Morning Report for Tuesday, June 19, 2012
June 19, 2012 15:49:21
Market Wrap-Up for Monday, June 18, 2012
All is fair in love and Europe and the fix was in. Are you really surprised about Monday’s action? Did you really have to sit on the edge of your chair for Sunday to come? It was a day trading paradise if you were up late-night Sunday trading the futures market.
It came as no surprise to day traders on our desk that Greece voted in its pro-unity government, which upheld the truth that is the euro. In the evening session Sunday and early Monday, the ES traded to 1347.5 and pulled back as low as 1339.75. At 8:30 AM Monday, the S&P was down on a classic case of buy rumor/ sell news.
The equities market opened lower, and ripped up after the opening bell went off. For those who did not want to get long out of the gate, there was reversal candle @ 10:50 AM. We advised that traders get long and stay long the front month SP futures contract from the 1332 level and target was the 50 day moving average @ 1342. Ok, so we missed the call. However, if one cannot make money on nine (9) handles, the last half is not going to help.
Most of our traders went long GMCR after the first five minutes of trading and took profits all the way to $20.74. Being a natural contrarian, we took a position short after the close of the European session, but covered it quickly when sell volume was sparse.
We were trading many stocks with particular focus on ARNA + AMLN. ARNA traded higher in anticipation of a June 27, PDUFA date where the stock broke $9 and never looked back. AMLN also traded in concert with ARNA, where investors wanted to get a little pin action off this news.
Amidst the distraction in the Eurozone, everyone has seemingly forgotten about the takeover bid of AMLN @ $25. Consequently, we capitalized on a low-risk trade by. Why the put options still have any premium below $25 baffles my mind. Not being reckless, we sold more than a handful of $23 and $24 July puts to line our pockets with. We are protected by the premium collected and are hedged on the other side.
We traded Facebook long just before 10AM and took a small gain of .25. Who knew that there was another dollar in the trade to the long side? I find it so comical how the media pundits were criticizing every move that Morgan Stanley made in bringing the IPO to market and then the endless commentary about the over-valuation of the stock.
FB received the Joan-of-Arc treatment as it traded off the IPO price down to $26.50. Even at that level, the moron analysts on TV were still saying how expensive the stock was. All I want to know is one thing…. Where are those people now? Apparently, they are getting chewed up by this short squeeze.
Just another example why you should never believe what you hear on TV or read in the paper. Do your own research, form an opinion and trade it. If you listen to the guys on TV and trade off their advise, you will go broke.
Be on the lookout for ORCL, Tuesday as the company reported a mixed bag on earnings estimates. The stock gave us an incredible short as it touched its 200 day MA on the daily after the bell before retreating $1 to settle at $28. ORCL blames a disappointing outlook on a strong dollar, but reported a record-breaking 4th quarter.
MAR increased its estimates from $2.45 to $2.85 per share. The current consensus earnings estimate is $2.36 per share for the year ending December 31, 2014. AKS said it expects second quarter earnings of $0.04 to $0.06 per share versus current consensus earnings estimate is $0.11 per share for the quarter ending June 30, 2012.
Good luck today!