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Archive for 2006

Friday Morning

Asia had some nice gains this morning with the Nikkei and the Hang Seng posting 2% gains, India picked up 379 pts (4%) – wouldn’t it be nice if we could do that just once? Europe is solidly up but not too eciting at the mid-day, probably waiting for our markets to react to the job numbers at 8:30.

The jobs number was way low (75K vs 180K expected) so we should be in great shape today so any kind of downturn would be a serious disappointment. We need the Dow to stay over 11,280 and the goal of the day is for the Nasdaq to stay over 2,230 but I won’t be worried if it can’t do it today as long as it doesn’t fall back below 2,220.

Rates should drive down on this news, especially as unemployment dropped another tenth which, coupled with strong productivity gains means the Fed should be about done. On the downside, this will drop the dollar as the rest of the world bank groups are still raising but we’ll worry about that next week.

This should rocket the miners and give yet another boost to oil companies. Between the weekend and the dollar drop we should be back over $71 today.

You have to take gains in oil and gold with a grain of salt today as the dollar may bounce back next week and quickly wipe them out. With oil, the demand picture was not that strong and next week will give us a clearer indication of the holiday driving picture. On a long-term perspective I noticed that the impressive market gains posted by Honda and Toyota yesterday were almost entirely in the small car segment which means consumers are already changing their behavior.

I am starting to buy now but if we have a huge day I will take the money and run into the weekend as a big rally might be a little overdone at this point.

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The Vonage IPO is now such an unqualified disaster that they may have to give back the money to some of the buyers! As I said back on the 23rd, before the issue: “This company is a classic .com model that needs money so they can lose much more money than they are losing now and maybe if they are really cool they will figure out a way to make money one
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Thank Goodness Thursday

Okay then! I guess I was just a day early when I said on Tuesday that we needed 2% in the next two days to get back on track. I could take credit for this actually being 2 days from Tuesday and tell you I’m a genius but I was including Tuesday when I said that – had I actually said it Tuesday night I would be replacing Bernanke next week as the Fed Chair! And, best of all (must say while dancing a jig) WE DID IT WITH NASDAQ LEADERSHIP!!! Not just any old Nasdaq leadership mind you, we found our SOX! I didn’t even mention it yesterday because the SOX topped out below Tuesday’s high and they have hurt me so many times before but today was a real punch out that has really gotten my hopes up. http://stockcharts.com/gallery/?%24sox Now, the bad news: The Dow was rejected from the 50 dma of 11,280, but only right at the end so tomorrow’s open will be critical. The Nasdaq took off like a rocket in the last hour and needs just 11 points to hith the 200 dma at 2,230 while the S&P looked good all day and is comfortably right between the 50 and the 200. Gold closed just under $630 and just below the non-adjusted 50 dma and tomorrow’s trading will be critical for the commodity. Copper had a tough day as trading had to be halted limit down in the morning but it pulled somewhat of a recovery when it reopened but it looks to be on the verge of a major meltdown. Oil had a very odd day as the build in oil was somehow regarded as a good thing by oil traders in the morning but then somehow went back to being a bad thing by the afternoon (I guess they read my blog after lunch!). http://finance.yahoo.com/q/bc?t=1d&l=on&z=m&q=l&p=&a=&c=&s=uso Thank goodness the Valero Rule voided those puts by heading straight up from before the 10:30 report (that’s 3 weeks in a row they’ve called the action in advance!). http://finance.yahoo.com/q/bc?t=1d&l=on&z=m&q=l&p=&a=&c=&s=vlo Although the oil stocks still look ripe for a fall, I am getting a little tired of watching them move the wrong way and, tomorrow being Friday, I think I will wait until next week to see where we really are. I think the bulk of the action is centered around the start of the hurricane season and…
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Thursday Morning

Today is another day where we probably can’t win.

If I get my oil sell-off it will likely drag down the S&P which will drag down the other indices unless, miraculously, the Nasdaq takes the lead but that would be such a shock I would have to cash out anyway in confusion.

Asia was mixed to the downside while Europe is definitively down so there certainly isn’t much fuel for a rally to get us started. Iran’s response to Rice’s “offer” yesterday was more politicking so things are settling back to the normal state of confusion I though we had gotten comfortable with.
http://online.wsj.com/article/the_morning_brief.html

What we cannot be comfortable with is losses that breach the levels we discussed last night. A small down day is to be expected, especially if the oil sector sells off again but with an oil inventory and an OPEC meeting today almost anything can happen.

