Posts Tagged ‘HON’

Bullish Options Trade On American Eagle Looks For Shares To Extend Run


Today’s tickers: AEO, HON & GDP

AEO - American Eagle Outfitters, Inc. – A large long-term bullish options play on teen retailer, American Eagle Outfitters, Inc., near the open looks for shares in the name to potentially reach levels not seen since 2007 by January 2014. Shares in American Eagle soared in 2012, rising approximately 90% since the first week of the year to touch a four-year high of $23.94 back on September 19th. Though off their highest level of the year, shares in AEO increased 2.6% this morning to $21.56 after the stock was rated new ‘Market Outperform’ with a 12-month target share price of $27.00 at Avondale Partners LLC. A three-legged options combination spread initiated on AEO at the start of the session prepares one options player to profit should the price of the underlying continue to push higher during the next calendar year. The strategist responsible for the single-largest transaction in American Eagle options today appears to have sold 5,000 puts at the Jan. 2014 $18.5 strike in order to substantially reduce the cost of buying a 5,000-lot Jan. 2014 $22/$30 call spread. Net premium paid to establish the position amounts to $0.20 per contract and prepares the trader to make money above an effective breakeven price of $22.20. Maximum potential profits of $7.80 per contract are available on the spread should American Eagle’s shares gain 40% to top $30.00 by expiration in January 2014. The trader could wind up having 500,000 shares of the underlying stock put to him or her at expiration in the event of a sharp pullback in shares of the high-flyer to the $18.50-level and below.

HON - Honeywell International, Inc.– Shares in diversified industrials company, Honeywell International, Inc., are up 0.15% as of 11:50 a.m. in New York to stand at $61.53, adding to gains realized earlier in the week after the company agreed to take a 70% stake in Tulsa, Oklahoma-based Thomas Russell Co. for…
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Monday Market Movement – Trying to Get Bullish

We are still trying to get more bullish.

Over the weekend we set a new, higher set of levels for our Big Chart on the assumption that our breakout levels hold up and our new Must Hold lines become Dow 13,600 (not there yet), S&P 1,360, Nasdaq 3,000, NYSE 8,000 and Russell 800, which means it's now up to the Dow and Nasdaq to continue to show leadership if we're going to be having a rally good enough to get us to add our next 10 bullish plays.

I already added 2 aggressive upside trade ideas on XLF and SPY in the weekend post and last week we already looked at WFR, X, BAC, GLW, BBY, CHK, AAPL, AA, and BA but we also added a new Long Put List (Members Only), which had 19 stocks that we thought were good downside horses to ride if, per chance, we fail to hold 3 of our 5 breakout levels.  

It shouldn't be too much to ask – IF this is a real bull market.  We've been extremely skeptical up to this point and, Fundamentally, I still have my doubts but Technically, we can't keep fighting the tape so were drawing a line in the sand for Mr. Market to cross and, if it does so, we're happy to play along.  If it fails to do so, however, well – we've already made those bets!  

Our aggressive take on the Dow is the result of analyzing the 5 components that were replaced since the crash with MO and HON thrown out for BAC and CVX in Feb of 2008, AIG replaced by KFT in Sept 2008 and C and GM replaced by CSCO and TRV in June 2009, causing a massive distortion in the index, meaning 16,000 is the old 15,000, possibly even lower:  

The Nasdaq is similarly distorted by AAPL, who are up 500% since 2009 and when a stock that is 11.5% of an index is up 500%, that stock alone causes the index to go up 57.5%, which is why we now call it the AAPLdaq.  The AAPLdaq itself is "only" up 100%, which means the ENTIRE rest of the index is lagging with a 42.5% contribution – those who tell you that tech is somehow loved again are fooling themselves
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Will We Hold It Wednesday – Nasdaq 2,603 Edition

Watch the Nasdaq.

That's the index we need to catch up to the Dow now that the S&P is halfway to goal at 1,297 (from our Must Hold line at 1,235).  The Dow is in La La Land, led by MCD (up 31%), IBM (up 26%), PFE (up 24%), HD (up 20%) and KFT (up 20%) while this year's Dogs of the Dow are BAC (down 59%), AA (down 43%), HPQ (down 39%)  and JPM (down 22%).  

