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4-29-2013 Watch List

 

Fridays lower then expected GDP numbers shook the market a bit, and we ended an otherwise positive week, on a down note. Futures are in the green this morning, and commodities are rallying with Gold up nearly $20, and Silver/Platinum up nearly 2%. We are still quite close to all-time highs on the SPY, and looks like $160 is in reach this week.

Tons of earnings reports due, including BWLD after the close today. Spoke about a few of them on the week ahead and how I will be playing them. You can find the week ahead here:

https://www.optionmillionaires.com/forum/showthread.php/399-The-Week-AHead-with-JB-4-28-2013

 

Folks asked me about JCP yesterday, and I’ll continue to just watch, but some more possible good news on the horizon after the Soros stake last week and the loan this morning : http://www.nypost.com/p/news/business/blight_brigade_ZEKHp90e4vyaxxuELb4HoO

 

SINA finally had some good news as the rumored Alibaba stake became a reality as Alibaba announced a partnership as well as 18% stake in SINA with the possibility of 30% in the future. SINA is up over $11 right now and will wait and see how she plays out today.

 

Here are some of the analyst changes today:

DKS Dick's Sporting initiated with an Overweight at Barclays

Target $57.

PVH PVH Corp. added to U.S. Focus List at Credit Suisse

Credit Suisse added PVH to the U.S. Focus List given long-term earnings power of the combined Warnaco business acquisition, improved control of Calvin Klein distribution, improved product assortments, and consumer engagement. Shares are Outperform rated with a $139 price target.

DIS Disney upgraded to Buy from Neutral at UBS

UBS upgraded DIsney citing multiple levers to drive shares higher that include the contribution from retrans/reverse comp, an acceleration of return on capital, parks margin expansion, and recent acquisitions. Price target raised to $72 from $55.

ANF Abercrombie & Fitch upgraded to Outperform from Neutral at Macquarie

Macquarie upgraded Abercrombie to reflect expectations for margin improvement and earnings expansion driven by management initiatives to improve fashion, reduce lead-times, and potential for increasing buybacks. Price target raised to $63 from $50.

FB Facebook Q1 revenue could miss expectations, says Piper Jaffray

Piper Jaffray believes Facebook could report Q1 revenue on Wednesday that misses consensus expectations by 1%-2%. Piper says the company's core ad revenue growth may not accelerate as fast as analysts expect. However, the firm thinks Facebook is positioning itself for sustained mid-term growth through investments in mobile and keeps an Overweight rating on the stock.

 

As I spoke about in the Week Ahead, like WU for a bounce over $15 and the calls are relatively inexpensive. WIll try and put another bid in for SAM ( I have 185 calls already). Will also try and play SOHU as they reported strong earnings this morning and may move $54-55 today:

 

 

 

Stock Ticker Call/Put Strike Expiration Closing Price Entry Price
WU CALL $15.00 May 0.25 0.25
SAM CALL $190.00 May 0.51 0.50
SOHU CALL $55.00 May 0.90 0.40

 

 

Will post in chat and twitter any trades. Will also be doing some DittoTrades today for those that follow.

 

Lets have a great day!

 

- JB

4-26-2013 Watch List

 

 

Another solid green day yesterday, as SPY marched above $159 for some of the session, only to fade near the end of the day. We had some more nice movers in the morning including WYNN and LVS, as well as an FFIV ramp and many, many others. After hours we had earnings from WYNN, EXPE, AMZN, and SBUX to name a few of the many.

 

GDP numbers are out this morning below expectations. Folks were expecting 3.0-3.1% compared to the 2.5% reported. Futures added to their losses after the report and we will see if this will be a “buy the dip’ or a sell the news day. With some many revisions on the number, I don’t think the miss is as big as it looks.

 

WYNN numbers were very good and 2 PT upgrades this morning, but will need to see $138 break for further upside. AMZN calls I have for May will need a miracle. NFLX had a nice upgrade today, so will watch for a possible break above $220.

 

Here are some of the analyst changes today:

 

SBUX Starbucks price target raised to $70 from $65 at RW Baird

Baird raised its price target on Starbucks following Q3 results. The firm cited continued comps momentum, raised guidance and its clean balance sheet. Shares are Outperform rated.

UPS UPS guidance conservative, says Bernstein

After UPS reported higher than expected Q1 EPS but maintained its guidance, Bernstein views the company's U.S. performance as encouraging and maintains an Outperform rating on the shares.

