Jeff T. - Freshman Equities Trader

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Tech/Telecom Wrap Up 7.8.2010
Posted by Jeff T. - Freshman Equities Trader on Jul 8th, 2010 11:35pm

The Tech/Telecom book had another positive day today finishing up 47 basis points versus an S&P 500, which finished the day up 0.94 basis points after staging a late day rally and finishing at the highs of the day. Although we were not on the webinar the desk performed well as we took advantage of opportunities when they were given to us and accomplished other projects when there was dead time on the air. I also felt the communication was terrific late in the day as we got long when the Spooz broke up through a trend line. The communication was terrific because there was no ambiguity, at 10:00 Dean said add 100,000 to the top 20 positions over the next 20 minutes and we added 100,000, then he said add another 50,000, so we added another 50,000. At the end of the day with the market on the lows we wanted to get long into the close so we looked for stocks at good levels and got long right in time for the rally. Everything ran very smoothly and we were able to add alpha at days end.

The top five winners in the book were GOOG, DELL, MA, MTSN, and MSFT. GOOG making it into the top five for the second day in a row had a strong day closing up 1.41% at 456.46. GOOG outperformed both the S&P 500 and the NASDAQ by 48 bps and 67 bps respectively. DELL had another strong day closing at 12.78 up 2.59%. DELL rallied into the close with the market and ended the days at the highs. MA was up 1.01% at 209.67 just 33 cents off the highs of 210. Rounding out the top five is MTSN and MSFT. MTSN closed up 1.34% at 3.77 and MSFT was up 49 bps at 24.42 and continues to rally off July 1st $23 low.

The losers were minimal in the book today with TTWO, MU, EMAN, AAPL, and VCLK. TTWO closed the day down -3.69% on what I perceive to be profit taking after an extremely strong day yesterday. The same is true for MU has had a nice run over the last few days from $8 to $9 this morning. MU could not hold at $9 and sold off to close the day at 8.69. EMAN closed the day -3.54% on no news except the fact its EMAN and moves at least 3% everyday. AAPL had a quiet day closing down 22 bps as well as VCLK closing down 46 bps.

As I said earlier we added to the book around 10 this morning and continued to add in the early afternoon increasing the value of the Tech/Telecom book by 80,000. The majority of that was allocated to AAPL where we added almost 50,000 dollars and then spread the other 30,000 out between MA, MSFT, GOOG, VCLK, and DELL.

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Tech/Telecom Review 7/7/2010
Posted by Jeff T. - Freshman Equities Trader on Jul 7th, 2010 11:14pm

A strong day for the markets as well as the Tech/Telecom book which finished the day up 56 basis points based on the notional value and 3.62% based on the current value of the portfolio. The market showed nice signs of strength as growth sectors should strength and small caps out performed large/mega caps. The market finally opened up flat and we were able to see the market grind higher throughout the day with the S&P 500 closing the day up 3.13%.

The three largest names in the portfolio led us to the upside with GOOG, MA, and AAPL being the three largest winners. GOOG opened up basically flat before rallying till 11 before taking a breather between 11 and 2 before continuing to rally into the close. GOOG finished the day up 3.24% at 450.20 a dollar off the highs. MA had a strong day closing at 207.57 above yesterday’s high and short term resistance. MA ended the day up 3.77% at the highs of the day. The third biggest winner and third biggest position in the book was AAPL. AAPL closed at the highs of the day up 4.04% and rallied about 3 points in the last hour. DELL was the forth biggest winner in the book closing the day up 4.68% at 12.46. DELL opened the day down five cents but rallied the entire day and closed at the highs of the day. Although there was no direct news on DELL, 4,000 February 10 Puts went up on the tape at 11.28 am which suggests someone feels DELL shares have stabilized for sometime to come. Rounding out the top five winners was Take Two Interactive (TTWO) which rallied the entire day to close at the highs of the day up 9.43%.

There were no negative names in the Tech/Telecom book today and since this book is 100% long there were no losers today. We added small to the book with 13,000 dollars of DELL and 5,000 dollars of MTSN. We also sold roughly 5,000 dollars worth of MU into the strength at 8.65. Overall, we added 13,000 dollars of long positions to take the absolute value up to $621,618.

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Tech/Telecom Review 7.6.2010
Posted by Jeff T. - Freshman Equities Trader on Jul 6th, 2010 10:49pm

The Tech/Telecom book underperformed the market today finishing down .08% versus a market that finished the day up 0.54%. The book opened up strong with AAPL, GOOG, and MSFT leading the way. Unfortunately, AAPL and GOOG could not hold their gains as the market pulled in and closed the day up 0.685 and -0.11%, respectively.

