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DARK HORSE HEDGE – Any way the wind blows, doesn’t really matter

Housing-keeping note: Thanks to WordPress’s destruction of Phil’s Favorites site (and replacement with an invite to sign up for its service!), I’ve been relocating my blog to TypePad.  Benefits: it looks better, is very user friendly and offers an easy way to search archives for any topic. One unique feature is that while exploring the internet, I can simply click on a button to post an excerpt of an interesting article with a link to the full article. That ability allows me to post links to articles that are worth reading when I do not have reprinting permission, such as articles from major news sources. 

The new Favorites site is here.  I’ve also created a website for Dark Horse Hedge, here.  - Ilene 

DARK HORSE HEDGE – Any Way the Wind Blows, Doesn’t Really Matter

By Scott Brown at Sabrient & Ilene at Phil’s Stock World

Is this the real life? 
Is this just fantasy? 
Caught in a landslide 
No escape from reality 
Open your eyes 
Look up to the skies and see 
I’m just a poor boy (Poor boy) 
I need no sympathy 
Because I’m easy come, easy go 
Little high, little low 
Any way the wind blows 
Doesn’t really matter to me, to me

Queen, Bohemian Rhapsody

 *****

Ilene and I started the Dark Horse Hedge on July 1, 2010 with the goal of helping self-directed investors weather any storm, no matter which way the wind was blowing.  Today completes the second month of publishing the Dark Horse Hedge and we thought it would be a good time to review.  

 

September 1976:  British rock group Queen at Les Ambassadeurs, where they were presented with silver, gold and platinum discs for sales in excess of one million of their hit single 'Bohemian Rhapsody'. The band are, from left to right, John Deacon, Freddie Mercury (Frederick Bulsara, 1946 - 1991), Roger Taylor and Brian May.  (Photo by Keystone/Getty Images)

The
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DARK HORSE HEDGE

DARK HORSE HEDGE Weekend Catch-Up 

By Scott at Sabrient and Ilene at Phil’s Stock World

Hedging into the week of August 2nd, the Dark Horse Hedge (DHH) is in a BALANCED tilt (long to short ratio) with 8 LONG and 8 SHORT positions. We used Phil’s BUY/WRITE strategy to enter two of our LONG positions (IM and GCI) at a 10-20% discount to the market.  As you can see from the chart, the SPX wandered between the 50 and 200 day moving averages (MAs) all week before whimpering towards the bottom of the channel Thursday and Friday. The 12-26-9 MACD which is the faster of the 2 technical direction signals we follow has flat-lined at just above +6 and the slower RSI 14-day still remains just below 50.

Without some impressive economic reports coming this week or much better than expected earnings reports, we believe the market will drift down towards and test the 50 day MA. If a bullish tone sets back in, it is doubtful that it could easily push through the 200 day MA.  Resistance points as well as the 50 and 200 day MAs all which fit into a fairly narrow trading channel.

[chart from FreeStockCharts.com]

We are happy with the positions we put on in DHH’s first 30 days of existence and we look forward to capturing more profit as the companies report earnings this week.  We will continue to take profits "after the news" and rotate into newer, fresher positions while keeping an eye on the overall market to adjust our tilt for maximum Alpha*, which is why we all write and read DHH. 

Summary of DHH positions in the virtual portfolio

LONG: XRTX, WDC, GCI, IM, DLX, GME, FRZ, and TEO  

SHORT: AIV, STI, HUSA, USG, CLDA, TEX, RAIL, and JOE 
 
Read previous DHH actions and follow our latest portfolio moves here. > 
 
*We are aiming to be hedged in our market exposure by being long stocks with the greatest potential to rise and short stocks with the greatest potential to decline.  To identify these winner and loser stocks, we use Sabrient’s Value Change Up (VCU) assessment system. Sabrient’s VCU system is a multi-factor quantitative ranking system that scores over 2,000 stocks and allows us to enter LONG positions in the best ranking stocks and SHORT positions in worst ranking


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DARK HORSE HEDGE UPDATE

DARK HORSE HEDGE UPDATE 

By Scott at Sabrient and Ilene of PSW

Black and white tilted view of horse grazing in meadow with wooden fence in foreground

You can run, you can run, tell my friend-boy, Willie Brown.
You can run, tell my friend-boy, Willie Brown.
Lord, that I’m standin’ at the crossroad, babe, I believe I’m sinking down.

