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business newsBuzz on the Street: Jobs Numbers Help Stocks Finish Higher
By
Terry Woo Apr 01, 2011 4:15 pm
Some of this week's most insightful and timely vibes.
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All day and every day, some of the stock market's best and brightest traders and money managers share their ideas, insights and analysis in real-time on Minyanville's Buzz & Banter. Click here for a 14 day free trial.
Note: Some links may require Buzz subscriptions.
Monday, March 28, 2011
Corrections Are Good!
Scott Redler
The market definitely climbed a wall of worry last week, as the action traded very well technically and told a different story vs. the headlines. After a three day bounce, the market couldn’t pull in, and then leaders flexed their muscles. This is why corrections are good. They uncover the new leaders and give you a new batch of “Go to type stocks” At this point the S&P’s are at a new area of resistance and the market needs to prove it can hang in again. The Inside range of the S&P is support around 1306-1308 and then a bigger area 1298-1302 while resistance is 1318-1322 then 1328-133.
Click here for my morning gameplan.
Click to enlarge
Click to enlarge
Click to enlarge
Click to enlarge
Click to enlarge
OIH Follow Up
Scott Redler
OIH had been giving us a ton of clues on direction of this market. It typically leads and it has acted very well. This had been acting very well starting back in September.
Click to enlarge
I put out strategies numerous times, most recent today to buy through 160.50-161.
Click to enlarge
Next spot is new highs above 166. I went to tier two today and am back to tier one.
Traders are having a ton of success with Apache (APA), Schlumberger (SLB), Halliburton (HAL), Anadarko (APC), Rockwell Automation (ROK), Oneok (OK), and Baker Hughes (BHI)..
Some are already at new highs. If you watched the action during the correction, that gave you clues to look here first during the rally.
Minyan Mailbag: Option Expiration Capping Gold?
Lance Lewis
Lance,
Option expiration capping gold at $1420? I have to say (at the risk of jinxing it) the shares act well in relation to the price of the metals. We’ll see what happens.
-Minyan Josh
Josh,
Yes, they do. Thus far, the GDX is once again down less than the GLD on a percentage basis. Per my GDX/GLD study, a close like that would be a positive sign for the gold price to potentially rally tomorrow. In the meantime, the COMEX option expiration appears to be effectively capping any advance in the metal until after 1:30 EST.
-Lance
Position in gold, gold stocks
Tuesday, March 29, 2011
OIH Follow Up
Scott Redler
On March 25th we outlined a strategy to buy the OIH as well as some stocks in that group
Yesterday I followed up showing the trade ignition.
Today it’s at new highs and if you’re in a tier greater than tier#1 I would book some of the trade.
Look at chart, pattern’s repeat themselves.
Click to enlarge
Following Up On QRM
Branden Rife
This morning (as part of the Dodd-Frank reform) regulators finally voted that in order for a mortgage to be considered a Qualified Residential Mortgage it has to have a 20% down payment or else the lender must retain 5% of the loan value in capital reserves on its balance sheet. Any loan from the FHA is exempt from this rule as are mortgages from Fannie or Freddie so long as those agencies are in government conservatorship. The fact that they included that last sentence is quite interesting and tells you the mindset in Washington about GSE’s. Private Mortgage Insurance was left out of the criteria and open for comment which I also find interesting… Additionally, if the borrower has ever had a 60 or more day delinquency in their credit history, they are not eligible for a QRM.
Initially it wasn’t completely clear how Fannie and Freddy would fall into the fold of the rule but now we know that through a supposed compromise to banks, their loans are being left out of the requirements so long as they are in existence under the government cloak.
What does this mean? No matter what type of loan you may chose, unless you put 20%+ down for a mortgage (or have 20%+ in equity for a refinance), the commensurate interest rate might make that mortgage less affordable than you initially thought…
Wednesday, March 30, 20111
Trading Outlook
Steve Birenberg
Over the past week we have completed several trades that leave my Entermedia hedge fund a little less long. About a week ago, we were at a delta adjusted net long position in the very low 40% range. This is about as high as we have been over the past 15 months. Our weekly timely model moved from bullish to neutral this week resulting in the sale of our S&P 500 long position associated with the model. We also added to our core short hedge in the S&P 500 given our view that recent events in Japan, Libya, the Middle East, and Europe should be of more concern to the market.
