October 25th, 2013 Watch List
Yesterday was a picture perfect day as the market's original gap faded and then was filled. Then, the market slowly rallied the rest of the day, recouping Wednesday's losses. Futures are flat this morning despite some great earnings from MSFT, AMZN, and UPS. AMZN beat expectations on revenue and the stock is up nearly 9% premarket. Every analyst upgrade out this morning has a target at or above $400, so it will be interesting to see how the stock plays out today.
I bought some IRBT and TRIP calls for bounces yesterday as well as some lotto V, PCLN, and CAT calls. Today, I'll most likely sit on my hands unless something really jumps out. Below, some of the analyst changes for today:
NQ Piper questions 'at least three' claims in NQ Mobile report |
Piper Jaffray says "at least three" claims made in the Muddy Waters report calling NQ Mobile (NQ) a fraud are inconsistent with its own research and work done by a "reputable third-party." Piper said its survey found NQ Mobile's market share in China at 11%, not the 1.5% stated in the report. The firm adds that its channel checks indicate NQ's attach rates in U.S. retail stores are in the 15%-30% range, not the 2%-3% claimed by Muddy Waters. Piper has an Overweight rating on NQ Mobile, but admits the 81-page report from Muddy Waters will take "considerable time to digest." Shares of NQ dropped 47% yesterday to $12.09 after the short-selling research firm called the company a fraud |
DECK Deckers Outdoor risk/reward remains compelling, says Jefferies |
Jefferies believes Deckers Outdoor's "strong" Q3 results should ease concerns over the Ugg brand. The firm says the company's momentum is accelerating and its finds the risk/reward on shares as compelling at current levels. Jefferies keeps a Buy rating on the stock with a $100 price target |
F Ford upgraded to Outperform from Underperform at CLSA |
CLSA upgraded Ford following the Q3 report citing impressive execution, strong U.S. truck demand, and a European recovery in the making. Price target raised to $20 from $18 |
WYNN Wynn Resorts downgraded to Hold from Buy at Craig-Hallum |
Craig-Hallum upgraded Wynn Resorts following the Q3 earnings beat due to strong Macau GGR growth, strength in Cotai, and improved VIP wins. Price target raised to $175 from $160 |
DECK Deckers Outdoor risk/reward remains compelling, says Jefferies |
Jefferies believes Deckers Outdoor's "strong" Q3 results should ease concerns over the Ugg brand. The firm says the company's momentum is accelerating and its finds the risk/reward on shares as compelling at current levels. Jefferies keeps a Buy rating on the stock with a $100 price target |
AMZN Amazon.com price target raised to $425 from $330 at RBC Capital |
RBC Capital raised its target on Amazon.com after the company reported higher than expected revenue. The firm thinks the company's guidance implies that its margins are stabilizing, and RBC keeps an Outperform rating on the stock |
AMZN Amazon.com price target raised to $400 from $350 at Benchmark Co. |
Benchmark Co. raised its price target for Amazon.com shares to $400 following the company's "surprise" Q3 revenue beat and keeps a Buy rating on the stock |
AMZN Amazon.com reported excellent results, says Stifel |
Stifel notes that, for the first time in many quarters, Amazon.com reported Q3 revenue at the high end of its guidance, and provided revenue guidance that significantly exceeded expectations. The firm thinks the company continues to distance itself from its traditional and online retail competitors. Stifel raised its price target on the shares to $400 from $335 and keeps a Buy rating on the stock |
AMZN Amazon.com upgraded to Strong Buy from Market Perform at Raymond James |
Raymond James upgraded Amazon.com two notches to Strong Buy given continued revenue acceleration in the U.S., strong AWS growth, and expectations for improving margins in 2014. Price target is $446 |
NFLX Netflix initiated with a Market Perform at FBR Capital |
Target $350 |
AMZN Amazon.com price target raised to $420 from $331 at Piper Jaffray |
Piper Jaffray raised its price target for Amazon.com shares to $420 following the company's Q3 results and reiterates an Overweight rating on the stock. Piper said Amazon's North America business accelerated for the third consecutive quarter |
DNKN Dunkin' Brands price target raised to $52 from $46 at RW Baird |
Baird raised its price target on Dunkin' Brands following Q3 results. The firm believes core operating metrics remain solid, sees the company as well positioned to drive growth, and sees a premium valuation justified by its asset-light model. Shares are Outperform rated |
I have 380 weekly and 400 Nov 1st calls on AMZN, but may try some $365/370 weeklies if the stock stays under $360 before the open. I may also look for one last pop on GOOG. Here are the strikes I am looking at:
Stock Ticker | Call/Put | Strike | Expiration | Closing Price | Entry Price |
AMZN | CALL | $370.00 | Weekly | 1.30 | 0.30 |
GOOG | CALL | $1,035.00 | Weekly | 1.90 | 0.45 |
Let's have a great day, and I'll see you Sunday at 10:30pm for the week ahead!
- JB
Bank Of Ireland (IRE) Still A Great Momentum Trade
I normally hate chasing momentum plays, as I know that they can be vulnerable to sharp corrections once the stock runs out of buyers. When I do, though, I prefer using options to limit my risk. The Most Interesting Man in the World says it best:
Bank of Ireland (IRE) has been one of the most hated stocks in the world, declining from a split-adjusted $157 to a mere $4 dollars at its low. Sounds Citigroup-esque, right? Anyway, it's been breaking out of a very long term base since the beginning of this year.
Meanwhile, most analysts and traders will uniformly say that with over $30 million to pay back to its bailout beneficiaries and still losing money hand over fist, this stock is a sell. Such advice about IRE started as early as 2012. Well, the stock has been up over 100% since then, and that means someone is buying it up. I'm jumping on this stock with simple call options, as I want to limit my risk. Thankfully, the options are fairly liquid, with small bid-ask spreads, and the implied volatility of the calls is low, so option buyers aren't getting ripped off as they would be by other momentum plays.
In summary: with a solid breakout from a long term base and no signs of fatigue in sight, this PIIG bank looks like it will keep flying.
Using Calendar Spreads to Trade Earnings
Earnings Option Trade Idea (CLF)
I think this stock could see a nice rally after the release of its earnings report tonight. For one, this is a stock that has a strong negative sentiment. In other words, it's a stock a lot of traders think will fall significantly from current levels. I have to admit that I enjoy the contrarian trade, and this is one of those instances in which taking the contrarian position may pan out. Generally, when a stock has too many playing on one side of the trade more often than not it will go the other way. That's what I think will happen with this stock.
Here's the chain heading into the earnings report tonight:
I like the $24 calls at $.60
I also like the $24.50 calls at $.45