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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

August 28th Watchlist

Stock futures are slightly higher, and off their lows they hit a few hours ago.  This pull back from all time highs continues with the latest leg down being blamed on the current Syrian crisis.  $USO continues to work as a trade on the conflict and potential war, I wrote about this on Monday:

https://www.optionmillionaires.com/2013/uso-oil-spike-coming/

We have bonds pulling back and the recent run up for $TLT has met resistance at $106, which is a level I thought would be the highest area any bounce would go.

$EXPR reported earnings this morning and is up 8% last check.  The breakdown will have to wait it seems.  $TIF today has seen two downgrades, the stock should continue to weaken into weeks end and I think low $70's short term is not out of the question.

Morning headlines courtesy of zerohedge.com:

  • Merkel Blames SPD’s Schroeder for Letting Greece Into Euro (BBG)
  • U.S. Bank Legal Bills Exceed $100 Billion (BBG)
  • U.K. to Request U.N. Action to Protect Syrians From Chemical Weapons  (WSJ) - and Russia to veto any decision
  • U.N. inspectors in new Syria mission as West prepares to strike (Reuters)
  • Emerging-Market Rout Intensifies on Syria Jitters (WSJ)
  • Rebels Without a Leader Show Limit to U.S. Role in Syria War (BBG)
  • Anger at IRS Powers Tea-Party Comeback (WSJ)
  • China has much at risk but no reach in Middle East (Reuters)
  • 'London Whale' Penalties Put at $500 Million to $600 Million (WSJ)
  • U.S. lawmaker says 'compelling' evidence of Syrian chemical attack (Reuters)

 

After this sell-off we have a few stocks coming up against strong support and some breaking through it.

$GOOG should see strong support at $845, if it gets that low.  That will be a great point to buy for a move higher.

$CAT should find support at $82

$GS  the stock broke below a long term support line this week.

$AAPL after the almost 3% decline should see solid support at $480

$TSLA remains on track for a move over $200 this year

 

ANALYST TALK:

 

 
$TIF Tiffany downgraded to Underperform from Outperform at CLSA
CLSA downgraded Tiffany due to valuation. Note that Citigroup also downgraded shares this morning

$TIF Tiffany downgraded to Neutral from Buy at Citigroup
Citigroup downgraded Tiffany based on valuation. Price target raised to $88 from $84.

$TOL $LEN $MDC $DHI Homebuilder price targets lowered at KeyBanc
KeyBanc reduced its price targets on several homebuilders after the industry's orders fell back to seasonal levels in Q2. The firm is now modeling a lower absorption pace for the sector. It reduced its price target on Toll Brothers (TOL) to $40 from $43, on Lennar (LEN) to $41 from $49, on M.D.C. Holdings (MDC) to $39 from $46, and on D.R. Horton (DHI) to $23 from $30. The firm reiterates Buy ratings on all the stocks named, however

$TIVO TiVo positive trends likely to continue, says BMO Capital
After TiVo reported higher than expected Q2 service and technology revenue, BMO Capital expects growth in the company's revenue from service providers to continue to be strong over the next several quarters. The firm thinks the stock's valuation is "extremely compelling," and it reiterates an Outperform rating

Trades I am looking at today:

$SPY $164.50 weekly calls $.35
$GDX $29.50 weekly calls $.40
$GOOG $865 weekly calls $1.00

August 27 Watchlist

Futures are lower to start the trading day. Silver, Gold, Oil, Bonds are all seeing gains early gains.

"U.S. stock-index futures slid, signaling the Standard & Poor’s 500 Index will drop for a second day, as investors awaited data that may show consumer confidence fell and tension grew over possible military action in Syria.
Cisco Systems Inc. and Microsoft Corp. declined at least 1 percent in early trading, pacing losses in the biggest U.S. companies. J.C. Penney Co. (JCP) retreated 2.4 percent after Bill Ackman’s Pershing Square Capital Management LP sold its stake in the retailer for $504 million. Tiffany (TIF) & Co. rose 2 percent as second-quarter profit exceeded estimates.
Futures on the S&P 500 (SPX) expiring in September slid 0.6 percent to 1,644.5 at 7:48 a.m. in New York. The benchmark gauge fell 0.4 percent yesterday after Secretary of State John Kerry said the U.S. will hold Syria’s government accountable for using chemical weapons. Contracts on the Dow Jones Industrial Average dropped 79 points, or 0.5 percent, to 14,852 today.
The Syrian crisis “brings to light the Middle East situation and Egypt,” Nick Xanders, an equity strategist at BTIG Ltd. in London, said by phone. “U.S. data seems to be mixed and you look at the Fed minutes and they’re cautiously optimistic but we’re not going to see the high growth we saw in the past.”


Is today's dip a buying opportunity for stocks? I think it remains that was for the gold miners, $USO, and $POT $MOS $MON. I think when the dust settles on this Syria conflict that it will be a great time to buy the dip. But right now its tough to tell when that will be. Since the lows in 2009 the market has been incredibly resilient and each one of these "news" events was a great buying opportunity I don't think this time will be any different.

$TIF reported earnings this morning, the stock is up 2% and the $75 puts I bought yesterday are going to open at a severe discount. Earnings trades are very difficult to time, when they work like $ANF and $ARO last week, they can be very profitable, when they don't you can lose 75% or more on your trade.

We have earnings coming up this week from more retailers. Williams Sonoma, $GUESS, EXPRESS. I still like $EXPR for a pull back after earnings and I will let you know if I enter a trade.

