Today saw a choppy session for U.S. equity markets as earnings and economic data sent markets lower in the morning before bring them back to close in positive territory. ADP Employment numbers were released this morning coming in slightly above to in line with most analyst estimates. January ISM non-manufacturing numbers were also released today coming in slightly higher than analyst estimates.  Today after the bell TWTR will make their first ever quarterly earnings announcement, a release that will be highly scrutinized. Markets are likely range bound today in anticipation of earnings releases and economic data tomorrow including jobless claims. As far as earnings we are looking for moves higher in TWTR, GMCR, and YELP. Bullish order flow in BG also led us into a long call position today and profits were taken in several old long positions. Looking to Friday we will continue to be selective about new longs and will likely continue with caution going into the release of the January employment situation.

Bunge Limited (BG) is a worldwide food processing and agribusiness company with operations across the entire agribusiness space. The company’s stock is currently trading around $74.45 in a 52 week range of $65.74-$84.18. The stock has been underperforming the market over the past 12 months with shares falling just under 7% over that time period. However, options action in today’s trading session suggests that traders believe this trend will reverse and that the stock will rally through February expiration. Early this morning a trader bought 3,656 BG Feb 75 calls for $1.30. This is a very bullish trade that exposes this trader to over $475,000 in risk. This block also represents volume over 6.5 times the average daily option volume in BG. Although the chart of BG is very weak we believe that this bullish order flow is a good signal for a long in BG.

Trade: Buying the BG Feb 75 Calls for $1.40
Risk: $140 per 1 lot
Reward: Unlimited
Breakeven: $76.40

U.S. Equities open moderately lower this morning as ADP Employment numbers were released this morning coming in slightly above to in line with most analyst estimates.  The report also saw Decembers numbers revised lower.  Markets did spike higher for a short period after the release of January ISM non-manufacturing numbers which came in slightly higher than expected. E-mini S$P 500 futures then reversed hard and are now trading lower by around 6 points. Last night saw the release of quarterly earnings of Myriad Genetics, Inc. (MYGN) who reported higher than expected earnings of $0.66 per share, beating consensus estimates of $0.46 per share. The company also raised its full year guidance and the stock is currently trading higher by nearly 10%. We were long MYGN Feb 7^th Weekly 28.5-29.5 call spreads going into the release and will net maximum potential profit if the stock closes above $29.50 on expiration. Again we will look for unusual order flow throughout the day as markets continue to slid from the highs.

Markets breathed a small sigh of relief today as E-mini S&P 500 futures closed higher by 16.50 points on the day after one of the worst single day declines in months.  Markets well buoyed in part by the release of January factory orders, which came in above analyst expectations. After the close we will watch earnings from BIDU and a few names reporting tomorrow.  Tomorrow morning will see the release of ADP Employment and ISM Non-Manufacturing numbers. A slew of other earnings releases are on tap for the week along with the release of the Employment Situation on Friday so traders will not lack opportunity this week. For earnings tonight and tomorrow morning we have longs in MYGN and GILD and a short position in BIDU.  We will continue to take profits on broader moves higher and will continue to keep a close eye on earnings in a week filled with catalysts.

E-mini S&P 500 Futures open this morning and have been trading in a choppy range. Although futures are trading higher by around 12 points right now we have seen them trade in a 10 point range today. Equity markets seem to be holding their bid for now as January factory orders were released this morning and topped analyst expectations. There are no more major data releases today so eyes will be on individual stocks and earnings stories.  This morning saw retailer Michael Kors Holdings Limited (KORS) release quarterly earnings besting expectations and sending the stock higher by nearly 19%. We are currently long the KORS Feb 7^th weekly 83-84 call spreads that appear to be going to full value. More upscale retailers are reporting tomorrow with Ralph Lauren Corporation (RL), and The Estee Lauder Companies Inc. (EL) scheduled to release quarterly earnings results before the open tomorrow. We will examine these names into the close as luxury and upper scale retailers have been doing well for us.

