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Before the Bell: Crude Rally and the Broadcom Beat


Oil has soared 16% in the last month and traders still see little sign of slowing demand.

Morning Perspective:The Crude Rally

According to Reuters, crude oil slid under $118 a barrel after hitting an all-time peak of $119.90. Soaring demand has fueled a 16% increase in recent weeks, but even with oil's rally, many still maintain a bullish feel as traders see little evidence of demand destruction. China helped fuel a price increase as new data revealed an 8% jump in demand in March, marking the quickest pace in 19 months. Further, OPEC has shown little desire to bring more oil onto the market and tensions in Nigeria continue to prop up prices. For more context, see Professor Ryan Krueger's Energy Strong and Getting Stronger.

From the Bull Pen: Professor Krueger positively mentioned Jacobs Engineering (JEC). Those bullish can set near-term sell-stops below $82.25.

From the Bear Cave: Bears believe some type of mean reversion is due and can use the Ultrashort Oil and Gas ETF (DUG), which tracks twice the inverse of the D.J. oil and gas index. Sell-stops below 29.20.

The Broadcom Beat

Broadcom (BRCM) beat the Street last night. According to Bloomberg, the maker of chips for Nintendo's Wii said profits increased 22% to $74.3 mln, or 14 cents a share, and revenues jumped 15% to $1.03 bln. Analyst estimates called for 7 cents per share on sales of $991.7 mln. CEO Scott McGregor said on the earnings call that 1Q results were much stronger than expected driven primarily by great demand in the company's traditional wireline business. But although the company remains cautious in regards to the macro environment, Broadcom expects solid revenue growth for 2Q within each of its three major target markets. Shares of BRCM jumped 8% in after-hours trading after the company gave upbeat guidance. Professor Sean Udall mentioned Broadcom in his article 3G iPhone Presents Stealth Opportunities.

From the Bull Pen: Those bullish Broadcom can set sell-stops below yesterday's close $23.50.

From the Bear Cave: Bears can find a downside play in Analog Devices (ADI). Buy-stops can be set above $32.55 (200 DMA).

For more ideas, check out Minyanville's Spotlight Stocks.

Quick Check Around the World

Asian trading closed with the Hang Seng +1.40%, Nikkei +0.23%, Sensex -0.51%, Taiwan -0.32% and Shanghai +4.15%.

A quick check of Europe finds the CAC +0.12%, DAX -0.68%, FTSE -0.73%

As of 8:40 AM EST, S&P futures are lower -1.3 points to 1379, and Nasdaq futures are higher +4.5 points to 1899.

A Look At Commodities

In commodities, crude is down -0.72 to 117.35. Gold is lower -14.6 to 907.70. Silver is off -0.350 to 17.360, and copper is lower -2.85 to 397.70.

The dollar index is higher +0.207 to 71.546.

On the Radar


MBA Mortgage Applications: -14.2% vs. 5.4% prior

Click here for the full trading radar.

Happy Hump Day! Good luck!
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