Archive for December, 2005

Tuesday’s Thoughts

Wow! I hate to be right sometimes, especially this fast – just as oil was moving down to $57 they blew up a pipeline in Iraq. Much as I despise conspiracy theorists, we have to believe there is something up when I can predict a terror attack based on a commodity chart!

You need to keep in mind that a small country like Saudi Arabia (26M people) produces $500M a day in oil at these prices. A $1 drop in price costs somebody $3.6Bn a year in that country alone! You don’t need Columbo on your team to follow the money in this industry…

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

GS has a mini scandal to deal in with Japan and has a lot of technical weakness to overcome. A break down below $126 could lead to a great fall down to support at $116 but don’t touch it if it goes up.

We were never sorry that we shorted BSX way back on the 12/5 TOTD and boy are we going to be happy now! GDT just drastically cut outlook “well below” wall street expectations (which were already lowered). It looks to me like “well below” is on the order of half or less in earnings on 20% lower sales. I wonder if JNJ will get the lift they deserve out of this for being smart enough to walk away from this deal?

BMY got a nice approval today on arthritis medication and should get a nice jump but it’s a crowded field and the stock is already up from $21 on anticipation of this so do not get involved at $25 where it will likely open.

Although MRK is on a roll I think the legal issues will be back and I will be looking for a short entry, especially if the stock moves up further. The new cholesterol drug is really just a combination of existing products and does not merit the move in the stock. Las week’s analyst conference gave me no confidence for the future.

I like ABT in the big pharma space as it is trading below 2003 levels even though revenues and earnings are up 25% since then. The company is nicely diversified into medical devices like J&J did and I think they will start turning up on more people’s lists. The company is resting right on the 50 dma of $41 and I am looking for it…
continue reading





Tuesday Already?

It is very interesting to go away for 3 days and come back to find essentially nothing happened.

To say news is slow is a major understatement. On the other hand, it does give us a good chance to really feel out the market momentum as drift without news is the best indidcator of direction.

The Nikkei and Asian stocks are moving lightly down as exepected with the Nikkei getting a push down due to changes in trading rules aimed as stopping retail investors from getting killed in margin accounts (or, a skeptic would say, to stop them from making big money as they have been doing in this runaway market).

Oil continues to drift down on warm weather and no terror so far this week. Even China’s demand is dropping off a bit so expect to start hearing “demand destruction” bandied about again. Coal stocks should hold up as a lot of the drop in crude is from countries that don’t care about pollution switching to lower cost coal wherever possible.

While oil is still thinking about testing that critical $56 level, there are a lot of people desperate to keep it above that mark because a free fall may lie below it. When I say people I mean very powerful ones and when I say desperate I mean like arrange to blow up a pipeline kind of desperate so we need to keep a keen eye on this one.

On the higher end, both the 50 and 200 dma for crude are at $59 so any break above that will be a real cause for concern but I think the battle for this week will be waged at $57. The dollar should be gaining ground this week with rising consumer confidence, strong retail and low inflation which will help keep oil in line as well.

Gold got another nice boost from inflation actually hitting Japan for the first time in 7 years (nice, healthy inflation – not the bad kind). This should cause a little weakening in the Yen (good for TM and SNE) and continued appreciation in precious metals. I still like NEM and GG in that space for another 5% or so.

The DOW is looking more and more like a flag pattern with strong support (that needs to be tested) at 10,700 and a massive breakout at 11,000. The SPX looks very strong to move…
continue reading





Finally Friday

With just one week to go in the year it will be interesting to see where everything heads but there are a few things that do look pretty good.

Anything can happen this week so risk as little as possible, stocks can be easily manipulated

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

FDX gave great earnings Wednesday and, unless there’s an oil spike, should move up to around $110 before hitting any significant resistance. YELL broke it’s 50 dma of $45.50, closing above it and looks poised to challenge the 200 dma of $49, especially if FedEx continues to roll.

