Archive for 2005

Freaky Final Friday

Last day of the week, last day of the month, last day of the quarter, last day of the year and it’s a holiday weekend with an abbreviated session.

Anything can happen!

Trading today will be much like playing roulette and never play a game where the odds are 10% against you.

The World markets that were open today generally regretted it, suffering large sell-offs and we can expect the same for the US, at least in the morning.

As a rule of thumb – expect a lot of big winners to go down a bit as people close out their books and get cash ready to seek out next year’s winners.

Some stocks will be driven up to make virtual portfolios look better but most funds have given up on this year so they will be happy to let the market die so they can blame the market for their poor performance rather than their poor strategies.

Cash, cash and cash is the Trade of the Day. That and maybe MFE and SYMC because this latest virus scare proves that Microsoft should not be trusted with Windows security!

Have a very Happy New Year!

- Phil

ps – Do not go into the weekend short on oil or gas as there is a potential crisis brewing in the Ukraine with a major gas pipeline. It will probably amount to nothing but you never know…





Told You So

Yeah they tried to sucker us in again but, lucky for us, we are now wise to this game.

It all looked OK until right at the end there when the Nasdaq finally led the market – only lower!

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I had a great time with my oil trades today. The Valero rule came up aces again as it kept us out of the shorts at 10:30 (when the inventory signaled a build) and put us into stocks that had run the wrong way right at 12:15 – almost a perfect entry point for oil shorting today.

See how well our picks of DO, UPL and NBR charted with Valero:
http://finance.yahoo.com/q/bc?t=1d&s=VLO&l=on&z=m&q=l&c=upl+nbr+do

Following the Valero Rule gave me an extra 1% profit (100%) on those trades. Always follow the rule!

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Tuesday TOTD EAGL marches on with another 1% gain today and was up 2% at 2pm and I stopped out at $9.75. I almost cancelled the sell as it was doing so good in a bad market but no rules = no profits so away it goes. Closing out with a 15% gain in a week is nothing to cry over.

Tuesday’s alternate pick BIVN kicked up 2.5% at 3pm and I have no idea why but we won’t worry about this one since we sold the June calls on it.

CY finally got some lovin’ after sitting idle while SPWR ran up 30% this week. The stock picked up 2% today and held steady through the market slide. I picked up some Jan ’07 $10 calls for $5.40 with the intention of selling $15 calls if the stock stalls.

LNUX hit $1.80 today and, as predicted, retraced quickly. This stock made us 15% since last Thursday and we bid it a fond farewell.

WFMI finally went down on volume. I still haven’t sold the puts yet but I should.

Got stopped out of 12/16 TOTD TGT at $6 this morning – no regrets with a 35% profit.

GENZ is killing me! I am almost ready to give up which means I should hold. If I had only followed the rule and sold the Jan $75s right away I would be even on this trade…

Got out of ECA $45 put for $2.20 (90%) which was the exact top today – thank you Valero Rule!

BZH almost gave me a heart attack today as it ran up but…
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Thursday Thoughts

MRK got an upgrade so should move up a bit but I don’t trust that stock.

GY lost a big military contract and will go down quite a bit.

The gold and oil moves today is on a strong dollar so effects are magnified/modified to that extent. $520 is gold’s big test today.

Existing home sales are out today and could put a stake through the heart of the builders. I am short on BZH for purely technical reasons but it has proven very resilient.

KO may be bottoming here. Growth is outpacing earnings but both are up and I think that should merit a little more than the lowest price since early ’03 when the company was coming off ’02 earnings that were 40% lower than today’s.

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Stocks that might go up today regardless:

TWGP looks primed for another move up in the insurance space. Revenue should be up 100% this year but earnings are lagging, which I think is OK for insurance… I like the April $20s with a low $1.20 premium. ZNT is another good one here.

I hate airline stocks but someone has to fix the planes and AIR looks like the best mover in the industry. The stock has been on a tear since October and I have been looking for an entry point as it has flown up 50% in the past 7 weeks but I am ready to throw in the towel and buy a little if it doesn’t go below $24 by next month.

SPSS also fought the tape yesterday, exhibiting amazing strength in a bad sector. This data mining company is catching on with sales that go straight to the bottom line.

ALKS (what a symbol!) will go way up on a drug to treat alcoholism. It will have a hard time breaking $20.

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Stocks in very dangerous waters:

NDAQ just broke its 50 dma, still 12 full points above its 200 dma of $24. If the stocks can’t turn around, the exchange may suffer.

NIS had a lot of selling interest that bought a 5 day 50% rally to a screeching halt. This is a Japanese lender, not the car company but I have trouble with the p/e of 60 vs. an industry average of 14.

