S&P Emini & Apple (AAPL) & Google (Goog) Vid Recap 9.18.2012
Author: Andrew Keene
Apple (AAPL) and Google (GOOG) Pivot Points for 9.19.2012
S&P Emini Pivot Points for 9.19.2012
Market Recap 9.18.2012
The iphone 5 is expected to ship on Friday and analysts predict that as many as 10 million units will be sold before the end of the fiscal year. Analysts also predict that the iPhone 5 may sell as many as 250 million units in its lifetime. This could make the iPhone one of the most successful products Apple has ever launched.
Rumors of a potential release from the Strategic Petroleum Reserve continued to circulate pushing oil prices lower today. Brent traded higher for seven sessions in a row before falling yesterday and today.
Things to look for this week:
Wednesday- Weekly mortgage apps, housing starts, existing Home Sales, AutoZone, General
Mills, Adobe Systems, Bed Bath & Beyond
Thursday- Jobless Claims, Earnings from CarMax, ConAgra, Rite Aid and Oracle.
Friday- iPhone 5 Ships.
Google Makes New 52-high 9.18.2012
Google is currently trading at $715, up $5.02 or +. 70%, just slightly off the newly established high, but up $2 from its previous 52-week high of $713 established yesterday. The stock has made an incredible move this year, up 9.9% year-to-date as of yesterday’s close. Google is up $158.48 or +28.47% from its 2012 low of $556.52, where it established a bottom, on June 14.
Every time the stock kissed the $556-558 area, it bounced higher. The bears failed to penetrate the $556.52 low several times in the month of June, creating a textbook double bottom, resembling a ‘W’. This ultra-bullish indicator gave traders the confidence to bid the stock back up 50 points to $600 a share on July 5th. However, the stock did pullback briefly to $562, but failed to touch the $556 low, validating the June 14 bottom.
The stock then started a new trend of consolidating sideways with an upward biased before making an explosive move higher.
The stock shot up 26 points from $583 to $609 on July 19, after trading sideways. Google moved sideways again, trading with little direction for a week before making another leg higher.
The stock shot up 20 points to $634 from $614 on July 27. The stock continued to exhibit similar behavior throughout the month of August, consolidating sideways before having another strong move higher, advancing 16 points to $659 from $643 on August 13.
The stock moved gradually higher for the second half of August, before shooting up 12 points on September 6, to close at $694 from $682. With the stock making a new 52-week high under the radar of most traders, I expect an upcoming consolidation period before making the next leg higher.
The stock is clearly in an uptrend. The bulls are looking to carry the stock higher.
The company is set to report earnings October 10, 2012. Google reported 2nd quarter 2012 earnings of USD 10.12 per share on 7/19/12. This beat the consensus of USD 10.04 by USD 0.08 of the 29 analysts covering this company causing the 26 point move mentioned above.
Market is clearly bullish on Google’s growth opportunities, specifically in mobile revenues, which have been a big driver of growth for the company.
Ciro J. Lama is currently an undergraduate studying Finance at the Zicklin School of Business – Baruch College
Website: CantalinoAssetManagement.com
Follow me on Twitter: @TraderCantalino
Facebook: Trade of the Day (GIS) 9.18.2012
Trade: Selling the GIS Sep 39-40 Call Spread for $.45Risk: $55 per 1 lot
Reward: $45 per 1 lot
Notes: Neutral to Bearish Trade
UPDATE 9.21.2012 With the Stock above $40, my Short 39 Calls will be short stock vs my long 40 Calls will be long stock, making the Spread worth $1 and moving to the next trade.
Salesforce.com (CRM) Conference Moves Stock 9.18.2012
Aside from the headliners, CRM is expected to launch a wealth of products onto to cloud community. CRM may update their Dropbox type application, similar to GOOG’s Drive. Chatterbox users can save and access files form any linked device, basically it is a collaboration tool for the enterprise. Work.com is also expected to be launched. “Work” will be a more human resources centric application based upon contact management needs. According to reports, this CRM tool will remember information about a contact, anything from Twitter handles to e-mail.
With all these cool services it is hard to stay impartial and only focus on the material items. Since 2006, below is an aggregation of past returns of CRM during the Dreamforce conference. The figures were calculated buying the open of the first date and selling the close of the closing conference date.