I like Yellow for a long-term play and think it’s very undervalued with a group low p/e of 9. Revenues and earnings look to be up 25% this year after doubling in 2004 when the stock opened the year at $30. Although the stock may have gotten ahead of itself at $64 in March, it was mostly driven down by energy costs which were ultimately passed on without problems to their clients.

Also helping our transport picks (but dooming the country) is a possible strike at UPS. I really doubt it will get that far but it will certainly scare some money out of this $84Bn company that is bound to find its way into some other shippers.

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

I found a fun stock to trade – BBH is a Biotech basket and has options and it really jumps around on news! I think this one is just about to pop back over $210 so I like the Jan $210 calls for $2.50 looking for $3.50.

NOK has a nice new line of phones coming out but I am a little nervous since it is already up over 10% since my initial pick. I am going to wish hard for a pullback to $17.50 before buying in again.

BA should get yet another boost with a $10Bn order from Singapore Airlines but the price is a little stretched for an entry here.

ABS’s deals are all off so look for that one to collapse today. Unlike the shareholders of WFMI, the Albertson’s shareholders understand that it is just a supermarket and even a p/e of 18 is a lot. The stock ran up from $20 on speculation so expect most of that to come out today. If it gets held up at the 200 dma of $22, that would be a great place to short…
continue reading





Thursday Wrap-Up

Now that was a little more like it!

It’s amazing how fast money moves these days…

Oil is down (and looking very weak), the 10 year is down and the world markets are softening so what else is left besides US equities?

Let’s not get too excited yet, this is a very thinly traded pre-holiday market but there is an incredible amount of call buying across the markets that could be a very bullish signal.

Another indicator I like is that volatility is way down at a level that usually signals a bull.

The Nasdaq is the key to the whole thing and today was the first in quite a while that the index didn’t fade, even shrugging off yet another loss from Microsoft and MU’s poor report card.

Having stopped just shy of 2,250 I am hoping for a close above that mark tomorrow. The Nasdaq is in the toughest position, either forming a flag for a nice breakout or a head and shoulder pattern that can lead to devastating losses.

The S&P, on the other hand, had no problem popping back over 1,263 but I am now looking for 1,275 before I can feel at ease with that one.

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

The ante is being upped in the global game of gold poker with a raise of $11 by the Americans today (see http://philstocks.blogspot.com/2005/11/metallica-rules.html for my original article on how this game is played). Expect this action to be met with timid buying in Dubai as they have just had half their pot wiped out in the last round.

The US should raise again tomorrow as our local boys consolidate the supply lines, giving our traders the green light to move up to a higher level. The combination of PDG and ABX (which I called right on the money on the 15th), while a detriment to both companies in the short run, ensures our picks at NEM, GG and MRB one less competitor to have to (don’t say fix prices with) worry about.

While GG and MRB have room to run no matter what – I am leery about NEM at this level and would keep tight stops in place. I felt good enough about GG’s position to take on some Jan $20s today for $1.05, looking for 20%, out with a 10% loss or a $5 drop in gold.

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

Funny, funny people keep buying GM in…
continue reading





Thursday Morning

I am not entering any trades today until I see which way the market goes. Economic numbers were as good as they can be this morning but the markets look dead.

Today was bonus day on Wall Street so there should be a little good feelings lift to the markets but nothing I would count on.

Housing affordability is at the lowest level since 1991 which was the beginning of a terrible 2 year run for the builders so let’s stay out of that for a while…

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

BCRX may get yet another boost as human trials are approved for their avian flu drug. It is not a vaccine so don’t get too excited but, if there are real outbreaks, this thing could really be a very important drug.

The EU is threatening to fine MSFT $2M a day until they learn to play well with others – this has been going on since 2004 and the Europeans are a little fed up with the same monopolistic practices that the US Government seems to have lost interest in.

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

As a salute to the free market system though, Linux is gaining ground with RHAT reporting 100% growth from last year with the operating system now being installed on about 20% of all servers, even more so on high-end systems.

Rather than buying RHAT (which is up 65% this year) I like NOVL, who are aggressively pursuing more Linux business and have been a steady grower for years. NOVL has a p/e of 10 vs. 96 for RHAT so any sign of growth from Novell will rocket the stock.