How low can BOL go is anyone’s guess but stay away from this on either side. Inertia alone may take this below…
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Thursday’s Sermon

Do not be led into temptation!

Many stocks may appear to be a bargain this week and some may well be but don’t commit yourself until we see a real broad based market move.

You may have the best and floatiest (ok, not an actual word) ship in the tub but, when the water drains out, you hit the bottom just like everyone else. After two consecutive weeks of teaser rallies that end in disaster you would think I wouldn’t need to say this but I do.

Let’s take GM for example. The stock is trading at a 30 year low and is looking very technically overbought but then there’s this: http://online.wsj.com/article/SB113582727104333651.html?mod=home_whats_news_usI’ve promised to lay off GM and let it die in peace but I see people are still buying it and I just want to make sure it is not one of my readers! The proposed FASB changes outlined in this article will bring GM’s balance sheet more in line with the real numbers I calculated way back in November when we first shorted this stock.

MSFT may look like a bargain but is still 5% above its 200 dma and RIMM is a well known accident waiting to happen. AAPL could pull back 20% and still be 20% above its 200 dma while INTC is attacking its mid point with a vengeance. All of these stocks (except Apple) had a terrible first 2 weeks of the year in ’05 so this is not the time to play the hero calling anything like a bottom as many analysts are doing.

Remember, the analysts work for people who only make money when someone buys stocks. If all they have is sellers they will run out of customers fast! That’s why everyone has been pumping the “Santa Clause Rally” all week, to no avail. Now they are changing their tune to “Big Gains in ’06” and, while I do think it can happen, I am really in show me first mode.

As I mentioned on Tuesday, I see some weakness in GS and other broker stocks spurred by poor ’05 investor returns and slowing trade but it is Goldman that will really turn the sector if it starts to fall.

The China market has turned down on real volume this week and the Nikkei is closed for New Year’s so there is a lot of money with nowhere…
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Wednesday Wrap-Up

There was a stunning last minute drop in the Nasdaq (QQQQ) right at the end of the day.

Obviously today’s whole “rally” lacked any real legs in another very low volume day. Not much should be read into anything on today’s action but on a regular trading day I would be extremely concerned at such poor action when consumer confidence was up well over expectations.

I think on the whole, that the junior traders that have been manning the floor this week are generally authorized to sell but not to buy without specific instructions.

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As expected oil was a great play today, it would have been hard not to make a few bucks on a day when oil went up 3%. Notice that yesterday’s pipeline attack did not move the markets so “coincidently” today an OPEC minister makes a statement that drives up prices. It will be good to see $60 tested again tomorrow, especially on an inventory day.

Remember our old friend Hugo Chavez? I predict it will be his turn next to make a statement to spike the price of oil. Earlier this year he said this:

http://www.forbes.com/business/newswire/2004/02/29/rtr1280446.html

and this:

http://news.bbc.co.uk/2/hi/americas/4153318.stm

Chavez is one of those guys who directly loses $3M per day for each dollar oil declines so he is pretty motivated to maintain high prices…

The oil movements of the past 5 sessions (since last inventory) have been mainly manipulation in the face of declining fundamentals but they have actually achieved a technical (from a charting perspective) turn. Tomorrow will be key as an inventory draw down will spur a rally over $60 but I don’t see that happening.

My prediction for tomorrow is a smaller than expected drawdown along with shrinking demand snapping oil and gas back to yesterday’s lows until Chavez or some other OPEC guy drops another bomb on the market. Remember – $57 must be defended at all costs!

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Gold is looking to test $520 again and our old TOTD GG had a nice 4% day and our other TOTD in the sector, NEM, picked up another 3.5%. I got out of GG with a big profit and now I am looking at some gold laggards to invest in like PDG, HL or BVN.

CY woke up a bit today but I still don’t think people get it.

UARM – That stock is amazing! Having missed the private placement at…
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Wednesday Morning

Today will be a big test but, as I said yesterday, I am feeling fairly bearish and will not be committing again until we see a day finishing back above my benchmarks.

I am still long-term bullish but the Nikkei picked up 1.5% today and Europe looks strong and there is only so much money in the world so I just don’t see it coming over here in any kind of volume until we give investors a good reason to put money into US equities.

Whole Foods surprised me with an S&P inclusion so we will have to see how that shakes out. The split can be a great positive as it doubles the amount of puts I hold but the S&P movement may hurt their value. I am considering buying protective Jan calls (maybe $80s) but I will wait until I see what today’s action will bring. Split or no split, who pays 80 times earnings for a supermarket.

The 10 year continues to drop which may be good for the builders but I am still leary of that space.

