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  1. phil

    Good morning!  

    Weather finally got better so we're having a lovely weekend, hope you guys are too.  

    Right now there's a pack of girls sleeping over so this is the only quiet time I get!  

    Obama had a nice meeting with Xi, apparently so we'll see if any new initiatives get announced.  

    President Obama yesterday warned Chinese counterpart Xi Jinping to halt his country's hacking of U.S. businesses, saying that continuing the cyber-theft would be a very difficult problem in the nations' economic relationship. Meanwhile, China wants a "level playing field" for its companies that invest in the U.S. Despite the areas of contention, one Chinese participant called the "shirtsleeves" summit "constructive, strategic and historic."

    Meanwhile, China factory prices fell 2.9% in May, indicating crap demand and that's accelerating from 2.6% down in April.  They're talking about a "weak" Q2 and, don't forget, Chinese companies release earnings too, so it's not just US companies we should be concerned about.  

    "In the corporate sector the overall situation is still bad, especially for small and medium-sized enterprises," said HSBC economist Ma Xiaoping. "Output prices are decreasing, which could reflect deteriorating profit margins for them."

    Meanwhile, the central bank said on Sunday that Chinese financial institutions issued 667.4 billion yuan ($107.6 billion) of new yuan loans in May, down from 792.9 billion yuan in April and below economists' expectations. Total social financing, a broader measurement of credit in the economy, came to 1.19 trillion yuan in May, down from 1.75 trillion in April.

     

    The broad M2 money supply also expanded at a slightly slower pace, climbing 15.8% at the end of May compared with a year earlier, against the 16.1% rise at the end of April.

    15.8%!!!  Holy crap, and we thought our Fed was printing a lot of money!   When this Global House of cars finally goes off the rails – it's going to be look out below (crash) or look out above (hyper-inflation) – that's why things are so tricky to play this year and that's why I like – CASH!!!

    Speaking of discounts:  

    Bargain-basement Buffett: After five years of climbing prices to win the annual "lunch with the Oracle of Omaha" auction – last year's winner paid $3.46M - the winning bid this year was a relatively measly $1,000,100. According to eBay there were 106 bids; the winner bidder is as yet unidentified.

    At the close: Dow +1.36% to 15246. S&P +1.28% to 1643. Nasdaq +1.19% to 3465.

    Treasurys: 30-year -1.17%. 10-yr -0.64%. 5-yr -0.34%.

    Commodities: Crude +1.47% to $96.16. Gold -2.66% to $1378.15.

    Currencies: Euro -0.21% vs. dollar. Yen +0.47%. Pound +0.29%.

    Market recap: Stocks powered up and closed near session highs after the monthly jobs report painted a Goldilocks picture of steady economic growth that's slow enough for the Fed to maintain its stimulus policies. Fund clients added to positions and hedge funds closed out some bearish bets, as some of the calm that had prevailed for much of the year was restored. The dollar nosed higher and Treasury prices fell in choppy trading.

     

    F'ing unbelievable:  HFT Robot Art

    Irrespective of today's strong jobs numbers, Doug Kass is sticking to his bearish thesis that market is headed much lower from here. The problem, Kass says, is that "central bank liquidity blurs the line of demarcation between economic reality and stock market euphoria." The narrative now is whether the Fed is simply "pushing on a string," and Kass thinks many market participants are coming to this 'aha' moment." (Video).

    This is the way Blue-Collar America Ends - Automation, computers, robots, higher skill requirements for workers, out sourcing jobs to cheaper labor markets, bringing in cheaper skilled/trained workers from over seas, all are working against the working people. This appears to be a trend and I don’t see most of it stopping soon. The future is here. So where do middle class workers go, lower paying service jobs, unemployment, or fall off the cliff. I see lots of unemployment/ under employment being a permanent thing with standards of living for the masses continuing to fall.

    It's looking like the June policy meeting when the Fed will officially signal it's set to begin tapering asset purchases, according to Jon Hilsenrath. Yesterday's lukewarm jobs reports removed pressure to act right away, but the prerequisite necessary to cut back QE – an improving economy – has been met.

