Monthly Archives: September 2013

Post Game: William Tell

The Summers Rally has come and gone. Given the events of today’s session, it’s difficult to know where we are headed. It was not difficult to fade this rally as the market’s reaction to the news that the hawkish Summers was out of the race for the Fed chairmanship was completely overdone, particularly given what we believe are misconstrued differences between Summers and the de facto front runner Janet Yellen. We made some money playing today’s bounce both ways, and it certainly feels like this market is teetering a little bit after we had virtually no conviction in this morning’s rally.

Before we continue with the post game, we’d like to extend our most heartfelt condolences to those affected by the tragedy at the Navy Yard in our nation’s capital today. There is a time and place to debate how and why tragedies such as these continue to plague both America and the entire world, but for now let us simply honor the fallen and give thanks for all we have been blessed with in this life.

Today’s aptly titled post game simply must lead off with a discussion of Apple, whose blunders in the last week have cost the one-time Wall Street darling roughly $60 per share in market value. Many were caught up in today’s onslaught trying to shoot the falling apple (William Tell puns), only to be washed out during the session’s prolonged selloff. Today we were able to capitalize on the mid-day lull in the stock that allowed us to scalp some gains in weekly call options. We were also able to capitalize on the late day sell off by utilizing weekly put options as $AAPL slid below $450. While there are those that felt the move to the $470 level was overdone, the downward momentum has shown no signs of abating, and the company continues to bewilder the Street with the seemingly misplaced iPhone 5C and no data regarding iPhone preorders. Our bull case for Apple was shot once we saw the pricing of the 5C, which essentially eliminated the possibility of a China Mobile deal anytime soon. We have no choice but to seriously question whether Apple’s growth days are over, as the smartphone market’s consolidation has been incredibly quick. For those of you that look to play Apple on an intraday or swing basis, you have to lean short here until the stock shows a serious change in its course of action. We engaged a few members on StockTwits tonight about whether we would lean long or short overnight. However, with the market in the position its in and the aggressive selloff in Apple, you simply cannot let a long or short bias get in the way of making money. While we think there is more downside in Apple to come, you need to let the trend dictate your behavior when your timeframe is short. Countertrend trading is virtually impossible to execute on a consistent, profitable basis, so if you’re playing Apple long in this downtrend, be nimble, use stops and TAKE PROFITS.

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$AAPL is in a world of hurt and is perched on its 100-day moving average. It barely held that level today and an open below that level tomorrow could trigger a major flush to the gap area around $434-$435. Again, this looks like an incredibly compelling short candidate in the short term, as investors will likely race to the exits as momentum picks up to the downside (much like we saw today). If Apple can somehow consolidate at this level and form a base, perhaps the story changes. With that said, it’s hard to have much conviction to the upside, if any.

As we stated before, US equities are in a precarious position, particularly given the slow grind down we saw today that literally spanned the entire session. $SPY posted what many call a black candle, as the market essentially opened on the highs and never advanced beyond that mark. If the bulls want to stay in control of this market, they need to see some consolidation at this level before taking out today’s highs. An open below today’s close could lead to increased selling pressure and a fill of today’s gap up, which could invigorate the bears who will undoubtedly be calling today’s market action an “island reversal.”

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We have just three positions on heading into tomorrow’s pivotal session and the next iteration of “The Most Important Fed Meeting Ever.” We think there are certainly going to be setups that look good in both directions for stocks, but we continue to preach selectivity and profit taking as the market definitely feels like it is in no man’s land. Keep an eye on the tech names for a possible correction, as they have lagged the market the last few days and several names showed weakness today including $TSLA, $NFLX, $LNKD, $GOOG and $FB. Most of these names are in no man’s land and don’t represent convincing buying or short selling opportunities based on where they closed today. Watch for names like these to either hold or break through key levels before initiating positions in either direction, particularly when we have a number of headlines coming our way in the next few days that could alter the market landscape.

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Mid-Day Update: Taking Profits

Hope everyone is having a good day thus far with the S&P breaking the 1700 level once again. We’ve seen a lot of action in some of the most prominent stocks of this rally, so let’s dive right in and talk about what’s moving, what we’ve traded, and where we’re headed.

