russell | 828 | 12 | 803 | 820 | 850 | 900 |
| Hang Seng | 20,681 | 293 | 20,200 | 20,600 | 21,000 | 22,000 |
| Nikkei | 17,394 | closed | 17,400 | 17,500 | 18,300 | 18,500 |
| BSE (India) | 14,078 | 205 | 13,200 | 14,000 | 14,725 | 15,000 |
| DAX | 7,446 | -9 | 6,900 | 7,000 | 7,400 | 8,000 |
| CAC 40 | 5,987 | -2 | 5,650 | 5,800 | 6,000 | 7,000 |
| FTSE | 6,511 | 26 | 6,325 | 6,450 | 6,600 | 7,000 |
So it's still up to the transports, which need an oil break below $63 to get it in gear and, of course, the S&P trumps the deck at 1,500. Without that mark being met, nothing the Dow does is going to be of any real consequence. Happy Trading's chart of the day shows us the channel on the SPX:
With TSO and SUN taking nice hits today (Helleluiah!) my macro premise is that they are going to decide that it's time to start refining some crude and selling it. While this may seem like an odd way for a refiner to make money, it has worked in the past so I will predict right now, a week in advance, a build in gasoline next week. Oil faces a CRITICAL test at $63 and has a long way to go down if it fails there.
We're keeping a close eye on the dollar at 82 and gold at $670 but none of that will bother Tuesday's selection, ABX, who is performing like a champ and should be challenging $30 regardless of gold's move.
Have a good day today but let's be careful – with Japan closed we may run out of gas!
