All posts by jimmybob

September 3rd, 2013 Watch List

Abhacken

With the worst month since May 2012 behind us, we can look forward to more market moving events in the coming weeks to include the FOMC meeting Sep 17-18th as well as other possible catalysts i.e. Syria. With possible intervention delayed, the market can breathe a short sigh of relief in the form of a few nice green days to take the SPY above the 50 dma(166.08) . Hard to say if that will be the case or if we will resume the trend fo last week as folks sold any gap up.

 

Some news over the weekend including Verizon buying the rest of it’s wireless stake from Vodaphone. A move that has been talked about for sometime.

Now the bonehead move of the weekend is MSFT buying NOK wireless business. Nokia is already using the crappy MSFT OS on their phones, so what does MSFT gain from this purchase? Expenses and a dying brand. I guess time will tell but there are plenty of other great acquisition targets out there for 7.1 billion.

 

Tons of gappers this morning led by Tesla crossing all-time highs over $174. Should be a very interesting day.

 

Here are some of the analyst changes of note:

 

 

MON Monsanto to benefit from COGS tailwind, says Morgan Stanley
Morgan Stanley said poor yields and increased corn prices have resulted in increased corn COGS by approximately 70c of EPS since 2008. The firm expects this trend to reverse in 2014, offsetting concerns of lower acreage and pricing power. Shares are Outperform rated with a $125 price target

 

 

FINL Finish Line upgraded at Janney Capital
As previously reported, Janney Capital upgraded Finish Line to Buy from Neutral. The firm's upgrade is based on an improving product line and potential 2H 2013 comp acceleration, positive early reads on the Macy's partnership, a slow down in digital, omni-channel investments which supports potential cash use for increasing buybacks or dividends, and valuation. Price target raised to $26 from $24

 

 

AAPL Apple downgraded to Sell from Hold at ABG Sundal
Price target remains $400

 

ZUMZ Zumiez could provide cautious Q3 guidance, says RW Baird
Baird expects Zumiez to provide cautious initial Q3 guidance when its reports quarterly results on Thursday. The firm believes there is little upside surprise for Q2 as they suspect sales trends in August showed a continuation of July's trends and the broader uncertainty in the retail environment. Shares are Outperform rated with a $37 price target

 

WDC Western Digital, Seagate weakness a buying opportunity, says Brean Capital
Brean Capital believes the recent weakness in both Western Digital (WDC) and Seagate Technology (STX) is a buying opportunity. The firm cited stable free cash flow and gross margins and current valuation. Brean Capital favors Western Digital over Seagate due to its discounted valuation. Both Seagate and Western Digital are Buy rated

 

ISRG William Blair says a buyer of Intuitive Surgical shares
William Blair said it is a buyer of Intuitive Surgical shares after meeting with the company's CEO Gary Guthart and conducting an analysis of system placement and utilization trends. The firm sees upside to expectations and keeps an Outperform rating on the stock

 

 

I am officially starting the Ditto Trade program today. Here is the webinar from last night:  https://www.optionmillionaires.com/forum/showthread.php/542-Ditto-Trade-Q-and-A-9-2

 

Also, here is the Week Ahead Webinar from last night for those that missed it: https://www.optionmillionaires.com/forum/showthread.php/541-The-Week-Ahead-With-UPB-and-JB-9-2

 

Will be watching two strikes for today as well as having eyes on SAM, Z, BIDU, SHLD, SODA, SSYS, and a few others:

 

 

 

Stock Ticker Call/Put Strike Expiration Closing Price Entry Price
OPEN CALL $85.00 Sept 0.40 0.35
CMG CALL $425.00 Weekly 0.35 0.30

 

 

 

Again folks, I if make a purchase I will post in the chatroom first then private twitter.

 

Lets have a great start to the holiday shortened week!

 

- JB

Three Webinars This Holiday Weekend (Gold & Above)

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Hope everyone has a great Holiday Weekend. Just wanted to make sure folks didn't miss any of the webinars going on, and even if you do, they will be recorded and in the forums before Market open on Tuesday, click the headers for the links to register:

Chris D will be hosting this one Sunday night at 7pm eastern for Diamond members:

Webinar – A Macro Overview Of The Market – Inflation, Sector Leadership, Sentiment, And More

I will be hosting the Week Ahead Webinar Monday night at 10pm, a bit earlier then normal. As always, it will be recorded.

The Week Ahead with JB

Ditto Trade Q & A with JB at 10:45 am or whenever the week ahead ends. I was going to do this Tuesday morning but figured better to do it all together - I will be discussing the Ditto Trade program, how I plan to strategize the trades, will mention probably 80 times how you will lose all your money, and then take questions. Again, this will be recorded.