We took off a lot of positions on the open as this stealth rally became not so stealth with today’s gap up following the Larry Summers news. We took profits in $NFLX and took off our $GOOG calls at a small loss (which would’ve turned into a big loss had we held them through the day). We’ve seen a lot of whippy action in several of the technology bellwethers that have participated in what has largely been a year long rally. Faceboook $FB, Google $GOOG, LinkedIn $LNKD and Netflix $NFLX all opened the day solidly in the green, but each name has given back those early gains and are now red, though the broader market S&P has held up well. Tech has really lagged today’s rally and this morning’s up move on the open didn’t have a terribly convincing feel, particularly now that we have seen a number of names sell off.

We traded Tesla $TSLA a couple of times and probably over traded the name a little bit. We made took some profits on the open as the stock traded higher to $170, booking roughly $1.50 per share. However, we gave back some of those profits when we tried a cute short and got stopped out for a loss of $.60 cents per share. We made a nice intraday bottom play in $AAPL by getting long the $460 strike weekly calls for $2.95 and exiting at $3.18, good for 7.8% profits. We also shorted IBM at $194 versus the highs of the day. IBM has proceeded to fade today’s gap up and is putting up an ugly bear pin bar on the daily chart as we speak. 

The banks have been remarkably strong today, with Citigroup $C, Goldman Sachs $GS and $MS all up over 1.5%. The casinos are also acting well with names such as $WYNN, $LVS and $MGM holding some gains today after an extended run.

3D printing has been a very mixed bag today. $XONE is taking a whack following the expiration of its lockup period, while $DDD is more or less flat on the day. $SSYS is the industry leader as it has gained more than 3% today, though it is well off the highs.

We looked at shorting $LEN around the the $36 level but opted against it as the market was still holding up fairly well. If any of you took that trade, solid work on your part as the stock has sold off for much of the day.

We think today’s rally will provide an opportunity for some shorts, but we continue to advise prudence as we remain in an extremely strong market environment. However, this week’s events are likely to provide some volatility that could trigger a sell off both in specific names that could be affected by rising interest rates as well as in the broader market. A key level in $SPY is $170.90, the previous all-time high in the index. We failed to sustain a breakout above that level and could serve as a reversal if we fail to break above with conviction in the next session or two. It’s definitely more difficult to initiate longs today than it was on Friday, but that doesn’t mean this market is an easy short. Stay tactical, keep moving and take profits. 

Manic Monday

Good morning y’all. Well, not much has changed overnight as S&P futures continued to hover near the 1700 level. The buzz around a Janet Yellen appointment as Federal Reserve Chairman continues to grow, and some talking heads are speculating that we’ll get some direction from the White House in the next 72 hours as to who the next Chairman will be.

Interest rates will obviously be in focus quite a bit this week with discussions about not only the Fed Chairmanship, but also the September Fed meeting where the T-word will undoubtedly be uttered quite a bit. We’ve seen the 10-year knock on the door of 3% in the last two weeks before retreating in recent sessions to roughly 2.8%. Yields could take another hit today as the presumed hawkish candidate Larry Summers withdrew his name from the Chairmanship race yesterday, though we believe the market is overselling just how dovish Janet Yellen is (and, for that matter, just how hawkish Summers is).

On to the markets: There will be green. Just about everything that has traded at least one share this morning is in the green, and our longs are no exception. We peeled off our $DDD long last Friday for a nice one-day gain, but that 3-D printer is poised to move higher this morning. Our current longs $GOOG, $NFLX, and $FCEL all appear poised for a higher open.  $NFLX has held up particularly well all year, and could be poised to break out this week above this year’s (and last week’s) high of roughly $315. The stock had a nice reversal off of the 8-day EMA on Thursday that could’ve provided entries and bounced again off of that level on Friday and sustained its gains.

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Google looks strong this morning as well with the stock tagging $897. While the chart isn’t as strong as $NFLX, the stock provided another potential entry on Friday as it reversed off of the 8-day EMA as well. Look for a move over $898-$900 to send the stock to the $909-$913 level. If the stock can get through there, look for it to make a run at all-time highs once again.