    Twenty-Year Anniversary of Market Backstops

    The percentage of the stock market now owned by hedge funds (5%) is the highest since Q2 2008, BofA Merrill Lynch finds in its Hedge Fund Quarterly Report. Hedge funds reduced cash holdings to the Q2 2007 trough of 4.3%, and raised net equity exposure to the Q2 2007 peak of 59%. Their largest exposure is to consumer discretionary stocks (XLY) followed by IT (XLK) and financials (XLF).

    The rout in junk bonds over the last 5 weeks is well known, but now leveraged loans (BKLNSNLN) have joined the tumble, notes Barclays. It suggests credit is becoming an issue along with higher rates as leveraged loans are floating rate and would seemingly be unaffected by rising Treasury yields. Also affected are short-term high-yield ETFs: HYSSJNK. 

    Watch out when Cramer makes convoluted arguments about why you should be bullish against bearish signals!  CNBC's Jim Cramer isn't worried so much about Fed tapering anymore. He's watching the 10-year bond. "When the ten-year goes down," Cramer says, "people step in and start buying." Stocks like Whirlpool (WHR), Toll Bros (TOL) banks that are levered to mortgages. If we can get 10-year rates to around 2.01% there, he thinks we could have a big rally. (Video). 

    Construction Improves, Yet Is Still Historically Low

    What does it mean to have “predicted the crisis”? (Noahpinion)

    Boring stocks can bring exciting returns, Mark Hulbert discovers, as his research reveals stocks exhibiting the least historical volatility on average comfortably outperform the most "exciting" (i.e., volatile) issues. One believer in the boring-is-beautiful school, Guggenheim Partners' Nardin Baker, likes these stocks: SODKMB,CLCOST. Too volatile are AAPLGSCMSHPQMET.

    Worried about the dreaded QE taper and the market volatility that will likely accompany it? Consider buying shares of CME Group (CME) and CBOE Holdings (CBOE), Barron's says. CMEshould benefit from ambiguity regarding the direction of interest rates as a quarter of "clearing and transaction-fee revenue [comes from] interest-rate derivatives," and CBOE has seen VIX trading volumes rise 111% Y/Y through May. (Also: Wells Fargo likes CME)

    Japanese Prime Minister Shinzo Abe plans to introduce tax cuts for capital expenditure in the autumn as part of the government's sweeping plan to pull the economy out of deflation. The lack of a nationwide reduction in corporate tax disappointed markets when Abe initially unveiled the program last week. He also wants to scrap regulations that shackle research and investment.

    Chinese industrial production +9.2% on year in May vs +9.3% in April and consensus of +9.3% also. Retail sales +12.9%, as expected, vs +12.8% in April. Fixed-asset investment excluding rural areas +20.4% in January-May vs +20.6% in January-April and +20.5% forecast. New local-currency lending -15.9% to 667.4B yuan ($109B), missing forecasts. Aggregate financing +4.4% to 1.19T yuan. "On balance, this weekend’s data is likely to strengthen the calls for a more expansionary macroeconomic policy stance," says RBS economist Louis Kuijs.

    China's exports +1% on year in May vs +14.7% in April and consensus of +5.6%. Imports -0.3% vs +16.8% and +6.6%. Trade surplus +12.3% to $20.4B vs consensus of $19.3B. The sharp slowdown in exports reflect a crackdown on invoicing, which is thought to have distorted the April data, especially regarding Hong Kong. Imports of copper and copper products -14.5%, indicating stuttering domestic demand

    Jeff Immelt believes China is serious about cleaning up its environment, and the GE CEO says he will "double down" his clean energy investments there. But Immelt worries that western CEOs who throw around terms like "green" and "sustainability" are hurting their own cause: "When a Chinese CEO hears the word sustainability, he thinks they're being lectured to by the U.S. on how to do things in an uneconomical way."

    Six families in Pennsylvania are angry with Chevron (CVX) and claim the company's gas wells have made it impossible to "quietly use and enjoy" their land. The Fayette County group seeks "unspecified compensatory and punitive damages" tied to what they say are the pernicious effects of twelve nearby wells which allegedly leak natural gas, methane, and "other toxic radioactive substances," according to documents reviewed by Bloomberg. The suit has not been verified with court records. 

    Ballard Power (BLDP +16%) soars again today on heavy volume. In an earlier press release, the company noted that recent growth in shipments of its ElectraGenTM Telecom Backup Power systems is being driven by the need for backup power in Asian, African and Latin American regions with regular, even daily, power outages due to unreliable electricity grids, as well as markets with reliable grids yet vulnerable to extended power outages in crisis situations.

