Archive for 2006

November Wrap-Up

What a week that was…

If you went long you got punished, if you went short you got punished – all in the same day!

As Rick Santelli summed it up nicely on CNBC today “To think that foreign investors are willing to lend us money for 10 years at 4.4% in exchange for a promise of US currency is really amazing!

That mirrors my weekend comment: “I think the dollar drop could be good for our exporters, of course, but it’s kind of like saying that running a 104 fever means you’ll be all warmed up for the decathlon – this is a symptom of a very serious problem and not really a reason to put on our party hats!

I ran away screaming from this nonsense last week but we still took quite a few light trades and I’ve been honing my day trading skills as you really can’t make a lot of money by holding things too long right now.

The morning’s drop knocked out almost all of my remaining calls so I’ll be in big trouble if we have a huge rally on Monday!

Summary of today’s trades: 

We held firm on those AMAT $18 puts despite the rise as they were there for crash protection but as I’m out of most of my calls they weren’t worth keeping so they were exited on today’s late rally at .60 (up 71%).

BA got weak so we sold the Jan $90s to cover our position at $3.30, that was good timing too although Boeing did make a nice recovery.  With our basis down to just $2.50 on the Jan ’08 $90s and the calls we sold down to $3.10, the current $10.50 price reflects a 196% gain so far!

Of course we also sold our own BA Jan $90s for $3 (up 20%) too!

In comments we switched the BEAVs on the drop and took the July $25s for $3.90 and sold the Apr $25s for $3.50 at the dead top – that’s a .40 investment I can feel confident about!  As the Julys already went up to $4.20 and the Aprils dropped to $3.30, we could close this now with a 125% gain!

We have to watch BIDU, I forgot about them as I said on the 22ndIf they pull back – consider it a gift!“  Of course it all depends on Google but darn…
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TGIF!

Goodbye annoying week!

We should have just extended that Thanksgiving vacation as I don’t know anyone who had a great week this week.

While an optimist may say there was something for everyone, the whipsaw action of the markets has given us nothing at all and really hurt the daytraders.  As I said last week: “the play of the week next week may be on those VIX calls” and it sure perked up on Monday and Tuesday!

On the bright side, the S&P is actually positive for the week (at the moment) but that is due entirely to a 5% rise in the energy sector, which makes up almost 20% of the S&P.

In comments someone postulated that strong oil is good for the markets but I think it’s generally a short-term illusion as the tug of the massive energy sector may move the market but there is a lagging effect that is much more powerful.

Although nothing really happened yesterday, something encouraging did happen.  I will repost yesterday’s levels with results:

  • Dow MUST hold 12,200 and needs 12,300 to be taken seriously (it did).
    • Transports can NOT go below 2,650 (they did).
  • S&P MUST break and hold 1,400 (it did).
  • NYSE MUST hold 8,900 (they did) but needs 9,000 to impress (made 21 pts towards it yesterday).
  • Nasdaq needs to get back over 2,450 fast! (oops!)
    • SOX MUST retake 480 and 490 is no big deal  (oops, but did gain 2.6 to 479!)

So, other than the Nasdaq, who were held back by MSFT, we had a pretty good day…

What does concern me (and should concern you) is that we are almost in the EXACT opposite situation that we were in when I first called for a record breaking rally back on August 17th.

The Dow Bullish Percent Indicator hit 90 last week.  Ninety.  90!  Nine-Oh.  90 – so if you are a bear, you are in very small company (that would be 10, Ten, One-Oh).  How long can we sustain that?

Nasdaq bull sentiment is “only” at 70and that’s why we will be looking for the Nasdaq to lead us one way or the other as the bear party over there could gather steam fast if our pals at Microsoft can’t break $30.

Remember your Lincoln: Some of the people can be bullish all of the time and all of
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Thursday Wrap-Up

Well I said we could go anywhere today and we ended up nowhere!

