Yesterdays watchlist included NFLX $190 calls which soared from an open of $.50 to a high of over $4.00. EBAY and BIDU were also on the watchlist and I feel confident about both heading into the holiday shortened end of the trading week although both look to open modestly lower this morning.
Futures are falling down over .5% as Cyrpus still remains a talking point, with some thinking that Cyrpus will be a template for the rest of the Eurozone. The Euro has dropped to fresh lows against the Dollar, the dollar gaining .5% against other major currencies this morning. The volatility index should see a spike at the open as well. It looks like we might have to wait another few days before pushing through all time highs on the S&P 500.
The $SPY closed a mere $.50 from multi-year highs yesterday with the DJIA rallying over 110 points. As I have been saying for many moons, every dip since the March 2009 lows has been a tremendous chance to buy stocks = BTFD. That hasn't changed and today's drop out of the gates will likely be just another BTFD moment. However there will remain stocks that will struggle today. I think $JPM is one of them, as some negative news is circulating about the company and its handling of Bernie Madoff as well as the "London Whale" losses. $JCP may see continued selling as it is being reported they are raising prices and mall owners are bracing for store closing. $AAPL more negative analyst remarks already this morning, with the negative overall sentiment, this will likely weigh on shares early on.
$GOOG has seen both negative and positive treatment this morning with one analyst lowering their earnings estimates and another raising their price tgt to just under $1,000. We've seen this a lot recently, and it shows just how convoluted this market is. No one seems to have a grasp on the market or individual stocks and going with your own intuition is usually the best move. Just look at $AAPL's recent move off its lows. Had you listened to all the recent negative analyst remarks you would be trading for the stock to mvoe to $370, however its done exactly the opposite. As I noted yesterday $GOOG hit major trendline support last week at $800 and I think the stock could have room to go higher. Currently it has been stuck in a tight range making OTM option purchases on either side not very profitable. Those selling options, however, are making a killing. At this stage, in spite of today's tgt raise I think $GOOG should be avoided for OTM calls/puts until we see something that will spark shares in either direction.
I think the next two trading days will show only modest moves in either direction and odds are we will close the week roughly were we started it. Keeping that in mind it, if we do end the week basically flat, this will be a premium kill on most out of the money options. So try and trade smart, we have earnings season kicking off soon and patience will likely be rewarded then.
Some important upgrades/downgrades/news:
Google price target raised to $982 from $847 at Credit Suisse
Credit Suisse believes Google's Enhanced Campaigns update will provide an incentive for publishers to optimize their websites for cross hardware/OS access, likely resulting in increased advertising budgets. The firm rates shares an Outperform.
Google search engine revenue reportedly fell in Q1, says Stifel
Stifel says that IgnitionOne, a large search engine marketer, estimates that spending on Google's search engine dropped 1% year-over-year in Q1. Stifel reduced its estimates for Google and expects Google to report weaker than expected Q1 results. The firm maintains a Hold rating.
Apple could miss Q2, Q3 consensus estimates, says Pacific Crest
Pacific Crest believes that Apple could report weaker than expected Q2 and Q3 results due to lower iPad and iPhone sales. The firm lowered its large format iPad unit estimates and has a $425-$520 price target on the shares. It thinks that the company's growth prospects are modest, and maintains a Sector Perform rating on the shares.
Target price target raised to $75 from $69 at Morgan Stanley
Yesterday, Target's Tony Fisher reaffirmed that the roll out in Canada is on track to hit 124 stores in its first year. The firm raised estimates and expects Canada store openings to move shares higher near-term. Shares are Overweight rated.
Intel shares could benefit from a capex cut, says Goldman
Goldman said a potential reduction in Intel's 2013 capex budget would likely be viewed as a positive for shares as it would address excess supply and improve cash flow. Shares are Sell rated with a $16 price target.
JPMorgan facing multiple federal investigations, NY Times reports
Prosecutors are examining whether JPMorgan (JPM) withheld information about Bernie Madoff, and the bank is facing a criminal probe over whether it lied to investors and regulators about its multibillion dollar trading loss, according to The New York Times, which cited unnamed sources. Meanwhile, at least two JPMorgan board members are worried about the bank's "mounting problems" as at least eight federal agencies probe the company, the newspaper stated.
VMW VMware upgraded to Strong Buy from Buy at ISI Group
What I am looking to buy today:
The Pac Crest upgrade of NFLX to $220 moved the stock over 6%. We saw a similar multi-day move with VMW after they said to buy the stock aggressively. We are still waiting for $FFIV as Pac Crest said to buy them aggressively over a week ago. I think $FFIV, while not working out last week via the call side, will work out handsomely in the future and I will be looking for OTM calls expiring in April.
$FFIV April $92.50 calls $.90
I think once the dust settles on Cyprus stocks will hit new highs and the VIX will fall. This will happen before the end of next week. I will trade this via VXX puts.
$VXX April $20 puts $.60 limit
$FB has been hanging tough at $25 support after falling most of March. I will be looking for next week's call options and for the stock to bounce off the $25 mark. A break below and I will close out my calls.
$FB April weekly $25 calls $.50
Have a great trading day. This is a holiday week for most and we are winding down one the of the best quarters ever. I'm not expecting any big swings and think we are gearing up for a strong rally to new highs over the next few weeks.