Archive for 2009

Insider Buys – Methods and Strategies

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For those wishing to learn about insider buying trading, I’ve consolidated three posts on this topic, to provide an easy way to find all the information in one place.

Insider Buys – Methods and Strategies

By Ilene and Dave

A generally reliable stock-trading strategy is to buy a stock when an insider has just reported a significant purchase to the SEC.

The theory is simple: the insider knows the stock is undervalued and/or knows there is good news on the way which will move the stock price up, and believes this move will be sustainable.

There are a number of services which notify subscribers when an insider buys stock in a company. Some services provide notification within minutes, transmitting the information to subscribers via email alerts.  Insider Cow, which is allowing us to tap into their service, allows subscribers to choose which insider actions they wish to be alerted to.

Not all insider buys have the same ability to move a stock – some are recognized as meaningful and will attract traders and investors, while others are virtually ignored. Distinguishing between meaningful buying and insignificant buying is part of successfully trading this strategy. To complicate the matter, the meaningfulness of an insider buy – measured by the market reaction to it – is influenced by an ever-changing market environment.

When I began trading this strategy, about four years ago, I was using a software program developed by a friend which would access the SEC website and alert us when an insider filed a buy.  The program would attempt to determine how bullish the purchase appeared to be.  It would do this by calculating a score based on the available information.  For example, if a CEO of company with market capitalization less than about $1 billion would buy $1 million dollars worth of stock, the program would toss out a relatively high score indicating that buying the stock was likely to result in a profitable trade.

Beginning around two and a half years ago, this method became more difficult to trade due to changes in day-trading patterns and market conditions. The first change we noticed was that we were losing our competitive edge. Faster, larger players (programs?) were buying


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Obama Passes Tenants Bill of Rights; Buying Frenzy In Phoenix

Obama Passes Tenants Bill of Rights; Buying Frenzy In Phoenix

Courtesy of Mish
 
President Obama has signed a bill that will halt "No Notice Evictions" in which tenants are give is little as 15 minutes to leave, with nowhere to go, and nowhere to put their belongings.

I talked about no notice evictions in Friday Night Videos: Inflation or Deflation; Lost Vegas.

Lost Vegas

During the boom years, no place in America boomed more than Las Vegas. But when the economy collapsed, Vegas fell hard. Laura Ling tours the wreckage of Sin City, from unemployed strippers and half-built, abandoned casino projects, to hospitals turning away cancer patients and ambulances, to one of the few remaining boom industries--evicting people.

The forced "no notice" evictions in the Lost Vegas video are very disturbing. If someone is not paying the mortgage on their property and is evicted I have little sympathy. However, the video shows multiple instances of "no notice evictions" as many as 13 a day, that give renters as little as 20 minutes to leave with nowhere to go and no place to put their belongings, even if they are current on their rent.

This is theft in my opinion, and I am quite sure the practice is not limited to Las Vegas.

Evicting Entire Rental Buildings

In response to Lost Vegas, "Tin Hat" replied in a comment:

A friend of mine experienced a "no notice" eviction in Ft Lauderdale December of 07. Her rent payments had been on time.

Luckily for her, she caught wind of it/heeded the rumor a week before it happened and found a place to move. As she was taking the last few boxes out of her apartment, the State police showed up to start mass evictions. Those tenants that didn’t know, were forced to leave with what they could carry on their backs and nothing else. They were not allowed to go back for anything that was left. So they not only lost the roof over their head, they lost most of everything they owned.

What happened to those people who didn’t have some one to take them in on no notice?

Tenants rights? In these cases, there are no tenants rights. It’s disgusting. They force people into homelessness through no fault of their own. It’s unconscionable. IMO, if a bank is going to


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Why the US Has Really Gone Broke

Another view questioning who is really in charge here.  Courtesy of Jesse’s Café Américain.

Why the US Has Really Gone Broke

Le Café AméricainThis is a difficult essay for an American of this generation to read, because we have grown up with the assumption that the security of the United States is intimately tied to massive amounts of spending for military preparedness. The first response to any essay such as this is often an emotional one: "What about the troops?"

