Archive for 2006

Continuing Issues

My housing article is up on SA at

http://usmarket.seekingalpha.com/article/19458

Much more readable there…

If you want to read October posts click on the month of October where, for some reason, the formatting remains intact.

I will give it a shot tomorrow but I am done messing with this thing for the day, if you don’t see my post up by 9:30 definately check http://seekingalpha.com/by/author/philip-davis for the latest update.

Well, we had lots of fun looking at how we COULD get a soft landing but there are still a lot of bridges to cross and one major toll coming up is cancellations.

Cancellations of pending home orders had caused the last 3 housing reports to be adjusted downward with an implied margin of error of 15% or more. That means that what has been reported as a 17% drop in new home sales this may end up being a 30% drop in new home sales next month. Of course, it may also be a 2% drop but, really, which do you think is more likely?

Don’t even read this if you’re trying to be bullish – Biodeiselchris points out that David Walker, the US Comptroller, considers the economy such a crisis that he is getting a bunch of economists together to go on tour so they can explain it to the American people who, when asked, consistently fail to rank our $8,500,000,000,0000 deficit as one of the top 10 problems facing our nation.

If you think you had a tough year, check out Vega Asset Management’s performance bad enough to warrant a letter of apology from the Mega Hedge Fund.

LOW is one of the few calls I kept (because it was so bad it wasn’t worth selling!) with the Nov $32.50s down at a dime (down 75%). Earnings are not until the 20th but Cramer just jumped on board so, if the market isn’t dying on us I will add to that position but with the December $32.50s at .45, giving it more room to run.

Cramer also agrees with me that YHOO is indeed too cheap to stay at this level and represents a takeover opportunity for a big media company. Amazingly our Jan $27.50s are back to $1 (up 20%) already as the initial play in which we sold the calls worked out just right! The Jan ’08 $25s are now back
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Test Again

This is totally annoying.

Wasted the whole weekend on this nonsense!

Sorry guys, now they seem to have destroyed the formatting…

I will try to accellerate getting us onto a pro site – even if it’s not quite done yet, it’s still going to be better than this!

If the site doesn’t come back, check for updates at:

http://editors.seekingalpha.com/by/author/philip-davis

They actually have a subscription (free) for my regular posts but not (that I know of) for my rants and raves:

http://seekingalpha.com/by/type/options





Mister Softee

Money, money, money!

Where does it come from? Where is it going?

For the past 3 years, a lot of America’s money has gone to just 2 places – Oil and Homes!

As we discussed last weekend, over $2.5T has poured into the commodity markets in the past 36 months but that’s nothing compared to the $12T that been added to the value of US homes in the past 3 years alone.

The median price of a US housing unit has climbed from $143K in 2003 to $239K at the end of 2005. With close to 7M homes a year turning over, that’s 1.9T in 3 years of new money that has worked it’s way into housing and, unlike the oil we bought, we still have the house!

If housing “stock value” drops 25% over the next 3 years, that would mean that 21M new homeowners would have lost $500Bn of the capital they invested (assuming they aren’t forced to “close their positions” on the homes) while a 25% drop in commodity stocks wipes out over $1T in real value since XOM, for example, turns over all of its 5B shares in 227 days of average trading.

According to the 2005 US census 17% of our country’s 125M housing units (including rentals) were occupied for one year or less (roughly 30% are rentals). Assume a similar number in 2004 and 2003 and that’s a turnover of almost half the US housing in just 3 very expensive years!

I think if you look at it from that perspective you could say that pretty much everyone who wanted to move has done so by the middle of this decade (page 90). From 2000 to 2004, 9M new units were built (pg 17), a far cry from the 14M that were built from 1975 to 1979 – that was real overbuilding!

In fact, from 1970 to 1980 an average of 2.5M new units a year were built compared to just 1.8M per year from 1995 to 2004, the current “Housing Bubble.”

What kind of slump that hit us after that development boom? In the next 5-year period, from 1980 to 1984, just 7.5M (1.5M/yr) new units were built! Now that’s a correction!

The slowdown started in 1979 and 1980 was the last year of Carter’s term in office, the Iranians were holding…
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Test

Test





Friday the 13th Plus 2 (weeks)

Well I don’t know if that was a top but I sure am glad I cashed out! Just 20% in at this point and barely a call in the bunch!

If I’m being overly cautious and we’re going to 15,000 then we have a long time to play (unless the Dow adds 1,000 points a day next week). If I’m right there will be lots of things to play on the way down…

Appropriately, the markets were simply frightening today with a sharp drop at 1:15 that seemed to be some sort of programmed selling kicking in that hit the Nasdaq very hard but spared almost no one.

