Archive for 2007

Weekend Reading – In Progress

Crossing Wall Street has a very interesting set of data for how were’re doing this Century (as of the 17th):

Here’s a rundown of some major indexes since December 31, 1999:

Here’s how the 10 S&P 500 Industry Sectors have fared:

   
S&P 600 Small-Cap Value…………129.84% Energy……………………………………..128.23%
S&P 600 Small-Cap………………….115.01% Financials…………………………………..52.87%
S&P 400 Mid-Cap Value……………109.02% Materials……………………………………50.94%
S&P 600 Small-Cap Growth……….98.15% Utilities……………………………………..46.96%
S&P 400 Mid-Cap………………………97.07% Staples……………………………………..34.99%
S&P 400 Mid-Cap Growth…………..84.92% Healthcare…………………………………27.57%
Dow Utilities……………………………..82.35% Industrials…………………………………20.99%
Dow Transports…………………………70.70% Discretionary……………………………….3.97%
Morgan Stanley Cyclical……………..68.33% Telecom……………………………………-48.75%
Russell 2000……………………………..64.23% Tech………………………………………..-54.70%
Morgan Stanley Consumer………….36.02%  
S&P 500 Value………………………….29.95%  
Dow………………………………………….11.10% (29.03% w/divs)  
Russell 3000………………………………8.19%  


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Google Strategies

It was a  very hectic couple of days so I’m doing a special update to keep us all on the same page on these Google plays and to discuss strategies so we can see what worked well and what didn’t.

Setting stops and controlling greed was key here and "Always sell into the initial excitement" is a rule that you may as well just etch onto your monitor – as Friday’s action makes painfully clear.

Safe(ish):

Sorry but when I wrote these up Thursday I did not adjust entries on B and C.

A) Buy the stock for $466 and sell the outrageously expensive May $470s for $16.35. This reduces your basis to $450. You can roll the calls if the stock trades down, or take advantage of dips to buy out the caller and resell as it moves up (this is what the big boys are doing to you!).

  • This is a very tedious way to make money but will likely net a 4% profit in 30 days on pretty much as much money as you would have wanted to commit.  While not totally safe, you could always sell the next level down for another $10 so, outside of a plunge, you don’t get hurt too badly.  For example, the stock is at $482 now and you can sell the $480s for $15.20 while the $500s are $6.55 so you can pick up about $4.50 for every $10 the stock drops.  Since you started with $16.35 it would have taken a $30 drop below your position ($466) before you took any real damage.   As it ties up a lot of money, I would just stop out even on this one.

B) Play for the comeback of volatility ($40) by taking a spread of the May $510s for $2.30 and the May $410 puts for $2.18.  Either one should be at least $8 if we get a $40 move within 30 days.  If we get a fizzle, they should be 50% recoverable and we can also flip and sell Apr calls against them (risky but fun).

  • This trade did not go off for me because the May $510s shot up to $4.75 on Monday’s open.  I took them, made 23% and killed the trade on Thursday as I decided the math no longer worked as I expected to have problems at $500 (remember my target was $490 with a possible spike to $510 so


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Wild Weekly Wrap-Up

What an amazing week that was!

Happy and I were talking and we are both very pleased with the charts – more on that tomorrow…

Last weekend I told you that the market could indeed exist in a metaphysical bullish or bearish state indefinitely and it would be up to the observers to decide which it was going to be.  You don’t have to believe in Santa Clause to sit on a fat guy’s lap and we were like kids in a candy store this week, grabbing up calls and making hay while the sun shines (while keeping our trusty umbrellas under the mattress!).

Our mattress plays seemed almost silly this week but they sure made us feel good on Thursday morning and we still haven’t gotten past stage one as the market posted gain after gain all week.  There was little economic news of note and earnings have been coming in better than expected with 66% of the reporting companies beating expectations and only 17% missing so far.  Of course Google was the beat of the week but there was plenty of cheer to spread around with C (got WM), KO (got ‘em), INTC (got ‘em), JNJ (got ‘em), JPM (not int.), MOT (got ‘em), GOOG (got a gaggle) and NOK (got MOT) all getting lots of good attention. 

