Archive for 2006

Weekly Wrap-Up

Wow, what a way to end a quarter!

Even with all my worrying and hedging we still finished the week with a 59% return on our 58 closed positions, which were held for an average of 11 days. While it’s a far cry from last week’s 117% – I did say last week that we should quit at the top as there was no way we were going to repeat it. Of course I said that the week before when we made “only” 50% so what do I know?

Despite my best efforts, we still have 35 open positions, but they represent a lot of rolls from positions that topped out and opposite sides of spreads that closed well. By themselves, they are a sad lot of open positions with no profit as a group after 10 average days.

Think of them as more of a watch list than positions I reccommend.

This is why we moved to cash. As I said Monday, the market was looking toppy and that was my theme for the week – although the Dow did it’s best to make me look silly for four days, I think I may have gained some converts by the week’s end!

My primary signal that the market was turning was our generally optimistic virtual portfolio’s performance dropping from a 90% return in week 2 of September to 27% in week 3. We did manage to close out 58 positions at 59% for this week but those are gone and just represent numbers on the balance sheet now (get spreadsheet here). As I said, the remaining positions, which are at 0% could be taken off the table by a smart guy and call it a quarter!

First a quick comment on today’s action (or lack thereof). I will save my economic diatribes for other posts:

The Dow had all the air let out of it early in the day but it closed the week at 11,679 – that’s pretty amazing! We opened Monday at 11,519 and went up 4 straight days, only hitting resistance at the all-time high of 11,722.

I’m what you would call in the markets a “recent historian” meaning I like to go back a week or two and try to figure out what changed, rather than just accepting the day’s BS at face value. Way back on Tuesday, the 19th,…
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Your Tax Dollars at Work

We are being ripped off on a scale that is biblical in scope! As I have maintained all summer, we are literally bursting at the seams with oil. The total amount of oil reserves in this country is over 10% higher than at any other point in history and is approaching 20% over our historical average: http://seekingalpha.com/wp-content/seekingalpha/images/Oilinventories1.jpg This abundance does not seem to stop prices from flying up and we want to know why: http://investorsfirst.com/charts/oil.gif In my never ending quest for facts, I am never afraid to go to the source, get the other point of view, whatever it takes to make a fair assessment of a situation and my investigation into the facts on the relationship of the Strategic Petroleum Reserve and the price of oil is – that this government is being run by thieves! This is just my humble opinion, of course but feel free to judge for yourself. The facts were far worse than my initial estimates when I first mentioned it on Tuesday, as I have long blamed the SPR as a side factor in adding to the price of oil but President Clinton reminded me that I should trust nothing this administration tells us so I went deep into the archives for this report. As we know, Clinton/Gore had used the SPR as it was originally intended – as a buffer in times of crisis, where they differed from Bush is that they saw high oil prices ($30 at the time) as a crisis and used the SPR as a way to assure reasonable prices for the American consumers. After all, as any squirrel can tell you, you store nuts when they are plentiful during the summer so you can eat them during the winter (see Clinton’s remarks at bottom). To spend all your summer gathering nuts only to let yourself starve while your home is filled to the brim is not exactly Darwin’s idea of a successful survival strategy. Of course, this administration rejects Darwin on many levels! Oil was so plentiful back in 1999 when it was selling for $14 a barrel that OPEC was forced to make 4.2M barrels in production cuts. That, coupled with a rapidly recovering economy drove prices back to the 1990s average of $20 a barrel. An exceptionally cold winter caught refiners by surprise but it was speculators, including Enron
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Fabulous Friday???

So we determined last night that this rally is fake(ish). Now we have to think about why? What would the motivation be? Given the non-stop market pump-fest this week, it is logical to assume that they are trying to get retail buyers to jump into the markets. You could say that this is logical as no one likes to invest alone and, if the market is such a good thing, of course fund managers want to share the joy with as many people as possible. A pessimist might say that this is all window dressing ahead of the close of the quarter and what fund managers really want to do is get you to take stocks off their hands, then wipe you out so you will give up managing your own money and invest in their funds (which should post some very impressive Q3 numbers). Perhaps they think a downturn is coming and this is their last chance to get you investors to hand them 1-2% of your money (per year) in exchange for their “expert” advice. Having the S&P up 8% so far this year means your fund can return 10% and “beat” the S&P by 25%, especially if they cash out Monday and drop the S&P to assure you will outperform it for the year! But that would be wrong… Anyway, there are plenty of other ways for big companies to make money.

