Market Recap: The market continued its positive movement today to the upside after starting out weak again for the second day. The market got solid news this morning out of the housing department as well as from some earnings to get some upside going along with a second day of commentary from Bernanke. Housing starts rose above expectations to 760K as 743K was expected. The continued rise in housing is definitely a positive sign for the market. Along with that news, earnings were good from Honeywell (HON) and Bank of America (BAC) as well. Bernanke continued to dance around QE3 in his testimony to the House today, and the market did like his comments that he does not think we will slip into another recession. Additionally, he continues to leave the door open for QE.
With Bernanke behind us, the end of the week should be based in Europe, earnings, and some data points tomorrow. We have a big day of earnings tomorrow, and that should give a lot of different sectors some differing headlines. Earnings season is interesting because general market movement is not always indicative of most sectors.
Two trades we like right now are Facebook (FB) puts as well as earnings position in DIRECTV (DTV). Facebook is definitely at risk heading into earnings next week. The company has had several negative reports about the company's first report, and the stock has had trouble maintaining gains for any extended period with most increases being sold off. The company is looking for a small EPS at 0.12 for the first report, and going into earnings, we do not see a lot of potential upside as people have been skeptical. DTV has a definite issue with Viacom (VIA.B) occurring right now, and we believe that issue is now priced in for DTV. Moving forward, we believe they have tons of growth potential and are being offered at a discount right now. We believe they could see a lot of upside over the next couple months with earnings as a start to a new uptrend. We like buying calls for future months or bull put spreads.
Trade #1: FB, Aug18, $28 Puts
Trade #2: DTV, 45/44 Bull Put Spread, Sept22
Tomorrow, the market will be getting over the drunken infatuation with QE, and we turn our attention to Europe, data, and earnings, which may bring some correction. For data, we have initial jobless claims, Existing Home Sales, Philly Fed Index, and Leading Indicators. All data points cannot alone move the market too much, but all together, this is a nice amount of data to give the market some direction. We would expect it to be mixed though. Earnings tonight and tomorrow morning are also going to be important. The key reports to watch being American Express (AXP), eBay (EBAY), IBM (IBM), Nokia (NOK) Qualcomm (QCOM), and Verizon (VZ), Yum! Brands (YUM). IBM will be crucial for tech, and American Express will be interesting as the first credit company. Overseas, the markets will need to watch Great Britain Retail Sales and Japan's Leading Index to move those markets.
Oxen Group Moves:
We had a pretty solid day as we were able to exit half of our long in Seagate Tech (STX) bull put spread for August expiration for a 12.2% gain. We also were able to exit a long in Papa Johns (PZZA) for a 9.5% gain in our long-term equity portfolio. We added long in Skechers (SKX) for short-term equity trade as well as the above FB position.
We have the following positions:
In our Short-Term Equity Portfolio we are long Skechers , Weight Watchers (WTW), Dollar Tree (DLTR), Ashland (ASH), SPDR Housing (XHB). We are short Kansas City Southern (KSU), Pall (PLL), McDonald's (MCD).
In our Options Portfolio, we are long Monsanto (MON), Starbucks (SBUX), Dollar General (DG) and AutoZone (AZO). We are short Aflac (AFL), Garmin (GRMN), Facebook . We have a reverse iron condor on Apple (AAPL) and Direxion Daily Financial 3x Shares (FAS).
In our Earnings Alpha Portfolio, we are long JetBlue (JBLU), Seagate Tech , Apple , Capital One (COF), Disney (DIS), Ashland , Vertex (VRTX), Intuitive Surgical (ISRG), Marriott (MAR). We are short Pitney Bowes (PBI), Schlumberger (SLB) and Walgreen (WAG). We have a reverse iron butterfly in Decker's Outdoor (DECK) and F5 (FFIV).
I am long