Archive for 2006

Weekly Wrap-Up

Wow, we really pulled it out at the close!

Still ended the day well under 11K on the Dow and the S&P and Nasdaq’s week really didn’t amount to much in the end. If anything, this week made us look more, not less rangebound.

http://finance.yahoo.com/q/bc?t=5d&l=on&z=m&q=l&p=&a=&c=&s=%5Espx

While in now way a disaster, this remains what they call “a stock picker’s market“. Fortunately I am a stock picker so I am happy as a clam!

China’s Hang Seng Index is on a real roll, picking up close to 1,000 pts this month. While the Nikkei is in for a technical correction, don’t expect the money to come right over to our dreary markets, it looks like China may be in for another investing boom like we had over the summer (while our markets suffered).

Sadly we called the top just right on Thursday morning in “We are the World” and that premise continues to play out in the market action. I go into next week very cautious on my long positions but still seeing plenty of opportuinities for good plays.

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Most stocks were flattish for the week. I encourage you to look at the 5 day chart and put a sticky on top of your computer that says “2% is a very nice move, 5% is great – Don’t be greedy!” There is always another opportunity to make money so take profits when you can and have cash available for the next trade, you’ll sleep better too!

Take MER for example. We called this on Monday as a not quite TOTD (because I didn’t trust the market) and it ran up from $69.25 all the way to $71.25 (3%) on Wednesday. It pulled back to close at $70.95 on Wednesday which should have triggered a stop (lost 10% of profits) and on Thursday we said to get back to cash so that was certainly time to get out. While the stock may recover on a good market next week – wouldn’t you have been happier to just have the cash?

http://finance.yahoo.com/q/bc?t=5d&l=on&z=m&q=l&p=&a=&c=&s=mer

TASR is another good example – we called it a buy on Monday but by Tuesday afternoon I got rid of 1/3 of my stock at $8.75 and set a $9 stop on the rest, boy did I feel smart on Thursday! While I love this stock and am anxious to get back in, there is no reason to ride…
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Friday the 13th

Today will be a very telling day, will the Dow retake the magic 11,000 mark or will that remain the strong upper resistance level that may keep us rangebound for another year?

The Nasdaq is well above 2,300, a logical but unproven psychological resistance level and the S&P is well above it’s danger zone of 1,260.

The Asian markets are flat and Europe is down so my World Money flow indicator says there is cash available for US stocks but I think it may sit on the sidelines until a clear indicator presents itself.

Oil is being entirely held up by the threat of a nuclear stand-off with (coincidently, I’m so sure) the World’s second largest oil producer. This situation can only last so long because the truth is that there is no way Iran will stop selling oil, that would be akin to cutting off your entire head to spite your face. Iran is in a funny position because, although they produce a lot of oil, they do not have much refining capacity. This leaves them vulnerable to sanctions that restrict their imports.

Once traders realize that, boycott or no boycott, that oil will be delivered somewhere, then prices will spiral down – but do not bet on it because another “crisis” will bring it right back up.

Speaking of another crisis, Nigerian rebels are chipping in this week by attacking oil installations in that country. Notice the rotation of countries having “attacks” every time oil starts to tick down… BP seems to have this under control and that news should keep oil from running away today.

Today is the PPI report (expect same old low inflation) and the more important Retail Sales report (expect good but disappointing numbers until they count the web and gift cards) so the market should move up today. If it doesn’t, I will be very concenrned!

Gold is hugging the $550 resistance line all over the world. I am fairly confident this is consolidation for an up move.

Hedge funds got hammered last year and there is growing investor frustration as they find the funds are not as liquid as they may have thought. Expect this to be a boon for traditional investment houses as little new money will go into the hedges this year.

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I’m looking for a rebound in the oil patch today if oil is above $64. We can…
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Thursday Morning

Oil is not going up in price, the dollar is going down in value.

Gold is going up in price and the dollar is going down in value. If I read my gold poker game correctly it is the American’s turn to raise while the once burned Arab markets continue to sell into strength.

We had a lackluster 5-year note auction yesterday, though not enough to panic the markets but it is one of the warning signs of a US meltdown. Expect a strong uptick in rates next month as the 30 year notes go on sale for the first time in years. More supply + weak demand = higher rates.

