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The market had a mixed day as the indices converged from one another as different companies earnings weighed or supported different indices. The Dow made moves higher on the back of strong earnings from IBM (IBM). On the other hand, Google (GOOG) weighed on the Nasdaq as well as S&P 500. It was earnings that led the way as earnings from GOOG, IBM, Microsoft (MSFT), General Electric (GE) and other major names were released today. Google's earnings hurt the upside in the market's rally, but other strong earnings from IBM and MSFT could allow for this market to continue to the upside.
Moving into next week, we believe the market is at a key point and there are two stocks we believe are super important to setting the tone for next week.
MCD is trading at 52-week high levels, and it will take a strong report for them to keep their current momentum going. They are eyes into emerging markets like Brazil and China as well as our own economy. Further, will MCD be hurt by the issues in Europe. We are long this stock and believe this company is worth around $110, but we would not be shocked to see a small pullback if earnings are not spectacular. For Ford, there was a lot of build-up in the new Ford Fiesta and Focus lineup as well as the ability to improve its situation in Europe and build a name in China. We will see how that is going for them. If those results are not strong from China and Europe, F could have a tough report. Both these companies need to be strong to get the market going next week.
For the day, data was limited to just existing home sales, which came in slightly better than expectations. This release is fairly unimportant in comparison to new home sales and housing starts. Housing continues its slight comeback, but it is still very, very weak.
Next week, it is all about the earnings once again and what is happening in Greece.
We had another solid day. We closed out a short-term position we had in Ultrashort Proshares DJ-UBS Crude Oil ETF (SCO) for a solid 4% gain as oil fell apart today. We also saw our position in a United States Oil (USO) bear call spread at the 40/41 level expire worthless. We also closed a SPDR S&P 500 (SPY) bull put spread we got into at the end of last week for a solid 11.24% gain. In our Earnings Alpha Portfolio, we took losses in our Apple (AAPL) calls we were using as a position long off Google earnings. We closed a position in a bear call spread in Polycom (PLCM) for a 3% loss as well. We did see our CarMax (KMX) $26 puts expire worthless for an 11%-plus gain. It was a busy day for us as we also exited two positions in our extended value portfolio. We got out of CA (CA) at 23.50 for a 10%-plus gain as well as Take-Two Interactive (TTWO) at 15.50 for a 10%-plus gain. We are nearing an exit on Microsoft at 30. Those positions were mentioned in our Top Picks for 2012 article here.
We have the following positions. In our Short-Term Equity Portfolio we are long eBay (EBAY). In our Options Portfolio, we are long Blackstone (BX), EBAY and Dollar Tree (DLTR) and we are short Salesforce.com (CRM). In our Earnings Portfolio, we are long Avis Budget (CAR), Vertex Pharma (VRTX), Nucor (NUE) and Ashland (ASH). We are short AOL (AOL).
Additional disclosure: We have the following positions. In our Short-Term Equity Portfolio we are long Ebay (EBAY). In our Options Portfolio, we are long Blackstone (BX), EBAY, and Dollar Tree (DLTR) and we are short Salesforce.com (CRM). In our Earnings Portfolio, we are long Avis Budget (CAR), Vertex Pharma (VRTX), Nucor (NUE), and Ashland (ASH). We are short AOL (AOL).