Archive for 2006

Weekly Wrap-Up

What a way to end the week!

We quickly blew through my 10,850 target and never really came down so all trades were on and I hope you put that cash to good use…

I got very nervous at about 1pm when oil spiked and the markets turned down but then very happy when they bounced back up before 2pm. The oil price is still based on fear rather than fundamentals and it seems that the markets are getting used to the fear. As I said earlier, the oil producers (oops I mean rebels over whom they have no control) have to take it up to the next level and actually disrupt production or the jig will soon be up.

This is a very odd rally and can easily be derailed by the rash of economic news coming down the pike next week. Traders chose to ignore the declining (and possibly erroneous) GDP in favor of a 2.9% increase in new home sales, although the builders didn’t seem to get overly excited about it.

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PFE was hot all day and even got additional good news at the end with an approval on inhaled insulin which I think will lead to magazine covers that say Pfizer’s back so I’m only 30% out so far with my double.

MSFT was a home run today! The March $27.50s have gone from .25 when picked on 1/25 to .75 so far. If I only got this one trade right all month I would feel that I had done my job!

Yesterday’s suggestion to at least take the MSFT Feb $27.50s for .15 actually did better with a 400% gain in one day. The best thing about big cap options is they are so liquid when you trade them so you can lock in profits at any point.

Gold did not hold $560 today and the sector was flat but 11/22 TOTD MRB went up 23% and is now close to a clean double! NAK picked up another 6.6% as well so don’t knock these little stocks… ABX showed how excited it can get at $562 as the stock ran up 5% in the morning peak but it immediately gave it back when gold dropped.

CY dropped off a bit today but I already halfed out of that so I’m holding on to see if it gets good press on the weekend.

11/17 not…
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Friday Morning

WOW! I just lost my whole blog for the day!

Don’t even ask how stupid I was but I just can’t do it again right now so I will give a down and dirty summary.

Things don’t look as strong as I would like. Japan is on fire (up 569 pts) and I do have some concern as to how much of the world’s money will be left for US equities.

Also, the GDP was much lower than expected which is good if you want the Fed to pause but bad as it could signal a real collapse in housing.

Today is the day to get all those things we’ve been tracking this week if the Dow breaks and holds 10,850 (yes, I raised it) against this semi-bad news. Unless that happens – stay in mainly cash!

This could be the start of a Japan-style rally if we can get the press on board although they will probably cry bubble the second the Dow crosses 12,000.

The difference between the US and Japan is that, in Japan, they call a 40% rally a “recovery” and they say that 2-3% inflation is “healthy.” When the Japanese Fed raises rates, consumers say “oh great, now I will make more money on my savings account!

http://finance.yahoo.com/q/bc?s=%5EN225&t=1y&l=on&z=m&q=l&c=%5Edji

Oil going over $68 will hurt us so watch out for that.

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BYD and MGM look very hot.

Steel stocks are in play. X has a p/e of 5, what’s not to love?

Stay away from builders until we know what the fed is doing although many are ready to take off on any good news.

PFE should have an amazing day. This was a 1/13 TOTD. If you are not in it you can take advantage of some early confusion about an approval to pick up the March $25s.

All that glitters will be our gold stocks if we hit $565. BVN is still the best looking if it can break up from $28. I think the whole group is being manipulated down at the moment. NAK is a great buy and hold even though it has run up a lot since we picked it.

XOM is already talking down oil prices. They sandbagged earnings last quarter to keep them down to “just” $10Bn but I think the number this quarter are going to give the anti-oil folks conniptions. I’m going to take the $62.50
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Thursday Wrap-Up

The Dow did exactly what we expected today, bouncing twice off the 10,825 mark but finishing right against it. As I said, the other indexes are ready to rock and roll and just need the confirmation from the Dow to head back to their highs.

Tomorrow might be the day – we will have to wait and see.

Oil stayed up all day which really confused the sector who opened as if it was going to plunge.

Gold hugged $560 and will have to make a decision soon.

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My personal intraday trade of the day is a great example of using the Valero rule to maximize profit. At 10:30 the gas inventories came out and Valero obviously liked it so I quickly checked the sector for the most beaten down company which was BTU. I picked up the calls and exited at about 1:30 when VLO turned down for a huge profit.

http://finance.yahoo.com/q/bc?t=1d&s=VLO&l=on&z=m&q=l&c=BTU

Although all of the potential trade of the days held their own today, you can see the negative effect that the 12pm rejection of 10,825 had on them. TIE took off so fast that I missed it so I bought ATI, who is pretty much in the same place but less well known.

