Halftime Report for 3.9.2012

Goldman Sachs cuts Q1 GDP forecast to 1.8% on trade deficit data,ha what a joke. This is the fourth GS GDP revision in two weeks. Hmm, is a Goldman “fade trade” coming to a city near you? US trade balance is the worst it has been since October of 2008. Dennis Gartman reported on CNBC that he is extremely “bullish” on Gold in terms of the Yen.

AKS- is higher .31 or (4.37%) at $7.34 after the all important NFP jobs report. In my opinion, this is an oversold technical bounce in the stock. The increase in PPS has nothing to do with the companies fundamentals. In my opinion, I see continued selling pressure in AKS in the near term.

Movers and Shakers (GMCR) Down (9.61%) to $5.79

Chart Glance: Broader Moving Averages prove that GMCR is still in a down trend and momentum indicators do not show an oversold stock as of yet.
Support 1:$47.50 Support 2: $45.00

GMCR: SBUX is up nearly 3% on news of a “single-cup,” home coffee machine. This doesn’t bold well for GMCR. GMCR were among the few “BIG PLAYERS” in the “single-cup” home, coffee machine space. SBUX presence really creates complications for GMCRs business model. Bank of America downgrades GMCR to “neutral.” Will GMCR continue to drop off a mountain? Is the GMCR upward momentum over for now? Traders love playing the SBUX/GMCR spread (Long SBUX, Short GMCR) and it seems to be working out well for them

Morning Rage 3.9.2012


Hedge Funds have found a loophole in Greek CDS. If this Reuters report is true, this can cost Athens more than 3 Billion Euros. Gold is trading at $1700 once again as Silver is approaching the $35 level. I guess investors want a good inflation hedge to add to their portfolios. 30Y Treasuries had its largest 2 day rally in nearly two months. Will there be more JPY weakness to support the thesis that risk is back on? Also, the ES average contract size traded was the highest its been in nearly 2 months. Are the big boys anticipating a nice size move after the NFP Job report? In my opinion, the USD will continue to weaken putting a bid under Crude Oil sending it over $107.5 again.

Trade of the Day (DNDN) 3.8.2012

Unprofitable: This trade is unprofitable if DNDN closes under $8.62 by April 20, 2012.  The most this spread can be worth is $1 minus the $0.38 I sold it for, so my maximum loss is $0.62.  I am risking $62 per 1 lot to make $38 on this spread.

Reason I Like This Trade: When DNDN was trading $9.25, I saw someone sells 6668 DNDN April 9 Puts for $0.95.  This is very bullish activity, so I wanted to get LONG the DNDN.  I wanted to make a goof risk vs reward trade, so I thought this was a great way to play DNDN to the upside.  In Our “LIVE” Trading room talked about this trade in real-time, but have to be in the room to hear to LIVE.   

UPDATE 3.9.2012 With DNDN popping the minute these Puts were sold, the Put Spread is currently worth $0.24.  Even though this Spread is up about 35%, but I am leaving it on to not chop up myself in commissions.  

UPDATE 3.12.2012 With DNDN lack of movement, this Put Spread is worth $.24.  Once again I will leave this trade on, so I do not chop myself of commissions.

UPDATE 3.15.2012  With DNDN trading in a small range, time is on my side, so I will leave this trade on for more profit potential.

UPDATE 3.22.2012 With DNDN not selling off to the $9 level, this trade looks safe and the Put Spread is currently worth $.22.  I will leave this trade on for more upside profits.  

UPDATE 4.9.2012 This spread is currently worth $.08, I am bidding $.05 in the book for it to take profits and move on.

UPDATE 4.16.2012 Another Put Spread that I should have closed, because now it is worth $.38 and I will leave it on hoping for a POP in DNDN between now and Friday.

UPDATE 4.23.2012  I took this spread off a little too early and bought it back for $.13.  Taking profits and moving on.

