Archive for 2006

Weekly Wrap-Up

Again the markets held up fairly well in the face of adversity.

We’ve been looking for a correction for a couple of weeks and, if that was all it is, we could be heading into a nice rally. This supposition is based on several factors that have held the market down this week can’t get worse: Oil heading to $70, interest heading to 5%, gold heading to $600, Iran has WMD capability, Iraq continues to be a quagmire… Also, a lot of people were taking profits off the table in a thinly traded week to pay taxes and that should be over by Monday.

Last year we had a 900 point Dow drop between Jan 1 and April 15 so it is understandable that many buyers (including me) had a wait and see attitude this year but, in both last April through July and the same period in 2004 we had 10% runs in the indexes. 2003 also had a very strong last 3 quarters and, although I would have liked to have seen more of a pullback (and still may see it), it does look like we are consolidating for a huge move up.

The Nasdaq is still resting on key support so we will look to that next week to gauge market direction but we need the S&P to get back over 1,300 in order to have real momentum.

Traders have cautiously trading as though we are in the mid ’70s when an the Arab oil embargo dropped the markets from 1,047 to 577 but this is a totally different situation. Back then oil went from $12 a barrel to $42 in just 2 years (to keep that in perspective, a new VW bug cost $1,995 back then) but it wasn’t the price of oil that killed the economy – it was the lack of supply!

There were many issues (Nixon resigns, we lose a war, stagflation) back then and here is a good summary article on the oil situation:
http://en.wikipedia.org/wiki/1973_energy_crisis#Chronology

Bush isn’t going to resign(so many jokes come to mind), we are not leaving Iraq for a long time (in the early 70s, when the war was a total disaster and everyone was protesting the Dow went from 662 to 1047) and there is plenty, plenty, plenty of oil. We did not have a 6 month strategic petroleum reserve back then, Canada did…
continue reading





Thursday Morning

Asia is up a bit but Europe is a bit weak and despite AMD and GE having great earnings, the futures are all down. If GE doesn’t go up there is no hope for the markets and the oil patch may drive the whole thing down but retail sales are very strong and retail pricing is in check so there is every reason for a rally today.

Remember, if oil is down (OGX, OIH) but the markets are up anyway, that’s a nice strong rally but more likely oil will drag down the markets again.

Oil has pulled back but is holding above $68 but the interesting thing of the day is that refiner TSO gave a disastrous warning that earnings are going to be 20% below expectations due to high oil prices and poor hedging decisions. It will be interesting to see how much they are punished for this and how much Valero suffers from spillover concerns.

The best thing is this ought to serve to remind traders what a dangerous game the oil business is and how quickly things can go the wrong way!

Interest rates already crossed 5% overnight as high oil sparks inflation fears which sparks fears of additional fed tightening all fueled by the fact that we got 30% less foreign participation than usual in this weeks bond sale.

Gold is maintaining the $597-602 range and I would expect it to close above going into the weekend but we’ll see what oil does as the markets are sending another message to OPEC that $70/barrel will indeed lead to demand destruction.

Cash cash cash except we may want to consider some oil puts but only for day trades. The key to watch will be to see if it holds $68 and if VLO holds $63.

There are so many overbought oil companies it is killing me not to short them all but this Iran thing could blow up (literally) at any time and it could be suicide going into a 3 day weekend so I’ll just hope they don’t pick today to crash.

CNBC is in day 3 of walll to wall oil pumping, now telling us that Africa is a bigger problem than we thought (and we thought it was a huge problem!).

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

If GE is doing well then C is lending money to someone to buy the $30Bn worth of stuff they sold!…
continue reading





Wednesday Wrap-Up

The markets held up pretty well, again looking amazing in the face of tremendous adversity. If all these world tensions go away and interest rates stop going up and oil goes under $60 we could get a really big rally going.

It’s all up to AMD tonight to set momentum for tomorrow. I’m concerned that, like DNA, they can’t say anything that will make people happy enough to continue buying the stock at double last year’s level. But earnings are a beat on in-line revenues so we can watch them to guage the mood of the market tomorrow.

Oil ended up coming down a bit while gold held $600 but again, this is a sign that the rest of the world is not as freaked out about Iran as we are. Another 4M barrels of oil couldn’t find a home this week and were added to an inventory that is about 15% higher than this time last year when oil dropped from $58 to $48 in the month of April.

The worst thing that happened today is that foreign interest in our note sale was very light and the ten year ran up to 4.98%. 5% will have the same kind of impact on the market that $70 oil does and we may hit both on the same day next week!

