Sunday, March 29, 2009

Earnings Week of 3/30

Here's the week's earnings spreadsheet:

Spreadsheet Link

This is a relatively light week with only a couple of names worth paying attention to so I'm going to stick a little recap of last week's action in here. Kind of a "Keepin' Score Lite" post for those that have been reading long enough to remember those posts.

Last week, I got a few things correct and few things sort of off.
First the correct stuff:
- Pointed out IV was too high for FMCN to make a profit. Result: peak price about 1.20 below B/E price.
- WSM did get above the 10 mark and spiked up ever so briefly to 12.36 before falling back.
- RHT looked interesting and it closed the week at 16.99 above the strangle B/E of 16.30 and at one point had reached 17.80.
- GME, if you had a long-weighted position you would have done fine as it peaked out at 28.45 just above the B/E price of 28.05 for a neutral position.
- I thought TXI was priced perfectly on the downside but had some wiggle room for profitability on the upside. It benefitted from a strong run and closed the week at 25.10 - well above the B/E price of 20.07.

Things I didn't do so well on:
- I thought TIF had peaked out, but it pushed upward and broke past the DMA(50).
- I didn't think WAG had very good odds to be profitable and it would have been.
- Similarly, I felt CCL wasn't worth the time but it came within a penny of the B/E price in the sheet.
- Not really sure how I managed to overlook BBY last week but that was a stupid, stupid move on my part. I would have treated that like GME given my ongoing thesis that the liquidation of CC has been like BBY buying outs its biggest competitor at zero cost. Hindsight is 20/20 but that's pretty disappointing for me.

So has the rally played out? I mentioned to someone in the middle of this past week that 666 * 1.25 = 832.5 so that was my target for the local maxima. The peak of SPX this week was 832.98. Obviously, it's a bit premature to declare the top here it does fit with the KISS idea of theories - Keep It Simple, Stupid. We'll see, but suffice to say longs are hedged and I am looking for more downside in the coming week, even if it is just a pullback to the DMA(50) around 790.

Anyway, as mentioned earlier the number of earnings releases this week is small. But here they are anyway. One important note: Yahoo! is providing yet another reason why their share price deserves to be where it is today. Again, the data reporting on the options has been dicey and in several instances the puts are intermixed with the calls. I have tried to manually correct, but I think in a few cases I have missed some so be aware.

Monday - SNP. I've mentioned many times on here that I don't like/trust ADR/ADS because of their even worse overseas regulation. The exception would be a company like STO because of its location in Norway. Who doesn't trust Norwegians? At any rate, I am not going to make a comment either way here because I've seen screwy patterns and volume many times in the past.

Tuesday - I think APOL will be volatile, just not volatile enough. Same thing for GIGM. ACH is another Chinese ADR. LEN... a 40% move seems a bit much to ask of any stock in this environment.

Wednesday - nothing. Probably because no bank wants to have their earnings on April Fool's Day. It's just too easy to make jokes. I'm sure LOLFed is sad.

Thursday - Two big companies MON and RIMM. I'll take MON first. Current pricing has an average absolute move of 11.25 which is well within the performance of the last two quarters considering the moves of +19.22% and +18.38% respectively. However, it just moved up from the 80 level and just like the rest of the market has moved basically 25% in 2 weeks time. It's difficult to imagine how much room is left on the upside especially with the DMA(200) looming at 93.20. MON has not been above DMA(200) since October. My two cent gut feeling is a return to 80. Now for RIMM, which is up about 22% give or take in the same period of time. The way that the spreadsheet calculates its break-evens is on a gap in strikes but even buying both at 45 still is no guarantee of success. The downside B/E ends up at 37.90 which is virtually the trough before the latest run and to move up requires a big bounce above the DMA(50). It's certainly not impossible - RIMM has made moves like this in the past - but it seems more unlikely this time around with the indices appearing to hit a local maxima. Of the other two on this day, KMX has shot up about 40% and MDRX about 25%. It seems unlikely that either of these two will be profitable strangles.

Friday - nothing made it through the screen.