Friday, December 25, 2009

WEEKEND STOCK MARKET MASALA- 25 DEC 2009

I. OUTLOOK FOR NEXT WEEK:

I am thinking 1130-1134 max on Monday followed by a decline to 1113-1120 by Wednesday.

I have been thinking about this for the past two days and this is on the capital gain taxes and CAN WE SEE SOME SELLING BETWEEN DEC 29th-31st 2009???-

Assuming the institutions started buying in Jan-Feb 2009, those who bought in Jan will start to hit the sell buttons in Feb and those who bought in Feb might do so in March. Now, the question is are they going to wait until a year is over to avoid higher capital gain taxes or will they start selling the beginning of next year (2010) as opposed to this current year so that they do not have worry about paying taxes before April 2010 versus April 2011. The focus here is when will will the sell orders come in?--a year after stock purchase or beginning of 2010? I know we would think a year after stock purchase to avoid higher capital gain taxes but what if some institutions start to sell at the beginning of next year because they do not want to wait until Feb-Mar when the market could be down 5-10% due to selling by institutions who have waited a little more than a year. What I am trying to say is all the selling might not happen in Feb-Mar, we might see some selling by people who are ready to take profits in the beginning of 2010 and ready to pay taxes by Apr 2011 as opposed to Apr 2010 because they do not want to wait until Feb-Mar where they might be selling at a 10% lower levels if a correction happens.

Now, if people are ready to sell at the beginning of 2010, can they still sell between Dec 29th - Dec 31st of 2009? Assuming it takes 3 business days for the transaction, will selling between Dec 29th-Dec 31st appear as selling in Jan 2010? If so, some people will sell between Dec 29th-31st 2009 and still not pay taxes until Apr 2011. This is possible because they will be selling at the highs as opposed to selling at a 10% lower level (assuming we have a correction) in Feb-Mar 2010 and not worry about paying capital gain taxes until Apr 2011. They will save 10% by selling at the end of Dec-early Jan but may pay 10-15% more in capital gain taxes compared to the institutions who will be selling in Feb-Mar 2010 at 10% lower levels but pay 10-15% less in capital gain taxes. In summary, it may not make much of a difference between selling end of Dec-early Jan and selling in Feb-Mar 2010 (assuming we have a 10% correction).

I am just speculating here. Correct me if I am wrong and appreciate others insight.

II. X AND SNDK:

X and SNDK are doing a parabolic move similar to Gold. You know how these parabolic moves end? Just see how GLD dropped from 120 to 105 within a few weeks

X- Maybe a tiny bit more upside and then it corrects to 50-51. Weekly RSI still has some room to the upside

http://finviz.com/quote.ashx?t=x

SNDK- Has huge resistance at 32.50, which is also the 200 MA on weekly.

III. OPTION ARM's: Suggest a market crash in July-Oct 2010 and July-Oct 2011???

"It’s tough to say exactly when the storm will come. But my guess is the second half of 2010.

This second wave of foreclosures will not be good news for the economy or the stock market…At least that’s my guess."


http://dailyreckoning.com/the-second-wave-of-mortgage-defaults/



Merry X-mas and a Happy & Prosperous New Year to all.


Wednesday, December 23, 2009

UPDATE

I. GLD: I bought calls at 107 and 105.60. Exit target at 109. GLD formed a inverted hammer/ inverted lollipop candlestick today and in the past it always led to 2-3% upside within 2-3 trading days. Also based on historic trading, GLD always went up 2-3% between X-mas and New Year. Pay attention to the black bars at the bottom of previous downtrend on the daily chart and you will see what I mean. I think UUP could drop to at least 22.90 in the next few days. I will close my GLD calls on Dec 28th/29th regardless of where it trades. I am hoping for a 2-3% rally in the next 2-3 trading days. The worst case scenario is it trades sideways, in which case I will break even. Gold usually drops during the first week of Jan. This is just a short term trade.

II. Few overbought stocks with my target entry price (for buying puts) and exit targets-

1. SNDK @ 28.75, exit at 24-25

2. X @55-56, exit at 50

3. SPG @ 84, exit at 79-80

4. CSIQ @ 32.00-32.50, exit at 28-29

Merry X-mas and Happy New Year.

