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September 20th, 2013 Watch List



After a green open, the markets faded and closed mostly red with the SPY down for the 2nd time in 14 sessions. The futures have treaded mostly in the red overnight and this morning, with a pop into green, followed by a dip back into the red as St.Louis Fed President Bullards said Octobers meeting could result in a taper. Gold dropped 1% on that remark.

Would be nice to close the week out strong headed into the weekend and see the SPY near $173. Talks continue to heat up around the debt ceiling and the impending Government shutdown. We shall see how that pans out next week.

The scary moment of the morning was seeing this article as the headline piece on Marketwatch :

I love bearish headlines, so a little worrisome for me.

AAPL is getting some serious action this morning as the IPHONE 5C/S launch looks to be going well. I checked this morning and the Gold Iphone 5S seems to be the most popular with availability for October, where the rest of the models were 1-3 days. Not sure how far she runs today but a break over $480 and she could run to $490.

TSLA soared out of a channel yesterday and looks poised to continue the run. UPB has been all over the stock : One of his many pieces on the continued break to $200. Should provide some opportunities today.


Will be hoping for some big moves in SSYS, SCTY, SFLY, SINA, FFIV, RAX, PCLN, GOOG, and some others today to salvage some positions.


Here are some of the analyst changes for today:



UBRN Urban Outfitters upgraded to Buy from Hold at Canaccord
Canaccord upgraded Urban Outfitters based on valuation, mid-single-digit growth, and eCommerce penetration. Price target is $48


CF CF Industries upgraded to Buy from Neutral at Citigroup
Citigroup upgraded CF Industries on its belief that nitrogen fertilizer prices are bottoming. Citi sees an attractive entry point into CF shares and raised its price target for the name to $240 from $199


PIR Pier 1 Imports upgraded to Outperform from Neutral at Credit Suisse
Credit Suisse believes Pier 1's Q2 miss was due to correctable marketing errors and not the beginning of reduced product demand. The firm upgraded shares to Outperform and views yesterday's sell-off as overdone. Price target raised to $25 from $23


FFIV F5 Networks initiated with a Buy at Cantor
Target $110


FB Facebook upgraded at Cowen
As previously reported, Cowen upgraded Facebook to Outperform from Market Perform. The analyst believes strong ROI in the newsfeed is sustainable with increasing advertising demand meeting rising inventory and prices. Also, Cowen sees Instagram and Video as additional monetization opportunities that are not fully reflected in shares. Price target raised to $53 from $29


BBBY Bed Bath & Beyond price target raised to $84 from $79 at Canaccord
Canaccord believes Buy rated Bed Bath & Beyond's revamped websites are gaining sustainable share and that valuation does not fully reflect growth potential


WDAY Workday poised to be next Tier 1 software supplier, says Oppenheimer
After conducting checks at a Workday conference, Oppenheimer reports that the checks indicate that the company is poised to be the industry's next Tier 1 software provider. The firm thinks the company is well-positioned to continue outperforming expectations, and it increased its price target on the shares to $92 from $85 while reiterating an Outperform rating


XONE ExOne price target raised to $75 from $50 at FBR Capital
FBR Capital raised its price target for ExOne to $75 and reinstated coverage of the stock with an Outperform rating following the company's recent secondary offering. FBR believes the global market for 3D printing in sand alone could be an annual opportunity of at least $8B, well above recent sell-side reports suggest, it says



Will be keeping it small today as I have quite a few positions once again:



Stock Ticker Call/Put Strike Expiration Closing Price Entry Price
TSLA CALL $185.00 Weekly 0.33 0.30
FFIV CALL $94.00 Weekly 0.30 0.25




Lets have a great trading day!!


- JB

$AAPL – Where is the stock headed?

$AAPL has been trading lower since the middle of September. The stock burst over $500 on the Carl Icahn stake, but has been dropping lower on fears the new Iphone is not going to bring growth to the company. My outlook on $AAPl is below, but before you watch that here is an excerpt about $AAPL from a well respected publication:

It's perfectly reasonable to assume that anyone thinking about buying a new iPhone when the latest devices hit retail on Friday would fixate on the hardware itself, especially with Apple trotting out two new models.

