The Week Ahead Webinar is now uploaded and available in the forum. You can find it here : https://www.optionmillionaires.com/forum/showthread.php/383-The-Week-Ahead-with-UPB-and-JB-4-7-2013?p=645#post645 , along with previous week ahead Webinar's.
Topics discussed include earnings kick-off as well as market direction.
- JB
The market pulled back yesterday as the ADP report missed expectations and folks took the opportunity to lock some profits. Unlike most of these pullbacks, there was limited dip buying until the very end of the day when the SPY jumped back over $155 and closed at $155.23. I guess we will have to wait longer for the SPY to close above the intraday high. This morning we have initial Jobless claims which came in worse then expected and is now at a 4 month high. Whether this is another reason to take profits or not will be seen. Futures dipped after the news and looks like the bright green open will be flat at minimum. Still think we are in a heads bulls win, tails bears lose environment for the next few months or until the unemployment goes under 7%.
Commodities continue to get punished with Gold and SLV buckling. Both should continue a downward spiral, which again raises the question ... where are folks to put their money to get a ROI?
Japan announced some extreme policies to, once again, try to kickstart their economy after years of deflation and slow/negative growth.
The US dollar is also stronger this morning.
FFIV broke to 92.50 yesterday and the 92.50 calls were a nice 3 bagger. CMG touched 330 then pulled back, still like her here. SODA broke under 50 and touch 48. Still have the 55 calls but they are not looking pretty.
Here are the morning analyst changes:
LULU lululemon checks show mild impact from luon issue, says William Blair
William Blair said its channel checks indicate a mild initial sales impact from lululemon's black luon quality shortfall. The firm believes management is taking swift action to address quality-control issues, and points out the company indicated last night that its Q1 earnings guidance is intact. William Blair continues to recommend purchase of lululemon shares on the recent pullback and keeps an Outperform rating on the name.
PNRA Goldman upgraded Panera based on strong unit growth trends, solid same-store-sales, increasing margins, and robust FCF deployment. Price target to $215 from $186.
DPZ Domino's Pizza downgraded to Buy from Conviction Buy at Goldman
Goldman removed Domino's from its Conviction Buy List due to share outperformance. Price target raised to $60 from $55.
SRPT Sarepta initiated with an Outperform at RW Baird
Target $63.
LULU lululemon downgraded to Sector Perform from Outperform at RBC Capital
RBC Capital downgraded lululemon due valuation and increased uncertainty following the departure of its Chief Product Officer. Price target lowered to $70 from $80.
PANL Universal Display upgraded to Buy from Hold at Needham
Needham upgraded Universal Display citing the recent pullback in shares and ramping revenue from Samsung with the launch of the Galaxy S4. The firm has a $35 price target for shares.
PPO Polypore upgraded to Buy from Hold at Topeka
Topeka upgraded Polypore citing valuation, lowered expectations, and expectations for a demand pick-up. Price target is $46.
MON Monsanto price target raised to $118-$120 from $104-$106 at Wells Fargo
Wells Fargo increased its target on Monsanto after the company reported higher than expected Q2 EPS. The firm notes that the company will look to use share buybacks to reduce the share count, and Wells keeps an Outperform rating on the shares.
SCHN Schnitzer Steel shares attractive at current levels, says DA Davidson
After Schnitzer reported slightly higher than expected Q2 EPS but lower than expected revenue, DA Davidson believes that Schnitzer's business could rebound quickly and the firm notes that the stock has reached multi-year lows. The firm keeps a Buy rating on the shares.
Will continue to hold my positions and may look to grab a few more today. Here are the strikes I am watching:
| Stock Ticker | Call/Put | Strike | Expiration | Closing Price | Entry Price |
| ISRG | CALL | $515.00 | Weekly | 0.45 | 0.35 |
| ISRG | CALL | $530.00 | Apr 15, 2013 | NA | 0.60 |
| PCLN | CALL | $715.00 | Weekly | 0.52 | 0.35 |
ISRG chart shows possible breakout to $510 coming, volume yesterday leads me to believe it happens very soon. PCLN looks ready as well, just needs to hold over $705 today.
I had some issues putting the wrong restrictions on the blog post yesterday. Going forward I will put the watch list in the forum as well.
Stay tuned to chat and twitter for more updates. Lets have a great day!
- JB
Another day, another record close for the S&P, now just waiting on a close above the intra-day high of 1,576.09 set on Oct. 11, 2007. The QQQ closed at Sept highs as Tech are starting to catch up in the rally, although Apple closed fractionally higher after being removed from the Goldman Sachs conviction buy list. The ADP report is out this morning: March ADP Employment Report employment at 158,000 vs. consensus of 205,000. Futures faded a bi but are holding green for now.
