by Phil - June 1st, 2010 4:19 pm
Today’s tickers: EEM, PFE, XLF, DELL, NWL, QCOR, SHOO, EWZ, SLB, DOW & TEX
EEM – iShares MSCI Emerging Markets Index ETF – Contrarian options activity on the EEM, an exchange-traded fund designed to produce investment results that correspond to the price and yield performance of the MSCI Emerging Markets Index, points to optimism the fund’s shares may rebound sharply by July expiration. Shares of the emerging markets ETF are down 1.10% to stand at $37.68 just before 3:30 pm (ET). One bullish strategist positioning for a rally in the next couple of months purchased a ratio call spread on the fund. The investor picked up 3,000 calls at the July $38 strike for an average premium of $2.05 each, and sold 6,000 calls at the higher July $41 strike for a premium of $0.73 apiece. The net cost of the transaction amounts to $0.59 per contract. The trader responsible for the ratio spread makes money as long as shares of the EEM rally 2.41% to surpass the effective breakeven price of $38.59. Maximum available profits of $2.41 per contract pad the investor’s wallet if, by expiration, shares of the emerging markets fund rally 8.80% to $41.00. Shares of the EEM last traded at $41.00 back on May 4, 2010.
PFE – Pfizer, Inc. – Shares of the research-based global pharmaceutical company earlier rallied slightly to an intraday high of $15.42, but slipped lower in afternoon trading to stand 0.40% lower on the day at $15.17 as of 2:45 pm (ET). Bullish options activity took place on the stock despite the slight share price erosion suggesting one investor expects Pfizer’s shares to rebound sharply by September expiration. The optimistic individual purchased a debit call spread, picking up roughly 4,000 calls at the September $17 strike for an average premium of $0.30 each, and selling about the same number of calls at the higher September $19 strike for an average premium of $0.06 apiece. The investor paid a net $0.24 per contract to establish the spread. Pfizer’s shares must rally 13.65% over the current price of $15.17 in order for the investor to break even on the transaction at $17.24. Shares must surge 25.25% to exceed $19.00 before the trader accrues maximum available profits of $1.76 per contract.
XLF – Financial Select Sector SPDR – A put spread on the XLF, an exchange-traded fund designed to yield investment results that correspond…
by Chart School - May 24th, 2010 2:34 pm
Courtesy of Allan
The look of love is in your eyes
A look your smile can’t disguise
The look of love is saying so much more than just words could ever say
And what my heart has heard, well it takes my breath away
This is the 60_minute DJIA, still entrenched in a short-term SELL, despite market strength over the past couple of days.
Same holds true for the 240_minute DJIA, still well into SELL MODE.
I consider this the most important of the three charts. It’s a Daily DJIA that suggests the decline of the past few weeks is unfinished. Note that there are several hundred DJIA points to go before this Daily trend is even threatened. That’s where the 60 & 240 minute charts come in, early warning systems which haven’t yet been triggered.
Allan’s “Trend Following Trading Model,” is based on his trend-following trading system for buying and selling stocks and ETFs. Most trades last for weeks to months. Allan’s offering PSW readers a special 25% discount. Click here. For a more detailed introduction, read this introductory article.
by ilene - May 20th, 2010 6:16 pm
Courtesy of Jr. Deputy Accountant
Listen, it’s not THAT unrealistic, look at the Dow from March 2009 to now! It’s a miracle!
Schwarzenegger economic adviser David Crane writes about the bizarre situation in WSJ saying in 1999, then governor Gray Davis signed into law a bill that made looting California legal and gave state pensioners quite a boost in income based on completely unrealistic projections of fund performance (you know, the sort of stuff prospectuses warn about).
WC Varones shares a bit of CalPERS math (via WSJ):
What Calpers failed to disclose, however, was that (1) the state budget was on the hook for shortfalls should actual investment returns fall short of assumed investment returns, (2) those assumed investment returns implicitly projected the Dow Jones would reach roughly 25,000 by 2009 and 28,000,000 by 2099, unrealistic to say the least (3) shortfalls could turn out to be hundreds of billions of dollars, (4) Calpers’s own employees would benefit from the pension increases and (5) members of Calpers’s board had received contributions from the public employee unions who would benefit from the legislation. Had such a flagrant case of non-disclosure occurred in the private sector, even a sleepy SEC and US Attorney would have noticed.
Hahahahahahahahaha a 28,000,000 Dow by 2099! Now that’s funny.
F%$k schools, f&*k roads, f*%k social services, as long as our state employees are taken care of, what the hell do we need the rest of that sh*t for?!
