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Test

SPY showed early strength before getting rejected on the broken uptrend line and falling back in a fairly orderly manner, before panic erupted and high volume selling ensued for the last 30 minutes, while the VIX put in a 33% day.  Interesting action and could set us up for a test of the 50 day as early as tomorrow morning, and a nice panic open with an overshoot of the 50 day could set up a nice tradable bounce.  

Tomorrow's Economic Data:
9:00 a.m. Case Shiller Index for December- Market Expected 6.5%
10:00 a.m. New Home Sales For January- Market Expects 383,000
10:00 a.m. Consumer Confidence For February- Market Expects 62.0

Options Angles-

NSC shares have recovered well from an earnings miss, and looked poised to break out this morning, but turned lower with the market and put in a bearish engulfing candle with a break and close below the 10 day.  Traders were active today in June 72.50 calls for 1,000 & 2,100 June 75 calls as open interest continues to build in the name.

Company Specific Dates: Earnings 4/24/13

Not looking to step into a longer dates long position at this point, but worth watching for a bounce off of the 20 day or through last weeks highs.

DG shares have broken the small downtrend on the daily, and on a longer time frame are bumping up against the downtrend on the weekly, with MACD looking for a bullish cross, shares set up pretty well here through 47.24, and will look to test the 50 day on the weekly at 48.47 and the 200 day on the daily at 49.72.  Traders were active today for more than 10,000 April $46 calls, which last traded at 1.91.  Certainly a notable position with open interest in the strike only at 40 and no other significant builds in the month.  

Company Specific Dates: Earnings Around 3/18/13

If the market can in fact bounce of the 50 day and begin to build higher, this is a position I am interested in, and would like to see some additional build in the name.  

Trade I would look to enter: March 48/April 46 calendar call spread at $1.55.

VOD shares continue to tread water, but options traders continue to position themselves bullishly on the name, and the one thought that continues to remain is some news in regards to VZ.  Shares are currently attempting to hold last May's lows and have a lot of gaps to fill above if shares can begin to rebound.  Certainly technically there is not much to like here, but today saw traders step in for 30,000 July 29 calls, which trade around .20.  Add to that significant open interest builds in calls in April and July and you have a bullish case despite shares looking weak technically.

Company Specific Events: 5/21/13 Earnings, 7/19/13 Management Statement For Quarter Ended June 2013, 7/23/13 Annual General meeting.

Certainly at .20 and $4 out of the money it is an extremely speculative play, and not one of interest to me, but I do have interest in the name going forward as I have seen weeks of accumulation and have traded the flow well, but I am waiting to see some commitment in the name before getting interested in some nearer strikes such as the July 26 or 27 calls.

FTNT sets up well here and tried to break out, but ultimately succumbed to the markets weakness and retraced right back above the 10 day.  The name continues to hold the earnings gap well, and certainly does look like a prime candidate to move higher on market strength.  Today saw some buying across varying strikes in March, but could be closing action and will wait for tomorrow to check OI, but also saw 2,000 April 26 calls trade and 2600 June 25 calls trade.

FTNT is more of a name I would rather play the break out for a day trade, and potentially swing a few pieces of the trade on watch for the 24.50 break.

No upcoming company specific events of note.

NTAP shares have been breaking down and have sliced through the 10,20 & now 50 day moving averages as well as the uptrend and now look destined for a test of the 200 day at 32.35 and with the way it has been trading look set to move below and test 31.50 area before making its way down to the gap in the 30 to 27.50 area.  Today saw a lot of activity with June puts including 3,000 33 puts (could be closing, will check OI tomorrow) & a massive June 30-25 put spread trade 10,000 times.

Company Specific Events: 3/12/13 Piper Jaffray Conference, 3/13/13 Pacific Crest Conference, 4/2-4/4/13 Wells Fargo Tech Summit & Earnings 5/22/13

It is an interesting play with a lot of catalysts in between and shares do look lower, but it is a longer term position, but an April 30-28 put spread at around .30 sets up well here on continued weakness through the 200 day.

GM shares have rolled over as of late and are currently trending lower into last Decembers Einhorn gap, and today saw traders step in with a bullish position of 6,500 April 30 calls & Sept saw action in 29 calls for 3,000 & 30 calls for 4,000.

Company Specific Events: 3/1/13 U.S. Vehicle Sales Conference Call, Earnings 4/29/13.

It is an interesting name, which does seem to be executing well, but I am not interested in bottom picking it here, and will wait for strength and additional positioning, but one could take a starter position in April 27 calls on a gap fill completion and roll up to a full position through 28.19, but it is a more aggressive play.

WMT shares are attempting to break out of a series of lower highs, and have once again held support and are moving higher after an earnings, which may have not been great but worse case scenario fears after the e-mail debacle were not met either.  Today saw 2,500 May 75 calls bought at around .35, with 2,000 already in open interest in the 77.50 strike.

