Owner: The Lauriston Letter URL:http://lauristonletter.blogspot.com/ Join Date: Thu, 25 Jan 2007 15:59:13 -0600 Rating:0 Site Description: Trades are posted live with analysis of stocks and financial markets. Chart patterns, business and political news, economic releases, sentiment data like volatility index (VIX) and put call ratios, and technical indicators are analyzed. Site statistics:Click here
Weekend Notes 1970-01-01 00:59:59 Put call ratios and volatility indexes are back in "complacent zone" confirming investors' positive outlook, tech wreck notwithstanding. We may therefore continue to see stocks drop after reporting good or excellent results that are baked into elevated prices, or if Q1 2007 guidance fails to meet inflated expectations already reflected in those prices à la Apple, Inc.
Economic data during the Read more:Notes
, Weekend
Sentiment analysis Jan 15, 2007 1970-01-01 00:59:59 Positives:
Markets made significant gains last week in almost all sectors, and weekend reading suggests this is expected to continue next week
Asian and European markets continued to make gains todayM&A activity continues with no sign of letting up. Today General Electric Co. agreed to buy Smiths Group's aerospace unit for $4.8 billion. Ample liquidity continues to support high share prices.
US Read more:Sentiment
Monday Outlook 1970-01-01 00:59:59 In the morning, watch reaction to earnings guidance from PFE and AXP. This evening, Asian markets are at 3 week highs on weaker yen, positive Univ. of Michigan sentiment survey last week, and rebound in commodities, including crude oil. This rally could shift into US trading tomorrow. I noticed most newsletters have a bearish spin on the US markets going into Monday
, I would be surprised then if Read more:Outlook
Dow down 100pts, BA downgraded 1970-01-01 00:59:59 I will feel more comfortable with my short positions when/if the financials C BAC JPM join the red column with convincing weakness. But right now JPM is up 1.5%, C is up 1% and BAC is flat. Wunder Pets GS MS MER are all positive too. Major indexes' uptrend lines are still intact. I think we are going to continue oscillating around here until financials break up or down.
Markets started selling
TXN and old news about Yahoo! 1970-01-01 00:59:59 TXN closed up 0.7% in regular trading, and rose a further 1.8% in after-hours trading, after reporting 2% increase in profits and 4% in sales from a year ago. Profits were helped by tax credits, will be interesting to see whether those after-hours gains hold tomorrow. I will be watching financials to determine trading direction in the coming days; most sectors are showing weakness except Read more:Yahoo
Technology stocks see red 1970-01-01 00:59:59 As noted all week, technology was due for a pullback which could turn into a correction if the rest of the market follows. Starting last week, the catalysts were evident for traders to sell tech: RIMM breaking down, SAP/AMD warning, INTC disappointing, and AAPL guiding down. The big caps are still in an uptrend with today's gains coming from health-care and consumer discretionary. IBM is down 5% Read more:Technology
Out of SPY puts for $1.30 1970-01-01 00:59:59 Entered yesterday at $1.25. Markets are flat with upside bias. From my experience I rarely find good stocks/ETFs trading ideas on options expiration day. So far no sign of 1/20/2006-type slam! And no rally either.
