Archive for 2005

Weekend Update

STX and all drive makers are on a roll with Seagate about to get the biggest pop on Monday with a well deserved Cramer mention. The p/e of STX is 2/3 of group average and PEG of .83 is almost half but they just raised guidance 10% so the run they are on should be good through $20 before gravity gives us another buying opportunity.

On a pullback, institutional money should start flowing back into this sector but with the Jan 20′s already selling at .55, I like this stock for buying now and looking to sell those calls for $1+ on Monday’s run-up. With the stock at $18.55, it’s a quick 15% if you are called away and it gives you insurance for a retest of the 200 dma of $17.75 which is likely between now and then.

Bank of Canada will almost certainly increase rates to 3.5% on Dec. 6th. With interest rates at 3.25% currently, “Monetary policy is still very accommodative,” said Carlos Leitao, chief economist at Laurentian Bank Securities in Montreal. “They have to be very cautious.” Ouch – we hate that kind of talk! This is their 3rd tightening but they are way behind our Fed and, with Europe having just raised rates, I think the Canadian companies are in for the same hell as US ones have been in all year. This is good for US stocks and bad for Canadian ones who have been enjoying the advantage of a point spread. RIMM is a Canadian company…

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Speaking of RIMM (I know, I’m obsessing but I really think they are going down!), I found out who the nut jobs are who are buying shares – RIMM! Apparently the company has bought $400M (5%) of their own stock over between 10/17 ($57.50) and 11/10 ($66), that represents 10%+ of all the shares that were purchased!

They had announced this plan on 10/11, driving the weak stock from $63 to $66.41 that day and they proceeded to shoot the whole wad as soon as bad news broke 8 days later as the stock dropped to $51, bringing it back to life at $66 again. So, in a low volume run-up after the collapse, RIMM was the “mystery buyer” who took the stock back to its 50 dma! Also, I hate to suggest such an unseemly thing, but it is entirely possible that they were bailing…
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RIMM playing Russian Roulette?

Great article @: http://www.upi.com/Hi-Tech/view.php?StoryID=20051202-100340-5928r

“RIM continues to play Russian roulette with BlackBerry consumers and partners,” Robert Green Sterne, a partner with the law firm of Sterne Kessler Goldstein & Fox, told Wireless World. “They need to respect the patent rights of NTP, the inventor and property owner. Instead, RIM is acting like a patent squatter by pursuing a scorched earth legal strategy that will, in the end, burn its users and stakeholders.”

I think that sums it up nicely!Also, from the today’s NY Times:

“R.I.M., which is based in Waterloo, Ontario, promises it has a solution that will keep its beloved BlackBerries humming even in the face of an injunction. While most analysts view the prospects of a shutdown as unlikely, they have little faith in the proposed solution, which has potential legal pitfalls of its own. What’s more, the history of the struggle between the companies means that no outcome is certain. (R.I.M. declined to comment.)”

“If NTP wins an injunction to end BlackBerry service and R.I.M. keeps BlackBerry service operating through the new software, Mr. Stout said his company would ask for an immediate judicial review of the changes. If that hearing finds R.I.M. is still infringing on NTP’s patents, Mr. Stout said NTP would ask that R.I.M. and every wireless carrier in the United States offering BlackBerry service be cited for contempt.””R.I.M. still has other legal options. The United States Patent and Trademark Office is reviewing eight of NTP’s patents and has issued preliminary rulings against the company in several cases. But final rulings are unlikely to come for months and a two-part appeal process could extend the review for years. In any case, NTP needs only a single patent upheld to gain an injunction.””

“If this goes as far as an injunction, I won’t feel sorry for them,” Mr. Stout said. “No BlackBerry customer can say that NTP didn’t offer a license. If R.I.M. turns that down, they have no one to blame but themselves for the consequences. BlackBerry users should tell R.I.M. to stop fooling around with their service and take the license.”This is like a great, public divorce battle and Blackberry users are the kids stuck in the middle.





BA – Up Up and Away

Boeings rival Airbus seems to have blown it with the A380 – it’s just too darn big for US airports without some major restructuring that they just don’t have time to do, even if they did want to spend the money.

The A380, while seeming very cool, is a gas guzzler and you just know it would only be a quarter or two before airlines take out the casino and the bowling alley and the lounge area to add another 500 seats (imagine the bathroom lines!).

Boeing scored 2 major air show victories in a row and the stock has been on fire. This is another one of those “You’ve got to put your past behind you” kind of stocks that is really is undervalued due to prior disappointments.

