Highlights: 83% successful trades & account up 6%!
July was another successful month for The Oxen Group. We saw our Oxen Picks account grow by over 6% due to numerous successful trades (15 out of 18, or 83!). In July, the market recoiled back from a stream of losses as tech and financials led the month. Playing the oil and energy ETFs was particularly profitable, as the energy market continues to be volatile. We are looking for the month of Augus for a defining month as we enter a post-recessionary market that will either continue to look forward or hit some bumps in the road. With the market being extremely overbought and overvalued, we may spend the beginning of the month somewhat sideways as investors await more big news and more bargains to present themselves.
Here are more more statistics from the month of July, trading my account:
Our account increased from 4481.77 to 4758.47 in month of July. That is an increase of 6.17%.
We had 15 positive trading days out of 18.
Six of 18 days gave us 3% gains or more.
We began a 3% stop loss policy. This was beneficial on two days when the stock we bought trailed below 3% from our entry price.
Our account has now moved up 58.62% in 86 days of trading or 4 months.
I came across this chart today, categorize it in the "for what its worth" department:
[Click on charts for larger view]
Let’s see how the above seasonality charts compare with my own SPX chart:
SPX – 120 minute
Counting eight bars from the right we can see the gap-up open to a new summer high in Thursday’s first bar. But look underneath at the Elliott Oscillator. Eight bars from the right is a major divergence, not even close to a new high for the move. If the S&P breaks below 985 Monday and stays below it, we get a trend sell signal that should carry at least 50 points lower. That would coincide with a break down of the trend regression channels with even more bearish implications.
Zooming out, here is the Weekly chart with Fibonacci levels and the False Bar Stochastic:
This is where the above seasonality chart is especially poignant. Prices have engaged the first major Fibonacci level of 38.2%. A turn down here, accompanied by a break down of the regression channels and another crossing of the FBS down below it’s signal line adds up to compelling evidence of a change of trend that could lead to the initiation of the next impulsive leg down.
If this analysis sounds familiar, it is because it has been hanging around these charts for the past six weeks. The consensus of the bulls is that we are in a new bull market, that the recession is over, or about to be over, that the government has pumped enough liquidity into the system to have saved the day and that the bear market is finished and its loyal adherents, especially those like me who say the worst is yet to come, just don’t have a clue.
Remember, in March, this bearish take was the view of the many. Today, August 1, it is the view of the few, as another piece of the puzzle falls into place.
All of this is predicatedupon a break below support on the above two-hour S&P chart.This has not yet occurred and unless and until it does, the trend is higher. [Ilene's emphasis]
That’s it for a Saturday in August. It’s 110 here in the desert and about time for a cold one.
Here’s an interesting article by Susan Blackmore. While there are parts of Susan’s article I might disagree with, the general idea opens up a whole new set of memes, for me – the third replicators. So, the first replicators are our genes. The second replicators are memes – ideas, the basis of cultural evolution. Using the machinery of the second replicators (human minds), we have have built the third replicators.
WE HUMANS have let loose something extraordinary on our planet – a third replicator – the consequences of which are unpredictable and possibly dangerous.
What do I mean by "third replicator"? …
About 4 billion years after the appearance of the first replicator, something extraordinary happened. Members of one species of lumbering robot began to imitate one another. Imitation is a kind of copying, and so a new evolutionary process was born. Instead of cellular chemistry copying the order of bases on DNA, a sociable species of bipedal ape began to use its big brain to copy gestures, sounds and other behaviours. This copying might not have been very accurate, but it was enough to start a new evolutionary process. Dawkins called the new replicators "memes". A living creature, once just a vehicle of the first replicator, was now the copying machinery for the next…
Memes are a new kind of information – behaviours rather than DNA – copied by a new kind of machinery – brains rather than chemicals inside cells. This is a new evolutionary process because all of the three critical stages – copying, varying and selection – are done by those brains. So does the same apply to new technology?
There is a new kind of information: electronically processed binary information rather than memes. There is also a new kind of copying machinery: computers and servers rather than brains. But are all three critical stages carried out by that machinery?
