by phil - August 27th, 2014 8:09 am
2,000.02 – We did it!!!
Unfortunately, we can't afford to pop the champagne because the 0.03 we spend on it would put us back under – so we'll watch and we'll wait another day before celebrating a milestone we've been expecting since last week (see "Will Jackson Hole Give Us S&P 2,000?") and we went with that TNA trade we discussed in yesterday's post to cover the expected bull run.
We also picked up long plays on BAC and DBA in our Live Member Chat Room and BAC has already rocketed on the settlement news but DBA is only just making the turn and still makes an excellent play that we'll be adding to our Buy List (Members Only) along with 10 more picks we'll be making this week.
As you can see from Dave Fry's SPY chart, we have set a new record for this decade for low volume on a full market day. Last Christmas Eve was 43M on a half day, for example, but the Christmas Eve before that was 53M and those were the lowest two days I could find before I got bored looking (very scientific).
Anyway, the point is that 38.9M is VERY LOW VOLUME – so low that paying attention to a dot on a chart that is drawn in such a light touch is just silly. That makes yesterday's jaunt over 2,000 completely meaningless and more so with the additional evidence of the intraday action which, as Dave notes, could not have been more manipulated.
This is why we have been pressing our bear bets. Even though we have peace in Gaza and peace in Ukraine (for today) and even though we've forgotten about Europe's negative GDP and China's plunging property prices and Ebola – we still couldn't find more than 38.9M buyers for SPY – that's just sad!
Speaking of China, last Monday, for FREE, right in the morning post, we picked the following on FXI:
We shorted India last week (EPI) and now FXI has got my mouth
by phil - July 16th, 2014 7:21 am
Did you make your $1,000 yesterday?
You would have if you read yesterday's morning post (subscribe here), where we picked the Russell Futures (/TF) short at 1,160 saying: "If the Russell FAILS 1,160, we'll be happy to flip short for another ride down to 1,150." As you can see, we had plenty of time to get our planned entry at 1,160 and, as we expected, Yellen's speech disappointed and the markets sold off a bit – easy money!
We even flipped back to bullish in the afternoon and, at the beginning of our Live Webinar (1pm), we were able to demionstrate a very quick $250 profit taking the Russell Futures long off that same 1,150 line. In fact, you can see the big volume spike that came with our live call right on the chart!
This morning, news of a deal between AAPL and IBM has both companies showing 2% gains pre-market. For IBM, that's $5 and that's adding 40 points to the Dow Futures (/YM) pre-market and for AAPL, that's $2 and AAPL is 20% of the Nasdaq so 20% of 2% is 0.4% added to the Nasdaq from AAPL alone pre-market plus a nice effect on the S&P from both of those heavyweight stocks.
Under the agreement, IBM's employees will provide on-site support and service of Apple products inside companies, similar to the AppleCare service that Apple sells to consumers. IBM said it planned to make more than 100,000 employees available to the Apple initiative. It is a rare partnership for Apple, which historically has avoided such alliances.
"This is just the beginning," said Ms. Rometty, citing a statistic that most smartphones inside companies are used only for email and calendar. She said the companies hope to create new, serious business applications.
The companies said Apple and IBM engineers are together developing more than 100 new apps for various industries. The first batch of apps is expected to be available in the fall when Apple releases the next version of its mobile software, iOS 8. "Apple is not an enterprise company, but that's…
by phil - April 25th, 2014 8:27 am
Did you see the frightened ones?
Did you hear the falling bombs?
Did you ever wonder
Why we had to run for shelter
When the promise of a brave new world
Unfurled beneath a clear blue sky? - Pink Floyd
What were we excited about?
With 204 of the S&P 500 now reporting 68% (139) have beat earnings estimates BUT only 44% (90) have beaten on revenues. It's yet another year of cost-cutting and share buy-backs to boost earnings per share with no actual growth in real earnings yet the market, overall, is up 35% from where it was last year on a 2.9% overall growth in EPS. - THAT'S FRIGGIN' CRAZY!
If we back out BAC, who had the crap fined out of them this Q, then the S&P earnigs are up a more respectable 4.9% but, on the other hand, that includes superstars like AAPL, who dropped $13Bn on the S&P by themselves, and it's very unlikely the rest of the S&P will bring up the curve. In fact, Zacks is now estimating that overall earnings will be DOWN 0.9% for the quarter compared to last year and DOWN 4.6% from last quarter.
