Big day today in Asia! The Bank of Japan didn’t raise rates, yet, which was good enough for the markets out there to fly up. The Nikkei jumped 400 points and all of Asia and Europe are looking very strong today. This is another one of those days where we are being given an opportunity to prove that we are at the top of a range, not a new bottom.
Since the BOJ didn’t raise rates the BOE is going to leave rates alone as well and *poof* just like that, the interest rate arms race comes to a halt. Now the button has moved to Bernanke and it is his call to hold or raise. A low jobs number tomorrow could really send up back to the top of our range but I don’t see it turning down so easily.
We should get an early relief rally as well but we still have the March 20th Iran Oil Exchange looming so we need to keep that in the back of our mind. Judging from the noise I’m hearing out of Washington and the International rumor mill it is now an outside possibility that we may be backing off on the nuclear issue in exchange for Iran backing off the monetary attack. Meanwhile, expect the rhetoric to be hardball (bad for markets) on both sides as the real negotiations drag on behind closed doors. Interesting World we live in isn’t it?
We will be back to watching our technicals to see if there is any chance we can really get back to rally mode. I’m flashing back to my boyhood at Shea Stadium where we always felt like we had a good team – The Mets won in ’69 (although we knew that was a fluke) and made the series again in ’73 and we still had great pitchers and decent hitting but we just couldn’t get it together for the next 13 annoying years, always on the verge of a rally that never quite happened… So you could say I am well prepared for this!
All this good market news plus Iran causes oil to move back up in its own relief rally so watch out for that today! Today is the natural gas inventory, any build will send oil and gas lower at 10:30.
No one likes to short gold into the weekend either so expect a bounce today that should help:
NEM $50s for $1.10
GG $25s for $1.05
ABX Apr $27.50s for .85
If gold doesn’t hold $547 run away fast – these are flighty day trades looking for 20% and out.
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Congress voted 62-2 to block the Dubai deal with the ports. First of all this is a terrible move that makes us look like a bunch of racists to the Muslim world. Second of all, this is just a ploy engineered by other foreign companies that run ports to eliminate a competitor. Third, Congress has no actual authority to do this. Fourth, we only inspect 30 out of 1,000 containers now – how can they possibly do a worse job?
As the Onion so properly stated: “Why not give it to Dubai? Some of those al-Qaeda people have probably done much more research on our ports than anybody else.”
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I knew something was up yesterday with Google. Here’s the article:
http://biz.yahoo.com/ap/060309/google_click_fraud.html?.v=2
I’ve been saying this was a problem for months but this settlement is a pittance. The notice I got yesterday reflects a big change in policy so now the question is, how much of their revenue really came from click fraud? According to the settlement, less than 1% of all traffic is fraudulent – if true, this will be a huge boost for Google so I will likely take the panic in the morning (as the headline sounds bad) as an opportunity to sell off my puts and possibly up my call position.
Speaking of click-fraud, did you notice in the notice they sent me that one of their items was “clicks generated by a publisher on his own web pages.” How closely do these guys watch you? This is beyond creepy that they can “see” you and monitor every click of your mouse. Obviously they keep the data and run profiles (hence my letter) and we know that data is already being subpoena’d by the Government because just listening to your phone calls doesn’t do it for these guys!
Homework: Read “1984” over the weekend – it’s a short book. Then start thinking about where we can escape to if this country takes just one more step down that path!
Speaking of Big Brother and phone calls – What’s Google’s next great idea? Using your cell phone to track you (oh sorry, to give you information based on your location) 24/7! Not even Orwell could have dreamed that one up, at least an ankle bracelet comes off after you’ve served out your sentence!
Once again, Google trading could go either way (this means you Rob!) so I’ll try to update in comments. Once again it would be so much healthier if the stock could re-test the 200 dma at $344 before heading up.
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I’m not so enthusiastic about buying today as most individual charts are showing nasty technicals after 4 straight down days. Like I’ve said (correctly) several times lately, if it’s a real rally we will have loads of time to jump in but for now we should recoup our cash coming into the weekend until (if) we break above our technicals.
Also, keep your ear open for Iran and Security Council in the same sentance as this will rally oil and kill the markets very quickly!!!
AAPL has held $65 very well but I really don’t want to get back in on this until it crosses $68 or maybe next week if the option prices come down. If you love the stock the $67.50s are under priced at .85 for a quick trade.
MOT is showing well at the big expo in Europe, the new PDA phone looks good and they are giving a keynote at the Tech Hardware Conference next Wednesday so I’m back on board with Jul $22.50s for $1.15 but keeping in mind that the 200 dma is $21.50 and I will get out if it doesn’t break over it soon.