Ditto Trade Q & A with JB

Hope to see you at some or all of these!

- JB

 

August 30th, 2013 Watch List

Abhacken

 

Make that two green days in a row, although it does not seem that way. The market started in the red yesterday, then ramped all the way to $165+ on the SPY, only to fade back near 164, and finally close at 164.17. Futures are higher this morning so we shall see what this last day before the holiday weekend brings. The VIX continues to hover near the upper bollinger band and the SPY is still under the 50dma. Both will need to move quickly in order to end this pullback and get us back into all-time highs.

 

Some big movers yesterday to include the text trade idea from Wednesday Zillow. You can read my thoughts on the stock here : https://www.optionmillionaires.com/2013/is-zillowz-the-monster-stock-of-2103/ and I do appreciate feedback for those that have it. Seems crazy to buy calls on a stock up so big this year, but folks thought TSLA at 90 was too much this year and look where that got them. Just want to see the $100 break and ill be happy.

 

Earnings from CRM last night beat expectations like they usually do, and all the analysts are cheering the stock.. nothing new here. Not sure ill play it but could be a nice one if your able to get some lotto calls at the open for a move to 49 or so. Gold sold off over night under 1400 and is trying to regain some of the losses. It pains me to watch but I will stay on the sidelines until it feels right, my gut just doesn’t like this whipsaw action.

 

Here are the analyst changes of note for today:

 

 

 

Splunk upgraded at FBR Capital
As previously reported, FBR Capital upgraded Splunk to Outperform from Market Perform. The analyst has increased confidence in Splunks product cycle and secular trends following last night's solid report and guidance. Price target raised to $61 from $48

 

Facebook price target raised to $50 from $38 at Stifel
Stifel believes that Facebook's revenue growth is beating expectations in Q3 while its margins remain high. The firm thinks the company is continuing to gain ad share and it keeps a Buy rating on the stock

 

Microsoft problems won't be overcome by CEO change alone, says Argus
After Microsoft CEO Steve Ballmer announced that he would step down within one year, Argus thinks the company suffers from "systemic weakness." The firm believes that it will be difficult for the new CEO to make the company more nimble and forward-looking. It keeps a Hold rating on the shares

 

Intel upgraded to Buy from Hold at Argus
Argus upgraded Intel to reflect new smartphone and tablet products that have advantage in terms of size and performance and are more competitive with ARM-based chips. Price target is $28

 

Salesforce.com price target raised to $60 from $52.50 at Credit Suisse
Shares are Outperform rated

 

 

Joy Global orders have likely bottomed, says William Blair
After Joy reported stronger than expected Q3 results but provided FY14 guidance that the firm views as weak, William Blair sharply lowered its FY14 EPS estimate. However, the firm thinks the chances of another negative catalyst surfacing have diminished. It keeps a $60 price target and Outperform rating on the shares

 

 

 

With the up and down action of the past 2 days, I will be a little more wary. With Yelp and Z continuing to be hot stocks, I think OPEN is the next one, and will look for a position today. Will also try for some lotto calls on TSLA today.

 

 

Stock Ticker Call/Put Strike Expiration Closing Price Entry Price
OPEN CALL $85.00 Sept 0.50 0.40
TSLA CALL $170.00 Weekly 0.68 0.20

 

 

The Week Ahead Webinar will be Monday night, sign-up here : https://www.optionmillionaires.com/live-event-classes-jtv/

 

Also, I will be doing a Webinar on Tuesday for the Ditto Trade on Tuesday at 12 noon. I do not expect to do any ditto trades until Wednesday. Signup for the webinar here : Please register for Ditto Trade Q and A with JB on Sep 3, 2013 12:00 PM EDT at:

https://attendee.gotowebinar.com/register/5925590671725763328

 

Lets have a great end to the week and have a great holiday weekend folks!

 

- JB

Is Zillow(Z) the Monster Stock of 2013?