The top performers on the day were MSFT, MU, AAPL, and Q. MSFT was up 2.36% closing the day roughly one percent off the highs and held up well as the market pulled in, closing the day at 23.82. There was a bullish article in Barron’s over the weekend that may have attributed to the outperformance. MU finished the day up 1.58% at 8.35. MU has been beaten down over the last week after issuing poor guidance at their recent earnings report and $8 remains the short term support level. AAPL which was the strongest performer right out of the gate, could not hold the early gains but still managed to close the day up 0.68%, 4 dollars off the highs. Q was the forth and final positive name in the book closing the day at 5.27 up 0.57%.

The worst performers in the book were MTSN, MA, VCLK, DELL, and GOOG. MTSN was down 5.35% closing the day at 3.54, five cents off the lows. MTSN is now down 30% since reporting earnings on April 21. MA managed to just barley close the day above 200 at 200.03, two dollars off the lows. MA opened up strong with the rest of the market but couldn’t hold the gains and was one of the first names to go red in the book. VCLK closed the day down 3.49% at 10.24 two cents of the lows. VCLK opened up positive but quickly sold off and continued to sell throughout the day until closing on the lows. DELL closed the day at 11.90 down 1.08%. DELL unfortunately made a new 52 week low today when it traded down to 11.72 until rallying back to close at 11.90 which was an important support level coming into the day. GOOG looked strong off the open rallying until topping out around 10:30 and sold off the majority of the day before closing at 436.07, $2.50 off the lows.

Overall a negative day for the book but we did add to some of the bigger positions as the market should strength off the open. We added to AAPL, DELL, GOOG, MA, MSFT, and VCLK.

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CSCO Cius
Posted by Jeff T. - Freshman Equities Trader on Jul 2nd, 2010 12:11am

Earlier this week Cisco released their newest product at the Cisco Live conference in Las Vegas, the Cius. The Cius is a business geared tablet andthe first tablet Cisco has brought to market. At the conference Cisco stated the Cius is made for the enterprise marketplace and is not designed to compete with the iPad.

Details
- A lightweight portable business tablet , 1.15 lbs. versus the 1.5 pound iPad, with an optional HD audio station equipped with a telephone handset speakerphone.
- A front-mounted 720p HD camera, a seven inch screen, and a high resolution widescreen touch target display for video.
- Also a 5-megapixel rear-facing camera, 8 hours of battery life and an accelerometer.
- It has support for 802.11 a/b/g/n Wi-Fi and 3G, with 4G services promised at a later date.
- Cius will offer HD video streaming and real time video, multi –party conferencing email, messaging, browsing, and the ability to produce, edit and share content stored locally or centrally in the cloud.
- Cius uses Google’s Android Operating System (GOOG). It is an open platform for communication and collaboration whose form factor and applications are designed to more securely connect employees on-the-go with the right people in real-time, and to provide those workers with the ability to access and share the content they need from any place on the network.
- Cius also offers IT professional’s new options to equip mobile workers with computing devices.

Pricing and Availability
- There is no released/confirmed price but the rumored number is under $1000.
- Customer trials will start in 3Q10 with limited availability in December 2010 and general availability in 1Q11.
- Right now Cius will only be available to the enterprise market and it is unclear whether or not it will be available to the retail consumer.

Theme
- The main theme of this device is advance the desk phone and “make video the new voice” said Ken Dulaney an analyst at Gartner.
- CEO Chambers said it isn’t just about selling tablets, its about advancing video and getting more people to collaboration market which he believes has a $34 billion opportunity.
- With plenty of cash on hands Chambers stated “if this doesn’t succeed, we’ll do something else”

Bullish or Bearish
The question is whether or not Cius will be successful and I have been thinking about it for the last few days. When I first heard the news my immediate reaction was give me a break. CSCO doesn’t stand a chance introducing a product that will have to compete with AAPL or does it?

With CSCO targeting the enterprise market I think there may be potential. They are pushing the collaboration market and believe strongly in the opportunities and growth potential in the space. But the real question is do businesses NEED to spend money on the Cius right now?

Right now the answer is no. The current economic conditions are brutal and it isn’t a top priority to switch to a video/tablet phone. A tablet is a “cool” product, something you would like to have for leisure not to increase productivity in the workplace, and the Cius is really no different. Even if the Cius is different, right now is not the time and I don’t see the product being really successful for sometime to come.
Chambers said the Cius is complementary for AAPL and it isn’t supposed to be a competitor. Right now its hard to argue that as a BS statement because Cius isn’t offered on the consumer market, but, it is the corporate world’s iPad and with the current condition of the economy I don’t see businesses spending $1,000 an employee for a “cool” product.