No wonder we are seeing the continued exodus of "smart money," who sell in volume into every rally we have. What's getting scary (and keeping us bearish) is that now we aren't even making gains on weak volume. Yesterday's move up was 100% due to AAPL, which gained over 8% on the day.
Since AAPL is 15%+ of the Nasdaq, that 8% gain should have popped the Nasdaq 1.2% and the rally in AAPL suppliers should have lifted the index even more. But it didn't. The Nasdaq was only up 0.8%, so it would have been down 0.5% without AAPL's contribution and even further without the rally in suppliers and the sectors that support them.
As I said to our Members yesterday ahead of the bell, Apple's gains are Samsung and others' lossses, NOT an indication of strength in the…
by Option Review - November 22nd, 2013 5:20 pm
by Option Review - December 17th, 2012 2:18 pm
by Option Review - December 5th, 2012 2:51 pm
Today’s tickers: BAC, WWAV & SFD
BAC - Bank of America Corp. – Bank of America is one of the best performers in the Dow Jones Industrial Average this morning, with shares trading up 3.8% on the session to $10.28, the highest level since July 2011. Heavy call buying across multiple near-term expiries indicates some options traders are positioning for shares in the name to extend gains through year end. Overall options volume on BAC is above 400,000 contracts as of 11:50 a.m. ET in New York, versus the stock’s average daily options volume of 295,930 contracts. The bulk of the trading traffic is in Bank of America call options, with the call-to-put ratio up above 3.5-to-1 in the first half of the session. Fresh interest in out-of-the-money calls with two full trading sessions remaining to expiration attracted buyers this morning, with nearly 25,000 calls in play at the Dec. 07 ’12 $10.5 strike against open interest of 2,940 contracts. Time and sales data suggests most of the $10.5 strike calls were purchased for an average premium of $0.03 apiece. Interest in the Dec. 14 ’12 $10 and $10.5 strike calls is also on the rise this morning. Traders snapped up in- and out-of-the-money Dec. 21 ’12 expiry calls as well, paying an average premium of $0.36 apiece for around 21,000 of the $10 strike calls, and shelling out $0.05 per contract for roughly 10,000 calls at the $11 striking price, as of the time of this writing.
WWAV - WhiteWave Foods Co. – Options on dairy and dairy alternative food products provider, WhiteWave Foods Co., are more active than usual today, with noteworthy volume building in the Jan. 2013 expiry puts. Shares in the maker of Silk® soymilk, almondmilk and coconutmilk, and Horizon Organic milk and dairy products, are up 0.80% on the session at $15.77 as of 12:15 p.m. ET, helped higher in part by analyst coverage initiated on the stock at a number of firms…
by phil - October 17th, 2012 7:31 am
Let's not make this more complicated than it needs to be.
A weak Dollar lifts the markets and, this morning, the Dollar fell from 79.50 at yesterday's close to 79 at 6:45 and that's why, despite earnings disappointments from both INTC and IBM, the Futures are up slightly 3 hours before the open. As you can see from the chart on the right, to say there's a strong inverse correlation between the Dollar and the S&P is quite the understatement. Over the longer run – the effect tends to wash out but, over the short run, it's an almost perfect match.
Of course, this also has a very direct effect on commodity pricing and part of the reason for the Dollar's big sell-off last night was the much-better-than-last-time performance of Barack Obama in the second Presidential Debate as the future of the Fed and all that free money hangs in the balance.
After the first debate, two weeks ago, Romney clearly won and has made it known that he will kick both Big Bird and Big Ben to the curb as soon as he gets in office – that sent the Dollar up from 79.10 to 80.21 (up 1.4%) last week and dropped the S&P from 1,460 to 1,430 (2%). After last night, Romney looks to be back off the table and that leaves the Dollar to resume it's downward slope – giving another lift to the markets.
At the same time, Moody's left Spain's credit rating above junk this morning and that's lifting the Euro to $1.31 and the Pound is moving in lock-step at $1.61 BUT the Yen dropped 0.5% to 78.63 and it's not likely the BOJ will let the Dollar slip below 79 as that makes Toyotas and Sonys more expensive just ahead of the holidays. Also, the Nikkei finally got back to 8,850 last night and you know they hate to lose that line.
So get set for some heavy-duty Global Market Manipulation by our Central Banksters as everyone but Europe tries to race for the bottom. Europe, interestingly enough, doesn't mind a strong currency as they are fuel and goods importers and most of the goods they export are "luxury" class and less susceptible to currency fluctuations. With strong intra-zone trading the backbone of the EU economy, it doesn't matter where the Euro is trading from that perspective either and, of…
by phil - August 21st, 2012 6:58 am
Here we go again (again)!
