Archive for 2006

Freaky Final Friday

Options expiration day!!! Anything can happen so I’m not even going to begin to guess. Google was bought up to $351 for 2 full minutes in the pre-market before being sold off back to $341, usually it ends and expiration day at a $5 level rather than a $0 to wipe out as many contracts as possible but I wouldn’t go out on a limb with $345 as $335 and $355 are still very possible. Asian markets were happy and European markets were mixed but the Mid-East markets were so bad recently (see previous posts) that Prince Alwaleed had to step in and promise to buy $2.6Bn in stocks, causing the market to reverse from 723 points down to close at 706 points up (out of 15,000). This is market manipulation at its finest! No SEC investigation for that guy but a lot of traders owe him their lives as they were about to jump out a window as the market dove 21% for the week. Why did they go down? Because they were bid up in anticipation of the IOB giving the region a shot in the arm. Thanks to Mike for this article which further supports my theory: http://www.thestreet.com/_tsccom/markets/marketfeatures/10274148_3.html I’ve been getting criticized a bit for being a conspiracy theorist. I hope people realize that this is tongue in cheek but it is more fun to point at invisible men behind the curtain than to lay everything down on Adam Smith’s “Invisible Hand,” which somehow doesn’t qualify as a conspiracy (maybe because it’s just the one hand and you can’t see it anyway!). It will be a great sign if we can just hold the line today but believe me when I say to you that the chance of a Black Monday next week infinitely outweighs the chance of a Boom Monday or some other name no one has coined yet because it almost never happens!!! So let’s be careful traders out there and not get too full of ourselves. ===================================== GM is in trouble again and just when I thought I was going to stop shorting it! 50 dma is $21.50 but below that may be a clean run to $19 but the puts are outrageously priced so I’m not interested other than in a watching an accident in progress kind of way… Can Google be manipulated all the way up to a retest of the 200…
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Google Watch

I don’t know what Google will do tomorrow. I hope it goes down because I got caught with a bunch of $340 puts I meant to sell at the close so I’m praying people are sane in the morning! At this point I will be dumbfounded if they make it through earnings above $300! They did get a favorable ruling on a copyright case but it was not that meaningful and there are many others ahead of them (think Merck-like constant legal issues) but the spin can be that it sounds good. At least they seem to be getting their money’s worth as they begin to spread it around Washington: http://news.com.com/2061-10796_3-6050741.html?part=rss&tag=6050741&subj=news The fact is that it has now gotten to the point where people are posting form letters on how to stop Google from infringing on your copyrights sites like this one: http://chillingeffects.org/dmca512/notice.cgi?NoticeID=232 More relevant, is this Washington Post article on click fraud which may have been a contributing factor in Google’s steep decline yesterday: http://www.washingtonpost.com/wp-dyn/content/article/2006/03/15/AR2006031502339.html The fact that there is an auditing firm called ClickFacts and that people who spend $500K a year are hiring them to go backwards and audit Google could be a disaster for the company. Imagine if they are forced to return 35% of the $6Bn they billed last year, that would be all of the profits and then some! “For $29 or so, anyone can buy fake traffic generator software such as Smart HitBot, Fake Hits Genie and Fakezilla, programs that can send bogus traffic to any Web page or ad.” D’oh! There’s a whole industry based on scamming Google! “But click-fraudsters have to watch out because more and more electronic sleuths are trying to catch them. Start-ups with names like Click Tracy, Click Detective and WhosClickingWho analyze traffic and tell advertisers about suspicious activity, such as a surfer in Malaysia repeatedly clicking on ads for a dentist in Baltimore.” Double d’oh! And there’s a whole industry that will be auditing Google! Despite all this Bear Stearns maintained an “outperform” on Google despite recognizing that they “could see pressure on advertising click-thru rates.” http://www.forbes.com/markets/2006/03/15/google-yahoo-0315markets10.html I guess BSC thinks the market is going way down for Google to be outperforming it after earnings! ===================================== And now for the good part! Do a search on “Kid fools Google News” in Yahoo and you will get many references to this article: http://www.haaretz.com/hasen/spages/694502.html Try running the same search…
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Thursday Morning