See also: Mish’s Social Unrest Spreads to Slovenia and Spain; Images Around the Globe; US Not Immune to Protests
by ilene - May 6th, 2010 4:11 pm
Courtesy of Mish
Treasuries and the US dollar both rallied hard today as panic broke out in Greece and equity markets worldwide.
Video of Greek Riots
That video is from yesterday. Tensions rose again today.
At one point the S&P futures fell all the way to 1056 from an opening at 1163. I have seen these kind of days close green, but the treasury market sure isn’t buying this rally.
Yield Curve as of 2010-05-06 3:15PM EST
Bullish Flattening of Yield Curve
That chart shows a bullish flattening of the yield curve as I expected. Those expecting a bearish flattening (yields rising) got their clocks cleaned today as treasury bears were slaughtered.
by ilene - May 5th, 2010 6:28 pm
Courtesy of Charles Hugh Smith, Of Two Minds
I recently wrote about the possibility of $9/gallon gasoline in the U.S. $8/gallon gasoline is already a reality for some global consumers.
Correspondent Bram S. from The Netherlands recently submitted this insightful response to Adaptation, Habituation, Consumption and $9/Gallon Gasoline.
Bram observes that gasoline is already $8/gallon (when converted from liters priced in euros) in The Netherlands, yet auto owners still spend hours every day commuting to work.
And this is a small nation with an extensive (if expensive) pubic transit system.
To the degree that every dollar/euro/quatloo spent on petrol/diesel is a dollar/euro/quatloo which is not available to be saved or spent on other goods/services, it is in effect a tax (notwithstanding the high taxes already tacked onto petrol/diesel in most of the EU nations).
Why would people continue to drive despite massive financial disincentives to do so? Could the high cost of housing be a factor, as Bram suggests? Or is personal transport so addictive that we are like the lab rats who famously starved themselves to death by continually pressing the button which released more cocaine for their "enjoyment"?
That experiment may be apocryphal, and I mention it only to suggest that there are clearly powerful emotional attractors involved in our decisions to own and drive autos. That is, it is not only a financial decision. But could the economy/society be modified structurally to bring work and home closer together, or to at least ease the financial and social decisions to move the two into close proximity?
Here is Bram’s informative commentary:
I read your story about fuel prices today. Here in the Netherlands the fuel prices are skyhigh, but everyone is still driving his metal cubicle and waiting patiently in traffic jams. Talking about the rise of hidden taxes. In 1993 it was 46.1% tax. Now in 2010 it is 72% on gasoline.
Gasoline Excise Tax (Netherlands)
(If you are using the Google Chrome browser, just click the "translate" button in the top banner to read the entry in English)The price per liter gasoline today is EUR 1.579 of which EUR 1.14 is tax….. In dollars per gallon: 7.95. Almost your estimation but no
…
by Option Review - May 4th, 2010 4:08 pm
Today’s tickers: GE, XLE, DOW, BP, SKX, IYR, ZION, RIG, AA & NTRI
GE – General Electric Co. – Shares of diverse conglomerate, General Electric Company, slipped 3.85% during afternoon trading to stand at $18.52 with one hour remaining in the session. Although a great deal of bearish activity took place on GE today, there was one sizeable contrarian options play on the stock that stuck out like a sore thumb. One investor, who apparently does not anticipate an all-out collapse in the price of the underlying stock, shed 19,000 puts at the December $14 strike to pocket a premium of $0.52 per contract. The trader keeps the full amount of premium received on the put sale, which adds up to a grand total of $988,000.00, as long as GE’s shares trade above $14.00 through expiration day in December. The investor receives the premium in exchange for bearing the risk that shares of the underlying stock do not exceed $14.00 through expiration. If the December $14 strike puts land in-the-money at expiration, the trader is apparently willing to have 1.9 million GE shares put to him at an effective price of $13.48 apiece. Shares would need to plummet 27% from the current price of $18.52 before the put-seller starts to amass losses beneath the breakeven share price of $13.48. Options implied volatility on General Electric Co. is up 15% to 31.94% ahead of the closing bell.