Saturday, December 19, 2009

WEEKEND STOCK MARKET MASALA- 19 DEC 2009


OUTLOOK FOR NEXT WEEK
: I am expecting a drop in the indexes early next week and a Santa rally to begin Dec 23rd and end during the first week of Jan 2010. Yes, Santa rally happens after X-mas based on past trading history.

CURRENT POSITIONS (Initiated on 12/18/2009):

1. Visa (V): Jan 90/85 put spread at 1.90

Visa (V) was added to S&P after Friday's (12/18/2009) close. The announcement that V will be added to S&P was made on Dec 11th.

Stocks added to the S&P gain 8.49% (on an average) from the announcement date to effective date (V gained almost 10% between Dec 11th-18th). Then they correct 3.23% (average) within 10 days of the effective date. If this is true, V should correct to 86 before Dec 28th.

http://www2.standardandpoors.com/spf/pdf/index/EventStudy.pdf

2. GOOG: Jan 590/580 put spread at 3.20.

600-605 is a huge resistance zone. I think GOOG will eventually break above it but I am hoping for a small pullback to 580-585 first.

Daneric's chart-

http://3.bp.blogspot.com/_TwUS3GyHKsQ/SyltYX3GM-I/AAAAAAAADDM/p7tn8lb5Fec/s1600-h/goog.png

Equilibrium's chart-

http://chart.ly/7fry4x

WATCH LIST:

1. GS: Target entry at 158

2. POT: Target entry at 104-105

3. GLD: Target entry at 105-107

4. BBY: Target entry at 38



Have a great weekend.

Saturday, December 12, 2009

WEEKEND STOCK MARKET MASALA- 12 DEC 2009



OUTLOOK FOR NEXT WEEK:

My outlook for next week is neutral/flat. Next week is options expiration week and I think SPX will be pinned at 1100. why 1100? Look at the graph above (Courtesy of schaeffersresearch). The 1,100 strike, per the graph below, is home to monstrous put and call open interest in the December series, which in turn may cause a magnetic effect in the week ahead.

MY WATCH LIST:

1. GLD: Target entry at 107.50-108.20. The 50 MA is at 107.87 and I believe GLD will find support at that level. Exit target (for GLD) at 113 and 115

Strategy- Jan 110/115 call spread (BTO Jan 110 call and STO Jan 115 call)

2. USO: Target entry at 34. The 50 MA on weekly is at 34.18 and 200 MA on daily is at 35.10. I will go 100% long if we get to 34 for a short term trade. My exit target would be a gap fill at 37.50

Strategy- Jan 35/38 call spread (BTO Jan 35 call and STO Jan 38 call)

3. FCX: Target entry at 72.50-73.00 and exit at 20 EMA at 80

Strategy- Jan 75/80 call spread (BTO Jan 75 call and STO Jan 80 call)



GLTA


Saturday, December 5, 2009

WEEKEND STOCKMARKET MASALA- 05 DEC 2009

If you had followed me at HOB, I made a decent profit on my GLD puts which I bought on Thursday. I went into Friday with 30% of my portfolio in GLD Jan 118/110 put spread and rest in cash. I closed all my GLD put spreads on Friday when GLD was trading at 115.64. I bought some index Jan put spreads on Friday when S&P was trading at 1115-1118.

OUTLOOK FOR NEXT WEEK:

1. Here is a perspective of the much talked about rectangle/box chart pattern that we are currently in (trading between 1087-1090 and 1111-1113):

In an uptrend, it could be bullish i.e., it can break above. However, the volume has been high on down days and low on up days within this rectangle pattern, which does not support the bullish breakout-

http://www.chartpatterns.com/rectanglecharts.htm

If we do end up breaking above, the target would be 1130-1140 (add the height of the rectangle to the upper trendline of the rectangle). Todays break above 1113 appears to be a fake out.

2. Thursday's and Friday's action were not bullish to me at all. "BAC repaying TARP" was rejected on Thursday and the better unemployment news was also rejected on Friday. On a closer look, the much touted rectangle/box trading pattern actually looks like an expanding wedge/megaphone/broadening formation. We could drop to 1092/1085/1072 next week and then stay flat or have a small rally into X-mas. I looked at the historic trading data between Dec 7th-Dec 25th from 1997-2008 and it suggests a small drop (2-3%) next week and flat to small rally (2-3%) into X-mas.