Apple is unleashing colorful handsets called the iPhone 5c, priced at $99 to start with a contract. And a brand new $199-on-up flagship phone, the iPhone 5s, brings with it beefy 64-bit computing power, a souped-up camera and the feature most people are pointing to, the Touch ID fingerprint reader.

But the biggest change to come to the iPhone arrives with iOS 7, the operating system at the heart of the newest handsets. As of Wednesday, it can also be downloaded to freshen up the iPhone 4, iPhone 4S and the now discontinued iPhone 5 as well as some iPads and the iPod Touch.
What does this mean?

September 19th, 2013 Watch List



Wow is all I can say. To hear everyone calling for a taper yesterday, and to see the Fed keep QE intact, as well as lowering economic forecasts was a surprise to say the least. Looks like tons of folks are on the wrong side of this and were either in other asset classes or were short the market, it was almost like you could hear hundreds of people saying ‘oh shit!’ when the release came out.

Eventually the markets will have to pay the piper, but for now we should have a decent bid in equities.


Futures were up solidly this morning but have given back some of the gains as the market looks to improve on it’s current record of 12 of the last 13 days being green. Quite an impressive run. Seems like months ago Syria was weighing on equities. The Debt ceiling debate will be front and center in the coming weeks as the next possible ‘headwind’ to equities. Also, the next Fed Chair appointment should be coming any day now.


Here are some of the analyst changes of note:



DKS Dick's Sporting sales trends better than expected, says Sterne Agee
Sterne Agee believes that Dick's Sporting's sales trends are better than expected so far this quarter, and the firm views the company's 2017 revenue guidance as likely conservative. The firm raised its 2014 and 2015 EPS estimates for the company and keeps a Buy rating on the stock


ORCL Oracle weakness a buying opportunity, says Susquehanna
Susquehanna would use any weakness in Oracle following Q1 results as a buying opportunity. The firm cited its solid execution, moderating attrition, conservative guidance and the likelihood for meaningful 2H2013 growth acceleration. Shares are Positive rated


DIS Disney downgraded at Morgan Stanley
As previously reported, Morgan Stanley to Equal Weight from Overweight. The analyst lowered estimates below consensus and said visibility is more difficult as its previous thesis of ESPN pricing power and returns on Parks investments is largely played out. The firm expects growth to come from creative success and acquisitions and sees stronger growth opportunities elsewhere. Price target lowered to $70


TTWO Take-Two Grand Theft Auto not enough to change rating, says Brean Capital
Breana Capital noted the better than expected sales for Take-Two Interactive's Grand Theft Auto. The firm believes its sales will put other third party developer's earnings forecast and although it is on pace to exceed expectations it will not be enough to change the firm's Neutral rating


MGM MGM Resorts shares can reach $25-$27 but road could be bumpy, says Wells Fargo
Wells Fargo thinks that MGM's stock could reach $25-$27 over the next 12 months, driven partly by better than expected Macau trends and new project wins. However, the firm thinks the company faces timing and execution risks, and keeps a Market Perform rating on the shares


BA Boeing price target raised to $140 from $131 at Cowen
Cowen raised its price target on Boeing following yesterday's announcements which the firm believes will support its positive momentum and the company's cash flow limiting the share's downside risk. Shares are Outperform rated


FDX FedEx price target raised to $126 from $116 at RW Baird
Baird raised its price target on FedEx following Q1 results citing improved margins at Express and incremental progress in its multi-year improvement strategy. Shares are Outperform rated


SBUX Starbucks new food offerings could lift comps 5%-7%, says Oppenheimer
Oppenheimer believes that Starbucks' new food products could increase its comps 5%-7%, excluding any traffic increases triggered by the new products. The firm reports that the company is also looking to introduce new breakfast sandwiches and lunch offerings, and it thinks the company's EPS boost in FY14 from lower coffee prices could surpass guidance by a wide margin. Oppenheimer keeps an Outperform rating on the shares