Well it looks like today should be a good day again! Europe and Asia sold off somewhat but all markets have been very strong and are pulling back slightly. Inflation looks tame but housing is cooling off quickly (not crashing) so perhaps we are getting back to that rotation into US equities. It is unrealistic to expect to break through significant highs like yesterday and just keep rocketing upward (unless some amazing driving event happens). The trick is how well these new highs can hold. What we really need now is the Fed to say they are done tightening and for housing not to collapse on us. Oil continues down, probably into the $61 range today as traders just can’t keep ignoring those inventory numbers. Natural gas is running into its own ceiling around $7 and, like I said, that tends to put a limit on industrial consumption of oil. Gas inventories come out today and traders are praying for a drawdown that would indicate demand is still there but people are switching to gas. A build in gas = demand destruction that would be a very bearish sign for oil. Nonetheless, I am not seeing any oil plays I am comfortable shorting as they have fairly strong charts. I would have to see oil go below $61, then I would go after our usual suspects. Gold remains very tame, an indicator that the world is not scheduled to end soon as the fear factor is draining out of it. The Google publicity machine is in full swing with 41 articles hitting the Yahoo news headlines yesterday alone! Forbes has been going to bat for Google for 2 weeks, I guess it really is a “Capitalist’s Tool”! If you believe all the press, Google will be all things to all people in the near future with GMail, GDrive, GCash… ===================================== OWENQ looks like a great company – $6Bn in sales $800M in profits and an $88M market cap? They suffer from overhanging bankruptcy issues due to all that asbestos they used to use in insulation. The stock usually trades at .30 on the off chance “something good” will happen but Congressional action sent the stock up to $5 last year but I want to wait on this one as they have a new plan to present on Apr 4. The current plan has a dire warning that people who bought…
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Wild Wednesday

Now it looks like rally time!

Most of the indices are now at pre 9/11 highs, although it’s still a long way to go for the Nasdaq to pre-.com crash levels so you could say that tech is really dragging but there were so many bubble companies in the Nasdaq you could argue that the Nasdaq is right where it belongs.

Every single index topped our numbers nicely, the Dow even edged just above 11,200 and the volume was very nice with broad market participation. Way better than expected! I’m going to need until Monday to believe it is real but by then I think I can get comfortable with a new set of trading ranges (oh it has been so long!!!).

Good thing we stayed away from oil, the POO dropped $1 but that didn’t deter most oil stocks from heading up, even in the face of a 4.8M barrel build – double what was expected! The excuse de jour for bullish oil is a gas drawdown but that always happens this time of year as refineries come off-line for spring cleaning. Once again BTU stayed flat.

Google gave back half of yesterday’s gains and I am done with this thing for the month unless a day trade opportunity comes up. I would love to spread the $350 call and $340 put from here but at $2.70 a pop, I would feel like a real idiot if they flatlined from here. Last Thursday before options the stock ran up 20 points, while it could happen again, I’d rather jump on the train when it’s moving than find myself standing in front of it.

I was totally right about Iran backing off the Bourse! That’s why it’s been so nice around here even though the UN is in the middle of convening on Iran. Fresh off the presses, from the Persian Journal no less, is the story (notice the PR spin they put on it):
http://www.iranian.ws/iran_news/publish/article_14125.shtml

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

SHLD finished up a full 13%, gaining $15 on the day, I feel so silly because I just told someone in comments last week what a great company this was way back at $117! I forgot who I was talking to but I really hope I talked them out of shorting this:
http://stockcharts.com/gallery/?shld

As expected LEH couldn’t match up to GS so even with a slight beat and a…
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Will it Happen Wednesday?

