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Virtual Portfolio Insurance

This is an article I was saving for the private site but news has forced my hand so I'm going to start picking up some of these next week. Insurance companies are always good in times of trouble and should hold up better than the Dow in a plunge (but will not be immune to it so we sell calls against or get out in a downturn). Currently the IYF insurance ETF is 10% behind the Dow's rally but usually outperform the Dow (move the time-line further out, resting neatly at the 10% rule. I'd like to give a shout out to my man Warren Buffett who took the time over the weekend to pump my beloved BRK.A, saying "you ain't seen nothin' yet" (I may be paraphrasing) while at the same time jumping on our bandwagon and taking a stab at Exxon for sqandering Billions on buybacks and dividends. Berkshire Hathaway was my stock of the year selection for 2006 and, although it was outperformed by some, there were none that made us feel safer through thick and thin! This puts a lot of pressure on my 2007 pick... I think that Warren Buffet taking the time out of his busy day to tell you his company is still a good 30% undervalued at $107,000 a share should tell you something about the markets, especially the insurance sector. AIG comes to mind as a possible play, with 2007 earnings projected at $6.26, up a mere 8% from 2006. "Yawn"you may say, but then you would be sleeping through the story! AIG only earned $3.33 a share in 2005, which was it's best year ever, but still fell from 2004 highs of $77 a share down to $49 during "the scandal." That was then, this is now, AIG is so similar to Berkshire that they co-insured deals and poor Mr. Buffet was even slightly tainted by that nonsense back in '04 but he's moved on and so should we with the AIG Jan '09 $70s for the "I'm Not Kidding Price" of $10.40. You can produce an income against them by selling the Jan $70s for $1.70 AND covering yourself with the Feb $75s for .40 but I would just do half as long as the stock holds $70 because you don't want to miss a nice pop. Now here's a freebie for my hedge fund buddies (as you need a lot of equity and patience to play this one). Buy the Jan '08 $70s for $6.70, sell the Jan '09 $80s for $5.60 AND the Jan $70s for $1.70 AND cover yourself with the Jan $75s for .20. That gives you .60 in cash on a $0 investment. The strategy is very complex but generally, you hope it stays flattish but you are playing to sell for the premium each month but with some protection. If it goes up, you can roll it, if it goes down you don't care once you get past the first month. As a reference, the Jan '08 $80s are just $2.40 so your goal is to make another $1.80 (you made .60 taking the position) to cover your eventual buyout of the '09's but everything else is pure gravy. This allows you to play the insurance game while laughing at natural disasters! If Mr. B's comments boost Berkshire, then there are several other nice companies we can take a look at: Insurance is a game of inches and the whole sector has been very out of favor in the latest rally as sexier stocks have gotten all the attention. Just like an old boyfriend, investors will come running back to these old reliables as soon as they have a fight with their new squeeze. AFL is certainly famous enough and trades right in line with the industry in p/e (14.72) but is growing about 10% faster than most. May $45 are $2.05. If they ever stop spending money on advertising, their cash flow should skyrocket! I meant to write this last week and there's a post-it on my screen with PGR (car insurance) written on it. They got a Bernstein upgrade last week (c'est la vie) and stopped at the 5% rule at $24. These guys are NOT doing a good job of growing but they have been unduly punished for it and have fallen way behind the sector. Jan '08 $25s are $2.05 and I'm not selling against them until they test $25. PRU got away from us last week but CB has made such a mess of their year that they are getting no respect, despite trading at a 20% discount (p/e 10) and, at $20Bn, being a more attractive takeover target. They are buying back 5% of their stock so the Jan '08 $52.50s for $4.50 seem safe(ish) but I won't rest easy until they break the 50 dma at $52.75. I am dumbfounded that GNW is still at $32! They added 13% to the bottom line this year and project another 10% next year on about 8% more sales. They missed last Q and I sometimes wonder if my love of this old GE division clouds my judgment but I have to take the Mar $35s for $.75. They should have a tough time at the 200 dma with a death cross 50 dma at $33.75 but there are 9M shorts who will be in a 5 day "House of Pain" if they break it. According to Yahoo, this stock is 101% held by institutions. Good luck to the retail shorts getting out of those positions if it takes off... I'm in no hurry on this one as I will happily get other $35s once it breaks out! TWGP just came down to where I want it with the Jan $35s at .85 that were $2 just 2 months ago before a 48% increase in earnings caused the stock to drop 20% as the company lowered guidance by a penny (I know, people are idiots!). I'm very sorry I missed it then! ALL is being probed in CT for pulling new policies in CT, NJ and DE as they are looking to get out of the storm business. Don't they have the right not to insure? Well the way they are doing it is sneaky - they are requiring Connecticut homeowners to install hurricane shutters to maintain coverage. That way they get to say you left them, they didn't kick you out! As an insured I say Boo! to the evil corporation but, as a shareholder, I say "why insure people we might have to pay?" If they come down closer to $63 I want the July $65s, hopefully for $1.50.
 
 
 

Zero Hedge

France Moves in the Direction of Banning Cash

Courtesy of ZeroHedge. View original post here.

Submitted by Sprott Money.

..........Written by Nathan McDonald (click for original)

Long has the government waged war on the privacy and freedom of its citizens. Government has an insatiable appetite for more power and control. This is ultimately how it expands itself and exerts its dominance and ability to tax / steal the wealth of its people.

Increasingly, governments are becoming more interested in the ability of its citizens to spend uninhibited amounts of money in the form of cash. Cash, although fiat, at least grants the ability of some priv...



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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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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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