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Archive for 2010

Swing trading virtual portfolio – week of March 22nd, 2010

This post is for live trades and daily comments. 

To learn more about the swing trading virtual portfolio (strategy, membership etc.), please click here

- Optrader





Unemployment Bet: Mish vs. Bryan Caplan at the Library of Economics and Liberty Blog

Unemployment Bet: Mish vs. Bryan Caplan at the Library of Economics and Liberty Blog

Courtesy of Mish 

Falling Businessman

Last week I was at a Economics Bloggers Forum in Kansas City sponsored by the Kauffman foundation.

Paul Kedrosky at Infectious Greed, Mark Thoma at Economist View, Former President of the Dallas Fed Bob McTeer , Michael Mandel, former chief economist for BusinessWeek, Bryan Caplan at the Library of Economics and Liberty Blog and a group of about 20 others were at the conference.

I gave my views on the unemployment rate and most thought I was too pessimistic. Bryan Caplan proposed a bet and you can find it here: Unemployment Bet: Mish vs. Bryan Caplan.

On the fiscal crisis panel, Mish predicted high unemployment for the next ten years. This provoked a lot of heat but little light. Over dinner, though, Mish and I hammered out the following bet:

If the official initially reported U.S. monthly unemployment rate falls below 8.0% for any month between now and June, 2015, I win $100. Otherwise, Mish wins $100.

Mish based his pessimism on the implausibility of rapid job growth in construction and other key sectors. I saw this as misleading "near" reasoning – and took the "far" road instead. My position: During the last big recession in the Eighties, the unemployment rate fell about 1 percentage-point per year after the peak. So while full recovery is indeed about five years away, it would be very surprising if unemployment stayed at 8% or more for three years, much less five. Where will the new jobs appear? If I knew that, I’d probably be investing in them instead of blogging about my bets!

I highly doubt the employment growth in the 80′s is the correct model, nor is the recovery following the 2001 recession.

The latter had the benefit of a housing boom followed by a commercial real estate boom, neither of which is coming. In the 80′s there was still a transition from one parent working households to two parent working households and that transition enormously increased the credit buying power of households. Given that the consumer is 70% of the economy and given the 90′s had an internet boom creating amazing numbers of jobs, such comparisons are prone to huge errors.

Let’s not forget that interest rates fell from 18% to zero and that the…
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“Passage Of The Healthcare Bill Means The Double-Dip Is Coming” – Market Insight From Permabull Jim Cramer Who Just Turned Bearish

Courtesy of Tyler Durden

Jim Cramer may be in hot water with the SEC over his theStreet.com, and he may be a mouthpiece for the biggest ponzi enabling organization the developed world has ever seen, however, he did have some interesting and spot-on observations on the just passed health care bill. In a nutshell, and for once we agree with Cramer, if futures are not limit down right now, it is because of the same bidding hand that has kept the market going straight up at a 30 degree angle for the past year.

Obamacare Will Topple the Rickety Market By Jim Cramer RealMoney

Either the market doesn’t care that the health care bill will pass --  and it will — or it doesn’t think that the proposal will cost that much — something I think is nuts. Which brings us to a very tenuous crossroad: We have to wonder if this is one of those occasions, like in 2008, where the market doesn’t see the coming catastrophe. Or perhaps the market sees any resolution as positive.

I don’t. I think when the health care bill passes — and it will pass, I believe, because Nancy Pelosi has worked diligently behind the  scenes to bend the anti-abortion foes, the key votes, to her will — the president will get a second wind. That means the whole agenda — cap-and-trade, Card Check for easier organizing (something that Wal-Mart’s (WMT) inability to move even on its dividend boost tells you is coming) and amnesty for immigrants who are currently not citizens — will quickly come to pass, perhaps even before the election. To pay for these items I see a dramatic increase in ordinary tax rates and perhaps capital gains and dividend tax rates in 2011 either reaching or exceeding those ordinary income rates as this current version of the Democratic Party believes that only rich people own stocks. (That’s been a hallmark from Day 1 with this administration.)

Given those hurdles, which include a suicide pact with financial health for small businesses that obviously can’t afford health care without risking the capital formation necessary, I think you have to put the double-dip recession back on the table.

