The Madison Letter Weekly Update

 Since inception, our overall timing return is 82.34% versus 49.26% on the S&P 500 for excess return of 33.07%.

Madison scores on the major indexes are in a wide range from +5 to +12. Stocks and indexes have moved lower in the past week. +20 is overbought and -20 is oversold.

The range between the buy and sell points is now below average. As an example, the S&P 500 range was 54 points at the low and is now at 69. As volatility rises, this expands. Witness at the October low the range was 169 points.

Also, in tracking the range between the 2 year and 10 year moves from 166 basis points to 151. Short term rates are on the rise while long term have risen in the last week. This needs to be watched. There are implications.

There are now two open positions, a buy on TRF and a buy on USO. Recent open and closed ideas are now in the second table.

We began to offer a buy and sell strategy via our Madison Market Timing Indicator at the beginning of April of 2007. There are now 24 open and closed winning trades to 8 closed losing trades with our market timing results. We were left with one long position TRF from our original buys before launching with Uncommon Widsom Daily. This column replaces the Morning Matters on Fridays.

SSI Options Activity

We highlight unusual options activity where volume is heavy as well. The third column from the left will highlight such outliers. Atmel (ATML) saw excess call action as rumors surfaced that Texas Instruments could big for the company. Huntsman Corp (HUN) continues to see excess put action as hedgie David Tepper added to his latest holdings. Put sellers?                                                                                                                     [Image 1]

                                                   [Image 2]

                     The rows in the options matrix are as follows:

  • Curr Vlm = Current Option Volume for today
  • OpVol20 = 20 day Option Volume average
  • % Delta (sorted descending) = Curr Vlm/ OpVol20 * 100
  • Sym = Symbol
  • 20 HV 100HV 252HV = 20 day, 100 Day and 252 Day Historical Volatility
  • Slope = The slope of the historic vol
  • Delta = Change in slope
  • cOptInt = Call Open Interest
  • pOptInt =Put Open Interest
  • cVolum = Call Volume
  • pVolum = Put Volume

Avago (AVGO) To Buy Broadcom (BRCM)

Yesterday news hit that Avago Technologies (AVGO) might bid for Broadcom (BRCM). This morning we indeed have a deal.

Deal

The deal value is $37 billion and is a combination of cash and stock. Yesterday Broadcom jumped 21.45% from 2:00 p.m. EDT into the close. Deals continue to be aplenty in 2015.

Futures Lower

May 28, 2015

In After Hours Trading

IPOs on deck this week none of note. Secondaries on deck BFAM CGI KNOP MIC NBS PLAY RXII SERV.

In After Hours Trading: Weekly Natural Gas and Crude Inventories are due out at 10:30 a.m. EDT.

What’s Happening This Morning

U.S. futures: S&P -5.50, Dow Jones -57, NDX -9.50 and Russell 2000 -2.60 with fair value higher hurting the open. Asia lower ex Japan and Europe mixed.

Copper higher with silver and gold lower. WTI Crude lower and Brent Oil Futures higher. Natural Gas is lower. $ is higher vs Euro, higher vs. Pound and higher vs. Yen. US 10 year Treasury yield +1. Prices as of 7:55 a.m. EDT.

Earnings Expected

Earnings due after the close (by market cap descending): SPLK, GME, VEEV, QUNR, ULTA, OVTI, DECK.

Due Friday morning (by avg. trade volume descending): FRO, BIG, BNS, CCG.

Rags & Mags: Inside Wall Street

USA Today: NASDAQ leading all indexes as the pace car. IRS was warned of computer risks. Michael Kors (KORS) falls out of style. Flooding continues in Texas.

Reported Earnings This Morning

Reported Earnings This Morning (Best to Worst absolute beats/misses [+.02 or greater/-.02 or worse]): SDRL+.22, AVGO+.13, OA+.09, TD+.03, DANG-.15, JKS-.21.

Current Morning missing: SDRL+.22, AVGO+.13, OA+.09, TD+.03, DANG-.15, JKS-.21.

Weekly Charts Updated

We are going to continue making Thursday our chart section in only Superstock Investor. That said, we are changing the format. Each Thursday in Wall Street Rebel we have moved to doing a Chart of The Week.

If you want to follow the S&P 500, then you will need to sign up for www.superstockinvestor.com at the website when subscriptions become available. Each week in Superstock we track the S&P 500, NASDAQ Composite, Russell 2000, Emerging Markets (EEM), 20 Year Treasury (TLT), U.S. Dollar (UUP), High Yield Bonds (HYG) and Corporate Bonds (LQD). 

