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October 25th, 2013 Watch List

Yesterday was a picture perfect day as the market's original gap faded and then was filled. Then, the market slowly rallied the rest of the day, recouping Wednesday's losses. Futures are flat this morning despite some great earnings from MSFT, AMZN, and UPS. AMZN beat expectations on revenue and the stock is up nearly 9% premarket. Every analyst upgrade out this morning has a target at or above $400, so it will be interesting to see how the stock plays out today.

I bought some IRBT and TRIP calls for bounces yesterday as well as some lotto V, PCLN,  and CAT calls. Today, I'll most likely sit on my hands unless something really jumps out. Below, some of the analyst changes for today:

NQ Piper questions 'at least three' claims in NQ Mobile report
Piper Jaffray says "at least three" claims made in the Muddy Waters report calling NQ Mobile (NQ) a fraud are inconsistent with its own research and work done by a "reputable third-party." Piper said its survey found NQ Mobile's market share in China at 11%, not the 1.5% stated in the report. The firm adds that its channel checks indicate NQ's attach rates in U.S. retail stores are in the 15%-30% range, not the 2%-3% claimed by Muddy Waters. Piper has an Overweight rating on NQ Mobile, but admits the 81-page report from Muddy Waters will take "considerable time to digest." Shares of NQ dropped 47% yesterday to $12.09 after the short-selling research firm called the company a fraud
DECK Deckers Outdoor risk/reward remains compelling, says Jefferies
Jefferies believes Deckers Outdoor's "strong" Q3 results should ease concerns over the Ugg brand. The firm says the company's momentum is accelerating and its finds the risk/reward on shares as compelling at current levels. Jefferies keeps a Buy rating on the stock with a $100 price target
F Ford upgraded to Outperform from Underperform at CLSA
CLSA upgraded Ford following the Q3 report citing impressive execution, strong U.S. truck demand, and a European recovery in the making. Price target raised to $20 from $18
WYNN Wynn Resorts downgraded to Hold from Buy at Craig-Hallum
Craig-Hallum upgraded Wynn Resorts following the Q3 earnings beat due to strong Macau GGR growth, strength in Cotai, and improved VIP wins. Price target raised to $175 from $160
DECK Deckers Outdoor risk/reward remains compelling, says Jefferies
Jefferies believes Deckers Outdoor's "strong" Q3 results should ease concerns over the Ugg brand. The firm says the company's momentum is accelerating and its finds the risk/reward on shares as compelling at current levels. Jefferies keeps a Buy rating on the stock with a $100 price target
AMZN Amazon.com price target raised to $425 from $330 at RBC Capital
RBC Capital raised its target on Amazon.com after the company reported higher than expected revenue. The firm thinks the company's guidance implies that its margins are stabilizing, and RBC keeps an Outperform rating on the stock
AMZN Amazon.com price target raised to $400 from $350 at Benchmark Co.
Benchmark Co. raised its price target for Amazon.com shares to $400 following the company's "surprise" Q3 revenue beat and keeps a Buy rating on the stock
AMZN Amazon.com reported excellent results, says Stifel
Stifel notes that, for the first time in many quarters, Amazon.com reported Q3 revenue at the high end of its guidance, and provided revenue guidance that significantly exceeded expectations. The firm thinks the company continues to distance itself from its traditional and online retail competitors. Stifel raised its price target on the shares to $400 from $335 and keeps a Buy rating on the stock
AMZN Amazon.com upgraded to Strong Buy from Market Perform at Raymond James
Raymond James upgraded Amazon.com two notches to Strong Buy given continued revenue acceleration in the U.S., strong AWS growth, and expectations for improving margins in 2014. Price target is $446
NFLX Netflix initiated with a Market Perform at FBR Capital
Target $350
AMZN Amazon.com price target raised to $420 from $331 at Piper Jaffray
Piper Jaffray raised its price target for Amazon.com shares to $420 following the company's Q3 results and reiterates an Overweight rating on the stock. Piper said Amazon's North America business accelerated for the third consecutive quarter
DNKN Dunkin' Brands price target raised to $52 from $46 at RW Baird
Baird raised its price target on Dunkin' Brands following Q3 results. The firm believes core operating metrics remain solid, sees the company as well positioned to drive growth, and sees a premium valuation justified by its asset-light model. Shares are Outperform rated