Furiex Pharmaceuticals, Inc (FURX) is a drug development company with several programs in development.  The company’s stock is currently trading around $111.95 and is up more than 140% in today’s trading session.  The stock has more than doubled today on news that two drugs they had in Phase III trials came in line with both FDA and EMA guidelines. This move in the stock was telegraphed somewhat by an unusual options trade we flagged on January 22^nd. On Jan 22^nd we flagged a buyer of 1,000 Feb 50 Calls for $7.50. This trader had to lay out $750,000 in capital to put this trade on. Today these calls are trading around $65.00. This means that this trader profited over $5.7 million on this trade. This is a huge return and a shining example of how unusual option activity can help us find homeruns like this. We also flagged activity in FURX back in December and featured it in our Covered Call Newsletter when stock was trading near $41.00. That trade netted an annualized return of 154%. This trade was also based on unusual option activity.

U.S. equity markets accelerated their sell off today after January ISM numbers came in much worse than expected. The number came in at the lowest levels in eight months sparking acceleration to the sell off and sending E-mini S&P 500 futures lower by over 40 points by the close. We also saw a huge bid higher in the VIX with the index closing at 21.44, up over 16%. Gold markets also responded to the selloff in equities and rallied $17.00. Tomorrow will see the release of more manufacturing data with Factory Orders set to be released at 10am ET. After today’s price action eyes will surely be on the release of the Employment Situation this Friday as traders continue to struggle to find direction in this market.  We continued to move to cash today and will continue to look for stocks that may have been oversold in the past 2 weeks. As far as earnings plays we shorted YUM via options and got long KORS. Neither company has released their results yet so whether or not these trades are successful remains to be seen.

YUM! Brands, Inc (YUM) is a fast food restaurant operating nearly 40,000 stores around the world.  The company’s stock is currently trading around $66.65 in a 52 week range of $59.68-$78.68. The stock had a relatively sideways year with shares only rallying 1.11% over the past 12 months.  The company’s is set to report earnings after the bell today with analysts expecting earnings of $0.80 per share on revenues of $4.3 billion. Historically, the stock is a relatively mixed performer on earnings with shares rallying 4 times and selling off 4 times on earnings day over the past 8 quarters. The stock sees an average earnings day move of 3.9% and the options market is currently implying a move of around 6.5% by this Friday’s expiration. The larger than average expected move might be explained by concerns over an economic slowdown in China, as YUM has large exposure to China. YUM is also trading in bearish territory on a chart with shares trading well below the Ichimoku Cloud and the future cloud sloping downward.  We believe that historical performance in YUM coupled with China concerns signal for a short ahead of earnings. We will be looking to get short YUM via options near the close with a downside price target around $4.30 lower.

With the first half of the first session in February behind us we see a selloff in equity markets as weak domestic data as well as economic data from abroad weigh on U.S. markets.  E-mini S&P 500 futures are currently trading lower by 13.50 points but are off the lows. January ISM numbers were released this morning missing consensus estimates and showing a much slower than expected pace of manufacturing growth. Global markets were under pressure as well as a release of China’s PMI index for January came in weak adding to the concerns of an economic slowdown in China.  Large moves lower in Asian equities may have been partly explained by thin trading dues to the holiday but the data still shows factory growth slowing the most it has in 6 months.  U.S. equities seem to have slowed their decline, but the VIX did trade above 20 briefly this morning.  Yum! Brands Inc. (YUM) earnings are set to be released tonight and will be closely watched due to their large China exposure. We continue to be cautious about new longs at these levels and have begun to look for small hedges where we can. We still believe that the market can head higher this quarter but is likely to be under pressure in the short term.

Equity markets end the month with a moderately lower session as ES futures rally through the day and close well off the lows. The market was under pressure today as emerging market concerns continue to weigh on stocks. Personal Income and Outlays was released this morning as well with data showing lower than expected growth in both personal income and spending. ES futures spent a shot time in positive territory before selling off into the close. Next week will see the release of the January employment situation and this number will undoubtedly be closely watched by traders and investors around the world.  Price action into the close indicates continuing concern over emerging markets and currency concerns. Traders likely trimmed long exposure due to headline risk over the weekend.  The first half of next week however does not see a lot of data releases so eyes will be on earnings. Earnings have been mixed with companies like MasterCard Inc. (MA) reporting below estimates while tech companies like Facebook (FB) have been performing well.  We remain long the market but have been establishing small shorts in weaker stocks.