In addition, we see recent economic data in the US suggesting that the economic recovery is continuing but no longer accelerating. In fact, although it may be due to external factors such as those just mentioned, there could even be a slight deceleration in the recovery. Put it all together and we did not feel being at our maximum recent long exposure made sense. With these S&P 500 trades and a few smaller trades discussed below, Entermedia is now at 37% net long on a delta adjusted basis.
Our other trades this past week included rolling our Russell 2000 Put spread from April to May. We have now rolled this trade a month forward twice since we originally put it on. Should the market enter a longer, sustained correction we expect small cap stocks to lead on the way down. Small cap stocks are more volatile and presently at a big premium on a valuation basis, so as long as we have a somewhat cautious near-term view of the market, this trade makes a lot of sense.
We covered almost all of our short on Cinemark Holdings (CNK), ending with a small loss. Despite awful box office in the first three months of the year and lots of chatter about shorter theatrical windows, CNK shares held up well. With the focus likely to shift to what looks like a strong summer movie lineup, we felt the time for being sort was over.
We also put an option collar on half of Virgin Media (VMED), our second largest position. We are a little worried about VMED's upcoming first quarter report as the UK economy is facing deep austerity measures and higher taxes. Also, VMED is already on record stating that the core cable business may take a breather while mobile wireless ramps up. This transition is fine with us but could prove tricky. The option collar is skewed to downside protection. Expect more option trades heading into quarterly season as we are a bit concerned that management teams will be cautious with guidance commentary in light of the global turmoil.
Market Thoughts
Smita Sadana
The Advance/Decline line has hit a new high today (intraday). That typically means that the market remains internally strong. It is unusual to see a market fall apart with the internals in sync.
Click to enlarge
However, I do think that the market will trade in a range. After having been in finance for nearly 17 years, ironically, one of my takeaway has been that the most important commodity’ in the world is trust. Once trust is violated, it has to be earned again. The in-sync AD line and support from allied indexes (as Russell, Dow Transports, and Mid Caps) help in regaining that trust.
Do note that the recent bounce has left some of the old market leaders (Semis, mainstream tech sectors) behind. Even the late bloomer since Dec, the financial sector, has not been able to regain its earlier momentum.
There are investment theories about buying the laggards, (buy-on-sale mentality), and while this approach to investing also works, it is important to recognize that it can require time and patience to be profitable.
Best case, these areas are undergoing a group rotation, and I had shared concerns about that on 3/22); Worst case, they can act as brakes on the current market action. Given these beliefs, I would be very cognizant of what I own and why I own it.
Position in SPY
Turning Taiwanese
Terry Woo & Matt Theal
Editors Note: This post was originally sent to subscribers of the Active Investor portfolio. Click here for a free trial.
This morning we took a position in the iShares MSCI Taiwan Index Fund (EWT). The thesis is that China's recent increase in the minimum wage should bring back favorable conditions for manufacturing and exports for other countries like Taiwan.
Technically, the EWT is in a short term downtrend and could retest its lows. So we'll start with an initial position here and be ready to add on a pullback towards $14. Our sell stop will be near the $13.50 area. This is a longer term position that we will be willing to be patient with.
Click to enlarge
Thursday, March 31, 2011
Actionable: ENV
David Dispennette
Envestnet (ENV) provides web-based investment solutions and services to financial advisors via a centrally-hosted technology platform. Revenues has increased between 25% and 37% during the last three quarters and earnings have climbed 200%, 133% and 450% during the same time frame. Earnings expectations are calling for an 88% increase this year and another 58% next year.
Institutional support has been rising and I expect to see that support to continue. It came public last summer at $9 and rose almost 100% until it started pulling back in January. It recently bottomed out and found support at the $12 range and heavy upside volume over the last week has landed this stock on some of my screens.
I’ve established half a position here around $13.25 as an investment and will add on any weakness toward the $12 level. My mental stop loss will be set at a close under the $11.50 level.
Position in ENV
DN... DN!
Fil Zucchi
As Prof. Miller explained, Dendreon (DNDN) regulatory issues are basically behind them. It took 10 years, but better late than never. Now it's up to the company to turn Provenge into a blockbuster, and to turn the science behind Provenge into a new platform for the fight against different types of cancer.