Crossroads, Robert Johnson

Heading into Friday July 23, 2010 the market is again at a technical crossroad with the SPX closing Thursday at 1093.7, above the 50-day Moving Average of 1085.5. The MACD 12-26-9 remains close but still under the (zero) signal line at -1.13, with the RSI 14-day at 45.26.  There is lateral resistance at the 1096 level from the close last Thursday showing how the market has traveled a long way the past week to get nowhere.

Amazon.com Inc. (AMZN) fell short of analysts’ forecasts after Thursday’s close and was down 14% in after-hours trading, suggesting that the market may follow the pattern it has been in most of the summer.

Up 200, down 200, up 200, down 200 - wash out your savings, rinse and repeat!  What a total sham of a market we have these days with machines running us up and down on virtually no news at all.  Yesterday they would have you believe that Ben Bernanke caused a sell-off. How ridiculous is that?  He didn’t say one thing that he didn’t already say in the Fed Minutes that were released on the 14th, which were the notes from the meeting of June 23rd so for analysts to get on TV and say “the markets were concerned by the Chairman’s comments” is beyond stupid – it’s criminal negligence.  Phil’s Thrill-Ride Thursday.


[chart from freestockchart.com]

Thursday’s economic releases were less than encouraging with a jump in the number of people seeking unemployment benefits. Sales of previously owned homes fell, but the market shrugged it off as seasonal and rallied on the earnings of Caterpillar Inc., UPS Inc., and others that beat estimates. However, the…
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DARK HORSE HEDGE UPDATE

DARK HORSE HEDGE UPDATE 

Black and white tilted view of horse grazing in meadow with wooden fence in foreground

By Scott at Sabrient and Ilene of PSW

You can run, you can run, tell my friend-boy, Willie Brown.
You can run, tell my friend-boy, Willie Brown.
Lord, that I’m standin’ at the crossroad, babe,
I believe I’m sinking down.

- Crossroads, Robert Johnson

Heading into Friday July 23, 2010 the market is again at a technical crossroad with the SPX closing Thursday at 1093.7, above the 50-day Moving Average of 1085.5. The MACD 12-26-9 remains close but still under the (zero) signal line at -1.13, with the RSI 14-day at 45.26.  There is lateral resistance at the 1096 level from the close last Thursday showing how the market has traveled a long way the past week to get nowhere.

Amazon.com Inc. (AMZN) fell short of analysts’ forecasts after Thursday’s close and was down 14% in after-hours trading, suggesting that the market may follow the pattern it has been in most of the summer.

Up 200, down 200, up 200, down 200 - wash out your savings, rinse and repeat!  What a total sham of a market we have these days with machines running us up and down on virtually no news at all.  Yesterday they would have you believe that Ben Bernanke caused a sell-off. How ridiculous is that?  He didn’t say one thing that he didn’t already say in the Fed Minutes that were released on the 14th, which were the notes from the meeting of June 23rd so for analysts to get on TV and say “the markets were concerned by the Chairman’s comments” is beyond stupid – it’s criminal negligence.  Phil’s Thrill-Ride Thursday.


[chart from freestockchart.com]

Thursday’s economic releases were less than encouraging with a jump in the number of people seeking unemployment benefits. Sales of previously owned homes fell, but the market shrugged it off as seasonal and rallied on the earnings of Caterpillar Inc., UPS Inc., and others that beat estimates. However, the SPX hasn’t been able to break through resistance at 1096 and essentially has gone nowhere since last Thursday.…
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DARK HORSE HEDGE

DARK HORSE HEDGE 7-18-10

By Scott at Sabrient and Ilene of PSW

Friday gave us a real-time example of why we use Hysteresis* and confirmations from our technical signals, MACD 12-26-9 and RSI 14-day, to select and monitor the tilt (long-short ratio) of the Dark Horse Hedge’s portfolio.  