GE (got ‘em) was great too but pinned at $35 while IBM (got ‘em) got beaten down (maybe pinned) despite a pretty good report.  EBAY (got ‘em) also seemed to go the wrong way, finishing right in between the $32.50 and $35 options.  BAC was iffy but shook it off while MRK (had puts 8-() and PFE took off despite aging pipelines.  In short, things looked pretty good with the majors and things were so good that we’re going to need to update our chart levels as our old ones are pretty much all green now:

 


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Friday Virtual Portfolio Moves

Posted April 20, 2007 at 9:48 am | Permalink (Edit)

I was just catching up on the old post. I don’t think they’ll break $500 but we’ll have to see. At this point I’ve been picking up $490 puts at $2.25, now $3.50 with 20% of my profits as my calls are May and later and can stand a $5 drop.

Posted April 20, 2007 at 10:10 am | Permalink (Edit)

GOOG spread – May $480s are surprisingly cheap right now at $20, we’ll have to keep our eye on this but would be best if it drops to lower $480s. If that doesn’t happen we’ve got the choice of buying out Apr $470s and holding in-the-money calls for about a $13 premium or cutting back 90% of the position and leaving the one call open (more realistic for $10KP players) or rolling the caller to the May $490s for $14, which puts us in for $3 (the $2 we collected yesterday plus the $14 we get today less the $19 we have to give the caller) and we make anythign over $483 up to $490. The last is my move for the $10KP if we don’t get a pullback but not everyone is allowed to make that kind of trade.

Of course I will attempt to time it but I’m waiting for the $485 to hit – if it does.

IBM is another good example, someone is selling this thing like it’s life or death to flush out the calls and I’m moving to the May $95s for $1.20 if I can.

Check out MCD – that’s a shocker, also opening up an opportunity for the May $47.50s at $1.45 (.80 premium)

Posted April 20, 2007 at 10:21 am | Permalink (Edit)

DIA – rolling up EOD to $129s – for .30, so far the insurance was well worth it…

Posted April 20, 2007 at 10:58 am | Permalink (Edit)
IBM – Roll and DD brings my basis down to about $1.70 ($.70 loss added to $1.25 purchase then another round at either $1 or $1.45) on twice as many shares and I need $1.70 to break even and those contracts traded


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Friday Already?

No TGIF today, how can they stop the week just when we're getting into such a good groove?

Thank you Google – we are in full-blown recovery mode with the Dow just blowing through 12,900 in the pre-market.

I think I've said quite enough about Google in the previous post so let's pretend something else is happening for a few minutes…  Asia had a nice rebound with the Hang Seng regaining 266 points and the Nikkei posting a more cautious 80-point gain.   Our TM calls should be rockin' and rollin' today as they were one of the leaders in Japan's rebound.

"The rest of the world didn't take too much of a notice [to the Asian selloff]," said Andrew Clarke, a sales trader with Societe Generale in Hong Kong. "The U.S was pretty calm, Europe was pretty calm, it was perceived more of a local panic rather than anything else, and here we are bouncing again."

The dollar is dead and blah, blah, blah – if no one else cares why should we?  We have now entered into  a very funny/complacent phase of the market where a drop in Asian markets don't bother us and a collapsing US economy doesn't bother Asia – it's a big world out there and we are moving from first to third in style!

SNE/ERIC's net more than doubled (again) as high-end phones continued to make them a fortune.  Anyone who doubts that Apple is right on target with the IPhone needs to read their release which shows an incredible demand for top of the line phones.  Average phone sales dropped however, and worried analysts.  Hitachi put plans for a new flat-panel display plant on hold so today will be a good day to sell the TXN May $32.50s for a buck as a cover on our leaps.

Europe actually had a good close yesterday and is posting 1% gains across the board this morning but a lot of it was a commodity rebound (boo!) as the general attitude about China's attempt to reign in growth is "so what are they going to do, slow down to 8.5%?"  MT is making a huge comeback as the Arcelor deal moves forward.

We should get leadership from MCD, who posted a 22% jump in profits,…
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Thursday Wrap-Up – Google Mania!

The markets did some stuff today blah blah blah…

Who cares?  Google earned ONE BILLION DOLLARS!  Muhahaha…

Oh Google, how do we love thee, let us count your earnings:

$1,002,000,000 in earnings on $3.66B in revenues, this is up from $592M (+69%) in earnings on $2.25 (62%) in revenues last year.

That works out to $3.68 per share, significantly higher than the $3.30 projected by the 40 analysts who follow the stock for a living (3 holds, 2 sells).  The highest analyst estimate was $3.52 per share and the net (of traffic acquisition costs) revenues came in at $2.53Bn, above the average estimate of $2.49Bn.  This was Google's 10th earnings beat out of 11 reports since they went public in Sept. 2004.