XLE – Energy Select Sector SPDR ETF – Two options strategies representing opposing sentiment on future share price moves for the XLE were enacted today in the June contract. One of the transactions, a ratio call spread, is bullish and positions one investor to benefit should shares of the underlying fund rally sharply by expiration. The other trade, a short straddle, yields maximum benefits to the responsible party if shares settle at $59.00 by expiration. Shares of the XLE, an exchange-traded fund that seeks investment results which correspond to the price and yield performance of the Energy Select Sector of the S&P 500 Index, fell 2.75% to $58.93 as of 3:15 pm (ET). The bullish trader responsible for the ratio call spread purchased 3,500 calls at the June $61 strike for an average premium of $1.36 apiece, and sold 7,000 calls at the higher June $64 strike for roughly $0.49 apiece. The net cost of the ratio spread amounts to $0.38 per contract, and…
by markettamer - April 9th, 2010 10:47 pm
Courtesy of Market Tamer
by Option Review - February 2nd, 2010 5:28 pm
Today’s tickers: VIX, MS, BAC, UNG, SU, RL, GIGM, FCX, CVS, SPF & DOW
VIX – CBOE Volatility Index – A massive bearish put position initiated on the VIX today is a bullish sign for the S&P 500 index. The VIX fell more than 6% during the current session to stand at 21.21 as the past two day’s uptick in equities serve to dissipate some of the fear and uncertainty felt by investors during the prior trading week. One investor anticipating further downside movement for the VIX picked up roughly 103,000 puts at the March 20 strike for an average premium of $0.70 per contract. The put options position the investor to accrue profits beneath a VIX reading of 19.30 through expiration. It appears the investor expects the so-called fear-gauge to head in the direction of the index’s 52-week low of approximately 17.49 attained on January 19, 2010. But, the VIX must fall another 9% from the current reading in order for the investor to breakeven by expiration. Furthermore, today’s reading is still 21.25% greater than the 52-week low described previously.
MS – Morgan Stanley – Global financial services firm, Morgan Stanley, attracted the attention of bullish options investors in afternoon trading. Shares are currently trading 1.00% higher at $27.83 with roughly one hour remaining in the trading day. A bull call spread stuck out like a sore thumb in the scantily populated March contract on the stock today. One investor purchased 5,000 calls at the March $28 strike for a premium of $1.35 each, and sold the same number of calls at the higher March $31 strike for an average premium of $0.34 apiece. The trader paid a net premium of $1.01 per contract for the spread, but stands to accrue maximum potential profits of $1.99 per contract should Morgan Stanley’s shares rally up to $31.00 ahead of expiration day. The call-spreader breaks even on the transaction as long as MS’s shares rise 4.25% from the current price to $29.01 before the options expire.
BAC – Bank of America Corp. – Optimistic sentiment on Bank of America appeared in the August contract today amidst a 0.65% improvement in shares of the underlying stock to $15.52. One bullish trader initiated a call spread to position for upward movement in BAC’s shares by expiration. The investor purchased 4,000 calls at the August $16 strike for an average premium of $1.52 apiece,…
by Phil - January 25th, 2010 3:00 am
Chart Review by Michael Clark
“By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”
-- John Maynard Keynes
SO, IS THIS FINALLY THE ‘REAL’ CORRECTION?
What a week it was. The Bears gave the Bulls some payback. Obama got a wake-up call. And the banks got a well-deserved scare (and we hope they will get a well-deserved hair cut).
The markets reacted, as one might expect, with selling. Actually, the selling began before the Massachusetts election and before Obama sent a shot across the Goldman Sach’s bow. Last week Intel announced surprisingly strong earnings; and the stock started up and then sank. For the past half-year investor behavior had been the reverse: a buying spree for any stock that did not lose as much as it might have — beating ‘Street expectations’ that had been dumbed down over and over again during a quarter so that the company could report ‘surprising’ strength. Suddenly, now, even good earnings are being greeted with selling. Then came Massachusetts — wasn’t that a Bee Gees’ song?
All the lights went out in Massachusetts
Anyway, readers want to know where the markets stand today, after the sell-off this week. My view of it — my ‘view’, not my gut-feeling — is that we are, so far, merely correcting from an over-extended rally. This rally has been bizarre, to say the least. This has been a ‘fear rally’ — usually the ‘fear’ side of the equation is when selling comes in, ‘greed’ driving the expansion. But fear of systemic failure has driven this rally; and Ben Bernannke has been the captain sailing the ‘Boat of Fear’, Ben’s logic — that more debt will solve the insolvency crisis — has a shadow side, the logic that a collapse in stock prices will result in systemic failure, international chaos, revolution, repression…made him believe that preservation of the status quo was requiired, at any price. A ‘make-believe’ recovery could be jump-started, perhaps, if the Fed could just stimulate (and simulate) another asset-bubble. After all – that is how his mentor and predecessor, Alan Greenspan, had become the darling of the coctail party crowd, leading member of Time Magazine’s ‘Committee to Save the World’; and that was how he, himself, had become Time’s ‘Peson of the Year’.