They are looking for another draw down in natural gas today and any build will devastate the gas markets but saber rattling in Iran is going to keep upward pressure on energy prices for now.

I’ve got to think that $65 oil is going to bother somebody some day so I’m being a little cautious coming into options expirations next week when stocks tend to make wild adjustments but it will take something substantial to derail this general uptrend.

We can expect, at best a slow start today with critical gas inventories and note auctions moving the market. The deficit was flat, which is better than expected but not enough so to rally the market today while unemployment came in about as expected.

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C cut LUV today, expect other airline downgrades as oil flirts with $65.

We called the dead bottom on KO at $40.31 back on Dec 29th, the stock has been up 6 of 7 sessions since but now it is running into the 50 dma of $41.75 so we may see a pullback here.

LAB is a nice play on the strength of the financials, they operate as market specialists for 600 companies and have not been getting respect for spectacular earnings growth.

BCRX had a nice pullback yesterday and may stay below $20 coming into options but I like owning the stock and selling the Feb $20s for $1.35 (a $2.50 premium).

I’m betting on little AMCC to turn a profit this year, riding up on great visibility at Mac World. I love this company because the CEO doesn’t take a salary and no insiders have sold since last Feb. Institutional ownership is rising steadily so, although I would prefer a pullback…
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We are the World

The Nikkei is up another 80 pts today, that’s 1,650 pts since Dec 1 which was up 1,500 pts from November 1, which was up up 1,500 pts from September 1, which was up 1,500 pts from August 1. I am not making these numbers up, it went up exactly 1,500 pts in 3 consecutive segments!

In that same time frame, the DJIA is up 500 pts and we have the nerve to call this a rally! Japan pays the same amount of money for oil as we do as well as other materials, they have a similar population with similar lifestyles… So what do they see that we don’t?

While the Dow had outperformed the Nikkei from ’01 to ’03, they went flat together in ’04 but there was a total disconnect in ’05 where the Nikkei outperformed us by a fat 40%.

http://finance.yahoo.com/q/bc?s=%5EDJI&t=5y&l=on&z=m&q=l&c=%5En225

This is what happens when even Warren Buffet has no faith in the dollar. World investors fear that there will be a collapse in the US Asset Markets (perhaps because we have been crying housing bubble for 3 years) and, as a result, the US Dollar. This causes international investors to consider a good company in Japan to be worth considerably more than a good company in the US.

Japan is a country with a declining, aging population and rising health care costs and exploding energy prices (they are having a harsh winter). They endured Tsunami disruptions this year as well and they are just as worried about terrorism as we are (remember the Tokyo subway attack?).

I think the real difference is PR. US news is so negative and based on scandal and dirt digging that you can’t help but get the impression that this country is on the brink of disaster.

Try to name something bad in Japan – something that would stop you from investing in a Japanese company… Not much right? How about other Asian countries? Europe (maybe one or two things)? But think of reasons not to invest in the US and JACKPOT!

This is why the hottest markets are the ones we know the least about. Your broker advises you to invest in Asia or Europe and you say sure but an Asian broker tells a client to invest in the US, with it’s 6 consecutive flat years and the money is just not going to come this…
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Wednesday Wrap-Up

This is very good!

What we have here is the exact opposite of what we had last year. The market is shrugging off bad news and reacting very positively to the slightest positive indicators – that’s what a rally is!

We got just what we wished for with oil this morning, a number that allowed everyone to win.

The Dow was able to shake DD, the latest to use the “hurricane ate my quarter” excuse as well as GM’s normal sadness. The Nasdaq had a fantastic day led by Apple but there was great general participation. Intel and SNDK looked downgrade proof today as well.

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Microsoft was resolutely up all day and looks very strong, the $27.50s are already up 25% but we’re not in this one for a quickie.

Taser took control of the $9 mark and conquered it on the first day, a very powerful move…

EK is still one of my favorite stocks.

ALTS picked up 2% and gave us a very nice entry today.

CY had a very weird after hours drop back to $15.66 – we need to watch that closely tomorrow. It’s probably nothing but it’s also nothing to ignore.

