On 1/30 I said the market of the year will be in India. It looks like I’m already right with India zooming past other Asian markets this month. Other than INFY, I don’t have any particular plays in that market but I will be doing a little research now that my theory is bearing fruit.
Asia was off a bit other than India, which was up another 1% today and Europe is looking anemic so we will, in the least get a bad open.
If the Nasdaq does not hold 2,250 I will be very concerned at this point. AMEX 1,850 is a real floor that would signal a sell-off while 8,000 should be a good technical hold for the NYSE. Do not discount the psychological value of Dow 10,800 either.
Oil is falling fast with Iran’s threats looking fairly empty and inventories looming tomorrow – another build could be a nail in the coffin of $65 oil. Another favorite indicator of mine is another analyst coming out with a $100 oil prediction. I don’t know who it was but this sort of thing usually comes just before a nice drop in prices (kind of like the guy who said Google was going to $2,000 just before the earnings disaster).
Gold is off a bit but still hanging out around $575. Under $570 is a get out signal while $580 is buy more. A pullback is coming but it might hit $600 first.
I’m starting to see more and more articles that are worrying about the dollar like this one:
http://news.yahoo.com/s/usatoday/20060203/bs
_usatoday/johnwaggonerinvestingbettingagainstus
dollarmaybegoodbuy
but maybe it’s just seasonal because I remember this stuff from last winter too. I don’t remember the dollar going lower than 1.12 to the Euro but again, with oil beginning to trade in Euros as well as Dollars on March 20, I think there will be a big snap back on the Euro so perhaps a little hedging is in order. I’m reserving judgment until I see a trend as this is one of those things that has too many people on one side of a trade…
Of course this Oil exchange is being opened by Iran so conspiracy theorists are already saying that our current “crisis” with that country is more about currency than nuclear energy. Adding fuel to this fire is a Fed decision to stop reporting the M3 money supply on March 23, possibly in an attempt to hide what may be a quick and unstoppably flood of unwanted dollars into the world markets.
Here’s a good technical article discussing the issue: http://safehaven.com/article-4108.htm
I’m actually feeling overall optimistic but oil has to firmly give up leadership for the markets to move. If the markets manage to turn positive and I will be taking small positions (10-20% of goal) on some of the more beaten down positions we have been watching.
=====================================
So glad I got out of those Apple puts yesterday. Might it be time to take the calls?
GM looks like they will actually cut, at least in part, their dividend. It will be very interesting to see how this is received by the street – a knee jerk out of the stock at this point will be more of a buying opportunity as I think they are finally going to get serious about fixing the company.
Toyota posted a 34% rise in profits on 7.6% more sales! Outlook for the year is to surpass GM in sales for the first time. We picked up the Mar $105s yesterday for $3 and I don’t think we’ll be disappointed. $108 should be the first level of resistance to cross.
TOL gave a very poor report this morning but I see more opportunity in oil puts than housing. NCS is the most overbought of the builders.
DIS looks great! Other than film, which everyone expected to be off from last year’s fabulous numbers, the company is firing on all cylinders. I cannot stress enough how insane it is that this stock is the same price it was in Feb 1996 when it had just over half the revenues and 40% less profits. Sure it doesn’t grow fast but it does grow!
Here’s a sneaky opportunity – Starbucks Japan just posted 30% profit growth and upped forecasts 14%. While you can’t buy that stock you can buy SBUX who own half! We recently played SBUX for a huge 400% winner and, now that things have calmed down, we may be able to take advantage of a bad market day to get a little more. The March $35s are a fairly reasonable .90 but don’t pay more, I only like them at this price!
Google looks like it may open down a bit but it could go either way at this point. For the third day in a row it is being artificially pumped up in the US pre-market after trading down in Europe all morning. A failure to open above yesterday’s close could be a very bad sign for the stock. As to the company, here is an interesting article about the possible future of Google:
http://money.cnn.com/magazines/business2/business2
_archive/2006/01/01/8368125/index.htm
The latest broo hah hah for Google is now VZ and other telcos are starting to say they are not going to let these web sites keep making money on their pipes. You know you’re doing well when everyone wants a piece!
Iran’s bluff has been called and the capitulation begins this week. They overplayed their hand and all of OPEC will now suffer declining prices (even if they cut production to maintain prices, it’s still declining revenue).
There are plenty of overbought oil companies but I must stress that on any given day, at any given time, you can be wiped out of an oil put! Bear this in mind when placing your bets!!!
Read the Valero Rule, print the Valero Rule, do not violate the Valero Rule!
XOM $62.50 puts for $1.60 are the cheapest way to control $62 worth of stock. The premium is just $1.10 but you will lose .10 per day as expiration nears next Friday.
OIS has earnings tomorrow. Anything less than a 100% increase in earnings will be a disappointment and the March $35 puts are just .60. I like the chance of a double here on a 3% drop which can be caused by either a miss in earnings or outlook being lowered either by the company or by oil breaking lower.
SLB is high risk/high reward at $125. Use HAL as an indicator but I think they will follow the sector down despite a good outlook. I like the Mar $120 puts for $4. There is heavy betting on this position as well as the $110s for $1.30 but that’s a bit of a stretch. You can buy the put and sell the $110s or $115s to lower both risk and reward on this one.
Very strangely, WHQ’s March $45 puts are $1.35, less than the Feb $45 puts. Get them if you can for that price! Also, if you can, sell the Feb for the same or more money – kind of a no brainer if the discrepancy holds up.
OII (2/21) needs to make more money on less sales to hit the mark. That makes the Mar $60s attractive at $3.75.
SU is always a good short when oil turns down. The Mar $80 puts are expensive at $4 but the stock is up $15 in 3 weeks and could turn ugly if oil gets close to $60.
Good trading,
– Phil
