Futures are looking a bit lower this morning. Sometime last night futures spiked down about 20-30 points for some reason. My guess is the Asian markets had opened up and were hedging against potential downside this morning but it’s anyone’s guess.
Visa’s looking weak this morning with pre-market action taking it below $82. I will most likely take a nibble at $81 which appears to be a good support base with two failed breakdown attempts over the past week at that level. If $81 does break down, $77 appears to be the next logical support base. I still don’t think well see Visa under $80, but one never knows.
Option Addict has released his latest watchlist this morning. If you’re in need of ideas, just starting out, or need to see how JK works, head on over and check it out.
Microsoft this evening withdrew its bid for Yahoo. Yahoo was demanding approximately $37 per share while Microsoft was offering about $33 per share. Microsoft also stated that it won’t go hostile in an attempt to take over Yahoo. Expect Yahoo’s shares to drop on the open on Monday. Remember that prior to Microsoft’s attempt at the takeover, Yahoo was trading in the $18-20 range. As a result, a 20%+ drop in Yahoo’s share price on Monday isn’t much of a stretch. I’m expecting quite a few angry Yahoo shareholders coming forward as well.
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No action taken on Visa so far with today’s selloff. The strength of the selloff actually concerns me so as a result I have yet to take any positions on it. Here’s what I have for Visa right now. Be back after lunch!
Over the past few months, I’ve seen my portfolio whittle away to almost nothing. Granted, I started with practically nothing (in the market’s view) but still. After trading for nearly a year, I still have quite a bit to learn. However, some folks at thinkorswim have given me a task in order to refine my trading skills. In short, in order to be a great trader, it pays to be a specialist. That is, if you want to become an options trader, trade only options and nothing else. Futures trader? Same thing.
There’s a twist to the homework assignment. Now that you’re focused on being specialized in a vehicle, take that one step further and specialize in a single underlying and just that single underlying. Learn how it moves, how it trades, what items affect it. Learn it for an entire year. While that seems somewhat excessive, it does appear to be a good exercise in focus and trading refinement. That’s why I’ve decided with the transparency of my trades, Visa will now be my project. That’s right. Visa will now be my bitch.
I will try my hardest to trade Visa exclusively. There will be times I will deviate, if only because some setups out there are so blatantly obvious or the Option Addict is on a tear (when is he never?). So starting tomorrow, here’s the game plan for Visa now that I’ve sold what May calls I had left on it.
There’s the short term game plan for Visa. I’m waiting for a short term pullback near the $83 region. With the recent $15 run-up in 48 hours, I’m expecting some sort of a breather. The other alternative is to buy on a breakout of $87.50, or today’s 52-week high and maintain a tight stop. With May options coming close to expiration, I will most likely be looking at June calls, somewhere in the 90/95 area. I don’t forsee Visa heading below $80 any time soon to be quite honest.
Let’s see how the game plan works tomorrow. Good night!
This morning, PPI and PPI Core numbers were released for the month of March. PPI came in at 1.1%, about 0.5% higher than estimates. PPI Core came in line with estimates at 0.2%. For a quick recap of PPI and PPI Core, here’s a link to the PPI homepage at the Department of Labor. Remember that PPI is a measure of inflation and PPI Core is a measure of inflation sans food and energy. What does this mean? From my point of view, food and energy costs are rising somewhat rapidly since core rates remained the same from February to March.
Crude futures earlier in the day rose to $113.90 and settled near that level today.
Perhaps it’s a lack of experience, but if two of the most basic needs for the US population, food and energy, are increasing as a pretty good rate, as well as crude and gasoline (closed near $3.35 per gallon today) are rising as well, why is the market taking it as good news? If people are forced to spend more on food and energy, shouldn’t that result in less money available for spending, resulting in a further slowing of the economy?
Earnings Report
Washington Mutual (WM) reported a loss of $1.40 per share while Intel (INTC) came in at $0.25 per share. WM’s earnings report was in line with estimates from last week and as a result are up about $0.20 in after hours trading. INTC, while reporting earnings in line with estimates, reported margins higher than expected. It also appears that INTC is reporting earnings for the rest of the year to remain unchanged which is helping to offset any ideas of a slowdown with the chip maker. INTC’s currently up about $1.75 in after hours trading as a result.
