Posts Tagged ‘CAT’

Monday Market Movement – Do We Ever Go Down?

breadth

We all go down for a piece of the moment
Watch another burn to the death to the core
And the roadshow thrills pack the freaks and the phonies
Sing: now is now, yeah! – Rob Zombie 

There is just no way to win betting against this market!  

Well, actually, there is one way and that's betting that each pop is nonsense and tends to have a subsequent pullback intra-day but, long-term, the cumulative effect of all that low-volume pumping has been a rousing success, to say the least.  

As you can see from Andy Thrasher's S&P chart, there has been some amazing underlying deterioration since the July 4th weekend with the Advance/Decline line falling back to trend and stocks above their 200-Day Moving Average dropping 15% in 3 weeks.  Stocks above the 200 DMA is a fantastic leading indicator for downside move – ignore it at your own risk. 

TNXPeople are panicking into bonds, dropping the 10-Year Yield 20%, from 3.1% to 2.45% this year but it doesn't matter because Central Banksters are pumping SO MUCH MONEY into the Global Markets that there's enough to buy all asset classes simultaneously – something that is unprecedented in Financial History – what could go wrong?

Well, one thing that could go wrong is you putting your money into Mutual Funds.  As it turns out, in an S&P study of actively managed Mutual Funds, only 2 (two) out of 2,862 actually beat the S&P over ANY of the fund's lifetimes (limited to 12 months or longer).  

That's even worse than the average performace of hedge funds, which only averaged a 0.59% annual loss when compared to just putting your money directly into the S&P.

 This dovetails with a conversation we were having this weekend in our Member Chat Room, where I identified 4 trade ideas for a $50,000 Portfolio that only used 1/4 of the buying power to generate $365,512 in projected profits over the next 15 years using CONSERVATIVE options strategies designed to MATCH the S&P, not beat it.…
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Federally Faked Thursday – The Unhappy Median

Look at this chart:

LOOK AT IT!!!!  This is America, damn it!  We peaked out in earnings in 2000 and it's been downhill ever since.  Even worse, this is America AFTER the Federal Reserve spent $4 TRILLION to boost the economy.  This is America AFTER our Government plunged another $6 TRILLION into debt – supposedly to save jobs and support the economy.  

This is a DISASTER!  If this were the chart of a company you owned – you'd be selling.  If there were a board of directors, we'd be looking to make changes, right?  Actually, there is a sort of board of directors and, as is often the case with Corporate Management – they're the only ones making any money!  

Only in Washington DC and Dick Cheney's Wyoming are people in this country still making as much money as they were in the good old days (Clinton years).  The rest of the country is in various states of decline – some of it fairly drastic – and in big states like Ohio, Michigan and Illinois, where people are earning about 20% less now than they did 14 years ago.  

Our standard of living is in decline, especially when you consider that inflation is chewing into those lower wages from the other end as well.  How much more evidence can we possibly need that the Bush Tax cuts were a complete and utter policy failure?  Yet you will hear none of that in the MSM.  What TV station owner or newspaper & magazine publisher is going to tell you that they should be paying 20% more taxes than they are paying now?

There's a reason that, despite the BS Employment Numbers put up by the Administration, that the #1 concern of US voters is JOBS!  People may HAVE jobs (actually 20% of the families in our country have NO ONE employed at the moment) but, clearly, from an economic perspective – the jobs suck!  Even people lucky enough to keep their jobs through the crisis haven't had raises in a decade but, of course, they are too afraid to leave because we all know people who lost their jobs and didn't find…
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Too High Tuesday? 10 Bullish Trade Ideas that Made Over 1,200%

SPY 5 MINUTEThis is ridiculous.

As noted on Dave Fry's chart, the S&P made a new record high with narrow participation and essentially all of the gains were one big move in the Futures to reprice the index.  I said yesterday we have been getting 50% of the day's volumes in the close and yesterday was no different and that closing volume is all dumping into the ETF, IRA and 401K suckers that are forced to buy.  

We took a couple of big bats against the Dow's move up yesterday, adding a DIA put at $166.80 (see yesterday's Member Chat for details) as well as going long on DXD at $26.20 – both with leveraged options plays, of course.  

