Archive for
January, 2009
by David Fry - January 27th, 2009 11:38 am
Welcoming Dave Fry to our site!
Dave’s Daily MARKET COMMENT
January 26, 2009
The day started off with a lot of lousy layoff news from HD (7K), PFE, (8K), CAT (20K) and STBK (1K). Pfizer buying Wyeth stimulated bulls and they got further pumped-up by home sales and Leading Economic Indicators being better than expected. So up we went early only to see those gains fade as the day progressed.
Volume was moderate and breadth was modestly positive.
A shocking story today came via ABC News asserting that government regulators aided a cover-up by IndyMac. If this is true then there will no doubt be more stories like this yet to come.
Then we got the comforting news from S&P that GE’s AAA credit rating is not “immediately affected” by its recent earnings statement. No, S&P will wait for a bankruptcy filing before they even put them on their super-duper “watch list”. Too ridiculous, eh?
The Fed meeting should prove interesting only as to the statement they will issue. Clearly they’re prepared to monetize US debt given the level of money printing taking place. How the Fed balances risks of inflation with new strategies is well articulated by this Bloomberg article.
So we start the week off on a mildly positive note. Barring news out of the blue, the three big news events to play out this week are XOM’s earnings since it’s such a heavy weight in the DJIA; the Fed meeting and what could be a peculiar and market moving statement from them; and GDP 4th quarter data on Friday. All this could wind-up January with a bang.
As for me, I’m heading to the States again tomorrow. I should be able to post tomorrow night but then we’ll be in the air literally most of Wednesday so no post that day. Hopefully, we’ll be able to post on Thursday.
So, let’s see what happens.
Disclaimer: The ETF Digest maintains a position in GLD.
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by Optrader - January 27th, 2009 11:31 am
This has been a great beginning of the year 2009 for the swing trading virtual portfolio. We are up 49% just in January.
Having a balanced virtual portfolio seemed to work very well in this range-bound market, as we were able to take profits on both sides. We only had 2 closed losing trades in the month. That is very lucky.
We also were pretty lucky on the AAPL’s earnings play, which worked perfectly.
Let’s hope the rest of 2009 is as good 
To learn more about the swing trading virtual portfolio (strategy, membership etc.), please click here
- Optrader
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by Phil - January 27th, 2009 8:45 am
Earnings, earnings, earnings!
We have got bunches of earnings today with many big names reporting and the Dow is bouncing around like a ping-pong ball in pre-markets as announcements hit the wire. Yesterday’s action was wild too as we flew up to test our 8,217 range-top and then back to our 8,066 zone, only to finish right in the middle at 8,116 so a whole lot of nothin’ was going on yesterday.
Today we’ll be looking for signs of housing life in the Case-Shiller Home Price Index at 9 but it’s a report on November pricing so ANY reaction by the market to this report will be silly. At 10 we will test the January Consumer Confidence and "experts" are expecting a one-point improvement to 39 but German business confidence made a surprising recovery after falling for 7 consecutive months with a 3% improvement in business expectations over the next 6 months so we could be surprised by our own numbers. "The end of the free fall in expectations is a strong ray of hope, that the vicious circle is broken and the German economy will manage, not to rebound strongly, but to stabilize in the second half of this year," said Alexander Koch, an economist at UniCredit Research in Munich.
We shook off some pretty poor earnings yesterday from BOH, CAT, FCF, ONB, PVTB, TSN and WYE (who we bought on the dip). After hours we got small misses by AXP and AMGN (who Pfizer should have bought), both of whom seem to have been forgiven. TXN was very surprising with a big beat but lowered guidance, as did STLD, VMW and ZRAN. This morning (so far) GLW missed and lowered guidance, DAL just missed (by a mile), DD missed (another bad sign for XOM). On the plus side we have beats from BJS, BMY, CP, CHKP, EMC, FPL, GKSR, HSY, KCI, MHP (big surprise but ruined it by guiding down), PRSP, STJ, STE, TLAB, TRV (good for ALL?), VLO (good for XOM) and WAT. In short – it seems hard to draw conclusions from earnings other than there are well and poorly managed companies out there and, for the first time in a long time – that sort of thing is starting to matter again!
It’s 8 am and we’re still waiting for NUE and X along with BTU to give us a look at the industrial picture but Europe…
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by ilene - January 27th, 2009 12:55 am
Bennet Sedacca discusses his reasons for believing we are heading into a depression, and the worst is yet to come. 