I had a quick post on $SAM and $CMG yesterday:
$SAM : https://www.optionmillionaires.com/2013/boston-beer-sam-continues-to-defy-gravity/
$CMG : https://www.optionmillionaires.com/2013/chipotle-mexican-grill-inc-cmg/
Like both and still hold 170/180 SAM calls (Added some @ .60 yesterday) and like CMG for a breakout on lower corn prices and tight Bollinger Bands. CMG was upgraded today as well so should help. Still think we have some short term room on SPY before we see some consolidation.
As folks continue to chase equities, whether it be from other asset classes, or from abroad(europe), Bonds continue to get shellacked and here is a nice read on the first negative return on the Agg since 2006: http://online.wsj.com/article/SB10001424127887324883604578398740602137744.html?KEYWORDS=bonds
Not good for those looking for a ‘safe haven’ as the market climbs the ‘wall of worry’.
Here are some of the analyst changes today:
PNRA Panera Bread upgraded to Market Perform from Underperform at Raymond James Raymond James upgraded Panera citing reduced industry risks.
PNRA Panera Bread shares should be bought now, says Oppenheimer
Oppenheimer expects Panera's shares to reach $200 by the end of the year as the firm expects Street estimates for the company to rise. The firm thinks the company can report higher than expected Q1 comps and beat margin expectations. It maintains an Outperform rating on the shares. t
DLTR Dollar Tree upgraded at Morgan Stanley As previously reported, Morgan Stanley upgraded Dollar Tree to Overweight from Equal Weight. The firm's survey indicates concerns regarding the payroll tax increase are overblown and that comps will sequentially improve throughout 2013. Price target is $57.
CMG Raymond James upgrades Chipotle Mexican Grill, Inc. CMG from Underperform to Market Perform
FB Facebook recent weakness a buying opportunity, says JPMorgan
JPMorgan recommends buying shares of Facebook following the recent weakness and reiterates an Overweight rating on the name. The firm thinks concerns of competing social services taking user engagement share away from Facebook are overdone. JPMorgan believes Instagram, Twitter, and other services are having only a minimal impact on time spent on Facebook says it remains comfortable with its Q1 estimates.
BWLD)
Buffalo Wild Wings upgraded to Strong Buy from Market Perform at Raymond James
Raymond James upgraded Buffalo Wild Winds two notches to Strong Buy given improving visibility, normalizing wing prices and restaurant trends, and valuation. Price target is $100.
Added FFIV calls yesterday and still hold my SODA 55 calls. Added SAM and CMG calls and still hold NFLX 200 calls (those not doing well!)
CALL reported great earnings once again, they always do. Will watch for a possible trade. I still love NFLX and may try calls one more time. Will also look to add some FFIV 95 calls.
Here are the strikes I am looking at today:
| Stock Ticker | Call/Put | Strike | Expiration | Closing Price | Entry Price |
| FFIV | CALL | $100.00 | April | 0.24 | 0.25 |
| NFLX | CALL | $190.00 | Weekly | 0.33 | 0.33 |
| CALL | CALL | $17.50 | April | 0.50 | 0.40 |
LETS Have a GREAT DAY!
- JB
This week is starting off like last week, as futures are green and the market looks primed to continue to climb the ladder to all-time highs. With Sequestration cuts looming on Friday, and all the hype like the fiscal cliff, one would think the market would be walking on egg shells instead of showing incredible strength.
We were given a 2% cut on our paychecks via the tax increases to start the year, whats the big deal if the US govt is going to cut spending by 2%. The embarrassing part is it’s forced on them rather then in a more diplomatic fashion. Either way, we shall see how this plays out as the week progresses. Figure folks will need a reason to lock more profits in on the way up so we may have a bit of volatility towards the end of the week.
If you missed it last night here is the link for the week ahead:
Quite a few earnings reports this week. I like AZO and PCLN and will position for some calls on both today and tomorrow. You also have retailers this week and hopefully SHLD, which we currently have calls on.
DDD completed the stock split today and will look to grab a few calls for earnings after hours:
05:24 PM EST, 02/05/2013 (MidnightTrader) -- 3D Systems Corporation (DDD) declared a three-for-two split of the company's common stock in the nature of a 50% stock dividend. On February 22, 2013, each stockholder of record at the close of business on February 15, 2013 will receive one additional share for every two shares held on the record date.Trading is expected to begin on a split-adjusted basis on February 25, 2013
Here are some of the analyst changes today:
BUD)
AB InBev upgraded to Neutral from Reduce at Nomura
(AKAM)
Akamai upgraded to Outperform from Neutral at Macquarie
Macquarie believes Akamai's (AKAM) miss was due to the Netflix (NFLX) migration to its own CDN and that when Akamai fills the capacity it will be at higher margins. As a result, the firm views the recent sell-off as a buying opportunity and upgraded shares to Buy with a $42 price target, raised from $41.50.
Apple price target lowered to $710 from $750 at Needham
Needham lowered its price target for Apple shares but maintained its 2013 and 2014 earnings estimates for the company. The price target drop followed Needham's semi-annual exercise of valuing Apple's products. The firm keeps a Buy rating on the stock.