SPX WEEKLY

We still have plenty of bullish trades to protect but, when we bein to cash out our winners and start buying short plays on the index – you can tell the winds are changing.  Our 500% trade on DDM from Thanksgiving was scheduled to top out in April anyway – and we sold in May to go away.  

That trade was one of our "10 Trade Ideas That Can Make (and some have already made) 500% in a Rising Market" and I had just as much trouble convincing people to go long in November as I'm having convincing people it's time to cash out in May.  

Not all the trades are done, but a quick summary of those positions is:

  • ABX 2015 $13/18 bull call spread at $2.80, selling 2015 $15 puts for $2.05 for net .75, now $2.35 – up 213%
  • 8 QQQ Jan 2014 $75/80 bull call spreads for $3 ($2,400), selling 1 ISRG 2015 $300 put for $23.50 ($2,350) for net $50, now net $2,600 - up 5,100%


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Caterpillar Puts In Play

CAT – Caterpillar Inc. – Shares in the world’s largest maker of mining equipment are off 1.0% today at $82.86 after the company said global retail machine sales fell 12% in October from a year ago while sales of power systems declined 9%.

Options on CAT are more active than usual, with volume above 37,000 contracts versus the stock’s average daily volume of around 26,100 contracts. Trading in Caterpillar put options is outpacing that of calls, with the put/call ratio nearing 2.25 as of the time of this writing. The most traded options on CAT today are the Dec 06 ’13 $81 strike puts, with roughly 8,700 lots in play against open interest of 140 contracts. Time and sales data suggests most of the volume was purchased at an average premium of $0.53 each during the first half of the session. Put buyers stand ready to profit at expiration in two weeks in the event that Caterpillar’s shares slide 3.0% from the current level to trade below the effective breakeven point at $80.47. 


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Caterpillar Call Buyers Bet Stock Extends Gains Next Week

 

Today’s tickers: CAT, QLGC & CPRT

CAT - Caterpillar, Inc. – Trading traffic in weekly call options on the world’s largest maker of machinery indicates some traders are betting Caterpillar’s shares, up 3.75% at $87.43 as of 12:50 p.m. ET on Friday, extend gains next week. Bullish bets in weekly contracts expiring next Friday are heaviest at the May 10 ’13 $87.5 and $90 strikes. Upwards of 4,000 calls changed hands at the $87.5 strike, with the bulk of the volume purchased in the early going at an average premium of $0.51 apiece. The price tag on the $87.5 weekly calls has roughly doubled to $1.03 as of the time of this writing, with the stock sitting at the highs of the session. Traders long the calls profit at expiration next week as long as CAT’s shares exceed the average breakeven price of $88.01. More than 2,000 of the $90 strike weekly calls have traded as well. It looks like most of the contracts were picked up this morning at an average premium of $0.13 each. Premium on the $90 calls expiring next Friday has also roughly doubled since this morning, with the last traded price on the contracts up at $0.25 apiece. Overall volume in CAT options is above 51,000 contracts, topping the stock’s average daily volume of around 46,700 contracts, with the call/put ratio up above 2.0.

QLGC - QLogic Corp. – Shares in QLogic are bucking the trend today, sliding more than 7.0% to $9.71 during the first half of the trading session even as the S&P 500 Index and the Dow Jones Industrial Average rally to fresh highs. QLGC had been participating in the run up in U.S. stocks earlier this year, rising nearly 25% from the start of 2013 to as high as $12.35 in mid-March. During the seven weeks since then, however, shares in the name have dropped more than 20% to the current level. QLogic’s shares slipped to a fifteen-week low today after a number of analysts lowered target prices on…
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Wednesday Worries – AAPL Makes $76,103 While You Read This

$76,103 – That's not sales, that's profit!  

Every minute of every day, AAPL is making $76,103 (at $40Bn a year) on the sale of $316,120 worth of products.  No company on Earth comes close to that kind of metric and, overall, the stock's performance clearly indicates that but, if you listen to the MSM, you would think AAPL is finished.

We had a nice, in-depth discussion about AAPL in Member Chat this morning and we not only concluded it's still a buy but we came up with a lovely spread that has the potential to turn $3,000 into $45,000 between now and Jan 2015 if AAPL simply holds $600 – needless to say we're very proud of that as it's always nice to have a trade or two in your portfolio that returns 1,500% and we rarely get a chance to do them with a blue-chip stock like AAPL.  