Recession:
A recession occurs when a nation’s living standards drop and prices increase. This downturn in economic activity is widely defined as a decline in a country’s gross domestic product for at least 2 quarters.
Depression:
An economic condition caused by a massive decrease in business activity, falling prices, reduced purchasing power, excess of supply over demand, rising unemployment, and other negative economic factors.
- Bloomberg financial definitions
Truth or Dare: Recession or Depression?
As unpopular as it may have been, I have been writing about the impending recession over the past several years. I am rather used to being called a "perma-bear" as it relates to the asset-based, over-leveraged mess we call our economy.
Truthfully, it’s been no fun whatsoever to call ‘em as I see ‘em. An outlier view has been a necessary evil, however, and one that I’ve been proud to have had the guts to provide. 
I will now turn to what, in my view, is the biggest risk of all: We’re in a recession – and the economy can actually shrink. And shrink it has, is, and will likely continue to do. The question now: Are we going through a traditional recession, or a once-in-a-lifetime depression?
I actually hoped the unprecedented credit unwind would end up in a nasty recession; but I fear a depression is either upon us or will soon be upon us. To be truthful is essential in markets and life: To face head-on the bad news which isn’t at all fun or exciting to face.
I hate to say this, as unpopular as it may be: Welcome to the depression. For my reasoning, please read on.
Putting the Recession Question to Bed
GDP estimates for 2008′s fourth quarter are due to be released on Friday morning at 8:30 a.m., with estimates coming in the -5.5% range, which follows a -0.5% number in the prior quarter. Many believe the economy will turn around in the second half of the year, when the Obama administration’s fiscal stimulus plan makes things…
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by ilene - January 26th, 2009 11:13 pm
Curious to know who was selected? Check out the article in the Guardian
The worst economic turmoil since the Great Depression is not a natural phenomenon but a man-made disaster in which we all played a part. In the second part of a week-long series looking behind the slump, Guardian City editor Julia Finch picks out the individuals who have led us into the current crisis…
Alan Greenspan, chairman of US Federal Reserve 1987- 2006
Only a couple of years ago the long-serving chairman of the Fed, a committed free marketeer who had steered the US economy through crises ranging from the 1987 stockmarket collapse through to the aftermath of the 9/11 attacks, was lauded with star status, named the "oracle" and "the maestro". Now he is viewed as one of those most culpable for the crisis. He is blamed for allowing the housing bubble to develop as a result of his low interest rates and lack of regulation in mortgage lending. He backed sub-prime lending and urged homebuyers to swap fixed-rate mortgages for variable rate deals, which left borrowers unable to pay when interest rates rose.
For many years, Greenspan also defended the booming derivatives business, which barely existed when he took over the Fed, but which mushroomed from $100tn in 2002 to more than $500tn five years later.
Twenty four more people "at the heart" (not necessarily implying fault) here.
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by ilene - January 26th, 2009 9:35 pm
Allan updates his Elliott Wave analysis of the SPX and is still expecting a significant move down.
The Elliott Wave Principle differentiates between, "Impulsive" and "Corrective" Waves, the former is in the direction of the main trend, the latter is generally against the main trend or sideways. Below is a 30-minute line chart of the SPX, showing the closing prices of 30 minute intervals.
SPX – 30 minutes
Note that in the chart, prices have etched out another Wave 4 sideways correction, only this time in a smaller, 30-minute time frame. As you can see, all the action from the January 16th High has been sideways, thus Corrective, in nature. We saw the same pattern earlier this month on a larger time frame, the Daily chart, a pattern that was resolved to the downside.
Most of my charts, including this one, include an indicator named, "False Bar Stochastic." I dislike using many indicators (they are one step removed from price action), but in the case of the FBS, it is too effective not to have on every chart in every time frame.
In the above chart, I’ve noted "BUY" or "SELL" every time the FBS reached overbought/oversold status and reversed. Please pay close attention to the direction of the SPX immediately after each designation. (It is only the Overbought/Oversold areas without a black horizontal line that we care about, those lines designate trends and we don’t trade against the trend.)
Accordingly, the market is set up to fall out of the drawn wedge on the chart, probably in another impulsive wave down to new lows for the move. No guarantee, just a probability that the next major move is DOWN.
