Make Billion$ With StockTwits (and Win a Free Quarter!)
by Phil - July 9th, 2011 4:34 pm
Billions!
That’s right, if you followed Philstockworld on Stocktwits this past month and followed our trade ideas, you could have made Billions of Dollars. Not bad but that’s only a tiny portion of what you get at PSW every day. Needless to say, we’ve had a good month but it’s no fun being right if nobody knows it so let’s review a month of Tweets and also make it worth your while to send others to Our StockTwits Link and follow us there.
For the month of July, every new follower will be entered in a random drawing and one will be selected to win a free 1-year subscription to the PSW Report – our twice-daily Email that gives you access to all of our non-Premium posts as well as Stock World Weekly. If you are already a paying PSW subscriber and win this drawing, we will give you a 3-month extension of your Current Membership Level instead added to your current subscription.
If you are a Member and your friends subscribe and tweet us your name – one of those named members will also be the winner of a 3-month extension of that member’s current level. The more friends you have, the better the chances to win!
We’re doing this because we need to build up our social networking presence so I’ve been tweeting more in June. You can go to our StockTwits site and see all 45 Tweets posted since June 1st (there are many also before that) but I’m just going to review the ones that were less generic (we auto-tweet my posts) to give you an idea of what kind of value your friends can get out of this free service:
philstockworld Phil Davis
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DiggStock World Weekly: Fireworks! Our 12 Dow Plays Make $6,720 in 2 Weeks!
by SWW - July 3rd, 2011 11:54 am
$6,720!
Not bad for our little newsletter… On June 19th, we published this list of 12 bullish trade ideas on the Dow in the weekend edition of Stock World Weekly that are already up $6,720 in just two weeks! How’s that for value?
The July $119/116 bear put spread was still at .90 on Monday, well after we flipped bullish (the "Bernanke Bottom" was called by Phil on Thursday Morning, June 22nd and reported in last week’s SWW) so a nickel loss on that side (5% or $50 on 10 contracts), which was well offset by the following gains:
- AA July $15 puts sold for $0.63, now $0.09 - up $540 (85%)
- BAC 2013 $7.50 puts sold for $0.60, now $0.61 – down $10 (1.6%)
- CSCO Jan $14 puts sold for $0.92, now $0.60 - up $320 (34%)
- DIS July $37 puts sold for $0.55, now $0.06 – up $490 (89%)
- GE 2013 $15 puts sold for $1.40, now $1.16 – up $240 (17%)
- HD Aug $32 puts sold for $0.82, now $0.17 – up $650 (79%)
- HPQ Jan $31 puts sold for $1.60, now $0.93 – up $670 (41%)
- INTC Jan 2013 $20 puts sold for $2.71, now $2.24 – up $470 (17%)
- MMM July $87.50 puts sold for $0.71, now $0.07 - up $640 (90%)
- MSFT 2013 $22.50 puts sold for $2.75, Now $1.94 - up $810 (29%)
- VZ 2013 $35 puts sold for $5.10, now $3.82 – up $1,280 (25%)
- WMT Jan $50 puts sold for $2.05, now $1.43 – up $620 (30%
That’s a total profit of $6,720 on these 12 positions in just two weeks. As our daily readers know, Phil called for cash on Friday so short-term bullish plays like these were taken off the table as we flirt with potential disaster next week.
If, however, the weekend goes smoothly and the markets maintain their bullish bent – we have all this lovely cash to deploy next week (and there are two brand new bullish trade ideas in this weekend’s edition of Stock World Weekly) and that BAC play still hasn’t made it’s money yet while GE is up "just" 17% so far – so both of those trade ideas are still ripe for new entries but, as Phil likes to say:
"Never worry about getting back to cash – I’m sure we’ll find something to trade tomorrow."
Click here for the latest Stock World Weekly: Fireworks
We hope you and your family have a very happy holiday weekend.
All the best,
Ilene & Elliot
…
Testy Tuesday – Dow 12,000 or Dow 11,500?
by Phil - June 14th, 2011 8:26 am
Are we "still too heavy"?
