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Two Ways To Play: Texas Two-Step


Strengthen your portfolio in good times and bad.

Chinese Stocks Lead Tumble

FT reports Chinese stocks had their biggest one day tumble last night in a year. It was their first day trading after a holiday on Monday and the reaction was mainly due to action taken by regulators over the weekend. China's central bank lifted the required reserve ratio by 100 basis points marking the fifth increase this year.

The Shanghai Composite dropped 7.7% and the Shenzen Composite fell 8%. According to ChinaDaily, just 32 stocks out of 1500 posted gains on both indexes while nearly 1,000 stocks fell by the daily limit of 10%, or 5%. For more context on China and the global economy, see Jeff Saut's Muddling Through The Big "W."

From the Bull Pen: The next level for bulls using the China 25 ETF (FXI) may be near $120. Bulls may consider entry should the stock fall to that level.

From the Bear Cave: Bears have an option of playing the Ultrashort China 25 ETF (FXP) which tracks twice the inverse of the FTSE/Xinhua China 25 index. Sell-stops in the near-term can be set near yesterday's low.

Texas Instruments Narrows Guidance

Texas Instruments (TXN) may weigh on the tech sector today. According to Reuters, the second largest U.S. semiconductor narrowed quarterly earnings and revenue targets it issued in April because of weak demand in wireless handset revenue and caution among its chip customers. TXN now expects $3.33 bln to $3.46 bln for the second-quarter and earnings of 43 to 47 cents a share. Analysts were expecting profits of 46 cents a share on revenues of $3.38 bln. The company had already disappointed investors on April 21 with a forecast below analysts' estimates. Shares fell less than 1% in after-hours trading yesterday. Did Todd see this coming? See Friday's Random Thoughts.

From the Bull Pen: Bulls can look elsewhere in the tech space. Professor Sean Udall mentioned a play in Broadcom (BRCM); bulls might consider fading into the stock as it pulls back towards the $25 level.

From the Bear Cave: Those bearish in this space can use the semiconductor ETF (SMH) for a downside play. Near-term buy-stops can be set above $33.

For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.

Quick Check Around the World

Asian trading closed with the Hang Seng -4.21%, Nikkei -1.13%, Sensex -1.17%, Taiwan -2.54% and Shanghai -7.73%.

A quick update of Europe shows us the CAC -0.73%, DAX -0.78%, FTSE -0.53%

As of 8:30 AM EST, S&P futures are down -11.80 points to 1351, and Nasdaq futures are lower -25 points to 1962.

A Look At Commodities

In commodities, crude oil is making a move early up +3.12 to 137.41. Gold is lower -10.50 points to 882.00. Silver is down -0.055 to 17.160, and copper is off -3.25 to 357.90.

The dollar index is higher +0.544 to 73.398.

On the Radar


Trade Balance: -$60.9 vs. -$60 bln.

Click here to see the full trading radar.

Good trading today!
No positions in stocks mentioned.

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