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!
Crazy day today. It looked like the S&P would be content to camp on the highs for most of the afternoon, but lo and behold the market began to sell off around 2 PM and trended lower for the remainder of the session, closing almost exactly flat after an incredibly whippy day.
As we mentioned in the mid-day update, several charts formed an identical V pattern in the first two hours of trading or so as the broader market was rocked by the jobs data and comments from both Obama and Putin regarding Syria. Our positions took quite a ride themselves. We nibbled on a momentum trade in $IMMU, but volume quickly dried up and we were stopped out for a small loss. We were able to recoup most of those losses with a nice $GMCR put option trade after there was heavy put buying in the September $80 contracts. We left some money on the table there as Green Mountain sold off in the final minutes of the session, but we’re comfortable with a scratch in realized P/L on such a volatile day.
Our live positions shaped up nicely into the bell. Home Depot $HD closed well off the highs and in the red as our put position had a volatile trading range between $.45 and $.62. The stock’s chart is becoming decidedly more bearish as it failed at the 8-day and looks ready to retest our $72.50-$71.50 bear channel. The 200-day sits at $71.68 near the base of that channel. AT&T also failed at its 8-day and closed in the middle of its trading range while our put position closed flat on the day. We didn’t get as definitive of a jobs report as we had hoped for, but we think there is enough substance there for the Fed to move ahead with an abbreviated tapering plan of, perhaps, $10 billion per month. If 10-year yields can break and hold above 3%, we think both $HD and $T have considerable downside risk.
$FCEL had a rough afternoon and closed down 3.68%. We took profits on our stock position yesterday but remain long $1 call options with an October expiry. Anything can happen, but based on the stock’s action in the past we would not be surprised to see a gap fill and possible bounce. However, we should note that the stock did not have the extreme run-up into earnings as it did in Q2, and it may allow for better price action over the coming sessions on what was a considerably stronger earnings report, in our opinion.
We initiated a new position into the close with $AAPL weekly $500 call options, a position worth just shy of 4% of our book. We had been anticipating a run-up ahead of the company’s product unveiling next Tuesday, while rumors had been swirling of a China Mobile deal that may be announced next Wednesday. Those rumors caught some traction late in the session and we initiated a position at $8.75 and bought again at $7.70 after the stock inexplicably sold off. $AAPL promptly rallied to the $499 level before closing just north of $498. The stock’s chart is building some strength and appears poised to pop, and we believe next week’s events could really set the stock in motion. $AAPL continued to run after hours and is trading north of $500 at the time of writing.
The broader market remains in a difficult spot, and today proves that it is still nearly impossible to have conviction in either direction. Headlines out of Washington will continue to drive this market for the foreseeable future, and rising tensions between the US and Russia could create additional fear in the markets. This is very much a stock-by-stock environment, which calls for prudence and profit taking where available.
We hope everyone had a profitable week. As always, feel free to engage us on Twitter at @vikingtrader14 or shoot us an e-mail at firstname.lastname@example.org. Have a great weekend! GO BEARS!!!!!!
Happy Friday y’all. Well, the “most important jobs number ever” is upon us, with NFP coming out at 7:30 CST. Consensus is calling for an addition of 180,000 job, while Goldman Sachs is the resident optimist on the street with an estimate of 200,000 additional jobs. We’ll cop out and say jobs fall somewhere in between there, and we’ll throw our hat in the ring with an estimate of 189,000 jobs.
So what does this mean for the market? Well, it’s hard to say right now, but we’ll take a stab at it. Markets have shown a considerable amount of resiliency this year as bad news has been good news and good news has been good news. Anything aside from a disastrous jobs number will probably signal to the Fed that we are ready for tapering (though the actual jobs picture is still fairly putrid – Bloomberg flashed a great chart this morning showing a massive deceleration of full-time jobs versus rapid growth in part-time jobs, rhetoric that is being translated as “a job is a job,” which I’m sure many Americans would disagree with). In our view, we’re not convinced that tapering is a death sentence for the market like some pundits are expecting. We partially outlined our stance yesterday, and we do believe that interest rate sensitive equities will take a hit, but with expectations of tapering happening sooner rather than later, perhaps equity markets have already priced in that expectation. That’s not to say that markets will surge out of the gate no matter what today, but we would refrain from calling tapering a major downside catalyst.
There are still other factors that could send the market into a swoon, including the ongoing situation in Syria and the seemingly never-ending debt ceiling debate (which feels like a non-event). While it is likely the proverbial can will be kicked once again when it comes to the debt ceiling, predicting an outcome in Syria is an exercise in futility as the Obama administration has been horrendous when it comes to execution. Let the market react as it will, just be wary of leaning too hard one way or the other. This is a headline-driven market until further notice, and selectivity will be paramount until these events are in the rear view mirror.
We pared our gross exposure yesterday to pocket some gains and allow some added mobility ahead of this jobs number. Whatever your market sentiment, just remember one thing today: keep your head on a swivel.
