Archive for 2006

TGIF

Yet another week we will be glad to be getting out of. At best, we are establishing a lower range of trading for the majors with a 5 day slide in the Dow that took us from the 50 dma of 11,250 to the 200 dma of 10,870. This is essentially the same channel we were in during the 2nd and 3rd quarters of 2004 and 2005, although in both of those years we broke down below the 200 dma before establishing our range. So it would be a real bull victory if we could turn up here and head back to 11,200. It will also mean that global rotation is in play and money is moving back to the US markets but let’s not get too excited yet! http://finance.yahoo.com/q/bc?t=5y&s=%5EN225&l=on&z=m&q=l&c=%5Edji The market could still go either way today but anything down is devestatingly bad! The deficit is expanding and is being paid for by increased consumer borrowing at increasing rates which is a big recipe for disaster if one is inclined to think about such things so better not to I say… Asia took a one point bounce but India came back 5% as the only index on that side of the World to make a serious effort to erase a week of losses that was worse than ours. Europe took a nice bounce as well, recovering over a point so far this morning but waiting for the all clear signal from our markets lest they get ahead of themselves. The S&P needs to hold 1,260 today while the Nasdaq needs to retake 2,200 just to stop being such a disaster and it’s unlikely to do that in one day. The SOX must turn and it would be a spectacular reversal if they do (look at the weekly chart) but hopefully TXN is strong enough to pull the whole chip sector out of its nose dive: http://stockcharts.com/gallery/?%24sox Oil is on the rebound today and the sector clearly overreacted to the small drop in oil we got this week. If crude can reestablish the 50 dma of $71 then look for a lot of oil stocks to reestablish their 50s as well. Gold has no reason to go up and will probably lay flat around $615 into the weekend but gold bugs should be glad to hold $600 against a rising dollar. Even Intel should be up today as TXN basically…
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Thursday Wrap-Up

Well we got the mid-day turnaround we were looking for and, for those of you who read the comments, I called the turn at the exact minute (11:53) with a very timely purchase of the $38 QQQQs. I’m not going to brag about the rest of my trades as I am painfully aware that most people can’t take advantage of that sort of movement but it’s days like this that can make the whole thing worthwhile! Hard to say if that 175 point thump was enough to flush out all the bears (but that 200 point rally must have hurt!). A lot of people have been asking me why I wasn’t playing more puts and today is why – sometimes it’s better just to have cash ready for the bottom. Let’s not get too excited until we get a relief rally on a more global scale but I am very happy that less than half of today’s recovery was attributable to commodities. I shouldn’t really say recovery as all we recovered from was a morning that was so bad that I did actually call my realtor so I could covert my biggest asset to cash but we got a nice spike volume sell-off around 11:30 that morphed into a low volume, steady upswing that had a nice volume finish at the day’s end – a very nice recovery! http://finance.yahoo.com/q/bc?s=%5EDJI&t=1d The Nasdaq took a very hard bounce off 2,100 while the S&P decided 1,235 was the right place to turn. The Dow’s turning point was 10,750ish, well below the 200 dma of 10,870, which it broke though on the way down without a pause. Oil made one of those famous afternoon recoveries but it looked to me like that was the genuine sort of demand we talked about last week as industrial users (airlines, chemical companies..) decided to lock in purchases under $70. This caused oil to finish above $70 and firmed up the sector. Gold had no such luck as it dropped another $18 to finish at $613 and we are still targeting $583 for a big turn. Copper went down significantly but PD and PCU went up mysteriously so we will be watching them tomorrow. Apple gave us a nice signal today (as expected and bounced exactly off my $57.50 target at about 10:45) and posted a solid 4% gain: http://finance.yahoo.com/q/bc?s=AAPL&t=1d On the whole, it was an encouraging day…
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Thursday the Market Went Thump!

Global meltdown!

Nikkei off 462 (-3%), Hang Seng -366 (-2.5%), India – 460 (-5%), Pakistan -425 (-5%), Taiwan – 280 (-4%), India -460 (-5%)… In Taiwan just 3 stocks in the entire 800 company index were positive for the day! The catalyst for Asia’s decline was an unexpected rate hike by the Bank of Korea but any excuse will do to cause a sell-off in this market.

Europe is not looking too much better with 2% average declines as buyers are nowhere to be found.

Talk to me about the US markets after we gain 3 or 4%, until then they are on probation in my books. Even though we should get a little something today (I’m still hanging on to my Global rotation theory) it wouldn’t surprise me if this is yet another false start.

Chris posted a great article in comments this morning and I suggest you read it, it’s a great overview of the current market situation:
http://www.bopnews.com/archives/006457.html

We apparently killed Al-Zarqawi, another nail in the coffin of oil prices which should be a positive for the markets so maybe we’ll only drop 50 points today!

