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!



 

 
 
 

You should consider the following points before engaging in a day-trading strategy. For purposes of this notice, a “day-trading strategy” means an overall trading strategy characterized by the regular transmission by a customer of intra-day orders to effect both purchase and sale transactions in the same security or securities.

Day trading generally is not appropriate for someone of limited resources and limited investment or trading experience and low risk tolerance. You should be prepared to lose all of the funds that you use for day trading. In particular, you should not fund day-trading activities with retirement savings, student loans, second mortgages, emergency funds, funds set aside for purposes such as education or home ownership, or funds required to meet your living expenses.

You should be wary of advertisements or other statements that emphasize the potential for large profits in day trading. Day trading can also lead to large and immediate financial losses.

Day trading requires in-depth knowledge of the securities markets and trading techniques and strategies. In attempting to profit through day trading, you must compete with other professional, licensed traders employed by securities firms. You should have appropriate experience before engaging in day trading.

You should be familiar with a securities firm’s business practices, including the operation of the firm’s order execution systems and procedures. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market for a stock suddenly drops, or if trading is halted due to recent news events or unusual trading activity. The more volatile a stock is, the greater the likelihood that problems may be encountered in executing a transaction. In addition to normal market risks, you may experience losses due to system failures.

Day trading involves aggressive trading, and generally you will pay commissions on each trade. The total daily trading fees that you pay on your trades will add to your losses or significantly reduce your earnings.

When you day trade with funds borrowed from a firm or someone else, you can lose more than the funds you originally placed at risk. A decline in the value of the securities that are purchased may require you to provide additional funds to the firm to avoid the forced sale of those securities or other securities in your account. Short selling as part of your day-trading strategy also may lead to extraordinary loses, because you may have to purchase a stock at a very high price in order to cover a short position.

All proprietary traders must submit fingerprints and Form U4 (Uniform Application for Securities Industry Registration or Transfer), and have trading privileges as an associated person of WTS Proprietary Trading Group, LLC.  Before beginning to trade, all traders must have either a Series 56 or Series 7 license. WTS will sponsor traders to get a license.

There are special risks associated with uncovered option writing that expose the investor to potentially significant losses. The writer of an uncovered call may incur large losses if the value of the underlying security exceeds the exercise price; and the writer of an uncovered put may incur large losses if the value of the underlying security declines below the exercise price. Uncovered option writing is not suitable for everyone. The strategy is only for the knowledgeable investor who understands the risks, has the financial capacity and willingness to incur potentially substantial losses, and has sufficient liquid assets to meet applicable margin requirements.

Proprietary traders may be required to make initial capital contributions in order to become a Class C Member of WTS Proprietary Trading Group, LLC. There is no guarantee that the trader will be successful and these capital contributions may be lost.

Proprietary traders are not customarily paid any salaried compensation. Instead, traders are entitled to distributions based upon profits from their trading – pursuant to their Class C interests in the firm.