My big concern with oil today is that there will be hundreds of microphones in front of Chavez today and that’s never a good thing! We are hoping for a shock in the inventories with one or more segments building by 2M barrels or more and no drawdowns, this should be a solid indicator of lower demand, which is critical to get some downside momentum and get oil back below $70.

The price of oil has become totally disconnected from the laws of supply and demand. Last Summer oil was at $48 in May before hurricanes knocked out production and sent the price up to $70 in August. Throughout it all, there was never an actual shortage and many are arguing that that is the free market in action (pay enough and you’ll get it) but there is more oil in storage in the US today than there was in 2004, when oil was at $30 and there is more production on-line today than there was then and demand is only up 4% during that time, still at a lower level than production.

Much like the end of the housing market, we are at the end of the oil market and just like the realtors who came on TV every week to tell you there was no bubble and the fundamentals are strong, we have oil analysts and T Boone Pickens saying the same about oil. It is a little harder to change sentiment on oil than it…
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Wednesday Wrap-Up

Well we got our gains but they weren’t very strong although there was a nice rally right at the end, reversing an afternoon sell-off.

Maybe it’s my sunny disposition but I think we’re going up. I’m not willing to bet we’re going up but I will be quick to get on board if we do. Looking at the Dow, I think we may bob around the 11,100 line for maybe a week and then head back north. I was very encouraged this morning when oil was down and the indexes were up but disappointed at the afternoon’s reversal of leadership. It was pointed out to me however that it is the end of the month and the 2% rise in the energy sector may have been attributable to “window dressing” by funds who were heavy into oil – we will see tomorrow.

The Dow must not go below 11,000 and the S&P must not go below 1,250 but I expect the S&P to have some respect for its 200 dma at 1,258 while the Nasdaq needs to stay above 2,150 until it can make it back over its 200 at 2,230.

If we can make it through next week without dropping below my targets, by Thursday I will want to start shopping so let’s hope for the best.

Rice made a podium statement regarding Iran and had a very strange tone in the opening that reversed at the end. I don’t know who wrote it but it didn’t seem like good diplomacy to me:
http://online.wsj.com/article/SB114908908594267546.html?mod=home_whats_news_us

Oil traded down .75 for the day to $71.30 but the oil stocks reversed around 1pm in a move that was indicated by Valero at noon. Essentially the initial reaction to Rice’s speech was bearish for oil but after talking it over the traders decided to keep the Iran fear factor in play.

Gold traders were very concerned about a sudden outbreak of peace and gold dropped $11 to finish at $649. As you can see below, the fear factor was almost identical to oil as the Iran statement came out at 11:30 with both commodities dropping 2% and holding there until oil was pumped up in the afternoon and gold followed just a bit in case something was really up:
http://finance.yahoo.com/q/bc?t=1d&s=GLD&l=on&z=m&q=l&c=uso

Another 2pm factor were the FMOC minutes which only seemed to cloud the issue of rate hikes further. At…
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Watch Out Wednesday

Today cannot be a good day unless the Dow gains 400 points. This is not likely as the Nikkei lost 400 points last night although Europe is taking things fairly well so far this morning. India’s economy is growing at a 9.3% pace, 30% better than expected and we’ve already gotten good numbers from Japan and China looks like it’s growing around 10% as well. India’s growth is largely in the service sector, as anyone with a telephone knows, but China does put pressure on commodities, especially oil. We need to get used to rising commodity prices as the falling dollar is here to stay as the rest of the world is growing faster than we are. Fed policies of fighting inflation by keeping the economy in check may have made sense when the US was the world’s greatest economy by a mile but 20 years of persuing that agenda have pulled us back into the pack with many contenders nipping at our heels. As we discussed last night, the S&P will be the one to watch today but anything less than a full reversal of yesterday’s losses will only confirm the alarming downtrend we have been seeing. The SOX are just destroying any chance of a Nasdaq recovery and all 30 Dow components were losers yesterday so at this point all we can do is keep in cash and just cheer for a quick wipeout, maybe another 10% down, so we can get back to bargain hunting. http://stockcharts.com/gallery/?%24sox Gold is at a serious inflection point, hovering below it’s dollar adjusted 50 dma of $675. If it breaks through there it should fly past $700 again to test $730. If it is rejected there, we may be seeing $580 again. Oil took a turn down in Europe today, erasing yesterday’s BS gains as traders run in fear of today’s inventory report which will almost certainly show a build despite the holiday driving weekend. The dollar is down 7% from April and oil is at $72, which seems high but 93% of $73 is $68 so we are actually back near the top of the channel we’ve been in all year, not breaking higher as it looks on a chart. http://stockcharts.com/gallery/?%24wtic Again, I am still the only person in America who adjusts for the dollar but trust me, I’m right and everyone else is wrong – so oil, on the above…
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Terrible Tuesday Wrap Up

If that was a test we just failed!