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Keep an eye on $TSLA, as the stock held up above its 20-day moving average despite being under some pressure last week from the shorts. The stock is moving higher this morning (duh) and could take another run at all-time highs if it gets continuation. The bulls have been calling the last few days a consolidation, while the bears are saying the stock is out of gas. Let the market decide for you, then act. Don’t let your opinion get in the way of momentum.

 

Watch out for the broader market to hold or begin to cede its gains in early trading. If stocks hold up, we could see a continuation move higher throughout the session and into tomorrow. However, with all of the economic news on deck this week, it may be prudent to take some profits to avoid any negative reaction coming out of the Fed meeting or rumblings of an appointment of a new Fed Chairman. Still, Monday appears to be a profitable day for those of you who leaned long today.

Happy trading!

Summer(s) Equinox

Happy Sunday y’all. Hopefully everyone’s rooting interest in the NFL is coming up aces today, and a special shout out to all the Chicago Bears fans out there today. Jay Cutler continues to be the most mercurial quarterback in the NFL, but Martellus Bennett managed to bail him out with two more touchdowns to lead the Bears to a 31-30 victory over the hapless Christian Ponder and the largely ineffective Adrian Peterson. In all honesty, the Bears should’ve won that game by double digits, but Bad Jay and poor special teams on the opening kickoff essentially spotted Minnesota 21 points. I digress…

It seems we can’t go one weekend this month without some sort of major economic or geopolitical news item that will impact the market. This was already shaping up to be a monumental week with the Fed meeting and the potential of a reduction in monthly asset purchases, but Larry Summers decided to throw us a curveball and withdrew from the race for the Fed Chairman appointment once Ben Bernanke takes his leave. Many have speculated that Summers’ confirmation would be an arduous process as many see him as an abrasive individual, with his detractors citing his tarnished tenure as president of Harvard University – specifically, his treatment of women. Janet Yellen, believed to be a far more dovish candidate than Summers, becomes the de facto leader in the clubhouse. Donald Kohn, a former Fed vice chairman, and former Secretary of the Treasury Timothy Geithner remain popular candidates among others.

The impact of Summers decision was fairly easy to predict before futures even opened. Given his aversion to continued quantitative easing and a more hawkish stance overall, stocks would be poised to rise should Summers not receive the nomination. However, given the fact that Summers is pulling out this early, S&P futures surged on the open this evening to the all-time highs, and the bulls appear to be in full control once again. While it is  not a foregone conclusion that Yellen will be appointed (and some close to the Obama camp have stated the President would prefer to go elsewhere now that Summers, an Obama favorite, has withdrawn), we would expect even interest rate sensitive stocks to rise tomorrow as well, which does not bode well for our $HD and $T positions. Still, we should note that there is plenty of time for our theses on those names to play out. On the plus side, our long positions in $NFLX, $FCEL and $GOOG should get a nice lift. Obviously, we wish we were leaning a little longer, but we should see some nice gains Monday regardless.

Tomorrow should provide some opportunities for intraday trades at the bell. With so many events that could shake markets this week, it may be prudent to take some profits on long positions at tomorrow’s open should we sustain this rally overnight (and there is little reason to believe that we won’t). Still, it is easier to have conviction to the long side as the market has pulled off something of a stealth rally in the past week or two. We’ll be back in the morning to assess what is moving, but until then, enjoy the rest of your NFL Sundays!

Take A Breather

Good morning y’all. Pretty quiet morning for equities markets as perhaps it’s finally time for a rest after a 7 day winning streak. Goldman Sachs  reiterated a call for another leg of this bull market. Asian and European markets are mixed while the Nikkei is down roughly .25% and the CAC and FTSE are up small, and the 10-year yield is trading around 2.89%. Vladimir Putin is in the news once again after writing an piece in the New York Times outlining a plea from the Russian government for caution regarding the Syrian situation.

