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October Seasonal Stock Performance 10.2.2012

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Sectors that perform well when bought in the beginning of October include banking, computer tech, healthcare. Tech stocks that are depressed, are most profitable when bought at the end of October. In the middle of October, the best performers are materials, pharmaceuticals while oil performs well if bought at the end of October.


The second week of October tends to be strongly bullish, and the monday before October expiration, on the 15th this year, the dow has been up 25 of the last 31 years. However, on expiration day, the dow is down six straight and seven of the last eight.

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Unusual Option Activity 10.2.2012

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Paper bought 2,000 CHL Jan 52.5 Puts, 57.5 Calls Strangle (8.7 times usual volume) was trading $55.36

Paper bought 2300 LEAP Jan 10 Calls for $.83 (9.7 times usual volume) when trading $7.86

Paper bought 5496 ARO Oct 13 Puts for $.55 (11.8 times usual volume when stock was trading $12.92

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Apple is Not Perfect: Maps App Disappoints 10.2.2012

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In actuality, only 0.55 percent of all iPhone 4 users complained to the company about the issue, and the number of phones returned to Apple was only 1.7 percent; 4.3 percentage points less than the number of iPhone 3GS models that were returned in the first month of that phone’s launch.

So in case you missed it, AAPL basically started to use their own data for the new map app in the iOS update, as opposed to GOOG data, and some 3D satellite images and directions were botched…and that’s it. Many strategic speculations can be pulled from this news, but basically it is an example of AAPL’s push for dominance in the app space they pioneered. Apple obviously wants to own the app tiles on your iPhone screen and the map function was ripe for the taking. The app market is a pretty organic, considering the low barriers to entry. Anyone who wants to make an app can readily develop one and have the marketplace decide if it is good. Should an entrepreneur be discontent, he or she is not held back by AAPL. If we have learned anything from Steve Jobs it is not to accept the status quo and keep pushing, for new frontiers await.

In order to remain unbiased, it is important to look at what the market said during this period. For us, it always boils down to the trade. AAPL longs hope this will blow over quickly before the media cycle really takes a hold on the story and puts a new ‘headline risk’ into the stock. Shares are off some 6% from the all time high, but with the rumored iPad mini coming out in a while, that high could soon be violated. Google longs could probably care less, for every day GOOG seems to push against a new high; and at last check GOOG was $3.00 away from said high.

In related news, AAPL analyst Shawn Wu at Sterne Agee said that iPhone yields are going to move positively with volume. The firm went on to reiterate the strong product cycle and a buy rating on AAPL shares with a $840 price objective despite map app concerns.

E-mail the author with any comments, questions, or any inquiry

mark@keeneonthemarket.com

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Morning Rage 10.2.2012

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Crude oil is up slightly, an eighth of a point, and gold and silver are both down, two and a half points and sixteenth of a points respectively. Platinum is down eight points. Corn is down three and a half points.

The Mosaic Company (MOS) will report its quarterly earnings before the bell this morning. MOS is currently trading at 58.01 up more than ten points since June and trending slightly up in the past week before earnings. Mosaic has moved around 3-4% on earnings and has missed three of the last five estimates.

Motor vehicle sales reports come out today, but otherwise, no major economic announcements are expected today.

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Associate Option Battle 10.1.2012

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Notes: I like this trade because I think Amazon is in a stall period and if I make money on the front month when it expires, I get a cheap ITM Call, if I want to hold on to the back month, on a stock that has shown impressive growth.

Associate Jim’s Trade

Trade: Buying 9 MON Oct12 92.50-97.50 Call spread for $1.05

Risk: $105 per 1 lot

Reward: $395 per 1 lot

Notes: Bullish trade ahead of earnings on Wednesday, stock rallied 3 out of the last 4 earnings.  I expect the stock to rally after earnings and I think this trade has a good risk vs. reward profile.

Alex Kalish has a masters degree in economics from Suffolk U

Jim Ramelli has a B.S. in Finance from UIUC

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October Seasonal Commodity Performance 10.1.2012

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Shorting silver from October 4th to October 29 has worked 23 times of the last 39, or a 59.0% success rate. Strong policy initiatives in Europe and the US last quarter could be driving usual seasonal dips for metals higher. Crude oil generally stays weak in October and stays weak until December. Crude futures were down in the month of September with a slight rally in the last week. 

In grains, long trades include corn and soybeans, while wheat tends to consolidate. Soybeans usually decline from a peak price in June. This year Soybeans saw a low in June, gained till early September and then declined till the end of the month.  Corn hit highs in August because of droughts, declined into September and had an huge rally on the last day of September.

Live cattle prices should continue its uptrend, and with possible corn shortages forcing early slaughters this summer, a strong uptrend may be in order. Hogs were also affected by the droughts, which may fight the usual downtrend in October when farmers would normally be fattening hogs with corn harvests.

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Covered Call of the Day ATK 10.1.2012

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The trade is to buy the stock for $52.00 and sell the Nov12 45 Calls for $7.60.  This trade has a breakeven of $44.40 and would yield a return of around 14%. We risk the stock going to zero for a max reward of what we sold the call for.