Stifel Nicolaus maintains Flowserve Corporation (NYSE: FLS) with a Buy and raises the price target from $169.00 to $175.00.
BMO Capital maintains Flowserve Corporation (NYSE: FLS) with a Outperform and raises the price target from $178.00 to $182.00.
Jefferies maintains Flowserve Corporation (NYSE: FLS) with a Hold and raises the price target from $152.00 to $175.00.
Still love SODA, SAM, OPEN, SHLD, BNNY, BPT, DNKN, CROX and will look to add a few positions this week for earnings and swing plays.
| Stock Ticker | Call/Put | Strike | Expiration | Closing Price | Entry Price |
| DDD | CALL | $40.00 | weekly | NA | NA |
| DDD | CALL | $42.50 | weekly | NA | NA |
| AZO | CALL | $420.00 | March | 0.60 | 0.50 |
| PCLN | CALL | $850.00 | March | 0.55 | 0.50 |
| PCLN | CALL | $860.00 | March | 0.45 | 0.30 |
Will try for a few AZO calls, as well as grabbing some PCLN calls for earnings which I may wait until tomorrow for. I am playing for a 10%+ move in PCLN and will grab way OTM calls for a possible few week move over $800. DDD calls are not priced yet so will have to wait for open to gauge a good entry.
Lets have a great day!!
- JB
Two big up days, one big down day past three sessions. Everyone and his brother, sister, mother, father, friends, and anyone else with a mouse/pen/blog are calling for some type of pullback soon. Some say its the huge insider selling recently... well duh stocks are at 5 year highs.( http://www.marketwatch.com/story/insiders-now-aggressively-bearish-2013-02-06?dist=beforebell ) Some say its the triple top coming from 2007 and 2000 highs. Other say its overall bullish sentiment of the market. Talks of Europe are starting to get back into the headlines with Spain corruption issues and more problems in Italy. 10yr bond yields have spike the last few sessions and folks are thinking we may have the same pullback we had in 2011/2012 in March. Gosh, sounds to me like its time to go puts... wouldn’t it. But once again, its the same old tune, and we saw how it worked out everytime since march of 2009.
This market will not go down until all the sheep are on the corral, with the gate shut, and all the herders out of the corral counting their loot. The VIX crossed the upper bollie on monday, and as I spoke about on the last week ahead webinar, the market reversed.
Futures have slipped this morning, and we shall see if we are in for another 3 digit move in the DOW. Its possible, but I think the trend will still be higher.
Nice earnings by EXPE yesterday, but it’s not moving the stock as much as I would like. I still think it will see over 70 today, and like PCLN to get over $710. DDD announced a 3 for 2 stock split which should help squeeze some shorts. We grabbed the 70 Feb 16th calls yesterday and may look to add some higher strikes.
CMG is getting positive comments from analysts but is down a few dollars pre-market.
Here are some of the analyst changes this morning:
Chipotle price target raised to $334 from $318 at Piper Jaffray
Piper Jaffray said it remains confident in Chipotle's long-term growth profile following the company's Q4 results. The firm keeps an Overweight rating on the stock.
McGraw-Hill upgraded to Strong Buy from Outperform at Raymond James
Raymond James upgraded McGraw Hill citing valuation and views legal headlines as only noise and sees no risk to the business. Price target remains $62.
Expedia gaining market share in hotel bookings, says Cantor
After Expedia reported stronger than expected Q4 results, Cantor believes that room night growth acceleration should help the company achieve healthy double digit revenue growth in the near and medium term. The firm raised its price target on the stock to $77 from $70 and reiterates a Buy rating.
Expedia downgraded to Sector Perform from Outperform at RBC Capital
RBC Capital downgraded Expedia given peak valuation and fundamentals following the Q4 report. Price target raised to $73 from $70.
Expedia price target raised to $80 from $67 at Benchmark Co.
Benchmark Co. raised its price target for Expedia citing the company's strong Q4 results and keeps a Buy rating on the stock. The firm believes investors should be willing to accept near-term margin compression from higher spending for an anticipated increase in global market penetration and keeps a Buy rating on the stock.
Expedia price target raised to $80 from $70 at Deutsche Bank
Deutsche Bank notes Expedia posted its highest hotel room night growth rate in several years in Q4. The firm raised its price target for shares to $80 following the results and says Expedia remains its preferred online travel agency stock.
Here is what I am looking at for the open:
| Stock Ticker | Call/Put | Strike | Expiration | Closing Price | Entry Price |
| DDD | CALL | $70.00 | Weekly | 0.20 | 0.30 |
| DDD | CALL | $75.00 | FEB 16th | 0.20 | 0.20 |
| GMCR | CALL | $65.00 | Feb 16th | 0.27 | 0.25 |
Stay tuned to chat and twitter for any updates to my trades. Lets have a great day!
- Jimmybob