Sterlite Industries for a Trade

Sterlite Industries India is a large mining and smelting company based in India. It engages mostly in the mining, smelting, and production of copper in India and Australia. I have liked the company ever since the IPO in the United States, which was not long ago. It has a strong cash flow and balance sheet and has been dragged down along with the rest of the commodities. The price of the commodity, in this case copper, accounts for 90% of the stock's price movement. The stock currently trades at a mere $4.89 per share with a price to earnings ratio of 4.05.

Shares of Sterlite are trading 8% higher on the Indian stock market under the symbol STER.NS. Since the Indian market precedes the US stock market, the price action there is usually a strong indicator of the price movement here. Therefore, SLT should trade higher on the AMEX by at least 5% tomorrow and if it opens anywhere below, it is a sure sign of a buy for a trade. Just to illustrate the strong correlation between the two equities, here is a chart that compares price movement of STER.NS with SLT:

Apple Blows Out Earnings

Apple after-hours reported earnings that blew out Wall Street estimates. The company reported revenue of $10.2 billion compared to estimates of $9.74 billion and actual earnings of $1.78 per share in comparison to expectations of $1.39 per share. Apple's performance is truly spectacular and even more impressive in a sluggish economy. I will personally hold my shares because I still think there is more upside potential. As I mentioned in a post last week, the company remains extremely strong fundamentally and Steve Jobs' leave is insignificant to its bottom line.

On a side note, Bank of America closed up 30%!

Cheers

If you followed my recommendation yesterday of buying into either IBM or Bank of America, consider taking your profits as the stock is up nearly 8% early. Bank of America is up 8%. I still like IBM as for a longer perspective, but Bank of America is way too risky to hold. On the other hand, if you have the appetite for risk, Bank of America could bring big returns.

Finally Some Relief

Crude oil has finally recovered a bit and is trading at $41 a barrel. Futures point to all three major indices being moderately higher. Apple and many other technology stocks are up after hours following IBM's upbeat report. I expect Apple to have a modest run up into earnings tomorrow. I have a long position in AAPL and will hold into earnings, although Apple has a reputation for conservative guidance, which might have a negative effect on the stock. I would buy more if the stock drops after the earnings release. Here's an interesting correlation that might indicate future price movement of AAPL:

Notice that the Put/Call Options Volume Ratio(shown in blue) moves inversely to the price of the stock (shown in red). After the sharp spike in the Put/Call Volume Ration, the stock consequently fell. Shortly after, the ratio dropped significantly but the price of the stock has not yet followed. Could this suggest that a move up is in the works? Possibly.

Source for the graph: http://www.schaeffersresearch.com/streetools/indicators/equity_volpcratio.aspx