3. Gold dropped to 1140 during overnight trading on Thursday last week after the Dubai news but it recovered like SPX and rallied to 1225. However, it dropped to 1140's again during yesterday's regular trading session. The SPX low (after Dubai news) during Thanksgiving holiday was 1067 and I think we will see that level soon. Too many of us are expecting an X-mas rally and believe it is impossible for the markets to crash just before X-mas. Though I am not expecting a crash, I would not be surprised to see the gap at 1070 getting filled.

4. Bullish Scenario: There are no economic news on Mon and Tue. It will be easy for the crooks to take the tape higher on those days. Also all the indices formed an intra day double bottom on Friday, the target of which could be 1114-1115. If it is indeed a rectabgle chart pattern, the target upon a breakout would be 1130-1140.

NEXT WEEK'S POTENTIAL EARNING'S PLAYS:

1. AZO and SAFM- Tue BMO

2. LULU- Wed AMC

3. COST- Thu BMO

AZO: My thoughts on AZO-

AZO has around 4.5% short interest. It filled its gap at 152. Daily RSI is currently at 65. AZO still has room to run up to 160-162. Daily MACD is yet to show a bearish cross over.

In Summary, I have a NEUTRAL bias and my strategy is to buy both Dec 155/160 call spread and Dec 150/145 put spread.

LULU:

I like LULU the most. LULU has 12% short interest and has the potential to move >10% after earnings.

BULLISH scenario:There is not much insider selling. They raised earnings forecast by 50%

http://chart.ly/6szz9k

http://www.cnbc.com/id/15840232?play=1&video=13...

BEARISH scenario- Looks like a bearish rising wedge with backtesting of the lower trendline.

http://finviz.com/quote.ashx?t=lulu

My strategy is to place a straddle/strangle.


GLTA

Sunday, November 29, 2009

WEEKEND STOCK MARKET MASALA- 29 NOV 2009


OUTLOOK
: We may get a bounce on Monday to 1100, which will be great ST shorting opportunity IMO. The new moon around Dec 2nd-Dec 4th might mark a cycle low and my exit target is a gap fill at 1070-1072. We could also drop to 1040-1050 but I may not hold until then. We should rally starting Dec 4th/5th according to Alex's ES forecast.

I am currently 15% short (SRS Jan 9/12 call spread and SPY Q4 Dec 109/104 put spread) and will add more if we rally on Monday. I will definitely exit before Dec 4th.

Looking to add GS (entry at 158 and exit at 168-170), GOOG and AAPL call spreads around Dec 4th for X-mas rally


EARNINGS PLAY: I may trade only GES, SNDA and JAS for next week's earnings.

1. GES EARNINGS PLAY: My bias is BEARISH

Bearish count- Double top at 40.50, H&S (head at 40.50, shoulders at 37.50) target of 32, which will also be a gap fill from Aug 26th. The 200 MA on the weekly is at 31.50 and GES is yet to retest the 200 MA since it broke above it in Aug 2009.

Bullish count- The daily chart looks semi bullish.....I am not really convinced until I see the MACD crossover. 1st target: 40-41, 2nd target: 46

My plan: 60% Dec 35/30 put spread and 40% Dec 40 calls


2. SNDA: Neutral bias

I believe it will move 10% after earnings, either goes down to fill the gap at 45.20 or goes up to 54-55 and may be even 60. If the earnings/guidance are bad, it can go as low as 40, which was a major resistance in the past and hence will act as support

http://finviz.com/quote.ashx?t=snda&ty=c&ta=1&p=d

My plan is equal amounts in put spread (Dec 50/45) and calls (Dec 55)

3. JAS: My bias is bearish. 1st target-30 and 2nd target is gap fill at 27.20. Strategy- Put spreads

Saturday, November 21, 2009

TIF- EARNINGS PLAY. EARNINGS DATE- 25 NOV 2009 (PRE-MARKET)


TIF (TIFFANY & Co.)

