While the market can stay irrational more than one can stay solvent, the Japanese situation seems to be unraveling as irrational markets fade away and fundamentals prevail. In recent news and market action, Japanese government borrowing rates have surged before and after market limit-ups. Additionally the USD/JPY currency pair broke out of a consolidating pattern to the upside. And finally other Asian countries have started to pursue an easing policy.

The chart below displays USD/JPY. Some may theorize that when there is a halt in JGB trading, investors turn to the currency market as a proxy to do their JGB selling. The idea behind this trade is that should the Japanese government pursue any more unconventional policy, investors will want US dollar as opposed to Yen (especially if they devalue).

The USD/JPY saw resistance at 100 for just about a month, now this level should provide solid support, but calling for a massive tide change can be dangerous.

salerno.mark.a@gmail.com 

Paper bought 1,200 CPB Jun 45 Calls for $1.15 (3.8 times usual volume) with stock at $45.39
Paper bought 8,516 WFT Jan 16 Calls for $1.07 (3.7 times usual volume) with stock at $14.24
Paper bought 1,000 HLF Jan 45 Calls for $9.70 (3 times usual volume) with stock at $51.49
Paper bought 25,600 AMTD Jan 26.5 Calls for (13.8 times usual volume) with stock at $22.53
Paper bought 932 PX Jul 120 Calls for $0.95 (4.4 times usual volume) with stock at $115.85

Paper bought 8,966 TSL Jun 5 Puts for $0.11 (4.8 times usual volume) with stock at $7.45
Paper bought 5,000 JNK Jun 41 Puts for $0.25 (3.5 times usual volume) with stock at $41.59
Paper bought 1,900 DGX Aug 55 Puts for $0.65 (3.9 times usual volume) with stock at $0.65
Paper bought 264 GNCR Aug 35 Puts for $1.40 (5.3 times usual volume) with stock at $37.47

Average volume has been 2.7 million shares over the past 30 days. Shares are up roughly 12% year to date as of close on Friday. The company has a market cap of $43.37 billion and a P/E ratio of 18.42. DHR’s success can be seen in numerous areas, such as its increasing revenue, secure financial position with practical debt levels, a steadily increasing stock price during the past year, superb record of EPS growth and increase in net income. Brian Drab stated that Danaher will continue to expand its sales in the years to come.

“Danaher currently generates 40% of its revenues from recurring aftermarket sales and believes this could expand to more than 50% over the next three to five years,” said Drab.

 All eyes will be on Danaher’s Q2 2013 Earnings release on July 15.

My Trade: Buying the June 62.5-65 Call Spread for $1.40

Risk: $140 per 1 lot

Reward: $110 per 1 lot

Breakeven: $63.90