Note in the above chart, that AAPL is still a relative outperformer this year – shown priced against HPQ, DELL, INTC, IBM, CAT and ISRG – all good companies that have simply failed to keep up.  We also like HPQ at this level, now $14.30 as their REDUCED guidance has them earning $3.62 per share next year after earning $4.05 this year and that's still 25% back on your money, which sure beats TBills and we're not even counting the $18Bn in cash they have on hand, which is quite a lot when you consider that their entire market cap is now just $28Bn.  Small wonder HPQ spent $9Bn buying back their own stock last year, when it was priced 100% higher. 

HPQ is a pretty good candidate for a buy/write, where we Buy the stock for $14.30 and Write 2014 $15 puts and calls (sell short) for $5.50 and that nets $8.80 on the trade and, if HPQ is below $15 in Jan 2014, then another round of shares will be put to you at $15 for an average entry on 2x of $11.90, which is 17% below the current price and, if HPQ is over $15 in 16 months, then you get called away at $15 for a $6.20 profit on cash (75%).  Buy/writes are our favorite tools for making long-term entries – see "How to Buy a Stock for a 15-20% Discount."

As we mentioned INTC in the above chart, let's look at a similar…
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Caterpillar Put Spread Preps For Further Downside Next Week

 

Today’s tickers: CAT, HAS & INTC

CAT - Caterpillar, Inc. – Shares in the world’s largest manufacturer of construction and mining equipment are getting some relief today, trading up 1.5% at $80.84 this morning as U.S. stocks snap a six-day losing streak. Caterpillar’s shares, hit hard in recent months on concerns of a global slowdown, are down 30% off the February 24th 52-week high of $116.94. Trading traffic in options with one week remaining to expiration suggests, however, that the rally in CAT’s shares may be short lived and the shares have further to fall in the near term. It looks like one trader purchased a 1,500-lot July $72.5/$77.5 bear put spread for a net premium of $0.71 per contract. The spread positions the strategist to profit in the event shares in Caterpillar slide 5% to breach the effective breakeven price of $76.79, with maximum possible profits of $4.29 per contract available given a 10% pullback in the stock by expiration. Shares in CAT last traded below $72.50 back in October 2011. The company is scheduled to report second-quarter earnings ahead of the open on July 25th.

HAS - Hasbro, Inc. – Put options are in play on game maker Hasbro this morning ahead of the company’s July 23rd second-quarter earnings report. U.S. stocks are broadly moving higher today, enjoying their biggest gains of the month thus far, but Hasbro failed to join in the rally with its shares trading 1.1% lower on the day at $32.52 as of 11:50 a.m. in New York. Traders positioning for further downside in the stock purchased 1,500 puts at the Aug. $32.5 strike for a premium of $1.33 apiece. Put buyers stand prepared to profit should the price of the underlying decline another 4.2% to breach the average breakeven point at $31.17 by August expiration. Bearish options are also in play at the Aug. $30 strike, with around 1,000 puts purchased at an average premium of $0.45 each.…
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Friday Failure – Weak Bounce Levels Turn Into Resistance

Resistance is, unfortunately, not futile for our indices.  

On Monday we discussed our expectations for a 2% weak bounce for the week, which would be a 20% retrace of the 10% drop I had predicted we'd have way back (and a bit early) in March.  That constitutes a WEAK bounce and not a rally and they almost fooled us on Monday by taking back most of that 2% on day one but, since then – it's been pathetic and we've essentially done nothing the rest of the week.  

The levels we were looking for were laid out in Monday's Member Chat and in Tuesday morning's post and were:

  • Dow – 12,750 (12,540 is 20% retrace/weak bounce), now 12,529 – off by 11
  • S&P – 1,343 (1,319), now 1,320 – off by 1
  • Nas – 2,900 (2,840) , now 2,839 – off by 1
  • NYSE – 7,720 (7,560), now 7,552 – off by 8 
  • RUT – 780, (765), now 766


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Bulls And Bears Take To CAT Options As Shares Extend Pullback