Yep, that's what I said last Tuesday and the Tuesday before that because Tuesday is a day they push the Futures higher and ditch the Dollar and tell you that this time it's different because of the same rumors they had the Tuesday before only this week – the data is getting worse and worse, as we know is better, right?
Last Tuesday we set levels to capitulate and go fully bullish at Dow 13,464, S&P 1,428, Nasdaq 3,060, NYSE 8,160 and Russell 816 and, as of yesterday's close we had the Nasdaq and the Russell over their marks needing just one confirmation to make it 3 of 5 and begin to flip our short-term portfolios (the $25KPs) bullish. We are soooo close but, so far – no cigar.
While we waited, we looked at some upside hedges that would do well if the market continued higher. Just as we get downside protection when we're bullish – we use upside protection when we're bearish and I suggested taking 5% or 10% positions in aggressive upside plays to help balance a bearish portfolio against – well against exactly what happened in the past 7 days. Our trade ideas were:
- 2 FAS Oct $105/115 bull call spread at $2, selling 1 BBY 2014 $18 puts for $3.25 for net .75, now $1.15 – up 53%
- 2014 SHLD $32.50 puts sold for $7.50, now $6.40 – up 15%
- 6 EWJ Jan $9 calls at .53, selling 1 BBY 2014 $18 put at $3.25 for a net .07 credit, still net .07 credit – even
- TNA Oct $55/61 bull call spread at $2.50, selling Oct $42 puts for $1.90 for net .60, now $1.80 – up 200%
The BBY puts jumped over 20% yesterday, from below $3 to $3.75 and that killed two of our trades (and worse today after earnings!), that were up significantly in Friday's update (which is why we take quick gains like that off the table). The good news is the EWJ play gives us a nice, new entry at the same net price so that one is still good and, of course, we are done with TNA after making 200% in a week and we'll find a fresh horse for that money.
by phil - August 13th, 2012 8:29 am
Think Mcfly, THINK!
Forget the rhetoric, forget what Cramer says – or any of the other idiots on what used to be accurately called "the idiot box." Just look at this one, simple chart (thanks Doug Short) and tell me – why on earth would the Fed step in and take emergency action when the market is at a multi-year high?
Have they EVER done this before? EVER? Has ANY Central Bank EVER taken emergency liquidity measures when their stock market was at or near their all-time highs? And look at the interest rates (the red line) – there's nowhere to go folks – not unless the Fed is going to start PAYING US to borrow money. In which case – sign me up for $10Bn…
This is the point that was made this week on the cover of Stock World Weekly, and my comments in "The Week Ahead" section were:
by phil - August 6th, 2012 8:30 am
Nothing happened this weekend and I guess that's better than something because most somethings that are likely to happen are bad and the only something that MIGHT happen that would be good is not all that likely to happen – not soon anyway. So better to have nothing happen so we can hope that something will happen than to have something happen that turns out to be nothing after all, right?
Welcome to 21st Century Investing. Please do not make the mistake of discussing the actual BUSINESS PROSPECTS of the companies you buy and sell with an average hold time of 22 seconds – that's so 1900's. It's rumors, not earnings, that power the modern markets so you'd better have your ears on the ground and keep your nose out of the financial statements – making money is so passe' – especially since money isn't worth the paper it's printed on anyway. What matters is how much FREE MONEY our Central Banksters will give us to play with today. Then we can have fun, Fun, FUN 'till Bernanke takes our T-Bills away.
This morning "ECB Officials" said that the Central Bank could intervene and buy the bonds of struggling euro-zone countries without unanimous approval, raising hopes that a bond buying program is still a possibility, and offsetting the disappointment caused by the bank's President Mario Draghi on Thursday. This is not new information but it's treated as such by Uncle Rupert's WSJ, who need a strong market as they look to split the company so Murdoch and his paper have Billions riding on a positive market environment – not that that would influence their reporting of course – allegedly.
That was enough to get the Asian markets excited – again – and the Asian markets closing higher was enough to give the EU a good open (even though the reason the Asian markets went up was nothing that would have gotten Europeans to buy again but – they don't know that) and the EU markets going higher helps our Futures go higher and that allows Cramer to go on CNBC this morning and tell you to BUYBUYBUY because, as Cramer tells us, the market is going to go higher because it went higher and higher is higher than higher so…