We did go everywhere though – we were up and down and up and down and up again (but then kind of down at the end) – can you possibly have a more exciting 6 and a half hours where nothing actually happens?

The Dow blah blah blay, the S&P blah blah blah, the Nasdaq blah blah blah - come on folks, nothing happened, what is there to say?

I’m a little annoyed because it’s 9:30 and I have Mad Money on the TV as I write this and you would think something unbelievably amazing happened today and at this point I have to throw the churning flag on Mr. Cramer.

Has this guy ever advised people not to trade – ever?  I called for mostly cash last Wednesday (all last week actually) and I am so not sorry!  Reading the comments today I would bet a lot of real people (not the crazed TV call-in fans) wish they had taken the week off as well…

This morning I said “Very tight stops on calls today as any indication of consumer weakness can really spook the markets…  If the dollar goes below 83, we are in BIG TROUBLE so I really have no desire to do anything other than manage my existing positions and wind down my month, something I’m sure many fund managers will be doing today as well!

Yet I read the comments and everyone is trading like crazy…

I’m not saying everyone should just do what I say (please, please never do that!) but it would make me feel better if SOMEONE took my advice as I do tend to make pretty good macro calls.

[Henry Paulson]

Speaking of macro calls everyone will ignore:

 The Wall Street Journal (who is quoting my views on the dollar anyway) now claim that Paulson is in my Inflation Nation Camp!

I think the little sketch they do of you in the WSJ says a lot about you and Paulson’s looks like he’s about to foreclose on Jimmy Stewart’s bank…

Oil pulled off a close over our $63.09 mark despite a massive sell-off at the close (something I expected yesterday but didn’t get).  It was enough to make me glad I held my puts, although $63.75 at 2:15 probably would have had me throwing in the towel had I been around to watch it!…
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Thrill a Minute Thursday

We could go anywhere today!

Personal income is up .4%, personal spending is up .2% but people aren’t spending it at Wal-Mart, who gave us some pretty lame numbers along with several other big retailers.

Very tight stops on calls today as any indication of consumer weakness can really spook the markets.

Asia had another great day with both the Nikkei and the Hang Seng adding on a point.  India’s GDP came in at 9.2%, well over expectations of 8.9% - this is another billion person economy that is kicking our butts!

Also kicking our economic booty is our old owners, England!  It now costs you almost $2 to buy a British pound (England still uses their own currency extensively), which is up from $1.40 on my last trip just 2 years ago!

Another reason Europe is flying is that it looks unlikely that Turkey will join the EU and drag them down in the near future.  Much like the integration of East Germany was very painful, Turkey just does not have their economic house in good enough order to join the team.

Let’s check our levels very carefully:

  • Dow MUST hold 12,200 and needs 12,300 to be taken seriously
    • Transports can NOT go below 2,650
  • S&P MUST break and hold 1,400
  • NYSE MUST hold 8,900 but needs 9,000 to impress
  • Nasdaq needs to get back over 2,450 fast!
    • SOX MUST retake 480 and 490 is no big deal 

Oil is going to test $63 at the open and yesterday’s move was independent of the dollar so we should be very, very afraid if it goes up from here ($62.50).  This contract was at $63.09 back on 11/10, when we were still looking at the December contract, and it fell back $6 from that peak a week later so that’s the new high they will be looking to break.

Gold will test $650 today if our markets look weak and NEM is always a good way to play this with the $47.50s just .45 but don’t be greedy! 

If the dollar goes below 83, we are in BIG TROUBLE so I really have no desire to do anything other than manage my existing positions and wind down my month, something I’m sure many fund managers will be doing today as well!

=================================== 

It’s time to put our money in foreign banks before
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Wednesday Wrap-Up

Ha – take that bears!

We are certainly back to the Meatball Market Philosophy where bad news “Just Doesn’t Matter!

Like I said this morning, from this altitude (Dow 12,000+) all the naysayers just look like little ants down on the ground.  Can we hold this altitude?  That will be the trick of the week now that we have made a critical 50% retracement of our drop from last week’s highs.