The SHORT tilt Friday allowed us to make +1.37% from our 6 SHORT, 3 LONG positions while the S&P 500 gave back -2.88%.  The economic data out Friday of course played a large roll in the failure of our indicators to turn from short to BALANCED.  A sharp decline in the University of Michigan Consumer Index to 65 in July compared poorly with a June figure of 76 and Briefing.com’s estimate of 74.5.  Google’s earnings miss didn’t help either as the S&P 500 fell through its short-term support area to close at 1064.88.  The MACD reading is currently at -3.56 and RSI 14-day at 42.85 (bullish signal is above 50).  The preponderance of evidence heading into the July 19 week is that the market needs to find support in the 1040 range.  

Despite the poor economic data that pushed the market lower on Friday, 19 of 23 S&P 500 companies reporting thus far reported better than projected EPS, and 15 of them beat revenues as well.

Earnings reports will continue to flow in this week.  In our portfolio Western Digital Corp (WDC, long position) reports profits on Tuesday while USG Corp (USG, short position) and Sun Trust Banks Inc (STI, short position) report their losses on July 22.  We will continue to monitor the market action and look for guidance on entering new positions. Key support areas appear to be 1040, 1022 and then 995.

Dark Horse Hedge maintains 10% cash for swing trade opportunities and we are highlighting one for entry on Monday at the Open.

SHORT Terex Corp. (TEX) at the Open Monday.  

TEX will report its latest loss figures on Tuesday, July 21. Twenty analysts project losses ranging from -$.15 to -$.44 with an average of -$.30.  Looking back over the last four quarterly announcements, we see analysts often underestimate Terex’s losses.  For example, in March 2010, analysts estimated -$.52 while the actual loss was $.64. In December 2009, analysts targeted -$.49 and TEX delivered -$.89.  In September 2009, the loss was projected to be $.34 and the company came in at -$.77.  In June 2009, investors were…
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The Dark Horse Hedge

The Dark Horse Hedge

By Scott Brown at Sabrient, and Ilene, at Phil’s Stock World

Silhouette of Horses Jumping a Steeplchase

Scott Brown, Managing Director – Retail Division at Sabrient, is launching a newsletter with Phil’s Stock World based on the highly successful and popular Investors’ (H)Edge product.  The Dark Horse Hedge newsletter is a Long/Short retail portfolio taking advantage of technical market trends to tilt the balance of LONG vs. SHORT in bearish, bullish or range bound markets for added Alpha (the measure of return on a risk adjusted basis).  Long and short equity positions taken in The Dark Horse Hedge portfolio will be chosen using to Sabrient’s rating system, which is primarily based on fundamental criteria. Because the stock positions will generally be held for intermediate to long periods, these positions are ideal for using with option strategies taught by Phil Davis, of Phil’s Stock World.

The Dark Horse Hedge (DHH) newsletter will follow a number of guidelines in an attempt to minimize systemic risk, or “Beta.” Beta is a measure of the volatility of a portfolio in comparison to the market as a whole.  To keep beta low, the DHH portfolio will have both long and short positions.  Consequently, dramatic moves in the market will always be in the direction of at least part of the portfolio.

Using Sabrient’s rating system, we will focus on being long high quality stocks, and short low quality stocks.  Long positions should fare better than average during market selloffs.  In contrast, the short positions, selected from the lowest ranking stocks, should perform well during selloffs. These stocks are also expected to underperform higher quality names in a stronger market.  This strategy is designed to balance the goal of attaining Alpha with the desire to keep Beta relatively low.

We will follow this list of guidelines in building the DHH portfolio.

1.  When fully invested, the Portfolio will have 24 positions.  However the portfolio may not be fully invested.

2.  Tilting (or weighing) of the portfolio will be based on the position of the SPX relative to its 50 and 200 day Moving Averages

  • If the SPX is below both its 50


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Zero Hedge

Something Appears To Be Going On With Gold

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Something appears to be happening to gold. That something is either China finally revealing its true gold inventory, which is unlikely, or, more likely, the biggest fat finger in the history of gold, as a liquidity testing algo goes absolutely insane in the pre-open period (and loses its job on the BIS' payroll). Or, most likely, just an ongoing bad print.

 

... and the algo, or the bad feed, or whatever, keeps going. $1400 now.