The PEG ratio on this stock is .4, you can hardly find a penny stock with that kind of value (and I think the growth estimates of 13% may be a little low)!

Aside from the planes we all know and love, they are also making the coolest little unmanned drones for the army that the Democrats love to use in “Police Actions” and I think it is pretty likely that we will either have a Democratic Government in 3 years or at least a more Democratish Republican (no, not Cheney).

Props to Cramer for pounding the drum all year but I prefer to come in for the quick kills and I think now is the time. I will not make this trade if the DOW (yes, the stupid Dow) continues down but I expect both it and component BA to be well up on Monday.

I’m going to take a spread on this stock like the one that worked on Google (but for a lot less money) in anticipation of earnings and, more importantly, raised guidance.

The stock should be up tomorrow due to some Cramer pumping so I will start with the Feb $75 call for $1 and I will look to exit if it doubles. I will also offer $1 for the Feb $65 put (a 30% discount) also looking for a double.

If we exit either prior to earnings we will have to decide what to do with the other half of the trade. The safest thing to do would be to take the .35-.60 that remains on the other side and call it a profit of…
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GM – We’ll Pay you to Love Us!

GM attracts car buyers by offering cash incentives for you to drive away with one of their cars so I suppose it makes sense to them to offer cash incentives to investors to drive away with stock certificates. The difference is, when GM goes bankrupt – the car is still worth something!

GM still fascinates me every time someone buys it. I guess people were buying Calpine too before the totality of their failure set in. You would think a look at this 2 year chart would stop someone from buying GM, BUT Nooooooo!

http://finance.yahoo.com/q/bc?s=GM&t=2y&l=on&z=m&q=l&c=cpn

This is what a company looks like just before it dies! Change the symobl on the chart to TM and you can see exactly where all of GM’s value went.

What really kills me about GM this week is they seem determined to pay out their usual $1Bn dividend as if nothing is amiss. Last year they made $3Bn, the year before that $4Bn, the year before that $1.6Bn – this year they are posting a $3Bn loss!!! Perhaps now is not the best time to give all the stockholders $2/share for the year…

How many people do you think are holding on until December 10th, just to get that little bonus? I’m sure Mr. Kerkorian is, he paid $31 for this mess and I’m sure he’d like to at least pick up a couple of bucks before he moves on. On the other hand, what if they cancel it? It’s a real damned if you do, damned if you don’t kind of thing.

Also, I noticed something strange on the books: The company declared a $12Bn gain in cash from “Investments” last quarter which is a huge and unusual amount that, frankly, makes me suspicious. Without that shot of cash, the company would have been cash negative to the tune of $13Bn for the quarter!

Not as strange but ignored by the press is the fact that the company has goosed income this year by reporting a negative income tax expense of $6Bn in the first 3 quarters. If they are getting a refund, great but if they are booking a tax credit accrual based on “future earnings” then that will be just another $6Bn that poofs away during bankruptcy.

Other unusual items they booked last quarter were:

  • $5Bn from “Financing Activities” vs $5Bn in all of ’04, $1.3Bn in ’03 and none


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Weekly Wrap Up

Well the markets turned, although you wouldn’t know it from CNBC or the other news agencies because the DOW stayed down. That’s right, the Nasdaq, NYMEX, S&P and Russell 2000 all posted gains representing over 2,500 stocks but all you will hear about is that the 30 stock index of industrial dinosaurs had a bad day.

I’m not going to go into another rant about how stupid the DJIA is, just ignore that index unless you are investing in big companies who get dragged down with their DOW competitors.

On the overall economic front – more so than the addition of 200K jobs that Bush somehow is trying to take credit for – I think the statistic to watch is Hourly Pay. Hourly Pay rose .2% in November and they revised September and October up as well. That gives us 3.2% average raises for the year and that’s a lot. This is a real indicator of full employment (I always felt that 5% unemployment is full anyway) and should mean the Fed really does have to stop tightening very soon.

Then why are they clamping down on immigration all of a sudden? Well, there are still 900,000 people over the age of 16 who are effectively homeless from Katrina so the politicos are circling the wagons to make sure these people don’t start showing up on unemployment reports! Less than 1/2 of those people have jobs vs. about 65% of the normal population so we need to create about 200,000 new jobs just for this group (assuming they don’t go back to New Orleans to work).

Speaking of New Orleans – the construction industry has added 72K jobs since last month in a season where they are usually laying off so that bodes very well for the materials industry.