The Asian markets took off (Hang Seng up 200, now that’s a rally!) and the European markets are looking good so we have no excuse not to break our technicals other than finding out that it is a rock-solid ceiling that will not go away. The Dow is just 8 pts away from it’s break point of 11,1160, NASDAQ still has a way to go for a high but anything over 2,300 would be positive today while the S&P does need to make that 1,300 mark. If we are in a real rally, look for them to either break out today or consolidate right around these levels. Oil is even looking like it will give us a break today but we need to see what kind of build we get (looking for barrels up in crude and no more than 2M down in distillates). Last week a big build did not cause prices to drop so I’m not sure about making a play in the face of rampant manipulation. We simply have more oil than we can use but I think they can prime the fear pump one more time before reality takes hold. CNBC is contributing today by holding a poll on what you fear most: Avian Flu, Mad Cow, Iran’s Nuclear Threat or Ambien Zombies. Come on! This is what we call the press? Again we have the Orwellian vision of a populace kept in a constant state of fear being easier to control… As another example of how Google leads all of corporate America, now they’ve got Exxon invoking the “Law of Large Numbers” in Congress! “The energy industry follows what I call the law of large numbers,” said Rex Tillerson, chairman and chief executive of Exxon Mobil Corp. He said that tightening antitrust laws would make it more difficult for his firm to be a reliable national supplier of gasoline. Boy, that phrase works for everything! Today we have GS upgrades, great Sears earnings, an HP conference, lower oil prices and a booming global market – how bad would it be if we go down today? Let’s be careful out there for just one more day (or at least until oil firmly trends downward after inventory) and then we can go bottom fishing. I am not alone at least, Merrill Lynch’s monthly global manager survey, released today, showed a big uptick in fund managers’ cash positions.…
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Google Watch

What a wild ride for Google today!

Didn’t quite hit my low prediction of $329 but I was fairly positive it was going there when news came out that they were compromising with the DOJ. The spike up at 12:40 surprised me as well as the guys who had been propping it up all morning but they quickly recovered and started selling into the rally.

http://finance.yahoo.com/q/bc?s=GOOG&t=1d

How do I know this? Thomson Financial (the “First Call” people) has a very useful chart that tracks institutional buying and selling. The presentation is terrible and I wish I could get the data and make better charts but here it is:

http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?ticker=goog

Now it doesn’t take a genius to see what’s going on here. “THEY” kept the price from falling below the $329 break point, from which it would be hard to recover but immediately sold anywhere above $335 – it is interesting what you can do with a stock when you are allowed to buy and sell the same security all day long with no margin requirements or account restrictions!

Notice heavy buying to save it from going to $330 at 10:45 and another big goose right at 12 – before the hearing started! So the idea was to create the impression that things were going well no matter what actually happened… Getting good news so quickly caused a huge run up and the institutional buying quickly ground to a halt.

After letting all the retail suckers buy it up to the psychological level of $345 it was SELL SELL SELL SELL SELL while the retail investors did a BUY BUY BUY. This is how the transfer of wealth is affected in this country!

At this point, just 3 days from expiration, I am just looking to get out of my remaining calls at it is possible the stock will flatline into expiration. Last month the stock gained 40 points on expiration day but counting on something like that is a good way to go broke.

Mike sent an interesting note in regarding Accoona, an upstart search engine (which I bet he doesn’t know is in large part owned by China Daily Information) that he says is “catching on” in colleges. Now what is really interesting is when you Google Acoona vs. wheh you Acoona (too soon to be a verb?) Acoona you get very different results.

Here’s an even better one:…
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Ah Ha Moment!

I’ve got it! I know what happened today…

Iran backed off on the IOB.

It’s the only explanation that fits!

Interest rates plunged (because we won’t have to raise them to attract investors)

The dollar is up (nobody will be dumping it for the Euro)

Oil shot up on sudden demand as people who had held off on long contracts (to take advantage of currency plays) rushed to cover their positions – essentially a short squeeze on the dollar. This one is complicated but say you just converted 1/2 your dollars to Euros to buy oil next week and now you need dollars again. You worry that now the dollars will cost you a ton so you order what oil you can right away with your dollars so you can worry about dumping the Euros tomorrow.

Gold is down again and the Mid-East Stock Markets are way off which indicates the spike in oil is very temporary and that people are looking back to the good old reliable USA.

The Yen is down 1% and the only flaw I can find in my logic is that the Euro went up 1% but that’s a lot of items backing up my theory.

There is no news to support this so far but then again there was hardly any news about it before… If I’m right then the roof has been raised and there will be no ceiling tomorrow.

If we settle with Iraq on the UN thing then you know the fix is in!





Turnaround Tuesday!