AMZN initiated with a Buy at CRT Capital
Target $350


TSLA Tesla price target raised to $200 from $160 at Deutsche Bank
Deutsche Bank raised its price target for Tesla shares to $200 on expectations the company is on track to modestly beat Q3 margin expectations while demand in the U.S. and Europe has continued to grow. Deutsche sees a favorable set-up for shares at least through the end of 2013 and keeps a Buy rating on the stock



With the SPY at all time highs, and the market on a tear the last few weeks, one would think it is an easy short/put opportunity. And maybe we do get a fade this morning, but I think there are tons of folks caught on the wrong side from yesterday and will look to undo the trade, whether it was short equities, short gold, or just sitting on the sidelines with cash.


$175-180 on the SPY looks possible in the next month and then of course we will await another FOMC meeting in October. Without a press conference after, I think they will wait until at least November for the next possible Taper announcement.


As for today, will be trying to keep it small but will look at the big stocks to make moves into all-time high territory:



Stock Ticker Call/Put Strike Expiration Closing Price Entry Price
PCLN CALL $1,025.00 Weekly .45 x .70 0.60
GOOG CALL $925.00 Weekly 0.30 0.25



Already have the $1030 PCLN calls and will look to lower strike this morning. GOOG looks set for new all time highs and will watch for an entry as well.


Still have tons of positions to include: SSYS, SCTY, FFIV, Z, SINA, SOHU, SHLD, FDS, CBRL, SAM, ULTA, RAX, RH... tons to list and thats why I am trying to keep it small today and tomorrow.


Lets have a great day!


- JB

September 18th, 2013 Watch List


Green is in, with the SPY finishing in that color 11 of the past 12 sessions. A huge move that has the markets at all-time highs heading into todays much anticipated FOMC meeting and announcement/press conference. Whats going to happen? Well expect a bumpy ride up and down regardless of the announcement at 2pm. I think as long as the Taper comes in around 10 billion, we are in good shape. If its less or none at all, i think we will see a nice bump upwards but could cause more issues down the road. More then expected and I think we may have some problems. They are currently buying 45 billion in Treasuries and 40 billion in Mortgage backed securities each month. Big Ben will then have a press conference at 2:30 where he will probably try and sooth investors and maybe have some more specifics on a timeline. Expect a bumpy ride here as well. Those faint of heart should look to be on the sidelines today.


Cracker Barrel reported earnings this morning that beat estimates and kept 2014 guidance pretty much inline. The only issue being next Q where expenses and commodity prices are expected to be a drag on EPS. Despite the lowered Q1 guidance, full year is still at or above, and Same Store Sales came in way above estimates. We shall see how the market takes the report, I still love the company and stock and think its $130+ sometime down the line.


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


CCL Carnival poised to report lower than expected Q3 EPS, says UBS
After conducting checks, UBS believes that the environment for Carnival continues to be promotional, particularly in the Carribbean and in the Carnival brand. The firm keeps a $39 price target and Neutral rating on the stock



WHR Whirlpool price target raised to $165 from $140 at KeyBanc
After meeting with Whirlpool's management, KeyBanc isi ncreasingly confident in the recovery within the U.S. appliance market. The firm believes that Whirlpool's acquisition of a 51% stake in Hefei-Sanyo, a Chinese appliance maker, will increase Whirlpool's EPS by 46c in 2015. KeyBanc expects Whirlpool's multiple to rise, and it keeps a Buy rating on the stock


ADBE Adobe executing very well, says JMP Securities
After Adobe reported lower than expected EPS but higher than expected net additions to its Creative Cloud, JMP Securities is encouraged by what it sees as the company's faster than expected transition to a subscription model. The firm thinks the company has strong momentum in its core businesses, and it raised its price target on the stock to $55 from $49. BMO keeps an Outperform rating on the shares