Today’s tickers: CAT, RRGB & ROC

CAT – Caterpillar, Inc. – Shares in machinery maker, Caterpillar, Inc., are down the most in the Dow Jones Industrial Average today, trading more than 4.0% lower this afternoon at $88.08 as of 12:15 p.m. in New York. The stock has fallen roughly 25.0% in the past two months after reaching a record high of $116.95 at the end of February. June expiry options trades initiated on CAT this morning suggest there are some strategists preparing for a recovery in the price of the underlying while others position for further bearish movement in the stock through expiration next month. A 1,500-lot June $80/$87.5 debit put spread established at a net cost of $2.20 per contract makes money if shares in Caterpillar decline another 3.2% to trade below the effective breakeven price of $85.30 by June expiration. Maximum possible gains available on the spread amount to $5.30 per contract should the stock plunge 9.2% to $80.00 in the next four weeks. In contrast, June $92.5/$100 call spreads established for a net premium outlay of around $1.55 each look for shares in Caterpillar to rebound sharply come expiration day. Finally, nearer term plays in the fresh weekly options issued on the stock were largely bearish in the first half of the session, with traders buying puts at the May 25 ’12 $80, $82.5 and $85 strikes that increase in value if CAT’s shares extend losses next week.

RRGB – Red Robin Gourmet Burgers, Inc. – It looks like traders that sold Red Robin call options ahead of the restaurant chain operator’s disappointing first-quarter earnings report can have their burger and eat it too as shares in the name take a sharp turn to the downside. Shares in Red Robin Gourmet Burgers are off their lows of the session, trading down 11.9% at present to stand at $31.50 as of 1:20 p.m. ET. A review of open interest in the May $35 strike call, currently at 814 open positions, suggests some 478 of the contracts were sold at an average premium of $1.38 apiece between May 3rd and May 8th. With shares in the name taking a big hit today and with expiration on the horizon, it’s no surprise to see these contracts are now almost worthless. The far out-of-the-money May $35 strike call is trading at a premium of $0.05 each this afternoon.

ROC – Rockwood
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Free-Falling Thursday – Facebook Faces Fatal Friday Follow-Through

What a week to do an IPO!

Will Facebook save the markets tomorrow with a successful roll-out of the largest IPO of all time or will it be the straw that breaks the camel's back, with a disappointing open that sends the Nasdaq off a cliff along with their entire over-priced sector?  Either way – this is going to be fun.

We can argue the merits of Facebook's value (or lack thereof) all day long but, scam or not, it's very likely FB will set off a buying frenzy in the space and we finish the week off with a bang. If that doesn't happen – I will be very, very bearish but from what I'm hearing and the way they are extending the offer and raising the price – it's way oversubscribed.  Also, we have to consider that people are cashing out 1-5% of their holdings to raise cash for FB on Friday – sure it's moronic, but that's what people do so you have to put yourself in a position of someone who wants to put 5% of your portfolio in to Facebook (the way you wish you had put 5% into Google at $80 when they IPO'd) tomorrow – what would you be doing with the rest of your portfolio today?  

EZU WEEKLYMeanwhile, the rest of the World is falling apart with Europe turning sharply lower as Spain sells bonds at record high yields (5.106% for 4-year notes) this morning after announcing that their Q1 GDP was -0.4% at the same time as Moody's indicates they will be cutting the credit ratings of 21 Spanish Banks this evening AND, to top it all off – there is a run on Bankia, which Spain nationalized last week – with $1.3Bn pulled from accounts this past week!  This sent Spain's markets down 1.6% and Italy (who is next) fell 2%, sending the Euro down 1% to $1.2668 and the Pound followed it down to $1.5832 (while EUR/CHF holds steady at 1.2009 in the most blatant currency manipulation ever witnessed).

Wow – that's a lot of bad stuff!  Maybe too many bad things – as in a bit suspicious that all this bad stuff happens at once – as if maybe someone WANTS to force a panic bottom?  If so, I applaud them – we certainly needed to shake things up a little
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Phil's Favorites

More Confusion: EU Tells Cameron To Hurry Up With Article 50 As Merkel Says No Need To Rush

Courtesy of ZeroHedge. View original post here.

While the political chaos slamming the UK over the weekend, will be its own chapter in the history books one day, with UK's dynamic leadership duo of Cameron and Osborne suddenly nowhere to be seen while the Labour party is undergoing a rebellion even as Boris Johnson has yet to make a concerted push to claim the victory the British people unexpectedly handed him, things in Europe are no better. Case in point, Europe's collective (or rather not so much) on the next major catalyst in the UK's exit from the Eurozone, which as we explained previously, i...



