The SPY finished red for the fourth session in a row as folks are using the debt ceiling talks and confusion over the taper to take profits. Yesterday saw some nice moves with ANGI continuing its break out, BIDU breaking out (then fading), and AAPL fading after the open as analysts downplayed the 9 million iphone sales number.

We had a buyout of Mako today for $30 a share, this stock has been on the rebound and was a stock I always had on my watchlist, but hadn’t purchased calls on in sometime... oh welll. Sound like DUBI has come calls, so hope he does and banks some major coin! Mako buyout should put a bid into ISRG and maybe one to watch today.

The RedWriggler was on the LIghtning Round last night and asked Jim Cramer about UNXL. Cramer said he doesnt like a crowded short so think he mistook the question, unless you really wanted to short? Either way, fun stuff!

 

If you missed the text trade idea yesterday it was ANGI 27.50 calls - .25 x 30. They almost doubled but faded the end of the day. Have plenty of time on them. Great one found by UPB. Here are some of the thoughts on the stock:

 

https://www.optionmillionaires.com/2013/angi-video-chart-update/

https://www.optionmillionaires.com/2013/unxl-angi-chart-updates/

https://www.optionmillionaires.com/2013/bull-case-angies-list-angi/

 

Lets see if we can end the 4 day losing streak on the SPY today.

 

Here are some of the analyst changes of note:

 

 

ISRG Intuitive Surgical named new top pick at SunTrust

SunTrust called Intuitive Surgical (ISRG) its new top pick after its survey of hospital executives indicated that those who have changed da Vinci purchasing plans were for delays and not cancellations. The firm expects those purchases to come back within 24 months and keeps a Buy rating on Intuitive Surgical with a $506 price target. Note MAKO Surgical (MAKO), another developer of robotic surgery, was acquired this morning by Stryker (SYK). Shares of Intuitive are trading up 2%, or $8.10, to $371.99 in pre-market trading

 

CF CF Industries upgraded at Atlantic Equities

As previously reported, Atlantic Equities upgraded CF Industries to Overweight from Neutral. The firm upgraded shares due to a potential rebound in corn prices and a seasonal recovery in Nitrogen prices. Price target is $245

 

CCL Carnival price target lowered to $40 from $43 at Susquehanna

Susquehanna lowered its price target on Carnival Corp following weak Q3 results. The firm remains Positive on the shares citing its pricing survey which points to improved net yields, expectations for better fuel pricing, and upcoming easier comps

 

SINA added to Select List at Stifel

Stifel believes that SINA's Weibo reached a major turning point in Q2, with the microblog helping to accelerate SINA's total revenue and improving its overall margins. The firm expects Weibo's growth to enable the company to generate revenue growth acceleration and margin expansion. It keeps a $100 price target and Buy rating on the shares

 

 

BA Boeing price target raised to $146 from $127 at Bernstein

Bernstein believes that Boeing's shares are still inexpensive on most metrics, as the firm thinks the company has several upcoming catalysts and low risk, while the 787's costs are on track. It keeps an Outperform rating on the stock

 

QCOR Questcor pullback a buying opportunity, says Piper Jaffray

Piper Jaffray believes the recent weakness in shares of Questcor presents an attractive buying opportunity and reiterates an Overweight rating on the stock with a $74 price target. Piper says most major managed care organizations continue to reimburse for Actha

 

CELG Celgene price target raised to $177 from $165 at Leerink

Leerink raised its price target for Celgene shares to $177 after meeting with management and keeps an Outperform rating on the stock. The firm said it left the meeting with increased conviction in the company's near- and long-term growth potential

 

MCO Moody's price target raised to $79 from $74 at Lazard Capital

Lazard Capital raised its price target for Moody's to $79 saying the company's new issue pipeline appears to be strengthening. The firm keeps a Buy rating on the stock

 

FB Facebook price target raised to $54 from $36 at Oppenheimer

Oppenheimer raised its price target for Facebook shares to $54 citing higher usage trends and a $4 per share valuation for Instagram. Opco sees additional upside potential from video ads, the FBX launch into mobile, and increased payments activity. The firm keeps an Outperform rating on the stock. Shares of Facebook closed yesterday up $1.26 to $48.45

 

CTRP Ctrip.com upgraded to Buy from Hold at Deutsche Bank

Deutsche Bank upgraded Ctrip.com citing strong travel booking volumes and its belief the company is emerging as the travel solution leader in mobile. The firm raised its price target for shares to $65 from $35.20

 

 

Got out of my NFLX puts yesterday as well as added PCLN 1050 calls and ANGI 27.50 calls @ .25 and .30.

