While stocks certainly aren't "cheap" by any measure, we've been able to identify 20 that are still good values. We've been compiling this list and going over trade ideas for playing them in our Tuesday Webinars since May 13th and, of course, we've been posting them in our Live Member Chat rooms, so this is just a review to consolidate our trade ideas.
We cashed in our Long-Term Portfolio last week at what we thought was a top but so far – so wrong on that call! Since it's up 19% in just 6 months, we're not going to cry about missing the last 400-point move on the Dow (2.5%) – we'll just have to look ahead to deploying our cash again, following the same strategy that was so successful in the first half of the year, which was, essetially, our "7 Steps to Consistently Making 20-40% Annual Returns" system:
As we did in building our Long-Term Portfolio, we're not going to rush in and buy everything. We will do exactly what we did in January where, following our Fall Buy List, we simply added stocks from our list whenever they became cheap. While our Members are able to pick up our trade ideas as they are released, we don't always add them to our virtual portfolios right away. As with the first half's Long-Term Portfolio, we will track every entry and exit in both our Live Weekly Webcasts, as well as in our Live Member Chat Room and alerts will be sent to our subscribers (you can join here, Basic and Premium Members get full access).
Our picks were originally grouped by industry sectors but, for reference purposes, I'm going to list them alphabetically below – these are the original trade ideas (the Webinar dates where we discussed our picks are next to the symbol), most are still playable but some have already taken off :
ABX (5/28) we featured in our June 3rd post - obviously one I like. If you don't want to buy the stock for $15.90 (and we NEVER pay retail at PSW!), then you can sell the 2016 $15 puts for $2.05,…
I think we've already blown the opportunity. In Stock World Weekly we discussed the stealth bailouts jammed into the Transportation bill on Friday which rightly sent the markets flying higher into the close of the quarter (I know quelle suprise!). As noted by David Fry, GS was working hard behind the scenes to make sure that, in the end, Germany toe'd the line.
For the year so far, the Dow is up 3.89%, S&P is up 6.66% (so you KNOW Goldman is involved), the Nasdaq is up 10.81%, NYSE 2.33% (all of it gained on Friday) and the Russell 6.15%. See how great everything is?
We took the money and ran, again, as we hit some clear resistance lines (see SWW) on our Big Chart and there was no sense risking a 10% gain in our first week in our new $25,000 Portfolio with the July 4th holiday coming up (we have a half-day tomorrow and we're closed on Wednesday).
The only trades we left active in the $25KP was 5 OIH July $35 calls at $1.25 (still $1.25), 10 DIA July $129 calls at $1.10 (now $1.35) and 10 SQQQ July $49/53 bull call spreads at $1 (now .75) we added later in the day to protect them in case we had a big dip this week. If we make it through Friday above the lines on our Big Chart – then we will continue to be "constructively bullish" and we'll be happy to deploy more cash but, into 2 days off – NO THANKS!
In fact, as we're already up 22% on the DIA calls – if we get another pop this morning, those are likely to come off the table as well. After all, how much money should you expect to make in 48 hours? This is a very unnatural and manipulated market and it's great to play it – as long as you keep that in mind! The danger comes when you delude yourself that this is some kind of "investing" environment when it's actually just gambling ahead of Q2 earnings reports – that could send us right back into a tail-spin.
Or, maybe not – as a key amendment to the Transportation Bill will add Billions of Dollars in profits to the S&P 500 by allowing Corporate Pension Plans to use the average…
The pre-markets are up 1% after a long weekend. That hasn't happened since – two weeks ago! Of course last Tuesday, we were jammed up as well and the Tuesday after Christmas, we were jammed up as well but THIS TIME – we're REALLY feeling it, right?
The funniest thing is the way they have dozens of idiots saying all sorts of ridiculous things on CNBC and not one of them mentions even the vaguest hint of deja vu in what has been the most consistent pattern of late 2011, early 2012.
On this Dollar chart from Scott Pluschau, you can see the dives that are occasionally taken to goose the markets and we have another one this morning with the Dollar down 1%, making the 1% pop in the futures slightly less impressive when taken in context.
This time may be different because, according to Friday's Legacy Commitments of Traders Report released by the CTFC, Commercial Traders are now net short on the Dollar to the tune of 59,023 to just 6,061 longs – about a 10:1 ratio that is EXTREME to say the least. Non-Reportable, Non-Commercial Traders (ie. Speculators), on the other hand, are almost 10:1 the other way with 9,765 long contracts and just 1,390 shorts. Reportable Non-Commercial Traders (Hedge Funds) fill out the rest of the longs with 52,644 long contracts against just 8,057 shorts.
To some extent, hedge funds are also speculators and usually you would assume their bets are covered but that's kind of hard to see with a 7:1 long/short ratio. Keep in mind that Commercial Traders are institutions with business reasons to hedge – they are not going to be flip-flopping their positions so they will NOT be buying Dollars just because they get cheaper. So, if it all hits the fan and the Funds shift to short – we could get quite a tidal-wave of Dollar selling.
That's an odd sort of positions for the speculating class to be taking (super-long on the Dollar) considering the possibility of a highly dilutive quantitative event (QE3) in the very near future. This is why we can't be gung-ho bearish – tempting though it may be and this is why every little rumor of Europe being "fixed" sends the Dollar flying down – there are no buyers – only nervous long Dollar holders.
So, according to the Fed's academic experts, the US economy is not, well, the US economy, it's not Y = C + I + G + NX, it's not the product of all goods and services created in the United States... it's this:
Which, for those confused, is precisely what it appears to be: a bunch of dots drawn on a piece of paper, not to be confused with this following random bunch of dots drawn on a piece of paper, which however is far more indicative of what the US economy is really like.
Whether the problem is with low interest rates themselves or the fact that rates still aren’t low enough to ignite a new credit boom is not clear. What is clear is that the world’s money center banks are facing a brutal downsizing. From today’s Wall Street Journal:
U.S. stock-index futures were little changed, after disappointing results from Alcoa Inc. offset optimism from a winning streak that’s put the Standard & Poor’s 500 Index on track for its best week of the year.
1) The shares of one of my largest short positions (~3%), Exact Sciences, crashed by more than 46% yesterday. Below is the article I published this morning on SeekingAlpha, explaining why I think it’s still a great short and thus shorted more yesterday. Here’s a summary:
The U.S. Preventative Services Task Force’s Colorectal Cancer Screening Draft Recommendation issued yesterday is devastating for Exact Sciences’ only product, Cologuard.
I think this is the beginning of the end for the company.
My price target for the stock a year from now is $3, so I shorted more yes...
Bulls can be happy with today's progress. What weakness emerged today was reversed by the close, a change on yesterday's action where sellers dumped in the last few minutes of trading. Volume climbed to register an accumulation day.
The S&P finished at the 50-day MA, but beyond that there is plenty of room beyond that to run to the next level of resistance at 2,045. Technicals are net bullish.
The Nasdaq pushed off its 20-day MA and has another 50 points of maneuver before it gets to its 50-day MA. Technicals are not yet net bullish, but they are close.
Uncertainty about the health of the global economy led investors to flee U.S. equities during Q3, primarily driven by worries about China's growth prospects and the Federal Reserve’s decision to not raise rates. Sure, there are plenty of real and perceived headwinds, but on balance it seems that a recession here at home is not in the cards. And when you consider sentiment and the technical picture, it appears that a continuation of Friday’s bounce is in store. The question remains as to whether the seasonally strong Q4 will be able to propel the bulls through levels of resistance that have built up.
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Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).
Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself.
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...
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 firstname.lastname@example.org 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.
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