I am long DNDN stock and I want to get longer . . . but I don't want to lay out more capital. Enter some fat volatilities in the options. I can buy a 1x2 Jan 40/50 call spread for about $0.80. The call over write is covered by my stock. The bottom line is that I'm doubling up my position for next to nothing, but I'm capped out at $50 come January. There are no free lunches, but this one looks pretty cheap.
Position in DNDN
Friday, April 1, 2011
Jobs Stat of the Day
Jason Goepfert
When Payrolls are greater than +25 and SPY gaps greater than 0.5%, the next 3 days were up 6 out of 18 times.
It took an average of 5 days to close the gap. Three times it never filled.
Morning Trading Plan
Quint Tatro
The pretty decent jobs number before the open has traders in a buying mood. The new offer for NYSE Euronext (NYX) has once again gapped shares higher. Financials are robust to start the session, with XLF up 1.2%. The Russell (IWM) is within a whisker off all-time highs today.
So with all of the holiday love in the air, where are the opportunities right now? Well, first off I want to point out some interesting contrary signals. Take note of the action in JDS Uniphase (JDSU) and Intel (INTC) today against the backdrop of all the giddy cheer. Even Apple (AAPL) has pulled back off of opening highs. Action in names such as these continues to have me cautious at current levels. Add in the fact that the move of the last two weeks has been a shot to the moon, and I would caution against initiating full positions right here. However, let me reiterate that I am not looking to short at all. The trend is clearly higher, and I am just waiting to see if we have a pause in the action.
I continue to hold regional banks Astoria Financial (AF) and Zions Bancorp (ZION) from Wednesday, and they are popping nicely today. I did sell a partial in AF this morning and raised my stop to entry of $14.21. I do like compressed natty gas plays Fuel Systems Soultions (FSYS), Clean Energy Fuels (CLNE), and FuelCell (FCEL) at these levels. I own all three with very long leashes. My goal today will be to watch closely to see if the indexes are able to hold onto gains into the weekend. If the buying euphoria starts to wane as the day goes on, I may roll up stops or lighten my long side exposure.
Position in AF, ZION, FSYS, FCEL, CLNE
Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
Lasting through April 15, 100% of the donations made to The Ruby Peck Foundation for Children's Education will be channeled to the children of Japan as they attempt to find their footing following this natural disaster; and to kick off this drive, we'll pledge $5000 to get it started. Please do what you can, as it will add up, and thanks.
Note: Some links may require Buzz subscriptions.
Monday, March 28, 2011
Corrections Are Good!
Scott Redler
The market definitely climbed a wall of worry last week, as the action traded very well technically and told a different story vs. the headlines. After a three day bounce, the market couldn’t pull in, and then leaders flexed their muscles. This is why corrections are good. They uncover the new leaders and give you a new batch of “Go to type stocks” At this point the S&P’s are at a new area of resistance and the market needs to prove it can hang in again. The Inside range of the S&P is support around 1306-1308 and then a bigger area 1298-1302 while resistance is 1318-1322 then 1328-133.
Click here for my morning gameplan.
Click to enlarge
Click to enlarge
Click to enlarge
Click to enlarge
Click to enlarge
OIH Follow Up
Scott Redler
OIH had been giving us a ton of clues on direction of this market. It typically leads and it has acted very well. This had been acting very well starting back in September.
Click to enlarge
I put out strategies numerous times, most recent today to buy through 160.50-161.
Click to enlarge
Next spot is new highs above 166. I went to tier two today and am back to tier one.
Traders are having a ton of success with Apache (APA), Schlumberger (SLB), Halliburton (HAL), Anadarko (APC), Rockwell Automation (ROK), Oneok (OK), and Baker Hughes (BHI)..
Some are already at new highs. If you watched the action during the correction, that gave you clues to look here first during the rally.
Minyan Mailbag: Option Expiration Capping Gold?
Lance Lewis
Lance,
Option expiration capping gold at $1420? I have to say (at the risk of jinxing it) the shares act well in relation to the price of the metals. We’ll see what happens.
-Minyan Josh
Josh,
Yes, they do. Thus far, the GDX is once again down less than the GLD on a percentage basis. Per my GDX/GLD study, a close like that would be a positive sign for the gold price to potentially rally tomorrow. In the meantime, the COMEX option expiration appears to be effectively capping any advance in the metal until after 1:30 EST.