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It was back in May of 2011, when LinkedIn (LNKD) had it’s IPO, one which saw the stock double on it’s first trading day. I still remember watching this interview of the CEO Jeff Weiner , and was impressed at what he had to say. Of course the talk turned from a hot stock, to a bubble immediately as folks turned their attention to so-called fundamentals. Just two days after the IPO, there was a line to borrow shares to short the stock. It seemed to be an easy bet, as euphoria tends to push stocks too high too fast. The stock faded slowly into the $70s, which is when the company announced a secondary offering that would nearly double the amount of shares outstanding. Couple that with the ending of a lock-up period, and you have a recipe for a pullback, and pullback it did. The stock traded down into the $50s , and continued to tread water to end 2011. In 2012 LinkedIn(LNKD) started to gain a bit of traction and closed at $76 on Feb 9th, 2012, which was the day we said the stock turned from garbage to growth stock, a bandwagon we have continued to ride, despite the same bloated fundamental arguments being given to us at each new high. So why am I talking about LinkedIn(LNKD) when this article is about Zillow(Z)? To see the future sometimes you need to look at the past. In building the bull case on Linked(LNKD) at $76 in Feb 2012, we looked at Salesforce.com(CRM), another supposedly bloated stock that continues to defy gravity even to this day. Now we are building our bull case on Zillow(Z) using those previous examples.

 

Some similarities:

 

  1. Hot stock in a hot sector. Cloud computing and social media have, and continue to be, hot sectors while Salesforce.com(CRM) and LinkedIn(LNKD) continue to be hot stocks. Despite the rise in rates, Zillow(Z) continues to be a hot stock in a hot sector.
  2. Billion dollar valuations with million dollar revenues. Zillow(Z) reported $46.9 million in revenue for the last quarter, yet sports a $3.6 billion market cap. LinkedIn(LNKD) was in a similar position with only $121 million in revenues for its first reporting quarter in 2011, yet it’s market cap exceeded $5 billion. In 2010 Salesforce.com(CRM) reported revenue of $331 Million in revenue for its 3rd quarter yet had a market cap in excess of $5 billion. LinkedIn(LNKD) has grown its revenues 200% from that point, while Salesforce.com(CRM) doubled it in nearly 8 quarters. On it’s currenty trajectory, it would not be hard to project Zillow(Z) doubling revenues in the near term.
  3. Astronomical Price to Earnings ratios. Both LinkedIn(LNKD) and Salesforce.com(CRM) could be considered poster boys for the 1k P/E ratio club. Both continue to have high ratios, and eventually one would expect the ratios to come down to earth when the companies fully mature. Using Zillow(Z)’s last profit of .01, it enjoys a 9,562 P/E ratio, even meeting it’s quarter 4 EPS estimate of .04 puts the P/E ratio at 2,390. These are the type of ratios that have Bears smelling blood.
  4. High Short Interest. Linked(LNKD) enjoyed over 25% of it’s available trading shares being sold short back in 2011. Salesforce.com (CRM) has enjoyed over 10% of it’s shares being short over the past 3 years. Zillow(Z) currently has a 19% short interest, which is almost down half since December of 2012, but still a significant amount, especially with the 200%+ move the stock has had since the start of the year.

 

Those are some of the reasons I love Zillow(Z) here, even with the huge move it has had this year. Can this be a $150+ stock? Sure, why not. The recent secondary offering announced a few weeks back presented a great buying opportunity, and now the stock looks set to break over $100. Smart companies utilize times like these to finance growth, and Zillow(Z) has picked a great time to do so.

Folks continue to use bloated fundaments, insider sales, competition worries, and huge short interests to validate a bearish position. I take the opposite view and think this could continue to be the monster stock of 2013. Time will tell, but we currently hold September $105/$110 calls and may add or close our position at anytime. 

 

Zillow(Z) was our text trade idea of the week and the $110 Calls we sent out are now up 200%, and will look even better when the stock breaks $100.

 

Z 8-30 - small

 

Happy Trading!!

 

August 29th, 2013 Watch List

Abhacken

I want to thank everyone for their kinds words, support, and congratulations over the past few weeks on my big day. I truly appreciate it as we all have built some bonds with each other over the past months and years. With that being said, I know some continue to ask about having some kind of conference, and I will make a commitment to get something ironed out before the years out. At least the details of it.

 

Now onto the important stuff...The market continues to struggle to find footing as Syria tensions and emerging market worries have folks taking profits or sitting on the sidelines. I think the emerging market story is even more eye opening then any possible escalation in Syria as the Rupee, Lira, and Ruble have all been punished recently as fears over higher rates in the U.S. will hurt those economies via exports...ect. The Indian government has been the worst, going back and forth on policy to try and strengthen the currency, only to see it fall to historic lows. As it has been for sometime, I think these pullbacks will be bought eventually, and concerns over these emerging markets only means folks will continue to look for a better place to put their money to work..ie. U.S. equities.

