by ilene - April 24th, 2016 2:24 am
Courtesy of Wade of Investing Caffeine
Basketball is in the air as the NBA playoffs are once again upon us. While growing up in high school, Michael Jordan was my basketball idol, and he dominated the sport globally at the highest level. I was a huge fanatic. Besides continually admiring my MJ poster-covered walls, I even customized my own limited edition Air Jordan basketball shoes by applying high school colors to them with model paint – I would not recommend this fashion experiment to others.
Eventually the laws of age, physics, and gravity took over, as Jordan slowly deteriorated physically into retirement. On an infinitesimally smaller level, I also experienced a similar effect during my 30s when playing in an old man’s recreational basketball league. Day-by-day, month-by-month, and year-by-year, I too got older and slower (tough to believe that’s possible) as I watched all the 20-somethings run circles around me – not to mention my playing time was slashed dramatically. Needless to say, I too was forced into retirement like Michael Jordan, but nobody retired my number, and I still have not been inducted into the Hall of Fame.
“Air Wade” Before Retirement: No Photoshop in 1988, just an optical illusion created by an 8-foot rim.
Financial markets are subject to similar laws of science (economics) too. The stock market and the economy get old and tired just like athletes, as evidenced by the cyclical nature of bear markets and recessions. Statistics are a beautiful thing when it comes to sports. Over the long run, numbers don’t lie about the performance of an athlete, just like statistics over the long run don’t lie about the financial markets. When points per game, shooting percentage, rebounds, assists, minutes played, and other measurements are all consistently moving south, then it’s safe to say fundamentals are weakening.
by Pharmboy - April 22nd, 2016 12:56 pm
Reminder: Ilene is available to chat with Members, comments are found below each post.
Update: PRGO may be losing its CEO to Valeant: Valeant’s Latest Acquisition Target: Perrigo’s CEO?. This news is knocking the price down into the low $120s. Paul says he is buying more shares and selling 2018 puts with a strike price of $150. See the screenshot below. Paul sold those three 2018 $150 puts.
Paul writes, "A forced change at the CEO level and PRGO’s depressed share price might induce management to reconsider its refusal to sell at above $200 when Mylan came calling last year. Shareholders are unhappy meaning something is likely being planned to get the stock moving again."
As originally posted April 20, 2016.
On June 10, 2015, Paul Price gave us a trade idea on BAX. Baxter Int. (BAX) was trading at around $66/share and scheduled to split off Baxalta (BXLT), its BioScience division, in the ratio of one share of BXLT for each share of BAX. BXLT is now at $40.65 and BAX is at $43.40.
Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015.
If you bought BAX, and held both companies after the split, till today, you'd have about a 27% gain. (Both Phil and Paul also suggested selling puts, see the article for more details.)
Now, for about a month, Paul's been suggesting buying and/or selling puts on Perrigo (PRGO, $129) at TheStreet.com's Real Money Pro (paywall) and Guru Focus. PRGO has been languishing around $128 – 130 and he thinks this area makes a good entry point for a longer term trade. Here are several excerpts from Paul's recent article at Real Money Pro with some updated charts.
Healthcare products provider Perrigo (PRGO) has a fabulous long-term record. The stock dropped sharply on Feb. 18, 2016, as the firm took a charge in its latest quarter for costs associated with fighting off a hostile takeover attempt from Mylan (MYL).
by ilene - April 21st, 2016 8:15 pm
Don't miss next week's webinar in real-time! Get LIVE access to Phil's Weekly Webinars by joining us at Phil's Stock World — click here!