-Lance
Position in gold, gold stocks
Tuesday, March 29, 2011
OIH Follow Up
Scott Redler
On March 25th we outlined a strategy to buy the OIH as well as some stocks in that group
Yesterday I followed up showing the trade ignition.
Today it’s at new highs and if you’re in a tier greater than tier#1 I would book some of the trade.
Look at chart, pattern’s repeat themselves.
Click to enlarge
Following Up On QRM
Branden Rife
This morning (as part of the Dodd-Frank reform) regulators finally voted that in order for a mortgage to be considered a Qualified Residential Mortgage it has to have a 20% down payment or else the lender must retain 5% of the loan value in capital reserves on its balance sheet. Any loan from the FHA is exempt from this rule as are mortgages from Fannie or Freddie so long as those agencies are in government conservatorship. The fact that they included that last sentence is quite interesting and tells you the mindset in Washington about GSE’s. Private Mortgage Insurance was left out of the criteria and open for comment which I also find interesting… Additionally, if the borrower has ever had a 60 or more day delinquency in their credit history, they are not eligible for a QRM.
Initially it wasn’t completely clear how Fannie and Freddy would fall into the fold of the rule but now we know that through a supposed compromise to banks, their loans are being left out of the requirements so long as they are in existence under the government cloak.
What does this mean? No matter what type of loan you may chose, unless you put 20%+ down for a mortgage (or have 20%+ in equity for a refinance), the commensurate interest rate might make that mortgage less affordable than you initially thought…
Wednesday, March 30, 20111
Trading Outlook
Steve Birenberg
Over the past week we have completed several trades that leave my Entermedia hedge fund a little less long. About a week ago, we were at a delta adjusted net long position in the very low 40% range. This is about as high as we have been over the past 15 months. Our weekly timely model moved from bullish to neutral this week resulting in the sale of our S&P 500 long position associated with the model. We also added to our core short hedge in the S&P 500 given our view that recent events in Japan, Libya, the Middle East, and Europe should be of more concern to the market.
In addition, we see recent economic data in the US suggesting that the economic recovery is continuing but no longer accelerating. In fact, although it may be due to external factors such as those just mentioned, there could even be a slight deceleration in the recovery. Put it all together and we did not feel being at our maximum recent long exposure made sense. With these S&P 500 trades and a few smaller trades discussed below, Entermedia is now at 37% net long on a delta adjusted basis.
Our other trades this past week included rolling our Russell 2000 Put spread from April to May. We have now rolled this trade a month forward twice since we originally put it on. Should the market enter a longer, sustained correction we expect small cap stocks to lead on the way down. Small cap stocks are more volatile and presently at a big premium on a valuation basis, so as long as we have a somewhat cautious near-term view of the market, this trade makes a lot of sense.
We covered almost all of our short on Cinemark Holdings (CNK), ending with a small loss. Despite awful box office in the first three months of the year and lots of chatter about shorter theatrical windows, CNK shares held up well. With the focus likely to shift to what looks like a strong summer movie lineup, we felt the time for being sort was over.
We also put an option collar on half of Virgin Media (VMED), our second largest position. We are a little worried about VMED's upcoming first quarter report as the UK economy is facing deep austerity measures and higher taxes. Also, VMED is already on record stating that the core cable business may take a breather while mobile wireless ramps up. This transition is fine with us but could prove tricky. The option collar is skewed to downside protection. Expect more option trades heading into quarterly season as we are a bit concerned that management teams will be cautious with guidance commentary in light of the global turmoil.
Market Thoughts
Smita Sadana
The Advance/Decline line has hit a new high today (intraday). That typically means that the market remains internally strong. It is unusual to see a market fall apart with the internals in sync.
Click to enlarge
However, I do think that the market will trade in a range. After having been in finance for nearly 17 years, ironically, one of my takeaway has been that the most important commodity’ in the world is trust. Once trust is violated, it has to be earned again. The in-sync AD line and support from allied indexes (as Russell, Dow Transports, and Mid Caps) help in regaining that trust.
Do note that the recent bounce has left some of the old market leaders (Semis, mainstream tech sectors) behind. Even the late bloomer since Dec, the financial sector, has not been able to regain its earlier momentum.
There are investment theories about buying the laggards, (buy-on-sale mentality), and while this approach to investing also works, it is important to recognize that it can require time and patience to be profitable.