It requires an effort to realize that the vast majority of this spending has absolutely nothing to do with what the troops want or need. The recent examples of the lack of adequate armor on vehicles carrying troops, to the abysmal conditions in the military hospital system, are more than just anomalies. The military industrial complex, of which we had been warned in the farewell address of Dwight Eisenhower, does not value the troops, the US citizen army, highly in its equations.

The United States has reached its limit. It can no longer aspire to be ‘the world’s policeman.’ We are not able to do this and maintain a viable and healthy democracy at home. We are not protecting ourselves and our liberties; we are promoting the interests of pseudo-american global corporations around the world. As Mussolini observed, corporatism is fascism.

The global corporate complex, though nominally based in part in the US, exists for its own purposes, serves its own purposes, and consumes everything which we the American people hold most valuable: our lives, our liberties, and our pursuit of peace and happiness with justice for all.

"Some of the damage can never be rectified. There are, however, some steps that the U.S. urgently needs to take. These include reversing Bush’s 2001 and 2003 tax cuts for the wealthy, beginning to liquidate our global empire of over 800 military bases, cutting from the defense budget all projects that bear no relationship to national security and ceasing to use the defense budget as a Keynesian jobs program. If we do these things we have a chance of squeaking by. If we don’t, we face probable national insolvency and a long depression."

Why the U.S. Has Really Gone Broke
Chalmers Johnson
Le Monde Diplomatique
February, 2008

Global confidence in the US economy has reached


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An almost perfect storm

Click here to sign up for a free subscription to the PSW Report.  It’s easy!  – Ilene

Here’s another one by Allan. Allan’s getting ready to pull the trigger on his long awaited Sell signal.

An almost perfect storm

The charts below contain my most important tools and indicators. They will define my trading going forward, just as they have in the past. With each chart a brief comment stating the obvious.
[Click on charts for larger views]
 
Weekly SPX
 


The bars remain blue going into next week. But the False Bar Stochastic, channels and wave count are all warning that the end of a multi-month corrective Wave 4 is upon us. Still unconfirmed, but running out of room and running on fumes.

Daily SPX

The Daily chart above flipped SHORT last week. The wave count and FBS are warning that another leg up is possible, maybe even probable. A recovery from last week’s decline would certainly suck in a lot bullish sentiment, just the psychology needed for the icing on that Weekly Wave 4 end, a culmination rally sucker-punching the bears.
 
240 minute SPX

Not all charts help the analysis, as is the case with the above 240 minute chart. But it does define our dilemma; Which way, which way?

30 minute SPX


So we drill down to a chart that does add tactical perspective. At first glance, this looks eerily close to the Weekly chart. But it’s a 30 minute SPX. The portrait here is of a definitive end to a Wave 4 correction and the first red bar of Wave 5 down. On the shortest tactical time frame we see what could be the beginning of a massive bearish formation that will infect all of the above charts and bring into the play a significant decline, or more accurately, the significant decline.

Bottom line is that the resumption of the Bear Market in a big, big way is upon us. If it hasn’t started yet, it will soon enough. Significant weakness next week will seal the deal. Absent that, another week, maybe two will be needed for an almost perfect set-up for an almost perfect storm.
 


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Priory guest blog

This is truly stunning information, and although I do not consider myself a "conspiracy" believer, I’m going to post this with no further comment. – Ilene Leaked Agenda: Bilderberg Group Plans Economic Depression 060509top2

Priory guest blog

Courtesy of Allan

My recent publication of The Bilderberg Depression [written by Paul Joseph Watson, borrowed from me, here, borrowed from Global Research, possibly borrowed from Prison Planet] has received a lot of attention across much of the blogosphere. It appears to have hit a nerve as immediately upon its publication my blog’s daily hit count increased by about 25%. More significantly for us, it has brought someone out into the open (relatively) who has been contributing to this blog through his ideas and forecasts for about the past 18 months. Some of my very best "lucky guesses" from past blogs were the direct result of information passed along to me by this mystery voice. Up until the Bilderberg post, he had asked me not to disclose his participation, relationship to me, or even his existence.