AIR had a terrible day because they are raising capital with convertible notes. This is ridiculous as they need money because they are growing at warp speed. I will be looking to pick these up when they settle down. This is what happened to PLAY back in October and became a great opportunity to buy in.

MSFT came in a little light on revenues but in-line for earnings so it will all be up to the conference call to see where this will go but I think guidance will rule the day and the stock will go up.

OXPS gained an amazing 10% for the day! There is some merit to buying what you use.

AAPL is taking on water from all sides, now they say Google will have a tunes site and Microsoft will be coming out with an IPod-like device. This is what happens when you are number one but I couldn’t take it any more and I picked up a small batch of $80 calls for .80.

TXN is firmly on the mend. I think that MSFT just not having a disaster signals that all is well in tech-land.

SNDK…
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Thursday Morning

Wow, the pre market is what Cramer calls “En Fuego” – one can only assume that things are going well in Davos. Today our world business leaders are discussing video games. Perhaps they will discuss the Trillions of hours of lost productivity they are causing (I know the Chinese are actually concerned about this).

Europe had > 1% gains across the board and the Nikkei grabbed another 250 pts so we will get a strong open. China is slowing down a bit which is a very good thing on the whole and lots of speculative money may begin to migrate back here.

Gold is going to have a critical retest of $560 today. Is it a floor or is it a ceiling? GFI announced a 6x increase in earnings but they are already up 50% since we pointed out the potential on 12/6. GFI is not a good stock at all, trading at 500x earnings but this should lift the whole sector as analysts (other than me) missed this by a mile.

Oil is seeking the market’s comfort zone (Shieks own stock too!) and seems to be finding it at $65. This is still a ridiculous fear driven price that has no foundation but what can you do?

Interest rates, unemployment reports and durable goods orders are the data of the day. Last month the durable gains were entirely from Boeing so AIR and TIE may be in for another nice pop.

Speaking of durable goods, CAT just raised guidance 10% – that is uber bullish! That should assure some upwards Dow movement today, but I refuse to get excited until we test my 10,825 target successfully.

Remember, holding over 10,825 will be a rally cry for all the markets, in a perfect world we will hit that todoay and follow up that with an upside surprise from MSFT tomorrow that will propel us right back to where we were 10 days ago before this sell-off started!

But that’s not going to happen. 8-(

Nobody bought our notes this week! This is the first sign of the apocalypse. Oil is still above $65 and, worst of all, Bush is speaking at 10:30 – that guy is stock market poison!!!

Cash, cash, cash and cash. Day trade some picks but be ready to sell – please!!!

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Selling the DIA puts and keeping the calls was my play of the week!…
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Google Watch

I guess we need to do this every day as it is so volatile…

Google is very unlikely to beat earnings since the mean estimate is for $1.76/share and the whisper # is $2.

How they can possibly do this when the projections for revenues are less than last quarter is beyond me anyway since they “only” earned $1.35 last quarter, and that was a blow-out number.

Yahoo only earned .68 per share of Google so even if Google took Yahoo’s entire profits and added it to their 3rd qtr they still wouldn’t beat the whisper number for this quarter.

Google is suffering from expectation inflation with about another penny per month being added to the estimates.

Check out the Analyst Estimate section in Yahoo: http://finance.yahoo.com/q/ae?s=GOOG

and look at the Earnings History Surprise row. Notice the narrowing trend downward? Yahoo went from a 14% surprise up last quarter to a -5% miss this quarter – If Google does that the Titanic will look unsinkable by comparison.

Here’s the real problem. Earnings for the first 3 quarters were: $1.29, (+4%=) $1.36 and (+10%=) $1.51 yet we expect a 33% jump in the 4th to get to $2.

Google doesn’t do traditional advertising so they don’t get a “Christmas rush.” In fact, it could be argued that the average person spends LESS time clicking ads on Google during the holidays and more time on Amazon or Ebay.

Maybe holiday advertisers step up their Adwords fees to attract more people during the 4th quarter and that will save them but it’s hard to see the driving force for growth that will equal last year’s buzz (they only went public that September) that will give them the same kind of kick this year.

On the bright side, the trend I noticed back in November continues as Google is leading CME around by the nose. If GOOG goes up, buy CME, if GOOG goes down, sell CME – it’s ridiculous but it works! Also, CME earns more per share today than Google is projected to earn for 2006…

http://finance.yahoo.com/q/bc?s=GOOG&t=3m&l=on&z=m&q=l&c=cme





Wednesday Wrap-Up

The bond sale went badly today. That is the real story of the day.