While the losers may seem to outweigh the winners, that's not how it works as the Dow is price-weighted so BAC dropping from $14 to $5.50 "only" costs the Dow about 68 points (roughly 8 points for each Dollar), IBMs rise from $145 to $185 added a whopping 320 points.

So a 26% rise in one component and a 59% drop in another nets out to a gain of 252 points!  At the beginning of the year, they had roughly the same market cap ($150Bn) but IBM has gained $70Bn and BAC has lost $100Bn which, of course, translates into a net gain of 2% on the entire Dow – BECAUSE IT IS THE STUPIDEST INDEX ON EARTH!  

Our Members, of course, know this.  I wrote "DJIA: The Most Useless, Overused Tool on the Planet" back in 2006, when GM was still part of the Dow so no need to rehash it all here other than to mention the fact that a 30-component index has made 5 substitutions in the 5 years since I wrote that article only serve to highlight how ridiculous it is to use the Dow to draw long-term conclusions.  The Dow is manipulated because it's easy to and Uncle Rupert sits with the other Masters of the Universe to decide how to use this headline tool to make things look as good as possible in the US markets.  


That's why CSCO and TRV replaced C and GM in June of 2009.  C was at $28.80 and is down a bit, GM went BK from $45 (which would have been a 360-point loss in the Dow) while CSCO was disappointing but essentially flat and TRV is up $20, adding another 160 points so a 520-point swing (5%) on those substitutions alone.  In September
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Fully “Fixed” Friday – Extend and Pretend Edition

SPY 5 MINUTEAll fixed!

Greece is getting another $229Bn at 3.5% with about 30 years to pay it from the EU (ie. Germany and France) and private bond-holders will share about 1/3 of the pain by "voluntarily" renegotiating their own notes.  Sounds like a really great offer, right?  BUT WAIT, THERE’S MORE!  Another $630Bn of already promised emergency aid has now been places into a very slushy fund that will now allow the EU to throw money at any nation that so much as sneezes – WHETHER OR NOT THEY ASK FOR ASSISTANCE.  This will allow them to play economic Whack-A-Mole, putting out all the little Euro-zone fires until that money runs out (about 6 months at the EU’s current burn rate).

All this fantastic news from Europe has sent the Dollar down to test the 74 line and that was down from 75.37 just ahead of yesterday’s open and that’s a 1.8% drop so we would expect our indexes to go up at least 1.8% – BUT – none of them did.  In fact, the Nasdaq only gained 0.72% and the Russell was up 1.07% and the Dow was up 1.21% and the S&P was up 1.35%.   The NYSE, which had been our perennial laggard, did the best yesterday – gaining a close, but still no cigar 1.57%.  

Will we make it up today or is this an indication that things may not be quite so good as they seem?  After the close yesterday, I did a news round-up for our Members and there is still plenty to worry about and we took a stab at some SPY Weekly (today) $135 puts at .79 for our aggressive $25K Virtual Portfolio on the off-chance they "fix" the US debt ceiling and accidentally make the Dollar strong again.  At the moment, we are still playing our short lines in the futures, where we’ve been scalping nickels and dimes since my 3:23 am Alert to Members (if you are not a Member, you can sign up here), where I said:  

I like shorting the Futures here:  S&P (/ES) at 1,346, Nas (/NQ) 2,415, Dow (/YM) 12,720 and Rut (/TF) 842.6 – as long as 74.20 hold on the Dollar, we should get a bit of a sell off so these are levels to look for as the Dollar heads

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Wednesday: Wiping Out All of 2011′s Gains!

S&P 1,260.  That's the line we need to hold.

That's where we started the Year on January 3rd and we finished that day at 1,271, beginning a fine tradition of making almost all of our gains on the first day of the month, continuing a very disturbing (and very fake) year-long trend that I am calling "sell the next day (of the month) and go away." (chart by Bespoke).