But The Bilderberg Depression has changed all that. Within an hour of publication of that blog I heard from him. As in the past, he again wanted me to pass along some information through this blog. Only this time I persuaded him to post himself. The post below was his response and I can attest to the veracity of everything disclosed in the post that relates to me and my relationship this individual and his group.

I have known this person since my days as an attorney in Georgia. The circumstances surrounding how and in what capacity we met is not something I can disclose. Nonetheless, he has never suggested anything to me that did not occur just as he described it would. The accuracy of his forecasts and the breadth of knowledge he has shared with me over the years suggests very strongly that what he describes in this blog is a reality. Those of you who have been with me for the past five years should realize that credibility is a big deal to me and accordingly, this source would not be appearing here, nor posting, if I wasn’t absolutely convinced of his authenticity and the credibility of his observations.

That’s about all he agreed I could say by way of


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Charting Too Big To Fail

Courtesy of Tyler Durden

Charting Too Big To Fail

The recent addition of legacy loans to TALF caused CMBX spreads to turn on the nitrous and rip like all the commercial real estate concerns over the past 6 months have disappeared (especially in the top-most AAA tranche). Between financials, whose stocks have doubled on average, and CMBX (whose spreads have halved), there is, at this point, no doubt as to what lengths the administration is willing to go to funnel every single printed dollar into these otherwise doomed industries.

While there is still no indication that TALF v3.0 will work at all (the ongoing tweaks to TALF are nothing more than the government’s way to moderate the CRE collapse) and facilitate leveraged interest in AAA CMBX, the market has priced in a massive upside at this point, implying the up/downside from this point, absent a complete nationalization of all commercial real estate, is significantly unattractive.

CMBX 1

[click on charts for larger images]

CMBX 2

CMBX 3

CMBX 4

CMBX 5

CMBX AAA By Vintage

Lastly, I present the MCDX spread chart, representing the index for risk of municipal default, which consists of both state and city constituents, which has also tightened since March as well as on the heels of Frank’s initiative to guarantee municipal debt issues. At this rate, there will i) either be no non-sovereign risk attendant to any asset class relatively soon, or ii) the administration’s plan of socializing every form of risk imaginable will blow up in some unprecedented and, as of yet, inconceivable manner.

 





Tyler Durden’s Weekend Reading

Tyler Durden’s Weekend Reading

  • Ben Bernanke’s commencement speech at the Boston College School of Law (FRB)
  • Obushma-Biney in the home of the frightened (FT)
  • Geithner picking the best (for Wall Street) of all derivative worlds (Bloomberg)
  • S&P: Britain will be the next stage of the global crisis (Telegraph)
  • More on Europe: The really ugly truth on European banks (HY Blog)
  • Steve Liesman’s favorite portal (Recessionblocker)
  • Dollar is dirt, treasuries are toast, AAA is gone (Bloomberg)
  • The importance of irrelevant alternatives (Economist)
  • Why Peter Schiff’s bookings are down 75-85% (Time)
  • Some pretty ideas here, most lacking a few extra zeroes (Dollar Redesign Project)
  • Libya sees 50% chance OPEC to cut oil output at Vienna Meeting (Bloomberg)
  • The new, new economy (Wired)

With sincerest gratitude for recent donations received from: Brendon, Brian, David, Desmond, James, John, Martin, Mehul, Richard, Rida, Ryan, Thomas, Todd and William. The support means a lot.





Smart money on market direction: Bears caught flat footed?

Thank you to PSW member who posted a link to this excellent review article in the chat.  Sajal has kindly granted us permission to reprint his work.  Thanks, Sajal! - Ilene

Smart money on market direction: Bears caught flat footed?