Closed half QQQQ puts for 47% profit 1970-01-01 00:59:59 Reducing exposure in case we close the gap down this morning. Over the last few weeks the markets have had a strong tendency to "buy the dips". Closed
at $1.25, trade entry here. Read more:profit
Closed all Russell2000 puts 32% profit 1970-01-01 00:59:59 Closed remaining IWM puts at 1.65 or 32% profit
, entry was yesterday. I will go into tomorrow with the QQQQ puts from last week, currently up 30% from my purchase price. Reducing exposure ensures any upside surprises from Apple have minimum impact on my positions, and besides, no one knows how long this market will continue "buying the dips". If AAPL disappoints, then the QQQQ puts will be there Read more:Closed
, Russell
Markets continue to rally 1970-01-01 00:59:59 We have improved since market open, about flat right now, but still breaking records every few minutes (Dow). No doubt the rally continues, but most newsletters I scanned this morning suggest we are stretched on the upside. That was my analysis 2 days ago. I see some good pullbacks setting up especially in technology stocks. Since I am already in Nasdaq100 and Russell2000 puts, I am not going to Read more:Markets
Pre-market notes 1970-01-01 00:59:59 Stock futures are lower after Alcatel-Lucent guided lower, confirming tech weakness. Alcatel-Lucent, world's biggest telecomm equipment maker, is down about 12% in France. TXN is up more than 3.5%. American Express AXP reported lighter than forecast results. Europe is trading down 0.4-0.6%. I will be watching financials again today, they seem to be the strongest sector and in my opinion will be
Morgan Stanley "neutral" on equities 1970-01-01 00:59:59 Just heard on CNBC that MS has a research note out advising their clients to go "neutral" on equities in US. I have no idea what neutral means in this context, my guess is "lighten up". I pay more attention to the market reaction to such a note, than to what MS is actually advising. But with recent tech and oil stocks weakness, MS may be preparing for a pullback or mini-correction perhaps. Let's Read more:Morgan
, Stanley
, Morgan Stanley
Reaction to EBAY and QCOM 1970-01-01 00:59:59 Very positive, EBAY up 15% and QCOM 5% after reporting. AMZN and YHOO have added on to their regular trading gains. With equity markets around the world at multi-year highs and the Dow Jones Industrial breaking records almost everyday, it looks like we will have more of this rally tomorrow. From a risk/reward point of view, I would rather take long day-trades and wait for better entries for my
VIX: Is it that simple? 1970-01-01 00:59:59 Markets gapped up and I have not found good long entry points to swing, except for a few quick daytrades in financials. The markets look similar to Nov. 21 and Dec. 14, 2006 as far as volatility indexes are concerned. I am therefore going to look for shorting opportunities based this VIX trade that can be profitable both from volatility expansion and increasing intrinsic value of puts. I am
Bullish drivers NOK and T 1970-01-01 00:59:59 Nokia reported 4th Q profit jumped 19% and the stock traded as high as 7.2% up in Helsinki. AT&T reported 17% jump in profits and is trading 3.6% up pre-market open. T rose 4% yesterday, and has almost doubled since Oct 2006, I will be watching to see if it holds on to those gains or whether we have "sell the news". But it looks like we may get more of the same as yesterday with EBAY QCOM T NOK Read more:Bullish
Mid-day update 1970-01-01 00:59:59 (Busy day, I am sending this remotely and hope it is readable) The good news from earnings was not enough to keep the bull going this morning. Weak sectors include techs, oil stocks (double top on 60min chart of XLE/OIH), consumer discretionary/staples, home builders (short DHI and doubled short this morning, see comments below and RYL profits fall 46%), small caps (added more Russell2000 puts at
What I really do not like about this action 1970-01-01 00:59:59 Or, because I am in bearish positions right now, I should write "What I really really like about this action today": The following big caps are fast erasing recent gains: MSFT, QCOM, PG, SHLD, WB, WFC, YHOO, GOOG, MER, and MS. Many oil sector stocks are joining in too. This implies the recent gains were a "head-fake". Remember we had a 4 day head-fake in May 2006? Look at the Dow and S&P charts
Techs to lead today 1970-01-01 00:59:59 That's the media headline today, just as I suspected in the comments I made last evening. The catalysts mentioned for techs to lead are YHOO and SUNW. I am going to look for long trades in tech and financials, which are due for a bounce, but I am aware that QCOM and EBAY reports today could finally break us out of the 6-10 week trading range. I also have an eye on short trades in case we start
YHOO up 5.6% and AMD down 4% in AH 1970-01-01 00:59:59 Yahoo! up after announcing it would roll out new search ad technology next month, earlier than expected, even as 4th Q profits were down 61% from a year ago. AMD
reported a loss from heavy costs related to acquisition of ATI Technologies, Inc.