Machines now copy information to other machines without human intervention…
“Treasury Secretary Timothy Geithner and National Economic Council Director Larry Summers both sidestepped questions on Obama’s intentions about taxes. Geithner said the White House was not ready to rule out a tax hike to lower the federal deficit; Summers said Obama’s proposed health care overhaul needs funding from somewhere.“
The Wall Street owned insurer Customer Asset Protection Company, known as Capco, may not be an off-shore company. But it sure operates like one of those Cayman Island based tax shelters president Barack Obama has targeted.
Capco is the mysterious company owned by WallStreet giants like Morgan Stanley and Goldman Sachs, banks like JPMorgan Chase and Wells Fargo, smaller brokerage firms, and Fidelity, the mutual fund giant. Years ago Capco moved from New York to Vermont, where state law enables it to operate without disclosing much about its finances.
It’s official address is 100 Bank Street, Suite 610, in Burlington, Vermont. But if you go there, you won’t find an office marked with the name Capco. Instead, you’ll find an office marked Marsh Captive Solutions, which is a division of Marsh & McClennen that administers captive insurance companies. A total of 185 business are run out of Suite 610.
This brings to mind the story Obama used to tell on the campaign trail about “the outrage of a building in the Cayman Islands that had over 12,000 business — businesses claim this building as their headquarters. And I’ve said before, either this is the largest building in the world or the largest tax scam in the world.”
So how big is Suite 610? We suspect it’s a small office with a bunch of secretary types and filing cabinets. The reason it houses so many companies is that these captive insurance companies are registered in Vermont to avoid tighter regulations in other states.
For those of you who missed it, today Capco was dragged out of the shadows by New York Times reporter Zach Kouwe. The company was formed to insure customer accounts above the $550,000 of SIPIC insurance. The idea was that customers didn’t need to worry about the insolvency of their broker because Capco was insuring it. But now Capco appears to be massively insolvent, facing a possible $11 billion in claims from the collapse of Lehman Brothers with only about $150 million with which to meet them. New York State regulators are worried, and the Wall Street owners could wind up having to pay the bill.
First, we have Corus, which reported a negative Tier 1 Ratio. That is, they are formally "in the hole" in terms of assets vs. liabilities. This is never supposed to happen – but it did, "Prompt Corrective Action" be damned.
Based on these adjustments, the Bank’s core capital ratio stood at negative 5.78% as of March 31, 2009. The Bank’s total risk based capital ratio as of March 31, 2009 stood at negative 5.52%. Both of these ratios result in the Bank being considered critically under-capitalized under regulatory prompt corrective action standards.
Yet Prompt Corrective Action (PCA) – a law, by the way, not a suggestion – has once again not been followed.
Finally, we have Colonial. I made a nice chunk of coin shorting and PUTting that turkey last year, when their CEO (and a lot of other people) said they were "very conservative." Uh huh. My read of their balance sheet said they were (like many other regional banks) massively over-exposed to condo construction loans in….. you guessed it…. Florida (which incidentally is what killed Corus.) Oops. But here’s the money quote on Colonial:
If the FDIC were to seize Colonial, it would be the sixth-largest seizure, by assets, in American history. Such a large failure could strain the bank safety net. Colonial has $20 billion in deposits, while the FDIC insurance fund has dropped below $15 billion. The FDIC wouldn’t have to cover every dime, but when Florida’s BankUnited, with $12.8 billion in assets, failed earlier this year, it cost regulators nearly $5 billion.
Add all three of these up and tell me what you think is going on?
These three are not small banks. They are significant regional institutions, unlike the tiny little banks that we hear about every Friday after the close of business.
Here’s the nut to the story above: When BankUnited was
Doubt it. While many businesses make money as people get fat and sick (fast food, processed food and pharmaceutical companies), I don't think there's an organized singular "conspiracy." Other businesses make more money when people are or try to be healthy (organic food, gyms and exercise equipment vendors, medical insurance providers). "The medical establishment" is not monolithic entity with a common purpose and common incentives. And I'm not cynical enough to believe your doctor wants you fat, unless you have a very unethical one.
I looked over the weekly Petroleum Inventory Report put out by the EIA today, and the biggest takeaway by far was that U.S. oil production set a new modern era high at 9.566 Million Barrels per day. The last high in U.S. production occurred in March, and it appeared that the U.S. production numbers were getting slightly weaker, and maybe the top in U.S. production was in. But this past week Production really ramped back up with a blowout ...