I have 380 weekly and 400 Nov 1st calls on AMZN, but may try some $365/370 weeklies if the stock stays under $360 before the open. I may also look for one last pop on GOOG. Here are the strikes I am looking at:

Stock Ticker Call/Put Strike Expiration Closing Price Entry Price
AMZN CALL $370.00 Weekly 1.30 0.30
GOOG CALL $1,035.00 Weekly 1.90 0.45

Let's have a great day, and I'll see you Sunday at 10:30pm for the week ahead!

- JB

Bank Of Ireland (IRE) Still A Great Momentum Trade

I normally hate chasing momentum plays, as I know that they can be vulnerable to sharp corrections once the stock runs out of buyers.  When I do, though, I prefer using options to limit my risk.  The Most Interesting Man in the World says it best:

 

I don't normally chase momentum but when I do, I limit my risk with calls | Dos Equis Guy gives advice

Bank of Ireland (IRE) has been one of the most hated stocks in the world, declining from a split-adjusted $157 to a mere $4 dollars at its low.  Sounds Citigroup-esque, right?  Anyway, it's been breaking out of a very long term base since the beginning of this year.

 

http://s16.postimg.org/m5xplbeo5/IRE_Base.png

Meanwhile, most analysts and traders will uniformly say that with over $30 million to pay back to its bailout beneficiaries and still losing money hand over fist, this stock is a sell.  Such advice about IRE started as early as 2012.  Well, the stock has been up  over 100% since then, and that means someone is buying it up.  I'm jumping on this stock with simple call options, as I want to limit my risk.  Thankfully, the options are fairly liquid, with small bid-ask spreads, and the implied volatility of the calls is low, so option buyers aren't getting ripped off as they would be by other momentum plays.

 

In summary: with a solid breakout from a long term base and no signs of fatigue in sight, this PIIG bank looks like it will keep flying.

$AMZN: How To Trade Tonight’s Earnings Report

amzn2$AMZN reports earnings tonight. This time last week $GOOG reported earnings and the stock rallied to over $1,000 per share. The chat room was rocking the next day with many traders making significant profits. For example, one turned $130 into $2,100; another $1,200 into $19,600; still another $380 into SIXTEEN THOUSAND DOLLARS. Will $AMZN provide the same profit opportunity? Will the company knock it out of the park this quarter?

https://www.optionmillionaires.com/2013/goog-calls-optionmillionaires-com-chat-room-today-money-mayhem/

https://www.optionmillionaires.com/2013/goog-960-calls-300-10600-48-hours-trade-options/

To answer the above questions, let's start with a look at the chart. The below is a 5-year weekly chart depicting $AMZN and its stock movement.

amzn1

I have one word for it: YAWN.

While $AMZN has seen some dramatic swings on earnings, the stock itself has led a rather mundane existence: it just keeps climbing. Heading into its earnings report tonight the market is expecting a $22 move, and guess what? Options are priced for perfection. There are plenty of bears out there that think the stock is severely overvalued. Even pro analysts are expecting a pullback. This, for instance:

RBC Capital expects Amazon.com to report Q3 EPS of (20c), versus the consensus estimate of (9c). The firm thinks that the Street's Q4 consolidated segment operating income outlook for the company may also be "a tad high." However, the firm keeps a $330 price target and Outperform rating on the stock.

Piper expects slight miss and guide down from Amazon.com
Piper Jaffray believes Amazon.com will report September quarter revenue 1% below consensus expectations and EPS of (25c) versus the estimate of (9c). The firm expects revenue guidance to be 2%-4% below the Street. However, Piper believes investor optimism around Amazon's position within eCommerce will remain unchanged following the results and reiterates an Overweight rating on the stock

How would I trade $AMZN earnings tonight?  I wouldn't. Instead, I'll wait for tomorrow and buy the dip.  I think $AMZN will fall 5-8% and hold the $300 level after reporting earnings tonight.  The stock will then rally back to even by mid-day tomorrow, and by the next earnings report I believe the stock will be sitting at another all time high.

