by phil - March 23rd, 2015 8:04 am
Dove, dove, dove.
Dove, dove, dove – now that Fisher is gone, that's all we have at the Fed these days. This week we hear from Mester, Williams, Bullard, Evans and Lockhart – all doves on the Fed and, of course Super Mario speaks at 10am (EST) to get our markets off to a good start for the week with his own special brand of doveishness.
While our Fed, the ECB and the BOJ are doing all they can to talk the markets higher, China is warning its investors that the run that has pushed their market 75% in less than a year is unsustainable. A spokesman for the China Securities Regulatory Commission said on Friday:
“Investors should be cautious about market risks. We shouldn’t be thinking if we don’t buy now, we will miss it.”
A previous warning from the CSRC was ignored. The Shanghai Composite jumped 2.8% to surpass 3,000 on Dec 8th, the first trading day after the securities body on Dec 5th cautioned investors about growing market risks. The valuations of some listed companies are “relatively high,” the CSRC spokesman said in Friday’s statement. “There are about 700 companies in the Shanghai and Shenzhen stock exchanges with a price-earnings ratio of above 100,” the spokesman said.
Stocks continue to rise in China on speculation that the Government will do whatever it takes to sustain a 7% growth rate, which means lots of FREE MONEY will have to be printed. I think that's a fabulous idea – all Governments should print unlimited supplies of free money until all of our economies are growning at 7% and then everything will be AWESOME and nothing can possibly go wrong with that plan, can it?
I certainly hope not, because that's the plan we're pursuing at the moment! Meanwhile, Japan is starting to look like Zimbabwe and the 22% drop in the Euro in 2014 sent 124.4Bn Euros ($150Bn) out of the Union in the kind of negative cash-flows you expect to see in countries that are on…
by Sabrient - March 23rd, 2015 6:56 am
Reminder: Sabrient is available to chat with Members, comments are found below each post.
Courtesy of Scott Martindale at Sabrient Systems
Well, it didn’t take long for the bulls to jump on their buying opportunity, with a little help from the bulls’ friend in the Fed. In fact, despite huge daily swings in the market averages driven by daily news regarding timing of interest rate hikes, the strength in the dollar, and oil prices, trading actually has been quite rational, honoring technical formations and support levels and dutifully selling overbought conditions and buying when oversold. Yes, the tried and true investing clichés continue to work — “Don’t fight the Fed,” and “The trend is your friend.”
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 top-ranked sectors.
Last week, global equity markets posted their biggest weekly gain in nearly two years. The S&P 500 is back above 2,100, the Dow Jones Industrials is back above 18,000, NASDAQ is above 5,000, and Russell 2000 is at new highs. Even China is performing well. Yes, the bulls are back in control and feasting on bear claws. Risk on.
The big catalyst last week of course was the FOMC announcement that at once removed the word “patient” from their strategy but also indicated some concern about the economy. The committee acknowledged that the strong dollar is hindering GDP growth and inflation. Indeed, recent economic data on retail sales, manufacturing, and home building have all been weak. Investors interpreted this to mean a further delay in raising rates, i.e., bad news is good news. After all, rising rates would only serve to make the dollar even stronger. The most likely scenario seems to be a token rate increase in September, followed by very slow going from there.
The S&P 500 has fluctuated an average of 24 points per session so far this year, which is the largest since December 2011. The dollar is up more than 20% over the past year, while oil prices are still quite low,…
by phil - March 20th, 2015 8:23 am
Up up and away!
Not only is the Nasdaq popping back over 5,000 today but the Dow is back over 18,000 in the Futures and the Russell is already flying over 1,250 – well past the previous all-time high of 1,243 that was set on the first day of March.
As we've noted earlier in the week, a rising market tide has NOT lifted all ships with 30% of the Dow and 1/4 of the Nasdaq at 52-week LOWS (mostly materials), which is why they had to stuff AAPL into the Dow – so it could at least keep pace with the Nasdaq going forward.
Hey, who are we to complain? This week's rally gave us a nice $4,300 gain on Wednesday's Top Trade Alert and a 5% comeback on our Long-Term Portfolio, which is closing back in on a 30% gain, albeit at the expense of our more bearish Short-Term Portfolio, which has fallen back to up just 77.6% but it's 1/5th the size of the LTP, so GO BULLS – I guess…
Despite our success, I'm not happy with this rally but I wasn't happy in 1999 or 2007 either and that made me miss out on some nice gains so we're keeping our LTP open (though, as you can see, over 50% in cash) so we don't "miss out" on the madness.
