Morning Rage 2.22.2012

The ES futures are trading around key ES support level, 1250 this morning. We have seen a drastic increase in NYSE volume on S&P down days.

It will be a quiet day for US economic events. At 4:15 P.M ET 10 year treasury notes and Federal Fund rates. Also, we will get the latest US housing data number. Obama administration is getting ready to update us all on the corporate tax-rate plan.


DECK: Quarterly Earnings and Estimates (Q4E)- $3.13 Quarterly Revenue(Q4E)-$562M. Deckers offer luxury shoes such as UGGs and multiple types of UGG accessories. Deckers Management reiterated their guidance after last quarter and stated, “pre- spring orders looking strong.” Expect a big move in one direction or another.

GPS: Quarterly Earnings and Estimates (Q4E)- $.42 Quarterly Revenue(Q4E)- $4.3B. Despite Gaps annual sales growth of $-1.75 for the last five years, could Gap miss analysts expectations and still run like Abercrombie is doing? Also, Gap is expanding into high-growth markets such as China, opening 30 new stores.

Also in the earnings spotlight: HPQ, Goodrich Petroleum, and TJX.

By: Greg Zimny

Cam at the Close 2.21.12

EU finance ministers approved a $173 billion package for the struggling nation. GLD closed up 2.18% to $171.02 while SLV closed up 3.47% to $33.40. Oil also spiked higher due to the news on Greece. Spot crude closed up 2.20% to $105.50. The 2x long oil fund UCO broke through a key $45 resistance level and closed at $46.17. Like I said earlier last week, MGM Resorts (MGM) was to be put on watch for a breakdown. Stock broke its steep trend line at $14.60 and traded down sharply after. Boyd Gaming (BYD) reported earnings in pre-market today and reported poor results. BYD is a smaller casino operator than MGM, LVS or WYNN but it has holdings in Las Vegas. MGM reports earnings tomorrow and is expected to report a loss of $0.19 per share on revenues of $2.17 billion. MGM closed down 3.38% to $14.17. With earnings tomorrow, swinging this name makes it difficult because there is no real edge. MGM closed right on its 20-dma but $12.40 would be my first downside target. This could easily be reached with an earnings catalyst. The street will focus more on MGM’s business operations in China, specifically Macau. Casinos in Macau have been the main revenue drivers for MGM, WYNN and LVS. Sears Holding Corp. (SHLD) is starting to display signs of weakness again. Stock fell 6.58% to $50.94. Dell reported earnings after the bell and is down over 4% in after hours trading despite its strong results. Almost Family (AFM), DryShips (DRYS), Qihoo 360 Technology (QIHU) and Yandex (YNDX) all report earnings tomorrow. DRYS has seen quite a meteoric rise and has made a short-term top at $3.82. Pay attention to this one tomorrow. The stock is up over 50% in 12 trading days and the breakdown could be epic.

Written by Cameron Patrick

Earnings Trade of the Day (DELL) 2.21.2012

Unprofitable: This trade is unprofitable if DELL Closes under $16.80 by April 20, 2012. The most I can lose on this trade is the amount the Put Spread can be worth $1 minus the amount I sold it for, $.21 for a total of $.79.

Reason I like this Trade: 

My heart screams AAPL, so it says short DELL, but my wallet says long.  Lets be honest when was the last time you heard someone say, i got this sweet new computer, “Its a Dell.”

We have seen strong earnings from “Old School” tech such as IBM, MSFT, and Intel.  Dell is up 25% YTD while the Nasdaq is only up 13%.  I would rather get long a pullback, 
than jump on a long into earnings.  They have received 5 downgrades in the last 2 days, but still remains very strong.  I think going forward they have issues with the Smart Phone market and their margins are now 22-23% vs historical level of 19%.  The stock has been to strong to buy into earnings, but I can not short into the strength.  I want to get long on a pullback, so I am putting the following trade on:

Monthly Dell has been in a very long drawn-out basing pattern.  After breaking downtrend in early 2011, the $18.50 level seems significant since it was resistance in 2009.  Even though technically overbought it has very near term positive relative strength suggests Dell will hold up and be a strong leader if the S&P remains strong.  
UPDATE 2.23.2012 I talked on Bloomberg that I was willing to get LONG DELL on a pullback and the stock still has not sold off under the $17 strike, so I comfortable with this trade.  Currently this Put Spread is worth $.27, so a small loser, but only a small one, because volatility got crushed so badly.
UPDATE 2.24.2012 With DELL rallying this Put spread is only worth $.25.  I wish this was a March position, but it is until April, so I will have to always keep an eye on this one.
UPDATE 2.29.2012 This spread is still worth $.26, but everyday DELL does not sell off, in theory the less this spread will be worth.  I will leave this trade on.
UPDATE 3.5.2012 This spread is still worth $.28, but I am leaving it on as it seems as if DELL could bounce off this $17 level.
UPDATE 3.9.2012 This spread is worth $.34 and time is on my time.  I might look to Punt this trade once I get a little more bored, lol.  
UPDATE 4.9.2012 This spread is worth $.68, but since I saw paper sell April 16 Puts for $.16, I will leave this trade on until expiration.

Halftime Report 2.21.2012

After the bell today, Dell reports earnings. Dell is expected to report Quarterly earnings of $.52 and Quarterly Revenue of $16B. Dell made a fresh 52 week high last Thursday at $18.33. Also, WMT, reports earnings after the bell. WMT is expected to report Quarterly earnings of $.46 and Quarterly Revenue of $.24B. WMT made a new 52-week high at $62.64 on February 1st.

Unusual Option Activity:

A customer Bought 20k KKR Jan 2013 17 Calls for $.95, while the stock was trading at $15.12.

A customer Sold 2500 MWW Mar 7 Puts for $.3, while the stock was trading at $7.01.

A customer Bought 4000 CTRP Mar 28 Calls for $.1, stock was trading at $22.6.

We didn’t put on any new positions today as their was no positive order flow. We usually like to take new positions when the risk/reward ratio is attractive.

By: Greg Zimny