Only 5 of 33 analysts had BIIB as a buy so today’s rally may be more of a beginning than an end of our trade. With Tysabri back on the market, this is the same company that went from $40 to $70 in 2004 and earnings have grown at a 100% rate even without this blockbuster drug. Expect another year of double or better growth along multiple revenue streams that should bring the p/e down to the low 20s, well under he industry average 34! I’m only guessing that the Jan $50s will be about $6 today if you are patient, but I really like that play. You could wait for it to pull back but it might not… If the stock holds $50+, you can have a very profitable year selling calls.
MRK’s latest case is not going too well for them so far and the $35 puts are cheap at .55 (a .23 premium) so I like this for a quick gamble.
BID blew expectations out of the water and are on their way to a great year. I like accumulating this stock below $23 but it’s a long term play.
Home builders will turn back up if rates just stop going up – not confident enough to play it yet…
IRM has room to fall but probably not until after expirations next week. I’m bidding on the Apr $40 puts for .50, hoping it comes in just a bit.
Although I think the first generation Oragami project will disappoint, I also don’t think anyone will realize that for a while so I’m going to pick up the MSFT April $27.50s for .50 this morning.
PKS was narrowly saved by the 50 dma yesterday but with a p/e of 1,000,000,000, I think Dan Snyder has done the same half assed job on this company as he has on the Redskins. A note to all young CEO’s: Finish what you start before you move on to the next thing! The $10 puts at .15 are a total gamble but you might be as rich as Dan if this thing collapses!
SRE is ripe to turn up if oil stays below $61 (more so if nat gas goes back to $6). They are being punished by the market even though they’ve done a pretty good job of keeping their margins in a very rough year. Just like the way prices go down at the gas station a lot slower than they go up, SRE should do very well in a declining oil market, especially if oil is below $55 during air conditioning season when they generate (get it?) almost half their revenues. I like the Oct $50s for $1.20 entering lightly in case it tests the 200 dma at $44.
HMT is giving away $20 calls for .25 – I think the trend is to good to be held down for a week (remember, all these short options trades are deadly risky and should only be done with the interest on your play money!). If it wasn’t for bird flu I would be long on this great company!
Daniel pointed out that TRLG seems overdone and I agree. Expectations are for a double on the 15th and, after rising 150% this year, anything less will be unforgivable. Now is the time to take the $20 puts for $1.05 before it is firmly rejected from the 50 dma at $20.75. A more conservative play would be to short the sock and sell the outrageous Apr $20 puts for $2.25 (10%) which will protect you to within $1.40 of the all-time high of $24.36.
Thanks also to Daniel for calling Shenanigans on SGMS as way too many insiders are using options as a piggy bank. With a p/e almost twice as high as GTK they need to spend more time selling and less time sailing! If the stock breaks below $31, then I really like the Apr $30 puts for .70, bearing in mind there is 200 dma support at $29!
TTWO’s Q4 was so horrendous that the stock shot up on speculation someone would buy them! LEXR actually did finally get bought out for $8.85. If TTWO does actually go up from here, I like THQI much better with the Jun $22.50s at $2.80 (a $1.40 premium).
DWA has earnings today and expectations could not be lower. Movie math is always tricky but is the company really worth 1/2 as much as last year? Sept $30s at $1.40 give us a chance to see the 4/28 annual report and check out the new Bruce Willis as a hedgehog movie written by the guy who wrote “Private Parts,” “Stripes” and “Meatballs.” I love this idea as I can’t sit through too many of these insipid children’s films with no script!
We may get a run up in oils prior to the natural gas report at 10:30. If there is any kind of build, yesterday’s puts will work. I will not play oil to the upside and, on the downside, remember no one likes to keep a short oil position into the weekend!
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2/17 TOTD IMAX is on the move again as two suitors have knocked on their door. If you were super greedy and held on to the Mar $7.50 calls that we bought for .75 – congratulations! This should open around $5 this morning (and I thought I was smart getting out with a triple!).
Hope for a pullback but they won’t sell for less than $12 as they were on the way there anyway. With luck, they won’t take a deal, the stock will plunge and then we can buy the whole company out so we can have real jobs!
The origninal trade:
IMAX is always a great trading range stock but it blew through it’s floor as the sector turned down in the fall but the company is going to blow through guidance after installing 14 new theaters this quarter, indicating it can accelerateate growth dramatically if orders keep up (all of last year they installed 21 theaters).
Earnings will come in at about .35 a share (up 50%) on revenues that are up just 12% – My favorite!!! Official earnings will come in March 9th but there is really no reason to wait while they are just giving the stock away for $7.82.
You can take the Mar $7.50s for .75 (a .50 premium) but I’m just as happy owning this one outright.
(pat pat pat)
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********** Trade of the Day – PGIC **********
PGIC has the next big thing in Vegas. You bet on each play of a game on a touch screen. I played the beta of this and it is amazing! The company had accounting problems that killed the stock but they just hooked up with the Palms and got approval for another platform of theirs in California. The stock is just $7.50 so it’s a buy and you can even be conservative and sell the Jun $7.50s for $1.45 and pocked a quick 20% but I would be willing to take a side bet that you will be crying when you get called away!