For some reason the Jan ’07 $10s are just $1.20 so I think I may just put some play money down on it and forget about it for a while.

That same dollar can buy you an actual share of Linux consulting firm VA Software (LNUX) which is a wonderful company that makes no money, ever. This company is the poster child for the .com crash having gone from $300 a share back in 2000 to about .50 in 2002.

Most investors wouldn’t touch this stock with a 10 foot pole and the last few day’s action on the stock should show you why but I have had some success trading its ranges ($1.35-$1.75). It is a hard stock to get in and out of with very thin trading. To say this…
continue reading





What a World!

There is a glimmer of a possibility that we may get a very nice jump next week from some virtual portfolio rebalancing on a global scale.

Global equity funds have been on fire this year, especially in Asia, and money has flowed out of the US all year long. Now it is time for these World funds to take some of that money off the foreign tables and look to the undervalued (we hope) US markets as they position for next year.

I’m expecting the first sign to be a slowing, not a large drop, in the Nikkei’s growth over the next few days followed by a general rise in the S&P above 1,270.

If we don’t make this critical turn and the S&P drops below 1,255 then there may be no hope in the short term – the next few days will tell.

The Dow has shown good support at 10,800 but is, as I always say, a silly indicator.

For Nasdaq support, look to 2,220 but, as I mentioned, without the Nas, this market is just doomed anyway. MU had a shocking disappointment yesterday, so the entire chip sector may drag the market down today.

Microsoft has been singlehandedly weighing down the Nasdaq, both by it’s own pathetic performance and the ripple effect caused by the company’s BS promises to layers of retailers that there would be 6 times more XBox shipments than actually materialized.

Don’t forget, MSFT (through the vendors) has taken the money in the form of deposits/reservations so that is over $1Bn of holiday shopping money that is out of circulation but not spent yet. There are also repercussions of other game sales being put on hold etc…

Gold looks like it may be bouncing off of $495, this was foretold yesterday by the $1.50 jump in NEM yesterday, even as gold declined. Apparently, the miners are the first to know when gold is going to move.

It took a little longer than I thought but the oil patch seems like it may turn up. OPEC says it may cut back production depending on what they see in China. We still can’t figure out China so I can’t imagine what OPEC expects to see in those tea leaves.





Wednesday Wrap-Up

Well today went pretty much as suspected with stocks fading badly in the afternoon for no particular reason.

Essentially the traders are doing what I was advising this morning – taking any small profits and getting back to cash!

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

RIMM is one tough company. Even with all this heartache going on the company hits its marks across the board! I may turn into a fan of these guys if they ever settle their patent dispute.

RHAT is also on fire with profits doubling from last year.

Trade of the Day THQI went up so fast I never got my option. The January ’08 $20s we picked were up $2.10 for the day (40%).

My official pick for the day should have been TM. The trade recommended this morning on the Feb $100s opened at our strike of $3 and ended up at $5.50 for an 85% one day return! The stock gave us no reason to exit but I am setting the stop at $5.25 because any gain in this market is amazing…

Other big winners today:
WDC – up 18%, way more than I thought
FDX – up 5.3%

Obviously today was a pretty easy day to be right with most stocks advancing so rather than review, we should concentrate on what showed real strength today.

YELL – finally looked like it is serious about going up
TASRE – up 11% without a late day fade
HET – crossed my $68.50 target with a vengeance which means “all aboard”
STN – last week’s pick up another 3% today.
GM – I don’t know who was buying in the morning but bless them for giving me another short entry position!
AAPL – took my predicted 4 day vacation, then back to work
GENZ – tomorrow’s the day when it confirms my $73.50 cross
AMZN – could care less about the rest of the Nas
MOT – waking up nicely
WFMI – finally seems ready to go down
SU – never showed strength with the oil patch

I will approach tomorrow the same way as today, very cautiously. It is a great market for stock picking though with no overriding market movers stocks will move on news and rebalancing that can be taken into account.

Tomorrow should be fun!