Courtesy of Sajal at Fundamental Insights and Ideas

With an almost ~40% equity markets rally behind us, this bull market may still have some upside left. The bears sure got caught flat footed on this one. It’s always interesting to collate responses from different strategists. I find that recurrent themes makes it easier to filter out the noise. (Consider this to be similar to the "most widely held" consensus stock portfolio. Only in this case we’re trying to divine the "most widely held" very-smart money strategy. )

I’ve written two other recent commentaries which can be found here and here. Together, they represent a nice summary of current very-smart money opinion.

Well, the consensus seems to:

  • Favor gold. We already knew that several prominent funds like Paulson Funds and Greenlight Capital have recently taken huge positions in gold.
  • Bearish strategists still point to the suspect technical nature of this rally, and sound as adamant as ever. Probably a little too wedded to their ideas.
  • A currency crisis with dollar devaluation looks imminent
  • Even the bears think the highs in this rally may be ahead of us
  • 930-950 on the S&P500 represents overhead resistance. If we clear it, this bull has a lot further to go. If we don’t, it’s a bear market rally.
  • One common thread running through a few commentaries focuses on a three cycle picture: a correction in May, another big rally into June-July, and then another really deep correction, possibly taking us to new lows (depending on how bearish the strategist is).
  • Some well respected economists have chimed in on how the current rally on green shoots euphoria sounds suspect.

So it definitely looks like the rally is long in the tooth. Let’s see what the very-smart money has to say:

  • Jim Rogers : The stock market may hit new lows this year or the next as the current rally has been largely caused by the money printed by central banks and fundamental problems remain unsolved

    I’m not buying shares if that’s what you mean. Not


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Hedging Your Way To Healthy Dividends – Part 2

Time to get a little more conservative

In Part 1 of this post, we talked about the potential long-term value of taking a chance on companies that used to pay dividends but don't at the moment.  In addition to the 7 selections we had last Tuesday, I would urge members to keep on the lookout for additional prospects we can discuss as the long-term benefits of catching these stocks at the lows can be amazing!  This was the same logic that led me to pound the table back in March on C, BAC, WFC, JPM and even the hated GS – stocks that have tripled or better in just 3 months

We had a very easy time selecting those stocks as we were able to hedge our entries and our long-term logic was that, at those low prices, we could be fairly sure of producing a good option income even if they never restored the dividends but the kicker was the possiblility of owning, for example, C at $1.50 down the road when they go back to paying $1 per year dividends.  Imagine having a year's salary put away on stocks that pay you almost a year's salary every year in dividends alone! 

Don't worry, you didn't miss a once-in-a-lifetime opportunity, we just have to work a little harder at the moment.  As I noted with our LYG example, there are still beaten-down financials that are worth a look and today we'll look at 2 more of our 21 Tuesday selections (one now, one later) and go over the trading plans for those positions.  Note that the LYG trade ties up just $1,035 in cash to make (hopefully) $1,465 in year 1 with a commitment of $3,535 if you end up owning all 1,000 shares on Jan 15th. 

By making sure you are on top of these figures, a person making $30,000 a year who has $5,000 in an investment account count take a modest 6-month gamble like this.  If this trade pays off, $5,000 becomes $6,465 and 500 LYG shares are secure (about $2,500 worth) or, at worst, you have 22% more cash for the next trade.  The next trade secures another potential dividend payer and if every 6 months you can secure just another $2,500 worth of dividend paying stocks for under $2,000 then in just 10
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Barack Obama: “We Are Out Of Money”

Click here to sign up for a free subscription to the PSW Report.  It’s easy!  – Ilene

Barack Obama: "We Are Out Of Money"

Courtesy of Tyler at Zero Hedge

Fast forward to 13:34 minutes in the clip below, in which the president, interviewed by C-Span, has the mother of all Freudian slips and discloses just what the real state of the economy is.

 




 
 
 

Zero Hedge

The Real Brexit "Catastrophe": World's 400 Richest People Lose $127 Billion

Courtesy of ZeroHedge. View original post here.

For all the scaremongering and threats of an imminent financial apocalypse should Brexit win, including dire forecasts from the likes of George Soros, the Bank of England, David Cam...



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Chart School

Best Stock Market Indicator Update

Courtesy of Doug Short's Advisor Perspectives.

