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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 years, investing just 10% of a $30,000 annual salary, you could, very conservatively, have $50,000 worth of
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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.

 




 

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!

 
 

Phil's Favorites

Chris Martenson and Mish Audio on Bank of Japan's Surprise Move on Friday

Courtesy of Mish.

Every other Wednesday or so, Chris Martenson and I get together for a podcast. Sometimes one of us or the other is out of town, and sometimes Chris has other guest speakers.

Because of scheduling difficulties, Chris and I got together today instead of Wednesday. I asked Chris to make today's podcast generally available.

For our take of Friday's BoJ surprise move, please play the audio on Chris' Peak Prosperity site: Off the Cuff: Japanese Central Bank Throws Granny Under the Bus.

The audio is about 25 minutes long. The podcasts are not scripted. Chris and I just talk "off the cuff" on events of the day or the week.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

...

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Zero Hedge

The Story Changes: Ebola Is Now "Aerostable" And Can Remain On Surfaces For 50 Days

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Michael Snyder of The End of the American Dream blog,

When it comes to Ebola, the story that the government is telling us just keeps on changing.  At first, government officials were claiming that it was very difficult to spread the Ebola virus.  Some of them were even comparing it to HIV.  We were given the impression that we had to have “direc...



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Chart School

Moving Averages: Month-End Update

Courtesy of Doug Short.

Valid until the market close on November 28, 2014

The S&P 500 closed September with a monthly gain of 2.32%. All three S&P 500 MAs and three of the five the Ivy Portfolio ETF MAs are signaling "Invested".

The Ivy Portfolio

The table below shows the current 10-month simple moving average (SMA) signal for each of the five ETFs featured in The Ivy Portfolio. I've also included a table of 12-month SMAs for the same ETFs for this popular alternative strategy.

For a facinating analysis of the Ivy Portfolio strategy, see this article by Adam Butler, Mike Philbrick and Rodrigo Gordillo:

  • ...


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Market Shadows

When one door closes...

Predictions that the US equity market would collapse at the end of QE have so far been wrong (and in a very painful way if you shorted the market based on the Fed's actions alone). The end-of-the-world-QE bears failed to factor in another surprise move by the Bank of Japan. The BOJ announced its own QE program today -- it is donating $124Bn ($80 trillion yen) to the market-propping cause. It plans to triple the amount of Japanese ETFs and REITs it buys on the open market.

As  at Business Insider wrote on Oct. 26, If You Missed The Rally, Then You Just Made The Most Classic Mistake In Investing. Since then, the market continues higher...

...

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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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Sabrient

Sector Detector: Bullish conviction returns, but market likely to consolidate its V-bottom

Courtesy of Sabrient Systems and Gradient Analytics

Bulls showed renewed backbone last week and drew a line in the sand for the bears, buying with gusto into weakness as I suggested they would. After all, this was the buying opportunity they had been waiting for. As if on cue, the start of the World Series launched the rapid market reversal and recovery. However, there is little chance that the rally will go straight up. Volatility is back, and I would look for prices to consolidate at this level before making an attempt to go higher. I still question whether the S&P 500 will ultimately achieve a new high before year end.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then o...



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OpTrader

Swing trading portfolio - week of October 27th, 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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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 the latest Stock World Weekly. Enjoy!

(As usual, use your PSW user name and password to sign in. You may also take a free trial.) 

 

#455292918 / gettyimages.com

 

...

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Option Review

LUV Options Active Ahead Of Earnings

There is lots of action in Southwest Airlines Co. November expiry call options today ahead of the air carrier’s third-quarter earnings report prior to the opening bell on Thursday. Among the large block trades initiated throughout the trading session, there appears to be at least one options market participant establishing a call spread in far out of the money options. It looks like the trader purchased a 4,000-lot Nov 37/39 call spread at a net premium of $0.40 apiece. The trade makes money if shares in Southwest rally 9.0% over the current price of $34.32 to exceed the effective breakeven point at $37.40, with maximum potential profits of $1.60 per contract available in the event that shares jump more than 13% to $39.00 by expiration. In September, the stock tou...



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Digital Currencies

Goodbye War On Drugs, Hello Libertarian Utopia. Dominic Frisby's Bitcoin: The Future of Money?

Courtesy of John Rubino.

Now that bitcoin has subsided from speculative bubble to functioning currency (see the price chart below), it’s safe for non-speculators to explore the whole “cryptocurrency” thing. So…is bitcoin or one of its growing list of competitors a useful addition to the average person’s array of bank accounts and credit cards — or is it a replacement for most of those things? And how does one make this transition?

With his usual excellent timing, London-based financial writer/actor/stand-up comic Dominic Frisby has just released Bitcoin: The Future of Money? in which he explains all this in terms most readers will have no tr...



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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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FeedTheBull - Top Stock market and Finance Sites



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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