The market made it 3/3 on flat, quiet days as the market went nowhere once again, awaiting a decision on Greece as well as headlines to push higher or lower. The market is sitting at a key level right now at the 1350 level on the S&P. The deal was not agreed upon for Greece and the ECB intraday, but the market is waiting for a decision to make its next major move. Lack of a deal would most likely pressure the market. Would a deal really lead to a lot of upside, however? It will be the big story once again today as the USA lacks major economic data once again and earnings have slowed considerably.
With the situation looking like a breaking point for more highs or a decent pullback from these astronomical highs and lows, here are two stocks we believe are going to be moving a lot in either direction.
Two stocks we have on our radar are Discover Financial (DFS) as well as Skechers (SKX). We entered a long bull call spread at 28/30 for April 20 expiration Wednesday as we believe DFS is set to blast even higher over the next couple months. Why? DFS is a company with a 7 P/E yet a good growth story and has fully recovered. We believe that they are exceptionally undervalued, and that they have a lot of growth ahead of them this year. If the market is really safe, DFS is a stock that is going to be a great buy.
Skechers...what's changed? Nothing is going well here. The Shape-Up craze is over, and it is back to a second-tier shoemaker that is going to struggle. Earnings are scheduled for next week with EPS looking to drop from 0.07 to -0.23 and sales are expected to drop 29%. Overall, we think that the company is not something that looks poised for growth. We would be interested in a bear call spread into earnings.
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For Thursday, the macro situation pins on Greece. Additionally, we have a lot of treasury bills going on, which may work the market down somewhat. Further, we should be getting some key data from China on CPI and PPI before Friday's open there, which should be crucial to Friday's market. Signs of more inflation could weigh on China, thus the US markets. Overall, though, the ECB and Greece are at the front and center.
We had a solid day here as we got a 9% gain on 1/3 of our VF Corp (VFC) February 18 120/115 bull put spread. We also got a 3% gain on a Monster Beverage (MNST) long as well as 2% gain intraday on Ultrashort ProShares Crude (SCO). We took 1/2 off Activision Blizzard (ATVI) long for 1.2% gain. We added reverse iron condor in Whole Foods (WFM) and long position in DFS mentioned above.
We have the following positions. In our Short-Term Equity Portfolio we are long ATVI. In our Options Portfolio, we are long Apple (AAPL), Priceline (PCLN), Dollar Tree (DLTR), SPDR Gold (GLD), Weight Watchers (WTW), Nordstrom (JWN), Bed, Bath, and Beyond (BBBY), and Discover Financial . We are short Deckers Outdoor (DECK) and SPDR S&P500 ETF (SPY). In our Earnings Portfolio, we are long CF Industries (CF), VF Corp. , EOG Resources (EOG), OIS, and Fossil (FOSL). We are short AOL (AOL). We have reverse iron condor in WFM.
Chart courtesy of finviz.com.
Disclosure: We have the following positions. In our Short-Term Equity Portfolio we are long ATVI. In our Options Portfolio, we are long Apple (AAPL), Priceline (PCLN), Dollar Tree (DLTR), SPDR Gold (GLD), Weight Watchers (WTW), Nordstrom (JWN), Bed, Bath, and Beyond (BBBY), and Discover Financial (DFS). We are short Deckers Outdoor (DECK) and SPDR S&P500 ETF (SPY). In our Earnings Portfolio, we are long CF Industries (CF), VF Corp. (VFC), EOG Resources (EOG), OIS, and Fossil (FOSL). We are short AOL (AOL). We have reverse iron condor in WFM.
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