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by ilene - January 26th, 2009 7:03 pm
Too close for comfort…
UK: Banks Were Just Three Hours From Collapse
Britain was just three hours away from going bust last year after a secret run on the banks, one of Gordon Brown’s Ministers has revealed.
City Minister Paul Myners disclosed that on Friday, October 10, the country was ‘very close’ to a complete banking collapse after ‘major depositors’ attempted to withdraw their money en masse.
The Mail on Sunday has been told that the Treasury was preparing for the banks to shut their doors to all customers, terminate electronic transfers and even block hole-in-the-wall cash withdrawals.
Only frantic behind-the-scenes efforts averted financial meltdown.
If the moves had failed, Mr Brown would have been forced to announce that the Government was nationalising the entire financial system and guaranteeing all deposits.
*****
Full article: Revealed: Day the banks were just three hours from collapse, by Glen Owen, at Mail Online.
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by ilene - January 26th, 2009 3:47 pm
Prelude to a failed economic state?
Courtesy of Ellen Brown, at Web Of Debt
On a recent visit to Tucson, where I was invited to give a presentation on monetary reform, I was disturbed by a story of strange goings on in the desert. A little over a year ago, it seems, a new industrial facility sprang up on the edge of town. It was in a remote industrial zone and appeared to be a bus depot. The new enterprise was surrounded by an imposing security fence and bore no outward signs identifying its services. However, it soon became apparent that the compound was in the business of outfitting a fleet of prison buses. Thirty or so secondhand city buses were being reconfigured with prison bars in the windows and a coat of fresh paint bearing the “Wackenhut G4S” logo on the side.
The new Wackenhut operation is shrouded in mystery. It has been running its fleet of empty prison buses night and day, apparently logging miles on a Department of Homeland Security (DHS) contract. Multiple buses can be seen driving all over town and even on remote desert back roads. Oddly, except for the driver and one escort guard seated in front, these buses are always empty.
Wackenhut Services was founded by George Wackenhut in 1954 to provide prison guard services to state and federal governments. Mr. Wackenhut was reported to be something of a brawler himself, having once earned distinction beating up his business partner in a fist fight. Now owned by the Danish corporation G4S, Wackenhut Services has a sinister reputation for hiring thugs. It has been said that it’s hard to tell which is more dangerous, the prisoners or the guards.
Observers originally thought that the purpose of the new Wackenhut operation was to outfit prison buses to be distributed in other parts of the country. But it soon became apparent that none of the buses was leaving the Tucson depot. Recently, a passerby observed what appeared to be a training operation there. In what seemed to be strange activity for 10:30 PM on a Saturday night, the depot yard was fully illuminated, the entire fleet of buses was up and running, and drivers and guards were scrambling around the yard. The question is, what were they…
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by ilene - January 26th, 2009 2:36 pm
Maybe Mr. Fuld’s wife should be running Merrill, with a eye for value like that. (Yes, I know, a minor problem of fraudulent transfer may arise.) 
Housing prices are falling around the country, but this one sounds hard to believe: A seaside mansion on Jupiter Island in Florida, bought for more than $13 million five years ago, was just sold for $10.
That’s right, 10 bucks. But in this case, the transaction is likely to raise eyebrows for reasons other than the price.
The seller, according to county records, was Richard S. Fuld Jr., the former chairman and chief executive of Lehman Brothers. The buyer was his wife, Kathleen.
The motivation is unclear, but Mr. Fuld has been under intense scrutiny since Lehman declared bankruptcy in September…
The couple jointly bought the home in Hobe Sound, Fla., for $13.75 million in March 2004, and the sale to Mrs. Fuld on Nov. 10 was first reported by Cityfile.com.
It is possible that he is now transferring properties because of his fears of investor lawsuits or a possible bankruptcy, lawyers in Florida said.
“This is the oldest trick in the books” said Eric S. Ruff, a lawyer with Ruff & Cohen in Gainesville, Fla. “It’s common when you hear the feet of your creditors approaching to divest yourself.”…
Florida has particularly generous home protection laws that protect residents from losing their homes in the case of lawsuits or bankruptcy. But Mr. Fuld may not see much benefit by shifting the house to his wife’s name because the Fulds may not be able to prove residency there.
Mr. Ruff, the lawyer in Florida, said that it might be difficult for him to claim residence in Florida, because he primarily lived and worked in the New York area. That could mute any bankruptcy benefit.