Logic was thrown…
by Phil - January 13th, 2010 8:07 am
The futures were boogying "all night long."
THIS is why we love being born-again bulls. China’s Hang Seng down 578 points on the Hangs Seng (2.5%) – It doesn’t matter! Shanghai down 3.1% – It doesn’t matter! Europe down half a point – It doesn’t matter! Germany’s economy contracted 5% in 2009, the worst decline since WWII (the big one) – It doesn’t matter! ABC Consumer Comfort Poll drops 11% with just 9% of Americans rating the economy postively – IT JUST DOESN’T MATTER - because WE are those 9% of Americans, right! OUR economy is just fine and we don’t know what that 91% contingent of babies is whining about do we?
Yes, it’s been a while since I dubbed us in a Meatball Market. The last market I labled as such was November 30th, 2006, when the Dow broke through 12,000 on the way to 14,000. Our bullish picks that day included BA, CAT, COF, DOW, GE, HD, JWN, QQQQ, TIE, TIF, XLE and XOM. Those were all, of course, fantastic picks but what I want you to do is read the October 2nd, 2007 article, where I began to turn cynical on the "Meatball Market" and I made the following statement:
Up, up and away – it’s Super Market! It’s bugdet proof, oil proof, terror (threat) proof, housing proof, inflation proof and pullback proof - 3 weeks in a row!
This is truly a Market of Steel (and the recent movement of X underscores that) and looking at the movement of the past week we really do have to believe it can fly… Is the US consumer (driver of 2/3 of the economy) really impervious to harm? What, if anything, is our stock market Kryptonite?
Unstable currency, runaway commodity prices, spiraling inflation, low savings rates, hedge fund collapses, declining home values, banks writing down their virtual portfolios, hundreds of thousands of layoffs, millions of foreclosures — it simply does not matter as long as they are LOCAL problems for the US as we are a smaller and smaller cog in the great global economy, one day we may even be granted emerging market status by our Chinese masters!
Doesn’t sound like much has changed in 2 years does it? Unfortunately, that also happened to be the day that Alan Greenspan (now working for PimpCo) decided to call China, with the Hang Seng…
May 24th, 2012 4:53 pm
Courtesy of Mish
The Pollyannas who thought the European recession would be short, shallow, and contained to the periphery have another thing coming. All three ideas were downright silly as I have long stated.
French Manufacturing PMI Plunges to 44.4, Sharpest Contraction in 3 Years
Markit reports French private sector output falls at sharpest rate for over three years.
May 24th, 2012 4:35 pm
Courtesy of Doug Short.
The S&P 500 got off to weak start and, after retracing a modest morning rally, spent most of the day in the shallow red with an intraday low of 0.63%. But in the last seven minutes of trading, the index recovered enough to a make a small gain of 0.14%. This is the fourth advance, the first was Monday's 1.60 surge, but the last three have ranged from 0.05% to 0.17% with today's close near the high of the miserly three-day series.
The index is now up 5.02% for 2012, which is 6.93% off the interim closing high.
From an intermediate perspective, the S&P 500 is 95.2% above the March 2009 closing low and 15.6% below the nominal all-time high of October 2007.
Below are two charts of the index, with and without the 50 and 200-day moving averages.
...
May 24th, 2012 3:55 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
And it was shaping up to be such a good year. According to the latest just released HSBC hedge fund performance update, increasingly more funds are starting to lose it, certainly for the month, but increasingly more for the year. How many LPs will be eager to keep on paying 2% management fees (forget performance) to funds who at best are long AAPL (at least 226 of them), and at worst have underperformed the S&P, for the second year in a row, by anywhere from 5 to 15%?
Select HF performance:
...
May 24th, 2012 3:44 pm
Today’s tickers: TIF, P & NYT
TIF - Tiffany & Co., Inc. – A surprise earnings miss and a reduced full-year profit and sales forecast from luxury jewelry retailer, Tiffany & Co., took some of the luster out of its shares today, with the stock trading down 8.5% at $56.55 as of 11:50 a.m. in New York. Options activity on Tiffany this morning suggests mixed sentiment on the st...
more from Caitlin
May 24th, 2012 2:05 pm
Courtesy of Benzinga.