Those who have read me here and watch “Mad Money” know that I was out there early thinking that 2010 would


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A Generous Government Keeps Doling Out The Refunds Even As 2009-2010 Tax Withholding Difference Hits New Low

Courtesy of Tyler Durden

We previously discussed the curious phenomenon of increasing individual tax refunds handed out by the US Treasury, despite record weak tax withholdings, and speculated that the Treasury’s generosity, which is very much unfounded, is one of the main reasons for the consumer “outperformance” year to date, due to the excess money obtained by US consumers courtesy of what appears an oddly lax Internal Revenue Service. We won’t speculate on the secondary implications of governmental cash flows to and from taxpayers, and instead will focus on actually following the cash. The conclusion is simple: even as the IRS has paid out far more in refunds in 2010 versus 2009, the difference in gross tax withholdings between 2009 and 2010 is at year highs. The government can not afford to pay refunds, yet does so at an alarming pace. The net difference (withholdings net of refunds) for just the first 10 weeks of 2010 is already at a ($42.7) billion cumulative number: a new 2010 high.

The chart below demonstrates the weekly difference between gross individual tax withholdings in 2009 and 2010. Out of the past 10 weeks, there have been only two in which 2010 saw greater tax withholdings (and these were for $0.2 and $0.4 billion).

Visualizing the data series on a cumulative basis shows that by week 10 of 2010, the differential in the gross withholdings number has reached $35 billion.

What is surprising is that a comparable analysis of weekly refund payments in 2009 and 2010, shows just the inverse: in 2010 the government has paid nearly $8 billion more in cumulative refunds compared to 2009: $152.1 billion vs $159.8 billion.

Combining these two data sets indicates that on a Net basis (gross withholdings net of refunds), the delta has hit a year to date record $42.7 billion: $344.2 billion in 2010 vs $386.9 billion in 2009.

Yes, at a time when the Fed is doing all it can to fund each and every auction with an increasingly odd cadre of bidders, be they direct, fund based, BlackRock, or whoever, the government should do all it can to minimize the weekly funding delta need. Alas, as the chart above shows, the government keeps on paying more and more even as it is collecting less and less. And this happens, as the country is faced with a…
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Dynamics of Gold, US Dollar & Gold Equities

Dynamics of Gold, US Dollar & Gold Equities

Courtesy of Market Folly

Gold Coin

Since many hedge funds have exposure to gold in some fashion, we’re posting up some interesting research from Raymond James on the topic of precious metals. Their commentary was published amidst the massive rally in the US dollar that definitely impacted the performance of gold. Given the action early in the year, they took advantage of the opportunity to look at the dynamic between gold, the US dollar, and gold related companies.

Maybe the most intriguing bit of research was their focus on equity stakes of gold miners and how they performed during the various swings in the price of gold. We note this correlation because while John Paulson’s new gold fund will invest in derivatives on the price of gold, the main strategy is to acquire equity stakes in gold miners. Paulson is actually using these equity stakes as a wager against the US dollar. So, while many will examine the dynamic between the US dollar and gold, it is also worth taking a look at how shares of gold miners are affected as well.

If Paulson thinks the US dollar will decline, then he is essentially wagering that the price of gold will increase. More importantly though, it appears as if he thinks equity stakes in gold miners will produce greater returns based on the correlation. But, as you will see from the research below, you also have to look at company specific risk. This comes after Paulson & George Soros recently bought shares of a gold miner.

At any rate, you can examine Raymond James’ research below. Of the companies they cover in the space, Aura, Osisko, Great Basin Gold, and San Gold performed the best "on average, across all three post ‘risk aversion’ rallies." The companies that suffered most over the big gold sell-off were Lake Shore, Golden Star, Aurizon and Yamana. Based on their research, Raymond James favors developers Anatolia and Detour, mid-tier producers San Gold and Crocodile, and large producers Agnico-Eagle and Eldorado.

Embedded below is Raymond James research on the dynamic between gold, the US dollar & gold related companies:

You can directly download a …
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How to Get Off the Performance Roller Coaster

How to Get Off the Performance Roller Coaster

Munich Oktoberfest Preparations

By Brett Steenbarger 

Do you find yourself on a performance roller coaster? This is a situation in which you make money for a while, begin to think you have it all figured out, only to fall back, lose money, and feel like a rookie all over again. 

A while back, I wrote about the performance roller coaster and some of the emotional factors that sustain it. The gist of that important post was that how we process wins and losses affects our subsequent trading--and sometimes contributes to winning and losing streaks.

I just finished an enjoyable interview with Mark Wolfinger of the Options for Rookies site. One topic that came up was the way in which traders identify with their P/L. Once a trader’s sense of identity and esteem becomes caught up in profits and losses, the trader begins an emotional roller coaster simply due to the natural ups and downs of markets.

Continue here.>>

See also: Addictive Trading: When Trading Becomes a Problem


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The Future After Health Care

The Future After Health Care

By Megan McArdle, The Atlantic 

Regardless of what you think about health care, tomorrow we wake up in a different political world.

