General Options Blog

December 28th Up or Down?

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Since December 20th, stocks have been rallying.... the Santa Clause rally. On Friday we had a stagnant lunchtime followed by a late session ramp. The SPY rose from $126 to $126.60 in mere minutes on a day when market movements were muted.

Today we had the same type of doldrums. A pop after the open, and then stocks just hung in a tight range. I was almost expecting another big pop by the powers that be, but it didn't happen. Stocks faded into the close. What can we expect tomorrow?

The only big even is the Italian bond auction, that could be a market mover.

What has me leaning on the bearish side is currencies and the Vix point toward lower stock prices, yet stocks contniued to hold their grounds. We've seen this since last week. Stocks have been decoupling from currencies and the VIX to a degree. I think the lighter volume has something to so with this. The Fed isn't accustomed to manipulating the market with less participants.

Stock futures are already down .30% , but that can all change quickly. If the Euro can break $1.30, the AUD/USD parity, then we could see a pull back. Right now stocks seem to want to go higher on light volume and I would not be surprised to see the market gap a good .5% to .75% higher. Being a holder of puts, I would be very happy with the opposite, but since 2008/2009 the bulls have a way of ramping the markets even amid the worst of conditions.

Tomorrow volume should be light and market gyrations kept to a minimum. I think a pull back to $126 on the SPY is a distinct possibility.

Buy… Buy… Or get the f&ck out of the way….

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Everyone on WallStreet has been fore-telling the grand "Santa Clause" rally. The one that will ensure huge bonuses and after work lapdances. That rally seemed to be in jeopardy  to start the week, as the market battled with the 1200 mark on the S&P. But three days later, the S&P has surged more then 4% from its Monday lows, and now sits above the 200 day moving average. A great sign for those looking for a continued move higher over the next few days.

Why?

Well, one could argue that the data coming out for the US economy continues to be somewhat promising. I actually think it doesn't mean anything. Folks will continue to shrug off the numbers and push the tape higher. It will only provide a better opportunity to go short sometime in 2012. For now, follow the big boys and look at some of the plays that have been beaten down on the Europe worries as well as those looking to break into new all-time high levels.

Plays I like into next week are Visa(V), Mastercard(MA), Priceline(PCLN), Caterpiller(CAT), Google(GOOG),Amazon(AMZN), and NKE(Nike).

 

 

Amazon (AMZN) ready to go on “Fire”

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Amazon(AMZN) closed at $181.26 on friday, down $65 from its October high of $246. What gives? Amazon recently released its updated Kindle device, the "Kindle Fire". Priced at an incredible $199, there are worries that the "Fire" will erode Amazon's already tight margins. There have also been some negative reviews on the device, as well as some complaints about a laggy touchscreen and buggy operating system.

With an estimated 6 million units to be sold in the 4th quarter, it is hard to think this can be anything but a good thing for Amazon irregardless of the issues. When you spend $199 to get a tablet, you need to lower your expectations. And if Amazon can get this device into enough hands, it can only help the companies margins down the line.

How?

Well think back to Apple and Itunes. Why did Itunes become the #1 digital download site for music? Not because it was the favorite site for music lovers, but because they were forced to register and use Itunes to manage their library. Over time, they became accustomed to using Itunes to buy their music as well. Why? Because people are lazy. No need to go to another download site, pay to get the music, then get it back into Itunes so you can put it on your Ipod.

If your a frequent Amazon customer, you will realize the focus they are putting on content. If it's not amazon app store, where they are offering a free app download a day, It's amazon prime, where they are talking up their video streaming.

Bottom line, is I think we will look back at the "Kindle Fire" launch, as a catalyst for Amazon's becoming a top destination for all digital content related items. And when it does, the chatter will not be Amazons low margins anymore.

Looking at the chart, AMZN (Amazon.com) looks ready to retest 200 day moving average at $200.99. Will also be looking for it to retest its highs into earnings in late January.

 

 

 

Jim Cramer upgrades PCLN (Priceline.com) to Sell. Sell?

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You have to love the antics of Jim Cramer. I give credit to the guy, he is entertaining at times. But I guess you have to be when your on National T.V giving out stock advice... the type of advice that has lost hard working blue-collar folks lots of money. Heck, Cramers remarks about Bear Stearns right before the collapse, will go down in infamy. (Watch it here:)

Over time, you learn to tune out the noise, and focus on the trade. So why talk about Jim Cramer today? Well because he created his "Pigs get slaughtered" list. (Here for the article) . The uber bullish Cramer, who has helped pump the "High Flying Stocks" of the past two years, is now saying stay away.

His little baby CRM is on the list, as well as LULU, GMCR, PCLN, FOSL. "Well golly gee willikers Jim, You sure nailed those!". Why didn't you say stay away PCLN at $550?? Oh thats right, because you said PCLN would continue to move higher if it beat on earnings:

Priceline.com (PCLN): This online travel deal company reports their 3rd quarter Monday after the markets close. Cramer thinks this is one of the few high-flyers that haven’t been crimped. In order for the stock to continue flying high, Cramer said the market needs to see $1.42 billion in revenue along with proof that Europeans are still flying.

LULU, FOSL, and GMCR also off 25%+ from their recent highs. Come on Cramer? PCLN is off $100 in under 30 days, and NOW you say something!?! 

What a joke. Its obvious there are other factors involved in PCLN's recent sell-off, including funds reducing their risk in equities. But PCLN remains the behemoth of growth stocks, this sell off non-withstanding.

I would compare the Dec 14th warning from Jim Cramer to stay away from PCLN, to a mom telling the child to keep their hands out of the cookie jar. It doesn't really do anything more then remind us the cookies are there... and we all like a good cookie.

PCLN looks to be setting up nicely for a reversal, with some above average volume today. It tested the lower bollie again, but looks ready to break to the $480-$490 level in the next few days.

PCLN 12-15

Dont worry Jim, I know you are nervous about leading your sheep into the slaughterhouse once again. But the sheep are smarter this go around. Are you??

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