1. Bias: BEARISH

2. Short interest- 8.5%

3. Chart: Looks like a BEARISH RISING WEDGE

CLICK HERE FOR CHART

4. From Yahoo Finance:

Mean Target:43.31
Median Target:44.50
High Target:50.00
Low Target:35.00
No. of Brokers:16

5. Odds/Probabilities

No. of earnings : 42
Earnings with less than 5% move: 20 (47%)
Earnings with 5-10% move: 13 (32%)
Earnings with > 10% move: 9 (21%)

6. What are Gurus and Insiders doing with TIF?

http://www.gurufocus.com/StockBuy.php?symbol=TIF

7. STRATEGY: ASSUMING IT TRADES AT CURRENT LEVELS ON THE DAY OF EARNINGS, DEC 41/35 put spread ON THE DAY OF EARNINGS

I would wait until Nov 24th to short it, it may rally into earnings and the best place to short it would be at 43-44 IMHO. If it rallies to 43-44, Dec 43/38 put spread might be a good idea.

THIS STRATEGY IS SUBJECT TO CHANGE. PLEASE CHECK BACK ON THE DAY OF EARNINGS TO KNOW MY STRATEGY/POSITION

JCG- EARNINGS PLAY. EARNINGS DATE- 24 NOV 2009 (AFTER-HOURS)



JCG ( J. CREW GROUP, Inc.)


1. Bias: BULLISH

2. Short interest 17%




3. From Yahoo Finance

PRICE TARGET SUMMARY
Mean Target:45.00
Median Target:46.00
High Target:56.00
Low Target:21.00
No. of Brokers:17

4. Odds/Probabilities

No. of earnings : 13
Earnings with less than 5% move: 5 (38%)
Earnings with 5-10% move: 3 (14%)
Earnings with > 10% move: 5 (38%)

5. What are Gurus and Insiders doing with JCG?

http://www.gurufocus.com/StockBuy.php?symbol=jcg

6. STRATEGY: Dec 40/45 call spread. May close the position just before earnings if JCG rallies 5% into earnings

JCG has a gap at 42.50 from Nov 18th. If there is no big gap down in markets on Mon, I will probably buy some calls at 40.00-40.50 area and unload them Tuesday evening (hopefully at 42.50) before earnings. I have a feeling it may drop after earnings because it also has a gap at 37.74 from Oct 21st. On the other hand, if the market gaps down huge on Mon, I will wait to see if it fills the gap at 37.74 prior to earnings, in which case I may enter calls at 37.50-38.00 area and hold through the earnings hoping for the gap fill at 42.50. If the earnings and guidance are good, a short squeeze can propel it to 45 (resistance and 1st target) and if it breaks above 45, it has no resistance until 49-50

THIS STRATEGY IS SUBJECT TO CHANGE. PLEASE CHECK BACK ON THE DAY OF EARNINGS TO KNOW MY STRATEGY/POSITION



WEEKEND STOCK MARKET MASALA- 21 NOV 2009

Did a quick scan for potential earning/guidance plays for next week and picked the following-

1. Stocks that went up after earnings all the previous three quarters- BCSI, JCG (Michelle Obama's fav shop!), TIF (went up after earnings all the previous SEVEN quarters!!!)

2. Stocks that went down after earnings all the previous three quarters- NUAN

3. DSW

4. DE

If I were to pick three, I would pick JCG, TIF and DSW.

I will try to look at the charts of these stocks over the weekend :-)


GLTA

Thursday, November 19, 2009

GME TRADE

In my weekend post (14 Nov 2009), I mentioned about GME as a potential earnings play. Here is what I wrote-

"GME- Bullish.... Insider buying.... I am guessing good sales of Uncharted 2, Call of Duty, Guitar Hero, Tekken 6.....has a gap at 26.60-28.0"

GME held up pretty well today! I will be watching how it trades tomorrow and if there is no sell off, I might buy some Dec 25 calls. I think it will fill the gap at 26.60-28 before X-mas.

I checked GME's performance during the week of Thanksgiving from 2005-2008 and it went up 7-10%.

