Archive for 2007

Weekend Ramblings – always a work in progress!

Here’s a great chart from MyMoneyBlog – he was using it to point out, correctly, how homeowners are more or less in denial and we may be a long way from the bottom of that market (think about where you are with your own home’s price) but I think it applies to almost every stock we buy! 

altext

This is a great example of how the 20% rule can save you a fortune as you are generally not mentally prepared to sell when you give up 20% of your trade’s profits but that 40-60% pullback range runs smack-dab into denial and by the time you pass there, fear and desperation have you in their clutches, followed closely by panic, selling for a loss and depression.  ONLY BY TAKING IT OFF THE TABLE "EARLY" ARE YOU LIKELY TO EXPERIENCE "THRILL" AND "EUPHORIA," those are fleeting experiences with a stock (especially an option)  and are quickly replaced on the downside. 

Cash out early, cash out often – cash is good!

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I know we’re all weighed in with our opinions re. the Cisco/Apple IPhone dispute.  You know I only work with the best, so I went straight to Harvard Law, where they gave me the skinny as to what constitues trademark infringementKey points discussed are:

  • The standard is "likelihood of confusion."

    • Is it likely to cause consumer confusion as to the source of those goods or as to the sponsorship or approval of such goods?
  • Factors under consideration will be:

    • (1) the strength of the mark
    • (2) the proximity of the goods
    • (3) the similarity of the marks
    • (4) evidence of actual confusion
    • (5) the similarity of marketing channels used
    • (6) the degree of caution exercised by the typical purchaser
    • (7) the defendant’s intent

Apple knows all about trademark law, one of the most famous cases in trademark history is Apple Computers vs. Apple Records, an issue that resurfaced as Apple moved into the music business.  The bottom line is they already had all the best lawyers on the planet on speed-dial so don’t go
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Wonderful Weekly Wrap-Up

What a wild week that was!

Our energy plays kicked in with a vengance and we closed 29 positions with and average gain of 119% - that's a pretty good week!

So good in fact, that our best bet would be to pack it in right now and go on vacation since last week was 107% and we are now heading into the most dangerous part of the year – EARNINGS SEASON! <==Click Here!

I was literally going through the open virtual portfolio last night and saying "what's wrong with me, why am I so hedged?"  Then I remembered we haven't really heard how the quarter went, we don't know what the Fed is going to do, we haven't gotten the CPI yet, we're not sure oil will stay down here…  So let's give it a week, we've got plenty of time to get irrationally exuberant but for now let's remain calm and go with the flow.

 

We rode the wave this week as oil prices crested and the money that's been sloshing around in commodities found another outlet and began to fuel our stage 2 rocket boosters for a mega market rally.  The Dow finally broke 12,500 on it's third attempt (so take that double top chart guys) and we got the Nasdaq leadership we've been searching for for so long.

We haven't hit all my targets yet but, as I said, I am starting to feel a little over-hedged, which is a good sign as the last time I felt that way was October and we "recovered" from my overly cautious positions quite nicely to post spectacular gains in November.  This is one of the reasons I started a blog 2 years ago, I learn a lot from going back and reviewing my picks.  We also had a LOT (141) of positions in October and I suppose that's a sign of a change in direction for me as I tend to add positions before I start purging

By November I had cut us down to 98 positions and we managed a nice 81% average gain on those and, of course, last month was just great too with 83 positions giving us an 82% average gain

We've already closed 59 positions in January, and it's only…
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Friday Wrap Party!

Woo hoo, what a week!

You know it was an amazing week when our remaining oil plays got toasted at the open and we just didn't care…

 

How amazing was that?  I feel the thrusters burn and we are definitely heading off into space, just one or two more strings to cut and we will be free of the gravity of all previous market levels and on our way to uncharted waters:

Oil came roaring back in the last hour of trading as it bounced off an early  low of $51.60 (15% down from $61)  to gain a full dollar in the last 90 minutes of trading and finished up at $52.99.  This was well short of yesterday's high of $53.90 and exactly $4 down from Monday's open for a neat 7% loss for the week.  

I'm not even going to pay attention to the move this afternoon as it was pure pump but the oil sector certainly acted like they won a prize and came roaring back allowing us to take a few new put positions.  Always remember though "the market can remain irrational longer than you can remain solvent" so we stand ready to give up on oil for now if they keep up the shenanigans next week.

 

27,000 February contracts were disposed of at the NYMEX leaving 199,000,000 barrels of oil open for February delivery.  What did they do with the 27M barrels?  Did somebody want them?  No…  They did the same thing we do when a contract moves against us and we want to give it another shot – they rolled into
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Friday Virtual Portfolio Moves – Now I want Comments on Format!

