Archive for 2007

Weekly Wrap-Up

 

We posted very good gains in a low volume week.

Whether we get follow through into earnings season remains to be seen but we did get the strong leadership we've always wanted from the SOX and the Nasdaq and the NYSE has been coming on strong as well.  Only the movement of the Russell is really disturbing but a single strong week can fix that.

 

 

Day’s

Must

Comfort

Break

Next

Index

Current

Move

Hold

Zone

Out

Goal

Dow

13,611

45

13,000

13,300

13,500

14,000

Transports

2,975

16

2,800

2,900

3,000


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Live Earth

I’ll be at the NY Live Earth concert today:

I’m sure it’s no surprise to you that I’m into saving the planet so I won’t get into that, but you can check out the very excellent multi-national video feeds today (click the above image or here) and if you’d do me the favor of just putting up with one or two of the PSAs about things you can do for the environment I’d really appreciate it.

Thanks and have a great day!

- Phil

 





Friday Virtual Portfolio Moves

Posted July 6, 2007 at 9:50 am | Permalink (Edit)

I’m taking one more stab at oil puts, adding to existing positions ahead of inventory but I will reduce and take the hit if it doesn’t go my way. I am totally convinced they are up on very badly flawed logic and I’m looking forward to another inventory shock next week.

Selling OIH $180s has not failed me yet so I”m adding those shorts at $3.70, probably giving up if they break $4.50.

osted July 6, 2007 at 9:58 am | Permalink (Edit)

BTU will not take abundant nat gas well and the Aug $45s are .82, not a bad play. XXX

Posted July 6, 2007 at 10:04 am | Permalink (Edit)

Huge Buy program just kicked in – sudden wide massive buying across sectors. Will be interesting to see hwo long it lasts but someone is taking a stand here.

Posted July 6, 2007 at 10:15 am | Permalink (Edit)

Gold rallying of course with NEM’s huge bet, they jumped 5% already on the news so GDX continues to be a good play. Our Sept $38s are still just $3.50, up .90 from where we took them but the $39s and $40s are valid too. XXX

FTO NOT moving up with other oil.

GENZ getting killed. Make that KILLED. Tolevamer missed it’s trial goal but this will be a buy opportunity if they drop too far. I’ve been avoiding them as too expensive vs. DNA and they still are but this may trigger a nice sell-off, hopefully a test of $60.

TSO pissing me off at $59 – have to take some $57.50 puts at $1.10 ahead of inventory. Nat gas expectation is 80Bcf but it’s selling off hard already and Z says probably 90s based on some pretty good import data that came in high.

Posted July 6, 2007 at 10:33 am | Permalink (Edit)

CLF – no reason they shouldn’t at least retest $90 in the near future. Earnings are on the 26th and they just made a deal with Kobe steel that I liked. If I were…
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Friday Already?

Wow, these short weeks really mess with your schedule!

We have jobs numbers today but the real deal is earnings season next week so I won't put much stock today's action until we see what follow through we have in the next few sessions.

8:30 Update:  Hourly earning are up a reasonable 3.9% for the year, the workweek ticked up slightly and non-farm payrolls grew 132,000, a "good" number but were adjusted up to 190,000 in May and 122,000 in April, which means the "good" numbers originally reported by the government of 157,000 in May and 80,000 in April were off by staggering amounts, indicating the market reactions at that time (both positive) were dead wrong and based on faulty data.

It is amazing that the markets even bother with this junk as this is not the first time the jobs numbers reported have been found to be off by 50% or more.  ADP sees a much hotter hiring environment and I think they have a little more credibility than the Department of Labor at this point.  Unfortunately, we are not producing "quality" jobs.  Service-sector employment rose 135K, Leisure and Hospitality were up 39K and Education and Health Services added 59K.  Business and Professional Services fell 9K and Retail lost 24,000 jobs.  Real earnings dropped .2% for May as the DOL apparently didn't get the memo to ignore food and energy prices when pretending how great things are.