That was what I said about valuations back on May 4th, when we set new watch levels. $96 was our goal on oil, we hit that and went long yesterday. Of course, in our upside-down Wonderland Market, falling oil prices are somehow BAD for the Transports and we thought we accounted for that with our 2,448 target but they failed that last week and fell another 125 (5%) since then. Similarly (easier to write than say), the Nasdaq blew through our 2,700 line and bottomed out at 2,639 yesterday (-2.25%) but the Russell has been the biggest surprise, leading us all the way down to 773 in yesterday’s action before bouncing back to lucky 777.
As we expected yesterday, the Dollar was sacrificed on the altar of keeping the markets from going to Hell in a handbasket – dropping all the way from 75.20 to 74.80 (0.5%) which gave us only a flat market but the 74.60 line held in overnight and we’re back to 74.80 and now the pre-markets are wondering why they gained 0.75% in overnight trading. Oil popped all the way back to $97.80 before failing spectacularly back to $96.50 but we have stayed on the sidelines so far, waiting to see if we can establish a new (hopefully lower) range to trade in.
We did take a poke at higher oil prices with the USO July $39 calls at $1.10 and they finished the day right at $1.10 so very dull so far but we figured oil might be good for a pop into Wednesday’s inventories. We also shed most of our bearish bets on yesterday’s dip and flipped fairly bullish but we haven’t done a lot of bottom fishing yet as our main plan is to use a fake market rally to cash out the longs we have left and flip short into the holiday weekend. As the moment though, I have noticed that the Dow has been holding up much better than it’s peers and we have that lovely 12,000 line to use as a stop so let’s construct a short hedge that pays big bucks below 12,000:
Notice how the Dow is holding up better than the other indices. Part of that is a flight to safety as several Dow components are considered "safety stocks" like KFT, MCD, JNJ… But, in the long haul, they all fall down eventually so we…
Fiscally Irresponsible Friday – Proles Swallow $858Bn in Debt for $ 613 and Some Magic Beans
by Phil - December 17th, 2010 8:18 am
Good job Congress!
Way to bend of and take it from your new Republican Masters! Not since Jack sold his cow for some magic beans has a deal like this been made by our "leadership" where families earning between $35,000 and $64,000 go $7,800 further into debt to get a $613 tax break while families earning between $5M and $10M get $38,590 and families earning $50M to $100M get $380,590 and families (or Corporations, of course) earning $500M to $1Bn get $3,859,000 or about 12,590 times more than the average middle class family but, then again, they deserve it because – they are that much better than you are!
Face it, unless you are in an income category where your tax benefit has 5 digits, you are what George Orwell (who worked in England’s Ministry of Propaganda) called a "Prole." In "1984" the Proles (proletariat) were the vast majority of the populace, the working class of Oceana. Though the proles are the majority, they are unimportant. The Party explicitly teaches that the Proles are "natural inferiors who must be kept in subjection, like animals". As one of the Party Leaders observes: "the relative freedom of working-class people is merely a symptom of the contempt in which they are held".
It is not only the Party which regards the Proles as unimportant: the arch-enemy, Goldstein, dismisses them too, referring to the divisions of High, Middle and Low people, in which the Low are essentially destined to remain powerless. This attitude has much in common with the one Huxley shows in Brave New World—the lower castes are mindless enough to be satisfied with little, and can be relied on not to be troublesome.
