Archive for 2007

Weekly Wrap-Up

Turn those machines back on!

Wow, what a week that was – we can't wait for Monday, maybe we can do the whole thing again.  While Don Ameche is an irate loser in this clip (and the full clip here is my all-time favorite), we winners can identify with the desire to keep those markets open, especially when they are in blow-out bull mode like they were at the end of this week.

While we are, of course thrilled, let's take a moment to remember that this is, in fact, a zero sum game and our great fortune was someone else's misfortune.  In this case, it seems to be hedge funds, who were reported on Wednesday to be $45Bn on the short side of the S&P, the highest short level since the index started measuring it in 1995.  Short interest was low on the Russell and that index finished flat for the week…

Dr. Brett Steenbarger has several concerns about the market that should be taken seriously:

Dr. Brett is also seeing a divergence in the money flows going into the Dow but I could be persuaded to look at that as some rational profit taking with 8 of 30 industrials posting new highs on Friday.


Happy and I can see the Dow making a run at 14,200 with a nominal peak at about 14,350 if we get continued strength in the week ahead but, on the whole, a…
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Weekend Reading – Part 1

Well I was going to be in a great mood this weekend until I read Lance Lewis' excellent article on putting the market into perspective.

It turns out that the fantastic run we've had in the S&P the past 12 months (happy anniversary by the way!) doesn't look quite as hot when you convert it to a stable currency – like the Euro.

I'm not even going to print the chart that compares the S&P to gold because some of you have just eaten and things could get messy!  This is nothing we haven't been discussing for ages but Lance went and put all my worst fears into pictures and they sure are worth several thousand words at least.    How can we make this a positive?  Well an optimist (who's had A LOT of Kool Aid) may say that this just shows how much more our markets have to go and that we shouldn't be surprised to make another couple of hundred S&P points since we are still miles below our International high (this is the kind of BS that gets me invited to the Republican cocktail parties!).

A pessimist would say that the entire global market rally, measured in Euros would look very similar to this chart (other than the BRIC countries, who never had a party in 1999) and all we have here is a very normal almost 50% bounce that is getting very toppy indeed.  You can see how I get thrown off the yacht with that kind of talk! 

For a happier view of the Dow, click here!


Oh, a note to new members as I haven't done this in a while (the kids are away so I have free time this weekend):  There is no theme or whatever to this so excuse the rambling nature of this post and really excuse the spelling/typos as the hardest thing I do every day is try not to look like a foreign exchange student by cleaning up my typing mistakes.  I don't do that here – this is straight from my brain to paper so enjoy if you dare!


NEM looks like it's breaking out.  They have unhedged themselves (and spent a lot of money to do it) and are near a 2-year low with very low expectations (due to the spending) coming into…
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Friday Virtual Portfolio Moves

Posted July 13, 2007 at 9:42 am | Permalink (Edit)

Welcome Cody – try hitting F5 to refresh but that shouldn’t be happening – let me know if it continues and I’ll call Jared. Oops, size too – I guess we’d better get ahead of this. Although it is possible that the errors were caused by me updating this post (I published it in progress) so let me know if it keeps up.

Ka-ching on BHI and RIG puts from yesterday, not going to be greedy ahead of the weekend, half off by close at least even if it doesn’t reverse.

Posted July 13, 2007 at 9:56 am | Permalink (Edit)

BHI – half out into the excitement as it was “weather related” so there shouldn’t be a long-term breakdown but I do think it’s somewhat of an excuse to mask other issues. The first one or two guys get to blame the weather, after that it’s called a trend. I remember making fun of WFMI when the stock was up near $150 and they blamed the hurricanes for a bad quarter and I said “Oh, yeah – groceries are the first thing people give up on.” To some extent I feel the same way about BHI – when I’m getting paid $70 a barrel to pump oil, the last thing I do is cut back on my drilling.

FWLT – what a disaster! I’m going to let the current caller expire and then roll to a higher put as this party can have a sharp correction. Cramer just jumped on TV to pump them so this may be the top for these guys as he usually does that when his buddies need an exit strategy. At the moment I’m probably going to roll to the Nov $115 at $8.50 and paying for the $4 move by selling the Aug $115 puts for $4.15. I suppose we have enough money to roll it up now, since that’s our intention so let’s do that.