On the whole we are still up about 1% for the week, nothing to complain about but it’s the first late day drop we’ve had in a long time so I was in no mood to ride it out.

There was lots of good news in the GDP report today:

  • The Price index (1.8%) was much lower than expected (2.8%)
  • The Core PCE (Bernanke’s favorite indicator) was 2.3% vs. 2.5% expected.
  • Consumer spending was up 3.1% and, since it wasn’t being spent on gas and homes, it went into useful parts of the economy!

One thing I like that companies don’t is that wages were up 4% over the past 12 months, with corporate profits at 17% it is the very least they can do!

So why did that suddenly matter?

Because it was only 1.6%!!! That’s a low number!!! Very low. Home prices are down 10% and the only reason residential prices aren’t down 10% is that people aren’t as realistic as builders about the price of their homes – that’s why they’re not selling!

The Auto Nation action has snowballed because they effectively pointed out that the Big 3 auto makers have been making cars that nobody wants for the past quarter. Take out the surge in automobile manufacturing and you are looking at a .9% GDP!

Treasury Secretary Paulson’s pals at Goldman Sachs decided today was a good day to give us a Halloween scare by telling us that chip makers are manufacturing motherboards that nobody wants either. [cue very scary music]

Mr. Jones finished the week at 12,090, 90 points above Monday’s open and still in magic 12,000 land but there’s trouble in paradise and we’ll see…
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1.6% GDP Friday

It hardly seems worth writing anything ahead of the GDP report but, seeing as I have nothing else to do for 3 hours, I guess I’ll take a stab at it!

Despite a warning from CAT, general expectations for the GDP remain around 2.2% and it is possible that Caterpillar’s heavy exposure to US housing has made them overly bearish.

All of Asia was on retreat today ahead of the GDP report but the Hang Seng got a boost from ICBC first day of trading as the mega bank rose 14%, making Goldman Sachs incredible amounts of money. ICBC is now the 5th most valuable bank in the world.

MC (Panasonic) doubled their profits on huge sales of flat screen TVs but Sony warns of a price war brewing so I have no taste for this industry.

Europe is flat ahead of our open with a mixed bag of earnings.

Mr. Jones will let us know if the economy matters today but I’m going to enjoy the morning while I can. John Farmer says that the economy is like the Titanic and we just don’t see that the iceberg is much bigger than the pretty white tip that sticks out of the water! We will put our hands over our ears and ignore all that “thinking” – we’re trying to have a party over here John!

Analysts are still uber-bullish on the markets and this may well be the last hurrah for the shorts if we get yet another positive move today. You don’t often get a parabolic weekly chart but the Dow has clearly fought off gravity and “looks” ready to achieve escape velocity. As we all well know, there is a critical juncture, right before you leave the earth behind, when a loss of fuel can lead to a critical failure – so let’s make sure we have the right stuff today!

The same goes for the S&P, NYSE and the Nasdaq – if the GDP doesn’t matter then nothing will and we are off to the races but we may get a severe case of gravity of it looks like the soft landing scenario is off the table.

8:25 Futures: Dow down 19, S&P down 1.7, Nasdaq down 3. Gold down $3 Oil up .08, 10-year note at 4.71% Dollar flat. FTSE down 21 DAX up 10.

8:30 1.6%! Oops! 10-year…
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Thursday Wrap-Up

Hey that was fun!

Mr. Jones gave us a little scare in the morning with another test of the 12,100 mark but that was quickly established as the low of the day as we moved on to yet another record close in a big volume day. That’s 4 straight days of higher lows, higher highs, higher opens and higher closes!
Dow 3 Month Candle Chart

The S&P and the NYSE did even better than the Dow with the S&P testing 1,390 near the close and the NYSE coming to a rest well over 8,800.

The Nasdaq had the scariest drop of the day followed by the greatest recovery as it spent all of 40 minutes around 2,350 before tacking on a 25-point gain to finish the day at 2,377.

The SOX were a big help, showing strength all day while the transports put in an iffy but solid performance on GDP fears.

Oil gave up half of Wednesday’s gains, falling back to $60.36 after making a day high just 1 penny above my $61.69 target. The Valero rule kept us from taking any oil calls, especially watching LNG’s awful open (and awful day in general).
http://futures.tradingcharts.com/chart/CO/C6

As you can see from a group chart, we got some mixed signals from the group but never from LNG, which lost 3% for the day. This is why we always have guest stars in our group; certain stocks tap into key sentiments at any given time!