Company Specific Events: Earnings 5/16/13

This is a play I like as these plays on lower beta names can result in massive percentage gains, and I will look to follow in the foot steps and take a position in the May 75 calls through 71.70.

Technical Set-Ups
AXP shares attempted to break out today, but were rejected and retraced with the market weakness and are now sitting on the 10 day, with the 20 day catching up.  This is still a name I like and one I will look to for the 63 break on market strength.

MCD showed strength today despite and extremely weak market, and that is worth noting the chart sets up well here with RSI ripping higher, but nearing overbought conditions and MACD looking to make a bullish cross.  I like this one through today's highs in the 96.78 area.

CCL has broken down hard for the past 10 days, and has sliced through the 200 day and longer term trend support, and looks like a short through 34 or on a bounce up to the 200 day.

 ACT shares have lost the 10, 20 & 50 days and today attempted to reclaim the 10 day but got rejected hard and closed near the lows of the day.  It appears set for a battle to hold support, which coincides with a gap fill below.  Looks like a short through the 200 day.

 FLDM broke out of a bull flag on a 1.8% down day in the markets so always worth taking note of and I like this one long through today's highs around 17.10 and then sets up for a nice move through 17.25.  RSI is moving higher and with a reading of 64 still has more gas in the tank for a nice move higher.  Stop below the 16.69 area or 16.38 to give it a bit more wiggle room if so desired.

 DXLG was able to remain green on the day, and continues to knock at resistance, and looks set to make the move through in the near future, I like it through 4.82 today's highs.

 DGX has not been able to find a bid since its large gap down, always a warning signal for lower prices, currently hanging onto to longer term support and looks like a good short through this 55.50 area could have 2 points in it.

 IPXL tried to break this small downtrend today, and failed, but did remain in the green for the day and is currently holding at last summers lows, but only so many times that it can try before it fails so one to watch for a short on market weakness.

 PWRD has pulled back in a fairly orderly fashion and was able to reclaim the 10 and 20 day moving averages in a tough tape with RSI moving higher and breaking through 50 got rejected on the trend line today, but looks good for a long through 12.22.

 PFSW in a rising channel and sets up really well here with RSI looking to break higher MACD crossing bullish and a big volume day today it looks nice through today's highs of $3.57.

 PNRA had some notable bearish options activity last week, but held in there rather well today certainly disappointing those put holders, but it is still on my radar for a trade on a break down of 152.50.

 WFM is approaching oversold and tried to bounce today before getting battered with the market, but shares do not look too good here and look good for a short tomorrow green to red.

Earnings

PCLN reports earnings 2/26 after the close and has beat each of the past 4 quarters, the street is looking for $6.54 eps.  PCLN has a 4 quarter average move of 9.5%, with a max move of 17.3% when it got roughed up for over 100 points.  Shares broke trend support and failed to rally on Friday as traders await this report options market is pricing in a roughly 7% move into the report.  It does seem fairly cheap in comparison to the norm, but with EXPE having a muted reaction it makes sense for these to be priced cheaper, not to mention the one outlier move of 17.3% skews the average move.

Trade Idea: 1) Iron Condor, March 1 720-730 call spread & March 1 630-620 put spread for a $4.20 credit.

                   2) Short March 1 720 calls Long March 16 730 calls & Short March 1 620 puts & Long March 16 610 puts for total debit of around $2.20.

                   3) Long March1/March16 730 call calendar spread @3.50 & Long March1/March 16 630 call calendar spread @ around $2.00.. Total debit $5.50.

FSLR reports 2/26 after the close and the street is looking for $1.76 EPS, and FSLR has beat 2 of the last 4 quarters with an average move of 11.875%, with a max move of 21%.  FSLR shares fell below its 10 day last week, but were ultimately able to reclaim it on Friday.  Options are pricing in about a 12% earnings move.  3 of the past 4 earnings reactions have been negative, and FSLR is always a name I favor a short strategy into earnings, but shares have performed well this year but also are probably slightly ahead of themselves.

Trade Idea: Long March 1 32-29 put spread @.95 & short the March 16 33-35 put spread for a .80 credit.  Net debit of .15.

Most Advanced:

EDAP .64 18.71%

CMGE .68 13.28%

AERL .39 11.02%

ENDP 2.22 7.92%

ZNGA .25 7.84%

Most Declined:

AFFY -14.08 -85.23%

PANL -4.21 12.85%

AVID -.68 -8.88%

JASO -.46 -8.85%

After Hours Advances:

MELI +2.44 2.89%

AMGN +2.45 2.74%

TIVO +.25 2.04%

PTEN +.40 1.77%

After Hours Decliners:

CZR -1.10 -9.39%

VVUS -.46 -3.71%

ADSK -.93 -2.54%

APOL -.38 -2.13%

BLMN -.30 -1.71%

Commodities:

Gold +13.80

Silver +.53

Platinum -.53

Copper +1.05

Crude -.02

Brent -.56

Nat Gas +.12

Few Quick Ideas.