AAPL Apple iPhone Q3 demand trending above expectations, says Morgan Stanley
Morgan Stanley's analysis indicates calendar Q3 iPhone demand is tracking to 34.5M units vs. consensus of 32M units, higher than August due to early new iPhone demand. The analyst adds investor concerns regarding the lack of a press release on iPhone pre-order volumes are overblown and says 2013 pre-orders are not comparable given the higher end iPhone 5s. Shares are Overweight rated


WHR Whirlpool added to U.S. 1 List at BofA/Merrill
As previously reported, BofA/Merrill added Whirlpool to the U.S. 1 List. The firm believes the market is overlooking strength in the replacement cycle and expects a peak in 2017 and for housing related demand to add to upside. Shares are Buy rated with a $175 price target


MGM MGM Resorts price target raised to $26 from $20 at Stifel
Stifel expects MGM to benefit from accelerated growth on the Las Vegas Strip in 2014 and continued strong growth in Macau in 2014 and beyond. The firm keeps a Buy rating on the shares


LULU lululemon risk/reward favorable, says Canaccord
Canaccord views lululemon's risk/reward as favorable given a re-acceleration in sales growth, transitory issues that are resolved and expectations that a new CEO will be named by year end, which will remove a significant overhang. Shares are Buy rated with a $85 price target


SBUX Starbucks new food appears to represent significant improvement, says Bernstein
After Starbucks introduced its new La Boulange food in some of its Manhattan stores, Bernstein thinks the new food will increase the company's comps. The firm believes that the company has a multiple comp drivers, and it keeps an Outperform rating on the shares


FB Facebook price target raised to $49 from $39 at Wedbush
Wedbush increased its price target on Facebook as the firm thinks that the company is just beginning to realize its vast monetization potential, and is poised to benefit from video advertising. The firm also expects the company to generate significant operating leverage in the future and it keeps an Outperform rating on the stock





Here are the strikes I am looking at today. I actually have both of these but think they still offer nice Risk vs Reward:



Stock Ticker Call/Put Strike Expiration Closing Price Entry Price
FFIV CALL $95.00 Weekly 0.29 0.29
SINA CALL $86.00 Weekly 0.24 0.24



Lets have a great trading day folks!


- Jb

The Most Eagerly Anticipated FED Meeting In Recent Memory is Here – What Will Tomorrow Bring?

The Most Eagerly Anticipated FOMC Meeting In Recent Memory is Here

Will the dollar rally/plummet? Bonds are surely going to be volatile. With stocks sitting at all time highs, will tomorrow be the start of the pull back everyone thought Syria was going to bring?

It will be an interesting trading day tomorrow and the only thing I can say with 100% certainty is that the market will be volatile.

Here is what some are saying about the FOMC meeting:

With tomorrow’s Federal Open Market Committee (FOMC) projections and announcements being such a big deal, it’s only natural that the market’s priority at this stage is caution – dealers do not want to be taken out of, or even given positions that they have not initiated at such a late stage in the game. Today officially marks the first day of the Federal Reserve’s two-day policy meeting, so investors are mostly in a wait-and-see mode ahead of the outcome.

Consensus this far expects the FOMC to announce its first reduction of asset purchases this week – a token taper of $10b – but Fed Chairman Ben Bernanke and the “boys” are expected to paint their decision as dovish as possible. To really do that, policymakers should only be tapering in Treasurys rather than mortgage-backed securities, and by tweaking their rate guidance to include a lower inflation threshold. At this stage, the biggest wildcard is the FOMC’s forecast for Fed funds rate in 2016. Various fixed-income dealers are calling for 2.75% to 3%, putting it significantly above current rates. The market will also be looking for further clarity on asset purchase guidance, the end of which has been tied to a +7% unemployment rate.