The conference starts today and ends Friday the 21st, and with that in mind the September options seem to be pricing in a mediocre move. Considering the close on Monday CRM was $158.17/share and the ATM $160 straddle was selling for $5.68 or 3.6% of the stock. Since 2006 there was only one conference that had a move of that kind of magnitude. The 2010 conference may have caused CRM to surge 3.13%; or did it? The SPY in that time period rallied 0.9% and then beta adjusting CRM for that market move…CRM actually outperformed the market, assuming a 1.4 beta. It can be argued that the outperformance was due to the conference.
According to CRM’s CEO Benioff, “We are not trying to snuff competitors out.” Even thought they seem to be doing a good job of that, for the market is assigning CRM a lofty multiple of 100X TTM. Considering the former, short interest, as last reported on 9/01/12, was about 10% of the CRM float. The analyst community also sees blue skies head for the cloud provider…33 of the 40 analysts that cover the stock have buy or better on it. The average target for CRM is $170.
E-mail the author with any comments or questions
Data courtesy of Thinkorswim
Oil Remains Lower After Yesterday's Sell-off 9.18.2012
Benchmark crude closed at $96.62 a barrel, down $2.38 or -2.4%. Oil had its biggest intraday swing since early June, hitting a low of $94.65 a barrel, after trading at a session high of $99.52 Monday morning, failing to break through the $100 key technical level.
The drop in U.S. crude was not as deep as the sell-off in Brent crude oil, which sank from $115.20 a barrel at 1:52 p.m. to $111.60 just 180 seconds later as trading volumes spiked despite the usually quiet Rosh Hashanah holiday. Brent crude settled down $2.87, or -2.5%, to $113.79 a barrel. Energy prices had spent the majority of the session trading marginally higher, with support from geopolitical tensions from around the world.
There is speculation among traders that a potential ‘fat-finger’ trade is responsible for the selling as prices rapidly fell more than $4 in just 20 minutes. There are also rumors of a strategic oil-reserve release. These rumors most likely derived from a report done by Reuters on the Obama administration considering a release much larger than the 30 million barrels from last year. However, the White House has denied these rumors with an official stating, “all options remain on the table, but we have nothing to announce at this time.”
Some analysts simply suggested the price of oil had gotten too high given continued weakness in the global economy, and it’s due for a correction.
Energy traders have enjoyed solid gains in the month of August with Crude-oil prices on the NYMEX up 8.7% from Aug. 1, and Brent crude gaining 7.7% over that period. Oil recently traded to a high above $100 on Friday partly on concerns that the tension in roiling parts of the Middle East and North Africa could trigger supply disruptions. Enthusiasm in the oil markets may soon fade however, due to an increasing negative outlook on global demand and high inventory levels.
Perhaps the euphoria over the Fed has worn off.
Crude spent much of the European session in the red, with the October contract off 52 cents, or -0.5%, to $96.10 a barrel.
Ciro J. Lama is currently an undergraduate studying Finance at the Zicklin School of Business – Baruch College
Twitter: @TraderCantalino
Website: CantalinoAssetManagement.com
Morning Rage 9.18.2012
Metals futures continue to slide lower from Friday as well. Gold futures are down 10.80 overnight and platinum futures continue their reversal, down 12.60 points. Crude futures stayed relatively still, only losing about 0.38 after getting crushed yesterday, down about three points.
Apple (AAPL| $699.78) continues to be the diamond in the rough as buyers pushed its price over the $700 mark in after hours trading to $701.60. This comes after another big gain of $8.50 even as the rest of the market slid downward. The sentiment in the market seems to be that iPhone 5 record sales have proved to investors that AAPL has not lost it’s obsessive fans and may not for some time.
My earnings plays for today is FedEx (FDX| $87.53). FeDex reported a rate increase for 2013 amidst an earnings report down once cent from last year for this first quarter. Revenue and operating income grew 3.0% and 1.0% respectively from last year but net income was down 1.0% from last year for this quarter. FedEx has dropped its forecast for annual earnings to $6.20 to $6.60 from $6.90 to $7.40. The stock fell in after hours trading almost 2%. The Sep ATM straddle suggests the stock will move around $2.50 by Friday and a little more than $4.00 by Oct expiration. I am going to wait to see what direction it moves in today and possibly play a spread in that direction for October.
Later today, a housing market index report will be released around 10:00 am EST. Last month, the index rose 2 points reflecting sales of new homes, expected sales in the next six months, and prospective buyers. Expected sales may jump higher because of QE3, so the information may be distorted higher.
Alex Kalish has a master’s degree in economics from Suffolk U.
Questions, comments and suggestions welcome: alexk@keeneonthemarket.com
S&P Emini & Apple (AAPL) & Google (Goog) Vid Recap 9.17.2012
