Archive for 2006

Freak Out Friday

Mega Deals, Scandal, Terror – oh my! The great wheel of news is spinning like a top today and it will be great to see how the market takes it. We have, of course, the Sears Tower Plot – is it good that we caught guys or is it bad that there are guys to catch? We also have Anadarko buying KMG in a $22Bn deal that indicated the oil sector is hellishly undervalued plus we have an possible insider trading scandal at hedge fund Pequot which could rock that industry (I mean if your hedge fund can’t trade on inside information what is the point?). So we SHOULD have the oil sector rockin and rolling on this news – great for the XOM calls that we picked up right at the bottom in yesterday’s comments. With big terror back in the forefront, I am pretty confident in the oil calls but not much else today as any of those stories can be interpreted badly but I will be very excited if we pull an up day out of this mess. Even a flattish consolidation would be nice but it is possible that this news could be the catalyst the market needs for a huge sell-off that sends all the nervous types back to bonds. We still need to see the Dow close above 11.100 and avoid falling below 10,900.

The S&P is still in big trouble if it can’t get over 1,260 as that is still well below the Jan open. The Nasdaq, like I said the other day, is a lost cause until it crosses 2,230 – over 100 points away before we can say we are back on a positive track and even that would be 70 points below the year’s open. Asia is flat but had none of this news during their trading hours so there is no indication there but Europe is flat in early trading, probably waiting for the US to set some direction. If I had a few Billion under management I would certainly be waiting for at least the weekend before making any purchases as terror issues have killed the market time and again since 9/11 but also there have been great recoveries after most of those drops. So I am really rooting for a massive sell-off today that will finally put a floor in this market but I will still…
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Thursday Wrap-Up

Well that wasn’t so bad – it certainly could have been better but at least it wasn’t worse.

The Dow gave back 1/3 of yesterday’s gain and the Nasdaq and S&P lost about half but the candles were engulfed bullishly and I have decided to stop worrying about volume as it’s Summertime and it’s sort of normal.

We are waiting for Oracle earnings which is a very silly thing to watch as they are no longer the market maker they once were but old traders think so and they have all the money so we pay attention anyway.

I am alarmed at the movement of rates this week with the 10 and 30 year hitting 5.25ish ahead of next week’s Fed meeting. The Yen gained a point against the Dollar today so flat commodity pricing is a sign of weakening there.

I got out of my QQQQ puts this afternoon as I think we may get a little bounce into the weekend but, unfortunately, it will likely be led by the normal energy sector Friday bounce rather than by any new leadership.

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GM is telling people things are getting better (only going to lose $1Bn this quarter?) and the lemmings went crazy, driving the stock up 4%.

Google is dumping it’s 2% BIDU position, knocking 5% off that price and they took a little hit themselves as it had been hoped they would get closer with China’s market leader – not have a breakup.

ADBE actually did improve upon it’s open but the $30s closed at $1.60 (up 165%), only .10 up from the open but the stock continues to look strong.

AAPL had a very strong day going against the grain. The Jan $55s are already $10.90 (up 15%) while the $60s have only gained .35 to $2.85. It is tempting to close this position now and pocket the $1.15 profit in this crazy market but I’m going to hold and possibly roll my sale into the $62.50s if all goes well.

Remember on Tuesday I said I didn’t like the McDonald’s deal in China? This is what happens to people who wait to read my column by mail!
http://finance.yahoo.com/q/bc?s=MCD&t=5d

BBY held up all right as it can’t be denied that people are still buying stuff. The $55s are right back where we started at $1.

MOT $20s lost 25% this week to .65 and I…
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Thursday Morning

Asia was up huge! The Hang Seng picked up 167 points and the Nikkei ran up 3.3% in one day for a 491 point gain. I watched this last night and I started to get excited but then I realized that this is what strong markets do, spectacular recoveries on huge volume – this is not what our market is doing. Also, if you look at what is working in Japan it is exporters and electronic firms and construction companies (remember we talked about the massive building in Asia). Effectively the Nikkei had a 1,250 point recovery (35%) in 6 sessions following a 3,500 point drop since May 9, very close to the Fibonacci expectation of 38%. The Dow has had a 470 point recovery (48%) in 6 sessions following a 972 point drop since 5/10.

We must have follow through today or we only confirming the market’s weakness. Europe is up about half a point across the board but there is a lot of grumbling that the Fed is overtightening and throwing us into a recession but the reality is they have no choice as the dollar continues to decline putting further pressure on commodity prices. Oil is up to almost $71 again not because of supply/demand or terror issues but because the dollar is falling apart again. Right now commodities are caught between a falling dollar and a long range outlook that we may be heading into an economic slowdown and rising commodity prices will damage profits and bring about that same slowdown so it’s a bad merry go round the Fed has gotten us on. I restate yesterday’s position that without the S&P making a firm cross over 1,260 this is no rally at all and I am looking more at shorting this week’s winners than jumping on the bandwagon at this point. Sorry if this is not a bright and sunny view but I’m really going to have to give this another day to see what happens.