00:01:41 Oil (CL): Trade Idea
00:08:06 Oil during Doha meeting
00:08:44 FUTURES Trade Idea
00:11:45 The Cheerleader Effect
00:13:38 CVX: Chart
00:16:04 Rig Count Saudi Arabia
00:18:14 Options Opportunity Portfolio
00:21:25 S&P500: look at the FUTURES
00:23:20 They dont freeze oil production because its they are producing too much
00:23:43 Petroleum Status Report
00:28:37 Trade Ideas
00:34:46 INDEX: NIKKEI likes the DX going up. Strong Dollar and Strong Euro effect
00:40:48 Latest UCO or USO trade to jump if oil does drop. Trade Ideas
00:47:23 UCO Weekly Spread
00:53:34 Butterfly Portfolio: Trade Ideas
00:58:29 Short-Term Portfolio: Trade Ideas
01:07:00 Checking on the Markets
01:10:54 SPY Volume
01:15:28 Trade Ideas
01:20:29 Checking on the Markets
01:24:10 Oil (CL): Trade Ideas
01:27:00 More Trade Ideas….
by ilene - April 21st, 2016 12:41 am
Courtesy of Urban Carmel, The Fat Pitch
Summary: SPY made a new all-time high on Tuesday despite falling margin debt, the end of QE, negative household fund flows, flat profit growth and a host of other reasons. In other words, exactly as a rationale and objective investor should have expected.
* * *
SPY closed at a new all-time high (ATH) on Tuesday. Recall that SPY pays a 2% dividend, so a new ATH in SPY is equivalent to a new ATH in the S&P 500 index on a total return basis. The Dow Jones Industrials index has also made a new ATH on a total return basis (enlarge any chart by clicking on it).
Is this the top?
That has been the opinion of many nearly every week for several months and, in some cases, for several years. True, SPY is now at prior resistance from 2015 and there is the potential for an evening star to be forming. But the evidence for this to be a long-term top is no more compelling now than it was last week or last month.
The more important point about Tuesday's new ATH is that it occurred despite a long list of reasons a new high has been considered unlikely, if not impossible.
First, Tuesday's ATH comes 19 months after the Fed ended it's quantitative easing program. The end of QE3 in October 2014 was widely believed to herald the start of a bear market. A post on why this was likely to be wrong from November 2014 is here. Instead of dropping to 1500 as expected by Zero Hedge (first chart), the S&P gained more than 8% over the next 9 months (second chart). Even at the February low, the S&P was nowhere near 1500.
Second, Tueday's ATH comes 13 months after margin debt peaked. That SPY fell into a bear market within 3-5 months after a drop in margin debt in 2000 and 2008 amounts to an analog with a sample size of just two (chart from Doug Short).
by ilene - April 20th, 2016 8:43 pm
Courtesy of John Mauldin, Outside the Box
Over the last few years, I have from time to time had the real pleasure of being in the presence of Lakshman Achuthan, Chief Operations Officer for the Economic Cycle Research Institute, a rather serious team of economists who spend their time researching economic cycles, especially those around recessions. They are known for having forward-looking models rather than always looking in the rearview mirror.
Every time I get around Lakshman I walk away impressed. And I always make a mental note to myself that I need to invite him to speak at my conference – but then manage to file that note somewhere where it doesn’t come up when I’m putting the speakers together. If I post this note in front of 1 million of my closest friends, maybe I’ll remember it for 2017.
Lakshman sent me the speech he presented at the 25th Annual Hyman Minsky Conference, and he has graciously allowed me to share it with you as this week’s Outside the Box.
One point he makes strongly in the initial part of his presentation is the readily observable fact that each recovery since World War II has been a little bit weaker. And that gives me pause, because that means that after the next recession the recovery will be even more anemic than the current one has been. Thus, absent any significant policy change – and by that I most definitely do not mean the Fed’s giving us more of the same; I mean a clear-cut change in the philosophical drivers of the policy – the US economy is going to look more and more like the Japanese economy.
Not that Japan is a bad place to live. Most Japanese have a relatively high standard of living, and life goes on – there’s just not a great deal of growth and all the wonderful things that happen along with that growth. So instead of actually growing its economy, Japan has piled up a huge mountain of debt, prone to unpredictable “landslides.”
by ilene - April 19th, 2016 7:53 pm
Picture via Pixabay.