BIIB Biogen price target raised to $230 from $179-$189 at Leerink

Leerink raised its price target for Biogen following the company's Q1 results and increased guidance. The firm reiterates an Outperform rating on the stock

NFLX Netflix price target raised to $325 from $250 at Lazard Capital

Lazard Capital raised its long-term estimates and price target for Netflix after concluding the company has the characteristics of a successful TV network. As such, Lazard Capital believes Netflix's margins will trend higher, making the shares attractively valued. The firm raised its price target for Netflix shares to $325 and keeps a Buy rating on the stock.

SBUX Starbucks weakness would create buying opportunity, says Oppenheimer

After Starbucks reported in-line Q2 results, Oppenheimer believes that the company's operating momentum remains strong. The firm thinks that several positive catalysts are poised to accelerate the company's earnings in 2H13 versus 1H13, and it raised its price target on the shares to $65 from $62 while maintaining an Outperform rating.

EXPE Expedia turnaround largely on track, says Cantor

After Expedia reported stronger than expected Q1 results but lowered its organic EBITDA forecast, Cantor believes that continued acceleration in Expedia.com hotels indicates that Expedia's turnaround efforts remains largely on track. The firm keeps a $75 price target and Buy rating on the shares.

FB Facebook upgraded at Raymond James

As previously reported, Raymond James upgraded Facebook to Strong Buy from Outperform. The firm upgraded shares based on expectations that new ad formats and increased ad load will result in higher monetization, higher mobile growth adoption, and attractive risk/reward. Price target remains $37.

CSTR Coinstar price target raised to $70 from $65 at Benchmark Co.

Benchmark Co. believes Coinstar continues to take DVD market share following the company's Q1 results. The firm raised its price target for shares and keeps a Buy rating on the name

WYNN Wynn Resorts price target raised to $155 from $146 at Deutsche Bank

Deutsche Bank believes shares of Wynn Resorts should keep moving higher following the company's Q1 results. The firm upped its price target for shares to $155 and keeps a Buy rating on the stock.

Nomura maintains Wynn Resorts, Limited (NASDAQ: WYNN) with a Buy and raises the price target from $141.00 to $147.00.

EXPE Expedia Q1 solid, guidance conservative, says Deutsche Bank

Deutsche Bank believes Expedia reported solid Q1 results and views the company's outlook as conservative. The firm sees a favorable risk/reward on shares and maintains a Buy rating on Expedia with an $80 price target.

 

Will be looking at a few weeklies expiring today for lottos. Here are the ones I am looking at:

 

Stock Ticker Call/Put Strike Expiration Closing Price Entry Price
NFLX CALL $220.00 Weekly 0.49 0.40
NFLX CALL $225.00 Weekly 0.20 0.15
LNKD CALL $190.00 Weekly 0.75 0.30
AAPL CALL $415.00 Weekly 0.59 0.40

 

 

If AAPL gets some mojo, may look to head higher into the weekend. $410s are too pricey so will try 415s if i like the action at the open. LNKD wants to close over 190 as well, and will place a bet on that possibly if the calls decline from the .75 closing price on Thursday. Will be watching NFLX for a bid on the $325 u/g today.

Lets have a great day, and see you Sunday night for the Week Ahead.

- JB

4-25-2013 Watch List

 

The Market battled all day to finish in the green, but a late day pull back saw gains melt away, and the SPY and Nasdaq finished near flat, while the DOW finished in the red. Overnight, Spain released its unemployment numbers, which topped 27%! UK, on the other hand, squeaked out a positive GDP number and will not be in a recession... for now.

 

Futures are up nicely this morning, and the market is getting near all-time highs once again. Jobless claims this morning came out at the lowest levels in a few months, helping futures add to their gains. Amazing how resilient the market has been.

There have been too many earning reports to mention, and some more coming today. The one I have my eyes on are AMZN and WYNN. I think (hope) this is the report that takes AMZN over $300, and think (hope) this is the report that sends WYNN back on its way to $160. EXPE is always an interesting play and PCLN could one to watch on the back of those.

 

Tons of analyst changes today, and most are upgrades:

 

AAPL Apple upgraded to Buy from Long-Term Buy at Hilliard Lyons

Hilliard Lyons upgraded Apple citing valuation and the $60B buyback and 3% dividend yield. Price target raised to $540 from $680.

QCOM Qualcomm price target lowered to $74 from $83 at Piper Jaffray

Piper Jaffray says Qualcomm's guidance was weaker than expected despite the slight raise. The firm sees margin pressure and falling handset prices as challenges for the company but keeps an Overweight rating on the name despite the lowered price target.