Could the S&P 500 be pulling a repeat of the 2000-2007 topping process?
The chart above reflects that the tops in 2000 & 2007 were 7 years and 7 months apart. Is it possible that another top is taking place 7 years and 7 months from the 2007 high? As the S&P is facing this potential time window repeating pattern, it is also staring the Fibonacci 161% Extension resistance level based upon the 2007 highs and 2009 lows, at the top of a rising wedge.
Is the S&P the only market facing a breakout test? The chart below takes a look at the white hot DAX index.
After 2 volatile days, a return to more calm on Thursday as the S&P 500 fell 0.13% and the NASDAQ 0.17%. The daily Greek drama continues; IMF Managing Director Christine Lagare told a German newspaper that a Greek exit from the euro zone was possible but that this would probably not herald the end of the euro currency. On Wednesday, both U.S. and European equities rallied after Greece said it had stated crafting a “staff level agreement” with its international bailout supervisors. However, European officials rebuked the claims on Thursday, saying there was some way to go before any agreement could be drawn up and that they were surprised by the upbeat sentiment from Greece.
Indexes look much the same as we entered the week.
Early last week, stocks broke out, with the S&P 500 setting a new high with blue skies overhead. But then the market basically flat-lined for the rest of the week as bulls just couldn’t gather the fuel and conviction to take prices higher. In fact, the technical picture now has turned a bit defensive, at least for the short term, thus joining what has been a neutral-to-defensive tilt to our fundamentals-based Outlook rankings.
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 offer up some actionable trading ideas, including a sector rotation strategy using ETFs and an enhanced version using top-ranked stocks from the t...
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
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Understanding the new normal of a business model is key to the success of any company. The managment of companies need to adapt to the changing demand, but first they must recognize what changes are taking place. Big Pharma's business model is changing rapidly, and much like the airline industry, there will be but a handful of pharma companies left at the end of this path.
Most Big Pharma companies have traditionally done everything from research and development (R&D) through to commercialisation themselves. Research was proprietary, and diseases were cherry picked on the back of academic research that was done using NIH grants. This was in the heyday of research, where multiple companies had drugs for the same target (Mevocor, Zocor, Crestor, Lipitor), and could reap the rewards on multiple scales. However, in the c...
Bitcoin, the virtual digital currency, has been called the future of banking, a dangerous fad, and almost everything in between, but we're finally about to get some solid data to help settle the debate.
On Monday, the Nasdaq (NDAQ) stock exchange said it would ...
Chris Kimble likes the idea of shorting the US dollar if it bounces higher. Phil's likes the dollar better long here. These views are not inconsistent, actually, the dollar could bounce and drop again. We'll be watching.
Phil writes: If the Fed begins to tighten OR if Greece defaults OR if China begins to fall apart OR if Japan begins to unwind, then the Dollar could move 10% higher. Without any of those things happening – you still have the Fed pursuing a relatively stronger currency policy than the rest of the G8. So, if anything, I think the pressure should be up, not down.
UNLESS that 95 line does ultimately fail (as opposed to this being bullish consolidation at the prior breakout point), then I'd prefer to sell the UUP Jan $25 puts for $0.85 and buy the Sept $24 call...
Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself.
Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene
The replay is now available on BNN's website. For the three part series, click on the links below.
Part 1 is here (discussing the macro outlook for the markets)
Part 2 is here. (discussing our main trading strategies)
Part 3 is here. (reviewing our pick of th...
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 email@example.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.
Note: The material presented in this commentary is provided for
informational purposes only and is based upon information that is
considered to be reliable. However, neither PSW Investments, LLC d/b/a PhilStockWorld (PSW)
nor its affiliates
warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither PSW nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance, including the tracking of virtual trades and portfolios for educational purposes, is not necessarily indicative of future results. Neither Phil, Optrader, or anyone related to PSW is a registered financial adviser and they may hold positions in the stocks mentioned, which may change at any time without notice. Do not buy or sell based on anything that is written here, the risk of loss in trading is great.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only intended at the moment of their issue as conditions quickly change. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Site owned and operated by PSW Investments, LLC. Contact us at: 403 Central Avenue, Hawthorne, NJ 07506. Phone: (201) 743-8009. Email: firstname.lastname@example.org.