Best case, these areas are undergoing a group rotation, and I had shared concerns about that on 3/22); Worst case, they can act as brakes on the current market action. Given these beliefs, I would be very cognizant of what I own and why I own it.
Position in SPY
Turning Taiwanese
Terry Woo & Matt Theal
Editors Note: This post was originally sent to subscribers of the Active Investor portfolio. Click here for a free trial.
This morning we took a position in the iShares MSCI Taiwan Index Fund (EWT). The thesis is that China's recent increase in the minimum wage should bring back favorable conditions for manufacturing and exports for other countries like Taiwan.
Technically, the EWT is in a short term downtrend and could retest its lows. So we'll start with an initial position here and be ready to add on a pullback towards $14. Our sell stop will be near the $13.50 area. This is a longer term position that we will be willing to be patient with.
Click to enlarge
Thursday, March 31, 2011
Actionable: ENV
David Dispennette
Envestnet (ENV) provides web-based investment solutions and services to financial advisors via a centrally-hosted technology platform. Revenues has increased between 25% and 37% during the last three quarters and earnings have climbed 200%, 133% and 450% during the same time frame. Earnings expectations are calling for an 88% increase this year and another 58% next year.
Institutional support has been rising and I expect to see that support to continue. It came public last summer at $9 and rose almost 100% until it started pulling back in January. It recently bottomed out and found support at the $12 range and heavy upside volume over the last week has landed this stock on some of my screens.
I’ve established half a position here around $13.25 as an investment and will add on any weakness toward the $12 level. My mental stop loss will be set at a close under the $11.50 level.
Position in ENV
DN... DN!
Fil Zucchi
As Prof. Miller explained, Dendreon (DNDN) regulatory issues are basically behind them. It took 10 years, but better late than never. Now it's up to the company to turn Provenge into a blockbuster, and to turn the science behind Provenge into a new platform for the fight against different types of cancer.
I am long DNDN stock and I want to get longer . . . but I don't want to lay out more capital. Enter some fat volatilities in the options. I can buy a 1x2 Jan 40/50 call spread for about $0.80. The call over write is covered by my stock. The bottom line is that I'm doubling up my position for next to nothing, but I'm capped out at $50 come January. There are no free lunches, but this one looks pretty cheap.
Position in DNDN
Friday, April 1, 2011
Jobs Stat of the Day
Jason Goepfert
When Payrolls are greater than +25 and SPY gaps greater than 0.5%, the next 3 days were up 6 out of 18 times.
It took an average of 5 days to close the gap. Three times it never filled.
Morning Trading Plan
Quint Tatro
The pretty decent jobs number before the open has traders in a buying mood. The new offer for NYSE Euronext (NYX) has once again gapped shares higher. Financials are robust to start the session, with XLF up 1.2%. The Russell (IWM) is within a whisker off all-time highs today.
So with all of the holiday love in the air, where are the opportunities right now? Well, first off I want to point out some interesting contrary signals. Take note of the action in JDS Uniphase (JDSU) and Intel (INTC) today against the backdrop of all the giddy cheer. Even Apple (AAPL) has pulled back off of opening highs. Action in names such as these continues to have me cautious at current levels. Add in the fact that the move of the last two weeks has been a shot to the moon, and I would caution against initiating full positions right here. However, let me reiterate that I am not looking to short at all. The trend is clearly higher, and I am just waiting to see if we have a pause in the action.
I continue to hold regional banks Astoria Financial (AF) and Zions Bancorp (ZION) from Wednesday, and they are popping nicely today. I did sell a partial in AF this morning and raised my stop to entry of $14.21. I do like compressed natty gas plays Fuel Systems Soultions (FSYS), Clean Energy Fuels (CLNE), and FuelCell (FCEL) at these levels. I own all three with very long leashes. My goal today will be to watch closely to see if the indexes are able to hold onto gains into the weekend. If the buying euphoria starts to wane as the day goes on, I may roll up stops or lighten my long side exposure.
Position in AF, ZION, FSYS, FCEL, CLNE
Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
Lasting through April 15, 100% of the donations made to The Ruby Peck Foundation for Children's Education will be channeled to the children of Japan as they attempt to find their footing following this natural disaster; and to kick off this drive, we'll pledge $5000 to get it started. Please do what you can, as it will add up, and thanks.
No positions in stocks mentioned.
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