OK – that was day one of this test.

It was not too much of a pain in the ass and I came up with a pretty good system but now you need to tell me if it was actually useful to you.

So please let me know if this does the trick and then stage 2 is what to do with this now that the day is over.  I’ll think about that tonight.

Notice I switched formats so let me know about that too.

 

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I’m disturbed by AXP – what the heck kind of rally doesn’t include AXP? Possibly they make a billion a year on gas charges???  Wouldn’t that hurt MA too? Since I already have a put on MA I may as well take a small entry on the AXP Apr $60s for $2.25 

Update 10:05 – looking weak, would rather wait…

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Let’s watch our oils

I’m looking to likely sell AAPL Apr $100s against my Julys as protective insurance – in other words, I don’t want to give up the position and I’m going to sell the calls into the weekend with the intention of buying them back on Tuesday and taking the .25-50 hit as "insurance" on my $6.50 position.

  • 10:12  I’m out of my AAPL July $100s befrore they give up $8.50
    • 10:19 Oops, Apple NOT hitting my $8.50 sell trigger, options going up – very, very strange!!!
       
  • 10:17 Z is right the MUR Feb $45s for $1.15 are a much better entry!
  • 10:32 MRVL – sell the Feb $18.75 if they breaks $1.95, that’s the 20% rule and should always be followed when in doubt!  Had I followed the rule, I would have been out yesterday with $2.25 on the unexplained dip (now explained). 
  • 10:49 DE $95 puts for $1 as a mo play!
  • 11:02 VTS – no TGIC replaced them on the S&P, but Veritas is being delisted – I didn’t know they were bought by someone! Sell them if you still have them – who knows what this means!
  • 11:48 MRVL – as I suspected this morning – the downgrade is an attempt to shake the tree, luckily I kept a low target, I’m taking the sell off them! 
  • 11:56 BP – oops, I didn’t update and they went up so fast I


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Friday Morning

What levels can we hold going into a long weekend - can we fininsh the week with a Dow record?

According to the WSJ: "Federal authorities are actively investigating a backdated stock-option grant awarded to Steve Jobs, Apple Inc.’s chief executive, that carried a false October 2001 date, people familiar with the matter say."  Oh no!  Not again!

Things are much more real when they’re in the journal, even if it is the same old story as last week.  Obviously, where there’s smoke, there’s going to be investigators, Federal or otherwise, investigating something – that’s what they do!  Did everyone think no one was going to investigate?  Anyway, I’m not even going to waste any more time on this that to remind you that the timing (going into a long weekend just 3 business days before earnings) or the "people familiar with the matter" is impeccable as always.

Speaking of investigating…  Oil was up over $1 a barrel in the early morning Brent pump but the European traders are already just saying no to that as the day moves on!  One would expect short covering into the long weekend (I know I am) but how much is going to be key.

We got our Asian bounce, with the Nikkei and Hang Seng both jumping more than 200 points and those FXI calls are like shooting fish in a barrel on a US rally!  Asia was up across the board with India posting a 3%, 425 point day (wouldn’t you love one of those!).  The BSE was my exchange of the year last year but I’m leaning towards somethng with a more Asian sound as this year’s selection - Dow!

Europe has no idea what to do ahead of our open so we’ll leave them alone.  An anti-tank shell was fired at the US Embassy in Athens but it turned out, to everyone’s relief, that it was only "domestic terrorism," not those evil foreign ones so (and I am not kidding) everyone was relieved!  It is truly a World Gone Mad!

As I’ve said before, from 50,000 feet – who cares?  We are back in orbit and looking to break free of all this nonsense so let’s see how the day treats us:


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Thrilling Thursday Wrap-Up

Dow all-time high!

Microsoft shot up 3.5% today as Vista won the "Best of CES" award – that's over $10Bn in market cap so one could only hope someone on that design team gets a raise!

DNA had huge earnings and INTC added 2% as poor AMD is firmly back in 2nd place.  Apple pulled back a little but not much and Google is brushing back up against $500 again.

That means we have ignition on our main Nasdaq thrusters and we could get a major rally with all engines firing as they can once again burn a limitless supply of cheap(er) oil to propel the markets on to new heights

It was another exciting day of trading as we jumped on another round of oil puts despite (or because of) a very big, and very fake, morning pump.  Considering I started yesterday determined to cut back on positions, we sure opened a lot more of them as we certainly don't want to miss any of this!

At 1pm news crossed that Cathy Minehan (Boston Fed – voting member – Dove) was resigning.  I noted at the time that if the market didn't mind that uncertainty, we were probably going to have a huge rally.

