Archive for 2006

Weekly Wrap-Up

This is why we move to cash at the first sign of trouble – there are great opportunities on the way down as well!

Our oil plays were amazing today, averaging well over 100% returns in just one day!

The markets were pathetic once again, now broken below all technicals and moving on to test some very negative barriers. It would be a gravity defying feat if they were to turn it around on Monday…

Oil may recover to turn around that sector but even a morning explosion in Nigeria couldn’t derail the fundamental fact that there is no more room to store oil in this country.

Gold finished down at $710 and, as I mentioned in comments, gold stocks finished back where they were when gold was at $550. Either someone knows something about gold or someone doesn’t know something about math because that extra $160 is pure profit per ounce over last quarter (forget last year) for the miners.

I’m not going to review pre-thursday picks as they all should have been sold in the downturn so it would be silly to look at where they are now. Please go over My Trading Policies if you are a new reader as tight stops and discipline can save you a ton of money, especially if we are heading into another choppy market.


What a great day to short oil! I chickened out early as I was concerned about someone pumping up the price into the NYMEX close but it just wasn’t enough to keep investors in the sector as almost everything fell at least a couple of points.

SU $85 puts ran up to $2.45 for a 300% gain.

GRP $55 puts finished at $4.60 for a 205% gain.

BP $75 puts opened at .45 not .35 but ended at $1 for a 110% gain.

OII Jun $70s still look good and are in the money at $3.20 (up 115%).

SLB continued the downtrend and the $72.50 puts are now $4 (up 95%).

CAM ran out of time or it would have gone lower but the $55 puts are already $3.30 (up 200%).

CLB dropped to $62.40 (down 6%) – I wish it were optionable!

HYDL was saved by the 5% rule and the $85 puts jumped to $6 (up 160%).

PDE held up well after recovering from a drop but the $35 puts are now .70 (up…
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Finally Friday

Asia is following our markets down with gusto, both the Nikkei and the Hang Seng dropped around 250 points. Europe is well down across the board and our futures do not look to bright today. I think a turnaround would be too much to ask for today so we’ll take anything that isn’t negative. There is a precedent for the Nasdaq coming back from a drop like this on Jan 23, after the last 50 point drop in the index and many bulls are pointing to it as a sign of hope. That was a Monday though, when the markets had a chance to reflect on the black Friday sell-off. With another day left in this week, the trend may not be our friend. The Jan 20 market crash came after a big run-up for the month and the false recovery that followed only led us into an ugly February. It was an options expiration day and the drop was sudden and confined to the afternoon – this is not the same at all! I do have good news though: oil has broken through its 50 dma at $68 and looks like it will test the 200 dma at $64 very soon. “Phil”, you may say, “you need better glasses – oil is clearly at $72, not $67.” Ah grasshopper, you forget (as do almost all analysts) the dollar! The dollar is down 7% since April 1st and oil is “only at $72.50″ just 6.6% above $68. This better explains the phantom resistance we’ve been seeing at $72.50 – it’s not phantom resistance to people who don’t measure in dollars – it’s the 50 dma!!! You can use this 7% rule to apply to any commodity to see if it’s a real rally or just dollar deflation driving the price. Applying a 7% discount to gold knocks a hefty $50 off the price to $675 but that’s still $85 (15%) higher than April 1st. This also explains the lack of resistance at $700 as we are the only country that sees it that way. Our stocks, on the other hand are getting very, very cheap to foreign investors and we can expect a real buying spree once the dollar stabalizes (of if, the way the chart looks!).$USD While I’m not sure we can break $72.50 with the weekend looming we did get a drop in global demand that should…
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Thankless Thursday Wrap-Up

Oooh that was ugly!

Thank goodness the Nasdaq tanked right off the bat and triggered our cash out or this could have been awful. As I said earlier, any downturn in the Nasdaq would drag down the other indices but I wasn’t expecting that.