So I’m still advocating cash…

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

After rocketing up $2 at the open, DNA finished flat for the day which was very disappointing but expected.

TIVO had a nice strong finish and ended up 8%.

HDI went down 6% on meeting estimates!

YHOO may have stopped its slide, this was one of the things pulling Google down but GOOG had a very uneventful day, whittling down April option values. In the spread play, the May $330 puts got filled at $2 but not the $490 calls. Now I need to make sure I’m covered on the upside so I will bracket up to the May $500s for less than $2 if I have to tomorrow and I will now attempt to buy another unit of May $340 puts for $2. If I fill that I will certainly take a second unit of $500s for the going rate as it will average out with my initial purchase.

XOM worked it’s way into a sweet spot for a spread with the $62.50s for .35 and the $60 puts at .20. The…
continue reading





WW Wednesday

With this sanction talk ratcheting back up anything can happen. In reality, as I said last month, Iran is years away from enriching significant amounts of uranium but there is no way from stopping anyone with the will from doing it.

But reality has little to do with this media accelerated world and diplomacy just can’t move fast enough to keep up with the news bites so things seem (or are made to seem for ratings) worse than they are.

Tensions are real though and I think I’m going to take a pass on most trades through the weekend (which starts tomorrow due to the holiday) as the DNA reaction has really soured my mood.

Asia and Europe are down about 1% and it will be amazing if we hold near flat today. Oil inventories come out at 10:30 and another big draw on gasoline will reignite that market as well.

It will fall on the Nasdaq to save the markets but if it begins to fall, it may be all over for this rally.

I’m keeping my $500 May Google’s unless it breaks $403 and I’m keeping a $62.50 spread on XOM and a COP spread of $70s and $65 puts for .30 each. I’m also holding onto my gold positions as I see nothing that will bring the price down.
http://online.wsj.com/article/SB114480366304223600.html?mod=hps_us_pageone

Other than that, I’m looking to get out of everything and see where the weekend leaves us, the slightly lower trade deficit (because oil was $5 cheaper in February) should give us a reasonable open to pull things off the table.

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

TIVO will fly up today as they are back in bed with Direct TV. The best way to play this is to buy the stock and sell some sucker the overpriced options – yesterday, with the stock at $7.51, the May $7.50s were $1.20, that’s close to 20% for a month!!!

In a normal market I would jump all over the DNA $80s for about $2 at the open. The forward p/e of this company is about 25 and they have a fantastic pipeline that could drive it further down but look at how Alcoa got beat up yesterday and you can see the mood of the markets.

Speaking of AA – if the market takes of in the morning the $35s for .30 make a nice day trade.

HDI came in in-line…
continue reading





Google Thoughts

Before we do anything else I want to be clear that nothing should be purchased if the market goes down tomorrow! DNA is down 1.5% in after hours trading on earnings that could not be better so if this one can’t go up, there may be no hope for Google either. ==================================== As we get nearer and nearer to earnings on Google I am (and I am ashamed to admit this) warming up to the company! While I still think the company is being run like a dot com bubble get rich quick scheme for insiders I am starting to think that, much like old-time survivor Yahoo, there is just too much of a real company built on too great of a core concept to mess up. I could go on about all the good things Google has going for it and its potential etc. but we’ve done that before and made a lot of money last fall when no one believed it would hit $300. After riding it up to $450 we bailed at just the right time and we caught another nice upswing last month so, on the whole, I’ve always kind of liked the stock – just not at $450 plus per share. But now we have to think about whether we really believe that giving $400 to Google for one share of stock is better than buying 2 shares of Microsoft, 2 shares of TXN, 2 shares of GE a share of PD and a share of NEM. What is my downside risk? For Google, about 25% ($300). The others maybe 20% (GE and TXN lost 10$ the week of 1/17). What’s my upside? For Google, possible $500 (25%) on good earnings. The others are all looking toppy with the markets. Also, Google doesn’t seem to care what the rest of the market is doing: http://finance.yahoo.com/q/bc?s=GOOG&t=6m&l=on&z=m&q=l&c=%5Edji Last quarter, Google missed by a stunning 22 cents and the stock plunged 10% in one day and another 15% in the next 2 weeks. It has since recovered all but 5% of it but is still far shy of the $475 high it hit after a beat on the 3rd quarter. The sole reason for the miss last quarter was 24 cents worth of taxes that the company was forced to adjust in the 4th quarter to cover a whole year of international taxes they didn’t allow for. While…
continue reading





Terrible Tuesday Wrap Up

Tuesdays are not so good for the market!

