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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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Market Shadows

Trade by Fibonacci Numbers?

The Fibonacci series of numbers make me think of designs in nature, and patterns that come to life again in art and architecture. Images like these:

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Submitted by Tyler Durden.

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These two gentlemen blow me away. Bud can make big-picture forecasts with uncanny accuracy. Dominick is a pure trader, relying on historical charts and graphs and seeing relationships I had missed. He is totally unemotional in his approach and makes decisions based on what the charts tell him. Like Bud, Dominick has made many calls far ahead of time.

Here’s what Bud and Dominick had to say.

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Mid-Day Update

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

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RTT browsing latest..

Courtesy of Read the Ticker.

Please review a collection of WWW browsing results.Date Found: Tuesday, 13 January 2015, 01:43:37 PM

Click for popup. Clear your browser cache if image is not showing. Comment: Ouch! See the last point of demand between $60 and $70 In Dec at resistance, now strong selling, Large pattern forecast sees a price under $40

Date Found: Tuesday, 13 January 2015, 06:54:16 PM

Click for popup. Clear your browser cache if image is not showing. Comment: Coffe ETF bounces off support, minor spring, if get some strength to $40, a trade may be on!

Date Found: Friday, 16 January 2015, 02:28:29 AM

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Swing trading portfolio - week of January 26th, 2015

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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.

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Sector Detector: With the Fed fading into shadows, investors look overseas for new catalysts

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By Scott Martindale

Last week, the S&P 500 put an end to its streak of weekly losses, despite giving back some gains on Friday. Thursday provided the big catalyst, with the ECB’s announcement of its bold new monetary stimulus plan. Investors were cheered and soothed for the moment. And U.S. fundamentals still look strong. But with Greece trying to turn back time, with volatility elevated (and likely to continue as such), and with the technical situation still dicey, the near term outlook is still worrisome.

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2015 - Biotech Fever

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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.

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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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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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