Bullish Motorola Play In Options Action
by Andrew Wilkinson - July 2nd, 2009 4:22 pm
Today’s tickers: MOT, AXP, JOSB & ILMN
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Thrilling Thursday Morning - Jobless Recovery Edition
by Phil - July 2nd, 2009 8:26 am
As I mentioned yesterday, the ADP numbers were not good.
Now it’s one thing to see something happen and quite another to do something about it. One of the reasons we like to be in cash is we get to wait for the market to do something silly so we can bet against it. Yesterday was a gift as the Dow climbed all the way to 8,577 at 10:30 and we gave it a few minutes for the Crude Inventories, which were a disappointment for the oil bulls and our first Trade Alert of the day went out to Members at 10:35 saying: "OIH $95 puts are a good deal at $1.58." These trades don’t happen in a vacuum - we had been watching OIH all week and decided it was a safer short than USO, which also sold off nicely but the OIH was no slouch with the $95 puts finishing the day at $2.30 (up 45%).
Just a few minutes later, at 10:43, we were able to take advantage of the DIA $84 puts at .84, which finished the day at $1.08 (up 28%) and we were able to get back to cash while speculating on TOT $55 puts at $1.20 and BG $60 puts for $1.30 into today as we expected some downside follow-through to grip Europe, who were overly complacent yesterday. I wanted to mention this as I hear from many traders who are getting hit hard because they feel the need to stay "invested" for fear of missing something and the only thing you are missing in this market by not having a cash position is a good night’s sleep. Having cash allows us to pick our spots, make money and get back out to cash. We’re not day-traders but we sure as hell take our profits if we hit our goals in a day!
We’re still waiting for the market to pick a real direction but there are some things we do know and one of them is that oil is massively over-priced. AAA just released a report stating that the peak for gasoline prices has already passed and estimates that auto trips will be down 2.6% this summer. As I keep saying, people simply CAN’T afford to pay these pumped-up prices, no matter how much speculators wish it to be otherwise. Clearly the dumb money is following Goldman et al into the commodity game - just like last year and…
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Oxen Group’s Buy Pick
by Oxen Group Trades - July 2nd, 2009 1:49 am
What to Buy: ERX/ERY
Courtesy of David at The Oxen Group
On Thursday, The Oxen Group wants to approach the Oxen Buy Pick a little differently. A pattern we are noticing is that economic data is moving this market no matter what other fundamentals and technicals may be out there. Tomorrow, the day will be ruled by unemployment figures coming out from the Labor Department. The estimated number is 9.6%. If we hit that or are below, then the market is going green. If not, we are going red the whole day. It all depends on that 9:30 AM announcement.
The oil market, as well, will move with this announcement. It is hard to predict which way it will swing. If we were betting, we would say a miss higher and into the red. But its impossible to know for sure. Therefore, if it misses and it is higher you want to buy Direxion Daily Energy Bear ETF (ERY). This ETF is inverse energy and gas stocks and will benefit by the increase in joblessness, as that means less demand for oil and gas.
On the other hand, less unemployment than expected should be a catalyst for the market with Direxion Daily Energy Bull ETF (ERX). [ERX and ERY] are 3x ETFs and will have some serious movement. We know that the oil market depends on this as Asian oil prices had no movement whatsoever. Analysts believe the unemployment rate lingered over the market. If unemployment is lower than expected, buy ERX. If unemployment is higher than expected, buy ERY. We believe getting into the stock as quickly as possible is good. Check back between 9:30 AM - 10:00 AM to see what we chose.
Entry: Recommend buying within first 15 - 30 minutes if ERX, first 15 minutes if ERY.
Update: Buying ERY
David bought ERY - the update was posted at Oxen Trades.
…The estimated number was 9.6%. We did beat that, but everyone right out the bat is much more concerned with the nonfarm payrolls, which showed that 467,000 jobs were cut when only 375,000 were expected. That is a huge miss and is far more telling tan the 9.5% unemployment rate. Therefore, ERY is jumping up out of the gate. Buy in right at the start of the market like we had suggested last night. This thing will move up, trade sideways, and then continue to trend up. Additionally, the initial jobless claims were higher than expected, also adding fuel…
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Bullish Vibes Radiate From Energy Fund
by Andrew Wilkinson - July 1st, 2009 4:16 pm
Today’s tickers: XLE, USU, XLP, MYGN, NYX & ELN
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Which Way Wednesday - A Brand New Q!
by Phil - July 1st, 2009 8:22 am
Well we sure ended Q2 with a bang.
Just because we’re in cash doesn’t mean we don’t have some fun and our final index play of the quarter was a nice 70% gainer on the DIA $86 puts. Other than a TNK spread and some quick GS puts (up a quick 20% and out), that was our only play of the week so far so we’re really picking our spots for that sidelined cash. Now that Q2 is finally fading into the sunset, it is time to see what’s real and what isn’t and we’re really looking forward to earnings season, where we hope to separate the haves from the have-nots.
As David Fry pointed out regarding yesterday’s action: "Stock price declines today were milder than expected given the news. But, silly me, I forget that this is the quarter and mid-year end—there are bonuses to be had and bullish headlines to be written. Why did the market rise this quarter? An overwhelming amount of liquidity plus an equal amount of BS." It has indeed been a very frustrating quarter to be a bear, mainly because you have an administration that turns a blind eye towards bullish market manipulation because it’s "good" for the economy. Unfortunately, it’s only good for the economy the same way rigging baseball so the Yankees would play the Mets in a subway series would be "good" for New York sports - it may be good in the short run but, if people begin to distrust the validity of the games, then they may lose interest altogether…
Professional traders like the market to make some sense. We like to see X data have Y effect in a fairly reliable curve. Consumer confidence fell 10% yesterday and consumer spending is 70% of the GDP so you would think it would affect the market by more than 1% right? Not this market - nothing seems to matter and that’s OK, we’re getting used to the scam but we’re now playing the scam - not the market itself and that’s never a good thing and it’s certainly no reason for us to commit our long-term capital and that’s the only way this market will ever get healthy again.
Meanwhile, over in reality, steel prices in the US fell 3.1% in June - the 11th consecutive monthly decline as the only green shoots we see there are the ones growing through the rust of the abandoned steel mills. Steel…
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Elan Reversals Indicate Bearish Sentiment
by Andrew Wilkinson - June 30th, 2009 4:03 pm
Today’s tickers: ELN, NOK, WYE, ELX, GERN, VALE, NVDA & EXC
WYE– A sudden frenzy of bullish call activity on the pharmaceutical company was picked up by our scanners this afternoon amid a slight 0.5% decline in shares to $45.12. It appears that the investor or investors responsible for the call action expect Wyeth’s shares to move higher. Perhaps such sentiment stems from speculation regarding the proposed Pfizer-Wyeth merger, which will be put to a shareholder vote at Wyeth on July 20, 2009. In the nearer-term August contract, it looks as though a long call position was rolled to a higher strike price resulting in fresh buying of some 5,000 calls at the August 50 strike price for 15 cents apiece. The calls appear to have been rolled from the existing open interest at the lower August 45 strike where 5,000 lots look to have been sold for a…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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