It’s tough to be outright bearish on CSCO at the current levels but I don’t see the Cius pushing the needle and the expenses that they could incur may apply pressure to the 12% - 17% revenue growth they are expecting over the next three years. Over the long-term I see tablet’s becoming a necessity in the corporate world but now nothing is proven and it isn’t the right climate for businesses to take chances burning cash and time on something that is unproven and foreign.

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L/S Review 6/29/2010
Posted by Jeff T. - Freshman Equities Trader on Jun 29th, 2010 11:51pm

The Long/Short book outperformed the market today closing down 2.49% versus a market that was down 3.1%. Although the book did outperform the market it did have its worst day since inception closing down just shy of $100,000. The spooz made a new intra-day low today on poor economic numbers and negative news out of China.

The market tested the 1040 level for the third time and today broke through. With the break of 1040 we took down our long positions by roughly $400,000. We also covered the rest of our short position’s including the FXE hedge, which was our best performer on the day.

The other four winners in the Long/Short book were our shorts, NAV which was down 6%, AVY down 5.26%, AIG down 5.11%, and BG down 4.95%. The two top laggards in the book were also our largest positions BA down 6.33% and GOOG down 3.77%. The other three losers were TPC down 6.5%, CBS down 7.5%, and MTSN down 7.4%.

We took the absolute value of the book down $1.8mln dollars but covered all of our short positions and sit 100% long. We did bounce off the lows to close at 1035 and will be looking for a good ADP employment report at 8:15.

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L/S Review 6/28/2010
Posted by Jeff T. - Freshman Equities Trader on Jun 28th, 2010 11:15pm

The Long/Short book was down 56 basis points vs. the S&P 500 which was down 20 basis points. The book underperformed the market as it was clear there was selling in cash equities. Our weakest performers were MA, BA, and CVE from a PNL basis. As far as percentage losers are concerned RDN was down 5.88% and WLT was down 4.69%.

The biggest winners in the book were the FXE, the euro based ETF was down 90 basis points. The FXE is also the biggest short in the L/S book which is acting as the books main hedge. CBS was the second biggest winner and showed its greatest strength right off the open. AAPL was the third biggest gainer in the book closing at 269.50 up 1.05% and just 25 cents off of the highs. AAPL showed relative strength throughout the day and held just below R4 as the market pulled in at the end of the day. AAPL is trading $9.50 off the all-time highs. BBY outperformed the market today closing the day up 54 basis points and is finally showing relative strength after there disappointing earnings report on the 15th. Rounding out the top five was MI, which closed the day up 1.14%. This is MI’s third consecutive day as a top performer in the L/S book. MI has been respecting the technical levels and has bounced roughly 10% off the 200 SMA on the daily chart.

MA was the worst performer in the L/S book was MA closing the day down 3.15% at 211.50. MA was sold off throughout the day and we’ll be watching the June low’s of 195.50 as a major support level. BA, one of the biggest positions in the L/S book was down 2.14% on the day closing at 67.30. CVE was down 3.35% on the day closing at 27.10 40 cents below the firms technical drop dead price. IMAX closed the day at 15.57 down 2.69% just seven cents above our drop dead price of 15.57 and AGM was sold throughout the day after making a high around 11 and closed the day down 3.47% at 15.03.

Not the best day for the Long/Short book, underperforming the market as it was clear they were selling individual names. Some stocks are pulling into major technical levels that we’ll be keeping a close eye on over the next few days.

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RIMM's Reaction
Posted by Jeff T. - Freshman Equities Trader on Jun 25th, 2010 12:02am

RIMM reported today after the close. The bottom line number came in as a slight beat, 1.38 vs. consensus of 1.34. RIMM reported top line growth of 23.7% year/year to 4.24 bln but missed the consensus estimate of 4.35 bln. During the release RIMM also issued a share repurchase program for approximately 31 mln shares.

When the release hit the tape, the first number we heard was the EPS which was a beat and then the share repurchase program. When this was announced Dean's immediate response was something has to be wrong and immediately wanted to know the units sold number. The units sold number came in weak along with revenues but the good news was out first and the knee-jerk reaction drove the stock higher.

The stock traded from the close 58.58 up to 60.63 immediately as short term traders reacted to the headline number. The stock continued to move higher and if you had all of the scenario's played out you had plenty of time to put on a short at an advantageous price.

In hindsight, reacting to earnings, just like everything else seems simple but in the moment its really hard. The key is to pay close attention to a select few names and have all the scenario's played out, this will give you the ability to make a smart and rational trade off of the initial reaction. This is the second earnings number I have noticed a big initial knee jerk reaction which has been a great opportunity to get on the right side of the trade at an advantageous price.

It's going to be interesting to see how RIMM opens up tomorrow morning with it trading down around 6% after hours. The last three times RIMM has reported the stock has opened down twice on a miss, gapping down 12% and 15% respectively and up 12% the one time they beat.