And it is madness – there's no connection between valuations and earnings and, as you can see from this chart, the Macro Outlook is deteriorating rapidly, even in the US. In fact – THE FED JUST SAID SO!!! Unfortunately (for us "rational" investors) bad news is still good news to the markets as it only brings wave after wave of MORE FREE MONEY – so much free money that we are drowning in it.
What does "drowning in money" mean? Here's some jokes for you -
- Money doesn't get no respect. Why, there's so much money in the World these days that you've gotta pay the banks to hold it for you!
- There's so much money in
by phil - March 19th, 2015 8:03 am
Over $4,300 in one day.
Not bad for sitting at a computer, right? Yesterday morning, at 9:37, we sent out a Top Trade Alert to our Members (which comes via Text and Email as well as in our Live Member Chat Room) to take advantatage of the morning plunge in oil to $44 a barrel on the May contracts.
We had, of course, been discussing oil trades all week but it's always special when we make something a Top Trade Idea and this was the moment we had been waiting to take advantage of, when the rollover of the April contracts caused a panic sell-off at the NYMEX ahead of an inventory report that was expected to be disappointing – a perfect storm!
That caused us to send out this Top Trade Alert for SCO, where we sold 3 of the April $110 puts for $10.50 (chart above) as well as a long entry on /CL (oil Futures) at $44. After the Fed announcement, we had oil at $47 for a $3,000 per contract gain and the 3 short SCO contracts that paid us $3,150 in the morning were available to buy back in the afternoon at just $1,800 (+42% on the day), for another $1,350 gain.
That's $4,350 of that single Alert in a single day – not bad! Of course we have no reason to buy back the short SCO calls and we expect to make another $1,800 on the trade between now and April 15th (contract expiration) but we took the money and ran on the volatile Futures trade.
Unfortunately, not everyone can trade the Futures so, at 10:14, we sent out a second Top Trade Alert to allow our Members to take advantage of the oil lows with the following trade ideas:
I like UCO July $5/9 bull call spread at $1.35, selling the Jan $5 puts for $1 for net 0.35 on the $4 spread.
USO has less decay so safer to sell puts on though there is some decay over time. Jan $13 puts can be sold for $1.25 to pay for the UCO play or you can establish a
by phil - March 18th, 2015 8:26 am
Not much to do this morning but wait patiently.
Oil fell all the way to $42.05 in overnight trading but not the contract we were trading (thank goodness), it was the soon-to-expire April /CLJ5 contract that we knew was heading lower still (see yesterday's post). We're back around yesterday's lows this morning and you can still take advantage of our long trade ideas on USO and UCO from yesterday's Live Trading Webinar as prices should still be good today.
Oil inventories are at 10:30 and the API report has already indicated a huge 10Mb build is to be expected. The wild-card is whether or not that takes into account Obama's purchase of 5Mb for the SPR last week. Since the announcement came on Friday – it's very possible that it wasn't recorded in the current week's inventories, which are taken on Sunday. This is why we went long on the MAY contracts (/CLK5) and not the Aprils…
I sent out a news alert earlier this morning and our Chart of the Day is cerrtainly this alarming picture of Greek 3-Year Bond Yields, which have jumped back over 20% again – something people really have to learn not to ignore!
It was also pointed out this morning, in Bloomberg, that while Greece is scrambling to pay German Banksters 20% interest rates, there's no plan at all for paying the $1.59Bn in MONTHLY retirement benefits due to 5.5M Greeks. Greece’s economy has shrunk by a quarter under the conditions laid down by Germany and other euro-area nations in bailout terms. The jobless rate increased in the fourth quarter as the economy began shrinking again and a political standoff rekindled concern the country could leave the euro area. The percentage of adults living in households where no one works rose to 19.6 percent in 2013 to 1.1 million, from 7.5 percent in 2008.
In the midst of this looming crisis, Greek PM Alexis Tsiparis is not heading to Franfurt but to Russia, as he's heard that Vladimir Putin is a kind and reasonable man – compared to the German Banksters he's been dealing with. Meanwhile, in…
by Option Review - March 17th, 2015 3:36 pm