Archive for 2006

Friday Morning

Let’s get ready for an exciting options expiration day today!

Oil is well above $67, casting a pall on the world markets in general. Today will be another big test for our markets which are just barely holding onto some weak technical positions.

Oil plays should be on today but follow the Valero rule to the letter or you can get very burned. Remember that there is no technical reason behind these oil prices and an actual attack on US soil would likely lessen demand, not increase it.

As much as I hate to mention it, if there is an actual attack, be prepared to short stocks that were down last time. I know it’s gruesome but it can save your virtual portfolio. Travel stocks are the easiest targets (there was a rumor that someone shorted the airlines just before the attacks) and take the longest to bounce back but also watch out for the retail sector.

Consumer confidence is at a six month high so go figure, that usually would provide a boost but the market always looks forward and that view could use some help.

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Cash cash cash today! The markets look very scary so maybe just some oil and gold trades until this puppy turns up (which I think may happen if Europe closes up). If things look sad this afternoon, I will be taking off early to ski but I’ll try to catch up on the weekend.

Laggards in the oil patch include RIG, XOM, CVX, COP, PDS, HAL and BJS. Today is not a safe day to trade anything with options coming up but if Valero is rockin’ then these are most likely to follow suit. XOM, CVX and HAL are all being held down by critical option levels and may break sharply up on Monday (assuming no change in the oil crisis).

NEM, ABX and BVN still lag the gold market. NAK is a buy as long as gold stays over $560 and MRB still looks strong.

Some homebuilders are crashing and some aren’t. There is no way I’m going to try to guess which at this point. Fundamentals seem irrelevant at this point.

  • DHI looks very weak but says they are very strong in the conference call so I guess I will hope it hits the 200 dma of $35 but then I will really want to buy.
  • RYL looks strained


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Thursday Wrap-Up

As expected, that was more of a bounce than a rally…

The Nasdaq did get it’s head over 2,300 so tomorrow is super critical but that was a big position to hold, especially with Google and Apple crashing and Yahoo and Intel offering no help at all.

Today it was Osama’s turn to pump up the price of oil. What a coincidence he happened to make his announcement just after a huge build in crude inventories was announced… The fact that oil couldn’t break yesterday’s high on this news shows you just how flooded with oil the markets are.

The gold market was goosed by Bin Laden’s guest appearance and kicked right back to $560. Aren’t you glad I told you to buy ABX this morning – up 4% today thank you very much!

The worst part of today is that, with all the mineral and oil stocks flying up, the rest of the market must have been fairly anemic.

Meanwhile Bush was out giving a rah rah speech about the economy. He said we can fix this deficit by not collecting all those darn taxes.

New home construction bottomed out last month giving most builders a hit today but BZH pulled it out for a 2.5% gain, amazing!

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Google got whacked by additional negative tones from analysts and a recycled story about the Government wanting to check out what porn is being downloaded by who. 25% of Google’s revenues come from porn so this is not a place they really want people poking around.

AMD was down a bit from its $38 open and I think that may be high enough for that stock.

Apple had a really lousy day. Although it recovered 50% from last nights sell off, the late day action was very soft. Usually it takes a few days for them to bounce back but the buyers just weren’t there today.

Yahoo gave up another .85 today – it is taking a lot of restraint for me not to buy this one.

All our gold plays were good today, even NEM had a good day before giving half back. BVN is now lagging the rest. Somehow MRB gained 6% but if you owned it you wouldn’t have thought so from watching today. GG was good for 5% too. My new favorite, NAK had a chart of beauty today gaining 6.5%.

BSX opened up but then…
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Thursday Morning

Well, Japan and Europe are bouncing back but we have to wait and see how our markets react. I am concerned that Japan’s quick rebound will suck global capital into Asia and away from our lackluster markets.

Cash was a great call yesterday as was obeying the Valero rule which told us well in advance that oil prices were going to come down. At this moment (6am) I am still not ready to jump back in until we recover at least Monday’s open, which is quite a ways away.

