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1. Chevron, Exxon's Twin; Apple & Google; Buffett
By Jim Cramer
1:25 p.m. EST
Keep an eye on
(CVX) for a run to $70 now that it has broken out of the $65 orb. In the short-squeeze rallies that occurred at the end of 2008,
(XOM) and Chevron led every charge up.
I would like to see
(AAPL) reverse. Apple's touched $90, where the February 90 puts got blown out. Google's a jump ball.
By the way, the Buffett apologists are now out in full force in keeping with the taboo that Doug Kass doesn't fear and I have joined him.
2. Related Calls and Puts at U.S. Bancorp
By Jon "DRJ" Najarian
12:39 p.m. EST
(NYSE:USB) is seeing huge options trading -- both calls and puts that appear to be linked.
USB averages 24,000 calls per day, but some 30,000 calls changed hands today in the first 45 minutes of trading alone, according to OptionMonster's tracking systems. Puts are also well above normal levels, especially at the June 7.50 strike, where they have been aggressively sold on the bid.
Those puts were down 30 cents on the day as shares of USB rallied 35 cents to $11.36. That action is clearly not normal, as these puts should be moving perhaps 20% to 25% of the move of the underlying stock -- or about 10 cents to 12 cents, not 30 cents!
Much of the call buying at the March 12.50 strike and the put sales at the June 7.50 appear to be related because the large block trades -- including as many as 3,000 contracts -- were executed just seconds apart on the same exchange. USB is down 1.27% in midday trading to $10.88 after spending most of the morning in positive territory.
3. CVS's Solid Earnings Report
By Brian Gilmartin
10:54 a.m. EST
CVS had good numbers this morning, and the stock is up on decent volume already, beating Walgreen's on total comp's and pharma comp's in CVS's q4. Front-end was still positive as of q4 '08. Operating eps grew 20% from q4 '07 to q4 '08 while cash-flow and free-cash-flow was solid. 4q trailing cash-flow per share was $2.75 with $1 per share of free-cash-flow.
At $27 - $28 per share, the stock is trading at 10(x) both '09 eps and 4q trailing cash-flow.
My own perception of the retail drug store business is that the front-end non-pharma business suffers in an economy like this as shoppers trade convenience for price, but CVS's front-end is still comping positively. The pharma foot traffic provides a steady stream of customers into the store.
If you have to be in retail stocks, i think you could do far worse than defensive names like WAG and CVS. We are long both names, but in smaller percentages than in a "normal" market.
4. Snapback Trade of the Day: CSX
By James Altucher
9:24 a.m. EST
(CSX) are down 3% based on a ruling against
(BNI) saying that it overcharged two Western power companies by tens of millions of dollars since 2004. Burlington Northern is out in mass opposing the Surface Transportation Board's decision "on its merits and believes the process used to arrive at this result is unfair."
I am going long CSX at the open at $27 looking for a snap back into the $28-$29 range or so as revenue for the fourth quarter rose 4% year over year based principally on rail efficiencies and higher prices. Rail volumes for CSX from 2006 to 2008 went from 7.358 million to 6.827 million while revenue went from $9.6 billion to $11.3 billion in the same period. Revenue per unit went from $1,300 to $1,649 in2006 to 2008 while operating margins increased from 20.7% to 24.6% in the same time period.
In premarket trading, CSX is down 3%, BNI down 3.5% and
(UNP) down 2.8%. It's also worth noting that almost commodity related items (which CSXships) are rallying right now, thus increasing the likely hood of a short-term snapback.
5. Bearish Options Activity in Wells Fargo
By Chris McKhann
7:13 a.m. EST
(WFC) drew heavy put activity yesterday as its stock hit a new 52-week low in intraday trading.
By midafternoon more than 460,000 contracts had changed hands, more than twice the 20-day average volume, with puts outpacing calls by 4-to-1. The action came in large blocks, with six of the 10 largest trades in WFC puts, according to OptionMonster's tracking systems.
Most of the volume is less than the open interest, with the exception of the March 17 puts, where 20,000 were bought against open interest of roughly 12,000. This all does have a bearish bent to it, but much of it may be rolling of contracts out to later months.
WFC stock hit a low of $12.06 yesterday but bounced back to close at $13.05. The shares were still down 4.6% on the day on more than twice the normal trading volume.
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This article was written by a staff member of RealMoney.com.