Looking ahead

Long weekend ahead and some planning is never a bad idea. Let the ideas churn.

Among the potential plays next week in a market that will be skittish (scaredy cat) at best or possibly cataclysmic (worsening of current crisis/crises or addition of new trouble spot), two stand out: Apple and British Petroleum. Apple's momentum is to the upside thanks to the iPad, which was just launched in Japan to hordes of customers, and the soon-to-be-released iPhone G4. The run from last week's low of 231 has been large for AAPL, which closed at 257 today. With a year-high of 272, AAPL has some room to play with, and if June brings some stability to the market — end of quarter can bring increased inflow that left after the Flash Crash ($9 billion left the market) — it could be the right play.

BP has no solution in sight. They've had vast success over the years with pioneering technology, but eventually, Mother Nature just said no. Now, with BP down to 43 after bouncing from 40 to 45 earlier in the week, where do shares go now? I'm not familiar with shorting individual stocks, but inverse oil/energy ETNs have worked. DUG (ProShares UltraShort Oil & Gas) closed up 4.1% at 69.08 today on decent volume (1.7 million shares). SCO (ProShares UltraShort Crude Oil 2x) rose 1.65% to 15.36.

On April 26, DUG was at 51.71. SCO was at 11.56. BP was 59.91 then, and closed today at 43.07.

Is there still room for gains in DUG and SCO? At this point, with BP a long way from any kind of reliable solution, of course. But most of the "easy" money has been made on the short side, clearly. There are at least two reasons, though, to believe this is far fro over and DUG and SCO are potentially decent plays.

1. Both BP and the White House underestimated — or publicly lowballed — the amount of crude bleeding out. The number may be as large as 19 million gallons per day, far higher than the earlier estimations of 5 or 12 million. This is relatively new info released in the past 24 hours. That impact is not fully felt in the stock of BP just yet.

2. BP has lost nearly $1 billion so far. If this problem isn't rectified for another month, or two, or three ... revenues continue to shrink and costs continue to spiral out of orbit. Worst-case scenario is BP is reduced to shambles and is bought out by another oil conglomerate. Best case is they find a temporary solution, or establish a relief well — the latter won't be ready until August at the earliest.

Whatever the scenario, the market is leaning on BP like never before.

Apple is what I know far, far better, and that's where I'll dip in and out. But as oil proves to be a multi-layered death trap for the US economy, I might try some SCO and DUG now and then. Just not today, and probably not next week.

[Update: Apple launched its iPad in London, too, to much mass indulgence.]

"Industrial Apple" wallpaper art by Stratification.