$10KP – spending $4.50 to roll Nov $100 puts to Nov $115 puts, will wait to sell Aug in case we get lucky and the stock drops. XXX  <ENDED UP WITH $110S AS $115s DID NOT FILL>

Posted July 13, 2007 at 10:02 am |

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Friday Already?

It’s Friday (the 13th!) already?

Darn, and we were having so much fun!

Isn’t this a great job – we hang out all day and follow the markets, make a few bets, make some money and chat amoungst friends.  I find myself anxious for Monday some weekends so we can get back into it and this is certainly one of those weekends.  We have lots of data, earnings and Uncle Ben testifies to Congress so it’s going to be fun and exciting.

Meanwhile, finishing up this week, GE (my favorite company) pulled off in-line earnings on strong sales despite taking another $200M charge on their sub-prime lending division (they got hit for $500M last Q).  Does this mean the sub-prime picture is improving?  Sorry, no – it means that GE dumped $3.7Bn worth of subprime loans on WMC Mortgage and is selling the rest of the division, exiting the US mortgage business.

On the opposite side of the planet, mega-electronic corp Samsung posted a 5% profit drop, generating just 1.42 Trillion in net income (won, that is!), the smallest profit ($1.54Bn) since the recession of 2000-2001.  Chip margins fell from 30% to 8%, down from 12% last quarter and cell-phone margins fell from 13% in Q1 to 7.7% in Q2.  The only profitable division for Samsung was LCDs, which jumped to 8.6% from 3% in Q1.  Despite the troubles the stock stayed strong on RUMORS that Carl Icahn has an interest in the company.

Asia isn’t worried about this so why should we (because we are rational, that’s why!)?  Hong Kong (up 1.2%), South Korea (up 3%), Singapore (up 1%) and India (up 1%) all finished at all-time highs while Australia pulled back a little from an intraday all-time high.  Exporters led a relief rally as fears of a US consumer slowdown were calmed by the performance of the US markets.

Europe is not so exuberant as Asia but is up across the board and the DAX, which dropped 150 points on Wednesday morning, is now flirting with record highs.  Earnings season is off to a good start in Europe and the markets there are all working their way into record territory as well.  Interest rates are kicking up in Europe and all over the world as this global stock rally is being fueled by $353Bn in margin borrowing in the US alone.

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Thrilling Thursday Wrap-Up

What did I tell you?

It’s 1999 all over again as we post the biggest one-day gain since 2002, breaking records on the Dow and the S&P and having a really good time!

It was not a good day to be short but thank goodness we let our covers keep us in the market on Tuesday while we searched for clues on Wednesday where I postulated in the wrap-up: "We discovered that the VIX goes up when the Dow goes down, does this mean down is the wrong (volatile) direction?" Well look at the VIX today, on a day we go UP 283 points!  It’s DOWN 12%

This morning we threw out all the bad news we could find and decided to cheerfully ignore it.  Mega kudos to Happy Trading, who kept us on the straight up and narrow by charting us through this week – we committed a nice chunk of our sideline cash at just the right time.  This is what I say every time we cash down – it’s good to have cash because then you can buy things that are going up!  I know, elementary my dear Watson and all that but people do forget to cash out sometimes…

It was a very happy 200% day for the Short-Term Virtual Portfolio as we crossed that milestone on this absolutely sensational week aided by massive gains on QQQQ & DIA calls (that were supposed to be just for protection) as well as our XOM calls (that were supposed to be just for protection) along with some very fortunate gains on our long positionsAs I often say, sometimes it’s better to be lucky than smart!

You’ll hear lots of reasons for today’s rally but I think Dylan Ratigan hit it on the head this afternoon – it’s a flight from cash!  It’s the same thing I said last night when I bemoaned the declining value of our currency and said: "Mega Kudos to Happy Trading for helping us to offset our rapidly declining currency with some excellent picks today."  That’s what this is about; Housing isn’t working, Bonds aren’t working, working isn’t working (real wages down year over year) and commodities are slowing down…   Money has to go somewhere and keeping it in US currency already cost us 11.5% this year so, much like the
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Thursday Virtual Portfolio Moves

Posted July 12, 2007 at 9:37 am | Permalink (Edit)

GM – can’t fight the big market though, let it run up then maybe the $37.50 puts.