October 24th, 2013 Watch List

The 4-day winning streak on the SPY ended yesterday as concerns over China as well as CAT earnings weighed on the markets. With Tuesday’s spike, and the market being on a tear recently, pullbacks like these are a welcome respite. Futures are higher pre-market, nearly wiping out all of Wednesday’s losses, and it will be interesting to see where we head today.

Weekly jobless claims came out down 12,000 week-over-week, but the 4-week average is the highest since early summer. There are still some computer issues causing the number to be skewed as well, so I'm not sure how accurate a data point these claims and the rolling averages are.

We had earnings from FFIV, MLNX, and ANGI yesterday. FFIV had some nice results but the stock is up only 3.4% at this time. MLNX and ANGI reported some mixed results and both are down pre-market. I have MLNX calls and I'm glad I bought some December strikes, as there are always buyout rumors on MLNX and I think the stock can head higher from here on out. I also didn't take any positions in FFIV or ANGI, although ANGI sure looks like she may go green today.

GOOG looks poised to continue Day 2 of a breakout, and I'll be keeping an eye on her. Additionally, I like ISRG for a quick bounce here as well. AMZN doesn't report until after the closing bell and I will likely hold some of the calls I have right into the bell, although I will indeed sell some, just like we did with GOOG.

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

DE Deere downside limited at Barclays
Following a recent Midwest ad dealer survey, Barclays believes a potential slowdown in North American ag equipment demand will be less severe than expectations. The firm said there has not been a significant reduction in demand and that Deere's visibility through 2H 2014 could be better than expected. The firm sees limited downside to Deere given relative valuation and reiterates its Overweight rating

 

ETFC E-Trade could sell off on results, says Wells Fargo
After E-Trade reported in-line EPS, Wells Fargo believes that investors were expecting the company to beat expectations. The firm raised its price target on the shares to $16-19 from $15-$17 and keeps a Market Perform rating on the stock

 

VAR Varian Medical weakness a buying opportunity, says Brean Capital
Brean Capital remains a buyer of Varian Medical on any weakness from its messy Q4 results. The firm believes hospitals are poised to take share from Free Standing Clinics and emerging market strength should continue. Shares remain Buy rated with an $80 price target

 

SIX Six Flags results remove several overhangs, says Wells Fargo
After Six Flags reported weaker than expected results, Wells Fargo reports that fallout from the accident at the park in Texas was limited to that park. The firm believes that previous growth drivers remain intact, while the company could look to relever in Q4 and use the proceeds to buy back shares. It keeps an Outperform rating on the stock

 

FB Morgan Stanley expects Facebook to report an in-line Q3
Morgan Stanley expects Facebook Q3 revenue and EBITDA to be in-line with Street estimates. The firm expects mobile revenue growth of $774M, or 46% of total vs. 41% the previous quarter and for management commentary to focus on Instagram, video app install ads, and timing of the video brand roll-out. Shares are Overweight rated with a $49 price target

 

ANGI Angie's List shares undervalued after pullback, says RBC Capital
After Angie's List reported weaker than expected results, RBC Capital notes that the company's e-commerce growth accelerated, while its cash burn fell significantly year-over-year. The firm cut its price target on the shares to $24 from $29, but keeps an Outperform rating

 

MSG Madison Square Garden initiated with a Buy at Guggenheim
Target $70

 

TRIP TripAdvisor growth story remains intact, says Piper Jaffray
Piper Jaffray believes TripAdvisor's growth story is intact despite decelerating in Q3. The firm attributes the mixed Q3 results to volatile metasearch auction dynamics and keeps an Overweight rating on the stock with a slightly lowered price target of $82

 