December gold broke $601 during the day but decided it didn’t like it there and closed at $599.80. Now it is tightly squeezed between a declining 50 dma and a rising 200 dma so we will look for a breakout in either direction, most likely tomorrow!

All this commodity action came as the dollar gave up half a point. All the other CB’s are on inflation watch and raising rates and while we may swallow this rubbish at home, the world markets do not consider $60 oil to be a sign of inflation being “contained.”

====================================

We had a very nice run on the day’s picks but a monkey with a dartboard can make money on calls in this market so I’m not particularly proud of myself…

AMGN gave us a nice open with the second round of $75s coming in at $1.50
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Thursday Morning

Another day, another record open.

That’s how it looks early in the morning with the Nikkei up 100 points and the Hang Seng up 200 as high oil prices don’t matter in Asia either.

Another thing that doesn’t matter is Sony’s 94% drop in net income. That’s right, SNE made just $14.3M on a $429M cost of a battery recall as well as a 21% loss in the gaming division on the delays in the release of the PS3. For the year, profits at Sony are expected to be $673M vs. the $1.1Bn that was forecast just 3 months ago.

Devastating for Sony’s stock? Uh-oh, that sounds like you’ve been thinking! Of course not! SNE gained .28 for the day as traders chose to focus on strong TV and camera sales and not on the $129M loss in the movie division, even with 12% more sales.
http://stockcharts.com/gallery/?sne

It doesn’t matter to South Korea that their unfriendly neighbor went nuclear, SoKo’s economy grew 4.6% this quarter (hmm, maybe we should give Mexico the Bomb!).

Europe was also in a forgiving mood with a strong open this morning, as investors were undeterred by RDS.A’s 34% decline in profits and a widening of Russia’s probe into their $20Bn Sakhalm project. Poor Shell, only a 4% gain for them today.
http://stockcharts.com/gallery/?rds.a

Airbus won a $9.6B contract for 150 A320 planes from China, who chose to balance their trade with Europe since they made a little noise about it. Our government is far too busy to help non energy-related companies succeed!

Our own Fed has told us that the worst housing data since 1989 doesn’t matter and the bounce in oil prices doesn’t matter and a falling dollar just does not matter! Now we have some shocking data from a study that tells us the Fed doesn’t matter!

I don’t even know why I look at downside levels anymore, I don’t think we’ve hit one since late September! The Dow will next break through 12,200, hopefully this afternoon as 12,000 becomes just another signpost in the rearview mirror.

We need to start taking a serious look at S&P 1,400 and think about what that psychological level will do for the markets as we break towards a 7-year high.

The NYSE is posting new records every day as well but the media tends to ignore…
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Wednesday Wrap-Up

Well we got our “ho-hum”, another record day!

Not even the Fed can stop this market (although I bet they would have had there not been political pressure against it).

Mr. Jones put up another 6 points pulling out of a tough mid-day slump below 12,100. He loved the Fed, then hated the Fed, then decided he loved the Fed again making for a very exciting finish that the VIX just slept through.

The S&P had far less doubt, never getting too negative on the day and adding 5 points to finish above 1,380, yet another breakout!
http://stockcharts.com/gallery/?spx

The NYSE also had no doubts today and even took a brief look over 8,800 at the close. Even the Nasdaq showed some spunk with early day leadership and a strong finish above that pesky 2,350 line.

The SOX put in a strong performance with a 2.5% gain, flying over the 50 dma to finish at 455 while the Transports, beyond all reason, decided today was the day to break back up!

The transports were extra impressive as oil gained $2.05 to finish way up at $61.40, still below my $61.69 danger zone but not enough to keep us in November oil puts.

I was lucky enough to call for a cover on XOM $70s at $1.40 as VLO flew up on the inventory report, which was a surprising build, but not smart enough to ride out the full day’s rise to $2.10 (up 55%). I took a quarter and ran as it lowered my basis on all those dreadful November puts and that was good enough for me.

We’ll do a post mortem on them later but there was no choice but to surrender as XOM flew up $1.50 for the day – earnings tomorrow!

Gold did nothing impressive, up $3 for the day as a weak Fed led to a weak dollar.

The Fed gave an almost identical statement to the September 20th statement that kicked this current rally into high gear as the Fed told us things that just didn’t matter! It should be noted that the day AFTER that statement, the Dow began a 2 day drop that shaved 100 points off. Did it matter? Of course not!

Tomorrow we get Durable Goods at 8:30, New Home Sales at 10 and the Money Supply at 4:30. By the…
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Whipsaw Wednesday

Oh great, just when I decide to adopt a “don’t worry be happy” market attitude the Wall Street Journal tells me to start worrying!