The Dow did break it’s technical, it crossed 11,100 on the way down to 11,094. That puts us very close to a very terrible ten thousand level… The Nasdaq retreated right back to 2,164, 30 points above last week’s low spike but just barely above the low settle of 2,160 below which we are sure to test 2,025, which is where I now want it as THAT may finally be enough to consolidate for a real rally. The S&P was equally pathetic and landed right on the 200 dma at 1,259 but still above last week’s low spike of 1,245.

That makes the S&P tomorrow’s key indicator as any downward open will put it in a terrible spot. CNBC said decliners led advancers 4:1 but I challenge you to find that many positive stocks. Worst news of the day was that volume finally came in during the last hour and losses accelerated into the bell (note to the S&P – stopping at the 200 dma because you ran out of time to go lower is not what we call holding the line!).
http://finance.yahoo.com/q/bc?s=%5EGSPC&t=1d

Oil went up but, as expected, oil stocks went down anyway. Tomorrow’s inventory should prove very interesting. This is holding in with my theory that demand was poor this weekend and those in the know are selling ahead of the reports.

Gold got off to a good start but settled flat, also as expected. As these commodity moves are occurring against a falling dollar (lowest since last April but still 5% higher than winter ’04) they are actually bigger than they look.

All in all, a terrible, terrible market with virtually no redeeming qualities whatsoever – that probably means we rally tomorrow but I’m not going to hold my breath but my bull market detector has been going off (Yahoo Finance is slow) although it could also be a bear rush.

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What the heck are people selling Google for?

The stock kissed the 200 dma today in the last 15 minutes of trading and looks more likely to break down to $332 than go up to $395. Why is this happening?

Their Q1 market share is up to 50% (6% better than last year).

Q1 Internet ad sales increased 38% from last year to $3.9Bn.
http://biz.yahoo.com/ap/060530/internet_advertising_google_yahoo.html?.v=1

The Q2 estimate for Google is $2.19, even…
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Testing Tuesday

The world markets have lost their confidence over the weekend with Asia and Europe both off in the .5-1% range over fears of a global economic slowdown driven by rising rates and commodity pricing driving inflation (same as it ever was). Smaller world markets are also facing a lot of pressure as doomsayers are predicting their dependence on foreign capital makes them a crash risk (it does). What they don’t say is that perhaps the fact that the US, Russia, China, India, Europe… all have so much foreign investing in their economies is because we are actually starting to achieve a fluid Global Economy and are moving towards a more open and efficient World Market just like we always wanted to! http://online.wsj.com/article/SB114895250881765923.html?mod=home_whats_news_us I imagine the economists who warn of these risks are the old economists who still think the boarders between European countries mean something more than arbitrary lines to the people who take $99 round trip weekends to 20 different countries the way we would travel from state to state. Today’s Dow tragedy will be people coming to their senses over GM (up 15% last week) and Wal-Mart coming in with sales guidance at the low end of the range. Exxon should also trade down as nothing blew up over the long weekend (although Iran continues to be a problem) so it will be amazing if the Dow can manage a positive day. We need a lot more than a positive day today to confirm a rally, we need about 2% in the next 2 days from all the indices to demonstrate that last week was anything more than a bounce. The Dow is, unfortunately, key as it is sitting just below its 50 dma at 11,280 and has not reversed an upturn through the 50 since September, when it faked a recovery into an even larger drop (but at least set us up for the October rally). Relative international calm is being offset somewhat by a falling dollar on commodities as gold holds steady despite the falling dollar. Oil is being ratcheted up on riots in Afghanistan and Iran taunting the US, saying we couldn’t invade them if we wanted to because we don’t have the troops for it (true) and the upcoming hurricane season which are all being pointed to to justify the 100% increase in oil prices in 24 months. http://www.bloomberg.com/apps/news?pid=10000085&sid=aDPhnm0uO6Wc&refer=Europe One thing nobody talks about…
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Zero Hedge

Why The US Is About To Be Flooded With Record Oil Production Due To Plunging Oil Prices

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

One would think that plunging oil prices and the resulting mothballing (or bankruptcy) of the highest-cost domestic producers would lead to a collapse in US oil production. And sure enough, if looking simply at headline data like the Baker Hughes count of active rigs in the US, then US oil production grinding to a halt would be all but assured. However, what will actually happen, even as the highest-cost producers and those with the weakest balance sheets are taken to their local bankruptcy court, is that as ...



