by Option Review - December 4th, 2013 5:07 pm
HPQ – Hewlett-Packard Co. – Options on HP are active today, with the price of the underlying stock climbing as much as 4.3% to a new 52-week high of $28.70 during morning trading. Overall options volume on Hewlett-Packard, currently hovering near 55,000 contracts as of the time of this writing, is more than 75% of the stock’s average daily volume of around 70,000 contracts. Trading in calls on the stock is far outpacing that of puts, with the call/put ratio hovering near 5.0 as of 11:20 a.m. EST.
by phil - December 4th, 2013 8:12 am
It's happening again.
Futures pump-jobs, big volume sell-offs at the open, low volume recoveries into the close and then a massive volume sell-off right at the bell to stick all the 401K and IRA suckers with all the crap stocks that are indexed under headliners like AAPL that the Banksters keep pumped up to cover their tracks while they head for the doors in the Christmas edition of Grand Theft – Stock Market.
Speaking of Grand Theft, the EU fined C, DB, RBS, JPM and SCGLF $2.3Bn for rate rigging on Libor but only gave wrist-slaps to UBS, BCS and C for being good little whistle-blowers, which is funny because UBS and BCS were essentially the ring-leaders.
HSBC, CRARF and JPM are still on the hot-seat for rigging Euribor and Tibor rates but the real news is that we may, in fact, have a free market going forward (yeah, right). Still, being forced to play on a level playing field gave GS and excuse to slap a 2-notch downgrade on rival C and, of course, this and many, many, many more fines and regulations to come are why we aggressively shorted XLF on Monday with our FAZ spread.
We were "only" up 233% at yesterday's close after our first two days and that's merely "on track" for what we hope will be a 3,900% gain on the .15 cash we used to fund the FAZ April $24/30 bull call spread at $1.20, offset with the short April $20 puts at $1.05. Also doing well today should be Monday's FXI short 2016 $33 puts ($3.20), which more than paid for the 2015 $40/48 bull call spread ($2.20) for a net $1 credit – but that's a longer-term play with "only" 900% upside potential – hardly worth mentioning…
This morning, I already put out an early Alert to our Members, noting all the rotten economic news. You can read all about it on my Twitter account, which you should really follow if you want to find out cool things earlier than everyone else. Since then, we saw a 12.8% drop in Mortgage Applications and it seems that the …
by Option Review - December 3rd, 2013 5:07 pm
by phil - December 3rd, 2013 7:58 am
To shop or not to shop, that is the question?
Today the question is also whether or not we should do a little bottom-fishing on this very minor pullback in the markets. To date, bottom fishers have been continuously rewarded (while our short positions have been pounded) but, on the whole, this is nothing more than the sell-off we expected – and just the start of it at that.
Our premise is that the Fed is already well baked into these index levels and now we need to see improving economic numbers to back up the exhuberance, which has taken us up about 15% since early October (1/2 the gains for the year).
Does 15% in 2 months seem like a lot to you? If we keep going at this pace, we'll be up 90% in 12 months and, while that may seem extreme, the S&P was at 666 in March of 2009 and now, just 4.5 years later, it's at 1,800 – up and AVERAGE of 37.5% per year since the Fed started meddling in the markets.
The Fed is not likely to stop meddling and, if we assume they meddle perfectly and there is no blowback ever, then we can look forward to another 37.5% next year and the Fed seems to have "learned their lesson" from the end of previous QE programs and is running QE3 without an end date, as the ends of QE1, QE2 and Twist all lead to decent pullbacks:
As we have demonstrated 3 times this year with our series of "5 Trade Ideas that can Make 500% in a Rising Market," as long as we can count on the Fed to keep things going, we will have endless opportunities to increase our wealth. I just finished writing up the first two weeks of our October Trade Review and a ridiculous 51 out of 59 trade ideas are already winners – and that includes the hedges! I'd say it's like shooting fish in a barrel but good luck shooting 86% of the fish…
by phil - December 3rd, 2013 2:22 am
And the madness continues!
We had our fabulous Las Vegas Conference last weekend so we're a bit behind this month and we ended the week at record highs. Our September Trade Review (Part 2) wasn't done until 11/2 anyway and Part 1 of September was completed on Oct 13th, when the market was just beginning to fly. (Chart by Dave Fry) We called the September action almost perfectly and, out of 112 trade ideas for the month, 96 (85%) were winners – an incredible percentage that actually improved upon August's 81%!
For some reason, people think I'm too bearish but that's because our SHORT-TERM Portfolio is full of bearish offsets to the bulk of our positions, which are NOT tracked until the reviews, because they are longer-term trades or day trades. Also, if we tried to track 112 additional trade ideas per month, we'd be just about getting to February now!
Options are not like stocks, we don't want 1,000 people all following the same trade (as I noted last month as well). That's why PSW is an educational site where our goal is to teach you to identify your own opportunities to BE THE HOUSE, Not the Gambler. By putting up an average of 5 trade ideas every trading day – we give our Members a huge variety of trade ideas that can fill in any portfolio. These trade ideas are highlighted daily in our Member Chat Room at PSW! Keep in mind that this is an arbitrary point in time and some trades could have had better (or worse) exits in between – we're not doing this to keep score, just to get an idea of what worked and what didn't in the past month so, hopefully, we can make better decisions this month.
by Sabrient - December 2nd, 2013 6:14 pm
Repeating Friday’s market performance, today, the S&P 500 sold off in the last 30 to 40 minutes, giving up its entire daily gain for a loss of 0.27%. Nevertheless, it did gain 0.1% last week for its eighth consecutive weekly gain.
The Small-cap Growth style/cap was the leader last week, gaining 1.58% and raising its leading one-year gains to 43.67%. The growth style continued to dominate value in all three major market cap ranges. Value delivered a negative performance for the week in both large- and mid-caps. (See market stats.)
Interestingly, all economic releases last week, and again today, beat estimates with only one exception, Consumer Confidence, which had been expected to be flat at 72.4, actually dropped to 70.4. Those indicators beating estimates included Building Permits, Jobless Claims, Durable Goods, Chicago PMI, Michigan Sentiment and Leading Economic Indicators. A few were actually down a bit but still beat estimates. Today, both the Manufacturing ISM index and Construction Spending for October were up and above estimates.
Two disquieting notes are the sharp drops in major indices during the last 30 minutes of trading and the sharp rise in the VIX fear index, up 5.9% on Friday and another 3.87% today, closing at $14.23. Volume was quite weak last week as expected, but it was also below normal levels today. Clearly, there was disappointment in brick and mortar holiday and Black Friday sales, down approximately 3% from last year. However, online sales were up a similar amount percentage wise. Accordingly, brick-and-mortar chains were down sharply today, while eBay Inc. (EBAY) and other online retailers were up. Amazon.com Inc. (AMZN) was off 0.41%.
What should we take from all of this?
Well, the rise in the VIX, while much closer to historic lows than highs, dictates caution. As do the late sell-offs. We feel valuations, while higher than the past few years, are still historically reasonable, and true bargains can be found as our weekly searches have demonstrated throughout the year. Good news from congressional dysfunction or the ObamaCare fiasco would certainly help.
3 Stock Ideas for this Market
I selected the following stocks from a custom search looking for undervalued growth stocks with recent upward analyst revisions in MyStockFinder (*all data below from Yahoo! Finance):
Marvell Technology Group Ltd. (MRVL) –Technology