Asia looked a little worried this morning as the Nikkei pulled back as Honda’s profits fell 4.3% on higher costs, but they boosted full-year earnings on strong US sales. Samsung was a disappointment as well. Wal-Mart and GE are partnering with China’s Shenzhen bank to launch a credit card, so now we know why WMT did so well this week!

Europe seems neither worried nor happy this morning. STM reported a 133% rise in profits but guided very cautiously and spooked the chips. IFX also traded down as they took a big hit from BenQ’s bankruptcy. On the whole, NOK is wrecking the industry with a flood of low-cost phones and a seemingly limitless ability to provide them in mass quantities.

Mr. Jones does not worry about Europe or Japan or making new highs for that matter. In case you’ve forgotten, the old record was 11,750, a record that has fallen 10 times in the past 14 trading days as we added another 375 points. So will it be “Ho-hum, another new high” or “Hasta la vista 12,000” after the Fed?

The S&P remains the reliable indicator and sits just under 1,380 and should have good support at 1,370 after spending 6 sessions using it as a ceiling.
http://stockcharts.com/gallery/?spx

The NYSE has been pacing the S&P step by step and has the same benefit of a firm floor being formed at 8,700 up 300 points since the Dow made it’s ATH.

I so want to say the Nasdaq is forming a flag and getting ready to break out above 2,350 but the pathetic SOX just aren’t letting me. Not only that but Microsoft is pulling some shenanigans with their Q2 earnings, but this “coupon” concept is just another way of saying that holiday computers will not ship with Vista and there is no way I’m buying a computer with a coupon that “allows” me to install an entire operating system “some time” after I buy it.

I’m pretty sure that explains HPQ’s disconnect from the market yesterday as Dell took a pretty big hit as well. The DELL Jan ’08 $27.50s got stopped out on the drop at $2 (up 54%).

A lot of the commodity action we’ve…
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Zero Hedge

Auto Shares Surge As Fiat, Renault Confirm Merger Talks

Courtesy of ZeroHedge. View original post here.

With President Trump in Japan for a state visit and most of Europe headed to the polls to vote in the quinquennial EU Parliamentary elections, there was enough news to keep market watchers occupied during what was supposed to be a quiet holiday weekend in the US. 

But on top of these political headlines, on Saturday afternoon, the news broke that Italian-American carmaker Fiat Chrysler had approached France's Renault with a merger proposal that would leave the shareholders of each carmaker with half of the combined company, in a tie-up that would create the world's third-largest au...



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Phil's Favorites

Trump and the problem with pardons

 

Trump and the problem with pardons

Courtesy of Andrew Bell, Indiana University

As a veteran, I was astonished by the recent news that President Trump may be considering pardons for U.S. military members accused or convicted of war crimes. But as a scholar who studies the U.S. military and combat ethics, I understand even more clearly the harmful long-term impact such pardons can have on the military.

My researc...



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Insider Scoop

Jefferies Sees 60-Percent Upside In Aphria Shares, Says Buy The Dip

Courtesy of Benzinga.

After a red-hot start to 2019, Canadian cannabis producer Aphria Inc (NYSE: APHA) has run out of steam, tumbling more than 31 percent in the past three months.

Despite the recent weakness, one Wall Street analyst said Friday that the stock has 30-percent upside potential. 

The Analyst

Jefferies analyst ...



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Kimble Charting Solutions

DAX (Germany) About To Send A Bearish Message To The S&P 500?

Courtesy of Chris Kimble.

Is the DAX index from Germany about to send a bearish message to stocks in Europe and the States? Sure could!

This chart looks at the DAX over the past 9-years. It’s spent the majority of the past 8-years inside of rising channel (1), creating a series of higher lows and higher highs.

It looks to have created a “Double Top” as it was kissing the underside of the rising channel last year at (2).

After creating the potential double top, the DAX index has continued to create a series of lower highs, while experiencing a bearish divergence with the S...



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Chart School

Brexit Joke - Cant be serious all the time

Courtesy of Read the Ticker.

Alistair Williams comedian nails it, thank god for good humour! Prime Minister May the negotiator. Not!


Alistair Williams Comedian youtube

This is a classic! ha!







Fundamentals are important, and so is market timing, here at readtheticker.com we believe a combination of Gann Angles, ...

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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control

 

Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...



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Biotech

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

Reminder: We are available to chat with Members, comments are found below each post.

 

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

A map of DNA with the double helix colored blue, the landmarks in green, and the start points for copying the molecule in red. David Gilbert/Kyle Klein, CC BY-ND

Courtesy of David M. Gilbert, Florida State University

...



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ValueWalk

More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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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:

 

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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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