Jeff T. - Freshman Equities Trader - Weekly Desk Notes

Futures Update and Global Market Recap 

• July 21, 2005- first allowance of Yuan to rise
• Re-pegged to dollar in 2008
• Implications:
• China has faith in its own economy and global economy
• Improving relationships with Obama administration
• Our nation’s biggest importer => products are more expensive
• Chinese labor will become more expensive in part of production process
• Trade balance is hugely negative- higher prices from imports will far outweigh our exports to China
• Traders view China’s news as a positive, views market as cheap, and are looking for excuse to buy when in reality the news is mixed
• Market indicators are on their lows since back in April:
• First less than 10 handle range on Friday
• Avg 5 Day Range is below 14
• Markets on monthly highs:
• Crude oil
• Gold, still making all time highs
• Europe, up 1.5%
• Asia
• Dollar rallying vs. Yen

- FBR says that if MTB was to be taken out they expect value would exceed $120 per share. 




- More upgrades than downgrades today. 

- PANL: OLED technology that allows the pixels to be flexible. 
- QNST: Frank Quattrone IPO. 
- Key in this business is to generate uncorrelated alpha. 
- On big gap days Shine continues to look for relative strength and relative weakness. 
- NAV is a 9/10 on Mosks rankings. 
- GME + BBY 
o Strong names but being liquidated. 
o JF is looking for Revs to start up ticking and EPS numbers to beat handedly next earnings cycle.
- BA strong look to add. 
- JPM = 40. 
- When the market opens up big and pulls in at 10:30 look to run aggressive TWAP’S. 
- Never look at one names PNL when managing an entire portfolio. 
- Look for good opportunities intra-day and generate alpha. 
- Markets don’t go down 20 handles on 2 mln contracts. 
- The day they captured Saddam Hussein the market gapped open 50 handles and ended up closing the day red. 
Macro Thoughts
• S&P futures down 2.5 handles
• Retraced 1/3 of the whole move from yesterday
• Yesterday was an outside reversal day, which is typically a trend reversal indicator
• Why we don’t necessarily believe yesterday’s outside reversal day is an indicator of a trend reversal:
• We haven’t had a strong trend prior to yesterday
• VWAP curve from yesterday’s is U-shaped where as on May 13 (the last outside reversal day)- more than half of the volume came after 2pm
• MOCs were better to buy yesterday
• This morning we are only 2 handles from fair value whereas on May 14 we had gapped down off the open
• Almost 7% off our lows from late May
• Crude is down about a dollar due to weakness in Euro
• Gold is down 5.50, following equity markets
• Existing Home Sales number today: risk to reward is favorable as a good result will cause markets to rally hard whereas a weak result will only mildly sell off the market by a few handles
• Tomorrow is a Fed day
• Yesterday we saw a bearish engulfing pattern in the daily charts for the S&P cash and on Friday we saw a spinning top
• SNDK: Nice upward pattern during a period of volatility although yesterday we saw a bearish engulfing pattern
• BBY: May put on a TWAP today on this name to get out of our position
• PHM: sitting on triple bottom










- MDRX and ECLP is merging. 
o Hospitals are subsidizing doctors costs for electronic medical records. 
- Dean likes to run his book 25% - 50% long. 
o Usually has an average beta of 1.2. 
- 2007
o Credit Markets locked up. 
o Money became difficult to get. 
- Unless it’s a supreme court decision 
Futures Update and Global Market Recap
• S&P futures up 3.5 handles from fair value
• Quiet overnight session
• Today 10a: New Home Sales; predicted to be huge drop off due to expiration of tax credit
• FOMC Rate Decision at 2:15p: will definitely be 0-0.25%; so the question is, will “extended period” language be left in
• March 2011 is expected to be first tightening by Fed
• Economy may be more fragile than it was 8 weeks ago, but does not mean recovery not in tact
• Removal of “extended period” language will rally the markets
• Europe and crude oil down small this morning
• Gold up, near all time highs
• Currently unhedged in our net long portfolio
• Will not short S&P futures today before FOMC rate decision announced

Technical Review
• Yesterday was not a damaging day, but a disappointing one
• AAPL held in well yesterday
• Steel, housing, financial sectors continue to be rough
• If unable to penetrate through 1220/1230, we are just in a cyclical trend in a secular bear market
• Don’t believe Fed rate decision will cause any major sell off
• Will be in short the rally mode

- Project on when and why futures symbols change. 
- Analysts are usually late to the party but right. 


- ADBE: People are very exciting about ADBE’s new project release. 
- GAIA: No real update from the company. 
o #1 seller of fitness DVD’s. 
o RBK will add 10 – 15 mln in sales
- Food Network: SNI owns 66%
- RSOL: Solarize your house on your own. 
- $1 in $7 of the pension funds in Europe are in BP. 
- 3 Key Things to Look At 
o Management. 
$FXI - China's stocks declined the first time in three days on conncern the govt is going to extend its tightening measures to commodities
- Find ten stocks with a trade in each at a level every day to make a trade. 
- SPYs expire at the end of the month. 
- Klein believes AAPL is now more important
- Small Cap – Up to 800mln. 