I don’t have to talk about the dollar anymore as Gary Dorsch has written the definitive article on the subject, neatly recapping everything we’ve been talking about in one massive article.  My thanks to Mike_C for posting this one in comments.

The best summary chart of the bunch is this one, which I call “The Fed stops hiking and the dollar starts crashing:

Of course you can also mirror this chart with the US deficit chart that was under control under Clinton (see steady rise of dollar, coupled with very low oil prices) and quickly turned into a nightmare under Bush II. 

 exchange rates

Our markets are much less impressive to foreign investors than they are to us as they look at the Dow in their own currencies, which have appreciated faster than our markets have kept up.

 

I’m sorry I couldn’t find a more up to date one (perhaps one our readers is a great chartist and could bring this forward) but you get the idea – the dollar has lost 10% against global currencies this year and is down 13% against the Euro in particular.

So your stock being up 13% this year isn’t impressing anyone who isn’t holding dollars in their savings account and shouldn’t impress you either as we need that 13% to keep up with the Joneses or whatever common European and Asian surnames there are.

Finally I’m starting to see a justification for energy stocks!  The multinationals collect global currency and deserve a higher valuation than those companies that get paid in sad little American dollars.  Here’s XOM vs the ten-year treasury note.

So the markets are not actually in orbit – its just that investors (us!) are tripping and THINK we are in orbit – kind of like when you experience some massive physical trauma and get that feeling of floating away from your body… 

DO NOT GO INTO THE LIGHT!!! 

Like I said this morning, I hate to…
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Recovery Wednesday?

OK, that title is only alliterative if you use your Elmer Fudd voice

If that was it for the drop I am in big trouble because I have no idea what to buy at these prices.  Obviously, I still have grave concerns that are apparently not shared by other investors who are piling money back into the markets after Monday’s pullback.

We are still not in orbit yet but the market is looking pretty weightless in overseas trading with (at 5 am) Asia, Europe and US futures all firmly green.

The GDP came in better than expected (2.2% vs. 1.8%) and the core PCE remains at a very manageable 2.2% – it’s the Goldilocks economy for sure!

Asia was led higher by Japan as the Nikkei gained 221 on a strong industrial output (up 1.6%) which brought the Hang Seng back 141 points, recovering almost a third of yesterday’s drop.

Europe’s bounce is less impressive with indexes over there picking up about half a point but globally, we seem to be holding our ranges, which is very good stuff.

The dollar is down 12% against the Euro (the world’s strongest currency) this year alone and 50% over the past 5 years and we can only hope, in that longer-term perspective, that this is some sort of bottom before we tip over into the funny money category.

We are completely depending on the kindness of strangers to help our currency now as nothing is being done at home to narrow the trade deficit (we send $70Bn a month out of the country) or the budget deficit (we borrow $50B a month to keep the country running) so the only thing that will save the dollar is other Central Banks propping it up artificially.

It’s not something I like to base my future on but, hey, that’s just me – you guys go to town! 

Speaking of which, I hate to be a naysayer on the markets and one reason is it hurts readership.  That’s right, I’m going to let you into a dirty little financial writing secret and tell you that readership goes down if I take off my cheerleading dress.

This is the main reason I don’t do advertising on the site (but I will soon), as much as I like to think I am above that stuff, when I had Google ads…
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Tuesday Wrap-Up

Well, we all held up quite nicely didn’t we?

The Durable Goods reportwas pretty poor and Barry Ritholtz has a very scary unspin on the NAR Numbersthat should please the housing bears but Uncle Ben must have borrowed Cramer’s “BUY BUY BUY” button for the day as he came out whistling “Don’t Worry, Be Happy” in New York.

Bernanke couldn’t get the markets moving despite sticking to my script of hawkish on inflation and enthusiastic about the economy – I think his delivery needs a little work as he always sounds like he’s actually quite worried about something.