YUM Yum! Brands upgraded to Market Perform from Underperform at Raymond James

 

MLNX) Mellanox downgraded to Neutral from Buy at Mizuho

MLNX  Mellanox downgraded to Hold from Buy at Needham

VAR Varian Medical price target lowered to $64 from $70 at Cantor

Cantor reduced its target on Varian after the company provided weaker than expected guidance. The firm expects the macro and regulatory challenges facing the company to persist and it keeps a Hold rating on the shares

CROX Crocs shares recommended at Goldman

Goldman reiterates its Buy rating on Crocs given the positive inflection in Asia, easing sales comps, improving inventory management, conservative guidance, and valuation. Price target raised to $19.

DECK Deckers Outdoor Q1 results likely to beat expectations, says Jefferies

Jefferies believes Deckers Outdoor's Q1 results today after the close are likely to top expectations and says the stock remains its top pick. The firm thinks sentiment on shares remains overly negative and keeps a Buy rating on the name with a $100 price target

YUM Yum! Brands shares have been de-risked, says RBC Capital

RBC Capital believes that several factors, including Yum!'s reiteration of its EPS guidance and the outlook for negative China comps through Q4, have substantially taken the risk out of the company's stock. The firm raised its price target on the shares to $75 from $69 and keeps an Outperform rating on the stock.

VMW VMware downgraded at Bernstein

As previously reported, Bernstein downgraded VMware to Underperform from Market Perform. The firm believes consensus growth expectations for VMware are too high and cites lack of revenue growth in end user computing, the nascent state of Software Defined Datacenters, and lack of visibility on how the hybrid cloud will benefit the company. Price target lowered to $61 from $75.

WDC Western Digital downgraded to Hold from Buy at Craig-Hallum

Craig-Hallum downgraded Western Digital due to valuation. Price target is $54.

WDC Western Digital price target raised to $65 from $60 at Brean Capital

Brean Capital raised its price target on Western Digital following Q3 results. The firm cited management guidance on both earnings and gross margins and would be aggressive buyers on any pullback in shares. Shares are Buy rated.

 

Again, missed AMZN calls and will finally pull the trigger today. May look to dabble in some lotto WYNN calls as well, so I can lock in my $135s. Think if AMZN shows some growth, especially with their AWS, then the stock runs like it has on some past earnings 10-15%. We shall see.

 

Similar strikes I am watching as yesterday:

 

 

Stock Ticker Call/Put Strike Expiration Closing Price Entry Price
WYNN CALL $150.00 May 0.19 0.20
AMZN CALL $320.00 Weekly 0.20 0.20
AMZN CALL $330.00 MAY 0.35 0.35

 

Dont forget Lee is doing a Webinar at 4:30pm to talk about option strategies: https://www.optionmillionaires.com/2013/option-strategies-with-leemalone-thursday-april-25th-at-430pm-gold-and-above/

 

Lets have a great day!

 

- JB

4-24-2013 Watch List

 

 

The market continued its way higher for the 3rd consecutive session and is nearing that 160 level on the SPY once again. For those who were away during the middle of trading yesterday, did not notice much, but for those watching saw the market tumble rapidly in a matter of seconds as a fake tweet from the Associated press about the White House being bombed caused a sell-off. It was short lived and in a matter of minutes the market was back at the session highs. Crazy stuff, and is the type of thing that makes you wonder about HFT’s and algo trading programs.

Had some earnings yesterday, with AAPL barely beating lowered estimates and issuing a weak outlook. Despite raising it’s buyback and divy program, the stock is down 3% pre-market. PNRA and AWAY also missed yesterday and both are down pre-market. PNRA is another great example how following analysts can be a terrible strategy. Since the start of April, PNRA was upgraded by at least 4 firms with Goldman Sachs putting it on their ‘Conviction Buy” list.

 

Futures are flat as durable good orders came in a little worse then expected.

 

Will be keeping it small today as I am holding quite a few positions now including my NFLX calls. I also added SAM calls , GOOG Calls, and some more BPT calls yesterday.

 

Here are some of the analyst changes today:

 

CREE Cree pullback a buying opportunity, says Susquehanna at Susquehanna

Susquehanna sees the pullback in Cree as a chance to build a position. The firm cited increasing EBIT, an acceleration of margins, and its market leadership. Shares are Positive rated with a price target of $66.

VMW VMware price target lowered to $90-$95 from $115-$125 at Wells Fargo

Wells Fargo reduced its target range on VMWare after the company provided lower than expected Q2 revenue guidance. The firm thinks uptake of the company's new products will be gradual but it believes that the company can meet its full year guidance and it keeps an Outperform rating on the shares.