So let’s Party!!! Asia is up, Europe is up but who cares about them today – 30 companies are about to break a new high! Forget about the fact that it’s not the same 30 companies or 6 years of inflation mean this new high is not even close to break even or that the biggest gainer, XOM, added $300Bn of Dow market cap (10%) by sucking it out of our wallets at grossly inflated, possibly manipulated prices…. Party time!!! Dow 11,718 – Woot, woot!!! Let’s go!!! Yes, we may hit 11,722, a level we haven’t seen since January 2000! Why haven’t we seen it since January 2000? Well because it was an overbought peak and the market dropped 2,000 points by April 2000 and then continued a prolonged downtrend all the way back to 7,300 in early 2003 —-- but forget about that! Party time – woo hoo!

On a day like today I always turn to the…
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Thankless Thursday Wrap-Up

Mark Hurd is earning every dime today! Wow, is he good! Diffusing a horrible situation about as well as possible. Too bad we got stopped out of those $35 calls at $2.40 (although they were up 140% at the time). Still cash, cash, cash. Today was nowhere near as smooth with out oil plays as crude took off like a rocket to $64, where it did an about face at noon, failed the afternoon pump and sold off into the NYMEX close down a quarter at $62.76. This was well below the 5% retracement line we were watching at $63.28. We had our party hats all day but, despite a lot of teasing, no all-time high on the Dow. It was a lot like when you have a surprise party and, every time the door opens – people go “Shhh, shhh, shhh” and then it’s just another guest and everyone goes – “Awww.” After that happens about 10 times everyone gets tired of it and, when the guest of honor finally arrives, everyone is already partying and all he gets is a half-hearted “surprise” and feels horribly ignored (or is that just my friends?). So Dow 11,718! Pretty good no matter how silly it really is. I’m in no mood to throw a damper on it after looking at RIMM’s blowout numbers (although they are delaying the official report as they are “checking” options issues), which indicates to me that that whole sector is rock solid – so game on for PALM tomorrow too! The Dow finished just 6 points below the hoped for number, just a tick or two on a regular day and it was not for lack of trying as many components were pumped for all they were worth into the bell. As I pointed out in comments, strange moves near the close included: CAT + .15, GE +13 and down .15 at 4:01, HON +.17, JNJ + .10, JPM + .13 and down .15 at 4:01, MCD + .30, PFE + .15 and, best of all XOM, who caught a bid at $67.46 – .41 above the last trade at 4:00 and it registered at the close! That’s a $2.4Bn jump in value after the bell that’s included in that final Dow number. Chart of triple top Dow??? Look at the one-minute chart and it’s as clear as a bell. Will I be the…
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Thursday Morning

I am not interested in a rally with oil back at $63. At some point the Fed will come back into play and the idea that bond pricing indicates a lack of inflation is a fallacy. There is too much money around – that is what is keeping rates down, not low inflation. This misconception on the part of pretty much every analyst I hear is really starting to bother me (so more about this on the weekend). Holy cow! We talked about the end of M3 tracking and what it would mean for the Dollar way back at the beginning of the year and so far, all my crazy theories are right on track! Oh yes, I said I would wait for the weekend – consider that a teaser! The Nikkei broke back over 16,000 and is back to being about 30% ahead of the major indices and 15% ahead of the NYSE, which has been our leader since April. Chart here. Like us, Asia is having a commodity based rally that is nothing to write home about. An early warning sign for us was Taiwan, who settled their monthly futures yesterday and dropped a point. Europe is up this morning although Italy is having problems with debt. “If you have a positive surprise on the tax side and at the same time a negative surprise on the deficit, it means that the fundamental problem is really quite worrying,” says Stephane Deo, an economist at UBS in London. This is typical British understatement for: Ahhhhhhhh!!! What do we care what’s happening in the world when the Dow is closing in on 17,000? That’s right, we are all being dutifully distracted by the 30-company index of the Dow with is used by pumpers as a pretty, dangling ball of string to distract investors from what is really going on in the markets. It also does a great job of distracting CNBC who did not talk about a criminally negligent 6% downward revision in new home sales and a pathetic durable goods report in favor of discussing what kind of party outfits they will wear for Dow 11,700. So it’s 11,700 or (literally) bust on the Dow but, as long as we keep watching these 30 companies to the exclusion of the other 8,500, everything should be fine! The S&P tracks 500 companies and got some serious…
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Wild Wednesday Wrap-Up

