This would be a sharp contrast to last years’ 3 cent per share loss on earnings of $5.99 billion.  Reasons for the improved outlook include  aluminum’s price rebound, forecast to grow by 6.5% in 2013.  With improving numbers from China pointing to a recovery, increased infrastructure spending in the region could spur demand beyond the price forecast for the year.

While expectations are low, Alcoa supplies aluminum to the auto industry and for iPads.  I believe they will surprise us and report better than expected earnings, another indication that global growth is not slowing down.  

A better gauge will be Bank Earnings with Wells Fargo (WFC) reporting later this week and Goldman Sachs (GS) and Bank of America (BAC) reporting next week.  For the recovery to move to the next level, we need to see strong Bank earnings.  The minor pullback we saw recently is healthy and should attract new buyers to lead us new 52 week highs and 1500 in the S&P 500 Futures.

—

Andrew Keene
President/Founder 
KeeneOnTheMarket.com

Paper sold 4002 AOL Feb 28 Puts for $.65 (7.6 times usual volume) when stock was trading $29.55
Paper bought 18,541 LNCO Aug 35 Puts for $3.55 (255 times usual volume) when stock was trading $37.90
Paper bought 1372 STZ Feb 32.5 Puts for $1.55 (5.0 times usual volume) when stock was trading $34.88
Paper bought 4500 FCX May 33 Calls for $3.40 when stock was trading $34.87
Paper bought 8684 TSO Feb 40 Puts for $1.60 (3.3 times usual volume) when stock was trading $40.76

Another item to note is the strong overhead resistance AAPL has. The hypotenuse of the consolidation triangle also, interestingly enough, overlays with the 50-day moving average. Testes of the upper bound now have two reasons to back down. Since the low on 11/16/12, implied volatility is up 26% across the options curve and considering the triangle is suggesting that AAPL will remain range bound, perhaps long theta with strategically placed strikes can be advised, but expiring before earnings.

The NFLX chart is also interesting. Yesterday NFLX filled the 4/23/12 gap and action so far today seems to indicate that lower prices are ahead of us. Shares are currently down 0.5% form yesterday’s close. This weak action is in line with the general market, but some extra selling pressure perhaps can be expected. Now that NFLX has filled the gap, price has traded at all the appropriate levels…this is vital for all the folks that have been shorting into this move are/have been wrong and need to cover at the least opportune time.

NFLX has been a controversial stock at best. Many eloquent arguments long or short the company can be made. The next untouched gap sits at $185 to $205, about 83% away from current levels. January 2014 options suggest that there is a 10% probability we reach the $185 level by Jan 2014 expiration. Should an epic short squeeze occur, this gap could be expected to fill too.

Feel free to e-mail any comments, feedback, suggestions, or general inquiries to… Author salernoma@mx.lakeforest.edu

Last quarter AA beat analyst’s estimates reporting earnings of 0.03 instead of the 0.00, and AA also beat the expected Q3 revenue by reporting 5.8 billion instead of the estimated 5.54 billion.  According to AA, management has made efforts to lower their $8.3 billion debt by concentrating more of their efforts towards developing products that can be used in the aerospace industry.  These efforts are in response to declining aluminum prices which are down from that of the previous year.  By cutting their debt, AA is attempting to offset the negative impact of lower aluminum prices.  The fourth quarter results for AA will likely reflect the previous movement of aluminum prices.  AA uses the London Metal Exchange’s (LME) aluminum prices to gauge their own prices.  According to Bloomberg the current LME three month price for aluminum is $2,065 USD per metric ton.  The current price for aluminum is down from the previous December high, which was around $2150.  Aluminum prices have bounced back from the October levels, which fell below $1900 USD per metric ton. The chart below displays the LME price graph for buyers of aluminum from the start of Q4 to today.  AA is standing by their claim that the demand for aluminum will double by 2020.   AA’s shares are up approximately 15% from November.  AA closed at $9.10 on January 7, 2013, and is up 0.03 in the after-hours session of trading. 

Author: Tyler Sciortino

Current Student at Roosevelt University, Majoring in Finance.

Contact for questions or inquiries at tsciortino@mail.roosevelt.edu