Courtesy of Joshua M Brown
Are we going to break out for real this spring? Markets around the world seem to be in bloom. It’s hard to trust it, given how badly the last two “failed moves” ended – last August and this January-February were monumental corrections, notable for their lightning speed.
Yesterday the Dow Jones Industrial Average retook 18,000 for the first time since last summer. Small cap stocks are approaching a break above their 200-day moving average for the first time this year, as you can see below.
Market commentators often cite moves in small caps as being indicative of investor risk appetites. I’m not so sure that’s true anymore, given how many smart beta strategies that are, blindly allocating to low market-cap stocks each day.
Let’s look around the world…
Here’s the EuroStoxx 600 index putting in a pretty clear inverse head-and-shoulders pattern. You can see it breaking above the neckline in my chart below. This is said to be a reversal pattern, meaning when it appears, it could serve to reverse the prior trend (which was down). Inverse head-and-shoulders patterns are created by a shift in sentiment – when sellers stop selling at a higher level than they had previously, thus creating the right shoulder as distinct from the lower head. You don’t have to “believe in this stuff,” because plenty of people do.
Or we could crack a serpent’s egg into a bowl of blood and then stir it with a pinky nail. What do you want me to tell you…
And how about this one: Emerging markets (EEM) vs foreign developed markets (EFA) vs the US large caps (SPY) year-to-date – when was the last time the race looked like this?
One more – here’s the US dollar index (candlesticks) versus crude oil and the energy stocks (in blue and green) since the dollar’s peak last December- look at that crossover.
by ilene - April 18th, 2016 6:55 pm
I think it's pretty much game over now…
Update: it appears that Holmes will be even more "devastated" because as the WSJ reported moments ago federal prosecutors have launched a criminal investigation into whether Theranos Inc. misled investors about the state of its technology and operations, while the SEC is also probing the company at the same time.
Walgreens Boots Alliance Inc. and the New York State Department of Health have received subpoenas in recent weeks seeking documents and testimony about representations made to them by the Palo Alto, Calif., blood-testing company, some of the people said.
People familiar with the matter said the subpoenas seek broad information about how Theranos described its technologies and the progress it was making developing those technologies. Investigators are also examining whether Theranos misled government officials, which can be a crime under federal law, some of the people said.
In addition to the criminal probe, the Securities and Exchange Commission is examining whether Theranos made deceptive statements to investors when it solicited funding, according to people familiar with the matter. Theranos was valued at $9 billion in a funding round in 2014 and the majority stake of Elizabeth Holmes, the startup’s founder and chief executive, at more than half that.
* * *
Investigators are also examining whether Theranos misled government officials, which can be a crime under federal law, some of the people said.
Furthermore, given the septagenerian elitist board, in an ironic twist, Theranos claims to have its own 'standards' for testing its own proficiency (like self-regulating banks or Valeant's or SunEdision's self-investigation?) – which it, surprise surprise, passed:
Theranos said it uses an alternative process for proficiency testing. The process “has been disclosed to and discussed with regulators,” said Ms. Buchanan, the Theranos spokeswoman. “Theranos’ proficiency testing process meets the regulatory requirements.”
Now would be the perfect time for Holmes to cash in on any leftover favors from the Clinton Foundation… if she still has any left, of course. Because otherwise "billionaire" Elizabeth's fall from grace is about to be complete, and she may well end up…
by ilene - April 15th, 2016 3:55 pm
Phil talks about (in order):
- Oil, banks, stocks, OPEC, energy sector.
- Q2 earnings season. Expectations are already low.
- Lumber Liquidators Holdings, Inc. (LL) – got oversold.
- Natural gas (UNG)
- Tesla (TSLA) – "It's a car company it's not Google. Grow up!" i.e, it's overpriced.
- Chipotle Mexican Grill, Inc. (CMG) – selling puts on the company.
- Allergan (AGN) – waiting for a bottom.