The index closed at 2,272 – already halfway towards the 200 dma at 2,230, a level not seen since Jan 1. The S&P flew down to its 50 dma of 1,302 but held there. The Dow stopped at the interesting psychological point of 11,500 but more because it ran out of time rather than taking some kind of bounce:

Nothing worked, I have a tech screen where the only stock that gained was PLAY – that’s how weird today was! I made the horrendous mistake of holding some golds too long and gave up half my gains but I bought them all back again at the end of the day anyway with my redeployed cash.

Oil and gold flew up but oil and gold stocks went down indicating that we are either in a major rotation out of commodities or that the whole econonomy is going to hell in a handbasket.

If we don’t get a nice snap back tomorrow I would suggest a vacation from stocks for a week or two!


I still have my PBR shorts as Bolivia’s Morales seems to have declared war on them so I don’t think it even matters what they earn tomorrow.

I also kept my XOM $62.50 puts even though they didn’t go over .35 even on that nice move down.

By sheer luck of the draw I got out of my remaining EXPE’s pre earnings because the earnings were a disaster! Income dropped 51% as “expenses ate into profits.” Revenues were up only 2% on a 14% increase in bookings but “We increased costs in many sectors — necessarily we believe for our long term growth — but didn’t generate the revenues to offset the increased expenses,” Barry Diller, Expedia’s chairman, said in a statement. Wow, ya think?

ATI, of course, did not go down but I got out of that one too – even TIE dropped a point today.

IAG was one of the best performing golds, gaining 1.2% during the day and another 35% (that’s right 35%) so far overnight, not on earnings but on a preliminary assessment…
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Thursday Morning

Asia is mixed again today but Europe turned up after a poor start, even though oil has continued upward in overnight trading.

The Fed gave the economy a great report card and key changes in their statements indicate a willingness to take a session off (after 16 consectutive hikes) but balances that with an emphasis on the fact that they will remain vigilant on inflation.

AIG will weigh on the Dow but I don’t think it will be too severe.

The Nasdaq should and must bounce today as crossing below 2,320 will lead us into a place we just do not want to be. In reviewing Nasdaq performance there have been only 7 up sessions in the last 23 with 7 of the last 10 being negative yet since the 4/19 closing high of 2,370 the market has only lost 50 points, a move up here would be a significantly higher low and set us up for a nice run at 2,400.

On the weekly chart, we see that this is just a nice consolidation flag above 2,300 so it will be very exciting if we do turn up from here. With the Dow clearly in breakout mode (and still 60% behind the Nikkei) and the S&P also looking strong I’m going to have to handicap us for an up move rather than a down.

I’m initiating a position in QQQQ Jul $42 for $1.05 with a stop at .90 as even being a little bit wrong on this trade will portend very badly for the markets.

Oil is back at $72.50 in the pre-market, which is critical support for a higher move but also a point they cannot afford to be rejected from so any downward movement in oil today will be a very good sign. The XOM $65 calls for .35 offer excellent upside protection and can be spread against the $65 puts for .30, which I own many of!

A major reason XOM, COP and CVX will be celebrating today is that they got to keep $6Bn in tax breaks in the $70Bn tax bill moving through congress thanks to last minute Republican horse trading (ie. Republican: “OK, you can have $150M for school lunch as long as oil companies get $700M to look for oil” Democrat: “But isn’t that their job? Why do we pay them to find the thing
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Wednesday Wrap-Up