FFIV F5 Networks reported very good results, says Cantor
After F5 Networks reported stronger than expected Q4 results, Cantor thinks the results "set the company apart from its peers." The firm thinks the company's new products are performing well, while it has several other growth drivers. Cantor keeps a $110 price target and Buy rating on the shares

 

FIO Fusion-io downgraded to Underweight from Neutral at JPMorgan
JPMorgan downgraded Fusion-io to Underweight and lowered its price target for shares to $9 from $15 following the company's Q1 results. Shares were also downgraded this morning at Morgan Stanley

 

CAT Caterpillar downgraded to Neutral from Overweight at JPMorgan
JPMorgan downgraded Caterpillar citing execution and rising headwinds following the company's weaker than expected Q3 results. The firm lowered its price target for shares to $90 from $105

 

TRIP TripAdvisor weakness a buying opportunity, says Deutsche Bank
Deutsche Bank recommends using any weakness in shares of TripAdvisor following the company's Q3 results as a buying opportunity. The firm lowered its price target for shares to $82 from $84 but continues to view TripAdvisor as a long-term share gainer in the travel space

 

 

GS Goldman Sachs upgraded to Buy from Hold at Deutsche Bank
Deutsche Bank upgraded Goldman Sachs citing valuation and low expectations. The firm raised its price target for shares to $181 from $163

 

 

Dont forget: LeeMalone will be hosting a Webinar on Calendar Spreads after the bell today (for gold members and above) : https://www.optionmillionaires.com/2013/trading-earnings-calendar-spreads-leemalone-oct-24-2013-430-pm-edt-gold/

 

Will be keeping it small. Hey, I think I always say that! At any rate, here are the strikes I'm watching:

 

 

Stock Ticker Call/Put Strike Expiration Closing Price Entry Price
ISRG CALL $390.00 Weekly 0.35 0.30
FFIV CALL $93.00 Weekly 1.63 0.40

 

ISRG put out a PR this morning : "Intuitive Surgical Highlights Two Reports Showing Less Complications in Urologic Robotic-Assisted Surgery." I may put a bid in for shares and will also look to add more $390 calls. Also, I missed FFIV yesterday, but I may still try to play some calls if it shows some strength at the open.

 

Let's all have a great day today!

 

- JB

October 23rd, 2013 Watch List

Abhacken
So much for consolidation this week. Turns out  the market ramped over $175 and nearly broke $176, though it then fell rapidly before recovering by the end of the day. Yesterday was a day that I believe the bears could have really come out strong and did some damage, and yet we held steady. With futures down today, I think we'll see another attempt by a few folks in the know to incite some jitters. What else is going on? Well:

Yesterday's stock of the day was NFLX, which was near $400 on its pre-market open when this post came from anivarth:

2013-10-22 08:55:31 AM anivarth nflx going down nflx 350 weekly puts may workout

 

I dismissed it and thought: "No way that will happen." Take a look:

2013-10-22 08:55:56 AM jimmybob anivarth was a great report cant see it going red. That's a stretch

2013-10-22 08:58:00 AM jimmybob anivarth Not saying I cant be wrong ~ 🙂

The above would have been the trade of the day, as it turns out, because the puts turned into serious multibagger action. This just goes to show how many great folks and great ideas are hanging out in the chatroom at any given time. Great call by anivarth!

PNRA and IRBT both reported some cruddy numbers yesterday in afterhours trading, and both are down quite a bit premarket. My calls will be pretty much worthless, although there are a few weeks before they expire and we all know anything can happen. The $185 calls did ramp near the end of the day and I was able to take more then half off to cover the entry price, so they were basically freebies. Of course, that kind of action doesn't always work out as planned but it's nice when it does. I'm hoping we can do the same with AMZN before tomorrow's close.