Money is flying into copper and gold which both hit new highs today.

Homebuilders got trashed by a weak housing report and oil sold off on inventory builds.

This was a great day!!!! If you had told me all that was going to happen today, even though I said some of it was going to happen this morning, I would have predicted a 50-100 point drop in the Dow and other indexes following down. The fact that we were a little under flat all day was a very pleasant surprise.

Tomorrow will be Telling Thursday (I need better alliteration) but a couple of good earnings reports could make for some real excitement.

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Don’t say I didn’t warn you about Google! I came up with an interesting play today. I took the March $490 calls for $15.60 and I sold the Feb $480 calls for $12 to cover my $410 puts which are nicely up from $12 I came in at. My logic is that the worst case is the stock tanks and I lose the calls but only $3.60 on the spread. On the other hand, if it goes up the March will hold it’s value and give me a lot of leeway no matter what the price. Best case scenario is that Google goes up but can’t break $490 until after expiration…

Wasn’t cash a great trade today? Isn’t it relaxing to have actual money when the market is all over the place?

The gamble of the day – BNI, paid off in less than 30 minutes and gave us a nice 20% return. We can do that one again tomorrow if the market recovers.

BVN did not disappoint with a 1.5% gain, but NEM and GG actually did better. PD was the real star of the commodity stocks with another 2.5% while PCU is still lagging behind.

We await GM earnings, I am blown away by all the people who put money into this company today! Kirkorian bought 12M shares this week, which probably accounted for 25% of the buys so I think that’s a top, although he may actually know something coming into earnings tomorrow…

NFLX finished the day up 15% as expected – there was no way into this stock though as it stayed high all day long.

You would think…
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Wednesday Morning

Asia is not crashing today. It’s not going up either, that could be good for us as money may find its way over here.

Some of that money has found its way into gold, which finally broke $560, if we hold that line in US trading, we can look for an attack on $570 this week. If the US turns around and takes it down, then that means we bluffed them again and it’s selloff time! One indicator I look for early is if the mining stocks diverge from the POG (price of gold).

Housing is the most dangerous report today. Numbers are expected to fall at 10am but there is a thin line between a healthy pullback and a pending disaster which will plunge us into a recession. We are looking for a run rate that does not fall below 1.5M homes, down about 25% from last year.

Doubling the importance of the housing report was a fairly weak sale of notes yesterday, pushing long rates up .02% and sending a shiver through the financial markets.

The oil patch is slipping this morning on fears that a huge US build in inventory (looking for about 1M across the board) will show that the emperor has no clothes, larger builds can lead to a catastrophic sell-off that would be great for the markets once the leadership adjusts. This take down is well choreographed by Opec which hit us with postitive comments by the Saudis followed by conciliatory language in Iran. Opec is becoming nervous that oil is becoming high enough to cause the one thing they dread – demand destruction!

As far as the indexes go, it is all up to the Dow – all indexes are ready to rock and roll but the Dow must cross 10,825 on volume to confirm a rally vs. a bounce. That will be difficult today but I will be very happy with any postitive action on the Dow.

Here is the graph that gives me the most hope for US stocks: http://www.stockmarketjungle.com/notsobubbly.jpg

Jan 31st is the Fed’s next anticipated rate hike. Since I know he’s a reader I will tell Mr. Greenspan that now is the time to surprise the markets and admit that rate hikes have done enough damage to the economy. I know it is out of character but wouldn’t it be nice to shuffle off into retirement to huzzahs…
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Ga Ga for Google

Jim Cramer has a segment called “Pimping all over the World” and that brings to mind the concerted global effort that is underway to reinflate Google’s stock price right on the heals of the concerted global effort to bring the stock price down for the previous two weeks.

It goes all the way down to Australia where they say Yahoo is just going to give up and let Google be the market leader: http://www.smh.com.au/news/breaking/yahoo-stops-chasing-google/2006/01/25/1138066832224.html

Despite the company’s high and mighty principles in the US, they are bucklng under in China and will run a censored version of the search engine so as not to cross any Party lines. The Google guys actually said “It is better for the Chinese to have access to censored information, than not to have any at all.” LOL!!! What’s the price of principles? About $40 a share I guess.

That being said I covered my Feb $410 puts with March $490 calls so I don’t care what the stock does as long as it does something big! If we break $450 tomorrow I will probably dump the puts and rebuy before earnings on 1/31.