A strong market makes dramatic recoveries (like the Nikkei today), not little incremental improvements. The same can be said for a strong stock…

The Nasdaq made only a token recovery yesterday and now needs to break back over 2,300 to avoid a confirmed downtrend. 2,250 is the key resistance on the way down – I would have felt better if we had tested it yesterday.

The S&P is in slightly better shape holding above 1,275 for now but it needs to break all the way over 1,300 before anyone will be impressed.

The Dow, having hit 11,000 already, took a nice bounce off its resistance of 10,825 and looks most poised to recover.

Oil pulled back from a market killing number of $67.50 yesterday as profit taking occurred ahead of today’s inventory reports but could easily break back up if we have a draw down.

The oil traders are catching on to my theory that the supply disruptions in various countries and the Iranian’s sudden interest in Nukes may simply be ploys to pump up the prices. That being said, as long as this game goes on prices will remain inflated but very volatile.

Gold is recovering, as expected and ABX looks like it as low as it will get for a long term play.

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Yesterday’s TOTD NVDA was invalidated by the market action – good thing too as it went the wrong way.

AMD had a wildly successful quarter and looks like it really is kicking Intel’s butt this year. Still I think earning $96M a quarter is stretching a $15Bn market cap a little thin.

APPL posted a phenomenal quarter but in this, “sure, but what will you do next?” world we live in, their guidance was conservative and will cost the company today. This is a normal pattern for Apple and the post-earnings drop usually presents a…
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Wednesday Wrap-Up

Not much to say about today.

It went about as well as could be expected given the start it had. This will certainly be a wait and see kind of day.

The close down was not that severe and now we need to see how the world markets look tomorrow.





300 Point Weekly Wrap Up!

Nothing wrong with that week was there?

We have a ton of open calls (although as I said on Thursday, I have sold most of my shorter plays) since everything just kept going up!

Out of 60 picks over the last 2 weeks we have had 3 losers (and I’m doubling down on those oil plays) and 4 neutrals – not a bad percentage. The average gain is close to 100% but that includes the newer picks… Really can’t complain can we?

Last Friday left us about 1% down but we called a bottom over the weekend and yesterday we laughed at the attempted pullback and called for Dow 12,000.

Here we are now, already at just under 11,400. I’m not ready to declare victory yet but we soon may have good reason to celebrate if we can just get the follow through on Monday.

Today’s action was better than I hoped, we got both our consolidation AND a breakout at the close.

The Dow closed at the day’s high at 11,381, a level only seen for 10 days this decade (they were in May) when the Dow peaked at 11,670 before plunging to oblivion on the shock of $75 oil. I have to think that had the oil pumpers not been so greedy, we could have gently eased the price up with the markets and we would all be happily paying $80 a barrel against a bull rally that would put the Asian markets to shame.

The S&P broke 1,300 at the close after brushing against it all afternoon and the NYSE finished just short of 8,400. I said we had a rally when the Nasdaq hits 2,100 and today it had a nice test of 2,140 at the open and went straight up from there to finish 25 points better at 2,163.

For the week, the Nasdaq was up 5.2% vs. 2.5% for the Dow and S&P. For the year, the Nasdaq is still -2% vs 6% Dow gains and 4.3% on the S&P. It’s all up to Nasdaq 2,200 next week!

Even Dell had a nice recovery today. If they can be forgiven, can MRVL be far behind? TOL and all the builders came back from an early sell-off but it was, unfortunately, oil that provided the gas for the markets at the end of the day. The pending Jihad weighs heavily on the markets and something…
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Wednesday Morning

This is almost sickening.

The Nikkei is down another 464 pts (3%) today, this time it was so bad they halted trading! I wish I traded foreign markets because I called the dead top on that one last week…

Not to be depressing but I was going to start this article off by referring to the Hitchhikers Guide’s great cover advice “Don’t Panic” but, looking at the world situation I’m not sure that is good advice today.