The Calm Before the Storm?
By Doug Drabik
September 16, 2013

There was very little movement last week in rates. The very short part of the curve lost 1-2 basis points in yield while the 5-year lost 6 basis points settling in at 1.70% from 1.758%. The 10-year fell to 2.89% from 2.94%. Friday had most of the significant economic releases which were less than enthusiastic and all eyes are now focused on next week’s FOMC meeting. Retail sales rose less than expected and consumer confidences fell to a 5-month low. Although it has appeared for weeks that the central bank will reduce its open market bond purchases, many economic releases continue to signal that the economy is weaker than many investors seem to wish for.

Lack of employment, a declining employee base and higher payroll taxes seem to be eroding consumers’ excitement. Consumers seem to anticipate higher inflation although in reality, the global average inflation rate has been below 2% (the Federal Reserve’s target rate) for the last several years.

The much anticipated FOMC meeting is upon us this week. The important concept to grasp is that despite the consensus feeling that the Fed will taper its purchases, tapering is not tightening.

Furthermore, it appears that any movement is overwhelmingly built into the market which implies that an actual announcement to taper may have little impact on interest rates. The best “guess” still seems that the Fed will likely reduce the $85 billion in purchases, not eliminate the purchases and clearly not tighten policy.


Today's FOMC meeting will kick off a two-day discussion of economic policy - and will leave unprepared investors confused...

Both the FOMC policy statement and its economic and market projections will be released on Wednesday at 2 p.m. EDT and will be followed by U.S. Federal Reserve Chairman Ben Bernanke's press conference at 2:30 p.m.

[Editor's Note: Stay tuned to Money Morning for a Wednesday FOMC Meeting roundup.]

The question hot on everyone's tongue is what the FOMC will decide to do about the $85 billion in monthly bond buying - will the inevitable quantitative easing (QE) taper finally begin?

Every time the Fed has stopped a QE program, the markets tumbled:

when qe ends

Almost three-quarters of the 69 economists polled after August's jobs data was released anticipated the FOMC would vote to taper its bond-buying program, according to Reuters. The central bank is projected to trim its monthly spending on QE asset purchases by $10 billion.
Conversely, rumor has it the FOMC may, for a third consecutive time, lower growth forecasts for 2013.

That's because annual inflation is about half a percentage point below the goal the Fed set in December. Plus, although unemployment was lowered to 7.3% in August, that's mainly because so many Americans are dropping out of the labor force:

More than 4 million people have been out of work for more than six months, and a doleful 11.5 million are looking for work in total. In the first seven months of 2013, 953,000 jobs have been created; a full 731,000 of those, or 77%, have been part-time.

In sum, 22.1 million Americans are either unemployed or underemployed.

Even if the Fed doesn't announce a taper, it will be deciding on growth forecasts through 2016. Yes, that seems like a far-away number - but markets will react immediately.

What investors need to be ready for is the Fed to possibly announce a taper and also lower growth forecasts - two clashing moves.

So why would the FOMC do both?

"It wouldn't surprise me if the FOMC lowers growth forecasts for strategic reasons," says Money Morning's Capital Wave Strategist Shah Gilani. "If they lower them and then the numbers come in better than expected, they have room to start tapering and the market won't freak out as much."

On the other hand, if the FOMC meeting today raises the growth forecast or leaves it as is, and growth numbers come in lower, the market will rally on the belief that the Fed will not taper at all.

"The FOMC is inclined to move toward winding down their balance sheet and is counting on doing that if doing so won't freak out the markets and ruin the wealth effect triage triangle: pump up the banks, pump up the markets, pump up consumer confidence to pump up consumer spending," Gilani explains.

When Bernanke speaks on Wednesday after the Fed meeting concludes, he's anticipated to discuss the decline in unemployment, in addition to other jobs data like the drop in labor participation. Plus, he should discuss interest rates and issues stemming from the Syrian crisis and comment on the debt-ceiling debate.

The central bank will not release the minutes of the two-day meeting until Oct. 9, so you'll have to tune in Wednesday for Money Morning's FOMC Meeting Roundup.