Every once in a while, usually when Google is high, they start with the click fraud stories – it’s back in the news again so watch out for a stutter in GOOG.

MCD was lovin’ us with a straight up 1.75% gain from the open. Our March $32.50s picked up 10% already!

KMG picked up 3% so far with their stock buyback. They also had their credit rating increased.

ABX went down a bit today on concerns that they may have to up the compensation to PDG shareholders to complete the transaction.

ATYT is doing the option expiration shuffle around $17.50. I like offering $1.80 for the Aug $17.50s and waiting for an up oscillation and selling the Feb $17.50s for .90.

COST April $45s are up 10% already in just 48 hours, I am now much more confident that we caught this going the right way.

HD picked up another 3% today and the Feb $42.50s we picked up yesterday are already up 65%. Set a stop at $1.25 but I doubt we’ll need it!!

As usual, I love GLW!!! Another 7%, please, no, thanks, I’ve had too much already… I sold half when it pulled back this morning but the remaining…
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Wednesday Morning

DD is whacking the Dow this morning with a big disappointment, we will see if this throws a damper on the whole party. The Dow looks very strong and it will be important to see how it handles this mess. It is very good to test the index strength against bad earnings from a component so I am very excited about today!

China’s trade surplus tripled to $102Bn last year and you will be hearing a lot about that this week but keep in perspective that this accounts for just 6 weeks of our trade deficit even if their trade was 100% with the US! By the way, it also counts as trade when our own companies set up plants in China to make cheap stuff to send here so these pundits really need to get a life…

Oil will make or break the rally today. We need a goldilocks oil report: not too hot – not too cold so neither the blue chips or the oil companies get crushed. They are predicting such a large build up that I doubt there will be a downside surprise in inventories.

Gold took a world bounce off the low $540s and, if it crosses $545 on our exchange today, then our gold plays will all look nice. ABX may be good for a day trade, especially the $30 calls for .50 if gold trends higher.
=====================================

KMG says they are undervalued at $94 and will buy 9% of their stock back. Thank Carl Icahn for forcing this company to step up as he has been pushing them to increase value since way back at $55 last year.

The company is also paying down debt and taking charges against the quarter so I think they are trying to avoid an embarrassment of riches. All the oil companies are sandbagging this quarter to avoid another round of congressional hearings. If BP doesn’t go down off of their warning, no one will.

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

JPM finally got around to reading my column and has downgraded SNDK to neutral. This stock
is currently the poster child for overbought with a run from $45 to $77 since 12/11.

UBS is first on board the Apple upgrade train, raising their target to $100. Expect Apple to hit $90 very quickly.

MCD will be announcing a plan to increase values next week. With earnings coming on 1/23 I…
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Tuesday Wrap-Up

A significant late day rally saved the indexes and gave us (technically) another day of gains, albeit flat. Index consolidation at these levels is flat out exciting for the market’s future!

I am going to take a very rare position on DIA (Dow Index Trust) in anticipation of another major move up. The spread between the FEB $111s for $1.15 and the FEB $110 puts for $1.35 looks attractive as a 200 pt move in either direction over 40 days makes a profit. The puts will hold their value on a move up but the calls will quickly deteriorate on any downward move.

There is a lot of short pressure piling in on the QQQQs (Nasdaq Trust) but I am in no mood to short today.

Apple, not Microsoft, led the Nasdaq with Steve Jobs wowing the crowd at Mac World more so with sales announcements (a first) than with what turned out to be an impressive array of products. A real market rally has multiple leaders and we have AAPL, HPQ, TXN, MSFT, SNDK, RIMM, AMD, AMAT… trading leadership day after day. DELL has been a real laggard and should move soon.

Gold dropped as expected and while oil was flat, the oil sector was flying – I was very pleasantly surprised with my Haliburtons today!

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MTH was a sector outperformer and HOV came right up off a bad open. I made a typo this morning when I recommended BHI in the homebuilders instead of BHS, who had a great day but BHI is a great oil company so no biggie!