Perhaps is was this statement: “A home for which the sales contract is cancelled becomes available for sale once again but is not included in the official data on the inventory of unsold new homes.” 

I found that quite shocking.  A home which is not sold is not counted as an unsold home…  How many homes are we hiding in this country?

So despite Ben’s rah rah speech (and the Italian American Foundation atendees almost fell out of their chairs by the time he was done 45 minutes later!) the markets were unenthusiastic until the old master, Greenspan came to the rescue.

The former Fed Chairman said “that the worst of the housing adjustment was over, and that he was preparing to publish an analysis of the “serious dispute” over the true effect of mortgage wealth on consumer spending,” otherwise known as The Consolation Prize Theory.

You know the Fed is trying to spin the economic data when they coordinate 2 governors, Bernanke and Greenspan to all give the same message on the same day!

Not only that but Paulson took a swing at itover in London by saiying that the US economy is “healthy and a strong US dollar will keep it that way.”  I’d like to know where he’s getting his dollars from because the ones I have are looking mighty weak!

All these happy, happy policy makers managed to convince a stunning amount of people to ignore $60 oil and “buy on the dips” enough to give us a positive close across the board.

NYSE advances outpaced declines by roughly 2 to 1 and AMEX up volume outpaced down volume 81% to 17%. 

On the whole, the Dow was a slacker with XOM contributing the majority of the 15…
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Telling Tuesday

Did I miss anything?

I tried to put a good spin on the charts but it looks like day one of a correction to me.  We have the UBS sales report, Durable Goods and Redbook ahead of the bell followed by Consumer Confidence and Existing Home Sales at 10 am plus Bernanke speaks in NY this afternoon!

To say I have no idea what will happen today is a massive understatement!

At times like this I have to look at the charts and the charts look very ugly indeed.  Not as ugly as the Hang Seng, which dropped 564 points (3%) this morning as exporters took a power dive on fears of a US slowdown along with the obvious problem of collecting worthless dollars from US consumers.

We sell $20B worth of Treasury Notes this afternoon (this is a nice way of saying we will borrow another $20Bn to fund our debt addiction) and we can expect Asia to step in and bail us out with “strong demand.”  This is a short-term fix for the dollar but should help a little.

The Yen is also pulling back and the currency trade of the moment is probably to short the Euro around 134 so the rebound in the dollar this week (assuming there is) will be more related to profit-taking there than real strength here.

I’m still fairly hopeful but I can afford to be since I cashed out last week! 

On Monday I said: “The Dow needs to hold 12,300 and get over 12,400 if we are to achieve weightlessness in December.  It’s a greedy target but there will be no points awarded for a good try on this one.  I would seriously love to say I’m not worried if it tests 12,200 but I will be seriously lightening up if we hit 12,249!

I would much rather be embarrassed that I got out too early than face the alternative!  We can always reinvest cash…

On Tuesday I said: “So we will watch the transports and pray they hold 2,650, otherwise it is really time to lighten up ahead of the holidays – despite my generally bullish disposition.  If it’s a real rally, I can certainly afford to miss one month out of 120!

The transports did hold but, on Wednesday I said: ” I will be cashing out ahead of the weekend on any weakness as I will just sleep
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Monday Morning

Well the dollar is starting to matter.

We talked about this back in Augustand it has always cast a shadow on our trading as I’ve never been able to get all gung-ho while ignoring this pressing issue.

While we were all out having turkey, the rest of the world took a long, hard look at our balance sheets and downgraded us. 

As our debt is looking riskier to foreigners, the rumors that the Fed will LOWER rates to boost a slowing economy make no sense at all to buyers of international paper (or to anyone who actually understands economics).

So let’s be very, very careful out there as things may LOOK good over here but to other countries we look a lot more like this:

   

And that is not good in any language! 