Notice that this trend became very disturbing at the same time Uncle Ben announced his fabulous QE2 plan that showered money on his fellow Banksters according to a nice, predictable schedule that allowed them to lever up their investments to inflate stocks and commodities, trapping index fund investors (especially the working poor who make monthly contributions to IRA and 401K accounts in a nice, predictable and controllable fashion).  It's a simple plan, index fund managers get your pension money at the end of the month, they are required to buy baskets of stocks to balance their funds and that action can be manipulated by clever bankers who jack up the prices and then sell into the fake demand they created – effectively stealing tens of Billions each month out of the paychecks of working Americans.  Just another one of those great crimes they commit where they steal a little bit of money from everyone, every day.  

Speaking of robbing from the rich to give to the poor (see "The Dooh Nibor Economy"), it's time we said happy 10th anniversary to the Bush/Obama tax cuts that have, as Barry Ritholtz put it: "driven the balanced budget he inherited from President Clinton deep into the red."  So deep in the red, in fact, that even now Congress is still debating about extending the $14.5Tn deficit that the Congressional Budget Office says will double over the next 10 years if these cuts remain in place.  

That's right, those same tax cuts that are "off the table" in negotiations in Congress are, other than war spending, the sole cause of our nation's deficit.  This country does not have a spending problem, it has a collecting problem!  As Mike Konczal, a research fellow at the Roosevelt Institute, noted: "It's not like this has unleashed a wave of productivity, or better incentives, or increased work output. It's mostly just rich
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Straddle Seller Foresees Range-Bound Shares for Flextronics

Today’s tickers: FLEX, NXY, XRT & HON

FLEX - Flextronics International, Ltd. – A sizeable short straddle initiated on Singapore-based Flextronics International this morning indicates one options player expects to see limited fluctuations in the price of the underlying shares through January 2011 expiration. Shares in Flextronics, which manufactures thousands of electronic devices, are up 0.45% at $6.90 as of 12:05 pm after Singapore reported a surge in exports in the month of October. The straddler sold 10,000 calls at the January 2011 $7.5 strike for a premium of $0.26 each in combination with the sale of 10,000 puts at the same strike for a premium of $0.81 a-pop. Gross premium pocketed on the straddle amounts to $1.07 per contract. The investor keeps the full amount of premium received if FLEX shares settle at $7.50 at expiration. Short positions taken in both call and put options expose the trader to losses in the event that shares shift significantly away from the selected strike price. Losses start to amass if shares rally above the upper breakeven price of $8.57, or if shares slip beneath the lower breakeven point at $6.43 ahead of expiration. Flextronics’ overall reading of options implied volatility is up 8.3% at 41.57% as of 12:10 pm.

NXY - Nexen, Inc. – Contrarian trading in longer-dated call options on the Canadian oil and natural gas company appears to be the work of an optimistic strategist expecting Nexen’s shares to rebound ahead of June 2011 expiration. Nexen’s shares are currently down 5.4% to stand at $21.00 as of 11:35 am in New York. At an investor conference this morning the firm’s CEO said Nexen will likely focus on developing existing holdings rather than pursuing additional acquisitions. Yesterday Nexen revealed plans to spend roughly $2.4 to $2.7 billion next year to promote…
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Zero Hedge

Eric Peters: "We Are Right Back Where We Started"... And Why Everyone Loves Conspiracy Theories

Courtesy of ZeroHedge. View original post here.

Below we present three entertaining vignettes from the latest weekly letter to investors by Eric Peters, CIO of One River Asset Management.

The first one explains how we have once again ended up "right back where we started" but after a curious tanget: one where central bankers now believe they can "invert causation" and not only control the yield curve but stoke inflation by doing so.

Right back where we started,” said the CIO, spinning, dizzy. “Twelve months ago we were talking ...

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Chart School

Tech Hold Breakout,.but S&P Wedge Bound

Courtesy of Declan.

It was a mixed day for indices. Large Caps remain bound by wedge support/resistance, but Tech broke upside yesterday from similar wedges and held those breakout today.

There was little change for the S&P over the last couple of days. The one technical change was the MACD trigger 'buy' as other technicals stayed on the bearish side.

Meanwhile, the Nasdaq cleared wedge resistance yesterday, and was able to hang on to the breakout despite today's loss. It too enjoyed a MACD trigger 'buy', but had an On-Bal...

