Archive for 2006

Monday Morning

War wages on but the markets don’t seem to mind too much.

I was reading the times this weekend and there was an article on the war in Afghanistan followed by a page on Iraq followed by a page on the war in Africa (which we usually ignore but millions are dead) and then a few pages on the “I don’t know how it isn’t called a war” in Lebanon. It really is a wonder there is any consumer confidence but even Europe is recovering.

Remind me to invest in whoever makes bullets though…

Israel suspended bombing for 48 hours while waiting for Condi to work her magic but that message apparently didn’t get to their Air Force which just dropped some bombs this morning. Oil was heading right down but a pipeline ruptured in Russia and Nigerian rebels forced an oil platform to be abandoned and there are heat warnings for the US (nat gas should shoot up) so it headed right back up again.

Asian stocks are still playing catch-up from last week and are up across the board while Europe is down despite very good retail numbers in Germany and an apparent housing recovery in England.

I still have my concerns about our markets as inflation continues to grow and the economy has slowed drastically since the last quarter.

If we assume a lag of 6 months, or 6 hikes the way the fed has been ratcheting up for 17 consecutive brutal sessions since mid 2004 then it it possible that the numbers we got last week are an indication that the Fed did indeed start to overdo it somewhere around the September rate hike and may have overshot the mark by 6/17ths, let’s call it 35%.
http://www.federalreserve.gov/fomc/fundsrate.htm

The Fed dropped rates from Jan ’01 through June ’03 but took long pauses between moves from 1.75% in Jan ’02 to 1.25% in late ’02 and then waited and hoped that would do the trick all the way to June ’03 when they dropped the final 1/4 point. The economy was already getting in gear around April of ’03 where the ridiculously low rates (Fed was too loose) sparked the famous “housing bubble” which drove, for example, TOL up from $10 in April ’03 to $58 in July ’05.
http://stockcharts.com/gallery/?tol

So the Fed dropped rates from 6% in Jan 2001 all the way down to…
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Weekly Wrap-Up

Soft landing!?!

Holy cow they do love to label things don’t they? The indices ended the week up 3-4% across the board, a huge move! I especially liked the way they did it in stealth mode so the rally sort of caught most people by surprise.

I’m still waiting for the other shoe to drop next week but let’s just sit back and enjoy the week that was while we can.

The Dow punched through 11,200 with authority today but has a lot to prove at 11,260 (July top). If you check the chart you will see that we have now had 3 month end rallies in a row and the other two did not end very well.
http://stockcharts.com/gallery/?djia

The S&P finally broke out of my range today and took a light rejection off 1,280 but that’s nothing to get picky about on a 1.2% up day. NYSE ran right past its July high of 8,241 and will be a good indicator next week of how real this rally can get. With the Nasdaq, I’m going to follow the rule that if you can’t say something nice, don’t say anything at all…

Oil finished the week flat but down over $5 from last week’s highs but that didn’t stop oil companies from making mega bucks.

Gold continues to track the dollar pretty much tick for tick but once again got slammed back from $640 today. Looks to me like it’s consolidating for a breakout, especially if the international market starts thinking the Fed is going to stop tightening.

On the whole it was a great week to play the markets but let’s keep our eyes open next week and not give too much back if we can avoid it! I called for a cash out today so all of these trades (other than, of course, leaps, spreads and income producers) are closed as of Monday and we’re going to make a fresh start.

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Now there was a lot more money to be made on some of these if you had followed the rules and stopped out but, except for extreme cases, I’m just going to go with today’s closing prices.

Congrats to Prof wherever he went for exiting the housing market at the exact right second!

AMGN should have been taken off the table at a triple but the $67.50s are still $2.40 (up 100%).

AXP made…
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Friday Morning

Wow, Friday already? See what happens when you miss a day…

I’m glad I missed yesterday, what a disappointment!

The Dow held 11,100 but it’s a BS indicator, the S&P couldn’t break 1,270 which I hope everybody realized was a strong don’t buy/sell signal. Now we will see if it can hold the still falling 50 dma of 1,257. The NYSE remains strongish above 8,100 but the Nasdaq is just sad even with a very mild SOX recovery:
http://stockcharts.com/gallery/?%24sox

We need to watch the S&P again today but I can’t see wanting to hold anything into the weekend. We did so well on the first 3 day’s of the week there is really no reason to push our luck until we get much clearer signals than we are seeing now.

Asian trading was mixed with the Nikkei pulling up the rest with a 1% gain on very good Sony and Cannon Earnings which you would think bodes well for retailers but no reaction here. Europe is trending down this morning as $75 oil rears its ugly head again.

Further dollar weakness will keep oil above $72 for a little while but I think we are due for a little pullback. I was pleasantly surprised to see my XOM $62.50 puts are still .30, I thought I was toasted when they announced their numbers!