I don’t want to make things sound dire but, since Wednesday, the dollar is down 2.3%.  That means that a European or Asian investor who has a virtual portfolio of US stocks lost 2.3% of his value across the board in just 3 days.  That’s the equivelant of a 250-point Dow drop!

We are going to be needing some pretty exceptional retail numbers to convince foreign investors that our economy still has legs…

Let’s not forget that we asked for this when we told China to strengthen the Yuan.  Currencies don’t strengthen in a vacuum and for the Yuan to rise, something had to fall and it’s no surprise to my readers that the dollar would end up suffering.

All of this is right in line with my Inflation Nation policy but it’s a fine line between a steady devaluation and a total meltdown so let’s watch our gauges!  Asian markets were up, except for the Hang Seng as investors there become concerned that the government will have to take action to curb the dollar’s fall.  Japan has already made noises about keeping a rate raise off the table to keep speculators out of the Yen and to maintain the ”carry trade” where investors borrow Yen to buy Dollars, taking advantage of the interest spreads.

Europe is having a 1% sell-off and companies that get paid in dollars are being hit hard, a strong indicator that European investors don’t see any great fixes ahead for our currency.

You would think Europe would be in a good mood as crude prices have slipped 2.5% in the past 3 days, something we are blissfully unaware of as the contracts are priced in dollars that are falling just
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Zero Hedge

World Trade War I: US Asks South Korea To Join Anti-Huawei Campaign

Courtesy of ZeroHedge. View original post here.

The bilateral trade war between the US and China is gradually becoming a global trade war of global geopolitical and commercial dominance between the US and Chinese spheres of influence.

Shortly after the two largest mobile phone companies in the UK decided against launching Huawei-built 5G phones this morning, and roughly around the time a bevy of Japanese tech and telecom companies including ARM Holdings, Panasonic and SoftBank all imposed a boycott on supplying Huawei with mission critical components joining Australia, and New Zealand as major US allies to end commercial relat...



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Phil's Favorites

Overpriced tech IPOs sell grand visions but aren't worth their valuations

 

Overpriced tech IPOs sell grand visions but aren't worth their valuations

rblfmr / Shutterstock.com

Courtesy of John Colley, Warwick Business School, University of Warwick

The year of the tech IPO is 2019. Uber went public on May 10 with a US$82.4 billion valuation. Fellow ride-sharing app Lyft floated in March with a U$24 billion valuation and Pinterest had a US$10 billion IPO in April...



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Kimble Charting Solutions

Emerging Markets About To Submerge If 3-Year Support Breaks?

Courtesy of Chris Kimble.

Are Emerging Markets about to “Submerge” and head a good deal lower? What they do at (3) will go a long way in answering this question!

Emerging Markets ETF (EEM) has been lagging the broad market for the past 15-months. They hit their 50% retracement level of the last year’s highs and lows and falling resistance at (2) recently. The weakness of last has EEM trading below its 200-MA line.

EEM has spent the majority of the past 3-years inside of rising channel (1), which reflects that this trend remains up. The weakness of late has it testing the bo...



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Insider Scoop

Amgen To Buy Danish Collaborator Nuevolution For $167M

Courtesy of Benzinga.

Amgen, Inc. (NASDAQ: AMGN) took a logical step forward in buying a preclinical biotech it has been collaborating with since 2016. 

What Happened

Amgen announced Wednesday an agreement to buy Copenhagen-based Nuevolution for $167 million.

Th...



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Chart School

Weekly Market Recap May 18, 2019

Courtesy of Blain.

China – U.S. trade talk continued to dominate the week.   A heavy selloff Monday was followed by 3 up days, with Friday moderately down.

On Monday, Chinese officials announced retaliatory tariffs against the U.S., hitting $60 billion in annual exports to China with new or expanded duties that could reach 25%.

Then on Wednesday:

The Trump administration plans to delay a decision on instituting new tariffs on car and auto part imports for up to six months, according to media reports.

...

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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:

 

·       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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