Trade of the Day – THQI

As I mentioned before, I really like this company and it is a nice income producer if you buy leaps and sell calls so I am going for Jan ’08 $20s for $5 (a $2 premium) and selling the Jan $25s for $1+ for a very nice first month’s return.





Wednesday Morning

I apologize to Kirk Kerkorian as I understand he missed my first 20 warnings to get out of GM but I hear he finally got the message yesterday and is finally going to start wiggling out of his horrendous position.

This, of course, will not be good for GM but that’s what happens when you brashly step in and announce you intend to overpay for a significant stake in a declining company. With GM, it’s the physics that get you: The inertia of a company with (they say) $450Bn in assets falling down, cannot be arrested by a $1.5Bn investor.

Out of 190 newsletters tracked by the Hulbert Financial Digest, only 3 have even a lukewarm recommendation on GM so I think we should close the book on this one. Congratulations if you took the short picks from early November as today’s action could be the start of a major death spiral for the stock. Don’t be greedy though as the sale of GMAC may irrationally boost the stock for a while.

On the opposite side of this trade, Toyota is just about ready to break the $100 barrier and may do so with a vengeance. With a net income of $10Bn, you would think they are selling oil rather than cars – add that to a 10% growth projection (more if GM really sinks) and the stock is way underpriced. This stock is another great global play as American analysts do not grasp the impact that emerging markets will have on TM sales. Obviously being closer to the new customer base will give them a real moat, especially with US companies in no position to invest in additional foreign manufacturing facilities.

So with the GM shorts nearing the end game, I am going to move into a TM call with the Feb $100s for $3 (a $3 premium). Rather than keep a tight stop on this trade, I will also take the very cheap Jan $95 puts for .70 to offset the risk of the stock failing to break $100.

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

ATYT combined poor performance with a lame outlook today so congrats to Amtech for catching that one on Friday. JP Morgan sees something I don’t with their upgrade so I am just going to stay away from this one…

NKE, which we have been worried about since November, also gave very disappointing guidance. The crux of Nike’s problem…
continue reading





Turnaround Wednesday?

Could today be the day? Probably not I’m afraid…

You would have to expect a bounce after the horror of the last 4 days but the Dow tested 10,800 nicely yesterday (a day I happily stayed out of), even with GM in freefall.

The Nasdaq and S&P also held tough yesterday, perhaps embarrassed that they have been outperformed by Japan by 15% since November 1st (40% for the year to date).

http://finance.yahoo.com/q/bc?t=3m&s=%5EN225&l=on&z=m&q=l&c=%5Edji%2C%5Espx+%5Endx

That’s right, the Japanese stock market has increased 40% this year while our indices seem determined to be as flat as possible. An optimist would say that the US markets have held up fairly well considering all that world money has moved into Asia.

With the competition for dollars coming from exploding foreign markets, commodities, real estate and our own government’s voracious appetite for capital – it’s amazing the markets aren’t in freefall.

So amazing, in fact, I’m not going to be jumping into anything today…

I am very, very pessimistic at the moment and today’s action could just be a dead market bounce off some weak technical resistance. The NYC transit strike is still on and, this close to the holidays, you can’t make any assumptions about floor activities.

Yesterday was a great day to cash out so I am pleased with that call as all indices had a good start before collapsing in the afternoon. If surprisingly great housing starts couldn’t get the market going I really don’t know what will.

Although I am still wary today, I am happy that there are now some nice trading opportunities developing but I have to stress that every single trade should be looked at as a quick in and out with a 10% goal and I will be happy to make 5%.

I will be keeping very few positions open, still looking to have as much cash as possible. If the market is going to rally, there will be plentiful opportunities to get in, but, if the market is going to collapse, it will be very hard to get out.

Sorry, but that’s the way it looks…





 
 
 

Zero Hedge

For The First Time Since The Crisis, Companies Spent More On Buybacks And Dividends Than They Earned...

Courtesy of ZeroHedge View original post here.