RealNetworks, Inc. (NASDAQ: RNWK) today announced that it has reached an agreement with the Washington State Attorney General over discontinued e-commerce practices. In accordance with the settlement agreement, RealNetworks has committed to:
Discontinuing the use of pre-checked boxes for purchases of RealNetworks subscription products; Spelling out more clearly the material terms of RealNetworks product offerings; Offering online cancellation of subscription offerings; Enhancing RealNetworks customer support guidelines regarding cancellation. Statement from Thomas Nielsen, President & CEO of RealNetworks:
"About two years ago, the Washington State Attorney General's Office contacted us regarding concerns they had with some of our e-commerce practices.
"While we disagree wit...
May 24th, 2012 1:40 pm
Reminder: David is available to chat with Members, comments are found below each post.
Click here for the full report.
May 24th, 2012 8:50 am
Submitted by Mark HannaCourtesy of MarketMontage. View original post here.
First we'll go to the technicals. Back in mid April I had opined a 'bear flag' formation was being created. [Apr 17, 2012: Potential Bear Flag Forming] But the market being the difficult beast it is, head faked everyone and rather than a break down from said flag it first went UP and nearly touched yearly highs. This caused everyone to think the bear flag had failed…. only to lead to a horrid May in the market. Generally a bear flag will resolve relatively quickly but the longer...
May 24th, 2012 2:14 am
Reminder: Sabrient is available to chat with Members, comments are found below each post.
Courtesy of Scott Martindale, Sabrient Systems and Gradient Analytics
Despite the fact that U.S. equities are well-positioned and well-supported to go up, once again it is the headlines out of Europe—especially Greece—that are scaring off investors. Some are saying that it is now likely (and even desirable) that Greece will default on all its sovereign debt, withdraw from the euro, and severely devalue its domestic currency (Drachma?). This will allow them to operate a balanced budget while pumping cash into growth initiatives, rather than suffer the ravages of Germany-mandated austerity.
Some say, so what? Greece makes up only about 2% of the Eurozone’s overall economy. Nevertheless, you might say that t...
May 23rd, 2012 5:29 pm
Courtesy of John Nyaradi.
Markets died and then rallied to flat again as European leaders “prepared contingencies” for a possible GrexitMarkets died hard and fast earlier today as major indexes registered as much as 1.5% of losses after news that Euro zone officials were unofficially “preparing contingencies” for a Greek exit from the Euro. Unofficial statements were not enough to keep markets down however, as major indexes rallied back to flat levels by the end of the day.
So the world continues to wait on Europe, as the SPDR S&P 500 ETF (NYSEACA:SPY) gained .05%, the SPDR Dow Jones Industrial Average ETF (NYSEARCA:...
May 21st, 2012 8:54 am
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
Optrader
...May 20th, 2012 5:04 pm
NEW: Ilene is available to chat with Members regarding topics presented in SWW, comments are found below each post.
Here is this week's test version of the latest newsletter. We apologize for some formatting issues that need to be worked out. Please tell us what you think.
Click on Stock World Weekly here, and sign in/sign up.
...April 28th, 2012 8:49 pm
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
In this article, please revisit an article written two years ago titled, "The Calm Before the Storm." This article focused on the patent cliff that was looming in the pharmaceutical industry, that was later picked up by the New York Times and several other bloggers! Subsequent articles were written about big pharma company's revenue streams, and the pros and cons of of their later stage pipelines. Other articles have also attempted to identify smaller biotechs with the potential to reap big reward...
February 26th, 2012 10:39 am
My last weekend update is dated from January 30 so after a long hiatus, here is an update of our virtual portfolio. Since the last update, we have closed the AA Money portfolio due to a lack of enthusiasm (and activity) and I have stopped tracking the FAS strangle as the low VIX makes it hard to get rewarded for the risk! But we have added a small $5KP virtual portfolio which does not use any margin. FAS Money We have had to recover from a big move up by FAS and a low VIX which keeps option prices low. But the portfolio has gaine about 10% since the last update. Last update P&L - $5499.00 IWM Money Not a lot of activity in this portfolio where the main focus is on the large IWM BCS. But the portfolio has grown over 20% since the last update. Last update P&L - $1998.00 $5KP Portfolio This is the virtual portfolio that replaced the AA Money portfolio. It does not use margin and we will keep holdings under $5K. AAPL $50K P...
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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Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Philstockworld, LLC (PSW) nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither PSW nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance, including the tracking of virtual trades and portfolios for educational purposes, is not necessarily indicative of future results. Neither Phil, Optrader, or anyone related to PSW is a registered financial adviser and they may hold positions in the stocks mentioned, which may change at any time without notice. Do not buy or sell based on anything that is written here, the risk of loss in trading is great.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only intended at the moment of their issue as conditions quickly change. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice. |
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