DIA note – this is why we stop out of mattress plays! Thank goodness I did what I said I would do yesterday – now I just have the Aug $136 puts and I will likely roll them up on today’s excitement so I’ll be right back where we started but with lots more cash. On the plus side, the DIA Aug $138 calls were a hedge against exactly what is happening now but I’ll be rolling those to $139s or $140s, depending on where the music stops. XXX

Q’s are slow going so far and GOOG wierdly dead. YHOO dead as usual…

Posted July 12, 2007 at 9:49 am | Permalink (Edit)

Dragon – which one – OIH? I’m not short yet, waiting for SLB to give me a turn signal.

SBUX going down no matter what.

MCD has got me puzzled. Going to initiate Sept $52.50s at $1.30 XXX

Posted July 12, 2007 at 9:58 am | Permalink (Edit)

Thank goodness I have Aug oil puts because my Julys would have been smoked! Still hurts though…
My poor DIA July $135 putter is getting killed but I’m not sure how much further up we can go (near 13,700) so I’m starting a roll of the DIAs here – just in case. Gold punched right through and this is record territory for the Dow but I’m not seeing enough confirming action from its buddies and I don’t see the Transports holding 3K with oil up here.

AMZN in kick-ass mode. CROX not. WFR taking off.

Posted July 12, 2007 at 10:04 am | Permalink (Edit)

OIH – $3 seemed to be the right price to sell the $180s – will DD if it goes to $5.

BOT still flying – someone thinks another bid is coming. They are a tempting short here, maybe Sept/July $230 puts for a $5 debit.

Speaking of debits – $10KP play buying 5 CLF Aug $90s for $3.35, selling 5 July $85s for perhaps $4 but certainly…
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Thursday Morning

13,600 or bust!

That's our rally cry for the day.  Do we take back our bullish posture or are we going to end this week (and possibly this rally) with a whimper?  We finally get some data in this very slow week but we're not going to like it:

  • Trade numbers we already know are dreadful, likely to break the $60Bn mark in monthly deficit
  • The Monthly Budget should be net positive and gives traders something to jump on
  • (All others are Friday)
  • June Export Prices may not exceed last month's .2% but the dollar is is now down 2% since June 30th.  Oil prices are up 4.2% since June 30th too so look out for this number next month!
  • Retail Sales are likely to be flat at best in the morning – only great GE earnings will offset that.
  • Business Inventories were up .4% last month, if this continues we are slowing down more than expected.
  • Michigan Consumer Sentiment hopefully bottomed out at 85 last month.

Next week we get hammered with data and earnings including PPI and CPI, Industrial Production, Housing Starts, Leading Economic Indicators, FOMC minutes and the Philly Fed but Bernanke will be testifying before Congress and hopefully Karl Rove's transmitter will be close enough to work this time as the chip in Ben's head must have misfired on Tuesday when he failed to sugar coat the economy adequately.

D Fry Market Outlook 12 07 2007Jim Kingsland wrote a nice piece entitled "The Subprime Disaster: How Long Can the Experts Live in Denial?" so I can skip along and pretend it doesn't matter today as clearly everyone else seems determined to ignore this stuff.  Like I've often said, just because we think the rally is insane, doesn't mean we can't profit off the madness!  David Fry says "I have never seen so much bad news shrugged-off as have recent subprime woes. One commentator noted, "People have been programmed to buy any dip." That could translate to "dips buying," but that remains to be seen. Bulls believe the subprime mess is "contained" now that S&P and Moody's have lowered credit ratings."  Hey come on guys – lighten…
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Wednesday Wrap-Up, that was interesting!

We began this morning looking for clues.  So what did we learn today

All in all it was a very educational day.  The Dow has somehow decided to make 13,580 a new resistance point, as you can see from action yesterday and todayWe didn’t quite get the 50% retracements we were looking for to get us back in true rally mode but we did have a strong finish so we maintained a "wait and see" attitude for tomorrow.

Oil inventories made everyone unhappy today with a 1.4Mb draw in crude and a 1.2Mb build in gasoline and an 800K build in distillates.  From my perspective that’s a net 600Kb build during the 4th of July holiday week when it was very hot around the country so any kind of build is nasty for oil bulls yet they were able to shake off that news about as well as investors shook off the looming lending disaster so what can you do?

Our man Phil Flynn disagrees with us, but he also disagrees with the EIA and anyone else who doesn’t thnk oil is going to $100.  He’s really gotten full of himself and declared victory over the oil bears saying: "But oh no! It seems some of my most ardent bearish critics are starting to throw in the proverbial bearish towel and admit that indeed they have been wrong about the price of oil and are now grudgingly staring to become bullish."