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Oil was up almost $1 today but you wouldn’t know it from XOM or COP. XOM was the only one of my oil picks to go down but I have zero tolerance for this sort of thing!

One very weird thing I’ve been watching is the decoupling of COP and SUN, who (up until 10/17) used to trade in tandem. Since then, SUN is up 10% and COP is down 5% for no reason I can see.

http://finance.yahoo.com/q/bc?t=3m&s=SUN&l=on&z=m&q=l&c=cop

This chart shows how closely they tracked right up until that day. I have a bet on COP


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Active Day

RIMM is down $1 after Robert Stone at SG Cowen (mooo!) said “an injunction against RIM “would strain common sense” and “would harm RIM’s business and millions of corporate and government BlackBerry subscribers.”

I bet Mr. Stone has a Crackberry in his pocket! I also be none of his friends have had a messy divorce. It also makes no sense for kids to spend alternating weeks at one parent or another but divorces are funny that way and this one will be very, very ugly.

I’m not going to rehash an article that is 9 inches down the page from here but I am going to call out Mr. Stone for throwing his clients in harm’s way. A hold maybe (if you feel strongly that the stock would weather this storm) but a buy? Institutions are bailing out of this thing every day, who does this guy work for?

Revenues may have be up 50% from last year (assuming all this mess goes away) but so is the stock price and with a p/e of 38, I’m not clear that there are that many more people who want a Blackberry.

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The SS GM is going down yet again, dragging the DOW with it with a big assist from GE

MRK is recovering, as I predicted Tuesday.

BA took a viscious rejection off of $70 again, last time it dropped to $68.25

MMM is having trouble with $80, if it makes it back to $86 it might be a good short

MCD is correcting, good time to look to get in, could go back to $33 but maybe not.

DELL is giving a great entry opportunity today.

Oops, market is finally turning, got to go trade – have fun!
INTC and TXN are bullet-proof (see umbrella stocks)

Last chance to buy WMT on sale.

IBM is preparing to throw a sale near the 50 dma of $84

AIG has major problems, Greenberg appears to be going into competition with them in China, this will be very, very bad for AIG who can only take comfort from the fact that Greenberg is 80 – although, as long as he is alive, his age is a plus to the Chineese.





Greenspan – Guardian of 11,000

Man, this guy is like the lady who lives next door to your off campus house and had the police on speed dial the second the stereo could be heard through the wall…

Just when it looks like we might really break out of this range, he has to come and beat the markets back into the place he is obviously comfortable with.

You’re all doomed!” He says. Ok, actually he says that trade imbalances are bad and, since they are not going away unless american workers want to start getting paid minimum wage in yuans, that means we are all doomed!

My Grandfather turned very negative when he got older and Greenspan looks a lot worse than he did.

Statements:

  • The only reason the dollar hasn’t crashed is that foreigners finance our debt (Duh).
  • The strong dollar causes us to import a lot.
  • But the foreigners can’t stop investing or else they’ll kill the goose that buys the golden eggs from them. (he is singlehandedly rocketing the price of gold as he speaks).
  • We have a big debt, he says… (I guess you have to use baby talk so our elected officials can understand this stuff)
  • Current Account Deficit is out of control at 6% of our GDP.
  • The US is on a “Pernicious Drift” to “Fiscal Instability”
  • We need to save more and spend less (does he get paid for this?)

Then he went all Adam Smith on us saying the “invisible hand” will be our friend if we let it. This coming from a man who constantly fiddles with the economy.

On the whole this is very doom and gloom of him, as usual, but it is nothing we don’t know, we just choose to ignore it. Actually, we are not ignoring it but the truth is that Intel doesn’t care if Americans, Asians or Europeans buy their chips. I think Greenspan’s view is very US-centric in a Global economy that is very different from his and my Grandfather’s days.

The economy thrives when banks lend money to businesses who put it to good use and end up employing people who ultimately become consumers of goods and services. Why does it matter if the banker is Chineese? Yes, we are losing jobs to overseas but we have already lost 50M jobs to computers and think of all those horseless carriage drivers who can’t make a…
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GE going Down

I not only am giving up on GE but I am taking a short position.

For reasons I cannot imagine, this stock has developed a massive amount of terrible signals.

I’m only looking to pick up a little on the short side to cover my losses on the long but if this stock breaches the 200 dma of $34.75 with volume, then look out below.

I think this is a short-term correction on a terribly underpriced stock but it is looking to fill the gap that occured on option expiration day a couple of weeks ago and doesn’t seem like it’s going to take no for an answer.





X Marks the Spot

How did I miss this one?