SPY ripped higher in the first 30 minutes of trade and faded pretty quickly before chopping around taking another leg lower and spiking into the close.  Moral of the story is another day of rather choppy action with volume really drying up between 12 and 2 tough trading within that time frame.

Worth noting here is the massive accumulation in open interest int he 152 strike, and it is a lot for the market to work through, going to take roll ups to happen, which could be worth a look in the morning as 150K 152 calls traded today so will be worth a look to see if that is closing out.  Otherwise I would say we will be right around this level on Friday, and to be safer I would say 151-153 is an expected range for this market this week.  To take advantage of this one might consider an iron condor Selling 153 calls, buying 154 calls, selling 151 puts & buying 150 puts for a net credit around .16 the risk reward isnt favorable but the probabilities of success are high.  Probably not the best of strategies to enter on a Thursday but success is likely for this trade if that 300K OI remains in the 152 calls tomorrow.

BIDU broke down early before rebounding off of the lows and then chopping around for the rest of the day.  Looks like a good day trade here for tomorrow through todays lows or if it opens green then watch for it to begin moving down or red.

EMC with large call buying today in the Feb 24.50 calls also in March with 2000 25 calls and OI is building in march calls as of late.  The Feb. calls could have just been a cheap play on a good CSCO report and probably not the best name to correlate with CSCO.  The March calls, well, they have been building up but the chart has just put in a lower high and shares rolled over today and I see no reason to be involved here.

GMCR saw about 4,000 March 45 calls bought this morning and really got shares moving, but the chart here isnt really impressive to me and while it could be a name to play through the 10 day its not something I want to get invovled in with calls trading around 2.00.  If you wanted a cheap play to play a run back to 50 the March 48-50 call spread trades at about .35 not a bad way to be invovled in the name if interested.

DNKN has been stalled out since earnings and today tested its 10 day and bounced nicely.  A trader stepped in and bought 8,000 march 35 calls, which trade around .40.  Also, of note was SBUX had a pretty rough day today and didnt trade well, so there could be a trade here on a break of the 10 day.  The 35's are about 7% out of the money so certainly speculative and one might consider the 37.50 as a way to play or a 37.50-35-32.50 put fly at around .50 offering 5 to risk reward, but harder to profit from quick sharp declines.

IP saw a lot of call buying today and has been this way for a week now today saw 20,000 July 45/50 call spreads trade at around .80 with 35,000 having already traded earlier in the week.  Signifigant positions in a name that has worked off over bought.  i have had success in the past following the flow in this name and it is interesting here, but too far out for me to join on that play the March 42 calls could be playable around .80 on a push back through the 10 day tomorrow.  Certainly a name to keep on the radar.

Things To Watch Tomorrow.. Preview Of Newsletter

SPY chopped around most of the day staying in a roughly .30 range for the most part before breaking out to highs of the day in the late afternoon session  before selling off a bit for an overall unchanged day.  QQQ did roughly the same, while the IWM closed right near session highs with a big green candle to end the day.  While the VIX closed right at session lows to end the day.  Overall, a bullish close in my opinion.  But becoming a choppy tape.  

Options Activity-

Equity Put/Call ratio- .56

Index Put/Call ratio- 1.39

Equity call volume- 824,905

Equity Put Volume- 465,420

Economic Data:

• Treasury Budget at 2:00 P.M.

Options Corner

MSFT is interesting here as it put in a very strong day today and took back the 10 day moving average. 13,000 Feb 28 calls were traded today and is certainly a very inexpensive way to play this name and a possible break out to the 200 day.  I entered this trade today at .12 and calls are now trading at .15, but still a very cheap way to play this name.  One that could move on a positive CSCO report.  CSCO is also a name that has been a target of bulls and today they took aim at the Feb 21.50 calls, earnings are on 2/13/13.

ORCL is interesting here after taking a breather and pulling back, albeit a bit further than most would like as it has lost its 10 and 20 day, but certainly a decent bounce candidate and one to watch as it could make a run back towards 52 week highs.  Today saw bullish activity in the April 35 calls I entered this one as well at 1.19, and calls are trading at 1.32 now, but still a great way to play a name that has been very strong and should perform well in the coming months.  Going out to April gives many options as well and the one I will be looking to do, is selling front week premium against my spreads.

