Archive for January, 2005

Tumultuous Tuesday

Well, we have a real tempest in a teacup today!

Fed days are often stock market poison but, after 14 rounds of hikes slamming the markets, Rocky may finally be ready to come off the ropes…

Just like the final round in Rocky II (because in Rocky I we were all expecting him to win), it could go either way and we won’t know until 2:20 when the markets either turn up or down, likely reversing whatever they do prior to that time.

The Asian markets are up 100+ pts (as usual) while Europe is more worried about our Fed and is trading down slightly.

Oil is dropping just a bit as OPEC made an early announcement that they will not be cutting production (what a surprise, they will keep selling as much oil as possible for $67 a barrel – gee I’m so surprised). I can scare my little girl by sneaking up behind her 3 or 4 times and still get most of my shriek premium but by the 5th or 6th time, that premium really starts to diminish. OPEC has kids too and they know there is only so long that $25 per barrel will be paid to cover jitters before people realize the monsters in the closet may just be a pile of coats.

World jitters are certainly being reflected in the POG (price of gold) as it flew up to $570 in Dubai but don’t buy yet as the Europeans have brought it back down to $565. The raise will be up to the Americans this morning and I think they just might ahead of a State of the Union message that has people very nervous. Unless the President is willing to tell the people that we will have to suck it up and take some painful steps to get the country back on track (pause for laughter) then there is a serious danger that the world investors will turn their backs on whatever dog and pony show he does try to trot out.

If gold can retake $570 then our gold plays are on. ABX is already flying in the pre-market but you might be able to catch BVN first thing. NAK and MRB don’t really trade pre-market and NAK certainly has room to grow for the next 5 years or so. Add EGO as another little company that could but BVN and NAK…
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Danger Time for America?

Trader Mike’s blog bought this economist cover story to my attention:

http://tradermike.net/images/20060114issuecovUS400.jpg

After all that trouble I went to to get my G8 buddies to follow my 11/14 plan to distract Greenspan by throwing him a lot of retirement parties so he can stop talking down the markets, this article puts him right back in everyone’s face!

The best quote in the article “It may sometimes be expedient for a man to heat the stove with his furniture. But he should not delude himself by believing that he has discovered a wonderful new method of heating his premises.” sums up Mr. Greenspan’s tenure at the fed quite nicely.

This is just one of those reasons I am moving a little more cash towards gold. Here is another nice article on that subject: http://www.gold-eagle.com/editorials_05/hommelberg010506.html





Friday Outlook & TOTD – LLY

Gasoline is up 20% (.24) in 8 days, merry Christmas!

I think/hope some of this nat gas buying is on speculation and short squeezing rather than on the reality that it now costs 150% more than it did last year to heat homes.

This will not affect today’s consumer sentiment reading but will be a major market bummer if it continues into next month.

Until the report at about 9:30-9:50, expect what will either be a dead market bounce or the start of a very nice Friday rally.

=====================================

I am going to apologize to Sunoco, they may actually be a better buy than COP but Conoco has made more investments in production while SUN has focused on cutting costs on current production. While SUN may rise faster than COP, I still think COP is the stock for the future.

VLO is really primed to pop at the moment as are THE, SLB, CVX and PTEN. There is a great sale on BP today as the Kuwaiti government is selling $2Bn worth of the stock in Europe. Just like with GNW, you have to wait for the dust to settle but this will be a great buy very soon as well!

NFLX has reached a critical juncture right at $27.50. There is a lot of downward pressure on the stock but it has steadfastly refused to cross this line. They have done a great job bringing costs down and they have low churn despite their much vaunted competition.

========== Trade of the Day ==============

LLY is guiding up but, most importantly, they announced that they have no more patent expirations this decade! I really don’t think they could have said anything better outside of a cure for something popular. This coupled with the Merck collapse makes this my Trade of the Day!

I’m sorry I missed this earlier in the week but there is no time like the present. The stock dropped $1 yesterday on unfounded guidance fears so ignore the first dollar of today’s rally in the stock. We need to give them another quarter to run and also we will pay less of the jump with a longer call so I’m going for the April $50 at $5 (no more than a $2 premium) and I will look to offset it by selling the current $55 or, if we are lucky, $60 as soon as the premium hits…
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Monday Monday

Game on for gold and oil. From the WSJ : "According to a recent study by the World Gold Council, an industry association of the world’s leading gold-mining companies, investment demand for gold rose 56% in the third quarter and is expected to increase further." According to my "poker with the Saudis" scenario, we should get a pretty nice run to the $520 or so range followed by a sudden, viscous pullback. It snowed in NY this weekend so, of course, that means it has just occurred to many traders that we might use some oil this winter so our oil picks are back in play. PTEN, TDW and OII look ripe for a move and SLB may break $100 if the sector is strong (if VLO and XOM are up). I still love my COP $65s but they have not been loving me so I can’t recommend them. Now we know what’s up with BSX, they just made a bid for GDT, trying to steal it from cheapskate JNJ who had the deal locked but then demanded a discount of 15% from Guidant. Now Boston Scientific is offering back around the original price but I think JNJ was right and that BSX is overpaying so I am going to make make BSX my Trade of The Day as a put. Anything above the 50 dma of $25 will be a gift on this stock, there will be big volume, so that’s not an if – which means if it breaks $24.75 then the Jan $25 put will be a nice gamble as long as it is not for more than the 1.60 that the $27.50 was going for on Friday. BSX is a $22Bn company trying to swallow GDT at $25Bn and it is very, very likely that over the next few days, someone will have a problem with that! On the other side of this trade, any chance to buy GDT for less than $70 is also a gift as analysts will jump on the bandwagon to claim $72 is a fair price for the company. DELL has made a nice, slow rising consolodation and looks to be primed for a nice move. I think they are a very safe bet to stay at or above the 50 dma of $31. HPQ has doubled for the year and Dell has dropped 50%, anyone who buys computers knows that…
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Zero Hedge