Well the Fed decided to let us know they are considering taking a pause (pressure dollar down) that refreshes while at the same time the Treasury decides China does not maniplulate currency (pressure dollar up). Tomorrow is the 10 year note auction and if we don’t get a lot of action on it then the dollar can go into freefall and make Warren Buffett very happy. Gold is flying up towards $710 in anticipation of this and oil closed over $72 so it’s amazing the markets aren’t completely in the toilet. I can’t imagine that these two moves are not coordinated with a commitment by China and others to buy a tremendous amount of notes tomorrow to keep the dollar from melting down (and forcing the Fed to raise rates anyway) so we will have to watch this carefully. Keep in mind that the Dow is up 250 points in the past 5 days and 600 points since 4/17 so what we are seeing is a lot of money moving into large caps and especially out of tech. The Nasdaq is now right on the 50 dma at 2,320 so it literally cannot take anymore of a downside. Unfortunately the SOX crashed through their 50 dma of 513 like a paper wall and INTC, VZ, NOK, MOT, SNDK, RIMM, GOOG, YHOO etc. give us no indication that there will be an improvement in the Nasdaq tomorrow. The S&P is miles above resistance and in no particular danger. If it weren’t for the tech dragging it down it would be as close to a new high as the Dow is. My shining ray of hope is MSFT, who picked up .6% today with a strong finish but I am very, very concerned about the Nasdaq for tomorrow. ===================================== AU was the star of the gold sector today and the Jun $60s moved up 35% to $1.80. I bought ABX $35s for .65 at 3:30 as it was just laying there all day! NEM Jun $60s opened at $1.90 and finished at $2.20 (up 15%). BVN barely moved but the Jun $35s went up to .75 (up 25%). DCX gapped up to fast to make a play on the Jun $57.50s. HPQ didn’t go down, which I considered a huge plus! UNH was a shining star all day and the Jun $50s finished the day at .70 (up 75%) but…
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Wednesday Morning

Fed Day! Fed Day! Fed Day! Yup, that’s all we’re going to hear today so just sit back and wait for it to be over. There is no way to know what will happen or how the market will react to whatever happens so we need to be cautious and patient today. The Nikkei fell right of the table at the end of the day on worries about our Fed which is sparking worries that the BOJ will be forced to tighten: It wasn’t Toyota, which had crushing earnings or BIDU, which is growing like gangbusters, lots of builders got sold off and gold went up again on inflation worries, now $704 in the overnights. Europe is trading flat and we need to watch them for a similar end of day sell-off. Oil is flat ahead of 10:30 inventory reports and we need to keep a close eye on the Valero Rule and the Friday list of oil puts keeping in mind that there is often a head-fake reaction to the reports but any build in crude should bring oil below $70 at least. Demand numbers come in a little later (or are interpreted later) and will be key. Gold is flying but should get a pullback at this level before heading on to $800. AU is still my favorite current gold play with the Jun $60s at just $1.40 but I sold my golds yesterday and I’m not buying back in until we get a drop. If I were going to take a contrarian play it would be GOLD which may have gotten a little ahead of itself – let’s use this as our canary in the coalmine to see if the market is turning. In general, the US economy and the World economy in general is too strong for the current rate environment, I remember being thrilled to get a 9% car loan 20 years ago, and all this fear of rate hikes is just a temper tantrum being thrown by a bunch of spoiled teenagers having their free allowance taken away and being told they have to learn the true value of a dollar. Down the road it will lead to more sensible purchasing decisions (eg. Blue Chips). Let’s remember that May options expire next week and you shouldn’t be holding any May contracts unless they are very short trades. If you really love your position,…
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Tuesday Wrap-Up

Hey that was a pretty good theory this morning wasn’t it?

All we need is a little bit of follow through tomorrow and we will have a new all-time high on the Dow! Notice we got exactly the kind of late day action I was looking for and the best is that we did it without tech and without a big performance from the oil patch which we need to leave behind if we are going to rotate out of that sector.

I’m not ready to throw in the towel on the SOX until it crosses $512 but another day like today will do it! TXN is not wowing the analysts in day one of their pump fest and INTC has got to close above $20 to be taken seriously.

CSCO was indeed a beat but options expensing hit the company hard and it will take the markets a day or two to figure out that they are actually doing great. Projections for next quarter were in-line on revenue but they should get another beat as cost cutting starts to take hold. The stock is way underpriced and I will be hoping to pick up the Jul $22.50s for .60 or less.

SYMC was less ambiguous and very strong although guidance was muted in the face of a looming threat from Microsoft in the virus arena. Outside of merger items, profits were huge so the spread we took in today’s comments looks very good!

Oil took another run at $71 but couldn’t close the deal and it will all come down to the 10:30 inventory report where any build in crude will be a big disappointment to oil bulls.

Gold broke $700 and finished above it, a big surprise to me as I took my profits off the table a little early in the morning…

It all comes down to the Fed tomorrow but I’m expecting an identical report with identical language in the aftenoon but the market is looking for any excuse to cut loose and I think a lack of bad news from the Fed will be just what they need.