Lehman gave a massive upgrade to Haliburton (target $80) and 18 other oil companies, notably raising the following price targets:
KEGS – $19
NOV – $82
OII – $60
SLB – $124
TDW – $65
WFT – $49

I’m waiting for $65 oil before jumping back in here except for HAL, which I am not ready to sell yet (at least until tomorrow’s inventory).

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ATYT should go up but I will wait to see if it pulls back to the 50 dma of $16.50 with a buy at around $17 as it turns back up. I am almost confident enough in this move to buy the $17.50 puts while I wait but the premium is a bit high at .40 (.52 premium for 8 days).

COST has flatlined for the…
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Tough Tuesday

Well correction day is finally here.

The Nikkei had a 300 pt sell-off on slowing consumer spending in Asia and the rest of the world markets are in pullback as well so, at least for the morning, we will be down.

The key to today is how far down will we go?

AA was disappointing yesterday and UTI got a downgrade and GM gained too much yesterday to hold so it will be critical to see how the Dow performs around that magic 11K mark.

The Nasdaq is up so much that it only needs to hold 2,3000 (an 18 pt drop) to impress while the S&P looks safe as long as it remains above 1,270 (a 20 pt drop).

Any sort of positive finish to the day will be an all-in signal to the markets and the strength and momentum are sure there but we need to watch volume as much as direction today.

Gold is pulling back just a touch in Europe but it was the US market that took it down last time so that movement will be more telling.

Oil is defying all logic (maybe Iran is today’s excuse) by continuing to rise in price even as supplies continue to build.

DHI will lift the homebuilders today with great projections. They had a huge $3 gain yesterday and are up 30% from our November 16th selection. I’m liking HOV, BHI and MTH for movement today but only for trades as one bad word from another builder or the Fed can have the opposite effect on the market.

I’ll be away today but I’m staying in cash until the Nasdaq turns positive, then I will go bargain hunting!

Good trading,

- Phil





Just Another Manic Monday

Now it is starting to look like a rally!

Nice strong finish across the board, Dow 11K (finally), Nas comfortably past 2,300 and S&P just flying to 1,300 – I love it! The Nasdaq performed so well I am hardly concerned that Microsoft and Apple sat this session out.

Gold hit $550 today and closed at $549 so hang on to those stocks! Do not be swayed by the massive manipulation that goes on in that market, they have to go up eventually. BVN was again a shining star in the sector.

Oil even behaved itself by coming down a bit to $63ish, not enough to hurt oil stocks, so you could not have asked for better conditions.

Homebuilders are rallying on a sudden burst of positive analyst reports saying the housing sector will still be hot in ’06. If that is true, we need to start planning our Dow 12,000 party real soon!

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

Everything worked today so I’ll just do the highlights:

Google did hold the $460s but only after a real scare in the afternoon. I shorted it in the morning at $471 but chickened out when I had to go to a meeting at 1pm so I missed the nice drop but there was no way I was going to leave this trade unattended! Just an hour later I would have had a double on my put…

If you followed Friday’s TOTD IBM through you either stopped out at $2 for a 22% profit or you hedged and sold the Jan $85s for $1.60 which would have netted you a gain of .55 against a .50 drop in the Feb $85 call for another 7% gain even though the stock went $1.22 against you! Hedging is fun!!!

BCRX flew up 8.4% today.

EK went up 5%, great timing on this morning’s call as it gave us a great entry.

GENZ gave pretty good preliminary results but expectations were very high so we will have to see how they are digested. My attitude is that 22% revenue growth is pretty good, even if it does miss expectations by a bit.

BBY continues to rock with another 1.5% gain.

SYMC tacked on another 2%, now in a confirmed rally.

Back on 11/14 I said SNFX could be bigger than big if their product works and apparently it does – the stock gained 11% today on a very strong…
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What I like this week

RBAK is a telcom equipment supplier that is growing fast and should post its first profit this year on 25% sales growth.

XMSR got a huge DB upgrade today to $33, this may help SIRI as well.

CSCO is finally getting some recognition from Prudential, who are looking for $24, but it is already way up from my original call back at $17.25.

Chip maker MRVL still looks great, watch INTC and TXN for market direction.

AAPL may have another good day in anticipation of Mac World tomorrow but watch out below if their new offerings don’t impress. High put prices confirm the general state of anxiety on this stock.