Lululemon $LULU is getting smoked today after poor earnings results. The company has been in a lull since Sheergate, and the street is not responding well to its guidance revisions. Men’s Warehouse $MW is also taking a beating this morning on weak earnings.

Not a ton of movers this morning with the markets so flat. Facebook $FB continues to rage higher after breaching the $45 level late in yesterday’s session, and the stock has become Wall Street’s newest darling. We saw some interesting tweets this morning reminding us that even if you bought Facebook the morning after the earnings gap, you’d still be up 40%! Incredible strength from Facebook.

Apple $AAPL is getting a small bid this morning after getting obliterated yesterday. We are flat $AAPL and we’re going to need to see some definitive action from the stock before jumping back in. There will probably be some tactical opportunities in the name, but that’s it for now.

Netflix $NFLX is pulling back this morning after an incredible run on Tuesday to over $310 per share. Look for a potential bounce at the $297-$299 level, but a breach of that could lead to further selling pressure.

Our $T and $HD positions have been working against us the last couple of days as the broader market has sustained this rally, but our thesis for these positions remains intact. Keep an eye on $AGO for further selling pressure after huge put buyers stepped in late in yesterday’s session, and we’ll keep an eye on the action in $GOOG to see if it can get some continuation today.

Post Game: Strong Like Bull

Long and strong! It’s good to be back writing for VT after a 24 hours hiatus thanks to some unexpected life events. But all is well, and hopefully y’all have had a profitable period as this market just will not fade. Let’s dive in to the recent action.

We tweeted out this morning that we sold our position in Apple $AAPL. The events from the last 24 hours were nothing short of dreadful. We were actually moderately impressed with the 5S and 5C, but GOOD LORD Tim Cook is not doing himself any favors. He continues to drop the ball in China as the company has effectively priced itself out of the middle market with the 5C. The phone looks totally puzzling now as we have a hard time believing it will find enough traction in the North American market. We peeled our long stock position off at $475 pre-market and we aren’t too eager to get back in. We scalped a few bucks on an option trade after the stock rallied off the lows, but that rally was faded over the course of the session.

We also let go a couple of losers in $TSLA and $TAP. We actually recouped some of our lost premium on our $TSLA calls, but we lost half of a small position in $TAP puts. Timing is everything in trading, and size does matter here, too.

Our book is very lean now and we have plenty of flexibility. We picked up $GOOG calls for next week at $495. It looks like $AAPL capital (rhyme! sort of) was being rolled up into Google and Facebook today, and we actually like both names, but we chose to put some capital into Google as Facebook passed its all-time high today. The chart looks pretty strong and the 890 straddle is implying at $19 move by the end of next week, which could make for some nice gains. Google closed on the dead highs today just above a key resistance level. Look for continuation to $900-$905 in the coming sessions, followed by potential continuation to the all time highs.

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Another stock we initiated a position in is Biogen $BIIB. This stock has been in a bit of a holding pattern over the last 3 months, but it has been building a nice rounded bottom and broke out today in the last hour of trading. We initiated a long at $232.39 and are looking for continuation in the coming sessions. The stock made its way into the gap above $234.70 and has room to run to the $240 level where the YTD highs sit.

We didn’t get a chance to write about it yesterday, but we hope some of you caught our note in yesterday’s morning post about Netflix $NFLX. We signaled that $NFLX could surge if it sustained the morning gap up and made it to $299, and that’s exactly what it did as it move straight up throughout the session yesterday. If you were long, hopefully you were prudent and took profits yesterday, though the stock did put a decent tail on today’s bar.

We initiated two put positions on unusual option activity in Assured Guaranty Municipal Holdings $AGO. For those of you that are unfamiliar with $AGO, the company is a municipal bond insurer and has been getting whacked since earnings and the Detroit bankruptcy announcement. The bears stepped in big time in the latter half of the session, buying up puts with both October and April expiration hand over fist. The stock got thumped in the latter part of the session and volatility spiked, creating some nice value in our puts.

Lastly, we also shorted $BEN via short stock as it tested the bottom of the Ichimoku cloud and could not break through. The stock rallied into the bell, which we obviously don’t like, but we’ll keep an eye on it. Our stop is tight just above the lower portion of the stock’s gap at $48.50.