Woo-eee! Ride that bronco! The markets are all over the place today and you had to be quick to make a buck. We were very quick in comments today, initiating our first oil puts at 10:19 as TSO ran into the 5% rule which felt like a safe top ahead of inventories, and we got out of oil puts at 11:21 after TSO pulled back the entire 5% for a one-hour 61% gain! Other than that the day was tricky and both the conversation and our trading reflected that, which was tentative for the most part. We cashed out a good number of our remaining positions and we are in a nice cash position to move forward, whichever way the market goes. The Dow made a lot of noise but ultimately went nowhere, finishing at a very disappointing 11,689 after being rejected from 11,700 but the S&P made a new 6-year high at 1,336.59 (you need the .59 because it only made it by .26). The NYSE added a respectable 24 points while the Nasdaq added a sad 2 but, for some reason, the QQQQs were negative for the day – indicating a certain lack of faith. Neither the SOX, which lost ¾ of a point or the TRANQ (flat) were any help at all and what really bothered me was the fact that the oil sector gained almost 2%, adding 4 S&P points for the day. As I have often said, this is nothing to base a rally on. As I said this morning, this was a good overall test of how the markets take bad news as the durable goods report was indeed worse than expected. Oil seemed to take this, plus an over 8M-barrel build in inventories (I kid you not!), as a sign to rally and tacked on $2 today to finish at $62.96 on the long-promised Super Mega Oil Pump ™. Gold also shot up today as a small scandal rocked the treasury markets indicating that they too, like the NYMEX, are being manipulated. Against a flat dollar gold broke through resistance to finish at $602. Perhaps the gold bugs are right and our entire monetary system is a sham that will topple like a house of cards……. nah! ===================================== WAG opened the day too high to buy with the $45s jumping to $2 before settling back at $1.30 where I would wait…
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Wary Wednesday

I want to be very clear that I am being bullish from a technical standpoint but I have a funny feeling in my gut that is keeping me in cash. The last few days have let us take some great gainers off the table but I’m not thrilled with the performance of the remaining picks (54 positions – up 27% over 11 days average) and maintain very tight stops. There will be an updated spreadsheet tracking all picks today at http://www.clinamengroup.com/philstocks/ for your viewing pleasure. So holding time increased 25% and profits decreased 12% (from 94% to 83%) on recently closed positions – nothing to panic about but, coupled with the weakness in open positions, you can see why I am concerned. Only 14 out of 54 open items are puts so it’s not me being overly pessimistic – but my MS/PEG play did produce 2 of my 4 worst picks (-50%)! There are a lot less doubles (8) and no triples although I do have to admit I did cash a few positions out a little early that would have made it but, like I said – funny feeling… Stephen Roach has a funny feeling about the commodity market! He says that US and Chinese demand may surprise to the downside and warns of danger ahead as funds (his is MS) follow Ibbotson recommendations to increase commodity holdings he says: “For my money, there is far too much talk about the globalization-led commodity super-cycle. It gives the false impression of a one-way market, where every dip is buying opportunity. Yet commodities as a financial asset are as bubble-prone as any other investment. As is always the case in every bubble I have lived through, denial is deepest when asset values go to excess. That’s very much the case today. After three years of extraordinary outperformance, denial over the possibility of a sustained downside adjustment in commodity prices is very much in evidence — underscoring the time-honored sociology of an asset class that has gone to excess. Meanwhile, China and US-housing-related fundamentals are going the other way — setting up increasingly tender commodity markets for unpleasant downside surprises on the demand side of the global economy.Hmmmmmmm… There are no funny feelings in Asia as the Hang Seng snapped back 213 points and the Nikkei picked up 390 – now those guys know how to
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Terrific Tuesday