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Zero Hedge

The Fed's Rate Hike Plans Are Now "In Tatters" - What Wall Street Thinks

Courtesy of ZeroHedge. View original post here.

Any “faint prospect” of a Fed July rate increase has entirely vanished, ING economist Rob Carnell wrote in note adding that the longstanding ING call for Sept. hike looks to be “hanging in tatters.”  Here are more comments, courtesy of Bloomberg, from Wall Steet's so-called experts, none of whom predicted the actual a Brexit outcome, about U.S. monetary policy outlook following the outcome of the U.K. referendum.

BofAML (Ethan Harris, others)

  • Next Fed hike now seen in Dec., not Sept.
  • Brexit vote is another in “long str...


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ValueWalk

Warren Buffett & Bill Gates Discuss Success, Mistakes and Work/Life

By Jacob Wolinsky. Originally published at ValueWalk.

In this discussion, students from the University of Nebraska got to ask Bill Gates and Warren Buffett questions of their choosing. The questions vary widely and can be found below. Warren Buffett and Bill Gates are two of the richest people in the world and their answers and advice are invaluable to anyone looking for success.

Date: September 2005
Location: University of Nebraska

Audio is out of sync in parts.

Video Segments:

0:00 Start
0:01 Intro
3:14 Start of speech
...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Central banks ready to cooperate after Brexit result (Business Insider)

Central banks are ready to cooperate to support financial stability in the wake of Britain's vote to leave the European Union, the Bank for International Settlements said on Saturday.

Central bankers gathered at the organization's global economy meeting in Switzerland discussed the implications of the referendum.

How Americans spend their day reflects a shifting economy and population (Wall Street Journal)

Americans overall are working less and sleeping more than they were a decade ago, trends that point to an aging p...



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Chart School

Best Stock Market Indicator Update

Courtesy of Doug Short's Advisor Perspectives.

We continue to receive requests for updates to the "Best Stock Market Indicator", which used to be a regular guest post from John Carlucci. Here is an update of the "Carlucci" indicator along with a summary of John's explanation on how he uses it.

As John described it: "The $OEXA200R (the percentage of S&P 100 stocks above their 200 DMA) is a technical indicator available on StockCharts.com used to find the "sweet spot" time period in the market when you have the best chance of making money."

Latest Indicator Position

According to this system, the market ...



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Kimble Charting Solutions

2007 pattern being repeated right now? Another "Push Away???"

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

The NYSE index kissed the underside of dual resistance at (1) back in 2008. Once resistance held, a big push away from it took place and sellers stepped forward.

NYSE creating a similar pattern again at (2)???

This would NOT be a good place for the Risk On trade if the broad market starts “pushing away” from dual resistance at (2).

Full Disclosure- ...



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Mapping The Market

Thoughts on Brexit

I have mixed feelings about Brexit today. Clearly the European institution need reforming. The addition of so many countries in the last 20 years has created a top heavy administration. The Euro adds more complexities to the equation as the ECB policies cannot fit every country's problem. On the other hand, a unified Europe has advantages as well – some countries have benefited from the integration.

For Britain, it's hard to say what the final price will be. My guess is that Scotland might now vote for independence as they supported staying in Europe overwhelmingly. Northern Ireland might be tempted to leave as well so possibly RIP UK in the long run. I was talking to some French people and they were saying that now there might be no incentive for France to stop immigrants from crossing over to the UK like they do now and simply allow for travel there and let the UK deal with them. The end game is not clear to anyone at the moment....



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Digital Currencies

Bitcoin Tumbles 10%

Courtesy of ZeroHedge. View original post here.

One week ago, when bitcoin first crossed above $700 on the seemingly insatiable Chinese buying which we forecast last September (when bitcoin was trading at $230) would take place as a result of China's capital controls (to much pushback by the "mainstream" financial media), we tried to predict what may happen next. We said that "it could go much higher. That said, anyone who bought last September when the digital currency was trading at $230 may be advised to take some profits, and at least make...



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OpTrader

Swing trading portfolio - week of June 20th, 2016

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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All About Trends

Mid-Day Update

Reminder: Harlan 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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Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



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Promotions

PSW is more than just stock talk!

 

We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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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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