You’re not going to be any trouble are you? Enjoy your $613, little people. That’s what, about a month’s worth of gasoline and cable TV? Congratulations on your voting acumen – you certainly have gotten the Government that you deserve! I apologize because I had mischaracterized the tax cuts as being fairer to the Middle Class last week, when I said it was only an outrage. I thought that families earning $50,000 would be getting $900, not $613, but it turns out that 12,590 times $287 is another $3,613,330 that could be given to a Billionaire and they NEED that money to buy stuff that might create a job while you would only…
DARK HORSE HEDGE – One More Cup of Coffee Before You Go, GMCR
by ilene - October 20th, 2010 10:06 pm
DARK HORSE HEDGE – One More Cup of Coffee Before You Go, GMCR
By Scott Brown at Sabrient, and Ilene at Phil’s Stock World
Your sister sees the future
Like your momma and yourself
You’ve never learned to read or write
There’s no books upon your shelfAnd your pleasure knows no limits
Your voice is like a meadowlark
But your heart is like an ocean
Mysterious and darkOne more cup of coffee for the road
One more cup of coffee ‘fore I go
To the valley below – Bob Dylan
Green Mountain Coffee Roasters (GMCR) doesn’t at first glance seem like the type of company that would need to be “mysterious and dark” but when “pleasure knows no limits” it can down into a metaphorical valley. How does GMCR, engaged in the specialty coffee and coffee maker businesses, churning out quarterly profits that meet analyst expectations while growing at 61% per year over the past five years, and expected to grow another 35% over the next five years, end up at #18 on the Sabrient VCU short ranking?
The fact that Michelle Stacy, President of Keurig (patented single cup brewing technology for GMCR), exercised 30,000 options at $6.20 on August 13, 2010 and simultaneously sold the shares on the open market at $30.95 for gross proceeds of $928,500, again exercised 5,000 options at $6.20 on September 13, 2010 and simultaneously sold the shares on the open market at $35.40 for gross proceeds of $177,000 and a week later exercised another 5,000 shares from $6.20-$9.14 and simultaneously sold the shares on the open market at $37 for gross proceeds of $185,000 alone isn’t enough to raise any eyebrows or red flags.
There are many reasons that insiders may sell shares which have nothing to do with their perception of the company’s prospects or valuation. However, when a week after the last insider sale the company discloses that the SEC is inquiring into the company’s methods for accounting for revenues, it starts to look a bit more dark and mysterious. It is worth noting that Keurig accounted for over half of GMCR revenue last year, so when the President of Keurig is selling, it is worth a further look. When the SEC discloses an inquiry into the companies accounting it is…
DARK HORSE HEDGE – One More Cup of Coffee Before You Go, GMCR
by Sabrient - October 20th, 2010 9:59 pm
DARK HORSE HEDGE – One More Cup of Coffee Before You Go, GMCR
By Scott Brown at Sabrient, and Ilene at Phil’s Stock World
Your sister sees the future
Like your momma and yourself
You’ve never learned to read or write
There’s no books upon your shelfAnd your pleasure knows no limits
Your voice is like a meadowlark
But your heart is like an ocean
Mysterious and darkOne more cup of coffee for the road
One more cup of coffee ‘fore I go
To the valley below – Bob Dylan
Green Mountain Coffee Roasters (GMCR) doesn’t at first glance seem like the type of company that would need to be “mysterious and dark” but when “pleasure knows no limits” it can down into a metaphorical valley. How does GMCR, engaged in the specialty coffee and coffee maker businesses, churning out quarterly profits that meet analyst expectations while growing at 61% per year over the past five years, and expected to grow another 35% over the next five years, end up at #18 on the Sabrient VCU short ranking?
The fact that Michelle Stacy, President of Keurig (patented single cup brewing technology for GMCR), exercised 30,000 options at $6.20 on August 13, 2010 and simultaneously sold the shares on the open market at $30.95 for gross proceeds of $928,500, again exercised 5,000 options at $6.20 on September 13, 2010 and simultaneously sold the shares on the open market at $35.40 for gross proceeds of $177,000 and a week later exercised another 5,000 shares from $6.20-$9.14 and simultaneously sold the shares on the open market at $37 for gross proceeds of $185,000 alone isn’t enough to raise any eyebrows or red flags.
There are many reasons that insiders may sell shares which have nothing to do with their perception of the company’s prospects or valuation. However, when a week after the last insider sale the company discloses that the SEC is inquiring into the company’s methods for accounting for revenues, it starts to look a bit more dark and mysterious. It is worth noting that Keurig accounted for over half of GMCR revenue last year, so when the President of Keurig is selling, it is worth a further look. When the SEC discloses an inquiry into the companies accounting…
Weekend Reading – Oil’s Not Well
by Phil - October 17th, 2010 4:51 pm
Wow, we covered a lot of stuff in Member Chat this weekend.