Sorry Phil, but its a very different kind of bull we think you’re spouting in your 24/7 multimedia
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Wednesday Virtual Portfolio Moves

Posted July 11, 2007 at 9:40 am | Permalink (Edit)

That’s a good thing, they will likely report a disappointment. My only concern is that that’s a shakeout move and it will be followed up by a series of Nigerian attacks or something. I’m going to up the XOM Aug $85 calls as protection on the way down but I’m taking the July puts off the table with whatever profits the mo stops them at. XXX

Posted July 11, 2007 at 9:44 am | Permalink (Edit)

SU is a good short in the slow lane. I’ve got the Jul $95 puts but the $90 puts will make a nice mo play if oil falls down. XXX

CHAP – I doubt there will be a counter offer, selling into the excitement myself – sometimes enough is enough…

Posted July 11, 2007 at 9:49 am | Permalink (Edit)

DIA status:

300 Aug $138 calls
100 Aug $137 puts
200 Aug $136 puts
150 Aug $135 puts

The Aug $137s are up 33% and will stop out up 25%, the $135s would stop out even at $1.90 and the $136s ould be my new base for a DD or roll. These are soft stops, I will ignore spikes or rallies I’m not buying into.

I also have 200 Aug $135s that I sold July $135s against, that trade is about even at the moment but if Dow starts falling again I need to stop out the Julys I sold.

Posted July 11, 2007 at 9:51 am | Permalink (Edit)

XOM and integrated majors just got an upgrade from someone with raised targets. That someone is wrong but I do like the XOM Aug $90s as a 50% offset to puts as they are the laggard of the oil patch, up about half of what OIH or the refiners are over the past few months.

Posted July 11, 2007 at 10:05 am | Permalink (Edit)

CHAP – half covered going into earnings, I lost a buck on the Aug $75s so I’ll give them some time to calm down before I buy…
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Wary Wednesday Morning


"The observer who has thoroughly understood one link in a series of incidents, should be able accurately to state all the other ones, both before and after." – Sherlock Holmes

First of all, as I said in the morning, we were so far above technicals that a 100-point drop, although painful, would not even break our bullish uptrend so let's all keep an open mind this morning and look for market clues without prejudice.

We need to take off our trader hat and put on our detective hat and watch the market's movements very carefully, looking for subtle signals by observing how companies respond to earnings, testing which indices hold up,  listening for changes in sentiment etc.  Of course, on the other hand, when you walk into the room and see a market that's been bludgeoned to death while sub-prime lenders are standing in the corner covered in blood and bad debt – well, it doesn't take the world's greatest detective to make a connection.

But the markets do tend to be more complex than that and it reminds me of what Holmes said about deduction in A Study In Scarlet:  "Like all other arts, the science of deduction and analysis is one which can only be acquired by long and patient study, nor is life long enough to allow any mortal to attain the highest possible perfection in it. Before turning to those moral and mental aspects of the matter which present the greatest difficulties, let the inquirer begin by mastering more elementary problems.  It sharpens the faculties of observation, and teaches one where to look and what to look for."  That's what we try to do here at PSW, we want to teach you what to look for.  No one can have a perfect understanding of the markets but, as a group, we can sure paint a pretty good picture!

[China]The picture in Asia was not so good today with the Nikkei giving up 203 points and the Hang Seng off 278 points.  There is a growing concern that Chinese companies have been playing the markets by plowing their profits back into the stock market (as it makes money faster than most businesses can!) exacerbating the bubble over there.  Many companies are increasingly dependent on investment gains for
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Zero Hedge

Auto Shares Surge As Fiat, Renault Confirm Merger Talks

Courtesy of ZeroHedge. View original post here.

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

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

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Phil's Favorites

Trump and the problem with pardons


Trump and the problem with pardons

Courtesy of Andrew Bell, Indiana University

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

My researc...

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Insider Scoop

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

Courtesy of Benzinga.

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

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

The Analyst

Jefferies analyst ... more from Insider

Kimble Charting Solutions

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

Courtesy of Chris Kimble.

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

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

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

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

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Chart School

Brexit Joke - Cant be serious all the time

Courtesy of Read the Ticker.

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

Alistair Williams Comedian youtube

This is a classic! ha!

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

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Digital Currencies

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


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

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

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

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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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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


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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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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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 >>