Even now, DNA just announced a beat with up guidance and the initial reaction is down! This is a sign of a market that just doesn’t want to hear anything nice and another sign that I should trade in the after hours because anyone who doesn’t want this stock is crazy…

If that was a test we failed but the markets will give us one chance for a make-up exam tomorrow before confirming a downtrend. We’ve slipped right below all resistance except Nasdaq 2,300 but another day like today and that will be a distant memory.

Hardly anything worked today but MCD had another up day as did GLW and, of course SHLD.

What really stunned me was the drop in commodity stocks even as the commodities themselves held record levels. Gold dropped slightly to $598 but copper is still at $270 yet here is PD’s chart:
http://finance.yahoo.com/q/bc?s=PD&t=5d

You would think that Alcoa’s earnings would give PD traders a clue as to what might happen….

All in all a truly awful day that makes me love my cash just soooo much!

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

We should have just watched AA as it traded down all day long, indicating the market was in no mood to reward even the strongest of companies.

GOOG shrugged off its upgrade after bolting to $417 it dropped the rest of the day to finish at $409. Although still up $3 for the week, that’s not going to get you to $500 by mid-May! The May $500s held their value at $2.25 but the bids dropped to $2.10. It’s very hard to keep perspective when you track a huge stock like this daily but the daily chart remains strong and the weekly chart is very strong on this one:
http://stockcharts.com/gallery/?goog

RIMM had a truly sad day and the $75 puts finished at $1.10 (up 60%).

I really like the WAG May $45s now for .40 (down 30%) but I’d rather buy them for .45 on the way up than guess.

DIS recovered at the bell (if you didn’t take the double like you should have!) and is well up from Monday with the $27.50s finishing at .55 (up 40%).

SLB lost another 3% today! I took the money and ran on the $62.50 puts!

We were too aggressive with our buy target on GM as the…
continue reading





Testy Tuesday

If it werent’ for oil and commodities the indexes would be down pre market. The Dow is sitting on 11,200, the S&P is right on 1,300 and the Nasdaq is oddly in the best shape at 2,330 but has the least holding up the index.

On the other hand earnings are coming in strong and the commodity boom could be attributed to good old fashioned strong demand so it will be interesting to see which way we go today.

Asia and Europe are having what looks like consolidation days with mild pullbacks but again I imagine their commodity companies are booming (ie. BP now $73.31 in Europe) to offset broader market losses.

Oil has moved even further up to $69.28, if it holds $69 anything but a shocking build in inventory can send it over $70 tomorrow. Once natural gas goes back over $7 it is all over for short positions (although that is probably right when it reverses!).

Gold stayed above $600 all night so it’s check/raise to the Americans and with sky high everything else I know I’m moving some more money into NEM and ABX and I picked up some BVN June $30s for .95 just in case things go really crazy.

Normally earnings like we got from AA would be enough to ignite the markets but materials are getting so expensive China is actually halting construction projects as costs are soaring out of control.

We need to keep our eye on GE and AAPL to see if there is any hope for the markets. Also I think if MCD falls then that will be it as they have been on a market ignoring tear for the past week, presumably because Burger King’s IPO will make people rethink McDonald’s value.

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

Although I’m glad I moved into cash I still see a lot of nice potential plays out there if the market does indeed hold up. These are generally hit and run ideas where I would want to set very tight stops with a goal of getting 20% off the table.

AA actually can go much higher than $35 – profits doubled and there is no end in sight and I will be looking for a pullback to pick up the $35s as a day trade.

Piper gave GOOG a big upgrade to $600 and they expect a beat so the stock either moves up or something…
continue reading





Testy Tuesday

If it werent’ for oil and commodities the indexes would be down pre market. The Dow is sitting on 11,200, the S&P is right on 1,300 and the Nasdaq is oddly in the best shape at 2,330 but has the least holding up the index. On the other hand earnings are coming in strong and the commodity boom could be attributed to good old fashioned strong demand so it will be interesting to see which way we go today. Asia and Europe are having what looks like consolidation days with mild pullbacks but again I imagine their commodity companies are booming (ie. BP now $73.31 in Europe) to offset broader market losses. Oil has moved even further up to $69.28, if it holds $69 anything but a shocking build in inventory can send it over $70 tomorrow. Once natural gas goes back over $7 it is all over for short positions (although that is probably right when it reverses!). Gold stayed above $600 all night so it’s check/raise to the Americans and with sky high everything else I know I’m moving some more money into NEM and ABX and I picked up some BVN June $30s for .95 just in case things go really crazy. Normally earnings like we got from AA would be enough to ignite the markets but materials are getting so expensive China is actually halting construction projects as costs are soaring out of control. We need to keep our eye on GE and AAPL to see if there is any hope for the markets. Also I think if MCD falls then that will be it as they have been on a market ignoring tear for the past week, presumably because Burger King’s IPO will make people rethink McDonald’s value. ====================================== Although I’m glad I moved into cash I still see a lot of nice potential plays out there if the market does indeed hold up. These are generally hit and run ideas where I would want to set very tight stops with a goal of getting 20% off the table. AA actually can go much higher than $35 – profits doubled and there is no end in sight and I will be looking for a pullback to pick up the $35s as a day trade. Piper gave GOOG a big upgrade to $600 and they expect a beat so the stock either moves up or something…
continue reading





