by phil - March 12th, 2014 8:09 am
We hit our $98.50 goal line on oil and that's up $6,500 per contact from $105 at the beginning of the month, where we went heavily short. When oil was at $102.50, on Feb 21st, I said to our Members:
Oil – You can play it either way off the lines. The reason I play short is because, over the long-term (3 months), I don't see oil sustaining $100 so, if oil goes to $105 on a violent pop, and I'm down $2,500 per contract, I don't mind doubling down to raise my net to $103.75 and, if it goes up to $106.25, I don't mind doubling down again to average a very big position at $105 average and sitting on it for as long as it takes to get real. If I were betting oil up and it dropped $2.50, however, I'd feel like a complete moron and I'd have no desire to DD and then I'd be hopelessly out of position and miserable and if it dropped another $2.50, I'd only feel stupider. That's why I prefer to play the side I have conviction on but, believe me, in the course of my own 10,000 hours – I learned that the hard way!
Realistically, if you think direction doesn't matter – you probably shouldn't be playing with Futures – other than very quick nickel and dime trading off support and resistance lines – which is how most people do play them (). Thank goodness for them, they provide the "liquidity" that goes into our pockets!
Oil peaked out on March 3rd at $105.22 over the Ukraine issue. That's still not resolved but, as we expected in the morning post, it still wasn't enough to sustain $105 on oil. In fact, our first trade of the morning in Member Chat was the USO April $38 puts at $1.25 and, already, they closed yesterday at $2.40 – up 92%, but they should look better this morning and we'll take that 100% gain and run when it comes so quickly. …
by Option Review - March 11th, 2014 1:27 pm
by phil - March 11th, 2014 8:23 am
Not a good chart pattern.
As you can see on our Big Chart, we are beginning to form a "Spitting Cobra" pattern and those generally resolve to the downside – much like it did in mid-January, when I warned you about it on 1/15, a week before we began a 1,000-point drop on the Dow. At the time, I said:
Speaking of reality – we're still waiting for the S&P to confirm the bull is back by popping over 1,850 again and the Dow is pathetic under 16,400 (our 2.5% line). They NYSE is over the 2.5% line at 10,250 so, IF the rally is real, the Dow should have no trouble making that leap today. If not, we'll, these Spitting Cobra chart patterns can be very tricky – you never know when they are going to strike!
We're still early in the formation but the fact that the Dow is STILL stuck at 16,400 does not bode well and, if the S&P fails 1,850 and the NYSE fails 10,250 – it would certainly be time to brace yourself for another good drop – especially if you haven't already heeded my call to get back to cash at what still seems like a market top.
What's really bothering me more than anything is that SPY volume yesterday was 71.4M, about what we get on a half-day holiday (see Dave Fry's chart). On the NYSE, only 1.07Bn shares were bought to the upside but they were swamped by 1.9Bn shares of decliners. This indicates that the Big Boys are trying to dump shares en masse, but simply can't find any buyers.
Maybe I'm wrong. Maybe we shouldn't worry about China's defaulting bonds, or the missing plane, or the Ukraine, or Japan's slowing economy, or Europe's disappointing numbers, or declining US Retail Sales or the sky-high valuations of equities… Maybe. And, if not, we can use our cash to buy more stuff.
As you can see from our February Trade Review, we were 39 and 7 (84% accurate) on our picks in the first week and 35 and 4 (89% accurate) in
by Sabrient - March 10th, 2014 7:37 pm
Today was the beginning of “spring break” for the market. At least it seemed that way with a very low trading volume of only 600M shares on the NYSE. Either the college crowd does more trading than we imagined or parents are taking the week off as well.
The market barely woke up for the session with the S&P 500 down 0.05% and the NASDAQ down 0.03%. However, the DJI must have gotten extra sleep this weekend as it was up 0.21%. Small caps took a bigger hit with the Russell 2000 dropping nearly 0.50% percent. There was nothing major in the news other than a disappointing trading figure from China. Indeed, the whole week will only include a meager four major economic reports with Wholesale Inventories tomorrow, Retail Sales and Jobless Claims on Thursday, and Producer Price Index on Friday.
The only positive sectors today were Healthcare and Financials, each up a paltry 0.4%; Industrials also eked out a tiny gain. The treasuries were a tad weak with the 10-year yield picking up 2 bps at 2.78%.
Last week was much more robust with the Ukrainian scare on Monday shaking up world markets for a day until hostilities eased. There was plenty of posturing back and forth across the border, but the markets decided to more or less ignore the standoff until something more ominous develops.
Economic news was somewhat muted following Monday’s releases, but the markets made up Monday’s fall quickly and drove ahead to new highs with the S&P 500 barely edging over 1880 on several occasions. NASDAQ also reached new highs while the DJI didn’t quite set a new high.
Last week’s style/caps were led once again by Small-cap Growth stocks, up 1.87% on the week, and Large-cap Growth brought up the bottom, up 0.67%. From a sector viewpoint, Financials and Industrials, up 2.17% and 1.58% respectively, led the way while Utilities faltered down -0.99%. Others sector failing to gain for week included Basic Materials, Healthcare and Telecom.
This week is likely to remain very quiet with little economic news, a dearth of new corporate earnings releases, and lots of college kids having fun probably not so quietly. The bargains are still out there.
3 Stock Ideas for this Market
by Option Review - March 10th, 2014 4:37 pm
by phil - March 10th, 2014 8:26 am
That's all I can say about the action this morning. There's a Global currency-manipulation scandal, China had an alraming drop in exports, a decline in manufacturing and expanding inflation at home, Japan's GDP has been revised down, Global debt has now passed $100,000,000,000,000, and an airplane is "missing" (possibly terrorism), yet the US Futures have already rallied back from a half-point deficit to flatten out an hour before the open.
The Russian thing is still going on, France's economy is showing no sign of improvement but none of this seems to matter to equity buyers and, in fact, Goldman Sachs looked at the recent action and put out a note to BUY Chinese stocks:
“Given how share prices have corrected and given where the valuations are, from a risk-reward standpoint we still think we can make a positive case on Chinese equities,” Kinger Lau, a strategist at Goldman Sachs, said in an interview in Hong Kong on March 4. He predicts the Hang Seng China Enterprises Index (HSCEI) will climb to 12,000 in the next 12 months, a 24 percent advance from last week’s close, versus the brokerage’s December forecast for the measure to reach 13,600 by the end of 2014.
As you can see from the chart above (good article here, thanks Sibe) China's money-creating stimulus puts the rest of the World to shame but that $100Tn total Global Debt should bother someone, shouldn't it?
From "born bulls" to "worry genes" and from Bitcoin to flash-mob-speculation, "there is a growing gap between the financial markets and the real economy…and the overall picture is one of growing risk and inadequate potential return almost everywhere one looks… as every 'Truman' under Bernanke’s dome