 

 

And... CTRL-Z. The...



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Chart School

S&P 500 Snapshot: Dithering Near the Record High on Mixed Signals

Courtesy of Doug Short.

The S&P 500 traded in a bit of a confused fashion during the morning, oscillating between its 0.23% and -0.23% intraday peak and trough in the first two hours of trading. The Second Estimate of Q3 GDP beat forecasts with its upward revision from 3.5% to 3.9%. But Consumer Confidence unexpectedly dropped, probably not a welcome signal as we approach the holiday shopping season. The index then dithered through the day in a narrow range, the only drama being whether it would log its 47th record close of 2014. It did not, ending the day with a fractional -0.12% decline. But perhaps tomorrow's close will give us a rationale for an extra helping o...



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Phil's Favorites

Follow The Sand To The Real Fracking Boom

Follow The Sand To The Real Fracking Boom

By James Stafford of OilPrice.com

When it takes up to four million pounds of sand to frack a single well, it’s no wonder that demand is outpacing supply and frack sand producers are becoming the biggest behind-the-scenes beneficiaries of the American oil and gas boom.

Demand is exploding for “frac sand”--a durable, high-purity quartz sand used to help produce petroleum fluids and prop up man-made fractures in shale rock formations through which oil and gas flows—turning this segment into the top driver of value in the shale revolution.

“One ...



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All About Trends

Mid-Day Update

Reminder: David 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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Sabrient

Sector Detector: Holiday fever takes hold of stock investors, but a pullback is needed

Courtesy of Sabrient Systems and Gradient Analytics

With warmer weather arriving to melt the early snowfall across much of the country, investors seem to be catching a severe case of holiday fever and positioning themselves for the seasonally bullish time of the year. And to give an added boost, both Europe and Asia provided more fuel for the bull’s fire last week with stimulus announcements, particularly China’s interest rate cut. Yes, all systems are go for U.S. equities as there really is no other game in town. But nothing goes up in a straight line, not even during the holidays, so a near-term market pullback would be a healthy way to prevent a steeper correction in January.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based Sector...



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Digital Currencies

Bitcoin Mining

Bitcoin Mining

Courtesy of Global Economic Intersection

By Rod Garratt and Rosa Hayes - Liberty Street Economics, Federal Reserve Bank of New York

In June 2014, the mining pool Ghash.IO briefly controlled more than half of all mining power in the Bitcoin network, awakening fears that it might attempt to manipulate the blockchain, the public record of all Bitcoin transactions. Alarming headlines splattered the blogosphere. But should members of the Bitcoin community be worried?

Miners are members of the Bitcoin community who engage in a proce...



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OpTrader

Swing trading portfolio - week of November 25th, 2014

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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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's the Happy Thanksgiving Edition of Stock World Weekly!

Click on this link and sign in with your PSW user name and password. 

Picture via Pixabay.

...

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Market Shadows

Official Moves in the Market Shadows' Virtual Portfolio

By Ilene 

I officially bought 250 shares of EZCH at $18.76 and sold 300 shares of IGT at $17.09 in Market Shadows' Virtual Portfolio yesterday (Fri. 11-21).

Click here for Thursday's post where I was thinking about buying EZCH. After further reading, I decided to add it to the virtual portfolio and to sell IGT and several other stocks, which we'll be saying goodbye to next week.

Notes

1. th...



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Option Review

Yamana Gold call options sink

Yamana Gold call options sink

By Andrew Wilkinson at Interactive Brokers

A four-year low for the spot price of gold has had a devastating impact on Yamana Gold (Ticker: AUY), with shares in the name down at the lowest price in six years. Some option traders were especially keen to sell premium and appear to see few signs of a lasting rebound within the next five months. The price of gold suffered again Wednesday as the dollar strengthened and stock prices advanced. The post price of gold fell to $1145 adding further pain to share prices of gold miners. Shares in Yamana Gold tumbled to $3.62 and the lowest price since 2008 as call option sellers used the April expiration contract to write premium at the $5.00 strike. That strike is now 38% above the price of the stock. Premium writers took in around 16-cents per contract o...



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Pharmboy

Biotechs & Bubbles

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

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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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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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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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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