Parties have passed legislation before that wasn’t broadly publicly supported.  But the only substantial instances I can think of in America are budget bills and TARP--bills that the congressmen were basically forced to by emergencies in the markets.

P>One cannot help but admire Nancy Pelosi’s skill as a legislator.  But it’s also pretty worrying.  Are we now in a world where there is absolutely no recourse to the tyranny of the majority?  Republicans and other opponents of the bill did their job on this; they persuaded the country that they didn’t want this bill.  And that mattered basically not at all.  If you don’t find that terrifying, let me suggest that you are a Democrat who has not yet contemplated what Republicans might do under similar circumstances.  Farewell, social security!  Au revoir, Medicare!  The reason entitlements are hard to repeal is that the Republicans care about getting re-elected.  If they didn’t--if they were willing to undertake this sort of suicide mission--then the legislative lock-in you’re counting on wouldn’t exist.

Oh, wait--suddenly it doesn’t seem quite fair that Republicans could just ignore the will of their constituents that way, does it?  Yet I guarantee you that there are a lot of GOP members out there tonight who think that they should get at least one free "Screw You" vote to balance out what the Democrats just did.

Read whole article here.>>


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Bears

Robert Prechter’s Thoughts on Valuation and Sentiment

Courtesy of Adam Sharp at Bearish News 

Nice interview via CNBC. Mr. Elliot Wave talks about current extreme bullish sentiment and what it means, among other things.

*****

Don’t let the bears eat you while you’re sleeping! (I know, you’re not worried now.)

THE SLEEPING BEAR

Courtesy of Jason Louv at Dangerous Minds 

image

This is perhaps the greatest camping accessory ever made. A sleeping bag that looks like a bear—perfect for scaring away bears that show up in the night… unless they fall in love and try to get all up in that shit….?

This is a greatest sleeping bag. You can wear it to sleep when you go camping. It is safe that no bear will attack your camp and eat you? Or you just want to wear it, and then scare your friend when he(she) wake up in the morning. (a good idea!) Well made and Cool! By artist Eiko Ishizawa.

(The Sleeping Bear)

(Thanks, @leashless!) 


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Guest Post: Weekly Gold, Silver, Oil & Natural Gas Analysis

Courtesy of Tyler Durden

Submitted by Chris Vermeulen of www.GoldAndOilGuy.com

 





The Oxen Report: The Market Continues Its Run, The Oxen Report Continues Its Successes

We had another good week with The Oxen Report. We were able to make some pretty great picks, yet, we only had a small handful of selections due to me missing Monday and deciding to post a more educational article on Friday. We had all winners with the three picks upon which we took action, and we had one pick, Hovnanian Enterprises (HOV) that we did not play due to the fact that the Short Sale never hit our entry range. Let’s break down the week, and how we did. It was a solid 3/3.

Winners of the Week:

Rue21 Inc. (RUE) – We started out on Tuesday with a great Buy Pick of the Day in RUE. I liked this attractive play because of the way the retail sector was booming with earnings over the past couple weeks, and on Tuesday night, RUE was going to be releasing earnings. We were not looking to make an earnings play, but the stock had some great movement upwards and was in the midst of getting bought up moving into earnings. With the market looking up and RUE looking up, we were able to enter early in the day and get a nice pop upwards as investors bought into the company. The company ended up announcing pretty strong results on the quarter, which was expected. We were out, though, with a 3% gain before that could happen. We entered in the morning at 33.30 and exited at 34.57 only thirty minutes into the day.

New York & Co. Inc. (NWY) – Our Overnight Trade of the Day was a pretty exceptinonal one for us. Again, we were dipping into the common theme of the week, which was retail. New York & Co. seemed to be a strong play because it had a very similar structure to other companies that had had very strong results. Further, the company had not reported in the green in over two years, but they looked ready to get into the green. The company reported a solid earnings beat, and they reported a large gain year-over-year, as well. It helped us make a solid 3%. We got in at 4.34 on Wednesday and exited on Thursday within minutes at 4.46. The stock, however, went on to be worth lots more, hitting a high in that day near 5, which was worth over 10%. Many of you…
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Chart School

Secular Bull and Bear Markets

Courtesy of Doug Short.

Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? At this point, over five-and-a-half years later, the S&P 500 has set an inflation-adjusted record high based on monthly averages of daily closes.

Let's examine the past to broaden our understanding of the range of historical trends in market performance. An obvious feature of this inflation-adjusted series is the pattern of long-term alternations between up-and down-trends. Market historians call these "secular" bull and bear markets from the Latin word saeculum "long period of time" (in contrast to aeternus "eternal" — the type of bull market we fantasize about).


