Monthly Archives: August 2013

The Kerry Effect

Midday Update – The Kerry Effect

Markets have been in a lull for most of the day as volume remains light heading into the holiday weekend. Despite a slew of economic indicators this morning, $SPX is just mildly lower and has traded in a tight range for most of the day… until VP John Kerry took the podium. While Kerry offered little “new news,” the speech felt like a precursor to a military strike, though no actual progress was made in Kerry’s remarks to suggest an attack is imminent. Nonetheless, Kerry’s words injected an element of volatility that caused a violent swing in the $SPX and $VIX. The Nasdaq has taken it on the chin today as most technology bellwethers are in the red on the day including $AAPL, $GOOGand $AMZN.

SPX

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VIX

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We have made just one intraday move thus far, peeling off our $AAPL weekly calls for a loss as the market has committed to the downside. $FCEL remains our strongest position on the day, rising as much as 5.8% on heavy volume and we would expect the Syrian situation could be a catalyst for the stock as alternative energy stocks may come into focus. We wouldn’t rule out $TSLA as a bounce candidate next week, as some have speculated that rising oil prices is bullish for the electric car industry, though we question the validity of that conjecture given the minimal penetration of electric cars thus far. Still, perception is often reality, and we trade the market we are given, not the one we desire.

Overall, Kerry’s comments left markets more or less unchanged, but uncertainty remains high. While we will keep our eyes peeled for opportunities heading into the weekend, there are unknown variables that could play out in the coming days that will make it difficult to position ourselves one way or the other.

Consumer Friday

CONSUMER FRIDAY

Morning y’all. S&P futures are getting a boost this morning from an upside surprise in Japanese consumer prices, rising at the fastest pace since 2008. ES futures are up 3-4 points on what may be a busier Summer Friday than we’ve grown accustomed to over the last few weeks. We will see a series of economic indicators both prior to and just after the opening bell that could sway markets in either direction, but for now we appear to be heading for a mostly green open. Still, August has been a rough month for the bulls as bears have finally received some modicum of a correction, though a portion of the sell-off stems from the reaction to the Syrian situation, a move that has been overdone in our opinion (and may already be over). Though we aren’t convinced that the near-term lows are in, we don’t see any compelling reasons to ramp up short exposure. We anticipate the market will take a more definitive direction in the next week or two as most of the financial community returns from end of summer sojourns.

Not a ton of pre-market action to comment on in the early going as we finally have an earnings lull, though our AAPL weekly call position initiated yesterday should be good for some Labor Day Weekend beer money as the stock is trading near $493. We’ll be looking to make a move early to lock in profits should any of the day’s economic indicators sour the markets. Names we will be watching near the close today for week to week swing possibilities:

$FB $AAPL $GS $TSLA $FCEL $AMZN $NFLX $GOOG $DDD $XONE

Market Wrap Up – August 29, 2013

Market Wrap Up – August 29, 2013

US equity markets closed higher as fears over the situation in Syria began to ease following stand-offish comments by President Barack Obama and an unwillingness to participate from the British government. $SPY broke through a key short-term resistance level at $164.40 early in the trading session, extending to session highs over $165 before selling off in the session’s final hour, closing below initial resistance at 164.17. Verizon Wireless made Thursday’s biggest market headlines as it appears poised to buyout Vodafone’s stake in the North American wireless provider for as much as $125 billion. Shares surged in the pre-market to more than $50 before selling off for much of the day’s session, closing up 2.71% at $47.82.

Key movers in the VT portfolio included Campbell’s Soup $CPB, which we played ahead of earnings by purchasing the September 21 $45 strike put calls for $1.15. The firm posted decent earnings results, but write-offs and concerns over the company’s European exploits caused a 3% sell-off on the day. We sold our put options at $1.70 on the news amidst market strength, good for a 4738% gain. Another mover was Fuel Cell Energy $FCEL, one of our favorite long-term equity plays. The clean energy developer of fuel cell power generators closed on the highs at $1.21 per share, perhaps receiving a boost from oil shortage fears stemming from the Syrian situation. The Street’s Roberto Pedone¬†@zerosum24¬†highlighted the technical setup for $FCEL, featuring the stock in one of his regular technical breakout pieces (http://www.thestreet.com/story/12022407/6/5-stocks-under-10-set-to-soar.html). We remain bullish on $FCEL’s fuel cell technology, and the company is rapidly approaching profitability as alternative energy continues to shift to the forefront. Fuel Cell delivers earnings next week, and we will be delivering our strategy for the stock ahead of earnings.

We will be looking to play the Technology sector once again after having found success with Facebook $FB weekly option swings spanning Friday-Monday over the past two weeks. Tesla $TSLA, Amazon $AMZN, Netflix $NFLX and Apple $AAPL remain our stocks to watch in the sector for short term movement. We will also be taking a look at the banking industry for a possible short-term move as well, with Goldman Sachs $GS representing a leading candidate.

LONG POSITIONS:

AAPL Stock from $405

AAPL 8/30 Weekly $495 Calls from $.90 (NEW POSITION)

FCEL Stock from $1.20

HOLX 9/21 $22 Calls from $.50

OMX 2/22/14 $11 Calls from $1.15

SHORT POSITIONS:

T Oct. $31 Puts from $.25

TAP Sep $50 Puts from $2