Cramer is right about VLO, they should be much higher but I’m more inclined to question why they aren’t than jump in and buy. If VLO, XOM, COP and CVX can’t all take $70 on these numbers then the only logical conclusion you can draw is that there is something very wrong with the price of oil! We have started the first month of Q3 with oil $7 higher than the average of Q2, that’s another $10M a day for XOM alone! Demand is strong and so far there have been no disruptions… What gives?

Watch gold very closely as it has been having a lot of trouble at $640 despite continued dollar weakness. I think the novelty of the war is wearing off and without any additional pressure some of the fear premium is wearing down but that can all change over the weekend.

I’m moving to pretty much all cash as I think the initial excitement over the GDP numbers causing the Fed to pause will give way to worry that the economy…
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What Happened Wednesday?

Darn, I really thought we were going to get a nice rally but it fizzled out at the end.

The S&P was a major disappointment, going above 1,270 but then giving it up in the last half hour. Still, as I said this morning, just holding on was going to be good after 2 positive days but I would be a lot more comfortable if there had been just a little more meat to these moves.

We’ll see what the evening and morning’s earnings bring but I have an early meeting so you are on your own tomorrow! Keep an eye on the same technicals we were watching today but don’t forget the huge impact XOM will have on the markets tomorrow.

Oil took advantage of fairly strong demand numbers to run back over $75 after the inventories but gave it all back just before the close. I don’t know what to make of this as it has not happened in a couple of years!
http://finance.yahoo.com/q/bc?s=USO&t=1d

One piece of gossip running around the oil patch is what happens if there are no hurricanes to disrupt supply? Oil we import so we can just say no to that but natural gas is produced locally and we are pretty much topped out in storage and this is the maximum possible demand (unless we have a historically cold winter). Someone did the math and, should we have normal demand and no supply disruptions through the fall, we will be physically unable to store more gas by October 1st.

That means we may be just 3 months away from gas providers having to start capping wells…

Oil is just as well supplied but, like I said, we don’t have to keep buying that but it is nice to know we’ve got a lot of it in storage in case another dozen wars break out. Crude could not hold $74 against a weak dollar today and that is giving oil bulls serious pause and we may be witnessing a power pump on the sector into earnings, possibly followed by some very heavy selling.

I took the XOM $62.50 puts for .35 in comments just for fun as a contrarian play to the now 60,000 call holders who disagree with me, see my reasons in comments.

Gold moved up against the dollar drop but again you can see that there is no additional fear…
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Watchful Wednesday

This may be a better test of market resolve than yesterday was.

Amazon had disastrous earnings, GLW was a huge disappointment in outlook, HP decided to go shopping, XLNX guided down…

We will see today just how forgiving the market can be today. We will hear from BA, BUD, BIDU, BIIB, BEAV, BDK, BXP, BOBJ, BVN and many other letters of the alphabet today but that gives you an idea of how significant today’s earnings will be.

Asia was mixed with the Nikkei giving up 125 points at the close despite Honda’s net rising 30% and Matsushita (Panasonic) posting a 7% gain on strong TV sales while Sharp also sees a strong consumer market. Europe is flat, waiting to see what the American markets do before committing.

Oil is holding back from the brink on concerns about Nigerian production levels (I think they need to learn a new song at this point) but inventory will tell the story today. The last two weeks were the most expensive oil weeks ever with and average of $76.50 per barrel so we will see if there are immediate demand fluctuations.

If an oil move is real, it should be followed by gold but gold is flat, even coming into the Asian wedding season where consumer demand is strongest. This is not a change in my belief that gold will go past $800 but an indication that the fear premium in oil is way overdone.

This is the weakest earnings day we’ve had so far and will be a real test of the markets. We held our marks yesterday and doing so again today may get some bears out of the market. Let’s make sure the Dow holds 11,100, the S&P still needs to break above 1,270 (yes I added a point) and the NYSE needs to hold 8,100.

As I said yesterday, the Nasdaq could gain 100 points and still look worrying so let’s just watch the 2,100 mark for a psychological positive but really watching the SOX which haven’t even made what you could call a bounce yet.
http://stockcharts.com/gallery/?%24sox

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I’m watching and waiting today but, on a positive move I will be looking to grab some picks that went the wrong way from yesterday. We need to see if UPS is forgiven as well as Dell and BNI to get a measure of market confidence in the second half…
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Tuesday Wrap-Up

What a silly market!

I suppose the huge run-up had something to do with the drop in oil as the gains started once the NYMEX closed in the red (usually they manage to pump something at the end) but, oddly, the oil stocks pulled a big recovery as well.