Wow! That was an amazing day. I really didn’t think GS could spark that kind of rally. The Dow broke 11,100 by 50 pts, which is huge. The Nasdaq broke through 2,280, where it had been having trouble and made it to 2,295, just under our rally ceiling. The S&P was also strong all day, finishing just inches from a 4 year high at 1,295. Despite oil getting pumped back up to $63, despite the current account deficit running up 21% to $804Bn, and despite retail sales dropping 1.3% (worst since 9/11) people just decided today was the day to buy stocks. Go figure, I missed it. I also missed Google reacting that strongly to settling with the DOJ as the whole thing was a non-event as AOL, Yahoo and MSFT already complied but there was a buying frenzy as soon as the court adjourned. Once again the Congressional hearing with the oil companies was mainly PR for the oil companies, this really shocked me and gave the oil patch a huge relief rally. I’m not loving my cash as much as I was but I am in no mood to short oil the way that sector is coming back. Tomorrow we are looking for a 2M barrel build in inventories and a 2M drawdown in distillates. I still need one more day like this to really start believing that the market is a safe place for my money. Tomorrow will be very telling as we are now sitting right on all the upside technicals. ===================================== Since I have been advocating cash, I’m not going to review trades we didn’t make but feel free to ask about stuff in the comments. Instead we can review the Google spread we were looking at last night. Google is the greatest example on ever on why spreads are good sometimes: This morning my target for selling my $330 puts was $329 but we never made it that far ($333 at 10:40 was the low) so I stopped out at $335 a little later with a decent gain and a lot of relief as I had really loaded up yesterday when the stock hit $345. I wish I had more faith in the upside as the $360s doubled but I could have also had the $350s for almost nothing earlier in the day. I did buy some $340 puts as it went up but…
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Tuesday Morning

Asia didn’t like what they saw over here yesterday (see, it’s not just me) and pulled back a bit today.

Europe is down as well and our futures don’t look so hot. I wish I could take delight in being right when I’m bearish but I am never happy when the markets go down and I hate to bet on good companies sliding. It’s important to know that about me as it colors what I do to some extent.

Make sure you check out the below Google Watch. As I said yesterday, I have a hard time recommending a short (even though it screams short) as the stock is still being manipulated but I thought yesterday’s action was a strong indication that gravity (and problem after problem)may be finally taking its toll on the company.

As I said on the weekend, without a Nasdaq rally there can be no market rally and without MSFT, INTC and the Semis it’s just not going to happen. I’m not ready to talk about a breakdown yet as my optimistic side still wants to see a flag consolidation in the Nasdaq weeklies but that can take weeks to resolve!
http://stockcharts.com/gallery/?%24comp

It’s Big Oil testimony day again. Last time they got called up before Congress it was a real lovefest, this time expect electoneering Congressmen to take a tougher line with the oil execs. As a one-two punch, the IEA lowered it’s global demand forecasts for the year which would make an unmanipulated commodity go down but we will have to wait and see what happens here. I’m expecting oil (which only trades $5Bn a day) to be manipulated up while companies like XOM (which trades $1Bn a day by itself) to be sold off to suckers who think oil is scarce or that Iran is willing to stop getting paid for a few months.

Let me clear this up – Iran’s choices are to:
A: Compromise and keep collecting $100M a day in crude exports.
B: Block the Gulf and go to war with all industrialized nations and their own neighbors.
C: Make a back-door deal to keep selling to Russia or China during sanctions but that will have no net effect on supply since they simply won’t be buying oil they would have bought from someone else.