Will look for a few more PCLN calls as think the stock keeps chugging higher into Friday. ISRG is up on the MAKO buyout, but think it may move to 385 or so and will try some calls possibly:

 

 

Stock Ticker	Call/Put	Strike	Expiration	Closing Price	Entry Price
PCLN	CALL	$1,050.00	Weekly	0.65	0.55
ISRG	CALL	$390.00	Weekly	0.20	0.30

 

 

Don’t forget LeeMalone will be doing a Webinar on Spreads Thursday at 4:30pm : https://www.optionmillionaires.com/2013/trading-spread-leemalone-gold/

 

 

Lets have a Great DAY!

 

- JB

Stocks were down again today. A nasty late day sell off turned a promising trading session into a losing one for the bulls. Where do stocks head from here? I will share my thoughts about the short and long term prospects for the market in my video.

"Stocks stumbled in the final minutes of trading to end near session lows Tuesday, with the Dow and S&P posting their fourth-straight session in the red, as investors remained cautious amid uncertainties surrounding central bank's stimulus program and budget discussions in Washington."

 

A red start to the week as the SPY closed red for a third day in a row despite AAPL adding nearly 5%. Most sectors were red led by financials. Futures are red this morning, and debt ceiling talks continue to add uneasiness to the markets. Again, my worry is for some U.S. debt downgrade, which is what ignited a sell-off in the summer of 2011. The longer this drags out, the more concerned I will become.

Yes, I did buy puts on something other then gold and Apple yesterday, and yes it was on one of my more beloved stocks Netflix. Does that mean the stock is done? By no means, it just looked primed to sell-off based on the Emmy news and the sell-off at the open from the $320 all-time high. I am looking for a rapid pullback to the 50dma. If I dont see weakness today, I may close out the puts I have as they expire friday.

UPB has been very bullish on ANGI, a stock that has run quite a bit since it’s ipo, and has been subject to negative reports by Citron and Seeking Alpha. I did some more digging last night and really like this story. Revenue is growin 50-60% YOY despite the company being in business over 18 years. It took them 16 years to get 1 million subscribers and only 18 months to cross the 2 million mark. Folks will cite the negative reviews and the fact that they take money from advertisers to move up listings as well as charging subscribers to use their service. I would argue that most reviews on Yelp and other avenues are manipulated. Having just been married and I can tell you all the vendors gave incentives to write positive reviews. My photographer gave free photo packages for each verifiable positive review you make, which you have to show them. As far as subscribers paying to be a part of Angies list, the cost is minimal and vendors are required to give discounts so its a win win. Either way, with the huge short interest, and revenue continuing to grow, think this stock touches 25+ in the coming days. Nice call on this UPB.

 

AAPL has been upgraded by at least 5 firms this morning as analysts try to play catchup  on Iphone 5c/s sales.

 

Here are some of the analyst changes for today:

 

 

AOL AOL outlook positive, says JMP Securities

After AOL announced that reserved inventory would be available to its Programmatic Upfront clients starting on January 1, JMP Securities is encouraged to hear that five agencies have already committed ad dollars to AOL, with three other agencies considering an Upfront commitment. The firm thinks that a number of changes made by the company will cause its revenue growth and profitability to accelerate, with the company starting to report better results for this quarter. It reiterates a $44 price target and Outperform rating on the stock

 