If you have been taking my advice and staying in mainly cash, then we can just wait and go bargain hunting later but, if you are still holding positions and the markets are dropping, you may want to take some losses off the table just in case the Nikkei drops another 500 pts tomorrow. The Japanese market lost $300Bn this week, that’s like losing a mid-size country’s whole economy – while it is possible that this will finally start a flow of money back to US equities, I’m not going to hold my breath.

If the market does not climb up from today’s open to close within 1/2% of flat, we will be breaking some major technical levels that will make for a very tough recovery.

It will all come down to earnings and we are off to a rotten start. AAPL should be a bright spot today, even with what are now insane expectations for the stock. EBAY is a wildcard so the most important number of the day will belong to AMD who, hopefully, can demonstrate that Intel’s suffering is due to their success and not due to overall market weakness.

More rebel attacks in Nigeria and the Iranian crisis are keeping oil up despite the fact that Opec is getting so backed up with actual crude that they are talking about cut backs. Fear and fear alone is driving the markets and President Roosevelt said that fear is the one thing we should fear (not exactly his point but it is mine).

A fear driven market is irrational and dangerous and I cannot emphasize enough the advantage of staying in cash at a time like this. Losses in Asia and Europe are so steep that people are cashing in their gold to cover their positions. Money is also flying into treasuries which is inverting the yield curve again.

Speaking of kicking a market when it’s down, Warren Buffet picks today…
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Tuesday Wrap-Up

Not a good day at all. Oil will not give us a break and there is no way the markets can climb on this.

BCRX was the only success of the day although none of our picks went down. As I said, stay in cash and let’s wait to see how things shake out.

Tomorrow is shaping up to be another disaster with INTC disappointing by a lot, and YHOO turning into a major let-down which will devastate web tech tomorrow.

IBM’s earnings were up 13% on 12% lower revenues than expected. I don’t have a big problem with that but I imagine the markets will.

As I said earlier, I still consider Yahoo a buy, earning were still up 36%, just not as much as expected but I think that kind of growth justifies the p/e of 30 this stock will drop to.





Telling Tuesday

This will be a telling day for the markets.

On Friday I said the Nikkei is in for a correction and, as I am so widely read in Japan it seems, the market is dropping close to 500 pts today. This, of course, is panicking the European markets, especially as it is due to the very real catalyst of $65 oil, and we can expect our markets to follow suit, at least in the morning.

The real question is going to be: “Can earnings save us or will they be the stake in our hearts?

I don’t think anything can save us from $65 oil other than a whole year where we prove we can earn money at that price. Q4 earnings were based on a $60 average so little credence will be given to good results – only great results will ease concerns!

Meanwhile, even with all this horror and destruction in the markets, gold pulled back from $560 so it may be correction time again if we can’t breach $560 in US trading today. GG and NEM have been on a real tear and could trade down into options if gold retraces to $555. At $560, BVN and NAK are gold stocks with room to grow.

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NAK is a buy on any pullback stock. They are just getting started on an amazing gold site up in Alaska that will make this company one of the World’s largest producers in years to come. I would consider $5 to be a gift on this stock, I’m not sure if we will get that much pullback and it may get away from us if the mainstream press discovers it. This is a long, long term hold.

On the flip side, NEM is having a bad run of run-ins with environmental groups which may slow a couple of projects. At a p/e of 60, they can’t really afford a misstep so I will be considering a short trade if gold breaks below $555.

AA is the latest company to slam the door on pensions. No new workers will be getting them and we can expect some terms to be renegotiated on the old ones.

Could we really be about to pass the asbestos fund? Friday’s move on OWENQ and GRA suggests so. Owens is probably the greatest value on the market if they can actually get out from under the cloud…
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Weekend Reading

As this is a blog I am exercising my right to randomly throw down my thoughts as I go through some of my readings this weekend so don’t expect any particular point to this article…

Bad Data: Corporate earnings are not up as much as we think. The 12% increase in earnings that has been headlined was inflated by $456Bn in share buybacks, fueled by the 0ne-time repatriation of hundreds of Billions of dollars under yet another tax cut. According to Barron’s, operating earnings were up just 7.8% last year, the smallest gain in three years.