CLICK HERE for Q3 earnings summary

I have 25.60-25.80 as the first target and it is a resistance zone too. 25.80 is about 5% from current level and if it goes to that level by Nov 26th, the Dec 26 calls which are currently trading at 0.55 will be at 1.10. So we are looking at a 100% return here ;-)

I think it will consolidate when it reaches the 25.60 area and then break above it during the X-mas rally. My target on GME by end of year is 28.

It issued a 2009 EPS Guidance in the range of $2.45 to $2.63. So it is currently trading at a P/E of 10 (using lower end of EPS estimate)

23.70 will be my STOP LOSS. Tomorrow's action should tell us....we will see how it behaves if the market gaps down at the open. I doubt it will break below 23.70-24.0 and if it does, the next stop will be 22.0-22.3. The best entry point would be at 22.0-22.30 for a ride to 25.60-25.80 IMHO

Sunday, November 15, 2009

DELL


DELL
: Earnings on Thu (Nov 19th) AH. Looks like a bull flag to me-

Chart from theEquilibrium http://chart.ly/gscppf

The flagpole (14 to 17) had good volume and now the rectangular flag is on decreasing volume.

Target upon a breakout of 15.5 would be 18.5 [ Add the height of the flag pole (17-14=3) to the breakout point].

Will DELL go to the 200 SMA on the weekly at 20? DELL has a gap at 16.69

WEEKEND STOCK MARKET MASALA- 15 NOV 2009

1. A good video on DOW/S&P and "Williams % R" by Adam Hewison-

http://broadcast.ino.com/education/dowsp5001112...

2. Video on Gold: SUPPORTS MY THOUGHTS ON GLD.

http://broadcast.ino.com/education/spotgold1112...

PS: Too many people were waiting for 625-650 on S&P to go long in March and the S&P turned around at 666. Now, too many of us are waiting for 1120 to go short and I have a feeling we may fall short again.

JMHO and GLTA

Saturday, November 14, 2009

WEEKEND STOCK MARKET MASALA- 14 NOV 2009


GAME PLAN FOR NEXT WEEK



1. BIDU: Add more to my existing put 390/340 put spread (current cost basis is 6.0) if it goes to 439-440, which will be a double top area. The Dec 340 puts are trading at 200% premium and so made use of that to pay for the Dec 390 puts which are trading at 10% premium. BIDU rallied 20% (from 360 to 432) and closed its earnings gap. I am thinking it will drop to 400-410 short term, which is a 5% correction. It has a gap at 410 from Nov 6th. If it drops to 410, the put spread will give a 75% return. Exit at 410

2. GLD: Add more to my existing Dec 108 puts (current cost basis is 2.0) if it goes to 110. Exit at 108. If you look at the GLD chart between Sep 1st & Sep 28th and between Oct 1st and Oct 28th, see how it forms a rounded top with 2-3% trading range before dropping to the previous peak level. I am guessing GLD will trade between 108-110 for the next few days before dropping to 105-106 (20 EMA on daily is at 106) and then it may rally from 105-106. If it breaks above 110 with good volume, which I highly doubt, I will get out of my puts.

3. SPY: Add more to my existing Dec 110/100 put spread (current cost basis is 2.55) if SPY goes to 112-113

4. FSLR: waiting for 112-114 (Sep lows) to buy Dec calls. Exit at 127-130

5. APOL: waiting for 50-51(Oct lows) to buy Dec calls. Exit at 57.

6. I have AAPL Dec 210/220 call spread at 2.60 as a hedge.

7. Potential Earnings play for next week: Narrowed down my original list (CRM, SHLD, BKE, STP, NTES, PLCE, CMED, GME, GYMB, CNQR, CSIQ) to BKE, GME, STP and SHLD.

I was looking at BKE, GME, STP and SHLD. Here is my opinion-

BKE- Bearish.... recent downgrade by GS....looks like it could go to 27......could be a good short at 30-31

GME- Bullish.... Insider buying.... I am guessing good sales of Uncharted 2, Call of Duty, Guitar Hero, Tekken 6.....has a gap at 26.60-28.0

STP- Bullish.... could go to 16.....However, options activity show a 10-day put/call volume ratio of 7.62

SHLD: Neutral.....almost everyone is bearish....short term, could go to the resistance area of 77-78



Follow me at HOB

GLTA :-)