Oil is a very tough call. While I have long held the position that oil was way overpriced and due for a correction, the severity of the dip this week is very surprising. The oil stocks have dropped 17% since May 11th while the price of oil itself is down just 5%.

Gold is down 15% since May 11th and gold stocks are down about 20%, which makes more sense but oil is still at a level equal to last year’s high yet most oil companies are now trading below last year’s average. This makes it a very tough spot to short but we know there is still another $20 of “fear premium” built into oil prices so it would be easy to project another $10 of that to fall out quickly.

Supply is, as we have long discussed, not a problem and will not be a problem unless we have 2 major crises at the same time (Iran+Hurricanes). While this is looking less likely every day, the actual occurrence of one would certainly make the fear of another a major factor again.

Chavez was indeed the voice of reason in calling for production cuts at the OPEC meeting as the ensuing drop in commodities has trashed the global…
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Wednesday Wrap-Up

Didn’t hold 11,000 that time did we?

And we are still not getting the kind of big volume plunge we need to signal a clear bottom. The markets were literally saved by the bell today and I am not getting my hopes up for tomorrow.

The very ugly turn of the S&P below the 200 dma at 3pm was about as bad as it gets:
http://finance.yahoo.com/q/bc?s=%5EGSPC&t=1d

I must say that the selling at the end of the day seemed like a very, very large program selling a broad base of stocks but that just might be me being an optimist…

Oil plunged and what is different this week is that no one is stepping in and saving it at the end of each day. Demand is off and the rats are abandoning ship but we are still one crisis away from a big bounce so be very careful out there.

Gold is flattening which is one of the reasons I think the Iran deal has played itself out from a fear perspective but we will have to see what tomorrow will bring.

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

VLO gave a nice clear sell signal on the oil report and both our picks did very well but a monkey with a dartboard could have shorted oil today!

OII gave us a nice entry and the Jul $75 puts jumped to $4 (up 20%) on a 4% drop.

BHI was even better with a 5% drop that moved the $85 puts way into the money at $4.60 (up 185%).

JOSB actually went up today but then posted rotten earnings and got killed in the AH.

VOD had a good day and the $22.50s are in the money but still at .55.

GOOG topped out right at $394

Some other notable movers today:

HPQ was flat today.

PFE was flat.

CME made 1%.

BA made a point.

SHLD added a point.





Wednesday Morning

This could be a make or break day for the markets. We are now within spitting distance of 200 dmas so any downward movement could easily gather steam. When I predicted a week of sideways trading last week that would have to have included some sort of upward movement as well so we really need it today otherwise my consolidation premise is out the window.

Asia suffered another day of big losses last night, averaging 2% across the board. Fear of interest rises is rampant, especially in Japan where many years of 0% borrowing have given investors no appetite for any change.

Europe is showing a little strength with numbers there showing that exports are not suffering as much as expected, even though the dollar is now down 8% against the Euro for the year. DCX is way oversold so I will be watching them to see if we might be getting a turnaround over there.

It’s all about the S&P over here today – will it revisit the 200 dma at 1,260 or was yesterdays very quick bounce enough to propel it back on the long road back to 1,295? It will be very hard today as oil is having another bad day with all this terrible peace talk and metals may suffer as well if people stop worrying about nuclear terrorism for a day.

Oil fell .14% against a 1% dollar rise yesterday and it is that, more than Iran news that is keeping the prices down overseas. Today’s inventory report should show a small draw due to the holdiday weekend but traders are looking for any excuse to get prices back up so they will be watching demand numbers very closely for any sign of an increase.

Gold is down around $624 which is a dollar adjusted $575 and should test the adjusted 200 dma at $540 which is $583 before it turns. I will be jumping in on gold stocks there in hopes of a nice bounce as gold has not seriously violated the 200 dma in many years.

Another good day to watch the spectacle from the sidelines. We are back in one of those situations where oil will either pull down the markets or the commodities will bounce back and provide the exact kind of leadership we don’t want.