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In general, airlines make great shorts today as British Airways lost 15% this morning on news of a scandal involving price fixing which is bound to ripple across the Atlantic. I’m going to wait a bit hoping these puts will come down in price as UBS picked today to give a general upgrade to the airline industry. CAL Aug $25 puts are $1.10 and won’t…
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Wednesday Wrap-Up

OK so I called the top of the Nasdaq 15 minutes early in comments – other than that it was a pretty good day…

The fact that I bought $39 QQQQ puts for .80 and again at .70 should tell you what I thought of today’s action. The S&P did not make 1,260, pulling back 50% of today’s gain by the close. The Dow could not hold 11,100 and the Nasdaq picked up “just” 30 points after a 10 point drop in the last hour.

Although the SOX had a good day they also banged off resistance at 460 pretty hard and the rally was the worst kind, led by Oil, commodities and financials – the same things that got us into the mess we were in last year.

MOT barely moved on its upgrade and GE couldn’t hold positive and Apple only gained .39 for the day – this is not a rally people!

Oil shot up to $70.33 and gold ran back to $590 on a declining dollar which hit resistance along the 50 dma. Failure of the dollar here can be a huge problem, another reason the Fed can’t afford to stop.
http://stockcharts.com/gallery/?%24usd

Oil inventories showed crude supplies at an 8 year high but demand was stronger than expected so everyone who sells oil is doing great. Now we have to stop wathcing supplies and start watching demand numbers because any sign of a cool summer, slowing economy or demand destruction will now have a lot more to do with sector performance than the price of oil.

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MS had a heck of a day today but flatlined at $60 before pulling back to $59.48. Even if you didn’t take my advice and sell in the morning the $55s finished at $5 (up 50%).
http://finance.yahoo.com/q/bc?s=MS&t=1d

After quite a jump on Monday and Tuesday, PLA pulled back to $9.09 (down .11) in an afternoon drop.

I really hope we get a follow through tomorrow but, on the other hand, I do have a bet against it but either way I think we may get an idea of true market sentiment tomorrow.





Watchful Wednesday

Asia was flat as the BOJ finally said they will, in fact, cancel their zero-interest rate policy “before the end of the summer.” It remains to be seen how devastating this will be to the global economy but the scale goes from bad to total economic meltdown – there is not even a spot for good as a possible outcome. The only rainbow I can see is that this move, like our own Fed, has been anticipated to the point where it may already be baked into the market prices and could even explain the global correction we’ve been having.

Europe is not taking the news well and is off about a point. Sentiment is so bad over there that AHO sold off this morning after reporting a Q1 profit increase of 76%, 15% ahead of estimates.

Sentiment is so negative on the semis that PHG should get a huge bump today on news that they are selling off their semi-conductor division!

If we are going to have a turn, today would almost have to be the day as further deterioration could lead to total capitulation by the bulls. Another day from the Dow that ends below 10,900 will certainly lead to another test of 10,700 in short order. The S&P is also more likely to test 1.220 again than it is to retake 1,260 and the Nasdaq could literally gain 50 points in one day and still be considered a lost cause.

FDX had great earnings but left guidance flat but flat is up 25% from last year so anything less than $112 today will be a major disappointment and yet another sign that there is no way to win in this market.

It’s oil inventory day and the reaction of the oil sector will probably set the tone for the markets after 10:30. I pointed out over the weekend how ethanol is actually adding .25 per gallon to the price of gas but it is now up to $5.75 per gallon, a 15% increase in just 2 days! That is the wholesale price!!! The wholesale price of gasoline is $1.94 a gallon, pre-tax, pre-mandatory ethanol blend – plus we subsidize the ethanol with our taxes so about .50 per gallon can now be blamed on idiotic policy makers.

The ethanol market is so out of control right now that you can buy it in Iowa (where there is…
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Tuesday Tear Down

Another day to stay out of the markets, luckily we called it right on the nose this morning as there was no money to be made with the indices finishing pretty much where they started after an exciting false start in the morning.

11,050 is becoming a problem spot for the Dow and the Nasdaq still can’t get out of it’s own way, dragged down by the SOX as usual.

Also as expected, the S&P mirrored the movement of the oil sector to the point where you could almost apply the valero rule to SPY. What has happened is that oil and other commodities have just grown to take up far too much of the S&P and it will take a long and painful correction before other sectors can regain a dominant position:
http://finance.yahoo.com/q/bc?t=1d&s=%5EGSPC&l=on&z=m&q=l&c=vlo%2Cxom%2Cuso

Oil is back to being manipulated as it went up .70 by 11:30, plunged over $1 to $68.75 by 1:00 before “recovering” back to a very false looking close at $69.35.