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Phil's Favorites

Kansas Ends Bad Economic News by Not Reporting It

In evaluating the results of real-life economic policy experiments it is important to measure them. Avoiding this step in the experimental process detracts from what could be a valuable learning experience, which could, potentially, put some incorrect theories to rest. For instance, consider Kansas. 


“What’s measured, improves.”

So said management legend and author Peter F. Drucker about the value of using metrics to define specific objectives within an organization.

Drucker is no longer with us; if he were, he might want ...

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Timely (Free) Advice

By BroyHill. Originally published at ValueWalk.

This wonderful advice from Fred Schwed was originally published in 1940 – some things never change.

“When there is a stock-market boom, and everyone is scrambling for common stocks, take all your common stocks and sell them. Take the proceeds and buy conservative bonds. No doubt the stocks you sold will go higher. Pay no attention to this – just wait for the depression which will come sooner or later. When this depression – or panic – becomes a national catastrophe, sell out the bonds (perhaps at a loss) and buy back the stocks. No doubt the stocks will go lower still. Again pay no attention. Wait for the next boom. Continue to repeat this operation as long as you live, and you’ll have the pleasure of dying rich”.


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Kimble Charting Solutions

U.S. Dollar Rally: A tale of two chart patterns

Courtesy of Chris Kimble.

This article was originally written for See It Market.

The U.S. Dollar Index has been trading in a wide consolidation pattern over the last 18 months or so.  But after the recent U.S. Dollar rally, that consolidation has formed two distinct chart patterns.

And as you may have guessed… one is bullish while the other is bearish.



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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

Oil Rises as OPEC Chief Barkindo Seeks to Resolve Output Plan (Bloomberg)

Crude advanced as OPEC’s secretary-general was due to visit Baghdad on Tuesday for talks aimed at resolving a deal on output after Iraq said it should be exempt from planned cuts.

Iron Ore Hoisted on Coat-Tails of Coal’s Record Rally in China (Bloomberg)

Iron ore is surging thanks to its bulk-commodity compatriot, coal. Iron ore futures in Singapore ad...

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Swing trading portfolio - week of October 24th,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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Members' Corner

World Series 2016

Courtesy of Nattering Naybob.

The good news... Waiting since 1945, after 71 years, the Chicago Cubs have a chance to win their first WS since 1908.  The bad news... The Cubs face an Indian's team that has been waiting since 1948 to win a WS and last appeared in 1997.

CLE swept BOS, and took out TOR who had swept TEX, and has only lost ONE post season game.  That being Game 4 ALCS at TO, yet, during that series, no Indians starting pitcher made it through more than six innings. 

In fact, Trevor Bauer, only lasted two outs during his one start, leaving Merritt and the pen to bear the burden of over eight innings of baseball.  Mid range reliever Merritt notched a victory in that game with ERA 1.80; WHIP 0.60 with 5 IP. 

What does all that tell you? Oddly enough, without Carr...

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Mapping The Market

The Most Overlooked Trait of Investing Success

Via Jean-Luc

Good article on investing success:

The Most Overlooked Trait of Investing Success

By Morgan Housel

There is a reason no Berkshire Hathaway investor chides Buffett when the company has a bad quarter. It’s because Buffett has so thoroughly convinced his investors that it’s pointless to try to navigate around 90-day intervals. He’s done that by writing incredibly lucid letters to investors for the last 50 years, communicating in easy-to-understand language at annual meetings, and speaking on TV in ways that someone with no investing experience can grasp.

Yes, Buffett runs an amazing investment company. But he also runs an amazing investor company. One of the most underappreciated part of his s...

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Digital Currencies

Gold, Silver and Blockchain - Fintech Solutions To Negative Rates, Bail-ins, Currency Debasement and Cashless

Courtesy of ZeroHedge. View original post here.

By Jan Skoyles

I was so pleased yesterday by the announcement that I have joined the Research team at GoldCore as it meant that I could finally start talking about it and was back in a role that lets me indulge in my passion by researching and geeking out on all things gold, silver and money.


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Epizyme - A Waiting Game

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...

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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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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! 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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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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