    GT Advanced (GTAT-2.8% AH after filing a $50M mixed shelf. The struggling solar/LED equipment maker only says it will use the proceeds for "general corporate purposes." GT had $320.2M in cash and $259.6M in debt on its balance sheet at the end of Q1, or a net cash balance of $60.6M. That's down from a net cash balance of $275.9M a year earlier.

    Several plant scientists are questioning conclusions Monsanto (MON) drew from its investigation of an escaped GMO wheat variety, and say there is still a risk that rogue grain is in the seed supply. “Sure they tested it, but that doesn’t mean it’s all clean,” says one. “It just means it’s not so widespread that it could be detected easily."  - Here's a great quote from the Monsanto Representative

    Tesla's (TSLA) a short says Barron's Bill Alpert in a cover story which rehashes familiar arguments, but notes the shares – recently essentially unborrowable – can now be had for a single-digit interest rate. Perhaps the most interesting part of the story is Elon Musk hanging up on Bill Alpert during an interview for the piece: "I have no interest in an article that debates what we consider to be an obvious point – which is that there is a dramatic reduction in battery costs … I am terminating this interview." 

    GameStop's (GME +6.2%) big rally on the Microsoft Xbox One trade-in news "is a gift to short sellers," says SA Pro's Josh Burwick. "Great entry point here." The entry point was even better 3 weeks ago when Burwick penned a piece arguing negative catalysts were emerging and for investors to "look out below." 

    Maxim's John Tinker thinks shares of Barnes & Noble (BKS) are cheap (does that still apply after today's rally?), but says he wouldn't be surprised "if the quarterly numbers are worse than expected" given the likelihood that Chairman Leonard Riggio will "be looking to pay as little as possible" for the retail division. Tinker notes that the retailer trades at a historically low EV/EBITDA ratio.

    Tech companies may be telling the truth by saying they have not provided the National Security Agency with full access to their servers, but they have reportedly taken steps to make data-sharing with the government easier. For example, Facebook (FB) has built a separate and secure portal to which it can deposit data requested by the NSA. Other companies that negotiated with the government include Google (GOOG) Microsoft (MSFT), AOL (AOL) and Apple (AAPL); Twitter has limited its co-operation as much as possible.

    While Sprint (S -1.3%) slumps on a report SoftBank (SFTBF.PK) is talking with Deutsche Telekom (DTEGY.PK) about buying its 74% stake in T-Mobile USA (TMUS +4.1%) should the Sprint deal falter, Dish (DISH +1.5%) has spiked higher, as investors take the report as a sign SoftBank would rather abandon its Sprint efforts than significantly raise its bid. Sources tell Reuters SoftBank and DT have been talking since last year, but that talks "intensified" following Dish's $25.5B offer for Sprint. Clearwire (CLWR +3.3%) has also moved higher, and is now $0.02 above Dish's $4.40/share offer price. (previous) 





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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

Imperial Collapse And A License To Kill

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Dmitry Orlov via Club Orlov blog,

The story is the same every time: some nation, due to a confluence of lucky circumstances, becomes powerful—much more powerful than the rest—and, for a time, is dominant. But the lucky circumstances, which often amount to no more than a few advantageous quirks of geology, be it Welsh coal or West Texas oil, in due course come to an end. In the meantime, the erstwhile superpower becomes corrupted by its own power.

As the endgame approaches, those still nominally in charge of the collapsing empire resort to all sorts of desperate measures—all except o...



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Phil's Favorites

Chart o' the Day: How Dispersion Stole the Alpha

Chart o’ the Day: How Dispersion Stole the Alpha

Courtesy of 

Why have stock-picking fund managers had it so tough over the last few years? A lot of people would say high correlation in the stock market, but that’s only part of the story. According to Goldman Sachs strategists, the real culprit is low dispersion.  We’ve talked about this topic here before, but to rehash: Dispersion is a measurement of how stocks act in relation to each other, not just to the overall market.

A high-dispersion environment is where a large number of stocks are zigging and zagging drastically. This means that returns and risk factors are all over the map, which, in theory, would allow skilled...



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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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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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