Nothin’ spells lovin’ for nuclear war like G-O-L-D and the Korean missile news was just enough for that market to make a nice recovery, also from a morning dip. $560 is forming somewhat of a base and is close enough to my target that I’m looking at miners again. Also, GOLD (the stock) has really started to become a great leading indicator. You could have used its turns for a buy and sell signal on GG or AU today and done very well:
http://finance.yahoo.com/q/bc?t=1d&s=GOLD&l=on&z=m&q=l&c=au+gg

As expected, GG outperformed the sector with a 3.5% gain on the day but slumping oil prices may put a small brake on a gold rally so we need to wait for inventories to clear out. NEM is lagging right now. NAK has been rolling quietly along throughout the gold drop and has radically outperformed since my mid-may pick!
http://finance.yahoo.com/q/bc?t=3m&s=NAK&l=on&z=m&q=l&c=gld

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CAT was thankfully a don’t short at the open above $70 as they had a great day today, gaining 1.5%.

AAPL threatened but fell back and today would have been a perfect day to enter our income producing position.

ADBE continues to try to ignore the rest of the market but I’m not sure they can keep it up. The $30s ran up to $1 (up 66%) before pulling back to .90 at the close.

The LVS Sept $60 puts did come down to…
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Tuesday Morning

Yesterday was a day I was glad I stayed away from. I’ve taken on a major project as the market is less fun than it was so I may not be making 2 posts a day, especially on a day when nothing happens worth discussing.

4 times in a row, Monday is a very bad day for the markets.

The temptation to short was overwhelming but the market may have bottomed in the afternoon with another one of those little bounces. The Dow came off the 200 dma of 10,900 but finished below 11,000 while the Nasdaq seemed to pause around 2,110 and the S&P decided 1,240 was far enough for one day. Even the NYSE broke below its 200 dma of 7,920 so that’s a level to watch on the upside.

We are back on Dow watch as it has to hold 10,900 to avoid a total meltdown while the S&P has a big climb back to 1,260 and the Nasdaq is OVER 100 points away from the 200 dma of 2,230!

In short, although we expect a bounce we are still clearly underwater and the ice above looks pretty thick and things look grim indeed.

The panic of the week is North Korea announcing they are going to test a missle that can reach the US so we have that to worry about now and, as usual, Condi is on TV warning about “serious consequences.” I think the US is starting to sound like that old man who’s always yelling at kids to stay off his nuclear lawn. He says it all the time and they do it all the time.

Another nail in the coffin of the markets was a terrible housing report that revived fears of a housing collapse and sent builders all the way back to last weeks open, erasing what little gains they made Thursday and Friday. The fact is that housing starts were actually up 5% last month although permits have dropped slightly so we don’t have quite the oversupply people fear.

Asia moved down again with the Nikkei losing 200 points and the Hang Seng dropping 160 points Europe is slightly down this morning, acting very wary of the US open (as should we all!).

It will be hard to get anything going ahead of next week’s Fed meeting and, at this point, we really need a nice healthy 700 point drop…
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Monday Morning

Just got back from the weekend so I will wrap up last week by saying good riddance!

There, now that that’s taken care of, let’s see where we are…

Asia traded down a bit as the US markets have confused them as well. China is making moves to slow growth by tightening the money supply. Europe had a good open but is selling off into our open as everyone is wondering what will happen in the US now that the expirations are over and there are just 10 trading days left in the quarter.

Intel got another upgrade as geniuns analysts come to realize that perhaps they shouldn’t have lost 40% of their market value this year. We will see how much it helps to guage the temperature of the market in general.

Let’s not forget that the S&P failed to get back to 1,260 last week so until we are firmly over that mark I won’t be buying a thing outside of a day trade. The Nasdaq is still a mile below anything that can be classified as a recovery and any downward motion there will get me shorting last weeks “recoveries.” We don’t care what the Dow does as money flowing in there could just be a “flight to quality” as investors look for somewhere safe to park their money.

It goes without saying that the Dow dropping below 11,100 would be disastrous.

There was too much of a commodity boost in last week’s rally and the same stocks could lead us the other way this week. It’s still all about the SOX and hopefully Intel can lead a recovery there but if 460 forms a barrier there, then the Nasdaq will suffer.

Oil is down right around $69 as yet another weekend goes by without the world ending – can we keep the streak going? Tune in next Monday to find out (or not as the case may be). Rhetoric alone is just not cutting it anymore as Iran has made inflamatory statements but no one seems to care anymore.

Gold is also off as the world makes it to another Monday but I think the dollar is running out of steam so look for gold to follow oil whichever way it goes on a roughly 10:1 ratio. Mining stocks are still way oversold but I want to see gold firmly over $585 before even considering it.…
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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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ValueWalk

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 ...

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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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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

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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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