Asia looked good this morning, with Shanghai taking a 40% bounce off yesterday's huge drop and Hong Kong continuing to act like pullbacks are something you only read about in textbooks, as that market tacked on another 278 points to finish the week over the critical 22,500 level (not reflected on this chart).  There is a hostile backlash forming against foreign direct investments as governments from Canada to China have imposed or are considering restrictions on foreign purchases of companies, factories and real estate in their countries.  The US received $99Bn in investments in 2005 while US companies spent a net of ZERO (yes $0) acquiring foreign assets, down from 222Bn in 2004.  This is NOT a good trend!

European markets were doing well until they saw our jobs report but have turned down a bit and Brent crude shot through the critical $75 level but the effect is…
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Thursday Wrap-Up

 

For the moment, supply (of oil/gas) isn’t extemely tight.

That's a direct quote from Liz Clayman on CNBC at 11:42

This is the spin they put on an inventory report that showed a 3.15Mb build in crude (vs. expected 200Kb draw) and a 1.8Mb build in gasoline and a 1.16MB build in distillates.  That's over 6Mb of crude products that we don't actually need in just one week – where is the shortage?  Where is the "record" demand? 

This is AFTER OPEC cut 1.7Mb per day of crude from global production which means they have a capacity surplus of at least 1.7Mb per day while we have a demand deficit of close to 1Mb per day.  This is not a US aberration, total oil inventories in the EU have reached a historic high and now stand at 66Mb above the 5-year average.  "These large uncertainties surrounding world oil demand, non-OPEC supply and the demand for OPEC oil pose a considerable challenge to the market. Nevertheless, with the current high stock levels and OPEC spare production capacity reaching around 15% in the second half of 2007, a sufficient cushion of supply is available to cope with any upward risk to the forecast," said OPEC

This is long-term demand destruction in action and recent auto sales indicate that the pattern is accelerating as the US consumers are ignoring the government's timetable and boosting their own fuel economy by 10 mpg by switching to more fuel-efficient vehicles.

 

Is this the beginning of the end for the energy cartel or can we simply expect more Nigerian kidnappings and the return of the "Iranian nuclear threat" along with the usual hurricane hysteria and refinery fires of the week to maintain prices at record levels for a product we clearly have a glut of.

I must apologize to the Valero Energy Corp. as I incorrectly stated this morning that they shut their Flint Hills refinery when, in fact it was Koch Industries that owned the hydro-cracking unit that was shut down.  It turns out that VLO only reported a "flaring of chemicals" at their 340Kbd Corpus Christi refinery but this had no impact on operations yet strangely it got included in this Bloomberg article as one of the
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Thursday Virtual Portfolio Moves

Posted July 5, 2007 at 9:41 am | Permalink (Edit)

T trading very illogically as they make more money per IPhone than Apple does. Over 2 years T gets a minimum of $720 a year ($60 month) on a service plan that costs them perhaps $360 incrimentally to service. 20M subscribers for them = $1.2Bn a month in revenues and the whole company currently takes in less than $10Bn a month with about $1Bn in monthly profits. I’m upping my long T positions. XXX

Posted July 5, 2007 at 9:46 am | Permalink (Edit)

SU is actually behind the rest of the oil patch in 1 year gains so the Aug $95 calls, now $2.17 make a nice cover as you can sell the July $90s, now $2.53 against them on a downturn. XXX

VLO is alos an upside mo play with the $75s at $1.85 (and flying) but it may reverse quickly at inventory.

Posted July 5, 2007 at 9:56 am | Permalink (Edit)

OIH – I’ve had great luck selling the $180 calls, now $3.80 and I’ll be looking to do so against my Aug $180s if inventory disappoints.