World wide chip demand is much stronger than expected and if today doesn’t get the…
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Tuesday Wrap-Up

Wow we held 11,000! See how you can learn to appreciate the little things during a disaster… Lots of weakness but a nice end of day recovery coupled with big volume but not in the SOX so I’m having a very hard time getting excited about anything that happened today. On the whole we would have been better off with a bigger drop so we could really see where the bottom is, these air turns (not off the dma) are pretty meaningless from a chart perspective. The S&P at least had the good manners to test its 200 dma at 1,260 but it went below it way too easily in the morning and again in the afternoon before the 3:30 buy kicked in: http://finance.yahoo.com/q/bc?t=1d&l=on&z=m&q=l&p=&a=&c=&s=%5Egspc The S&P is the only thing I care about tomorrow as it can do two things. It can form a big W on the 5 day chart and head back up to 1,280 or it can form a broken bounce and dribble out like the proverbial dead cat: http://finance.yahoo.com/q/bc?s=%5EGSPC&t=5d&l=on&z=m&q=l&c= Think of these patterns like an actual ball bouncing – does the bounce pattern show energy like a superball or sort of splat like a deflated basketball? As you can see from the sad little rebound we had today, this is no superball. HPQ was the tip off today – the company announced that they made 10% more than they thought (so their p/e is actually 12 next year) and that news was greeted with a 2% loss for the day. They did take a nice bounce off the 200 dma but that was with the whole market run at the end of the day so no credit to them. Oil ened the day flat after being down as much as a buck and the oil patch was down about a half point in general, making a 1 point comeback from early lows. Gold lost another $15 as commodities in general continue to free fall. Copper has been relatively untouched so far, down just $35 (10%) from it’s highs while PD and PCU are down 20%. CUP, on the other hand, is flying up against the tide and I will be keeping an eye on that one. On the bright side, Cramer has gone negative and that’s a great contrarian indicator to me but, as I keep saying, it is not my job to save the markets.…
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Tuesday Morning

Asia is off considerably and Europe is looking grim so no help from overseas today. Today is 6/6/06 for all you number people, maybe not the best omen!

We can expect a bounce of sorts but it will be tough to pull out of the dive track the markets are currently on. I’ve been saying we will probably end up with a 10% correction and this is the ugly face of it while you’re in the middle.

The Dow is about 100 points above its 200 dma of 10,867 where we can expect the next downside pause but without a firm bounce, it may just be the 2/3 mark on the way to 10,500.

The Nasdaq is getting violent rejections from the 200 dma at 2,230 and is in no danger of challenging it today as it opens around 2,175. The Nasdaq has another 50 points to fall before hitting the 10% mark. The SOX are already down 20% from their January highs so the Nasdaq is lucky it has had comparatively little damage so far but we will have to see if the SOX holds the current floor of 456.

The S&P is just 5 points above the 200 dma at 1,260 and, as with the other indices, we are better off testing it than not. 10% down for the S&P would take it to 1,195, that’s 2 more drops like yesterday to get there!

Finally the mainstream press is catching up to me and talking about the oversupply of oil, it is amazing that they are still managing to keep prices this high now that the cat’s out of the bag but the mantra of Hurricanes, Iran, Nigeria and Chinese demand are being repeated endlessly by the oil pumpers.

India is paring back some of the subsidies it has in place on oil by allowing the state run oil companies to raise rates about 9%. This will pare losses by about 14% out of the $16Bn loss that was already expected this year. China also subsidizes oil and more changes like this will likely lead to a real decrease in global demand.

Gold is suffering as one of gold’s fear/inflation factors is high oil and, as we said last week, a $1 drop in oil generally translates into a $9 drop in gold. Both the oil and gold markets are on the edge of their seats waiting to…
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Monday Morgue

That was beyond ugly!

It was a bad day to start but then Bernanke put the final nail in the coffin with some very hawkish comments on inflation, signaling more rate hikes ahead. This is something they have to do as no one talks about the elephant in the room which is the out of control US deficit that must be funded by foreign currency that is getting a little harder to come by.

The Dow dropped 198 points but went straight down all day while the S&P went back to 1,265 and the Nasdaq dropped to 2,169. Let’s remember last Wednesday we were in worse shape and the same rules apply:

The Dow must not go below 11,000 and the S&P must not go below 1,250 but I expect the S&P to have some respect for its 200 dma at 1,258 while the Nasdaq needs to stay above 2,150 until it can make it back over its 200 at 2,230.”

So we are triple testing those marks tomorrow. There is no reason to do anything but watch as there are miles to go up if things look good but below those levels we have just as far to fall if it comes to that.

The oil sector had its worst sell-off (3%) since mid-May, which was the middle of a spectacular drop from the market top after crude peaked out at $75 and plunged. This is not the same as oil is now heading up from $72 to $75 but, as I have said many times, it’s all a load of BS based on fear of the markets, not fundamentals. Now the fear is gripping the sellers of oil who worry that Iran may accept the treaty tomorrow (they won’t, not right away) and that oil will show obscene builds on Wednesday (they might).

