Cam at the Close 2.10.12

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Apple made new all-time highs today when it reached $497.62. U.S. consumer confidence slid more than consensus for February, as concerns about job prospects are still very relevant for consumers. Stocks also dropped over concerns that Greece’s plans to avoid a default were in jeopardy. The whole Greece situation is becoming quite comical at this point. On a more Macro level, China’s exports and imports declined for the month of January. This is the first time in over two years where that has happened. Oil took a beating today and closed down 0.90% to $98.94 due to ongoing Greece concerns and the Euro also declined from a two month high. Electronic Arts (EA) and Game Stop (GME) both were down over 3.5% due to a NPD Group Inc. report stating that retails sales for video games were down 34% for the month of January. Amtech Systems (ASYS) plummeted 20% to $9.01 due to lower guidance. Cobalt International Energy (CIE) surged 35% after test results from an Angola well were positive. Goldman Sachs is the company’s biggest investor….go figure. LinkedIn (LNKD) rose 14.84% to $87.72 after the company reported strong profit numbers.

Halftime Report for 2.10.2012

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Bill Gross is bullish on the treasury market in 2012. However, he did miss credits biggest move in 2011.  Should we fade Bill Gross’s trade? Fighting the Fed has not been profitable as they continue to print money at zero cents on the dollar. 

In US equities, there seems to be a shift into high flying tech names such as Dell and IBM. Apple is one of those names that can play both sides of the fence, risk on and risk off. Apple is a safe haven name that investors flee when we are in a risk off environment. Cooperman raises its stake in Rimm thinking there is limited downside.

LinkedIn’s volume exploded to the upside as the stock is trading up 17%. LNKD earnings were good, but not great. Their guidance seemed conservative. The new product outlook is encouraging. LNKD reported that it earned $13.3 million, or 12 cents per share on revenue of $167.7 million for its fiscal fourth quarter and we think it could be a possible short squeeze.

Earnings for week of February 13 2012

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Borgwarner (BWA) – Consensus EPS $1.17, Year Ago Actual $.89, revenue estimate $1.8 billion
Metlife (MET)- Consensus EPS $ 1.24, Year Ago Actual $1.14, revenue est $ 1.25

Abercrombie & Fitch (ANF)- Consensus EPS $1.16, Year Ago Actual $1.38, revenue est  $1.17
Agnico Eagle Mines (AEM) – Consensus EPS $.57, Year Ago Actual $.55, revenue est $ 482 million
Cliffs Natural Resources (CLF)- Analysts predict a rise of 14.8% in revenue from the year-earlier quarter to $1.63 billion. The average estimate of analysts is for net income of $1.85 per share. Consensus EPS $1.55, Year Ago Actual $2.82
Energy Transfer Partners (ETP)- Consensus EPS $.70, Year Ago Actual $.65, revenue est $

Apache Corp (APA)- Consensus EPS $2.87, Year Ago Actual $2.19, revenue est $4.3 billion
Barrick Gold Corporation(ABX)-Consensus EPS $1.29, Year Ago Actual $.95, revenue est $3.9 billion
Cloud Peak Energy (CLD)- Consensus EPS $ .52, Year Ago Actual $.29, revenue est $390million
General Motors (GM)- Consensus EPS $.42, Year Ago Actual $.52
VF Corp (VFC)- Consensus EPS $2.31, Year Ago Actual $1.78,  revenue $2.6 billion

Eog Resources (EOG)- Consensus EPS $.88, Year Ago Actual $.36, revenue est $2.3 billion
HJ Heinz Co (HNZ)- Consensus EPS $.85 , Year Ago Actual $.84, revenue est $3.1 billion | CBOE VIX Remix 2.10.2012

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(the following chart was published on 2.5.2012 in the Market Intelligence Report)

 VIX 02052012 d

For the week ahead we are bullish but the charts above call for more selectivity and vigilance. We remain long and are looking for intraday chart signals for buying opportunities. However please understand that because of the circumstances laid out above, any significant negative news catalyst will have a magnified selling reaction within the stock markets. So what has transpired since? We see that the SR6 signal, based on volatility mathematics, circled on the chart worked out well. We had a warning of a bounce in the VIX well before the recent developments in Greece. We used this info to begin legging out of our longs this week and being more selective on new trades. The nice thing about where we are now is we have well defined resistance above around 25 (shaded red) and support below in said range (shaded blue). These areas represent the extremes in terms of support and resistance based around volatility. And, money is made at the extremes.

 VIX 02102012 d

Can Unusual Options Activity Predict the Future (CIE)

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Cobalt International Energy, a deepwater oil exploration company that explores off the Gulf Coast reported Friday morning that it hit a monster well. The flow rate of the well was in excess of 20,000bopd. Deutsche Bank and Morgan Stanley raised price targets substantially. The upside potential in CIE is limitless as the Angola property seems to be de risked. Vaalco Energy, another oil giant owns property in the Angola region. CIE is an attractive takeover candidate In my opinion.Friday morning CIE stock is now trading above the $35 level (up 50%) and seems to be gaining strength as the morning progresses. CIE stock and option volume is trading well above average volume.