This is just simply not good enough to justify the rise…
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Google Watch

The latest knock on Google is a brewing controversy over GSU’s. GSU stands for Google Stock Units which, the company had contended, was not a stock option and therefore we don’t have to talk about them. GSUs promise to give employees stock at a future date, at a certain price. See, that’s not an option at all! So what, you may say. I’ll tell you so what! A new national FASB ruling effective Jan 1 is that all corporations must expense stock options in the quarter they are issued but since it doesn’t say anything about GSUs, Google had decided it didn’t apply to them. Now, under pressure, they finally talked about them in the Q4 report, but only in 1 tiny little paragraph. In the earnings release Google says: “Stock-Based Compensation – In the fourth quarter, the charge related to stock-based compensation was $58 million as compared to $46 million in the third quarter. ” “The increase in stock-based compensation was primarily related to Google stock units issued in 2005. Stock-based compensation in 2006 will be significantly greater than it was in 2005 as a result of our adoption of SFAS 123R effective January 1, 2006. We currently anticipate that dilution related to all equity grants to employees will be approximately 1% to 1.5% per year. ” (emphasis is mine, of course) http://investor.google.com/releases/2005Q4.html Dillution of 1% to 1.5% a year?!? Of a $100Bn company?!? That’s $1Bn to $1.5Bn of dilution!!! That’s a little more than $58M a quarter they are currently showing. Aside from the fact that they are diluting us 1.5% a year (kind of a reverse buyback), is Google telling us to expect hits of $250M-$400M per quarter to the bottom line? The bottom line is only $381M!!! Make no mistake about it, this is share printing on the level of the old .com bubble. In plain English it means Google has been shaving $1Bn in payroll expenses, bonuses, etc.. by giving everyone options and is getting caught with their pants down by the new accounting rules. Trade timing is also being called into question as the last quarter’s earnings were released a week later than generally expected (Q1 – 4/21. Q2 – 7/21, Q3 – 10/20, Q4 – 1/31). This is not generally a big deal except Reyes, the CEO sold 10,500 share between 1/20 and 1/26. This was Google’s first miss and the stock dropped…
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ValueWalk

#1 Performing Global Macro Hedge Fund Sees More Shorts Opportunities Ahead As China Bursts

By Jacob Wolinsky. Originally published at ValueWalk.

Crescat Global Macro Fund update to investors on 1/19/2019

Crescat Global Macro Fund and Crescat Long/Short fund delivered strong returns for both December and full year 2018 in a difficult market. Based on ...



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Zero Hedge

Johns Hopkins, Bristol-Myers Face $1 Billion Suit For Infecting Guatemalan Hookers With Syphilis 

Courtesy of ZeroHedge. View original post here.

A federal judge in Maryland said Johns Hopkins University, pharmaceutical company Bristol-Myers Squibb and the Rockefeller Foundation must face a $1 billion lawsuit over their roles in a top-secret program in the 1940s ran by the US government that injected hundreds of Guatemalans with syphilis, reported Reuters.

Several doctors from Hopkins an...



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Phil's Favorites

Divisive economics

 

Guest author David Brin — scientist, technology consultant, best-selling author and futurist — explores the records of Democrats and Republicans on the US economy in the following post. For David's latest posts, visit the CONTRARY BRIN blog. For his books and short stories, visit his web...



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Kimble Charting Solutions

Stock declines did not break 9-year support, says Joe Friday

Courtesy of Chris Kimble.

We often hear “Stocks take an escalator up and an elevator down!” No doubt stocks did experience a swift decline from the September highs to the Christmas eve lows. Looks like the “elevator” part of the phrase came true as 2018 was coming to an end.

The first part of the “stocks take an escalator up” seems to still be in play as well despite the swift decline of late.

Joe Friday Just The Facts Ma’am- All of these indices hit long-term rising support on Christmas Eve at each (1), where support held and rallies have followed.

If you find long-term perspectives helpf...



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Digital Currencies

Transparency and privacy: Empowering people through blockchain

 

Transparency and privacy: Empowering people through blockchain

Blockchain technologies can empower people by allowing them more control over their user data. Shutterstock

Courtesy of Ajay Kumar Shrestha, University of Saskatchewan

Blockchain has already proven its huge influence on the financial world with its first application in the form of cryptocurrencies such as Bitcoin. It might not be long before its impact is felt everywhere.

Blockchain is a secure chain of digital records that exist on multiple computers simultaneously so no record can be erased or falsified. The...



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Insider Scoop

Cars.com Explores Strategic Alternatives, Analyst Sees Possible Sale Price Around $30 Per Share

Courtesy of Benzinga.

Related 44 Biggest Movers From Yesterday 38 Stocks Moving In Wednesday's Mid-Day Session ...

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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

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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:

 

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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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