YOKU Youku Tudou price target lowered to $14 from $16 at Maxim

Maxim notes that tudou.com traffic declined 50% post-merger and youku.com traffic declined 10% in the past three months, according to www.alexa.com. The firm thinks weak traffic could become a stronger than expected headwind to Youku Tudou's growth and reiterates a Sell rating on the stock with a lowered price target.

BRCM Broadcom revenue growth not reflected in shares, says RW Baird

Baird noted Broadcom reported significant Q1 revenue growth but does not believe it is fully reflected in its valuation. The firm expects growth to continue driven by a looming set top box upgrade cycle, a new product cycle in 3G, and its leadership in connectivity market share. Shares are Outperform rated and price target raised to $40 from $38.

PNRA Panera Bread pullback a buying opportunity, says Jefferies

Jefferies views the pullback in shares of Panera Bread following the company's Q1 results as a buying opportunity. The firm notes Panera's same-store-sales are now back to 5% in April and the company's earnings outlook is unchanged. Jefferies keeps a Buy rating on the stock with a $202 price target.

 

WYNN announced yesterday that they will be reporting earnings tomorrow after the close. Great news for my 135 weekly calls, as they will see an instant premium boost at the open. May look to get some more calls today, probably 140s. Did not get any AMZN calls yesterday but will look again for an entry.

 

Here are the strikes I am looking at today possibly:

 

 

Stock Ticker Call/Put Strike Expiration Closing Price Entry Price
WYNN CALL $140.00 Weekly 0.08 0.05
AMZN CALL $330.00 May 0.33 0.33

 

 

Lets have a great day, and don’t forget about LeeMalones Webinar tomorrow after the close at 4:30pm!

 

- JB

Historical Probabilities & Market Sentiment Regarding Apple’s Earnings Announcement

Has it already been three months since Apple's last earnings announcement?

The market's "fallen star" is scheduled to report tomorrow after the closing bell.  Specifically, Apple's earnings releases tend to occur around 4:20-4:30 PM.

Generally, as a technical analyst, I prefer to play a stock after it releases earnings, as it is very difficult to predict both how a company's earnings will be and how the public will react to it.  This time, however, I'll take a shot at trying to forecast the earnings announcement.  I'm also sure that many of you are doing just that right now, and likely placing money at risk too.

Volatility

Typically, Apple's earnings announcement approaches traders as somewhat of a roulette game, since the stock usually experiences a large price swing between the day of earnings and the day after.  In fact, in the past 2 years (8 earnings releases), only twice has the stock moved less than 3% from its previous close on the day after earnings.  To long option traders especially, who need volatility to be profitable, this also means large potential profits.

Probabilities & Negative Surprises

So let's jump into the probabilities.  First, Tom Bulkowski, owner of ThePatternSite.com has done extensive work on earnings releases, and found over a large array of stocks that earnings misses are followed by earnings misses 74% of the time.  That means, at face value, that Apple only has a 26% chance of beating their analyst's expectations tomorrow.  But considering that the company has missed three times in a row, the probability of having three negative surprises, following the first one, in a row is .74^3, or about 40%.  It's the same issue when flipping a coin.  Does getting heads 9 times increase the probability of a tails on the next flip?  No, but a run of 10 heads would be a much rarer occasion than a run of 3 heads.

Sentiment

While the price of Apple slips, the media and the community has shouted, "It's hated so much!  All bad news is already digested"  Well, according to PredictWallStreet.com, there are still lots of Apple lovers out there.  Specifically, as of this evening:

  • 82% of 188 voters expect AAPL to be up by the end of trading (assuming that means post earnings)
  • 74% of 163 voters expect it to be up from where it is now one week from now
  • 81% out of 90 voters expect it to be up from where it closed today one month from now
  • 83% of 181 voters expect it to be up from today's closing level three months from now

Is this bearish?  Not necessarily.  It just means that the investing public is likely still largely bullish on Apple, and will also have high expectations for their announcement tomorrow.  That actually sets the stage for a possible negative reaction to the announcement, even if expectations are met.

Conclusion

All things considered, it appears that probabilities favor another negative quarter for Apple.  However, if they do beat by a large enough margin to make price gap higher, sellers will likely be waiting near the 420-425 area.  If that level is broken, the next level of resistance appears to be closer to 475.  That said, for those holding weekly option positions; if price gaps to the 420-425 range then stalls, and you are holding a profitable position, I suggest not waiting until expiration, as there is a good chance sellers will enter by week's end and push the price back down.  Best of luck!