US Steel has a p/e of 5, and that’s after almost doubling since 10/15!

Even with this massive run-up, it is still way under NUE’s p/e of 8 and they are well above prior all-time high while X is still a far cry from $60.
The market cap is $5.5Bn and:
They make $1Bn a year.
They have $1Bn in cash
They have $2Bn in receivables
They have $1Bn in inventory
They have $2Bn in “Other Assets” (whatever that is)

I will wait for a pullback which may never come but the lesson here is I have to poke my head out of my usual sectors more often!





Walgreen$$$ – Trade of the Day

WAG is already up 1.7% in PM but don’t let that stop you.

For the last week the rumor was that earnings would disappoint but sales are up 11% with same store sales up 8%.

The stock is down from its high of $48.25 on the 24th and has a lot of shorts who will have to duck and cover today.

Its already a great company with sales and earnings growing at around 14% for every one of the past 5 years. Come on people, they sell drugs and it’s legal – what else do you need to know?

With the stock up 30% from last year, insiders shed just 1.6% of their holdings in the last 6 months while institutions have been buying , even in a bad sector.

This stock will probably retest $48.25 today so any entry under $47 is a real gift. I’m buying the $47.50s at the bell and will look for about .25-.50 before I get at least half out.





 
 
 

Zero Hedge

Americans' Economic Hope Has Collapsed

Courtesy of ZeroHedge. View original post here.

Which came first, the confidence or the stock market rally?

One thing is for sure, the crash in stocks in December has crushed the hope of Americans that their economic future is going to be better under President Trump.

Overall confidence dipped to 58.1 - a 4-month low, but, U.S. consumers this month were the most downbeat on the economy since November 2016, a third straight drop after expectations reached a 16-year high just three months earlier, as the partial government shutdown wears on toward a fourth week.

...



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Kimble Charting Solutions

Triple Breakout Test In Play For S&P 500!

Courtesy of Chris Kimble.

Is the rally of late about to run out of steam or is a major breakout about to take place in the S&P 500? What happens at current prices should go a long way in determining this question.

This chart looks at the equal weight S&P 500 ETF (RSP) on a daily basis over the past 15-months.

The rally from the lows on Christmas Eve has RSP testing the top of a newly formed falling channel while testing the underneath side of the 2018 trading range and its falling 50-day moving average at (1).

At this time RPS is facing a triple resistance test. Wil...



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Phil's Favorites

Brexit deal flops, Theresa May survives -- so what happens now?

 

Brexit deal flops, Theresa May survives -- so what happens now?

Courtesy of Victoria Honeyman, University of Leeds

As the clock ticks down to March 29 2019, all of the political manoeuvring, negotiating, arguing and fighting is coming to a peak. In the two and a half years since the 2016 EU referendum, views on both sides have hardened and agreement still seems as far away as it was the day after the referendum.

With Theresa May’s withdrawal agreement disliked by all sides, and voted down by an unprecedented majority in the House of Commons, everyone is wondering what can and should be done next?

...



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Digital Currencies

Crypto-Bubble: Will Bitcoin Bottom In February Or Has It Already?

Courtesy of Michelle Jones via ValueWalk.com

The new year has been relatively good for the price of bitcoin after a spectacular collapse of the cryptocurrency bubble in 2018. It’s up notably since the middle of December and traded around the psychological level of $4,000... so is this a sign that the crypto market is about to recover?

Of course, it depends on who you ask, but one analyst discovered a pattern which might point to a bottom next month.

A year after the cryptocurrency bubble popped

CCN...



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ValueWalk

D.E. Shaw Investment Calls For Leadership Change At EQT

By ActivistInsight. Originally published at ValueWalk.

Elliott Management has offered to acquire QEP Resources for approximately $2.1 billion, contending the oil and gas explorer’s turnaround efforts have done little to lift the company’s share price. The company responded and said that a thorough review of the proposition is imperative in order to properly act in the best interests of shareholders, “taking into account the company’s other alternatives and current market conditions.” The news came only a month after Travelport Worldwide agreed to sell itself to Siris Capital Group and Elliott’s private equity arm Evergreen Coast Capital for $4.4 billion in cash and two months after Athenahealth was bought by Veritas and Evergreen for $5.7 bi...



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Insider Scoop

UBS Says Disney's Streaming Ambition Gives It A 'New Hope'

Courtesy of Benzinga.

Related DIS Despite Some Risks, Analysts Still Expecting Double Digit Growth From Communications Services In Q4 ...

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

Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

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

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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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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

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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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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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