And, Mr. Ruff said, the transfer to his wife could be deemed fraudulent conveyance if she did not pay enough for the house. That would make the house fair game for creditors who come after Mr. Fuld.
…
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by Robin Hood Trader - January 26th, 2009 2:01 pm
THE MARKET REFUSED TO CO-OPERATE THIS WEEK. ROBIN CALLED FOR 8348 TO BE STOUT RESISTANCE AND IF REJECTED WOULD RE-TEST THE 7995-8110 LEVEL. IN FACT, THAT IS WHAT HAPPENED AS THE DOW FAILED TO BREAK 8348 AND RETRACED TO TEST 7909. WE HAD A BULLISH BIAS BUT A LITTLE PREMATURE ON THE CALL. THE MAGNITUDE OF THE BEARISH MOVE ON TUESDAY WAS MORE SEVERE THAN ANTICIPATED ALTHOUGH NOT TOTALLY A SURPRISE. INAUGURATION DAYS ARE TYPICALLY BEARISH. THE REST OF THE WEEK WAS SPENT ATTEMPTING TO RECOVER WHAT WAS LOST ON TUESDAY. THURSDAY AND FRIDAY WERE SIGNIFICANT IN THAT THE DOW REJECTED LOWER PRICE LEVELS ON DECENT VOLUME.
WHEN ATTEMPTING TO MOVE THROUGH A SOLID AREA OF RESISTANCE OR SUPPORT, IT IS LIKE TRYING TO SMASH THROUGH A PHYSICAL BARRIER. PRIOR TRADING ACTIVITY CREATED A BARRIER THAT WAS A LITTLE MORE FORMIDABLE RESISTANCE THAN INITIALLY ANTICIPATED. THE MARKET AT THE END OF THE WEEK TOLD ME THAT IT DOESN’T WANT TO GO LOWER AND IS PUSHING AGAINST RESISTANCE AND WANTS TO GO HIGHER. KEEP AN EYE ON THE PREVIOUSLY MENTIONED 8340-8350 LEVEL. WHEN RESISTANCE FINALLY SUCCUMBS TO THE BULLISH PRESSURE WITH VOLUME AND CLOSES ABOVE THAT LEVEL, THEN WE WILL RUN TO 9000.
LAST WEEKS’ INDU COMMENTARY:
“8348 will be important resistance in the INDU. If the index breaks that level on volume, look for it to run to 8900-9000. If it has difficulty breaking through, it could head back to retest the 7995-8110 level. My best bet is that we are going higher”.
The market was closed on Monday in honor or Dr. Martin Luther King’s memory.
Tuesday was true to form as the market put in a bearish performance on inauguration day. SST was hammered losing over 50% of its’ value. Citi also had a bad day as we ushered in the Obama administration. The DOW declined a whopping 332 points.
Wednesday, IBM stepped to the earnings plate and posted a solid report. Timothy Geithner was tamely interviewed by the Senate Finance Committee, which shed little light on the pending Obama Economic Stimulus Package. For that matter, little understanding was revealed on how a man so apparently qualified to be considered as the next Secretary of the Treasury has the inability to pay his own personal taxes. The DOW regained 279 points.
…
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January 27th, 2012 1:40 pm
Reminder: David is available to chat with Members, comments are found below each post.
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January 27th, 2012 12:55 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
In an effort to reach the angry mob, CNBC's Rick Santelli goes all Sesame Street on the numbers behind the US Debt Ceiling Rise. Focusing for two minutes on what this practically means for every man, woman, child, and politician, the shouting Chicagoan points out that when the US breaches this new limit then the world's entire population will be on the hook for $2,346 each (and $52,409 per US person).
...
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January 27th, 2012 12:35 pm
Courtesy of Doug Short.
The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) posted -6.5 in its latest reading, data through January 20. The latest public data point is a reduced contraction from last week's -7.6 (a slight downward revision from -7.5). This is the highest level (i.e., least negative) since early September. However, the underlying WLI declined fractionally from an adjusted 123.3 to 122.8 (see the third chart below).
Early last December Lakshman Achuthan, the Co-founder of ECRI, spoke with Tom Keene on Bloomberg Television's Surveillance Midday. You can watch the video on the ECRI website here, with bold heading Recession Update. The eight-minute video is well worth watching in its...