I got stopped out of my XOM puts at .75 for a mere .15 gain as I was away and couldn’t catch it in time. The Dow made it to 11,100 – very nice but the S&P just couldn’t give us the one point we needed to confirm a real rally. The NYSE looks strong at 8,149 while the Nasdaq is still over 50 points away from challenging the 50 dma and another hundred off the 200 after that.

The SOX did not come through today even though TXN added another 4% and SNDK was up 15% so forgive me if I don’t have my rally cap on but overall the end result was very good today.

Oil dropped all the way to $73.75 ahead of tomorrow’s inventory while gold held essentially flat against a strengthening dollar.

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There was nothing to buy today as the S&P never made it over our 1,269 target (other than a brief spike on the closing madness) so please take gains and losses with a grain of salt.

HPQ had a great day but then blew it by overpaying for Mercury Interactive by $1.5Bn ($4.5Bn total). In case you forgot, MERQ was an early victim of the options scandal, losing the CEO and several managers and getting delisted from the Nasdaq. I don’t mind this deal but $52 is more than this company was worth before they got in trouble! I don’t even want to look at the HPQ $32.50s, which closed up 30% at .90 but may be worthless tomorrow! A stop will not help us on this one….

TM had a rockin’ day and the $105s shot up to $2.15 (up 70%).

GM is going to be a hoot tomorrow morning! The stock shot up 3% to $30.66 ahead of earnings.

XLNX had good earnings but lowered guidance and will not be a pretty picture tomorrow but I’m still a believer as they have already been sold off over the option scandal which has now been booked as a $1.5M charge and should be the end of it. If we assume a 20%…
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Testy Tuesday Morning Redux

It was one month ago, on a Tuesday, when we became concerned about the Nasdaq making a “death cross” where the 50 dma crossed below the 200 dma. At the time I said “this is a very powerful signal from which few stocks recover.” On the same day we had the Global Banker’s Conference in Basel where I called for an end to the senseless war on inflation but no one listened to me (to be fair, I was over in the kitchen and they were in — Switzerland).

Since then we have been paying the price with one of the worst 30 day periods in many years. Uncle Ben came home last week and finally took my advice and said inflation is under control – this is a lie but he can’t come out and say he no longer cares about inflation, it would make him look like he changed his mind and, as John Kerry learned, that is just not allowed in today’s politics. Instead the Chairman says that inflation is moderating, this is a prelude to a statement that we can expect in the near future that “some inflation is acceptable” which will signal a real change in policy.

Remember, it’s the bankers who hate inflation as they are lending you dollars today and they don’t want to get paid back in crummy deflated dollars tomorrow. What good does it do them if you get a raise and your house doubles in value and you can easily pay them back when it costs them double to hire a clerk? Most people live paycheck to paycheck and it’s generally a good thing when those paychecks get bigger. The whole concept of credit was initiated under the premise that you will earn more in the future. Giving you credit and charging you interest that is above the rate of inflation when your wages are stagnant is one of the great cons of the 21st Century.

Who else hates inflation? Rich people! Not people with a million dollars or even people with a few million dollars… I mean RICH people – George Bush and Dick Cheney level rich people. Rich people don’t play the markets, they have a diversified virtual portfolio of investments that yields 8-14% over a long period of time. Inflation is their mortal enemy! It erodes their returns and, ultimately, their wealth. What’s the point of wiping…
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Monday Mania!

Yahoo!

That’s all I have to say about today because my Yahoo’s are looking pretty damn good right now. I chickened out of my calls this afternoon when the market looked toppy but I put the cash to good use buying AXP as it sold off a little bit later. AXP’s report was so good it ignited a secondary rally in practically every stock but AXP (see article below).

The Dow flew through 11,000 with a 182 point gain, coming to rest right under the 50 dma of 11,053 where it got a light rebuke at 3:30. The Nasdaq jumped 40 points but hasn’t even made it back to last week’s high yet while the S&P matched last week’s high but got a light rejection off the 200 dma at 1,265. The S&P will tell the whole story tomorrow as it is sqeezed right between the 2 dmas with just 6 points between them!

The NYSE was the indicator of the day, punching through the 200 dma with ease and running right past the 50 dma with a good, strong finish:

http://finance.yahoo.com/q/bc?s=%5ENYA&t=1d

Volume was very good for a Summer Monday and if your stock didn’t advance today it probably sucks. PD was one of the few decliners as copper went limit down this morning but it’s more a reflection of their massive acquisition than about sector concerns.

Kraft beat on earnings which should help fuel the Dow further tomorrow and SOX puppet SNDK looks like it knocked the cover off the ball as well.

Oil rallied on: The loss of a major Venezualan refinery, A pipeline leak in Nigeria, 2 refinery outages in the states and a major Hurricane forecast – not on the war in the Mid East (pick one) or the record hot summer and surging global demand. Nonetheless, I shorted SLB in comments as it looked like a top to me.