It will hardly come as a surprise to many, but according to the latest cash flow analysis from Goldman Sachs, 2018 was a record year for S&P 500 cash spending: not only did aggregate spending on capex, R&D, cash acquisitions, dividends, and share repurchases rose by 25% to $2.8 trillion, "the fastest year/year growth in 30 years"...

...



more from Tyler

Phil's Favorites

Fed's Balance Sheet Spikes by $253 Billion, Now Topping $4 Trillion

Courtesy of Pam Martens

By Pam Martens and Russ Martens: October 18, 2019 ~

Shhh! Don’t tell Congress that the Federal Reserve is back to electronically creating money out of thin air to throw at a liquidity problem (of an, as yet, undetermined origin) on Wall Street. And be sure not to mention that the Fed’s balance sheet has shot up in a period of just 42 days by $253 billion. And, of course, don’t remind Congress that before the last Wall Street crisis was over the Fed had secretly, with no oversight from Congress, piled up ...



more from Ilene

Insider Scoop

48 Biggest Movers From Yesterday

Courtesy of Benzinga

Gainers
  • Hepion Pharmaceuticals, Inc. (NASDAQ: HEPA) shares climbed 43.2% to close at $3.58 on Thursday after the company announced the publication of a research article, "A Pan-Cyclophilin Inhibitor, CRV431, Decreases Fibrosis and Tumor Development in Chronic Liver Disease Models," in the peer-reviewed Journal of Pharmacology and Experimental Therapeutics.
  • Synthesis Energy Systems, Inc. (NASDAQ: SES) rose 26.9% to close at $9.20 after surging 12.24% on Wednesday.
  • Assembly Biosciences, Inc...


http://www.insidercow.com/ more from Insider

Kimble Charting Solutions

Bank Index Breakout? Stock Market Bulls Sure Hope So

Courtesy of Chris Kimble

One of the most important sectors of the stock market is the banking industry and bank stocks.

When the banks are healthy, the economy is likely doing well. And when bank stocks are participating in a market rally, then it bodes well for the broader stock market.

In today’s chart, we look at the Bank Index (BKX).

As you can see, the banks have been in a falling channel for the past 20 months. As well, the banks have been lagging the broader market during this time as well – see the Ratio in the bottom half of the chart above.

That said, th...



more from Kimble C.S.

The Technical Traders

Currencies Show A Shift to Safety And Maturity - What Does It Mean?

Courtesy of Technical Traders

Recent rotation in multiple foreign currencies hints at the fact that a new stage of the “Capital Shift” process is taking place and that skilled technical investors need to pay very close attention to how these currencies continue to react over the next 3 to 6+ months.  In the recent past, most of the world’s foreign currencies were declining in value while the US Dollar continued to strengthen.  In fact, we authored many research articles about these trends and how weakness in foreign currencies will drive new foreign investment into the US stock markets for two simple reasons; strength and security. 

Now that a few of the world’s most ...



more from Tech. Traders

Chart School

Review of Andrew CardWell RSI with Wyckoff price waves

Courtesy of Read the Ticker

RSI measures relative strength of price action of a set period versus prior set periods. It helps review the price swings or waves, the power of each price thrust into new ground, or lack of it. Price thrust like many things relies on energy, and energy is not a constant, it has a birth, a life and a death and relative strength helps us see that cycle. 

More from RTT Tv






Chart in video

Click for popup. Clear your browser cache if image is not showing.



...

more from Chart School

Digital Currencies

Zuck Delays Libra Launch Date Due To Issues "Sensitive To Society"

Courtesy of ZeroHedge View original post here.

Authored by William Suberg via CoinTelegraph.com,

Facebook is taking a much more careful approach to Libra than its previous projects, CEO Mark Zuckerberg has confirmed. 

“Obviously we want to move forward at some point soon [and] not have this take many years to roll out,” he said. “But ...



more from Bitcoin

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...



more from Lee

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...



more from Biotech

Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

more from M.T.M.

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...



more from Our Members

Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

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

...

more from Promotions





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...

Learn more About Phil >>


As Seen On:




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.

Market Shadows >>