AAPL Apple price target raised to $525 from $450 at RW Baird

Baird raised its price target on Apple following its report of its first weekend of iPhone 5S and 5C sales. The firm raised its estimates as well to reflect higher gross margin assumptions and its positioning over the next twelve months. Baird maintains its Neutral rating due to longer term margin and competitive questions

 

RHT Red Hat outlook still attractive, says Wells Fargo

After Red Hat reported lower than expected billings, Wells Fargo still thinks the company is one of the best long-term ideas in software. The firm continues to believe that the company can generate mid-teen percentage revenue growth for the next several years, and it keeps an Outperform rating on the shares

 

FANG Diamondback Energy upgraded to Buy from Neutral at Sterne Agee

Price target is $54

 

AAPL Apple upgraded at Susquehanna

As previously reported, Susquehanna upgraded Apple to Positive from Neutral. The analyst upgraded shares due to the stronger than expected new iPhone launch, healthy backlog, and a likely China Mobile launch ahead. Price target raised to $625 from $440

 

BBRY BlackBerry upgraded to Hold from Sell at Canaccord

BlackBerry is being acquired by a Fairfax Financial led consortium for $9 per share

 

SBUX JPMorgan sees 'more modest' upside for shares of Starbucks

JPMorgan says shares of Starbucks are up 75% since bottoming on August 2, 2012. The firm sees continued upside to shares, but at a "much more modest" pace, and raised its price target for the stock to $80 from $74. JPMorgan keeps an Overweight rating on Starbucks

 

 

Here are the strikes I am looking at for the open:

 

 

Stock Ticker	Call/Put	Strike	Expiration	Closing Price	Entry Price
ANGI	CALL	$25.00	OCT	0.55	0.50
NFLX	PUT	$275.00	Weekly	0.29	0.29

 

 

Lets have a Great day!!

 

- JB

Make that three green weeks to start September albeit last weeks help came via the Fed. Will we see 4? Futures have fallen into the red this morning and the SPY is nearing the 170 level. Talks of the ‘taper’ have been replaced by the jostling over the ‘debt ceiling’. Its only a matter of time before there is some rumor or news of possible debt downgrades...ect. As crazy as it would seem for the U.S. to have its credit rating dropped, its almost hard not to when you see a government that cannot come together to even pay it’s bills. This will probably present another great buying opportunity.

Folks are starting to say the market is fairly valued or over valued on a historical level and say most of the earnings growth has been accomplished via buys backs...ect. With rates near historical lows, why wouldn’t companies use this time to finance stock buybacks as this is one of many ways to add shareholder value?

I had issues with my presentation last night on the week ahead and will do a Webinar on Tuesday. Here is last nights week ahead webinar: https://www.optionmillionaires.com/forum/showthread.php/585-The-Week-Ahead-With-UPB-and-JB-9-22

AAPL sold over 9 million IPhones over the weekend, the news sent the stock up $18. Considering the supply issues, this is very good news. Most phones are not available till October now.

Here are some analyst changes of note for today:

DRI Darden has several positive catalysts, says Sterne Agee

After Darden reported weaker than expected Q1 results, Sterne Agee thinks the company is making positive changes and will cut its costs. The firm believes the company's dividend is safe and creates a floor for the stock. It keeps a Buy rating on the shares

 

TSLA Tesla shares remain overvalued, says BofA/Merrill

BofA/Merrill said Tesla's institutional ownership has fallen to about 66% today from 84% back in January. The analyst said retail investors have had an increasing hand in driving shares higher and will be at risk of a correction. BofA/Merrill said the Gen 3 vehicle would have to be one of the best-selling vehicles in the world to drive 2020 volumes implied by the current share price. The analyst continues to see substantial downside risk and reiterates its Underperform rating and $45 price target

 

CRM Salesforce.com price target raised to $65 from $60 at Stephens

Stephens views the recent announcements from Salesforce.com as reinforcing its thesis that the company's enterprise positioning is improving. The firm raised its price target for shares and reiterates an Overweight rating on the name

 