WeWork Board, Softbank Officials Push For CEO Neumann's Ouster

Courtesy of ZeroHedge View original post here.

The odds of WeWork co-founder and CEO Adam Neumann becoming "the world's first trillionaire"  maybe about to take another major hit.

In what appears to be the latest attempt to salvage the farce that is the WeWork IPO (and the massive hole it will leave in Masayoshi Son's balance sheet and credibility), ...



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Insider Scoop

Notable Insider Buys In The Past Week: AbbVie, Kraft Heinz And More

Courtesy of Benzinga

Insider buying can be an encouraging signal for potential investors.

A packaged food giant and two drugmakers saw notable insider buying activity this past week.

Some of this insider buying occurred alongside insider sales.

Conventional wisdom says that insiders and 10% owners really only buy shares of a company for one reason — they believe the stock price will rise and they want to profit. So insider...



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Phil's Favorites

Peloton IPO Guide... And Why It Makes No Sense

Courtesy of ZeroHedge

By Scott Willis via Grizzle.com

BOTTOM LINE

At the end of the day, Peloton is a gym membership pretending to be a tech company.

We fully admit the product is exciting and unique in the market, but Peloton still faces the same problem...



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Digital Currencies

Buyer beware: How Libra differs from Bitcoin

 

Buyer beware: How Libra differs from Bitcoin

Recent revelations about the lack of privacy protections in place at the companies involved in Facebook’s new Libra crytocurrency raise concerns about how much trust users can place in Libra. (Shutterstock)

Courtesy of Alfred Lehar, University of Calgary

Facebook, the largest social network in the world, stunned the world earlier this year with the announcement of its own cryptocurrency, Libra.

The launch has raised questions about the difference between Libra and existing cryptocurrencies, as well as the implications of private companies competing with s...



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Lee's Free Thinking

Look Out Bears! Fed New QE Now Up to $165 Billion

Courtesy of Lee Adler

I have been warning for months that the Fed would need new QE to counter the impact of massive waves of Treasury supply. I thought that that would come later, rather than sooner. Sorry folks, wrong about that. The NY Fed announced another round of new TOMO (Temporary Open Market Operations) today.

In addition to the $75 billion in overnight repos that the Fed issued and has been rolling over since Tuesday, next week the Fed will issue another $90 billion. They’ll come in the form of three $30 billion, 14 day repos to be offered next week.

That brings the new Fed QE to a total of $165 billion. Even in the worst days of the financial crisis, I can’t remember the Fed ballooning its balance sheet by $165 bi...



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The Technical Traders

Is A Price Revaluation Event About To Happen?

Courtesy of Technical Traders

Skilled technical traders must be aware that price is setting up for a breakout or breakdown event with recent Doji, Hammer
and other narrow range price bars.  These types of Japanese Candlestick patterns are warnings that price is coiling into
a tight range and the more we see them in a series, the more likely price is building up some type of explosive price breakout/breakdown move in the near future.  The ES (S&P 500 E-mini futures) chart is a perfect example of these types of price bars on the Daily chart (see below).

Tri-Star Tops, Three River Evening Star patterns, Hammers/Hangmen and Dojis are all very common near extreme price peaks and troughs.  The rea...



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Kimble Charting Solutions

India About To Experience Major Strength? Possible Says Joe Friday

Courtesy of Chris Kimble

If one invested in the India ETF (INDA) back in January of 2012, your total 7-year return would be 24%. During the same time frame, the S&P 500 made 124%. The 7-year spread between the two is a large 100%!

Are things about to improve for the INDA ETF and could it be time for the relative weakness to change? Possible!

This chart looks at the INDA/SPX ratio since early 2012. The ratio continues to be in a major downtrend.

The ratio hit a 7-year low a few months ago and this week it kissed those lows again at (1). The ratio near weeks end is attempting to...



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Chart School

Crude Oil Cycle Bottom aligns with Saudi Oil Attack

Courtesy of Read the Ticker

Do the cycles know? Funny how cycle lows attract the need for higher prices, no matter what the news is!

These are the questions before markets on on Monday 16th Aug 2019:

1) A much higher oil price in quick time can not be tolerated by the consumer, as it gives birth to much higher inflation and a tax on the average Joe disposable income. This is recessionary pressure.

2) With (1) above the real issue will be the higher interest rate and US dollar effect on the SP500 near all time highs.

3) A moderately higher oil price is likely to be absorbed and be bullish as it creates income for struggling energy companies and the inflation shock may be muted. 

We shall see. 

...

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Biotech

The Big Pharma Takeover of Medical Cannabis

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

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

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Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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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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