BRCM Broadcom patient investors will be rewarded, says Cowen
Cowen believes patient investors in Broadcom will be rewarded as the see not only low valuation as a catalyst but both 5G WiFi and LTE should provide some expense cover. Shares remain Outperform rated with a $31 price target

 

 

JNPR Juniper shares attractive, says Cantor
After Juniper reported stronger than expected Q3 results, Cantor believes that sentiment towards the stock remains negative. However, the firm thinks that sentiment will improve if the company continues to execute well. Cantor keeps a $26 price target and Buy rating on Juniper

 

FCX Freeport McMoRan price target raised to $45 from $40 at Jefferies
Jefferies raised its price target for Freeport McMoRan shares citing the company's solid quarter and keeps a Buy rating on the stock

 

NUS Nu Skin price target raised to $130 from $97 at JPMorgan
JPMorgan thinks shares of Nu Skin should continue to perform well through the remainder of the year following the company's better than expected Q3 results and raised guidance. The firm upped its price target for shares to $130 and keeps an Overweight rating on the stock

 

APOL Apollo Group upgraded to Buy from Hold at Stifel
Stifel upgraded Apollo Group due to cost reductions, compelling cash generation, and valuation. Price target is $30

 

AAPL Apple iPad changes to drive significant demand, says RBC Capital
After Apple announced enhancements to its iPad mini and the launch of iPad air, RBC Capital expects significant demand for the new devices. The firm keeps a $550 price target and Outperform rating on the stock

 

RAX Rackspace upgraded to Outperform from Perform at Oppenheimer
Oppenheimer upgraded Rackspace due to expectations for a re-acceleration in cloud momentum and valuation. Price target is $62

 

AMZN Amazon.com likely to report lower than expected EPS, says RBC Capital
RBC Capital expects Amazon.com to report Q3 EPS of (20c), versus the consensus estimate of (9c). The firm thinks that the Street's Q4 consolidated segment operating income outlook for the company may also be "a tad high." However, the firm keeps a $330 price target and Outperform rating on the stoc

 

PNRA Panera Bread price target lowered to $124 from $137 at Piper Jaffray
Piper Jaffray lowered its price target for Panera Bread to $124 and reiterates an Underweight rating on the stock following the company's Q3 results. Piper believes Panera's fundamentals are deteriorating amid ongoing negative traffic trends

 

PCLN priceline.com initiated with an Outperform at FBR Capital
Target $1,250

 

GLW Corning price target raised to $19 from $16 at Citigroup
Citigroup raised its estimates and price target for Corning to reflect the transaction with Samsung, which it views favorably. The firm keeps a Neutral rating on the stock, noting the company's outlook for Q4 was sof

 

 

AMZN Piper expects slight miss and guide down from Amazon.com
Piper Jaffray believes Amazon.com will report September quarter revenue 1% below consensus expectations and EPS of (25c) versus the estimate of (9c). The firm expects revenue guidance to be 2%-4% below the Street. However, Piper believes investor optimism around Amazon's position within eCommerce will remain unchanged following the results and reiterates an Overweight rating on the stock

 

PNRA Panera Bread weakness could represent buying opportunity, says Oppenheimer
After Panera reported weaker than expected Q3 results and lowered its Q4 guidance, Oppenheimer is "biased towards buying the dip." The firm thinks the stock sets up well into 2014, in light of low expectations for the company and easy compares. It keeps a $190 price target and Outperform rating on the shares

 

 

 

Remember: LeeMalone will be doing a Webinar on Calendar Spreads after tomorrow's closing bell for Gold and above members : https://www.optionmillionaires.com/2013/trading-earnings-calendar-spreads-leemalone-oct-24-2013-430-pm-edt-gold  It will also be recorded and in the forum sometime before Friday's market open.

 

"Buy the Dip" will be tested today but with the SPY above the upper Bollinger Band for a third day, a small pullback or even a channel day would be a welcome sign for me.

 

I'll also be keeping it small with a possible play on MLNX and FFIV in afterhours trading. I'm hoping for a premium build and I may lock positions in and hold some for the lotto play:

 

 

Stock Ticker Call/Put Strike Expiration Closing Price Entry Price
FFIV CALL $105.00 Weekly 0.36 0.33
MLNX CALL $49.00 Weekly 0.55 0.50

 

 

Let's have a great day!