BBY Best Buy price target raised to $50 from $38 at Barclays

Barclays raised Best Buy price target and estimates again due to continued cost reductions and managements utilization of floor space. The firm's 2014 EPS estimate goes to $2.75 from $2.65, vs. consensus of $2.67. Shares are Overweight rated

 

WAG Walgreens upgraded at Morgan Stanley

As previously reported, Morgan Stanley upgraded Walgreens to Overweight from Equal Weight. The firm upgraded shares based on FY16 growth prospects when the Alliance Boots deal is completed, deal synergies, and coverage expansion. Price target is $70

 

TRIP TripAdvisor upgraded to Buy from Hold at Stifel

Stifel upgraded TripAdvisor citing more positive investor sentiment towards the meta transition, the company's status as a brand leader, and its belief that monetization of mobile users will improve. Target $93

 

CTRX Catamaran recent weakness a buying opportunity, says Credit Suisse

Credit Suisse said Catamaran said exchange risk concerns are overdone and that above average growth is sustainable. The firm expects Catamaran to continue to take share and consolidate mid-market PBMs and recommends investors use the weakness as a buying opportunity. Shares are Outperform rated with a $64 price target

 

NKE Nike price target raised to $81 from $72 at Citigroup

Citigroup raised its price target for Nike shares to $81 and views the company's investor day on October 9 as the next catalyst for the stock. Citi believes Nike could issue annual revenue growth guidance of up 9.0%-9.5% through FY18, which it says would imply revenue of $39.5B. The firm reiterates a Buy rating on the stock

 

SSYS Stratasys initiated with a Buy at BofA/Merrill

Target $116

Here are the strikes I am looking at for the open:

Stock Ticker	Call/Put	Strike	Expiration	Closing Price	Entry Price
SSYS	CALL	$120.00	OCT	0.55	0.55
TRIP	CALL	$85.00	Oct	0.45	0.45

Of course BAC starts SSYS at a buy today with $116 tgt instead of friday when we had calls. SSYS still looks headed to 108-110 so this should help, and will look to grab some at the open. Also like TRIP here on an upgrade this morning and chart looks set for all time highs in the coming weeks. $85 calls look priced right so may try for those. Still love CBRL and SCTY, as well as SFLY, SAM, FFIV and others and may look for some positions in those as well.

Lets have a great day!

- JB

The Fed should really consider looking at a momentum oscillator some time.  It seems that the market reaction after the Fed makes announcements is largely dependent on the short term overbought/oversold condition of the market.

 

To elaborate, at the September 2012 Jackson Hole meeting, the FOMC on May 22nd of this year, and the most recent FOMC release on September 18th, the Fed made announcements that should have boosted the market, but instead they each occurred at, or near, short term tops.  Why?  They made these announcements when the market was already severely overbought.  See the chart below for examples.

 

 

Before delving into this, I will never say that buying an overbought market is a bad strategy.  In fact, some of the lowest risk short term opportunities come from overbought markets (TSLA?).  However, to understand why these short term tops occurred, we need to take a look at the dynamic between supply and demand during these news driven moves.

 

After an extended short term decline, most of the sellers (in the short term) have had already sold.  Conversely, after an extended rally, most of the buyers have already bought.  So, when there is a positive news event after an extended rally, demand is most likely already exhausted, so prices cannot go much higher.  Everybody welcomes the bullish news, but does not buy, since they have already bought.  You get the super high volume on one or multiple days with little price movement as previous buyers sell into the any rally that develops.  That is characteristic of an exhaustion move.

 

On September 18th, when the Fed announced their would be no taper, NYSE total volume skyrocketed over 70% above its 50-day average, giving the day the ominous appearance of an exhaustion rally.  After follow-through was weak on the next day and a powerful, high-volume selloff ensued on the day after that, we mostly have a short term top in place.

 

In conclusion, exceptionally high-volume, news driven rallies, like we saw on September 18th and May 22nd, should be regarded with caution.  This is especially true when these rallies have little signs of continued strong buying in the days after.  I will most likely be shorting the weakest sector ETFs (currently XLE and XLU) on a test of the Sept. 18th high, if it occurs, with a very tight stop in case I am wrong.