[Google Chart]Google's only miss was caused by a higher than expected tax bill as they dealt with complex foreign tax structures but, great company that they are, they hired the best and this report cut their effective tax rate down to 25.9%, well below the 30% target rate and saving .04 per share.  That's right, you have to drill down to taxes to find a flaw in this company's execution and they've fixed that too!

Far from cutting back, the company is firing on all cylinders as they push forward with $596M in infrastructure investments, up from "just" $366M in Q4.  Google hired 1,600 additional staff bringing the population up to 12,238 employees who each generate over $1M in annual sales on average – this beats MSFT by 66% on the top-line per employee and embarrasses Microsoft by generating 322% more profit ($500K) per employee per year.

Steve Ballmer knows why

If this is an arms race it is more like the one between the US and Mexico than the one between the US and Russia!  Microsoft (notice we now ignore Yahoo) is fighting this battle with conventional forces and studying battle plans from the War of 1812 while Google is literally taking satellite images of their offices and devising strategies for battlefields that haven't been invented yet.

Google handled 55.8% of U.S. Web search queries in February, compared with 20.7% for Yahoo and 9.6% for Microsoft, NetRatings Inc. said. Google's 40% growth rate in the number of queries handled compared with a year earlier far outpaced…
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Wednesday/Thursday Virtual Portfolio Moves

Posted April 18, 2007 at 9:42 am | Permalink (Edit)

IBM $95s for $1 as a mo play! I’m taking 10 for the $10KP, stop at .80 – lots more than that in stp!

Posted April 18, 2007 at 9:48 am | Permalink (Edit)

CAT – I really need to finish my LTP review today, just in case we need to sell calls (I’m hoping not) . I’d sell the $65s right now for $3.90.

Posted April 18, 2007 at 9:59 am | Permalink (Edit)
IBM sell-off is overdone, they should hold $95 and may get a bounce to $97 but it’s a tough play with low money. I’m taking a DD at .50 to get a .75 avg, 1/2 out at .75 and all out at .60 (if it fails to get back over .75) for a $300 loss in the $10KP. This is day trading and you should NEVER do it if you don’t like to lose as you will be doing great if you win 40% of the time.
Posted April 18, 2007 at 10:13 am | Permalink (Edit)
YHOO, of course you’d better be out of the $30 puts, I’m done at $1.90 avg, not bad so I have some useless May $32.50s and I’m in no hurry to get back in as I’m up $1 on the total trade so I’ll just let the $32.50s be a bonus if they come back. The Apr $30s? I guess for a nickel but very very doubtful – their earnings were actually bad and good Google earnings won’t save them, just highlight the problem is specific to Yahoo.
Posted April 18, 2007 at 10:25 am | Permalink (Edit)

Oil stocks – waiting for inventory as this could be a mother of a head fake. Oil stocks are generally up about 10% since last expiration with TSO up 25% and VLO up 15%. Right now, I frankly wouldn’t mind an oil rally as we need to save the market and that’s going to be tough if commodities


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Thrill a Minute Thursday

Are we looking at another China Syndrome today?

 

A meltdown in the Asian markets caused our markets to collapse on Feb 27th and a 477-point drop on the Hang Seng is no way to start a Thursday and 295 Nikkei points is nothing to sneeze at but we are sitting pretty on our DIA mattress play and we are certainly not ready to throw in the towel just yet.

That dip (for you recent history buffs) was brought on by our man Greenspan uttering the word recession at a speaking engagement and this time it's EXPANSION that has Asian traders concerned .  China's GDP jumped 11.1% in Q1, doing better than 85% of the S&P 500 but inflation rears it's ugly head as economists are shocked to discover that Chinese people eat food and consume energy (unlike our government's measure of Americans).

Today the Shanghai composite "only" fell 4.5%, better than the 9% dive it took back on 2/27 and this drop, although ugly, only returned the Hang Seng to last Friday's close.  Feb 27th we ran into limit-down trading curbs in Asia but today we have a commodity led sell-off as China may be poised to prick that bubble before 10% of their population gets upset.  If 10% of your population was 120M people, you'd try to keep them happy too!  The Shanghai is still up 29% for the year AFTER this pullback and 7% a month is pretty good growth for any market so let's not freak out over a less than 20% pullback of the recent move up.