The market has been on an incredible run as the S&P has rallied 7 consecutive sessions, making it a bit of a precarious spot for shorter term traders. It’s still hard to get aggressively short and we’ve seen high short interest names like $TSLA shake off the bears. Keep your eyes peeled for short candidates, but don’t lean too hard that way until the market stops raging higher.

We’ll be out of the office on Friday, but we should be back to our usual pattern of three posts a day tomorrow and next week. Feel free to shoot us questions on Twitter @vikingtrader14 or via e-mail at vikingtrader14@gmail.com.

Syria, Shmyria

Good morning y’all. All is right with the world this morning as the Chargers blew a 21-point lead against the Texans and S&P futures are ripping on news that Syria has agreed to a Russian initiative calling for the country to turn over its weapons stockpile. Futures have traded in a wide 10 point range but are sitting on the highs this morning near 1680 as it looks like we are heading for another big green day. Just about every name on our watch list is in the green this morning with the exception of Gold $GLD and Blackberry $BBRY. Blackberry likely needs a breather after a big rally yesterday and fear is dissipating from this market as the Syrian situation appears to be dwindling.

The teen retailer Five Below $FIVE blew away earnings and is trading roughly 13% higher this morning. Teen retailers have had an absolutely abysmal summer including Abercrombie and Fitch $ANF, Aeropostale $ARO and American Eagle Outfitters $AEO, but I guess teens have to buy their clothes somewhere. As we mentioned yesterday, Apple $AAPL will obviously be in the spotlight today as it kicks off the first of two major events that will likely define the company’s near-term success.

Our momentum long in $JASO could be poised for a breakout today after news came out this morning that the company is delivering 96 MW of solar power technology to China. Again, $9.50 is the level to watch there, and then watch for a move over $9.75 that could send $JASO to $10 and beyond to the year to date highs over $11.

Keep an eye on $NFLX today early in the session. If the stock can get over $299 with volume it should challenge the $300 level and beyond.

We’ll probably take another hit to our positions in $HD and $T today as the broader market continues to rally hard, but the thesis for those positions remains intact. Tapering is a matter of when, not if, and those names will certainly be impacted by those effects. The September Fed meeting should provide some answers there. We’ll watch the levels closely in case either name can reverse course with some commitment, but for now we aren’t too worried about a two day rally. Risk happens fast, and we’re more concerned about making money than being right, so if these positions turn on us we won’t be ashamed to cut our losses. Trade the market you’re given.

Don’t rush into any positions today to the long side unless the market can hold this gap up for the first 30-60 minutes of the session. There will likely be opportunities to take both tactical longs and shorts in a number of names, but the key is to be tactical. It looks like we may have cleared the Syria headwind, but President Obama is still set to speak tonight at 8 PM CST on the situation. Obama hinted that he is supportive of the Russian-Syrian initiative, but he remained skeptical of Syria commitment. Still, this mornings headlines appear to jive with the notion that Syria is willing to cooperate to avoid military action from the United States.

Post Game: Crossroads

Interesting day and a good start to the week. The S&P 500 was remarkably strong all day and basically moved higher all day after a brief stagnant period mid morning. Several names saw strong action (in particular, the casinos $WYNN and $LVS, two names we highlighted last week as potential breakout candidates), and we have a number of events that will occur in the coming days that will help markets. First, we should receive some definitive news from President Obama regarding the outlook for Syria both tonight and tomorrow morning. However, the market appeared to respond positively to news that Russia had called for Syria to hand over its chemical weapons, though the validity of Syria’s willingness is being questioned by US officials. Look for Obama to provide some answers there.