As I said last week, this is not a very good rally – here’s a chart that proves it! http://www.chartoftheday.com/20060113.htm?T What does this mean? Well, we are 800 days into a rally, making it one of the 6 longest in 105 years, yet we have gained only 50%, making it one of the 4 weakest in that same time period.

Big Data week coming up. Earnings from IBM, AAPL, AMD, Intel and several Banks along with the CPI on Wednesday. Wednesday also brings us the Housing Index setting us up for Thursday’s huge builder day with Housing Starts and Building Permits being reported on the same day as earnings from BZH and DHI. Both of these companies have told people things are not bad so look out below if they are!

YHOO has earnings Tuesday and I consider the pullback to $40 to be a potential gift but I will wait until the results are in to buy as good news will move the stock up for days while bad news (or the perception of it) will present a great long-term buying opportunity at around $37.

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It looks like the oil market can’t shake the Iran thing and Brent Crude hit $63 today, that makes $65 almost certain tomorrow. On 12/6 in “Gold Rush” we talked about the macro impact of 6M people per year entering the “middle class” around the world. Mario Gabrlli of Gamco Inverstors goes me a few factors better by discussing the 3Bn people who are in what he calls “takeoff stage.”

You need to think of these people as adolescents just getting their first jobs. Think of what you did with your precious money when you were just entering the work force. While they themselves may not be running out to buy cars, the radios, shoes, watches,…
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Zero Hedge

Americans' Economic Hope Has Collapsed

Courtesy of ZeroHedge. View original post here.

Which came first, the confidence or the stock market rally?

One thing is for sure, the crash in stocks in December has crushed the hope of Americans that their economic future is going to be better under President Trump.

Overall confidence dipped to 58.1 - a 4-month low, but, U.S. consumers this month were the most downbeat on the economy since November 2016, a third straight drop after expectations reached a 16-year high just three months earlier, as the partial government shutdown wears on toward a fourth week.

...



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Kimble Charting Solutions

Triple Breakout Test In Play For S&P 500!

Courtesy of Chris Kimble.

Is the rally of late about to run out of steam or is a major breakout about to take place in the S&P 500? What happens at current prices should go a long way in determining this question.

This chart looks at the equal weight S&P 500 ETF (RSP) on a daily basis over the past 15-months.

The rally from the lows on Christmas Eve has RSP testing the top of a newly formed falling channel while testing the underneath side of the 2018 trading range and its falling 50-day moving average at (1).

At this time RPS is facing a triple resistance test. Wil...



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Phil's Favorites

Brexit deal flops, Theresa May survives -- so what happens now?

 

Brexit deal flops, Theresa May survives -- so what happens now?

Courtesy of Victoria Honeyman, University of Leeds

As the clock ticks down to March 29 2019, all of the political manoeuvring, negotiating, arguing and fighting is coming to a peak. In the two and a half years since the 2016 EU referendum, views on both sides have hardened and agreement still seems as far away as it was the day after the referendum.

With Theresa May’s withdrawal agreement disliked by all sides, and voted down by an unprecedented majority in the House of Commons, everyone is wondering what can and should be done next?

...



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Digital Currencies

Crypto-Bubble: Will Bitcoin Bottom In February Or Has It Already?

Courtesy of Michelle Jones via ValueWalk.com

The new year has been relatively good for the price of bitcoin after a spectacular collapse of the cryptocurrency bubble in 2018. It’s up notably since the middle of December and traded around the psychological level of $4,000... so is this a sign that the crypto market is about to recover?

Of course, it depends on who you ask, but one analyst discovered a pattern which might point to a bottom next month.

A year after the cryptocurrency bubble popped

CCN...



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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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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 ...

http://www.insidercow.com/ more from Insider

Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



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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:

 

·       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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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.

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