Tuesday Wrap-Up

April 29, 2008

84

Another day where not much happened.

This is pretty much as we expected ahead of the Fed. I had said we will revert back to Monday's open and Monday we went up to 12,932 and today we went down to 12,806 and we closed at 12,831, down about 60 points from Friday's close. I'll be surprised and worried if we break below 12,750 ahead of the Fed and holding 12,800 will be a good sign tomorrow.

A quick review of my earnings picks from last night:

ADM – Made their money selling food and those prices are in doubt with costs up. Right on with that one.
BP – Huge earnings overcame falling prices, still at $72. Totally wrong there.
GLW – Great Q, I was right about GLW but it's not rubbing off on AUO, who we had to DD on at .80 ($1 basis).
MA – Wow! Way BTE, even so our butterfly is still up a bit so no panic yet but time is not our friend if they stay high.
X – Perfect for us, earnings great but costs up and they didn't go far which is perfect for our put spread.
VLO – This was exactly what I said it would be. I still like the XOM puts into earnings but we took them off the table because we were too far ahead yesterday to take the risk (although still in the LTP as a put).
BXP – Perfect! Also, very encouraging for the overall economy. This makes me think I may not be crazy and we really are at the bottom…
BWLD – Very nice! The Sept $30s should do quite well!
DWA – Another encouraging consumer signal.
LFG – Also perfect. Man am I on a roll!
PNRA – I should have been braver but those June puts were free money to sell!

We don't know Wednesday morning but let's look ahead to later Wednesday although the Fed is going to change everything so I'm not keen to make fresh picks without GDP and Fed data.

Wednesday evening:

AKAM – These guys may affect GOOG so let's watch them. An indication of web growth.
CTX – I'm not guessing a builder's earnings but if they don't lose a TON of money they will go up. I think with 20% of the float still shorted down 75% from it's highs, I have to pick up some Jan $30s for $2.25, just for fun.
IRBT – This was one we used to play in the fall and boy are we glad we got out but I still like the company. I want to see real progress before getting back in though as they are relying on military contracts that may not come if McCain doesn't get a chance to bomb, bomb, bomb – bomb, bomb Iran.
JDSU – Oh yipee, real tech earnings! They've been on a nice recovery path and it won't take much to continue it. They had one-time charges so earnings should be way up but let's see if they can break $400M in sales, that would be bullish.
MUR – A nice oil to short as anything less than 300% earnings growth will disappoint and outlook better be stunning too! These guys are up 100% from Jan '07 and May $85 puts are a good gamble at $1.18 but it's an all or nothing bet.
OII – They will be a good indicator of OIH performance. We had fun shorting them in the fall but they never recovered enough to make an interesting put. They may be one of the first service cos to have a major breakdown.
SBUX – Can it really be worse than expected? We're in the Jan $15s at $4.39, now $2.88, just hoping for the best.

Thursday Morning:

APA – Another oil that's up 100% and better not miss. If they don't have a 100% gain in earnings they are heading to $120 fast but the options are too pricey to risk.
BCK – MCD is doing great, but the home of the Whopper is getting no respect. They should do good for the same reasons as MCD and management should be motivated to put up a good number off their recent IPO. July $30s are cheap at $1.05 but don't expect a big pop unless we get good GDP to back it up.
EK – An old favorite of ours, now down on their luck. If they don't lose money I may be tempted to get back in but $20 is far away for these guys.
XOM – A miss from the Big Kahuna will tank the sector. We're still in our XLE puts and I'll get back into XOM $90 puts if we can get them for $1 again on a silly oil run (might get it if GDP is better than .5).
MRO – another oil co leading the charge down. I was just saying to Sage that oil bulls need to look at the CROX weekly chart to see how wrong your valuation of a company can be!
OSK – Should be good. Worth a stab at the Oct $40s at $4.20. This should be a 20% entry with the intention of rolling down to the Oct $35s on a miss with a DD because they may have incentified customers to take deals and cut into this Q's profits but, overall, they should roar back with the economy.
RSTO – How dead is the home market? High-end fixtures are soooo discretionary.
WNR – Are these guys still in business? VLO may be buying them soon.
XMSR – I wouldn't play it but will be interesting. If they do well then satellite radio has moved out of being an option and is really taking hold (we do have SIRI).