Read more about closes by www.keeneonthemarket.com

Cam at the Close 3.8.12

When weakness occurs in equities, this is generally what you want to see for confirmation. Even at $600, Apple’s valuation is not outrageous. If you are using next year’s forward EPS estimates of $48. That gives you a P/E of around 13x. This is still very reasonable, but my fear is that being long Apple is becoming a very crowded trade. Every day I hear someone talking about it and when the whole world thinks they know something special, it generally does not bode well as time goes on. The volatility in Apple is become much greater as well. In 2011, Apple rarely made intraday swings of 10-15-20 points, but now it is becoming normal behavior. Apple is the greatest company on the planet and there is no argument about that, but stocks do not go up in a straight line forever and that is a fact. It feels like investors are looking at Apple as an asset class, instead of a company that is driven by products. I firmly believe that Apple must close above $545 if the market continues to uptrend in order to continue its rise. If not great risk/reward short sets up might start to appear.

Written by Cameron Patrick

Halftime Report for 3.8.2012

Today, the price for Greek CDS bond topped par today for the first time. Live webcast of the ECB press conference reports, “still no plan regarding the Greek PSI.” US Initial claims miss expectations. This is the 3rd consecutive miss, first time this happened since Aug of 2010.  ES is up 12pts at the highest level of the day as Greek default might be priced in. Crude Oil rallied to the $107 or up .77 /(.73%) as geo-risk premium is still hanging its ugly head. The House of Representatives just passed the jobs act as there is still fear in the unemployment picture.


In the earnings line for tomorrow: HIBB (Hibbert Sports), STEM (STEM CELL RESEARCH) and TITN.

Movers and Shakers (MCD) down $3.19 (3.18%) to $96.99

Chart Glance: Breaking out of a neutral, sideways, trading zone. High volume shows distribution. MCD is not a volatile, exciting stock that moves a lot. Support 1: $97 Support 2: $90.19.

McDonald’s shares were down 3% in pre-market trade after its February sales missed estimates on weak Europe and Asia numbers. Even though sales expectations were “high” for McDonald’s, same-store sales were a “disappointment,” but global sales up 7.5%! Did the strong USD finally catch up to McDonald’s numbers? Sales growth slowed last month on weak numbers in the Middle East and Africa, where sales growth decreased by 1.6%. However, in the US, a new food item called, “Chicken McBites and the AMAZING Shamrock shake,” should improve McDonald’s balance sheet.

Morning Rage 3.8.2012

Earnings Today:

American Eagle- reports earnings after the bell. Options imply about a 9% move in either direction. American Eagle Q4 inventory is still high around +26%. However, a much better improvement from +42% in Q3 2011. Wall Street analysts expect the teen retailer to earn 38 cents a share on revenue of $809 million. In January 2012, ARO reiterated its fourth-quarter earnings outlook to be between 35-38 cents. Personally, I am staying away from most retailers. Their charts look topped out for the most part. Finally, Discounting the unwanted/unused winter merchandise will probably squeeze all retailers gross margins.

Bke- The average analyst estimate is earnings of $1.14 per share. Estimates range from $1.11 to $1.18. Weekly support is at $42.90, which was last week’s low. Buckle’s February same store sales up 14.8% vs 5.8% estimates. For the month of February, total revenue increased 17.4% to $86.7 million from $73.9 million in the same month last year. Buckle’s closing price yesterday was $47.88. Buckle’s 52 week range is $33.97-$47.88. In my opinion, Buckle is going to really have to to blow out earnings and raise guidance for this stock to make fresh 52 week highs today.

Cam at the Close 3.7.2012

As the market was getting pummeled yesterday, DECK still remained above a key support level at $75. This was not the case today and investors punished DECK. DECK fell 10% after cracking $75 and traded 8M shares. It traded 5x normal volume today. I would wait until DECK sees some consolidation and I would watch for buyers to step in before trying to bottom pick this name on the long side. The SPY saw a nice gap up around 8am PCT. It shot from $135.17 to $135.60 in a hurry. Corrections in an uptrend are extremely healthy and with the action seen today, it is clear that the uptrend is still very much intact.

Written by Cameron Patrick