I just hope tomorrow's trading does not continue this oscillating behavior that I bet you is frustrating both bulls and bears. Just take a look at the
AKAM at support 1970-01-01 00:59:59 AKAM was mentioned last week here. Since then it has followed the script and is now at support. If that does not hold the next level is around $47.
Index of Leading Economic Indicators 1970-01-01 00:59:59 for December rose for the first time since September 2006, implying economy may be in growth in coming months. Dow is up 40 points. Looking forward to YHOO earnings this evening. Read more:Economic
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, Indicators
Industrials regain yesterday's losses 1970-01-01 00:59:59 Industrials (XLI is the ETF) have regained all losses from yesterday on reaction to UTX earnings, making the Dow Jones Index also regain almost all losses from yesterday, up 65 points. We are caught in a tight trading range in the last 6 weeks, I expect the break up or down to be significant. Energy stocks (Bush to propose doubling strategic petroleum reserves), small/mid caps and industrials are
Tight trading range last 6 weeks 1970-01-01 00:59:59 I will be glad when we get out of this tight range, whether on the upside or downside! (Cartoon from Peter Nicholson.)
Took off some IWM puts for 31% gain 1970-01-01 00:59:59 Opened yesterday and today at $1.45, closed for $1.90. Will go into MSFT earnings with IWM, SPY puts and short DHI.
MSFT beats estimates, earnings down 28% 1970-01-01 00:59:59 I hope the MSFT results and promises do not ruin the bear party tomorrow. I am sure many bears are going to scream in agony if we rally tomorrow, thus continuing the sine wave action that must be frustrating both bulls and bears! MSFT is trading up about 1.5% from regular trading and down 1% from yesterday. Investors seem happy with raised guidance. AMGN is trading 3.5% from yesterday after
The Good and The Bad news 1970-01-01 00:59:59 Since I am in bearish positions, let's start with the bad news. Asian stocks slide on semiconductor news, full article from Bloomberg.com:Taiwan Semiconductor first profit decline in 5 quartersNEC Electronics 3rd quarter loss widensChartered Semiconductor Manufacturing smallest profit in 5 quarters The good news: Big ticket factory orders are up 3%, the highest increase in 3 years! And MSFT had stronger-than-forecast sales growth. Dow futures are about 30 points up already!! I can already hear the bears screaming in agony. This is why taking some off the table is always a good thing. Anyway, anything is possible but seeing it's Friday, I suspect the markets may continue to bull-y the bears, for the hundredth time.Live trades and analysis from The Lauriston Letter
Closed SPY puts for 23% gain 1970-01-01 00:59:59 Entry at $1.10, closed at $1.35. Closed
other SPY puts entered at $1.25. Also closed DHI at 27.66, shorted at 28.57. Still holding some DHI short from 26.11.Live trades and analysis from The Lauriston Letter
Window Dressing Shenanigans (WDS) 1970-01-01 00:59:59 Here is my thinking for next week's action, please post comments, especially if you have a different take on window dressing (WD): Last week we had some serious selling on 1/25/2007 which brought in bears from the closet, er... woods. With the end of month upon us, I would expect a rally next week from WD (when funds buy best performing sectors of the month to include them or increase exposure in their portfolio). This should be aided by losing bears covering their positions. Continued in comments...Live trades and analysis from The Lauriston Letter Read more:Window
, Dressing
China en Fuego 1970-01-01 00:59:59 "When I go to the beauty salon, the girls who give me a manicure are even talking about stocks..." Was it only 2000/2001 when taxi-drivers in the US were asking for Internet stock tips? Somehow the dotcom bomb has been lost in translation, make your own conclusions from this story International Herald Tribune.Live trades and analysis from The Lauriston Letter Read more:China
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