The biggest news for an individual name undoubtedly will be coming from Cupertino tomorrow and China on Wednesday as Apple $AAPL will certainly unveil the iPhone 5S and its less expensive cousin, the iPhone 5C. There is also talk that Apple will unveil a revamped iPad and iPad Mini, but we believe the bigger catalyst for Apple is a rumored deal with China Mobile. There is always the possibility that all of this news is already baked into the stock price, but the impact of a China Mobile deal is beyond compare. A deal would signal increased competition with Samsung in the middle-tier smartphone market, and China Mobile is far and away the largest mobile provider in the world, and while some have speculated that a cheaper iPhone will slash Apple’s margins, Tim Cook’s expertise is supply chain management, and this may be his opportunity to deliver a high margin, low cost phone that could consume market share in China away from Lenovo and Samsung. There is also the possibility that Apple has an Ace up its sleeve that no one is expecting tomorrow. While the odds of such an event transpiring are low as the street has become quite good at predicting the outcome of Apple’s showcases, the possibility remains. Beyond the headlines, the technicals have been shaping up nicely for Apple’s stock. The stock has been in a strong trend since bottoming in late June. We kept our weekly options on and remain bulls on Apple long term via stock.

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We also maintained our short on $TSLA via next week’s $155 put options. The stock failed to maintain a mid-day breakout off the lows and began to sell off once again into the end of the session. Bulls have been quick to defend this name and its difficult to have conviction to the downside after what has been a truly breathtaking run for the electric car maker. Still, we think the stock has a date with the 20 day (and that date may even come tomorrow), and that should serve as a major proving ground for the stock. $TSLA has tested the 20 day several times and has rallied well of that level in each instance. While it is difficult to fight what has been a prolonged uptrend, this is still a car company, and whether you’re a believer in fundamentals or not, there is not a car company on the planet that justifies the valuation that $TSLA is commanding right now. The stock is an incredible growth story and perhaps there is a chance they can pioneer a secular transition to electric vehicles (which I would have to believe is the long-term bull case), but the faster it ascends, the more likely the stock is due for a correction. We love Tesla and frankly would love to own one of their cars, but the market has a way of pulling the rug just when the party really starts to rock. If we get a test of the 20 day, watch the action between $155 and $157. For those of you that follow Scott Redler from T3 Live, this area could serve as one of Scott’s patented “Red Dog Reversals.” A break of that level and we could see a major sell off trigger in Tesla.

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We were pleasantly surprised by the action in $FCEL today. The stock ripped to $1.36 on solid volume after fading a substantial portion of the earnings move to $1.41 in the last couple of sessions. While we think a gap fill to $1.25 or so is still possible, the stock continued to see action after hours and tagged $1.38 on light volume. We remain long via options and think $FCEL is a tremendous long-term opportunity. Keep an eye on this one for a breakout if it can get above the earnings high of $1.41.

We stuck with our $JASO momentum long after the stock ran into some resistance around $9.40. The chart still looks strong here and could really get going over $9.50. Our taper plays didn’t do us any favors today as just about everything was green today along with the broader market. Still, $HD failed to reclaim its 8-day and $T may be forming a bear flag. We posted a more detailed look at treasury yields and how they impact big dividend names like $T earlier today, so be sure to check that out.

Make sure to check out Obama’s interview tonight while you’re watching Monday Night Football, and as always feel free to engage us on Twitter (@VikingTrader14) or shoot us an e-mail at vikingtrader14@gmail.com.

 

Mid-day Update: Tesla Under Fire, Apple Racing

Great start to the week. The S&P defended the low of the day very well this morning before grinding higher to the 1667 we sit at now. We haven’t had a whole lot of major news items to deal with in the early going, but there has been plenty of action in individual names that has created a lot of opportunities.

Our biggest gainer thus far today is our $AAPL position. Our options are trading roughly 50% higher from the close on Friday and the stock hung tough while the market was defending the lows this morning. We saw buyers consistently step in around the $504 level that gave us conviction to hold on to our options, and the stock has grinded to $507 and continues to look strong. We may take down some exposure heading into the events, but the stock looks so strong it is hard to not extend another day (at least) with our options.

$FCEL is getting a nice lift today as we remain long the stock via options. We added to our $HD put position as the stock is struggling to reclaim its 8-day EMA. Keep an eye on that one as the chart looks incredibly bearish.