I would be more concerned about commodity inflation if it were based on reality but this is, almost across the board, a cartel issue where supply is being artificially constrained to drive up prices.  While some commodities, like nickel, may be "hard to get" at times, the fact is that there is plenty of everything and we are simply being ripped off and what we have going on in China is a buyer who is about to put their foot down and demand lower prices.  As I often say, if the global citizens were to conserve just 5% of the energy we use every day, that would flood 5M more daily barrels of crude onto the markets.  How can we do it?  Turn off…
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Wang’s World – Excellent!

The Phil’s World Universe is expanding and ZMan, Options Sage, Jared and I a thrilled to welcome our new resident chartist Andy (HappyTrading) Wang to our little family!

This is so hot off the presses that the link isn’t on the main page yet but you can reach him HERE and we will be featuring HappyTrading(tm) charts to highlight major market moves and breaking stocks.

While Andy tends to be a little more bullish than me, we find we balance each other well.  Back on 4/11 he brought me around on the S&P with this observation:

His Biotech call of 4/7 was right on the money:

And a nice play on the SOX the at the beginning of that week (4/4):

Having Andy on our site will give us the ability to post bigger, clearer charts and, when you’ve got a guy who knows his stuff – a picture really can be worth a thousand words so thanks a million HappyTrading and welcome to the family!

- Phil

 

 





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We’d honestly rather have new members who are referred by current members, because you are smart people and you are probably friends with other smart people. So if you signup 4 new members, we’ll throw another $50 your way, and will keep doing so for every fourth paid referral. Again, this last perk is only for current members.





 
 
 

Zero Hedge

Johns Hopkins, Bristol-Myers Face $1 Billion Suit For Infecting Guatemalan Hookers With Syphilis 

Courtesy of ZeroHedge. View original post here.

A federal judge in Maryland said Johns Hopkins University, pharmaceutical company Bristol-Myers Squibb and the Rockefeller Foundation must face a $1 billion lawsuit over their roles in a top-secret program in the 1940s ran by the US government that injected hundreds of Guatemalans with syphilis, reported Reuters.

Several doctors from Hopkins an...



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Phil's Favorites

This Is The One Chart Every Trader Should Have "Taped To Their Screen"

Courtesy of Zero Hedge

After a year of tapering, the Fed’s balance sheet finally captured the market’s attention during the last three months of 2018.

By the start of the fourth quarter, the Fed had finished raising the caps on monthly roll-off of its balance sheet to the full $50bn per month (peaking at $30bn USTs, $20bn MBS, although on many months the (balance sheet) B/S does not actually shrink by this full amount which depends on the redemption schedule) and by end-Q4 markets also experienced some of the largest volatility and drawdowns in nearly a decade.

As Nomura&...



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ValueWalk

The Competition For Capital Has Made Stocks Cheap

By Michelle Jones. Originally published at ValueWalk.

The new year is upon us, and now is the time many investors look at what 2018 was and prepare for what 2019 might be. Recession jitters are starting to pick back up again, especially now that the full picture of 2018 is in the books. But what if you could pick only one theme for 2018? Jefferies strategist Sean Darby and team have a suggestion which is especially timely given that it appears to mark the end of an era.

StockSnap / PixabayVolatility carries into the new year

This past year was one of extremes, and the markets ended i...



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Kimble Charting Solutions

Stock declines did not break 9-year support, says Joe Friday

Courtesy of Chris Kimble.

We often hear “Stocks take an escalator up and an elevator down!” No doubt stocks did experience a swift decline from the September highs to the Christmas eve lows. Looks like the “elevator” part of the phrase came true as 2018 was coming to an end.

The first part of the “stocks take an escalator up” seems to still be in play as well despite the swift decline of late.

Joe Friday Just The Facts Ma’am- All of these indices hit long-term rising support on Christmas Eve at each (1), where support held and rallies have followed.

If you find long-term perspectives helpf...



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Digital Currencies

Transparency and privacy: Empowering people through blockchain

 

Transparency and privacy: Empowering people through blockchain

Blockchain technologies can empower people by allowing them more control over their user data. Shutterstock

Courtesy of Ajay Kumar Shrestha, University of Saskatchewan

Blockchain has already proven its huge influence on the financial world with its first application in the form of cryptocurrencies such as Bitcoin. It might not be long before its impact is felt everywhere.

Blockchain is a secure chain of digital records that exist on multiple computers simultaneously so no record can be erased or falsified. The...



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Insider Scoop

Cars.com Explores Strategic Alternatives, Analyst Sees Possible Sale Price Around $30 Per Share

Courtesy of Benzinga.

Related 44 Biggest Movers From Yesterday 38 Stocks Moving In Wednesday's Mid-Day Session ...

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Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

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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