That was a pretty exciting day! I’m starting to feel like Chicken Little here, trying to say the sky is falling on a beautiful clear day. While I have long contended that stocks are way too cheap, I am still baffled by the enthusiastic buying of Builders and oil companies given the current market conditions. As I was reminded in comments, I did make a bottom call on builders on 8/22, against TOL’s scary earnings report, but that was 20% ago! This just seems a little overdone at this point… Gotta have your rally cap on for this one though! I’ve never had so many stocks that I’ve set stops on not trigger for 3 straight days. They just keep going up! 24 of 30 Dow stocks were up today with just MO (for good reason), MRK, T, HON down a bit and HPQ and JPM down just a penny each. DIS (9/6 pick), CAT (every day pick), INTC (9/19 and today pick), XOM (Boo hiss!), GE (every day pick), BA (9/8 pick) and GM (not a pick but I called it to $33 yesterday) were all the top gainers (over 1.5%) other than AXP, which we usually pick but for some reason I forgot. I have moved from gravely concerned to cautiously optimistic but have not yet deployed the cash we’ve been accumulating as stops triggered. I am wondering how many pro traders are doing the same and at what point we will have to give up and just start buying stuff. There is nothing worse than underperforming the S&P for a fund and that fear is driving a lot of the buys this week. I’ll feel much better about things once we get past next Wednesday but I hope that isn’t another 300 points from now! The Dow looks like it is heading for 12,000, and I was so pleased to take a 33% profit on my DIA $117s last Wednesday… Oh well, the price of being careful! A week later, the Dow is 50 points higher and the calls are up just .15 from our exit. The S&P blew out 1,330, tested it twice and said sayonara like it was the Nikkei and I have to say that this is just fantastic! I so hope this isn’t a fake rally because it looks so good! http://stockcharts.com/gallery?spx The NYSE again is my main concern as it…
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Tuesday Morning

Cash, cash, cash. I rarely get paranoid but I am right now as the market does not feel right to me at all. Let’s remember that I am the guy who called for a bull market with record highs last time the market looked like it was topping. At the time, I said I expected a pullback but the minor drop we got that first week of August hardly qualified. http://stockcharts.com/gallery/?spx This did not stop us from going with the flow and taking a record number of open positions which yielded a record level of profits for the month but, just for this week, I have decided to get protective and move back to mostly cash. If it’s a real rally, we will have months to get in and take new positions but, if we have another Black Monday ahead of us, well – it’s a little hard to recover from that when you are heavily invested. OK, enough doom and gloom – let’s have some fun with the markets! It’s easy to be bullish with the markets looking like they do but Asia finished lower with the Hang Seng taking a 238 point hit as a “corruption probe” sweeps through China. “People are being pretty cautious, there is a sense of the economy slowing down in Japan and the U.S.,” said Yoji Takeda, fund manager with RBC Investments Asia. Europe is up in anticipation of a strong US market and it would be a real shame to disappoint them. We have the consumer confidence index at 10 am this morning and it is expected to be well over 100 with falling oil prices easing tensions. A lot of bets are being placed on the continued strength of the US consumer as $60 oil is projected to give us an extra $100Bn to spend over the holidays (as we have been expecting). As it is only a survey, it will be potluck as to whether the timing of the poll caught the right people at the right time. Another potential pothole at 10 am in the road today is the Richmond Fed Manufacturing Index. It was the Philly index that killed the markets last week and a confirming downtrend from Richmond (just 150 miles away) would not be good. We start the morning with retail sales and if they don’t trend positive, that sector may suffer. The…
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Take the Monday and Run!

Yesterday’s action really made me feel good about my cash-out call! The Dow opened at 11,536, ran up to 11,575 in 10 minutes, fell below 11,440 less than an hour later and then ran back to be rejected from 11,600 for the third time in 4 sessions. The S&P gave us a better signal, breaking over 1,325 closing at its highest level in over 5 years while the Nasdaq gave us the leadership we’ve been looking for with a 1.3% gain on the day but finishing (just slightly) below our target at 2,249. The NYSE also decided to fall just below my 8,400 target at 8,398, which makes me nervous and glad I cashed out most of my positions. Fed Pres. Fisher said there was a “serious correction” going on in housing so, this being bizzaro world, the builders decided to rally with that sector adding on another point for the day. Fisher did say that he believes the economy to be generally strong which will likely lead us back to hiking fears tomorrow but today the markets liked it. In comments, we got out of our oil puts at 11:15, when I became nervous about mixed signals in the Valero rule and Rob pointed out at 10:54 that someone cashed over 12,000 XLE Oct $50 puts (the first of many that were cashed out). Merkhava noticed that the VLO $52.50 calls had dropped unnaturally as well (and wisely bought some!). This set off all sorts of warning signals as the puts were just about to go in the money and I decided THEY must know something so we took them all off the table at just the right time. This was a great example of how sharing information on the things we are looking at helps us make much better decisions! A look at the USO daily graph shows you just how ridiculous the buying was in the oil patch from noon through 2:35 after hitting 10 month lows in European trading. It was heartening to see that and crude tested my target of $61.69 before pulling back slightly to $61.45 at the close. A look at the weekly USO chart shows that it fell to a low of $54.06 and tested $56.30 for the second time in two days. What is $56.30? It’s 5% lower than last Tuesday’s high of $58.95! Gold is
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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 ...

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

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

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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About Ilene:

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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