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January 27th, 2012 11:15 am
Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Some combination of better made cars, and less Americans able to pay new car prices has conspired to push up the average age of U.S. vehicles to a new record high. Reflecting this sea change, one of the best investment g...
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January 27th, 2012 10:05 am
Courtesy of Benzinga.
Shares of battered tech company Research in Motion (NASDAQ: RIMM) are seeing much strength during Friday's trading session.
Fairfax Financial Holdings released a 13G filing with the SEC this morning, in which they disclosed a 5.12% stake in Research in Motion.
Currently, shares of Research in motion are up over 4% at $16.85. Over the last year, Research in Motion is down over 72%.
Research In Motion Limited is a designer, manufacturer and marketer of wireless solutions for the worldwide mobile communications market. RIM provides platforms and solutions for access to information, including e-mail, voice, instant messaging, short message service.
...
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January 27th, 2012 12:00 am
Top 5 RisersStockRatingAnalysis
ASBCBUYMany analysts are expecting higher than previously expected long term growth from Associated Bancorp, and its near-term earnings outlook is also improving.
CZZSTRONGBUYThe recent earnings history for Cosan Ltd shows significant improvement while projected valuation continues to rise.
STLDBUYProjected value continues to rise for Steel Dynamics while long term increases in earnings growth are also becoming more widely expected.
PSESTRONGBUYAn increasingly attractive expected long term growth rate and a significantly higher projected valuation from just a fe...
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January 26th, 2012 6:16 pm
Courtesy of John Nyaradi.
Major markets and major index ETFs corrected slightly today after the stock market’s euphoric party yesterday Major markets suffered a slight hangover today, as the S&P 500 dropped .57%, the Dow Jones Industrial Average dropped .18%, the NASDAQ dropped .46% and the Russell 2000 Index dropped .34%, after yesterday’s crazy Fed and Tech Sector induced Wall Street Party. The NASDAQ, in particular, partied very hard, so hard in fact that the NASDAQ reached its 11 year record high.
The major market index ETFs were hungover too as the SPDR S&P 500 ETF lowered .51%, the SPDR Dow Jones Industrial ...
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January 26th, 2012 1:38 pm
Today’s tickers: DB, ATHN & LSI
...
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January 23rd, 2012 8:56 am
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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January 22nd, 2012 10:09 pm
Here is the virtual portfolio weekend update. Basically a recap of the positions and some notes about the trades. As usual, I'll post the previous week's P&L for comparison. Not the greatest of week in general!
AA Money
Only transaction last week as we bought back the AA Feb 9 puts on Tuesday for close to a 70% profit. The idea is to sell another set of put as soon as we get a chance.
Previous week P&L - $400.00
We lost some ground this week, but we'll keep on selling premium!
FAS Money
We also lost some ground in this virtual portfolio, but we have sold plenty of premium for the coming week. A little correction would go a long way to help! On Wednesday we sold the FAS Feb 72 puts (already good for 50%), on Thursday we added the Jan4 78 calls and on Friday we had to roll the Jan 78 puts to the Jan 80 puts. We were hoping for these ones to expire worthless on Friday, but a late stick killed that hope.
Previous week P&L - $4372.00...
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January 22nd, 2012 2:52 am
NEW: Elliott and Ilene are available to chat with Members regarding topics presented in SWW, comments are found below each post.
Here's the latest Stock World Weekly. We discuss the Fed's next move, and it's new policy for more QE-cating. Brief review of Sabrient's trade ideas for 2012 (already doing well) and a few new buy-writes from Phil and Pharmboy. Enjoy! (Feedback appreciated - give some life to the comment section below.)
Click this link for this weekend's newsletter, and sign in or sign up.
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January 18th, 2012 1:09 am
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Finding new and exciting Biotech companies that target novel mechanisms is like trying to find a needle in a haystack. Sure there are many companies working on cutting edge science, but investing in those companies to reap the rewards of their work is a very dangerous game. More often than not, companies fail because the mechanism does not pan out, the compound(s) do not have pharmacokinetics (get into the body or last very long in the body), or an adverse event happens that knocks years off a development timeline. In addition, the stock can be manipulated by market makers so investors don't know which way is up. I approach investing in biotechs as a long term prospect. I continue to like our current portfolio of biotech companies (join in chat for many of those plays), and we continually add/subtract shares and sell/buy options on ...
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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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