We took a feeler position on another momentum/breakout candidate in JA Solar Holdings $JASO. This is a volatile stock that has traded in a huge range in 2013, but the stock is forming a rounded bottom pattern and there is huge potential for a breakout over $9.50 that could send the stock well over $10. The YTD high sits at $11.40, and there is essentially no resistance to that mark if the stock can get going. Image

We also initiated a short position in $TSLA today via next week’s $155 puts. We’ve touched on shorting Tesla a couple of times over the last few days, and today has been the first move down with some conviction in quite a while. A test of the 20 day SMA around $157.20 seems imminent if the stock cannot move higher before the end of the session. If the 20 snaps, it could be bombs away for the stock. Still, this stock has been incredibly resilient, so don’t press too much if you’re making money. It’s still well above the Ichimoku cloud and it doesn’t take much for this stock to reverse its course.

We took a question on Twitter regarding our AT&T $T position and why tapering would impact the stock so much. It’s actually a relatively simple thesis – the big dividend players hate rising interest rates. If and when the Fed begins to reduce its bond buying, we should see the 10-year yield sustain a move above 3% which crushes equities that are known as strong dividend payers. Utilities and Telecom stocks frequently attract investors with attractive dividend yields, and those names have the most to lose if treasury bond yields begin to rise. AT&T’s chart looks particularly bearish in our view, which is why we have been buying puts over the last few weeks. Here’s a chart comparing $T and $DTYL, the bullish 10-year ETF. For those who are new to fixed income, the price-yield relationship is inverse: as yields rise, prices fall. $DTYL and $T are moving virtually in lockstep.

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We’ve been preaching prudence for several days as this market remains extremely headline driven, and any news from a number of ongoing story lines could catapult the market in either direction. As we were writing, $TSLA absolutely ripped off the lows to $161 and has already retreated under $160. Markets and stocks turn quickly! Keep. Your. Head. On. A. Swivel.

This Looks Familiar

Good morning y’all, hope everyone enjoyed the weekend. A little late with our preview today as someone may have been celebrating  an anniversary a little too much last night and was responsible for today’s morning post. This week is shaping up to have a similar feel to last week as the same news events will likely be driving the markets for most of the week, starting with President Barack Obama’s pre-recorded address airing tonight on the major networks. Charlie Rose conducted an interview with President Bashar al-Assad in which he adamantly denied use of chemical weapons, stating that the weapons were used against his own forces. The situation remains a pressure cooker that could have catastrophic repercussions if handled incorrectly, which means volatility could return to the market at any point stemming from related news. Speculation over Fed tapering will likely continue as well, which we would welcome with open arms for our $T and $HD positions.

In the meantime, we appear headed for a higher open as S&P futures have traded in a tight range over night but are sitting up 3-4 points. Apple $AAPL is trending up in premarket action as the run-up into the company’s events tomorrow and Wednesday has begun in earnest. Look for continuation throughout the session today as the stock looks ready to break out, but there is the stigma that Apple’s events have become “buy the rumor, sell the news” situations, so take profits and trail with stops if you’re long stock. We remain long via both stock and options, and we may look to take off a portion of our options position today if the stock really surges.

Molex $MOLX is making news this morning on reports that the company is being bought out for $38.50 per share by Koch Industries, a premium of roughly 30%. The stock is halted and we’ve placed a large, low-ball limit bid in the stock as a lottery ticket, but we have no expectation of getting filled. Blackberry is also trading up over 4% in the pre-market as speculation continues over a possible buyout of the Canadian smartphone maker. While a takeover does seem imminent, these events are so hard to predict and there will likely be several head fakes in the stock before a deal is announced. Finally, Facebook $FB is up once again on another upgrade and $50 price target from Sterne Agee. Zuckerberg continues to count his billions.

One name we will be watching closely this week is Tesla $TSLA. The stock has begun to move sideways and is flirting with a breakdown below its 8 day moving average. Any short in Tesla must be tactical as the stock remains on an incredible trajectory with a strong chart, but opportunities to the short side may present themselves if the stock cannot resume upward momentum.

We’ll take a deeper dive in our mid-day update into some other names – one of us is a little behind this morning. Good luck out there today everyone, stay tactical and profitable!