Gold dropped to $613 but held $600 in intraday trading which rallied the gold stocks as it seems there is a limit to how far the US traders can drive the price down.

On the whole it was a great day but we still have some work to do to get back in a rally mode. It will be up to TXN (hopefully all those Amex users were buying cell phones and flat panel TVs), MMM, MO, AMZN, T, BNI, GLW, DD, MCD et al…
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Reading the Fundamentals

Come on people (and I don’t mean you, my very intelligent readers but all those sheep selling American Express this afternoon) read the article, not just the headline!!!

Here is the fundamental problem with Google Finance, they return the same AP article (or whatever service) as it is published in 100 different papers vs. Yahoo, who actually has human beings edit the content for relevance.

So When I put in AXP under Google Finance I see A-H headlines where A,B,C,D,F and G are the exact same AP article with the headline “American Express 2Q profit falls.” (note that by the time you click on this the page may have changed significantly).
http://finance.google.com/finance?q=axp

The article says that Amex profit fell nearly 7 percent in the second quarter, reflecting the spinoff last year of its Ameriprise Fiancial unit but it doesn’t mention that Ameriprise represented 16% of the profits last year.

Further down the article it does say that profits from continuing operations rose to $972M from $860M but nowhere in the article does it mention that last year also included a tax benefit of $87M while this quarter includes an unusual write off of $62M worth of Reward Program redemtions. In fact, last year also included $113M of 9/11 insurance claims paid to the company but I’m even willing to let that one slide as this quarter included a gain on the sale of Brazillian operations so I’m willing to say that it’s always something.

But what we really have here is a Q2 ’05 that was actually $620M (removing Amerprise and the tax bonus) vs. a Q2 ’06 of $1,034 (adding back the reward write off). One trend we can expect to continue is the company’s 17% decline in loss provisions as the change in bankruptcy laws mean collections will be up up up!

As I mentioned in the comments I grabbed both the $50s for $1.20 and the $52.50s for .25 as the stock dropped below $50 and I eagerly await tonight’s conference call where the execs can slap these silly traders around but they have only themselves to blame if they can’t take an extra 5 minutes to read the full press release instead of relying on the headlines.

http://biz.yahoo.com/bw/060724/20060724005801.html?.v=1

Also, I find it very interesting that American Express is reporting strong card usage as Amex is generally not a “credit” card per se and has…
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Monday Morning

Well nothing blew up (other than a few thousand miscellaneous shells traded by Isreal and Lebanon) so the pre markets are all excited this morning.

Oil is down a buck in Europe and gold is off a touch but most of that is due to a surge in the dollar which hit some overhead resistance as it hit key low technicals against they Euro and the Yen.

The Dow will have to contend with heavy resistance of its own at the 200 dma of 10,943 while the Nasdaq and the S&P are far enough out of the money that no one day rally can possibly put them in bull mode. Our best indicator is once againg the NYSE which is just below 200 resistance of 7,973 and also faces a death cross of the 50 dma if it heads any lower this week:
http://stockcharts.com/gallery/?nyse

The world markets are generally on hold waiting to see what we will do and it is likely we will get some kind of rebound today but in hunting for bargains this weekend I came to the terrifying conclusion that there is still a long way for many companies to fall. When we talk about the tragic drop offs we have had this year they are generally a pittance compared to what happened to certain stocks in the first half ’04.

Still I think we are ripe for a proper turnaround if we can get through this earnings season without any major disappointments. AMD’s purchase of ATI is a signal that tech is just getting too cheap and HCA is going private after dropping down to its 2004 mid-point.

We need to watch the action on the NYSE very carefully today as well as the broad indicator has been very reliable this month and looks ready to break either up or down out of the range between the moving averages. Secondary resistance will come at 8,011 and a break above that level will get me to buy things but not much else.

Only the Nasdaq currently looks really oversold (as opposed to making a mild correction) with the SOX looking way oversold so we need to look to these indicators on a turnaround. If people are ready to forgive Dell and embrace TXN we just might be able to get something going.

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Oil fell off the mark on Friday and many oil companies…
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ValueWalk

#1 Performing Global Macro Hedge Fund Sees More Shorts Opportunities Ahead As China Bursts

By Jacob Wolinsky. Originally published at ValueWalk.

Crescat Global Macro Fund update to investors on 1/19/2019

Crescat Global Macro Fund and Crescat Long/Short fund delivered strong returns for both December and full year 2018 in a difficult market. Based on ...



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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

Divisive economics

 

Guest author David Brin — scientist, technology consultant, best-selling author and futurist — explores the records of Democrats and Republicans on the US economy in the following post. For David's latest posts, visit the CONTRARY BRIN blog. For his books and short stories, visit his web...



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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

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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

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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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