- Baker Hughes Incorporated (BHI) – put selling strategy.
by ilene - April 14th, 2016 6:18 pm
This week's trading webinar is ready for your viewing. Enjoy!
Don't miss next week's webinar real-time! Get LIVE access to Phil's Weekly Webinars by joining us at Phil's Stock World — click here!
00:02:31 Checking on the Markets: RUSSELL, S&P, NASDAQ, DOW, NIKKEI, CL
00:05:26 JP Morgan about Pre-Market. CL, NG, RUSSELL, NASDAQ, XRT, Utilities, Health Care, Real State, TLT, Currency
00:10:44 GDP by Country
00:15:05 TLT and Gold, Europe, DX, Brazil, Russia, India, China, IMF
00:21:55 Checking on the Markets: NIKKEI, CL, S&P, DX
00:25:25 Free Money
00:28:11 UTX Trade Idea
00:32:40 Checking on the Markets: DX, SI, YG, NIKKEI, AAPL, TSLA, AMZN, WYNN
00:33:27 Short-Term Portfolio Review
00:37:40 Long Term Portfolio Review, Strategy
00:44:00 Butterfly Portfolio Trade Ideas
00:50:00 Lumber Liquidator Holdings (LL)
00:55:12 Beige Book
00:56:36 Summary of Commentary on Current Economic Conditions by Federal Reserve District
01:07:25 Checking on the Markets: Pretty Well as the Beige Book goes.
01:08:55 Trade Idea
01:12:47 Short-Term Portfolio: SDS Trade Ideas
01:21:48 Shorts SI Trade Ideas
01:27:15 Checking on the Markets again
01:29:59 The RUSSELL
01:30:00 Shorting the Nikkei with EWJ May $12 puts (0.35)
by ilene - April 13th, 2016 8:30 pm
Update: the mystery gets weirder. Saudi confirms 'genuine' $681M donation to Malaysian PM:
KUALA LUMPUR, Malaysia (AP) — Saudi Arabia has for the first time publicly confirmed Malaysia's claim that $681 million in Prime Minister Najib Razak's bank accounts was a donation from the Saudi royal family, countering accusations that the money was siphoned from heavily indebted state investment fund 1MDB. [1MDB is the 1Malaysia Development Bhd., the troubled Malaysian state fund - see Malaysia's 1MDB Fund Says It May Be Victim of $3.5 Billion Fraud.]
Saudi Arabian Foreign Minister Adel Al-Jubeir called the money a "genuine donation" in comments Thursday to Malaysian reporters in Istanbul after a meeting with Najib. On Friday, Malaysia's foreign ministry provided a video clip of Al-Jubeir's comments, which Najib's office said vindicate the prime minister, who has faced months of pressure to resign from critics including former Prime Minister Mahathir Mohamad.
"It is a genuine donation with nothing expected in return. And we are also fully aware that the attorney general of Malaysia has thoroughly investigated the matter and found no wrongdoing," Al-Jubeir said. "So, as far as we are concerned, the matter is closed."
"This confirms what the prime minister maintained all along, and what multiple lawful authorities concluded after exhaustive investigations," Tengku Sarifuddin, Najib's press secretary, said in a statement. "This also proves that the wild allegations pushed by Mahathir and his anti-Najib campaign are completely false."
Mahathir Mohamad, who stepped down in 2003 after 21 years in power, has been a fierce critic of Najib, alleging that he was corrupt and should resign.
Saudi's confirmation may ease pressure on Najib, but he still grapples with controversy over massive debts in 1MDB, which he started in 2009.
Courtesy of Pater Tenebrarum of Acting-Man.com
Mr. X and his Mysterious Benefactors
As the Australian Broadcasting Corporation (ABC) reports, a money-laundering alarm was triggered at AmBank in Malaysia, a bank part-owned by one of Australia’s “big four” banks, ANZ. What had triggered the alarm? Money had poured into the personal account of one of the bank’s customers, a certain…