Morning Rage 2.17.2012

Friday, should be somewhat of a quiet day today in the US equity markets as investors scramble to plan their positions ahead of ECBs Greek debt swap deal over the weekend. EUR/USD seems to be trading with some conviction as it trades higher all morning around the 1.315 level. The USD is trading sideways as it awaits further news flow regarding the credit crisis and Gold stays above $1735 level. US CPI number is tomorrow morning and will be a market moving event. Will the VIX hold its key $20 level or sell off as the market takes off to the moon? Only time will tell..

Societe Generale’s CEO was optimistic regarding the banks future in 2012. He said that the LTRO program will aid European Banks if further capital injections were necessary. Societe Generale posted a quarterly profit that was way worse than analysts predicted(down 88%). Societe Generale’s CEO states, “our bank has only $3.5 Billion of exposure to PIIGS.” Might be a good time to cover your Emerging Market short positions as a lot of bad news seems to be already priced in a lot of these names.

By: Greg Zimny

Cam at the Closing Bell 2.16.2012

This thought was quickly destroyed as seen by the trend up day. The SPY made a morning low of $134.33 and traded up to $135.97 by the end of the day. Like I said yesterday, the uptrend is still very much in place and shorting this market as a whole yesterday would have been an amateur move. One day does not make a trend and tops are always harder to call than bottoms. Casino stocks continued their rampage today. Las Vegas Sands, Mel-crown Entertainment and MGM were up 2.34%, 2.29% and 1.3% respectively. MGM seems to have no problem going directly up in a straight line. I would watch this name for signs of weakness and a trend line break. The July high on MGM is $16.05, but if the overall market rolls over, I believe a move back to $12.40 would not an unrealistic scenario. RSI is a very basic tool, yes I know but on a 14 day RSI, MGM has bearish divergence. Microsoft soared higher today and was up over 5% at one point. Stock closed up 4% to $31.25. Price really does have memory. The highs on MSFT on 12/31/09 were $31.50 and $31.58 on 4/23/10. Today the stock touched $31.55 and then sold off during the last hour of trading. You want to see a break of that $31.60 level on volume for the MSFT move to continue higher.

Written by Cameron Patrick

Earnings Trade of the Day (BIDU) 2.16.2012

Unprofitable: This trade is unprofitable if BIDU Closes under $128.50 or above $151.50 by February 17, 2012. The most I can lose on this trade is the amount the spread can be worth, $5.00 minus the amount I sold the spread for $1.50 for a total of $3.50.

Reason I like this Trade: I looked at the amount of movement that Bidu has had over the last 4 quarters and it has been very tight. The stock is implying a 7.1% move and it has only moved at most 5% on any earnings. I want to sell movement, but always define my risk vs reward. I am risking $350 per 1 lot to make $150, but I think it is great risk vs reward.

UPDATE 2.17.2012 With BIDU selling off, but staying above $130 this trade will be worthless after today.  No trade is profitable until it is closed, so I will have to monitor it but looks like a BIG winner at #KOTM.  This spread is worthless in an hour and a half, taking profits and moving to the next trade.   

UPDATE 2.21.2012 This spread expired worthless, so it is on to the next trade, another winner at KOTM.

Halftime Report for 2.16.2012

We have seen unusual option activity in stock MTG. A customer bought 338,189 Mar 4.5 Calls at $.42 while the stock was trading at $4.49. I think the size of the play was too big and therefore, we are not playing the MTG options. Today, we have seen a customer sell 1,850 ASIA Apr 10 Puts at $1.05. ASIA seems to be trading in a tight range and therefore I am staying away from those options as well. Baidu reports numbers after the bell. The average estimate of analysts is for net income of $.90 cents per share. Baidu has beat EPS estimates each quarter over the past three years. After reporting earnings, Baidu has risen the next session seven of eight quarters. General Motors posted its highest profit ever last year, though fourth-quarter revenue and earnings fell short of expectations. GM is currently trading higher by 7% or at $26.43 a share. Cloud Peak Energy, Ultra Petroleum Corp, and Barrick Gold set to report earnings after the close.

By Greg Zimny