XOM and CVX are also way overpriced here and both make attractive mo plays to the downside with XOM Aug $85 puts at $2.17 and CVX Aug $85 puts at $1.80. I also like the XOM July $75 puts at $1 if oil turns down but I’m already loaded with puts.

The last thing to break down should be the XLE $71 puts, now $1.12 so they could be fun if the sector turns down and they also make a good upside play with the $70s at $1.95 carrying a .85 premium.

We only want to do this if we get a big surprise. I think they are expecting a 500Kb draw in crude and a small build in gasoline and distillates so those are ultra-low expectations. The wildcard is whether one of those ships parked in the Gulf decided to sell into the initial excitement, which could have dumped a couple of million extra barrels of supply on the market.

Posted July 5, 2007 at 10:05 am | Permalink


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Thrill a Minute Thursday

This should be an interesting day!

As expected, the Bank of England raised their interest rates a quarter point to 5.75%, the 5th increase in 12 months but the ECB left their rates unchanged at 4% after a June hike as the dollar sits at an all-time low against the Euro, taking a pause after 8 hikes since December '05.

Shanghai B Share IndexWe will pretend this doesn't matter even as we pretend oil rising to $72 doesn't matter or that the Shanghai Stock Exchange plunged 5% this morning, which one would think is significant since 10% is "limit down" for a stock over there so for every stock that stayed flat there statistically could have been one they had to halt trading on.  The smaller Shenzhen Composite Index fell 5.8% with 10% being the most any single stock could drop!

The Nikkei and the Hang Seng shook this off and closed modestly higher as they blame "liquidity issues" on the Mainland China drop with four IPOs scheduled for next week:  Bank of Nanjing, Bank of Ningbo, high-tech firm Guangdong Ronsen Super Micro-wire, and Sichuan Gaojin Food.  I'm not so sure about the timing of SG Food as the Chinese government just acknowledged MAJOR problems in their food industry: "The Ministry of Health's report singled out 26 categories of products for low quality, including bottled water, canned fruit, dried fish, linens, grass-cutting equipment and other goods. In the case of canned fruit, dried fish and vermicelli noodles, "major quality problems exist" because of high levels of bacterial contamination and excessive amounts of additives.Hey, and we told them "no MSG!"

European shares are trading down ahead of our open but our pre- markets are looking up so we will maintain our bullish positions even though we know the whole thing is a different kind of bullstuff entirely!

[Hot Markets]Jobless claims are flat but the very unreliable ADP report came in heavy, leaving investors very concerned and driving rates up ahead of tomorrow's Payroll and Unemployment Reports.  Goldilocks needs non-farm payrolls to stay below +150K or you will hear the term "wage inflation" until you are sick of it.  Hourly earnings were up .3% last month and should continue to creep higher. 
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The Great Nigerian Oil Scam

chartNigerian rebels kidnapped 5 RDS.A workers from an island rig, sending oil to $74 in Europe.

US crude futures are up at $72 again despite inventories holding a 9-year high, which does not included the 19M barrels (or more) that are parked in tankers sitting in the Gulf of Mexico.  We have oil inventories today where they will use a 500,000 barrel draw down as an excuse to break the 5% rule for the week, Despite the fact that 500,000 barrels represents .00357 of the US’s weekly consumption of 140M barrels.

Soku is an island in the coastal area of Nigeria where Shell has several rigs and a gathering plant that generate over $14M a day in revenues yet they cannot afford to hire adequate security to stop MOTORBOATS from assaulting the island!  This is a joke people – it is a massive con being perpetrated on you by the oil companies and shame on our government for allowing it to continue and shame on our "Mainstream Media" for having lost the ability to investigate this sort of nonsense.  Meanwhile, VLO shut it’s 300Kbd Flint Hills refinery so even if the Nigerians shipped the oil here, we couldn’t refine it.  Refineries are operating at about 90% of capacity, that’s 3% below last year’s post-hurricane levels taking 600,000 barrels of refined product off the market PER DAY.