(Anchorman is clearly a theme this week)
Got a prediction for the jobs number and the corresponding market reaction? Throw it in the comments.
Very little activity in the markets today as we have sat in a pretty tight range for much of the morning after the S&P leaped to the 1659 area before settling in around 1656 to churn. The ADP report was solid albeit somewhat light compared to estimates, and the 10-year is hovering just below 3% as murmurs of tapering in September have crept back into the markets.
Not a whole lot of major individual movers out there, though we are seeing interest rate sensitive names taking a hit, including housing related stocks such as $HD, $TOL and $LEN, while our favorite taper play $T is getting whacked today after rallying hard yesterday. Our puts are trading back near the $.30 range. $LNKD rallied extremely hard off of the opening lows and would have made a very lucrative intraday swing trade, but we can’t catch them all. $AAPL is taking it on the nose some today, while $FB surged on the open and has held its gains most of the day.
One idea that we’ve been toying with of late is getting short $TSLA via puts. We probably wouldn’t initiate this position any time soon because the stock still has an air of invincibility surrounding it, and it has not shown a commitment to any prolonged sell off in the past. Still, the rumored addition of $TSLA to the buy list at Goldman Sachs (a report that has been heavily disputed with some Sachers calling it a miscommunication) has us thinking. Apple’s meteoric rise was met by ludicrous price targets and upgrades upon upgrades. The firm’s valuation is beyond absurd, but we wouldn’t seriously consider it until we had another round of earnings from the firm, at least. We are utterly infatuated with the cars ourselves, and we think the company has done a remarkable job in the early innings of bringing the electric car to the mass market. But at some point, the company has to start delivering real earnings, and there are still major hurdles to the electric car catching on, including the institution of charging stations and a more affordable model with the same appeal of Tesla’s current upscale model. Nothing to act on just yet (because the stock could surge to $200 at the drop of a hat), but it may be time to question whether the company can keep its foot on the gas (puns!).
$FCEL has had decent price action today and has traded in a fairly tight range on heavy volume. The stock met major resistance at the high of the day as September options holders put a lid on today’s rally. We may look to peel off either our stock or option position at some point today, but we would be content with standing pat if need be. Nonetheless, a big winner for us on the day.
We’re currently bidding on $EJ February calls after seeing some unusual buying activity in the $12 strike, and we may play a few earnings names today, including Smith and Wesson $SWHC, likely to the long side.
Morning y’all. Sovereign debt and economic stimulus is making all the headlines with the US and German 10-Year yields inching higher. The US 10Y is trading at roughly 2.94% while the German bund clipped 2% for the first time since 2012. The ECB is leaving benchmark interest rates unchanged at 0.5%, and the Japanese yen crossed 100 while the Nikkei rallied overnight for modest gains.
S&P futures are more or less flat this morning ahead of perhaps the biggest jobs data we’ve seen since the last release (rimshot!). In all seriousness, today’s jobless claims and Friday’s jobs report will be paramount in the decision making process regarding tapering, which should accelerate the rise of rates. While recent jobs data has shown decent growth, we’re not convinced that the underlying economy is as stable as some of the pundits would have you believe. With that said, we think it is indeed time to taper to allow this market to make a directional move without being throttled by every headline coming out of the Fed. Look for a lot of commentary regarding tapering in the coming days, while headlines out of the G20 and continued discussion regarding the Syrian situation could serve as shocks to the market. We would expect the market to take a definitive direction following today’s jobless claims.
On the company front, not a ton of news this morning. Yahoo $YHOO made a “splash” by unveiling a new logo… yawn. The stock has been on quite a tear this year, but Marissa Mayer is going to need to start delivering sooner rather than later, and we’re not sure how spending $1 billion on Tumblr is going to radically alter the face of the firm. Samsung is still in the spotlight after yesterday’s product reveal, setting the stage for Apple’s $AAPL event next week. The perpetual turnaround story at Groupon $GRPN received another shot in the arm from Morgan Stanley with an upgrade to overweight. Groupon has been acquiring warehouses to improve distribution of its consumer goods, and the company’s mobile efforts have shown improvement. As Chicagoans, we’ve always had a healthy disdain for the Groupon platform and in the few times I’ve been to the site, I’ve rarely found deals that are even of vague interest to me. Still, it’s hard to argue with the direction of the stock, and it seems like getting Andrew Mason out of the way has reignited the fervor of growth surrounding this name. Still, we can’t see Groupon becoming a serious competitor for Amazon $AMZN just yet, as some have speculated.
We’ll be looking to manage our $FCEL position today as the company has surged higher following a strong earnings report. The conference call is slated for this morning and we will be looking for further commentary on profitability in the coming quarters. Seasonally, this stock has performed well during fall trading, and we may be hesitant to exit our positions if the stock can hold gains today. We’ve been preaching it all week, but it remains difficult to have conviction in either direction with so many external variables impacting markets, and this is an environment that presents very few buying opportunities for long-term holdings. For now, we will stay nimble and try to be extremely selective when taking day, swing and momentum trades.