We continue to receive requests for updates to the "Best Stock Market Indicator", which used to be a regular guest post from John Carlucci. Here is an update of the "Carlucci" indicator along with a summary of John's explanation on how he uses it.

As John described it: "The $OEXA200R (the percentage of S&P 100 stocks above their 200 DMA) is a technical indicator available on StockCharts.com used to find the "sweet spot" time period in the market when you have the best chance of making money."

Latest Indicator Position

According to this system, the market ...



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Phil's Favorites

Brexit: What Happened Take II

Courtesy of Mish.

Several readers are still wondering why the odds-makers and pollsters got it wrong so badly.

Let’s recap.

  1. If the odds-makers made money, they got it correct. If they lost money, they got it wrong. That is all there is to it. Odd-makers do not predict results. People betting money do. I have not seen any analysis that suggest the odds-makers lost money. It’s possible they did, but if so it was most likely due to a late voting surge.
  2. The pollsters did blow it badly. I surmise pollsters looked at historical trends to judge a vote that happens once a century or so. Since the pollsters got it so wrong last time, they over compensated this time. ORB was particularly bad.
  3. Surprise surprise. It turns out the online polls were far more accurate. In telephone polls, the poll...


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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Why Brexit Is So Bad for the Global Economy (The Atlantic)

Great Britain’s decision to extricate itself from the EU has consequences that are at once far-reaching and unknown. By Friday morning, no market was immune. Great Britain’s currency, the pound, had fallen to its lowest levels since 1985, and the FTSE (an index of the London stock exchange) and DAX (a German stock index) plummeted. In the U.S., markets opened in the red, gold (a co...



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ValueWalk

Brexit: China Could Be The Biggest Winner Of All

By Jacob Wolinsky. Originally published at ValueWalk.

There has been a LOT of discussion about the Brexit vote and what the implications are (although none of us can predict the future), but one interesting point many seemed to miss is the impact on the world’s largest economy after the USA and EU – China. How does a Brexit impact the world’s largest country by population? No one knows for sure but it will likely have a big impact on China.  Quartz is saying its bad while Bloomberg News says its good.

Quartz opines:

UK chancellor George Osborne, meanwhile, promised a “golden decade...



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Kimble Charting Solutions

2007 pattern being repeated right now? Another "Push Away???"

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

The NYSE index kissed the underside of dual resistance at (1) back in 2008. Once resistance held, a big push away from it took place and sellers stepped forward.

NYSE creating a similar pattern again at (2)???

This would NOT be a good place for the Risk On trade if the broad market starts “pushing away” from dual resistance at (2).

Full Disclosure- ...



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Mapping The Market

Thoughts on Brexit

I have mixed feelings about Brexit today. Clearly the European institution need reforming. The addition of so many countries in the last 20 years has created a top heavy administration. The Euro adds more complexities to the equation as the ECB policies cannot fit every country's problem. On the other hand, a unified Europe has advantages as well – some countries have benefited from the integration.

For Britain, it's hard to say what the final price will be. My guess is that Scotland might now vote for independence as they supported staying in Europe overwhelmingly. Northern Ireland might be tempted to leave as well so possibly RIP UK in the long run. I was talking to some French people and they were saying that now there might be no incentive for France to stop immigrants from crossing over to the UK like they do now and simply allow for travel there and let the UK deal with them. The end game is not clear to anyone at the moment....



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Digital Currencies

Bitcoin Tumbles 10%

Courtesy of ZeroHedge. View original post here.

One week ago, when bitcoin first crossed above $700 on the seemingly insatiable Chinese buying which we forecast last September (when bitcoin was trading at $230) would take place as a result of China's capital controls (to much pushback by the "mainstream" financial media), we tried to predict what may happen next. We said that "it could go much higher. That said, anyone who bought last September when the digital currency was trading at $230 may be advised to take some profits, and at least make...



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OpTrader

Swing trading portfolio - week of June 20th, 2016

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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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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Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



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We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

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News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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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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