After a really fun Friday where we had another couple of massive index puts pay off in the morning and on Saturday we reviewed our October’s Overbought 8 list, with half our trade ideas already past our 50% targets and 3 of the 4 remaining spreads on track. In Member Chat, we discussed the possibility of a pullback in oil next week as the barrel count on the NYMEX is dangerously high with over 600M barrels currently scheduled to deliver to Cushing in the next 90 days. Cushing has a capacity of about 40M barrels a month and they are full but, even if they weren’t, 480M barrels need to be dumped and rolled into Feb, March and April contracts between now and the year’s end.
The November contracts settle on Wednesday, the 20th and any traders caught holding those "hot potato" contracts have to figure out what they will actually do with millions of barrels of oil. Right now, there are 141M barrels earmarked for November delivery and, if this month is typical, only about 20M are actually needed. 141,000 contracts (1,000 barrels each) were traded 210,000 times on Friday as prices fell from $84.12 at 3am (Asia trading) to $80.75 into the NYMEX close. It is easier for a NYMEX trader to drink a barrel of oil than fob off his contracts to some other sucker during a glut – or something like that is the old biblical saying…
What I love about investors and the MSM in this country is their ability to completely ignore the fact that, ultimately, someone must consume the oil that is leading the inflationary drive in the economy. Actually, we shouldn’t blame oil (I said as much last week) but, as I also said last week, QE is the wrong kind of inflation because we are not giving any money to the workers. Ultimately, it’s the workers who have to buy food and fuel you know….
One thing people don’t realize from a global perspective is that gasoline prices are subsidized for India and China to the tune of nearly $40 per barrel so China’s 11Mbd of fuel subsidies is bleeding Beijing by $13Bn a month and that goes up $3Bn a month for every $10 increase in…
Turn Up Tuesday – POT Gets Really High
by Phil - August 17th, 2010 8:29 am
BHP offered to pay $38.4Bn for POT this morning.
Is BHP high or is this market seriously undervalued? Well, for one thing, POT turned them down saying the offer ($130/share – CASH) "substantially undervalues PotashCorp and fails to reflect both the value of our premier position in a strategically vital industry and our unparalleled future growth prospects." CEO Dallas Howe continues: "We believe it is critical for our shareholders to be aware of this aggressive attempt to acquire their company for significantly less than its intrinsic value. The fertilizer industry is emerging from the recent global economic downturn, and we feel strongly that PotashCorp shareholders should benefit from the current and potential value of the Company. We believe the BHP Billiton proposal is an opportunistic effort to transfer that value to its own shareholders."
Considering POT closed at $112 yesterday, so a 16% pop in the offer but POT was at $85 at the beginning of July and hasn’t been over $130 since the 2008 crash, although they did top out at $239.35 so I suppose a very patient investor could imagine that within 5 years, $200 is not an unreasonable goal. Still, is that enough reason to turn down $130 of cash now, with the proverbial 1.3 birds in the hand being worth 2 in the bush?
Back on July 12th (when POT was trading at $92.81 and the Dow was at 10,200) my premise for looking for S&P 1,100 and Dow 10,700 was that Corporate America’s Non-Financial companies were sitting on a $2Tn pile of cash and, as an old M&A consultant, it seemed pretty obvious to me what was going to happen to that money.
We’ve had plenty of M&A activity recently. In fact, M&A activity in the first half of 2010 saw 5,345 deals (up 49% from last year), the highest level since 2007, indicating that companies are INCREASING their confidence in the economy despite the BS spin you are getting from politicos who NEED you to believe things are worse than they seem and the MSM, who push fear like heroin to create a NEED for their product.