Meanwhile we are deluged with stories telling us that US demand is up yet somehow we get by with 4.2Mb per week LESS gasoline and distillates than we had last year.  Gasoline stocks are in fact, off just 5% from the 5-year high, just 10M barrels off record July levels:

gaso-stocks-e-061207.jpg

Something just doesn’t add up but that will not change unless we do something to break the cycle that rewards the energy industry for NOT producing product.  As I’ve said in the past:  If your oil company makes 20% more money when you have a refinery fire, do you invest in fire extinguishers or matches?

Don’t even bother sending this to  a Congressperson, they haven’t done anything about this — ever, so why start now?  Perhaps if we start pointing this out to politicians in the EU, they can do something over there because it’s pretty clear who pulls the strings on this side of the Atlantic.

According to Dave Lindorff: "If Congress and the White House were serious about combating price rigging
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Tuesday Virtual Portfolio Moves

Posted July 3, 2007 at 10:40 am | Permalink (Edit)

AAPL – now that’s much better! Stopped out of all my $125 callers in a nice orderly fashion but I’ll resel them, or at least the $130s when this thing runs out of gas.

Posted July 3, 2007 at 10:50 am | Permalink (Edit)

T – I have long-term faith but I have the Jan $40s as anything can happen in the short run but I’m not selling against them either. July $40 puts are just .28 if you want short-term protection.

Posted July 3, 2007 at 11:25 am | Permalink (Edit)

OIH – I hit the button on the $180 puts but that’s my obsession…. As long as RIG goes back to $107 I’m a very happy camper. I think oil will hold up until Thursday inventory at least and I’m not too keen on taking them naked into the weekend but I’ve decided it’s a manageable risk for me (as this is 10% of my postions and I’m 80% in cash so risk is 2% of my total) but it still makes me uncomfortable. There will be all the time in the world to ride these guys down and my overall play is that I’m establishing small positions with the full intention of doubling down and rolling several times until I have, for example, 100 RIG Sept $120 puts for $3.40 which I will be about 40% in the hole on. Then, when the final hurricane of the season misses the gulf, I will ride these suckers down about 25% for a series of triples. Hopefully that will work out but I will go from 2% to 10% of my virtual portfolio, as I was this fall when I came very close to quitting before XOM finally pulled back 10% in late August. I vow this year to do more rolling and less doubling as that is what was straining me last year.

Posted July 3, 2007 at 11:34 am | Permalink (Edit)

TM – yes a rising Yen would hurt TM but that would presume the dollar recovered, HA!

AAPL – when in doubt, sell half (the $130s against). This…
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Tuesday Wrap-Up

Apple came on strong today and deservedly so.

I’ve been writing about Apple all week and it’s my single largest remaining holding as it is for many of our members and I find new reasons to like it every day.  Today’s fun facts are the IPhone battery replacements will be $85.85, renting an IPhone while you wait for a repair is $29.95 and, if you synch it up with your desktop, Apple claims you will not know the difference.  Also, sometime later this month, Apple will roll out Applecare for the IPhone.

Let’s see, that’s a new battery once every 3 years ($30/yr) and perhaps $10 per year in rental and a $50/yr Applecare contract all to assure you your $70/month phone service is never interrupted.  Sounds like a no-brainer sale of $90 x 10M per year and bingo – we found another $900M in IPhone revenues!  You gotta love these guys!

Oh did I mention that DT has announced they will be rolling out the IPhone in Germany on November 1st and in Asia in early ’08?  Did you know people are already bypassing AT&T service just to have the multifunciton device sans phone?  Goldman Sachs now estimates that 700,000 IPhones were sold in 4 days yet Apple has moved up the shipping date for mail order IPhones to July 6th after telling people it would be 2-4 weeks – just how many of these things did they make?  700,000 phones is more that the previous record holder, the Motorola Razr, sold in its first month.  The Razr shipped its 100,000,000th phone this year so someone at Apple must have had big plans.