4.9% unemployment means CDI could bounce back. This is a very volatile stock that MIGHT be bouncing off its 200 dma of $25.25 or not…

MRB is still a class act in the mining sector, even though it is up 30% from our original pick. Do not buy into any gold positions if we don’t hold $540! Gold is currently trading at a huge historical premium to silver so if gold continues up, we need to look into silver stocks.

Old TOTD PLAY should get some play coming into Mac World and announcing the expected strong results. Sure it’s up 50% from our November pick but 1/3 of the float is still shorted and earnings are coming out on the 26th so we can expect a lot of covering between now and then.

JPM downgraded AMZN on slowing US growth. If the stock goes below the 50 dma of $46, it has little support all the way to $41.

MER is poised for a nice run up and would be my Trade of the Day if I had more faith in the markets.

DUK also looks smart dumping some low performing assets.

BSX goes back to being a sell as they press on to buy GDT for too much money while their own sales fall below flat. JNJ will sell off as well as investors are concerned they will be pressured to match the offer.

TYC is moving well on break-up plans.

DOW continues on its roll as natural gas prices remain tamed.

GM got a GS upgrade that will bring a lot of money back in and will really move the DJI today. People buying this stock are nuts!





 
 
 

Phil's Favorites

Overpriced tech IPOs sell grand visions but aren't worth their valuations

 

Overpriced tech IPOs sell grand visions but aren't worth their valuations

rblfmr / Shutterstock.com

Courtesy of John Colley, Warwick Business School, University of Warwick

The year of the tech IPO is 2019. Uber went public on May 10 with a US$82.4 billion valuation. Fellow ride-sharing app Lyft floated in March with a U$24 billion valuation and Pinterest had a US$10 billion IPO in April...



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Zero Hedge

Futures Slides As Trade Tensions Escalate

Courtesy of ZeroHedge. View original post here.

S&P futures were lower on Wednesday as investors sought safety in bonds, the Japanese yen and Swiss franc in muted trade amid renewed worries over the U.S.-China spat after reports Washington is considering cutting off the flow of American technology to as many as five Chinese companies including Hangzhou Hikvision Digital Technology, the world's largest supplier of video surveillance products, expanding the US crackdown on China beyond Huawei to include world leaders in video surveillance. The dollar and 10Y yield were unchanged ahead of today's FOMC Minutes.

...



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Kimble Charting Solutions

Emerging Markets About To Submerge If 3-Year Support Breaks?

Courtesy of Chris Kimble.

Are Emerging Markets about to “Submerge” and head a good deal lower? What they do at (3) will go a long way in answering this question!

Emerging Markets ETF (EEM) has been lagging the broad market for the past 15-months. They hit their 50% retracement level of the last year’s highs and lows and falling resistance at (2) recently. The weakness of last has EEM trading below its 200-MA line.

EEM has spent the majority of the past 3-years inside of rising channel (1), which reflects that this trend remains up. The weakness of late has it testing the bo...



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Insider Scoop

Amgen To Buy Danish Collaborator Nuevolution For $167M

Courtesy of Benzinga.

Amgen, Inc. (NASDAQ: AMGN) took a logical step forward in buying a preclinical biotech it has been collaborating with since 2016. 

What Happened

Amgen announced Wednesday an agreement to buy Copenhagen-based Nuevolution for $167 million.

Th...



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Chart School

Weekly Market Recap May 18, 2019

Courtesy of Blain.

China – U.S. trade talk continued to dominate the week.   A heavy selloff Monday was followed by 3 up days, with Friday moderately down.

On Monday, Chinese officials announced retaliatory tariffs against the U.S., hitting $60 billion in annual exports to China with new or expanded duties that could reach 25%.

Then on Wednesday:

The Trump administration plans to delay a decision on instituting new tariffs on car and auto part imports for up to six months, according to media reports.

...

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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control

 

Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...



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Biotech

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

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

 

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

A map of DNA with the double helix colored blue, the landmarks in green, and the start points for copying the molecule in red. David Gilbert/Kyle Klein, CC BY-ND

Courtesy of David M. Gilbert, Florida State University

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ValueWalk

More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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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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