POT’s board of directors is very confident that they don’t NEED BHP’s money and BHP may NEED POT badly enough to want to sweeten the deal – frankly I’m surprised at the timing because I would have waited for another dip and the fact that BHP (one of the World’s largest resource companies with $50Bn in annual sales)…
9 Fabulous Dow Plays Plus A Chip Shot (Members Only)
by Phil - July 7th, 2010 7:24 am
We were discussing what to invest in in a terrible market this morning in Member Chat.
I thought it would be handy to add this post to our Buy List because 9 of my 10 picks below are Dow components and there are very easy ways to hedge our Dow purchases against disaster so it will be a good opportunity to construct a self-contained virtual portfolio filled with dividend-paying stocks that are suitable for a long-term retirement account that we can buy using our discount strategy.
Let’s say we allocate $5,000 to each of these positions and we intend to buy $2,500 in the first round and hold $2,500 on the side in cash, in case the Dow does fall more than 20% and the majority of our stocks are put to us in a second round. In the below list, XOM and WMT are more expensive but others are less so you can buy 100 of the big boys (price-wise) and see what’s left or allocate a double helping for those two, so you’d be buying 100 shares for about $4,000 a block (after our discount) and hold back $4,000 on those two.
This is acceptable because we do have $50K in cash sitting around and A) We don’t really believe the Dow is falling below 8,000 B) When the stock is put to us our margin requirement will only be about $25K (assuming 50% margin for stocks held) as our short puts will be gone C) We will have a disaster hedge. On all of these plays, the upside is at least 25% so that’s also our built-in cushion, all the way to Dow 7,307 so we really only need our protection to kick in below 8,000.
Aside from our weekend 500% DXD disaster hedge, which is perfect to cover this group, we can do a very simple, margin-free hedge like the DIA 2012 $95/80 bear call spread for $5.50, which pays $15 if the Dow is below 8,000 in Jan 2012. So $5,500 put into this play returns $15,000, offering us an additional 20% downside protection, now down to Dow 5,845. If that seems silly to you (it does to me) then a $2,500 hedge that gives us an additional 10% downside protection would seem to be plenty.
Once we have that hedge in place, we can aim to make it free by selling puts. To make up $2,500 over…
Financial Regulation Friday – Finally!
by Phil - June 25th, 2010 8:22 am
Yipeee, financial regulation!
That’s all I’m going to say about it. I’m sure there will be thousands of places to read all about it all weekend. I’ll just say that it’s about freakin’ time SOMEBODY did SOMETHING to reign in the madness. Whether it’s a good bill or a bad bill doesn’t really matter as much as the concept that financial institutions NEED to be regulated. The rest we can get right over time. I consider this to be a huge market positive because the Financial sector has grown like a cancer on the markets since deregulation. When corporate profits totaled $4Tn in the 80s, the Financial sector made $400Bn – now that coprorate profits are $6Tn, the Financials make $2.5Tn – that’s 40% of all the money earned in corporate America and ALL of 2 decades worth of growth going to the Financials!
Not only that, but that $2.5Tn is AFTER bonuses and dividends that add another $2.5Tn to the total so out of $8.5Tn earned in corprorate America, 60% goes to one sector. That’s what a cancer does, it sucks resources away from the healty organs in the body and eventually grows big enough to kill it. America has gone from a country where investors make money by investing in companies that build things and sell things and create jobs to a country where investors gamble with "investing institutions" and, rather than put money into creating energy solutions, we trade 6Bn barrels of oil per month back and forth on the NYMEX in order to decide who will end up taking delivery of 25M barrels (0.4%) at the end of the month.
Why do they do it? The fees, the fees, the fees, the fees. Even the stock market has become a casino and not only do the financials make the fees but they build a culture that tells you to BUYBUYBUY and SELLSELLSELL every other day so they can rake and rake and rake those fees but that is not enough for them – they also have to insert themselves in as Market Makers where they make money on the spread every time you buy and sell but that is not enough and they then track your trading and write programs to analyze your trading patterns so they can bid against you – YOU, their CLIENT!
That’s still not enough so they game the…
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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...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(