AAPL has, for some unknown reason, decided to treat $70.50 as some kind of floor and I still like the $72.50s for $1.05 (down 30%) but only if the Nasdaq is recovering.

EBAY finally made a real move and the…
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Take-Off Tuesday

Here’s my theory: If that news from Dell can’t kill the market then nothing can. I think investors will see anything other than a big sell-off as a tremendous sign of strength (like last year when London bombings didn’t kill the markets) and will start pouring in later today or tomorrow. We’ll see if I’m right but I’m thinking we only need to get past Cisco’s earnings tonight and tomorrow’s Fed meeting and we could be in very good shape. Asia doesn’t agree with me and gave up most of yesterday’s gains on average. The European markets are a bit higher though and I think the realization is hitting people that Dell’s problems are Dell specific and not an industry issue. The oil picture remains unclear as what was thought to be a peace offering from Iran has already been rejected by the White House (and now we are putting a General in charge of the CIA). This lovely geopolitical nightmare should keep gold on a roll to $700 (as I predicted last week) but oil is still heading for a great fall as the fundamentals are just crushing in on it. Tomorrow’s inventory report will either be a nail in the coffin or a repreive but, without an actual war with Iran, the fear factor is already maxed out. Dell has now lost about $40Bn in market cap since last Summer and it’s pretty much gone straight to HPQ: I’m not over-commiting until I see how the market holds up today but I really am getting excited about the market right now! Even GM made a profit last quarter!!! Watch rates today as we have a note sale pending and lack of foreign interest could be a market mover… ===================================== Do not, under any circumstances, buy GM! Although they are showing earnings it is purely an act of voodoo accounting and does not reflect the overall health of the company. The numbers they are talking up today include GMAC, which they just sold, leaving them with a production facility that loses $600 for every vehicle sold. With the increasing price of commodities and a 6 month turnaround time from assembly line to auto sale, one could argue that GM would make more money stripping the cars back down and selling them for parts! Let’s watch this one for yet another shorting opportunity! SNE is beyond confident…
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Monday Mop Up

Perfect! Just what we needed – a bullish consolidation.

GE did a nasty fade at the end of the day but INTC had a strong finish and a huge drop in oil earlier in the day did not send the markets down.

Unfortunately DELL just lowered guidance significantly and may trash the markets tomorrow and is costing Intel most of what it gained today in AH trading. I will take advantage of a drop tomorrow as this is a cost problem for DELL as Lenovo is getting to be serious low-cost competition for them while HPQ has been winning market share as more people just pop down to the local computer store and buy a box rather than wait for their Dells.

Either way plenty of INTC chips are being sold so this knee-jerk reaction will be a good buying opportunity as long as it doesn’t plunge the whole market into a correction. Dell cut prices to move more boxes – they moved more boxes but made less money – how is this bad for Intel? Perhaps it’s a pricing issue in the long run but the reality is that dual core chips and the new Windows (if it ever does get released) will shift demand back to the high end where everyone makes money.

Oil was down .42 for the day after being down as much as $1.50 earlier thanks to a last minute buyer who just had to buy oil up a full dollar in the last hour of trading.

I wish gold had a protector like that! It traded down all day but not enough to cause any serious damage beyond a 1% pullback in the sector:

My charts say oil hits $68 this week, possibly lower depending on inventories. I think BTU is setting up for a high dive from a point of great denial:


Any of the oil plays from Friday worked great in the morning and gave all the time in the world to take profits when VLO turned at 12:30 and they are all in play again tomorrow as long as oil gets back below $69.

AAPL was a disaster but it had the good manners to go down all day and never look good enough to buy – thank goodness! Maybe those fleeing execs know something…

AQNT was a nice roller coaster ride today into earnings but we…
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Monday Morning

Asia predictably is on fire this morning as they play catch-up coming off a long holiday but Europe does not seem very excited and US futures are flat in early trading.