That reminds me of an interesting article I read back in May when Apple placed the World’s largest ever NAND order with Samsung, which, at the time, we thought it was for the whole line but what if it was just for the IPhone?  500M 2Gb chips, now that we’ve opened the phones up, are enough for 125M 8Gb Iphones.  Of course they may have bought those chips for their $149 Nanos but I’m starting to get the feeling that they are going to blow the doors off the estimated 4M IPhones that were projected to be shipped in the first 6 months.

In other action, M&A keeps marching on with KFT making a $7.2Bn
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Zero Hedge

Enemy Of The People?

Courtesy of ZeroHedge. View original post here.

Via The Zman blog,

There has never been a time when normal people did not know the media was biased and biased in a predictable direction. For every non-liberal in the media, there were at least ten liberals. The ratio was probably higher, but then, as now, some lefties liked to pretend they were independents or some third option.

The media used to invest a lot of time denying they had a bias and an agenda, but the only people who believed them were on the Left, which had the odd effect of confirming they had a bias and an agenda.

...



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Phil's Favorites

A 2019 Earnings Recession?

 

A 2019 Earnings Recession?

Courtesy of 

Shout to Leigh!

On the new Talk Your Book – Josh Brown is joined by Leigh Drogen of Estimize, one of the leading providers of crowdsourced financial and economic data to talk about the trend in corporate profits that could potentially lead to an earnings recession later this year.

What is the thing that Leigh is seeing in the data that Wall Street isn’t yet picking up on? What segment of the stock market is most at risk? Why is the crowd smarter than the narrow consensus of Wall Street analysts?

Check out Estimize ...



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ValueWalk

D.E. Shaw Investment Calls For Leadership Change At EQT

By ActivistInsight. Originally published at ValueWalk.

Elliott Management has offered to acquire QEP Resources for approximately $2.1 billion, contending the oil and gas explorer’s turnaround efforts have done little to lift the company’s share price. The company responded and said that a thorough review of the proposition is imperative in order to properly act in the best interests of shareholders, “taking into account the company’s other alternatives and current market conditions.” The news came only a month after Travelport Worldwide agreed to sell itself to Siris Capital Group and Elliott’s private equity arm Evergreen Coast Capital for $4.4 billion in cash and two months after Athenahealth was bought by Veritas and Evergreen for $5.7 bi...



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Kimble Charting Solutions

Gold & Silver Testing Important Breakout Levels!

Courtesy of Chris Kimble.

Gold and Silver from a long-term perspective have created a series of lower highs over the past 8-years. Will 2019 bring a change to this trend? A big test is in play!

Gold since the lows in 2016 has created a series of higher lows, while Silver may have created a double bottom.

Gold & Silver are currently facing break attempts a (1) and (2). These falling resistance lines have disappointed metals bulls for the past few years.

The direction of Gold and Silver weeks and months from now should be highly influenced by what each does as they are attempting to break above important resistance levels.

To become a member of Kimbl...



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Insider Scoop

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

Courtesy of Benzinga.

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

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

Digital Currencies

Russia Prepares To Buy Up To $10 Billion In Bitcoin To Evade US Sanctions

Courtesy of Zero Hedge

While the market has been increasingly focused on the rising headwinds in the global economy in general, and China's economic slowdown in particular, while the media is obsessing over daily revelations that Trump may or may not have colluded with Russia to get elected, a far more critical, if underreported, shift has been taking place over the past year.

As we reported in June, whether due to concerns over draconian western sanctions and asset confiscations following the poisoning of former Russian military officer Sergei Skripal, or simply because it wanted to diversify away from the dollar, Russia liquidated virtually all of its Treasury holdings in the late spri...



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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 failure based on his personality, which was evident years ago. This article, written in 2017, references a prescient article Bill wrote before Trump became president, in July, 2016, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

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

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

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.

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