 

Last week we looked at the SPDR S&P 500 ETF (SPY) that withstood a quick drop below zero and is now turning up. We noted it was “Worth a look on the long side here” A week later it is little changed and we still like long.

spy 

 

This week we look at the SPDR Utilities Select Sector Fund ETF (XLU) as it looks ready to break out. 

xlu

 

SSI Options Activity

We highlight unusual options activity where volume is heavy as well. The third column from the left will highlight such outliers. Alcatel Lucent (ALU) scontinues to see excess call action which leads me to believe a new bidder could emerge for the company. Huntsman Corp (HUN) comtinues to see excess put action as hedgie David Tepper added to his latest holdings. Put sellers?                                                                                                                 [Image 1]

                                                   [Image 2]

                     The rows in the options matrix are as follows:

  • Curr Vlm = Current Option Volume for today
  • OpVol20 = 20 day Option Volume average
  • % Delta (sorted descending) = Curr Vlm/ OpVol20 * 100
  • Sym = Symbol
  • 20 HV 100HV 252HV = 20 day, 100 Day and 252 Day Historical Volatility
  • Slope = The slope of the historic vol
  • Delta = Change in slope
  • cOptInt = Call Open Interest
  • pOptInt =Put Open Interest
  • cVolum = Call Volume
  • pVolum = Put Volume

Erlanger Value Lines at 12:35 P.M. EDT

This morning SPY has traded towards resistance (red line). Right now we are trading right around the day’s 1 hour high (grey line). Let’s see if we can hold the gains into the close.

evl wsr

Below is the legend for the valuelines. Pay attention to key levels through the day.

evl legend

Futures Higher Thanks To Fair Value

May 27, 2015

In After Hours Trading

IPOs on deck this week none of note. Secondaries on deck COT.

In After Hours Trading: WDAY+.06, NMBL+.03.

What’s Happening This Morning

U.S. futures: S&P +1.50, Dow Jones +10, NDX +3.50 and Russell 2000 +1.30 with fair value lower helping the open. Asia higher and Europe mixed.

Copper, silver and gold lower. WTI Crude and Brent Oil Futures higher. Natural Gas is higher. $ is lower vs Euro, higher vs. Pound and higher vs. Yen. US 10 year Treasury yield +1. Prices as of 7:55 a.m. EDT.

Earnings Expected

Earnings due after the close (by market cap descending): COST, PANW, CPRT, UHAL.

Due Thursday morning (by avg. trade volume descending): SDRL, ANF, TD, EXPR, RY, DANG, JKS, FLO, SIG, SHLD, OA.

Rags & Mags: Inside Wall Street

USA Today: Corruption in soccer hits FIFA. Hackers stole 100,000 households tax id information. Average cost of a computer breach on corporate level is $3.79 million.

Reported Earnings This Morning

Reported Earnings This Morning (Best to Worst absolute beats/misses [+.02 or greater/-.02 or worse]): BMO +.05 BWS +.09 TIF+.11, DSW+.05, TOL+.02.

Updated On The Superstock Morning Matters Portfolio

The S&P 500 is lower than a week ago. The Nasdaq Composite is still above 5000. The portfolio remains 50% invested long, 0% short and 50% in cash, net long 50% with profits taken eBay (EBAY)of 11.92%. We are now at a value of 989.27% from 999.83% through Monday’s close. We finished the year at a value of 951.10 up 29.86% for the year. Our current value is 989.27% which puts us up 4.01% for the year without dividends.

Below are the year by year results on a cumulative and absolute basis:

[Image 5]

It appears for now that 2100 on the S&P 500 has become support and 2150 is resistance. We are now at 2104.20 which is lower than a week ago. A big test for the week is to see if the S&P 500 can stay above 2100. So far it has been above for the last eight trading days.

Remember these returns are total returns with the average change for all winners and losers is 8.68% per idea. Our batting average of closed winners and losers is 71%. The portfolio is up to a value of 989.27% and from inception when it began at 0% in April of 2008. The performance on the Uncommon Wisdom Daily Portfolio Tracker is a bit higher due to dividends which they add in. We have never added in dividends unless a special dividend is declared, so our weekly results are understated since 2008.

The Russell 2000 is tracking the S&P 500 on a daily basis.

Unusual Options Activity From Tuesday

We highlight unusual options activity where volume is heavy as well. The third column from the left will highlight such outliers. Alcatel Lucent (ALU) scontinues to see excess call action which leads me to believe a new bidder could emerge for the company. Huntsman Corp (HUN) comtinues to see excess put action as hedgie David Tepper added to his latest holdings. Put sellers?                                                                                                                 [Image 1]

                                                   [Image 2]

                     The rows in the options matrix are as follows:

  • Curr Vlm = Current Option Volume for today
  • OpVol20 = 20 day Option Volume average
  • % Delta (sorted descending) = Curr Vlm/ OpVol20 * 100
  • Sym = Symbol
  • 20 HV 100HV 252HV = 20 day, 100 Day and 252 Day Historical Volatility
  • Slope = The slope of the historic vol
  • Delta = Change in slope
  • cOptInt = Call Open Interest
  • pOptInt =Put Open Interest
  • cVolum = Call Volume
  • pVolum = Put Volume