FFIV shares are beginning to roll over here and RSI has already rolled over, while MACD is crossing bearish, and also has the small earnings gap, which seems likely to get filled.  Today saw a trader paying about $6 for 1,000 April 105 puts, $600,000 in put premium a pretty significant position.  It is certainly an interesting position and one to keep in mind and one to possibly play if looking for a short position.  A March 100-95 put spread and trades at about 1.25 could be a better way to position for this move.

Shares of NOC have held trend support and put in a higher low, while taking back the 10-day and moving towards the 20 day RSI is moving and looking to leap above 50, while at the same time MACD is setting up for a bullish cross.  Today we say 4,000 March 67.50 calls bought add that to 4000 in OI at the March 65 strike and over 10,000 now in OI at the march 70 strike, while what appeared to be some put selling in May, and you really have a bullish scenario here.

Shares of SYK pulled back and held the 20 day and last week regained momentum and took back the 10-day, and now look set to make a break out to new 52 week highs. Today saw over 2,000 March 65 calls bought.

COST had been a set-up I had been watching for a while now waiting for that 104 break, but it never happened, but shares have pulled back here breaking the 10 day and closing right on the 20 day.  Today saw some interesting action out in July calls deep in the money the most bullish of positioning with 800 July 93 calls 1500 July 98 calls & 900 July 100 calls.  July is going out too far for me, but if you were interested in a stock replacement I would certainly say the July 93 calls are attractive and using a covered call strategy writing front month premium or overwriting is a good way to play this.  I am more interested in a shorter time frame and with this pull back I feel like there is now more ways to play this one could look to play an overshoot of the 20 day and making a buy at or near the 50 day around 100 or play the break out above 104.

Large Caps-

WRPT is interesting here after making a series of higher lows, and putting in a strong day today, I like how this one set ups through today's highs for a move higher up to the 200 day and possibly beyond.

YHOO sets up well here and earnings pull back has been bought very quickly RSI is moving MACD crossed bullish and this one looks great through today's highs.

Small Caps-

 AXL looks very strong here after a long ride on the 10 days shares broke free today and RSI is moving MACD is bullish, & shares have been under accumulation there is not much here not to like.  Looks to me like 12.70 then 12.94 and then off to new highs I think this one has gas.

 ELY this is a weekly view as shares broke out on the daily, but stopped perfectly on some resistance into the weekly I like this one on a break above 7.25.

 GTIV shares broke out of this trend resistance today and RSI is moving with a bullish MACD this one can run with 10.97, 11.21, 11.79, 11.95 & then 12.60 all reasonable targets here.

 MU shares are flagging and put in a strong day today, I mentioned over the weekend the notable call buying in this weeks 8 calls, and I received some hate mail on stocktwits from a guy that seemed to be losing long and short in this name and seemed very confused.  This one looks good on an $8 break.

OVTI with AAPL catching a bid so are its suppliers and OVTI sets up well here looking for that 16.03 break.

Earnings-

BWLD has missed wall street estimates the past 2 quarters and has beat 2 of the prior 4 quarters.  Wall Street is looking for .95 in the current quarter.  Four quarter max move is 17%, and average move past four quarters is 11.8%.  Options are pricing in about a 10% roughly in line with past for quarters average move.  Feb open interest is about 2 to 1 calls/puts and nothing notable today.  March 75 puts were active today with 1400 trading, and need to confirm OI change tomorrow.

On the chart BWLD has been range bound but trending up and has failed to make much progress in filling the prior earnings gap always a worrisome sign, but for the most part the chart does not matter much except for levels coming into earnings.  Resistance is at 79.31 the 200 day moving average and has the gap fill into the 82 area.  While support comes in at the 72.50 level and 69.80 below that and 68.70 area below that.

Trade Ideas:

Feb 80-85-90 call fly for 1.65
Feb 75-70-65 put fly for 1.00
Feb/March 85 call calender spread at .40
Feb/March 70 put calender spread at .60
Sell the Feb 85-90 call spread & 70-65 put spread for credit of 1.35

Nile has missed Wall Street estimates 2 of the last 4 quarters, while beating the prior two.  NILE 4 quarter max move of 32.5% and average 4 quarter move of 12.3% affected largely by a no reaction to report in November, but taking that away gives an average move of 16.4%.  The options market is pricing in a 12.8% earnings reaction largely in line with prior reports.

On the chart NILE looks pretty bad and looks set to fill a prior earnings gap that needs filling, which would take shares all the way down to the 26 level roughly in line with the expected earnings move.  Up above you find resistance at 34.67, 40.25-40.54 and at 43.

Trade Ideas:
Feb 30-25 put spread at 1.25
Feb 30-35 call spread at 2.00
Feb 35-40 call spread at .50
Feb/March 25 put calender spread at .20


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Trades Today:
RAX +$1.20
NOC +$.02
RTN -$.03

Solid day for a dull day in the markets.

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