The dollar continues to fall, especially against the yen and Warren Buffet has made a whole weekend full of anti-dollar statements. The weakish jobs number on Friday has put currency traders back to the mindset that the Fed is “one and done” on rate hikes (Wednesday being the one) but I think we will get an identical statement from the Fed and we should get at least one more hike in June.$USD

The bears are getting desperate and yelling “Top” as the Dow is just 140 points from an all-time high but in the last run (during the dreaded bubble) the Dow and S&P averaged 30 times earnings while they are currently averaging 15 times earnings so we are not even comparing apples to oranges, we are comparing apples to chicken or two other things that are totally different this time! The Nasdaq is, meanwhile, 150% below it’s bubble high when p/e’s of 100 were being snapped up as bargains so I don’t think we have too much to worry about.

We may get a bit of a pullback into the Fed meeting this week, especailly with oil weakening as nothing blew up over the weekend. Now that Cheney did his part to push oil up on the Russian front Iran is making some nice noises to calm tensions slightly on the nuclear side. This indicates to me that the manipulators have given up on $70 as unsustainable and are targeting the mid to low $60s to stabalize POO.

Speaking of apples, AAPL computed won their lawsuit against the Beatles just this morning in London so no fines and no restrictions on using the name and logo to market music – this is a big deal as a loss was baked into the numbers so the $72.50s for $1.50 or the $75s for .60 should both make good day trades as long as the Nasdaq isn’t tanking. One caveat on Apple is that they’ve been shedding a lot of exectutives lately for reasons unknown.

The Dow could drop 77 points today and will still be in great shape as long as it holds 11,500 so be very careful today! The Nasdaq is 42 points over resistance and…
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Zero Hedge

Enemy Of The People?

Courtesy of ZeroHedge. View original post here.

Via The Zman blog,

There has never been a time when normal people did not know the media was biased and biased in a predictable direction. For every non-liberal in the media, there were at least ten liberals. The ratio was probably higher, but then, as now, some lefties liked to pretend they were independents or some third option.

The media used to invest a lot of time denying they had a bias and an agenda, but the only people who believed them were on the Left, which had the odd effect of confirming they had a bias and an agenda.


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Phil's Favorites

A 2019 Earnings Recession?


A 2019 Earnings Recession?

Courtesy of 

Shout to Leigh!

On the new Talk Your Book – Josh Brown is joined by Leigh Drogen of Estimize, one of the leading providers of crowdsourced financial and economic data to talk about the trend in corporate profits that could potentially lead to an earnings recession later this year.

What is the thing that Leigh is seeing in the data that Wall Street isn’t yet picking up on? What segment of the stock market is most at risk? Why is the crowd smarter than the narrow consensus of Wall Street analysts?

Check out Estimize ...

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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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Kimble Charting Solutions

Gold & Silver Testing Important Breakout Levels!

Courtesy of Chris Kimble.

Gold and Silver from a long-term perspective have created a series of lower highs over the past 8-years. Will 2019 bring a change to this trend? A big test is in play!

Gold since the lows in 2016 has created a series of higher lows, while Silver may have created a double bottom.

Gold & Silver are currently facing break attempts a (1) and (2). These falling resistance lines have disappointed metals bulls for the past few years.

The direction of Gold and Silver weeks and months from now should be highly influenced by what each does as they are attempting to break above important resistance levels.

To become a member of Kimbl...

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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 ... more from Insider

Digital Currencies

Russia Prepares To Buy Up To $10 Billion In Bitcoin To Evade US Sanctions

Courtesy of Zero Hedge

While the market has been increasingly focused on the rising headwinds in the global economy in general, and China's economic slowdown in particular, while the media is obsessing over daily revelations that Trump may or may not have colluded with Russia to get elected, a far more critical, if underreported, shift has been taking place over the past year.

As we reported in June, whether due to concerns over draconian western sanctions and asset confiscations following the poisoning of former Russian military officer Sergei Skripal, or simply because it wanted to diversify away from the dollar, Russia liquidated virtually all of its Treasury holdings in the late spri...

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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 failure based on his personality, which was evident years ago. This article, written in 2017, references a prescient article Bill wrote before Trump became president, in July, 2016, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...

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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

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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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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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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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 >>