Futures Update and Global Market Recap
• Not seeing high interest in selling despite feeling of dragging economy because volumes are light each time we sell off
• Crude oil down 0.60 on top of 1.50 it was down yesterday
• 10-yr yield on 52-week low: sign that economy is sick
• Month of poor economic number releases
• Today:
• Durable Goods (items used over 1 year)- 3rdtier
• Jobless claims- very important and expected to come in at 463K
• Fed came out yesterday: they believe economy is softening
• Fed event sold off the market
• Fed has no bullets left and just has to wait in hopes for markets to move higher- little they can do
• Bullish view on poor jobless claims: explained away by temporary census workers
• Bullish view on poor housing sales: explained away by tax credit expiration
• Good earnings season will enable markets to rally
• Earnings season defined as significant majority of companies reporting subsequent to end of quarter
• Pre-announcements have been very quiet
• Trading in a tight range due to lack of clarity in markets
• Alcoa (AA) is first major earnings report- on July 12 (night)
Technical Review
• Liquidity sale
• Technician’s view: when you start to come to technically significant levels, they’re coming down (or up) to those levels to test them
• We could test 1040 again- does not necessarily suggest bearishness according to above view
• Payrolls number- why stay long and bullish when payrolls number will probably disappoint?



- Steel is high fixed costs business so when prices drop margins tighten up quickly. 
- RIMM : Reports 1.38 vs. 1.34: revs 4.24 bln vs. 4.35 bln. And miss on unit sales. They also announced a stock repurchase program which drove the stock up after hours 58.59 – 60.63. The earnings missed and this was a great chance to short the stock, or sell your position. 
o The release gave you about 2 minutes to make up your mind and put on a trade RIMM missed and the opportunity to short the stock was there when guys drove the stock up because of the share repurchase. 
o We saw a similar opportunity to by IMAX when they killed it after a solid beat. 
- Keep track of the earnings and get a feel for how the market will react to the report.

Futures Update and Global Market Recap
• S&P futures up near highs
• Europe down small- in catch up as we sold off yesterday
• RIMM and ORCL reported last night- ORCL reported solid earnings while RIMM missed (due to competition)
• Companies are not saying anything about negative impacts due to European crisis
• Further confirmation that stocks are still cheap right now
• 8:30a, final GDP number- largely ignored
• Revised UMich Sentiment: largely ignored
• Largest item on agenda: Russell reconstitution, which is usually market neutral (Russell 2000, small cap, and 1000, large cap), occurs on last Friday in June at 4p
• Names that are going to be added
• R2 to R1: promoted names, R1 to R2: demoted names
• R1 to R1, R2 to R2: rebalancing
• Reconstitution should increase liquidity flow
• Flows have often gone the wrong way for individual names because of the tremendous amt of speculative dollars chasing the rebalance; e.g., R1 to R2- see sell off
• Outlier bids and offers can be filled
• Today expect market will push higher
• We are already long this morning

- Auriga prefers MU to SNDK. 
o Think SNDK outperformance is investor preference to SNDK’s relationship w/ AAPL. 
Lumberjack Hour 
- Tech/Media/Telecom
o Ask Dean everyday what I need to be looking for in my sectors. 
o You want to be the best tech/media/telecom trader possible. 
o Know everything
- Look to hedge positions out with indices in order to add alpha. 
- We don’t know our names. 
- We don’t know our levels. 
- We don’t know the books. 
- Make sure a name is only in one book. 
- 75% of the move in the stock is because of the market. 
- Use the projects as a way to also build content. 
o Learn the names
o Learn the Technicals 
o Learn the Fundamentals 
o What news can affect the name? 
- Ask questions. 
- Don’t waste time and build good content on the names in the most efficient way possible.

Weekly Desk Notes 6.25.2010591.86 KB
Weekly Desk Notes 6.18.10533.54 KB
Weekly Desk Notes 6.11.2010790.75 KB
Weekly Desk Notes 6.4.2010691.12 KB
Weekly Desk Notes 5.28.20101.13 MB
Weekly Desk Notes 5.21.2010817.74 KB
Weekly Desk Notes 5.14.20102.98 MB
Weekly Desk Notes 5.7.20103.56 MB
Weekly Desk Notes 4.30.20103.23 MB
Weekly Desk Notes 4.23.20103.77 MB
Weekly Desk Notes 4.16.20103.45 MB
Weekly Desk Notes 4.9.20102.75 MB
Weekly Desk Notes 04.01.2010619.89 KB
Weekly Desk Notes 03.26.2010574.66 KB
Weekly Desk Notes 03.19.201096.33 KB
Weekly Desk Notes 03.12.201093.19 KB
Weekly Desk Notes 03.05.201098.71 KB
Weekly Desk Notes 02.27.2010103.2 KB
Weekly Desk Notes 02.19.2010103.48 KB
Weekly Desk Notes 02.12.201099.79 KB
Weekly Desk Notes 02.05.2010121.7 KB
Weekly Desk Notes 01.29.2010.58.86 KB
Weekly Desk Notes 01.22.201089.53 KB
Weekly Desk Notes 01.15.201078.82 KB
Weekly Desk Notes 01.08.201090.17 KB
Weekly Desk Notes 12.31.200951.47 KB
Weekly Desk Notes 12.24.200948.45 KB
Weekly Desk Notes 12.18.200946.58 KB
Weekly Desk Notes 12.11.200969.2 KB
Weekly Desk Notes 12.02.2009158.89 KB