Today will be all about consumer confidence which should be markedly higher and will be a real disappointment if it isn’t.

Business confidence is very high but I think that the Delta and UPS strike talks are an early indicator of a large scale worker uprising in which the employees will start to expect (gasp) a share of the increasing earnings.

Oil will continue strong into inventories now that it has held $58 yesterday. Oil traders don’t care whether you hold a line artificially or based on value, as long as you hold a line! Today will be a good day to day trade SUN, COP and other oil companies for an early bounce back but you need to be happy to take 1% and get out. Tomorrow is inventory day and that will tell the real tale.

Gold continues to fly, up another $5 this morning but it will have to break and hold $520 to get people excited about gold stocks again as too many people were burned in the last run-up.

I am still of the mindset that the Nasdaq must lead the markets higher and Microsoft must turn in order for the index to succeed.

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A lot of biotech has been hurt by the Korean cloning scandal but I think this will wash over…
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Wednesday Thoughts

Oil is coming back thanks to our friends in Iran pushing for production cuts at the January OPEC meeting. Whether they pull this off or not the rhetoric will keep the price over $57 unless another credible minister negates it (and why would they?).

Natural gas is not going up with oil, indicating that it is way overpriced so I am staying with my short on ECA at least until it tests its 200 dma at $42.50.

SU came back with a vengance today, retracing almost all of yesterday’s loss. I’m hoping it hits $65 where I will be comfortable shorting it again.

HET marches on but last January was a disaster for this stock so I will wait until next month to establish a position.

My Apple $75 put is one of the most volatile options I have ever owned, just today it was down .10 and up .50 (15%) on relatively small movements in the stock.

I covered my WFMI ’07 put with a current $80 call and picked up a quick 15% which I will sell in a day or two to offset 1/2 of my put loss. I think much like GNW, this stock will sell off on the actual S&P inclusion but I am hedging just in case. I said yesterday I was being greedy and I was! I would have cleaned up if I had taken the 10% for the $145 calls yesterday. This is another great example of do as I say, not as I do…

SNDK is showing some weakness at $65 but I would like it to close below $64 to really say it’s on a downward path. The 50 dma is way down at $56 and the 200 dma is way down at $38! The company has great 30% growth but a lot of competition coming around the bend and I just don’t see them keeping it up. This stock is up 25% in 8 sessions and looking strained.

LNUX is still showing strength but I would look to take the money and run at $1.80 for sure.

Yesterday’s TOTD EAGL picked up a nice 4% today with the May $30 up to $9.30 for a clean 10% in 24 hrs. Do not be greedy if you are in this, place a tight stop around $9 on the option to ensure 7%. Look to exit at $10 no matter what…
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Tuesday Wrap-Up

When I said the indexes needed to pull back 5%, I didn’t mean today but we did call this at 4:41 am and hopefully you are almost all in cash like I am.

The yield curve inverted today which totally freaked out the markets. My bad for not noticing this was going to happen as I would have been even more pessimistic in the morning.

No upside trades worked today and all the averages failed at critical levels which bodes very badly for the week. The only saving grace was the very low volume which means all this can be reversed in a day.

An inverted yield curve (the 10 year note is lower than the 2 year note) has signaled 6 of the last 7 recessions so no one wants to be caught with stock until this sorts out.

I do not buy into this indicator as I feel that world cash flow has ruined the value of the yield curve as a tool to understand the US economy in so much as there is no more independent US economy. Half of our notes are sold to foreign investors so these yields are not under our control. The one thing I do feel it indicates is that the Fed is done tightening!

On the depressing side, MSNBC commentator Art Cashin, who I deeply respect, said we may be stuck in a multi-year trading range trapped between DOW 10K and 11K as we have been since Q4 ’03. On the other hand, if we can get comfortable with that, there is a lot of money to be made, but it will have to be lots of little hits.

I still like to feel that we are consolidating for a breakout but Art is much smarter than I am and he is very concerned that this is the case.

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OK, what positions do I still have open?

I just put in a $75 put on AAPL for $3.50, looking for $4 to get out on a technical pullback only.

BZH – $70 put for $1.65 may have been a waste. This is one great company, I can’t believe I bet against it!

ECA – $45 put for $1.05. I am being way greedy on this one as it is almost a double. It will serve me right if I get burned. I have a sell in for $2.20 near the…
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A Nice 20%

BIVN is a nice little biotech that has a great treatment for leukemia that has may soon be approved in Europe.

These things often drag out and many people bailed on Bioenvision this year leaving a lot of money on the table.