Analyst:

$CRM Salesforce.com has some big deals coming up, says Piper Jaffray
After conducting checks with industry players, Piper Jaffray reports that Salesforce.com has some "big... .service cloud deals...on the horizon." Feedback on the company's marketing cloud operations are mixed, the firm stated, but it reiterates a $52 price target and Overweight rating on the shares

$MON Monsanto upgraded to Buy from Neutral at UBS
UBS upgraded Monsanto based on the year-to-date sell-off in shares and expectations for stabilizing corn prices. Price target remains $110

$EMC EMC attractive at current levels, says Brean Capital
Brean Capital believes EMC is attractive at current levels citing further growth in license booking which will ease concerns about saturation in the core server virtualization business. Shares are Buy rated with a $31 price target

Trade I am looking at today:

$EXPR $17.5 sep puts $.45
$AAPL $510 weekly calls $1.00
$USO $37 weekly calls $.95

Earnings Trade Ideas

Last week our earnings trade idea focused on $ARO. The stock, which we talked about the prior Sunday night, dropped over 20%. Anyone buying the puts heading into the earnings report made almost 1,000%. We also spoke about $ANF, another retailer that dropped significantly post earnings.

So here we are again. A week later. What is the next earnings trade that will plummet post earnings?

Let's start with one that is reporting earnings later this week.

Campbells Soup ticker $CPB reports before the bell on Thursday. I think the stock will fall and the $45 puts at $.50 offer a great trading opportunity.

Tiffany and Co reports Tuesday and I think the stock could see a 10-15% drop to the mid $70 level or below post earnings:

August 26th Watchlist

Welcome to the last week of August! Last week stocks zig zagged around and closed just a little higher for the week. The 3 hour halt of trading was met with more buying of stocks. That makes perfect sense in this centrally planned market when stocks rise when they should fall.

Think about it for a second. What is the value of any stock if you can't sell it? If you can't sell something what is its value? For 3 hours last week $AAPL was worth ZERO. $GOOG was worth ZERO. You couldn't sell them. Yet for some reason when the market reopened traders couldn't buy enough of them and stock closed at their highs. Remarkable! They shoudl schedule market halts throughout the year, it seems a lack of confidence in the system only makes trader/investors want to buy more. Again it makes perfect sense for the mentally unstable. For the rest of us we just have to understand what we are up against in this market. The central banks and powers that be run the show.

Last week we have some great earnings trades, I highlighted two of them last Sunday night. $ANF and $ARO. https://www.optionmillionaires.com/2013/anf-aro-back-to-the-future/

Last night I hosted the week ahead. Here is the link to that video: https://www.optionmillionaires.com/2013/the-week-ahead-live-video-talked-about-tif-ges-spy-jcp-nflx-tlt-and-more/

Here are my thoughts:

Where is the market headed this week? https://www.optionmillionaires.com/2013/spy-where-is-the-market-headed-this-week/

Is This Retailer Ready To Tumble? https://www.optionmillionaires.com/2013/is-this-retailer-ready-to-tumble/

Where Is This Stock Headed Post Earnings? – Some Unusual Option Action On Friday https://www.optionmillionaires.com/2013/where-is-this-stock-headed-post-earnings-some-unusual-option-action-on-friday/

Jimmybob will be back on Wednesday, that should be good for the market this week!

We have earnings tomorrow before the bell from $TIF. I am leaning for a big move lower, there was heavy and unusual option activity on Friday for the stock. It should be interesting.

Analyst talk:

$MSFT Microsoft price target raised to $37 from $34 at BMO Capital
BMO Capital increased its price target on Microsoft after the company announced the resignation of CEO Steve Ballmer, as the firm thinks a new CEO could significantly boost the company. However, the firm keeps a Market Perform rating on the stock based on valuation

$BIG Big Lots upgraded at JPMorgan
As previously reported, JPMorgan upgraded Big Lots to Neutral from Underweight. The firm upgraded shares due to balanced risk/reward. Price target is $32.25

$TIVO TiVo is worth more than current valuation, says Brean Capital
Brean Capital believes TiVo is worth more than its current valuation citing its strong value proposition. its broad customer base, and a growing market opportunity. The firm notes the legal overhang as well as its uncertain relationship with its largest customer but reiterates its Buy rating and $14 price targe

$EXPR Express business model strongest among retailers, says Brean Capital
Brean Capital believes the Express business model is among the strongest in retailing and called the risk/reward impressive. The firm remains buyers ahead of earnings on Wednesday despite reducing estimates to reflect the promotional atmosphere. Shares remain Buy rated with a $28 price targe

$QIHU Qihoo 360 price target raised to $100 from $55 at Stifel
Stifel increased its price target on Qihoo after the company delivered beat and raise results. The firm thinks that the company's search revenue growth alone could double the size of the company and it keeps a Buy rating on the shares

$FL Foot Locker outlook still positive, says Piper Jaffray
After Foot Locker reported weaker than expected Q2 results, Piper thinks the stock's valuation is attractive, and believes the shares can return at least 20% over the next 12 months. The firm keeps an Overweight rating on the shares

Trades I am looking at today:

$PCLN $980 weekly calls $1.50 - I think this is the week the stock gets with striking range of $1,000
$EXPR $17.5 weekly puts $.60 - Break of support last week could be sign of more weakness to come
$CPB $45 September puts $.45 - Reports earnings Thursday before the opening bell