Monday Mop-Up

Another pretty good looking consolidation day!

My big problem with today is that only oil kept the S&P and Dow above water. Remove those gains and you would pretty much have a negative of the same amount in each. Still it was a very strong finish and we will just have to wait and see what follow through we get tomorrow.

Nonetheless, up is up so we take it for today and my screens had a healthy mix, very much unlike the sickening sea of red we had Friday.

Just imagine how mad we’d be if we were long on oil and it hit $69 and XOM is still under $62… The whole oil patch just looks exhausted after it’s long climb, it is almost time to pounce!

Gold stocks also took a breather today as crazy gold went up and down $14 today. By the time it finished at $604 for the day most of the gold stocks just couldn’t believe it and remained near their day’s low. This may lead to a nice buying opportunity in the morning.

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

Google had a heck of a rally as Comscore indicated they gained 6% market share in the last quarter (compared to their prior 57% share). That should translate to 6% more revenues (was $1.9Bn) so about $100M but we know they raised prices so probably more – and that’s pricing power!

Since it costs them virtually nothing to gain the additional revenue we could be looking at over $100M in additonal bottom line profits on top of last quarter’s $372M (which did also carry a high tax cost). If the Comscore numbers bear out – even if taxes are consistent and the other estimates for increased expenses are correct, we could be looking at a 25% increase in earnings to $2.20 a share.

I don’t think anyone, not analysts, not pumpers, not Cramer, not anyone – has even contemplated a 10% beat. This can send the stock into the stratosphere if those numbers play out. I did initiate a play on the May $500s for $2 in comments when it was weak today. They closed at $2.30 (up 15%) and I still like them if the momentum continues but there is no way I would hold these through earnings unless they were just the profits.

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

Man, just this morning I said Alcoa would do well and they’re up…
continue reading





Monday Morning

Well Asia was mixed and Europe is up except for France (investors there finally decided that a week of riots might not be so great) so I expect at least a bouncy open in our markets.

Can the S&P break back over 1,300 as easily as it slipped below it? Will the Dow retake 11,200? Can the Nasdaq make 2,400 before it falls back to 2,300??? Direction will be confirmed today so we almost hope oil does do well because a big drop in that sector will likely doom the markets (but $68 oil will doom them anyway so you can’t win).

Huge recovery in oil thanks to the Wall Street Journal and others doing a PR blitz this weekend to whip up a frenzy for the USO oil ETF. What’s interesting about all this is natural gas, which is a commercial substitute for oil, is still going down back to last year’s levels. I still think this indicated that the pumpers have just run out of money from this extended push but I certainly don’t want to bet against it until the Valero Rule tells me to!

Gold also shot right back over $600 so it’s just the American traders who keep selling off. Notice the wacky trading intraday trading patterns of this very painful rally:
http://finance.yahoo.com/q/bc?s=GLD&t=5d

Earnings season starts today with Alcoa and I think they will do well but expectations are high and the psychology is such that a miss might be taken very badly so I am going to take advantage of today’s open to move mostly into cash. I want to give it a couple of days to see how people react to earnings reports.

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

Other than watching oil and gold I have little interest in trading today. The closer we get to a 50 point run up the more I want to cash out my positions. If it’s a real rally, there are plenty of beat up stocks to buy with free’d up cash.

RIMM continues down and the $75 puts for .70 make a nice momentum play but this is one dangerous stock to bet against but still up $10 from last option expiration and puts outweigh calls by a mile so there will be a lot of interest in maintaining this price through next week.

RAD posted some good numbers and you would thing WAG would respond as well,…
continue reading





 
 
 

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 ...



more from ValueWalk

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...



more from Tyler

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...



more from Ilene

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...



more from Kimble C.S.

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...



more from Bitcoin

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 ...

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...



more from Chart School

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 (...



more from Our Members

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.

...

more from Biotech

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...



more from M.T.M.

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 ...



more from OpTrader

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 >>