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Phil's Favorites

Spain to Abolish Rent Controls; 20,000 Small Businesses May Close; Good Thing or Not?

Courtesy of Mish.

Abolition of rent controls in Spain this month have prompted some landlords to increase fees by tens of thousands of euros. The Guardian claims Spanish rent changes ‘could close 20,000 small businesses’.

Is this a good thing? Ponder that question for a moment, but also consider a few snips from the article.
Up to 20,000 small Spanish businesses could be forced to close when rent controls are abolished at the end of this month, according to the self-employed workers union. Many of the closures will be emblematic shops that shape the urban landscape in cities such as Madr...



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All About Trends

Mid-Day Update

Reminder: David 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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Insider Scoop

Oppenheimer Initiates Coverage On Twitter, Believes Stock Is Appropriately Priced At Current Levels

Courtesy of Benzinga.

Analysts at Oppenheimer initiated coverage of Twitter Inc (NYSE: TWTR) Friday by issuing a Perform rating and setting a $36.00 price target. Twitter is a global social networking platform with over 280 million active users.

The Numbers

While Oppenheimer analysts fully recognize the strength in Twitter as a company, they believe that Twitter’s stock is appropriately priced at current levels. “While TWTR is the best Internet platform for real-time content discovery, we believe that the stock’s current valuation of 10x 2015E sales, a 52% premium to peers, fully reflects future prospects based on current growth rates.”

Insider Dumping

Between November and December 2014, Twitter insiders have sold more than $...



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Chart School

Relief Bounce in Markets

Courtesy of Declan.

Those who took advantage of markets at Fib levels were rewarded.  However, this looked more a 'dead cat' style bounce than a genuine bottom forming low.  This can of course change, and one thing I will want to see is narrow action near today's high. Volume was a little light, but with Christmas fast approaching I would expect this trend to continue.

The S&P inched above 2,009, but I would like to see any subsequent weakness hold the 38.2% Fib level at 1,989.


The Nasdaq offered itself more as a support bounce, with a picture perfect play off its 38.2% Fib level. Unlike the S&P, volume did climb in confirmed accumulation. The next upside c...

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Digital Currencies

Chart o' the Day: Don't "Invest" in Stupid Sh*t

Joshua commented on the QZ article I posted a couple days ago and perfectly summarized the take-home message into an Investing Lesson. 

Chart o’ the Day: Don’t “Invest” in Stupid Sh*t

Courtesy of 

The chart above comes from Matt Phillips at Quartz and is a good reminder of why you shouldn’t invest in s...



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OpTrader

Swing trading portfolio - week of December 15th, 2014

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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Sabrient

Sector Detector: Energy sector rains on bulls' parade, but skies may clear soon

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

Courtesy of Scott Martindale of Sabrient Systems and Gradient Analytics

Stocks have needed a reason to take a breather and pull back in this long-standing ultra-bullish climate, with strong economic data and seasonality providing impressive tailwinds -- and plummeting oil prices certainly have given it to them. But this minor pullback was fully expected and indeed desirable for market health. The future remains bright for the U.S. economy and corporate profits despite the collapse in oil, and now the overbought technical condition has been relieved. While most sectors are gathering fundamental support and our sector rotation model remains bullish, the Energy sector looks fundamentally weak and continues to ran...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly.

Click here and sign in with your user name and password. 

 

...

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Option Review

SPX Call Spread Eyes Fresh Record Highs By Year End

Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...



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Market Shadows

Official Moves in the Market Shadows' Virtual Portfolio

By Ilene 

I officially bought 250 shares of EZCH at $18.76 and sold 300 shares of IGT at $17.09 in Market Shadows' Virtual Portfolio yesterday (Fri. 11-21).

Click here for Thursday's post where I was thinking about buying EZCH. After further reading, I decided to add it to the virtual portfolio and to sell IGT and several other stocks, which we'll be saying goodbye to next week.

Notes

1. th...



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Pharmboy

Biotechs & Bubbles

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

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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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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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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