Meadows on the Markets 4.23.2012

In currency markets, EUR/USD bounced off session lows and closed the day in the mid-1.31s, down 60 pips on the session. As the US$ strengthened, Gold futures sold off, falling to below $1,640 per ounce. Simultaneously, Crude Oil futures also were pressured, falling to $103.10.

Here are companies that report earnings tomorrow: 
– 3M (MMM)

– AT&T (T)

– Coach (COH)

– Novartis AG (NVS)

– RadioShack (RSH)

– Western Union (WU)

That of course, is before the big game of earnings – Apple (AAPL) tomorrow after the close. 

Trade of the Day (NFLX) 4.23.2012

Profitable: I make money on this trade if NFLX closes between $76.74-$93.26 by April 27, 2012.

Break-even:  I breakeven on this trade if NFLX closes at $76.74 or $93.26 by April 27, 2012.

Unprofitable: I lose money on this trade if NFLX closes under $76.74 or above $93.26 by April 27, 2012.  The most I can lose on this trade is the Price of the Spread, $1.74.

UPDATE 4.24.2012  With time on my side and more potential profit to be made, I am leaving this trade on.  It is currently worth about $5.50, good for a triple.

UPDATE 4.27.2012  I will close this position out and it has worked very well.  This spread should be worth about $9 today.  

UPDATE 4.30.2012  I took every single penny out of this trade and when the stock was trading $84.50 on Friday, I took this trade off at $9.50.  This was a HUGE winning trade and another winner at KOTM. 

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Halftime Report for 4.23.2012

Equity markets are pretty flat after a morning sell-off. All the major indices, S&P 500, NASDAQ, and DJIA, are down at least 1%. Overseas, these losses were magnified, with the FTSE closing down 1.8%, the DAX down 3.4%, and the CAC 40 lower by 2.8%. 

Treasury futures are higher, but not significantly so. 30-year bond futures gained 0.6%, and 10-year note futures rose 0.25%. The US$ index is also up 0.4% – lifted mostly by a sharp drop in EUR/USD to 1.3130 from above figure-1.32 on Friday.

With calm back in markets, I would not be surprised to see some losses pared in the afternoon. 

Today’s earnings will see the following companies report. Traders are selling the stocks into earnings – whether that is taking off positions or just in conjunction with the broader equity market decline is yours to decide:
– Ameriprise Financial (AMP): -1.5% today

– Netflix (NFLX): -3.2% today

– Rent-A-Center (RCII): -1.4% today

– Texas Instruments (TXN): -1.5% today

Morning Rage 4.23.2012

Investors are also keeping an eye on France to see how elections over the weekend will play out. Socialist Francois Hollande won 28.6% of the vote in the first round of the presdiential election, compared with 27.1% for President Sarkozy. Hollande favors a tax on financial transactions and renegotiating Europe’s fiscal accord. Markets are down sharply in Europe, with the FTSE 100 lower by 1.8%, the DAX down 2.9%, and the CAC 40 off by 2.2%.

Also, this morning, Pfizer (PFE) is reportedly selling its baby food business to Nestle SA for more than $10 billion. Shares of PFE are down 0.75% in early trade. This morning, ConocoPhillips (COP) and Xerox (XRX) report earnings.

Treasury yields are falling this morning in conjunction with a drop in equities. Prices on the 30-year bond and 10-year note are up 0.6% and 0.3%, respectively. The US$ is also stronger, gaining nearly 80 pips against the EUR (1.3130) and 40 pips against GBP (1.6080). USD/JPY has sunk to near session lows, trading at 81.10 ahead of the U.S. open. Gold is trading 0.7% lower, and Crude Oil futures are down 0.9%.

No economic data will be released this morning in the U.S. On Friday, the first estimate of Q1 GDP will be released. 

Meadows on the Markets

– This week shows that traders are looking for good companies. Companies that missed expectations are getting sold, hard. Sandisk (SNDK) lost 11%, Riverbed (RVBD) fell 29%, and Tempur-Pedic (TPX) shed 20% – just today

– The on-again, off-again relationship with Europe continues. Traders were concerned about Spain’s debt early in the week, sending Spanish 10-year notes to above 6%. One OK auction later, and Spanish 10-year bonds are back below that critical figure and the world is right again

– EUR/USD is set up for a move higher. Finally, the currency pair was able to close above its daily Ichimoku Cloud (1.3190). We would be a buyer at the open Sunday, and expect that prices could move towards the 1.35 level in the near term. Of course, that all depends on the G-20, IMF, and World Bank not screwing things up this weekend. Initial reports of a $430 billion fund boost is a good start

– Elections in France this weekend… with French President Sarkozy expected to lose to the Socialist candidate

Have a good weekend everyone. 

Halftime Report for 4.20.2012

– SNDK -13.4%
– TPX -20.8%
– RVBD -26%

Equity markets themselves are performing well. DJIA front-month futures reclaimed the 13,000 handle, trading nearly 1% higher on the day. S&P futures gained 0.7%, while the NASDAQ futures are up 0.5%. Along with equities, Crude Oil is higher by 1.5%, trading just under $104 per barrel. 

The US$ is also taking a hit today. Yesterday, we wrote that we are waiting for EUR/USD to break out of its Ichimoku Cloud for an indication on where prices may move in the future. That cloud contains prices between 1.3055 and 1.3190 on a daily chart. EUR/USD is trading at 1.3214, so a close at or above the 1.3190 would be a buy signal, possibly for an extension to the 1.35 level.

In Treasury markets, the 30-year bond is down 0.3%, while the 10-year note has fallen 0.1%. 

At this point, on the week, Orange Juice futures are among the largest gaining commodities, rising 3.9%, double the gains of Copper (1.9%) and the DJIA futures (1.8%). On the negative side, Sugar futures are down 7.9% and Natural Gas fell another 2.7%. Year-to-date, Natural Gas is now down 35.4%. Ouch.