July 27th Morning Outlook


Stock Futures = Flat
US Dollar = +.15%
Germany = -.43%

The Euro/USD is down .23% while the Aussie is up .20% against the US Dollar.

Stock futures were much higher earlier this morning before fading. Germany has come out and said they do not back the ECB buying of more bonds. This flies in the face of Draghi's comments, who at about this time yesterday, helped spark a massive global rally by saying the ECB will do everything it can to keep the Euro zone together. Haven't we heard this before? If you don't have the backing of the largest economy in the Euro zone it will be tough for the ECB to follow through on bond buying.

From a chart perspective the SPY bumped up over $136, which has proven to be resistance in the past, but remains below the trendline from June 4th that was broken on Monday, which in my view makes this market a sell. Over the last 30 days we've been in a $7 range on the SPY and sit at the higher end. This is still a nimble traders market.

AMZN earnings numbers failed to dissuade the bulls from pushing the stock higher after hours. The stock initially fell to below $203 from $220 and closed the afterhours session at $222. This will kill all out of the money options that expire today.
DECK popped a good 12% on earnings, the options were pricing in a move of this magnitude. Call buyers will have a nice gain at the open.
EXPE beat and will help PCLN rally today as well.
FB dropped below $24 a share after initially surging over $28 a share early on after reporting their earnings. This will likely drag other social media stocks lower such as LNKD. ZNGA could break $3.00 but I don't think it heads much lower. Some great reads on ZNGA as far as how the insiders have been selling hand over fist. Nothing short of a penny stock pump and dump. It didn't stop me from buying some calls for earnings for a bounce, and it goes to show that even the worst of charts doesn't necessarily have to bounce.


I wrote about SBUX and did a brief video yesterday morning before the open. The chart looked weak. I bought SBUX puts at the open and proceeded to watch the stock ramp almost 5% higher. The last 15 minutes SBUX saw tremendous buying and looked ready to break $53. Only 20 minutes later the stock dropped more than $6 on poor earnings and outlook. At one point those calls I bought dropped to $.60 from my average entry at $.83. The trading action would lead one to believe SBUX was going to go higher post er's, but the chart said differently. Without the central bank intervention, or talk of intervention, SBUX would have only been modestly higher and would have never broken $51.50 resistance, making the bearish case still valid. I think this highlights the difficulty in trading the markets since 2009. With the central banks intervening, and manipulating markets charts can become, at times , unreliable. SBUX has no business breaking back above resistance yesterday and that is why I stuck to my guns and held my puts, in spite of the massive move SBUX made. Ultimately it should be a nice trade as those $.83 avg puts should be worth $2-4 today.

For quick option expiration trades today I will be looking at a few for either a bounce or pull back. FB I may try for $24 calls on a dip below that figure for a very quick trade. PCLN, with the big numbers from EXPE, should be good for the call buyers. I think CAT and XOM will fade today and into next week and will be looking for puts for next week $80 and $85 strike respectively. I already own this week $85 (.21) puts and next week $85 puts (.40) on XOM. I like MOS for a pull back and currently own the $57.50 puts.

I will have a live event covering the week ahead this Sunday night. The link should be posted 30 minutes before the 10:30PM Est event.

The Week Ahead with UPB and JB – Webinar Registration Link

Should be a great end to the week.

*AGCO Corp Cut To Hold From Buy By S&P Capital IQ

*AmerisourceBergen Corp Raised To Outperform By Baird

*Analysts Saw ICICI Bank 1Q Net Profit at INR16.85 Bln

*Baird Had AmerisourceBergen Corp At Neutral

*Green Dot Corp Cut To Mkt Perform From Outperform By Keefe, Bruyette & Woods

*HealthSouth Corp Cut To Hold From Buy By Jefferies

*Meritage Homes Raised To Hold From Sell By ISI Group

*NetSpend Holdings Cut To Mkt Perform From Outperform By Keefe, Bruyette & Woods

*RadiSys Corp Cut To Hold From Buy By Needham Research

*SandRidge Mississippian Trust Cut To Sector Perform From Outperform By RBC

*Starbucks Corp Cut To Neutral From Outperform By Baird

*SunTrust Banks Raised To Hold From Sell By ISI Bank

*Valley National Bancorp Cut To Underweight From Neutral By JPMorgan

*Walter Energy Inc Cut To Equalweight From Overweight By Johnson Rice & Co

DJIA 12848.0 +23.0 +0.2%
S&P 500 1356.8 +2.0 +0.1%
Nasdaq 2578.8 +6.3 +0.2%
As of 0550 ET