I am still leaning short as Google is expected to earn $1.76/share this quarter, up over 200% from Q4 ‘o4 on revenues that are only estimated to be up 50%. So you see where they might conceivably miss just a bit. If they beat though – well what else can you do but buy the stock?

Yahoo had pretty good earnings and dropped all the way from $44 to $34 in one week, add a 0 to that and you have a pretty good picture of what can happen to Google if they miss as well.

There is no doubt that Google is a strong stock, the last two days have been amazing but both days together only total the volume of Friday’s sell-off so it remains to be seen what will happen tomorrow. The Googlephiles are hanging their hats on the China sell-out being a benchmark event for the company that gives them another 2Bn eyeballs (if everyone in China had a computer rather than the 50M people who actually do) to sell clicks to.

Google is not Starbucks or Wall-Mart and their product faces many hurdles in Asia which may be why there has been so much insider selling of late: http://finance.yahoo.com/q/it?s=GOOG

Ordinarily, I would dismiss this…
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Tuesday Wrap-Up

Today was a technical triumph with the Dow holding above the key 10,700 mark, although finishing a bit weak. I am very pleased because it did this DESPITE oil trading down but with a big assist from GM who gained 5.5% today.

The Nasdaq was strong, bouncing off the 50 dma of 2,250 and staying up all day but the QQQQ was firmly rejected by it’s 50 dma of $41.75.

http://finance.yahoo.com/q/bc?t=1d&s=%5EIXIC&l=on&z=m&q=l&c=QQQQ

It is very interesting to watch these two indicators trade since they are supposed to be identical but little differences like that can be very telling….

The S&P took the same exact bounce as the Nasdaq off the same critical moving average so this “rally” will be officially confirmed if the Dow can just make it back to 10,850.

Both the NYSE and the AMEX are well above their 50 dma so no worries there, these indexes are really ready to fly if they get the all clear from the dow.

Oil came down below $67 (isn’t it sad that we are now happy with this tidbit) as that sector prepared for another build in tomorrow’s report.

Gold had a strong day but could not break $560 so most gold stocks traded down – except for my two picks: NAK (+3% again) and BVN (+1.3%). This is a great example of how sector funds will never substitute for good stock picking!

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SLB came down as predicted this morning. We seem to have reached a terror saturation point where there will have to be actual disruptions in supplies in order to keep the prices up. Since I believe that most of the drama that is going on is faked by the oil producers, I don’t think there will be any that are willing to take it to the next stage so we may be in for a real decline in oil at this point.

Copper hit a stunning $2.15 today, more than double last year’s price and PD gained another $5.56! PCU is now lagging PD by a lot and will be a buy tomorrow if copper is flat to up.
http://finance.yahoo.com/q/bc?t=5d&s=PCU&l=on&z=m&q=l&c=pd

TXN finished just below my $31 target price but I don’t want in until I am sure we are not heading to $30. I will by in on an up move with good volume but today was a down move all day on huge volume.…
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The Streak

We have a serious streak going!

An up day today would mark 5 consecutive up days, a feat we haven’t accomplished since the week of September 11th where we posted 7 consecutive up days through the 18th.

That run led to a minor pullback followed by a 500 point run (as of yesterday). Prior to that, we have to go all the way back to May to find the last 5 day streak, from May 4th to May 10th, when the Dow flew up 300 points, to 11,709, up from 10,215 – where the rally started way back in late October ’05.

Here is an excellent article written at the time, on a 50 point up day, just 30 hours before the market crashed!

What caused it? A Fed meeting! What happened? The Dow dropped down to 11,200 just 5 days later, a 500-point drop. Less than 1 month later, we were back at 10,200, erasing 6 months of progress.

Not to pick on Helene Meisler, who is a very good writer, but her article on May 18th is a great example of what the media tells you after a 500 point drop, just before the next 500 point drop – it’s stay the course!

In fact, if you look over the articles leading up to and after the spike of May 10th, you’ll see very little warning signs either before or after the Fed, even as the market dropped 100 points per day!

As a student of history I started down this track as I noticed the Nikkei is about to test 17,000 again, where is hasn’t been since May 10th when… Oops!

So I apologize for not being a market cheerleader and believe me, I never expected to be that grumpy old guy sitting in the corner at the party wagging my finger at you while you try to have fun – but someone’s got to do it!

So I’ll try to be like the sensible Uncle who gives you the car keys and tells you too keep it down to a 6-pack while driving…

Those crazy Asian drivers held the Nikkei flat today as Sony apologized but they only bowed while sitting which is causing quite the controversy in Japan! The main reason Asia keeps going up is because US and European markets keep going up and…
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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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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

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

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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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