 

Anyone following the watchlist and blog know I am a Gold bear. After bottoming out at $1180, the precious metal has found some bidders and vaulted over $1400. I actually was hoping for a bounce to $1380, so happy i was away for the bigger move over $1420. I am waiting for an entry for some puts on GLD and calls on DUST and will continue to watch for an entry. I still think Gold is set to test 1100 or less in the coming months and think DUST can head to new highs as well. The story hasn’t changed too much besides inflation nearing the 2% target, so my bear case is intact.

 

I bought some Z 110 calls yesterday and sent the trade out via text, like it for a break above $100 in the coming days based on lower mortgage rates and the fact that everyone keeps saying its overvalued, especially after the secondary. I will hold for the break above 100 but selling some for a double maybe a good idea when it happens.

 

Continue to love NFLX and BIDU here and will look to grab some NFLX calls today. NKE could also be a nice play off the lower bollie and may look for a position today. Being in Greece, Rome(airport), and Paris (airport) you can see the global impact Nike has. I would bet over 30-40% of the folks walking around in greece were wearing a nike sneaker. Heck, I saw more Lebron and Kobe jerseys then i see in New York.

 

More on that on the Week Ahead this weekend.

 

Here are some of the analyst changes of note for today:

 

 

UBS remains cautious on FactSet ahead of Q4 results
UBS remains cautious on Factset ahead of Q4 results based on valuation, increased competition, and decelerating buy-side growth. Shares are Neutral rated with a $99 price target

 

Cree weakness a buying opportunity, says JPMorgan
JPMorgan said recent weakness in Cree following the mixed Q4 report and guidance is a buying opportunity. The analyst believes margin concerns are overblown and that the company has been somewhat supply constrained and has several levers to maintain margins. Shares are Overweight rated with a $75 price target

 

Expedia competitive concerns provides a buying opportunity, says Benchmark Co.
Benchmark Co. said Expedia share weakness since the Q2 report provides a buying opportunity. Firm believes Expedia has been addressing the changing competitive landscape and that shaers are undervalued. Shares are Buy rated with a $66 price target

 

Williams-Sonoma reported solid results, says Wells Fargo
After Williams-Sonoma reported stronger than expected results, Wells Fargo thinks the company's guidance is conservative. The firm keeps a Market Perform rating on the stock

 

Nike one of best performing brands, says Wells Fargo
Based on channel checks, Wells Fargo thinks that Nike was one of the best performing brands in Q2. The firm believes that Nike has strong momentum in key emerging markets, and it identifies the company as one of its top picks. Wells keeps an Outperform rating on the stock

 

Cisco outlook positive, says Wells Fargo
After meeting with Cisco's COO, Wells Fargo believes that the company continues to execute well and see gradually improving trends in many key product categories and geographies. Cisco reports that the global economy is continuing to recover, according to Wells, which keeps an Outperform rating on the stock

 

Joy Global price target lowered to $57 from $69 at RW Baird
Baird lowered its price target on Joy Global following Q3 results. The firm cited lowered bookings guidance but remains positive citing its share buyback program, expanded cost reductions, and current valuation. Shares are Outperform rated

 

 

 

The SPY is below the 50dma for the second time since June, an area i usually mark as my line in the sand. The VIX closed just below the upper bollie band and will look for a reversal today and tomorrow. Looks like the USD is getting a bid as well and would like to see it close above 82. Time will tell. Here are the strikes I am looking at today:

 

 

Stock Ticker Call/Put Strike Expiration Closing Price Entry Price
NKE CALL $63.50 Weekly 0.26 0.26
NFLX CALL $300.00 weekly 0.16 0.16

 

 

Both are weeklies that expire tomorrow so be wary. Will get into NFLX if it holds 285, and will try for the NKE calls after the open.

 

I went and approved all the Private Twitter requests for Gold members and above yesterday that were pending since I left. If you are a Gold member and above and want access to the private twitter feeds please email optionmillionaires@gmail.com with your OM username and Twitter Handle. I post my trades in the private twitter feed right after i post in the chatroom so its a matter of seconds for those unable to monitor the chatroom all day.

 

I also went and approved all Diamond member requests to follow on dittotrade.com .

 

Some nice posts by UPB yesterday and today:

 

https://www.optionmillionaires.com/2013/upb-morning-market-video-tsla-spy-goog-amzn-tlt-uso-aapl-nflx/

 

https://www.optionmillionaires.com/2013/as-long-as-these-pullbacks-have-a-name-stocks-head-higher/

 

http://stocktwits.com/message/15413233

 

https://www.optionmillionaires.com/2013/uso-where-is-oil-going-from-here/

 

 

Lets have a great day folks!

 

- JB