Don’t let the small build in oil price fool you, that has less to do with oil traders and more to do with last minute oil pumpers. As the Valero chart clearly illustrates, there was no doubt by Valero traders that oil was going down. Even as it flew up this morning towards $73.50 Valero fell steadily.
http://finance.yahoo.com/q/bc?s=VLO&t=1d

Gold notched up a small gain but still can’t get back to $650 and gold stocks gave up all of their strong gains this morning. This also is predicated on fears of possible peace breaking…
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Monday Morning

Both Asia and Europe are mixed but all the action is on the commodity sector, which is why China is doing better than Japan today (producer vs. consumer) and the oil doom and gloomers are having a field day with Iran’s Ayatollah threatening to cut us off if we mess with them. We are in the same place we were last Monday, needing the averages to get over their 50 dma to get going and very concerned about any further downturns. While I don’t want an energy led rally, I will take anything today to avoild a meltdown of the S&P and the Dow. I think the fundamentals are there for a very strong rally but short-term anything can happen so I will be very careful deploying my cash. Oil is well on its way to $75. $74 has been no barrier the last 3 times it headed up but $75 has both been a firm top and a market killer as well. What I would like to see this week is $77 oil and a positive market so we can shake off the index fear of high oil prices but we had nothing of the kind last summer and it may be too much to hope for. The biggest difference is that last summer oil went from $45 to $70 (up 60%) while this year we are looking at $65 to $80 (up 22% on a very devalued dollar) so I’m hoping people will rationalize this at some point but I’m not going to hold my breath. Gold will need to play catch up since it has come down so much and nothing gets gold started better than fear of inflation and fear of war all coming from one convenient location. If the dollar crosses below $1.30 to the Euro we can expect gold to shoot back over $660 to retest the satanic $666 barrier it hit a few times before. I’m not going to play gold or oil other than a day trade as a word from Iran one way or the other (and we are currently getting both ways simultaneously) could send prices flying in either direction. I am still looking for generally flat markets through the week which I consider consolidating for a break up. As long as international news doesn’t sink us the fear factor should cool off by Wednesday and we should see some…
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Weekly Wrap-Up

Well we finished the week back around where we started but, unlike last week where we saw it as a positive sign, this recovery was led by commodities which was exactly what we didn’t want.

That theme looks to continue into this week as oil spins back out of control as Iran gets worse and oil demand numbers are being spun as stronger than they actually are. Anything less than a surprising build on Wednesday’s inventory report will surely get us back to testing $75 for oil again.

While we will obviously get a lot of oil sector action on Monday, the question is whether this will kill the broader markets although it would be amazing if they can shake this off.

As we did not have a big day Friday, our trades were pretty blah and I am back mainly in cash at the moment. We couldn’t trigger an oil trade last week and the ones I forced against the Valero Rule I regretted so I think fighting that market makes no sense right now.

Considering what a lousy week it was we did OK with our picks and I’m still warm to them for this week but I will take things off the table very, very quickly as I have no reason to trust this market.

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

ADBE (6/15) is right back where we started with it a week ago, which is exactly where we expected it to be into earnings but buzz is building as it shook off the markets on Friday to post a nice gain. The $30s are still off .10 at .60.

AET looked very strong Thursday and money is coming back into the sector and the $40s have shot up to $1.50 (up 150%).

ATI went up quickly to $1.70 (up 20%) but keep an eye on BA for direction.

BOOM made plenty of money for 1 day (20%) so I sell at $33.30 even though I love this stock.

CHA was kind of flat but the Sept $35s shot up to $1.30 (up 30%).

GE Jul $35s are up just a dime and I will take my .50 back if they drop and wait for a better entry point.

Even though GILD had a terrible week, the $57.50s are still in the money at $1.80 (up 60%) but shame on anyone who didn’t cash out when it was more than a double.…
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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

This Is The One Chart Every Trader Should Have "Taped To Their Screen"

Courtesy of Zero Hedge

After a year of tapering, the Fed’s balance sheet finally captured the market’s attention during the last three months of 2018.

By the start of the fourth quarter, the Fed had finished raising the caps on monthly roll-off of its balance sheet to the full $50bn per month (peaking at $30bn USTs, $20bn MBS, although on many months the (balance sheet) B/S does not actually shrink by this full amount which depends on the redemption schedule) and by end-Q4 markets also experienced some of the largest volatility and drawdowns in nearly a decade.

As Nomura&...



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ValueWalk

The Competition For Capital Has Made Stocks Cheap

By Michelle Jones. Originally published at ValueWalk.

The new year is upon us, and now is the time many investors look at what 2018 was and prepare for what 2019 might be. Recession jitters are starting to pick back up again, especially now that the full picture of 2018 is in the books. But what if you could pick only one theme for 2018? Jefferies strategist Sean Darby and team have a suggestion which is especially timely given that it appears to mark the end of an era.

StockSnap / PixabayVolatility carries into the new year

This past year was one of extremes, and the markets ended i...



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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

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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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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