...



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Zero Hedge

A World Without The Welfare State

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted Richard M. Ebeling via The Cobden Centre,

We live in an era in which few can even conceive of a world without the welfare state. Who would care for the old? How would people provide for their medical needs? What would happen to the disadvantaged and needy that fell upon hard times? In fact, there were free market solutions and non-government answers to these questions long before the modern Big Government Welfare State.

In fact, before the arrival of modern welfare state, voluntary, private-sector institutions had evolved to serve as the market providers for many of those “social services” now...



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Phil's Favorites

If It Ain't Broken, Don't Fix It: Religious Freedom Act Take II

Courtesy of Mish.

Religious Freedom Act Take II

I received a number of emails in response to Indiana Legalizes Discrimination on Grounds of "Religious Freedom".

The bill, signed by Indiana Governor Mike Pence openly encourages discrimination based on sexual preference although Pence incredulously denies that claim. Pence now recognizes the need to "clarify" the legislation.

One of the better email responses came from reader Mark who wrote ...
The Constitution plainly states "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof."

The Constitutional guarantee of religious freedom is sacrosanct. The only restrictions placed on religious freedom are...



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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: Defensive sectors lead hesitant market, but traders honor long-standing bullish support

Courtesy of Sabrient Systems and Gradient Analytics

Last week, the major indexes fell back below round-number thresholds that had taken a lot of effort to eclipse. There has been an ongoing ebb-and-flow of capital between risk-on and risk-off, including high sector correlations, which is far from ideal. But at the end of it all, the S&P 500 found itself right back on top of long-standing support and poised for a bounce, and Monday’s action proved yet again that bulls are determined to defend their long-standing uptrend line.

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 enh...



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Insider Scoop

MKM Sees Consolidation In Subscription Software Space

Courtesy of Benzinga.

Related N 7 Market-Moving Tech Ratings Changes That Just Happened At Brean Capital BNP Paribas Initiates NetSuite At Underperform

NetSuite Inc (NYSE: N)'s recently announced sales partnership with The Ultimate Software Group, Inc. (NASDAQ: ULTI) suggests that a consolidation wave may hit ...



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Digital Currencies

Federal Agents Investigating Bitcoin Money Laundering Stole Over $1 Million In Bitcoin

Courtesy of ZeroHedge. View original post here.

This is one of those sad times when The Onion realizes it has badly, and permanently, missed its IPO window.

Just released from the Department of Justice

Former Federal Agents Charged With Bitcoin Money Laundering and Wire Fraud

Agents Were Part of Baltimore’s Silk Road Task Force

Two former federal agents have been charged with wire fraud, money laundering and related offenses for stealing digital currency during their investigation of the Silk Road, an underground black market that al...



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OpTrader

Swing trading portfolio - week of March 30th, 2015

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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Promotions

Watch the Phil Davis Special on Money Talk on BNN TV!

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...

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Market Shadows

Kimble Charts: South Korea's EWY

Kimble Charts: South Korea's EWY

By Ilene 

Chris Kimble likes the iShares MSCI South Korea Capped (EWY), but only if it breaks out of a pennant pattern. This South Korean equities ETF has underperformed the S&P 500 by 60% since 2011.

You're probably familiar with its largest holding, Samsung Electronics Co Ltd, and at least several other represented companies such as Hyundai Motor Co and Kia Motors Corp.

...



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Option Review

Cypress Semi Draws Bullish Option Plays

Bullish trades abound in Cypress Semiconductor options today, most notably a massive bull call spread initiated in the July expiry contracts. One strategist appears to have purchased 30,000 of the Jul 16.0 strike calls at a premium of $0.89 each and sold the same number of Jul 19.0 strike calls at a premium of $0.22 apiece. Net premium paid to put on the spread amounts to $0.67 per contract, thus establishing a breakeven share price of $16.67 on the trade. Cypress shares reached a 52-week high of $16.25 back on Friday, March 13th, and would need to rally 4.6% over the current level to exceed the breakeven point of $16.25. The spread generates maximum potential profits of $2.33 per contract in the event that CY shares surge more than 20% in the next four months to reach $19.00 by July expiration. Shar...



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Pharmboy

2015 - Biotech Fever

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

PSW Members - well, what a year for biotechs!   The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down!  The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months.  What could go wrong?

Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.

Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies.  A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...



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Stock World Weekly

Stock World Weekly

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

Here's this week's Stock World Weekly.

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

 

...

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Help One Of Our Own PSW Members

"Hello PSW Members –

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

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

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

Thank you for you time!




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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

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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