 "THEY" attempted to rally the oil sector ahead of the natural gas inventories but the 10:30 report gave a paltry draw of 49Bcf, nowhere near enough to encourage buyers and the whole "rally" was over by 11:15.  As I said this morning as they were pumping oil up to $53.90 pre-market: " I don’t
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Thinking About It Thursday

I am behind schedule so I will keep this brief!

 

I know that's very unprofessional and a writer should never let you think he hasn't fully researched everything better than you could ever hope to but I'd rather let you know I had a busy day and am a little behind as I'm sure this does happen to you at least once every few years and you can relate.

So I just finished the wrap-up and it's already ten to eight and we have 90 minutes until the market opens so let's see what we can accomplish between now and then:

Asia fell again!  China is boosting the Yuan as the dollar gathers strength so it's net neutral for trade and they get to pretend they are trying to help.  Very interesting action in Japan as Finance and Brokerage shares led a 100 point Nikkei drop!  Take heed all you people who asked me what calls to buy on GS and MS – I still don't like them…

The Hang Seng  gave up ANOTHER 182 points and it looks like they are determined to test the 50 dma at 19,250 – a 1,300 point drop since Jan 5th!  As I said on Monday – "Are you prepared for a 300 point drop in the Dow?"  I'm not saying it will happen but I am saying it could VERY EASILY happen and I get very worried when I see people trading with no hedges.

Europe is in a good mood as the ECB held rates steady again at 3.5% but the BOE riased rates to 5.25% as housing is making a strong comeback there and inflation is ahead of UK targets (2.7% to 2%).  Russia seems to have resolved their issues with Belarus and I have to tip my hat to Putin as cutting them off for a couple of days – much better than dragging it out in court!

What's in a name?  We'll find out today as CSCO sues AAPL over the IPhone name I am dumbfounded at how Apple had the nerve to hold that event and announce the name IPhone without clearing this matter up first.  Apple seems to think that a cell phone is very different from a VOIP phone and that Cisco's very legal trademark won't hold up across categories.  The
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What Happened on Wednesday?

Another kooky day in the markets.

As I said this morning, how can the markets go down with oil at $55?   Well, oil hit $54.02 at the 2:30 close and the markets perked up considerably on the fall.  This is happening DESPITE the tremendous drag exerted by another 2% drop in the commodity sector.

 

So I am very proud of the trading community for overcoming their fears and finally realizing that 80% of the market does benefit from a bursting commodity bubble (including housing).  I'm still not in love with the action and I'm still going to be waving the grouchy old caution flag until we break up but you can't be too unhappy with today's action:

Oil finished way down at $54.02, losing a whopping $1.62 for the day on an even more whopping 333,000 contracts traded, leaving 251,465 open contracts for suckers traders anxious to accept delivery of 10.5Bn gallons of very expensive, black, sticky goo in Cushing, OK sometime in February.  At least it's cold in Cushing fellas!

My comment after the inventory report was: "Let’s remember our oil resistance levels of $54.34 (likely) and $52.88 on the way to a possible test of the $50 mark!"

Oil's fate was sealed at 12:30 when Fed Governor Moskow said inflation risks remain.  My comment at the time was that it would…
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What Will Happen Wednesday? – in progress

What will happen today? 

I don't know – I'm asking you!  Really, I have no clue the way this market's been acting.  It didn't like $70 oil but it doesn't seem to like $55 oil either. 

I am wondering if the larger trading community is so unsophisticated that they can be spooked out of the whole market by a correction (long overdue) in the commodities sector.  Last I read, most businesses make stuff out of commodities and tend to do well when those prices drop but maybe I'm just getting old and out of touch with the new-fangled economy…

Cap sent me an interesting article by David Nichols who makes a somewhat disturbing point that perhaps stocks are a commodity too and are subject to the same bubble deflation as oil, gold and copper as the money supply tightens up and the dollar rises.  I have thought about this in the past and we have discussed the market movement relative to foreign currencies but REALLY thinking about it as just another commodity (with M&A taking $1.3T out of circulation this year accounting for the bulk of the move) makes this whole thing seem a little tenuous.

Of course nothing is as disturbing as the report we discussed yesterday by perma-bear Marc Faber entitled "Irreparable Cracks in the Financial System" which you should force yourself to read even though it's depressing as he makes a lot of good points.  I'm saying this today as I see several disturbing market trends while I also see a lot of irrational exhuberance on our member site and like Uncle Greenspan, I may feel the need to take away the puch bowl if the party starts getting out of hand!