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Competing
Posted by Jeff T. - Freshman Equities Trader on Jun 23rd, 2010 11:31pm

Earlier this year when I first started at the firm and before the news hit we use to talk a lot about Tiger Woods. We spoke about how consistent his routine was and how dedicated he was to his profession. Unfortunately for us and the rest of the world we were slightly off as the news leaked and Tiger's extracurricular's hit the front page of every newspaper. But lets put that aside for a minute as I discuss something I noticed when watching the US Open this past weekend.

Before the start of the final round on Sunday afternoon they showed Tiger warming up on the range and his reaction to a shot caught my eye. Tiger was hitting short wedge shots, which most would just be hitting to loosen up and paying little attention to the result, but not Tiger, he was incredibly focused and competitive. His reaction to a meaningless warm up shot was of utter disgust. Say what you want about Tiger, his mind is out of it, he's not the same guy, he's never going to catch Jack, etc. the guy is a competitor and he's out there to win every week and expects more out of himself than anyone else.

If any other player on tour and maybe any other athlete in the world went through what Tiger did they wouldn't be playing in majors and they defiantly would not be finishing in the top 5. I thought it was important to notice how focused Tiger was and how competitive he is, because, when you trade the markets its no different than playing in a tour event. To put it simple the Tiger Woods of our world is a guy called "The Russian" and if your trading the e-mini's your trading against him everyday. He has more fire power than anyone, he's extremely talented, and as competitive as Tiger.

I thought it was interesting to bring this up after the US Open, because anyone with a 1.4 handicap or better and 200 bucks can try to qualify and if you qualify you can play against the best. In the financial markets, anyone with a few thousand dollars and a futures account can trade against The Russian.

Let me get my point, if your a trader no matter what your status (handicap) may be, every time you put on a trade your competing against the best and brightest minds in the business. These guys are extremely smart, focused and as competitive as any pro athlete so you have to be on your game everyday or its going tough to stick around.

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Defining Risk with the ADR
Posted by Jeff T. - Freshman Equities Trader on Jun 22nd, 2010 10:14pm

I just read an interesting article in Stocks and Commodities Magazine that I feel is relevant to what we are currently trying to accomplish at the firm. One of our goals in the coming weeks is to generate alpha intra-day and this article focuses on a day trading strategy.

The article talks about defining your downside intra-day risk by using the average daily range. The average daily range is the daily high – daily low averaged over a select period. The article uses the seven day average for their strategy.

Anyway the strategy is fairly simple, use the average daily range over the seven day period to define risk and reward. Every trade you enter your stop should be 10% of the seven day ADR and your profit target should be 15% of the seven day ADR. For example if the ADR for MON is $1.00 your stop is 10 cents and your profit target is 15 cents on every trade you enter.

This is a broad strategy but if you could couple this with pivot points and moving averages it will take another grey area out of our trades and give us defined stop’s. This will be especially helpful when making low risk buys and sells at S4 and R4. The next few days I’m going to start tracking how a few of our bigger positions, BA, MA, AAPL, GOOG, and IMAX respond to the seven day ADR strategy.

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L/S Review 6/21/2010
Posted by Jeff T. - Freshman Equities Trader on Jun 21st, 2010 10:16pm

The Long/Short book opened up strong today but couldn’t hold the gains. The L/S book made highs just off the open when the book traded up 88 basis points as the market rallied on the news out of China. The book pulled in for the rest of the day before bouncing off the lows with the market to close down 31 basis points versus the S&P 500, which was down 39 basis points. The e-mini’s rallied into the 4:15 close to finish the day flat.

The day started out with names like AAPL, IMAX, and BA leading the way to the upside but that changed mid-day when AAPL started to pull in with the market and positive news came out in MA. MA started to rally at 12:45 when news came out that an agreement with the House has been reached on the heavily debated debit card fee cap issue. MA traded as high as 230.48 before pulling well off the highs to close the day at 223.34 up 4.24%. FXE was another winner in the book as the euro started to sell off at noon to close just off the lows of the day at 122.78 down 47 basis points. IMAX was also one of the bigger winners on the day closing at 16.46 up 1.94% having its second strong day in a row.

GOOG was one of the bigger losers on the day closing down -2.29% at 488.56. GOOG was weak all day as the news from China rallied BIDU as GOOG sold off. MTSN and XIDE also had a rough day. MTSN closed at 4.23 down 4.51%, 12 cents off the lows of the day while XIDE closed down 3.53% at 5.46 two cents off the lows of the day.

We’ll be keeping a close eye on two of the biggest positions in the book tomorrow AAPL and GOOG. AAPL has shown strength making new all time highs on a daily basis and GOOG after the weakness today and a close well below 500. GOOG is approaching short-term support levels at 472.

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