FTSE 100 5569.2 -3.9 -0.1%
Xetra DAX 6560.4 -21.3 -0.3%
CAC 40 3212.5 +5.4 +0.2%
As of 0550 ET

Nikkei 225 8566.6 +123.5 +1.5%
Hang Seng 19275.0 +382.2 +2.0%
Closing prices

-Stocks seen slightly higher; dollar and sterling take advantage of negative euro moves; Treasurys lower; Brent higher at $105.65, Nymex up at $89.46; Gold lower at $1,619.35.

-Watch for: US Advance GDP Figures.


Stocks are expected to start slightly higher Friday, after investors applauded comments from Europe's central bankers that showed support for the euro zone, driving stocks sharply higher and pushing down Treasury prices.

But while the DJIA had been called as high as 12,950, Fawad Razaqzada, market strategist at GFT Markets, said opening calls started to sink as European equity markets started to sag. Following the strong gains on Thursday, Razaqzada said he would not be surprised to see traders pocketing profits, particularly as the summer holiday period nears.


Chevron (CVX) has been ordered to pay more than $19 billion in environmental damages, $1 billion more than originally decided, after an Ecuadorian court adjusted the amount on appeal, a source said Thursday.

"Due to an involuntary calculation error, the reparations now amount to $19, 021,552,000," a court source in the northeastern Amazonian province of Sucumbios said.

Amazon.com (AMZN) said it isn't planning to roll out same-day delivery to a broad swath of the U.S., despite speculation that it might.

"We don't really see a way to do same-day on a broad scale economically," Chief Financial Officer Tom Szkutak told analysts after releasing second-quarter results.

Ensco (ESV) will take Goodrich's (GR) spot on the Standard & Poor's 500-stock index, a change scheduled to take effect as of Monday's closing bell, according to S&P Dow Jones Indices.

London'sEnsco, which provides offshore-drilling services with a market capitalization of $11.9 billion, will be added following United Technologies's ( UTX) $16.5 billion acquisition of Goodrich, an aircraft-components maker.

Netgear's (NTGR) second-quarter earnings rose 4.5% as the networking company's revenue improved, though adjusted profits missed analyst expectations.

Shares sank 15% to $29.70 as the company also offered a downbeat outlook for the current quarter. Through the close, the stock has fallen 9.1% over the past three months.

Newmont Mining'S (NEM) second-quarter earnings fell 28% as the gold-mining company reported lower gold and copper output, and lowered its full-year production view. Shares dropped 4.5% to $44 in after-hours trading Thursday. Through the close of regular trading Thursday, the stock was down 23% so far this year.


In foreign exchange markets Friday, the euo fell further against the dollar after Germany's Bundesbank commented that it has not changed its views on the ECB buying government bonds. The euro fell to a fresh day low of $1.2254. Sterling also took advantage of negative euro moves, with the euro trading down at GBP0.7808.


Treasurys were lower but off their worst levels as Thursday's Mario Draghi- inspired rally begab to fade. Thursday's $29 billion 7-year auction results were seen as soft with the b/c of 2.64 a bit below the 2.84 average over the past year. The September Treasury contract was 6/32 lower at 134-27, the 10-year cash yields 1.447% while the cross market US/German 10-year yield spread widened by 2bps to 12bps.