Asia was getting out of hand and China is tightening up on the money supply in conjunction (or related to) the rapid decline in commodity stocks.  Apple had a VERY interesting effect on Japanes electronics manufacturers as they sold off on concerns that they have lost their innovative edge to the Americans.  When did you think you would ever hear those words again?  If you think about it, it's true – while it's been many, many years since we held the title, America used to lead the world in new and cool technology while Asia used…
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Tuesday Wrap-Up

Wow, what a day!

278 comments at the close of day and over 200 of them were about Apple.  What oil?  As soon as MacWorld started no one seemed to care anymore, which was a shame because it was a fun day for oil too!

There was "Just One Thing" at MacWorld and it was the IPhone – looking very cool indeed but not available until June.    Jobs in on CNBC saying specifically that there are no option issues, that means it is very unlikely that there is an SEC investigation.

As I said last week when "THEY" were pulling every trick in the book to shake people out of their AAPL shares: "Unfortunately, in today's media saturated world, it is not enough to just check our sources — we also need to check the agenda of our sources!" 

Even this morning, as MacWorld began, rumors were flying that Jobs' family was in attendance because he was going to announce his resignation.  I've never seen such a massive PR attack mounted against a company but, then again, it wasn't the company they were aiming for – it was the retail shareholders of Apple stock who were onto a good thing and had to be "eliminated."  One can only hope that all those "Apple insider sources" are discovered but, as we learned from HPQ, a company has to be very careful in its investigations.

I think it is important that people "vote with their eyeballs" so to speak and let the Financial Times know that legitimizing/sensationalizing rumors fed to them by people with a clear agenda will drop them out of the realm of legitimate financial web-sites.  The timing, content and source of this story all made it very questionable yet in 3 days (over Thanksgiving) they ran 4 stories on the subject – still visible in the top right under "Editor's Choice." 

In America we are taught you have freedom of speech but you can't shout "Fire" in a crowded theater and panic people - yet the Financial Times chooses to shout "Scandal" in a crowded market and cause their readers to lose how many millions needlessly dumping Apple's stock.

Meanwhile, the markets had a so-so day, holding up well as the energy sector plunged, but not doing…
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Zero Hedge

Americans' Economic Hope Has Collapsed

Courtesy of ZeroHedge. View original post here.

Which came first, the confidence or the stock market rally?

One thing is for sure, the crash in stocks in December has crushed the hope of Americans that their economic future is going to be better under President Trump.

Overall confidence dipped to 58.1 - a 4-month low, but, U.S. consumers this month were the most downbeat on the economy since November 2016, a third straight drop after expectations reached a 16-year high just three months earlier, as the partial government shutdown wears on toward a fourth week.

...



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Kimble Charting Solutions

Triple Breakout Test In Play For S&P 500!

Courtesy of Chris Kimble.

Is the rally of late about to run out of steam or is a major breakout about to take place in the S&P 500? What happens at current prices should go a long way in determining this question.

This chart looks at the equal weight S&P 500 ETF (RSP) on a daily basis over the past 15-months.

The rally from the lows on Christmas Eve has RSP testing the top of a newly formed falling channel while testing the underneath side of the 2018 trading range and its falling 50-day moving average at (1).

At this time RPS is facing a triple resistance test. Wil...



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Phil's Favorites

Brexit deal flops, Theresa May survives -- so what happens now?

 

Brexit deal flops, Theresa May survives -- so what happens now?

Courtesy of Victoria Honeyman, University of Leeds

As the clock ticks down to March 29 2019, all of the political manoeuvring, negotiating, arguing and fighting is coming to a peak. In the two and a half years since the 2016 EU referendum, views on both sides have hardened and agreement still seems as far away as it was the day after the referendum.

With Theresa May’s withdrawal agreement disliked by all sides, and voted down by an unprecedented majority in the House of Commons, everyone is wondering what can and should be done next?

...



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Digital Currencies

Crypto-Bubble: Will Bitcoin Bottom In February Or Has It Already?

Courtesy of Michelle Jones via ValueWalk.com

The new year has been relatively good for the price of bitcoin after a spectacular collapse of the cryptocurrency bubble in 2018. It’s up notably since the middle of December and traded around the psychological level of $4,000... so is this a sign that the crypto market is about to recover?

Of course, it depends on who you ask, but one analyst discovered a pattern which might point to a bottom next month.

A year after the cryptocurrency bubble popped

CCN...



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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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Insider Scoop

UBS Says Disney's Streaming Ambition Gives It A 'New Hope'

Courtesy of Benzinga.

Related DIS Despite Some Risks, Analysts Still Expecting Double Digit Growth From Communications Services In Q4 ...

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

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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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.

Market Shadows >>