The way to play this one is to buy the stock for $6.68 and to sell the Jun $7.50 calls for $1.20, a quick 19% return with an extra .82 (12%) before getting called away and protection all the way down to the 6 month low of $5.42.

It’s good to have a few stocks like this to hold on to when the market is uncertain…





Trade of the Day – EAGL

Egl Inc. is a company that works for other companies I like providing supply chain management to the transportation industry and the people who use it.

If this sounds like a big market, it is and these guys are the swiss army knife of the industry. Their 25% growth is outpacing their earnings but that is very normal for a service company. They got tapped for overbilling the government early this month and the stock pulled back from its high of $39 but it bounced off $35.69 on Tuesday and looks to be heading back up.

I like the very cheap May $30 calls for $8.50, a $1 premium as you can sell the Jan $40s against them for .80 for an immediate 10% discount with $3 of cushion before you are called away. I’m not going to sell the $40s right away as I would like to get out of this trade for $10 without worrying about next month but I will keep my options open on this trade!





 
 
 

Phil's Favorites

Stunning Visualization Of The Explosion Of ICO Activity In The Last Four Years

Courtesy of Zero Hedge

Via Elementus.io,

This graphic shows every token sale that successfully raised at least $100k, from the beginning of 2014 through the end of last month, November 2017. The bar chart at the bottom displays the total dollar amount raised in each month (details below).

How big is the ICO (aka token sale) market really?

It seems like this should be an easy question to answer. After all, blockchains are open data layers that contain a complete record of every transaction ever made. However, we've found the answer to this question to be surprisingly elu...



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Zero Hedge

Stunning Visualization Of The Explosion Of ICO Activity In The Last Four Years

Courtesy of Zero Hedge

Via Elementus.io,

This graphic shows every token sale that successfully raised at least $100k, from the beginning of 2014 through the end of last month, November 2017. The bar chart at the bottom displays the total dollar amount raised in each month (details below).

How big is the ICO (aka token sale) market really?

It seems like this should be an easy question to answer. After all, blockchains are open data layers that contain a complete record of every transaction ever made. However, we've found the answer to this question to be surprisingly elu...



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Digital Currencies

Stunning Visualization Of The Explosion Of ICO Activity In The Last Four Years

Courtesy of Zero Hedge

Via Elementus.io,

This graphic shows every token sale that successfully raised at least $100k, from the beginning of 2014 through the end of last month, November 2017. The bar chart at the bottom displays the total dollar amount raised in each month (details below).

How big is the ICO (aka token sale) market really?

It seems like this should be an easy question to answer. After all, blockchains are open data layers that contain a complete record of every transaction ever made. However, we've found the answer to this question to be surprisingly elu...



more from Bitcoin

Chart School

Tape Reading - Dow Jones Price Waves

Courtesy of Read the Ticker.

This is a continuation of price wave analysis.

More from RTT Tv

RTT Volume wave analysis like this helps the retail investor find price action that is true. The reference to 'tape reading' is by the definition of Richard Wyckoff (section 5M of the Wyckoff Course), you can learn more about RTT Volume Wave here.





NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net ...

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Insider Scoop

Attention Contrarians: This Analyst Says JD.com Set Up Could Be In Your Favor

Courtesy of Benzinga.

Related JD Want Some Exposure To China's Growth? Stifel Says Buy JD Or Alibaba Q3 13F Roundup: How Buffett...

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Biotech

Designer proteins that package genetic material could help deliver gene therapy

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

 

Designer proteins that package genetic material could help deliver gene therapy

Courtesy of Ian HaydonUniversity of Washington

Delivering genetic material is a key challenge in gene therapy. Invitation image created by Kstudio, CC BY

If you’ve ever bought a new iPhone, you’ve experienced good packaging.

The way the lid slowly separates from the box. The pull...



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ValueWalk

Tax Bill May Spark Exodus From High-Tax States

Courtesy of FinancialSense.com via ValueWalk.com

The following is a summary of our recent podcast, “Exodus – The Major Wealth Migration,” which can be listened to on our site here on on iTunes here.

It’s looking increasingl...



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Members' Corner

An Interview with David Brin

Our guest David Brin is an astrophysicist, technology consultant, and best-selling author who speaks, writes, and advises on a range of topics including national defense, creativity, and space exploration. He is also a well-known and influential futurist (one of four “World's Best Futurists,” according to The Urban Developer), and it is his ideas on the future, specifically the future of civilization, that I hope to learn about here.   

Ilene: David, you base many of your predictions of the future on a theory of historica...



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Mapping The Market

Puts things in perspective

Courtesy of Jean-Luc

Puts things in perspective:

The circles don't look to be to scale much!

...

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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

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Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

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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