The oil futures market will remain in a macro trading mode, focusing on the U.S.' GDP estimates for 2Q later Friday and then the FOMC's policy announcement next week, said VTB Capital analyst Andrey Kryuchenkov. "Some pre-weekend profit taking is possible, but overall we still expect the latest rebound to run out of steam without any macro or geopolitical surprises," he added. A sustained retreat below $103 a barrel could see a Brent pullback to $101/$100.5 a barrel, he said. "Otherwise, we will continue in choppy trading above $103 and with resistance around $107/$108," Kryuchenkov noted.

Spot gold was slightly higher in Europe, holding above $1,600/oz as market focus shifted from yesterday's ECB comments to key data and QE3 clues in the U.S. A weak second-quarter GDP reading at 0830 ET could intensify speculation of more Fed stimulus, potentially lifting gold as a hedge against liquidity-fuelled dollar weakness and inflation. "Should the Fed decide to ease we would expect the gold rally to continue," said James Steel, analyst at HSBC. "Conversely, given the recent build-up of gold prices alongside increased expectations of easing, should the Fed elect not to ease further, we would expect gold prices to ease," he said.

=======TODAY'S CALENDAR=======
0830 US Q2 Advance estimate GDP
0955 US Jul Thomson Reuters /
University of Michigan
Survey of Consumers
1000 US Q2 U.S. Housing Vacancies

Bundesbank Maintains Opposition to ECB Bond Buying

Germany's central bank remains opposed to further government bond purchases by the ECB, but isn't against using the euro-zone's temporary rescue fund doing so to drive down soaring sovereign borrowing costs.

Eurocoin Slump Points To Deepening Contraction

The euro-zone economy contracts at a steeper pace in July as consumer and business confidence weakens in the face of deepening fiscal and banking crises.

ECB's Draghi: Ready to Preserve Euro Within Mandate

European Central Bank President Mario Draghi indicated Thursday that the central bank may be ready to buy government bonds or embark on other measures to drive sovereign borrowing costs down as long as its actions remain within its mandate, but it will not embark on another long-term refinancing operation or quantitative easing despite market pressure.

Spanish Unemployment Hits All-Time High

Unemployment in Spain rises to a fresh all-time high in the second quarter, as a recession in the euro zone's fourth largest economy leads to further job losses.

French Consumer Confidence in Surprise Drop in July

The confidence of French consumers falls unexpectedly in July as their personal finance outlook wilts and fewer of them consider it the right time to make big purchases.

Swiss KOF Leading Indicator Rises Sharply in July

Switzerland's KOF leading economic indicator rises to the highest level in almost a year in July, suggesting growth will quicken in coming months.

Spanish and Italian Bond Yields Fall, Pace Slows

Spanish and Italian government bond yields continue to fall, extending the rally sparked by European Central Bank President Mario Draghi's pledge to defend the euro.

Real-Estate Crisis Hits More Spanish Banks

One large and two mid-sized Spanish banks report sharply lower second-quarter profit after setting aside billions of euros to cover real-estate-related losses amid a deepening economic slump.

Barclays Net Narrows; Governance Under Scrutiny

Barclays comes under renewed scrutiny after the lender put aside millions of pounds to cover the misselling of financial products and said that its finance director was being investigated by U.K. regulators.

BP To Challenge Russian Court Ruling In TNK-BP Lawsuit

BP says that it will challenge a ruling by the Tyumen arbitration court in Siberia to award damages of $3.1 billion to the company's Russian joint venture TNK-BP, over a cancelled Arctic exploration pact between the U.K. energy giant and Rosneft.

Japan'sCore CPI Falls in June, Retail Sales Up

Japan's core consumer price index fell 0.2% in June from a year earlier, the government said Friday, citing the effect of falling gasoline and other fuel prices.

Japan Says Economy Headed For Gradual Recovery In Annual Report

The Japanese government said in its annual economic report that the nation's economy is headed for a gradual recovery mainly due to reconstruction demand following last year's earthquake and tsunami that devastated northeastern Japan.

Fitch: China Banks Face Rising Risks From Wealth Management Products

Fitch Ratings said Friday that China's banking sector faces growing risks from small banks' aggressive issuance of wealth management products to attract and retain depositors.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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