Archive for 2005

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

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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.

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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…
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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.

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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.

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Funny, funny people keep buying GM in…
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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…

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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.

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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…
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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!

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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.

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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…
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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…





Tuesday Morning

Sometimes the wisest thing you can say is “I don’t know.

That would sum up my opinion of the markets today.

I will be taking a fairly defensive position and moving the majority of my holdings to cash until I see some clear direction.

The NYC transit strike will make this a very difficult trading day.

The only positions I am probably maintaining are some shorts on oil (following the Valero Rule – see right link), a call on Apple and I will look to pick up MWD below $58.

Markets may turn up today but I would have to see a full retrace of yesterday’s losses to go long at this time.

Good trading,

- Phil





Monday Mop Up

What a disaster!

Now I am truly concerned – 3:1 decline to advance ratio across the markets while oil continues to decline really points to a big problem in the markets.

The Nasdaq crashed below 2,250 and is in serious trouble now.

The Dow looks like it is aiming to challenge 10,800 and the S&P crashed below my critical 1,263 level.

Needless to say I cashed out a lot of positions today! Even LLY bit the dust today.

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TSO and COP are strong in a weak sector.

Oil is being traded down on technical reasons having nothing to do with supply and demand but the forecast looks like warm weather and less driving will deliver a technical death blow to oil this week.

Much as the long-range picture for oil remains strong – as with gold, anything can happen in the short run! I will look for other oil companies than Suncor who are ripe for a great fall for tomorrow’s column.

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Reality Check: Whole Foods Market is a grocery store!!! They make $136M on $4.7Bn in sales! This is not a company that should be trading at 70 times earnings!!!

Not only that but 2005 earnings were flat against a 20% increase in revenues. That’s bad! Do you know why they were bad? Whole foods blamed the Hurricanes for disappointing 4th quarter earnings…

Please don’t buy this stock!





 
 
 

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 ...

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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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