Archive for 2007

How the Market Spent My Summer Vacation

So, did I miss anything?

I left for my vacation on Saturday, August 4th (had a fabulous time, thanks for asking!) and my comment on that Friday morning, with the Dow at 13,462, was "Usually when I take off I am filled with regrets as I hate to miss the fun in the markets but I’ve never been happier to lighten up on positions and take a break."  That was another in my series of "Chicken Little" posts where I warned that "the sky actually falling" as we saw the sub-prime issues gathering steam.

At the time we were "rallying" back from a visit to 13,200 that Tuesday and, while I hate to be a wet blanket, I had to say: "I’m not here to win a popularity contest so I’m really pushing the "better safe than sorry" school of investing this month as my best case scenario for the next couple of weeks is that we consolidate around 13,600 and my worst-case scenario is downright depressing!"

My timing couldn't have been better as that was the Friday that gave us a 400-point intra-day drop and Cramer had his little melt-down on national TV at about 2:30.  If you review the clip, bear (oops, don't say bear!) in mind that Mr. Cramer was freaking out about a correction from 14,000 to 13,400, a 4.2% dip after a 2,000-point, 16% run that began in mid March.  We at PSW were in a very different position than Mr. Cramer, having played that dip perfectly the week before so his comments seemed humorous to us as it was obviously way too early to play the Fed card.

We had been all over the place the first week of August as Happy and I called the bounce on August 2nd but, in the same post, asked the very timely question "Are the Brokers Broken?"  I do regret not being more aggressive with my broker puts but, as I mention in the article, I had been painfully burned before so I was patiently waiting for BSC to get near my $100 buy target rather than taking the very risky put side of the trade (as you never know when the Fed will bail them out!).

On Monday morning, a I still had reasonable web access in Barcelona, I had to pipe…
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Follow-Through Friday?

Wow, what a day!! We made money on both sides (short and long)!!

We started off with PCU and X puts, purchased yesterday. Right off the bat, those PCU puts doubled overnight!! We sold them way too early, as both PCU and X continued to drop. But, as the market bounced, we got into RIMM, PCP, SPWR calls, and made money on the long side. This is also why I’ve been staying mostly in cash, so I have the “power” to react when I need to. Still not the time to jump in “head-first”, yet. Please read on.

SPX bounced back to close “UP” by +4.57 points; Nasdaq was off by almost 8 points; and the Dow lost 15.69 points.
indices_8_16_07.jpg
The 2 weak sectors that have been causing most of the problems on the market were actually among the strongest today. Housing (HGX) went up +1.18% and the financials (XLF) went up +3.01%!! VIX went as high as 37.5, but closed flat at almost 31! Semiconductors (SOX) and the biotechs (BTK) hung on well!

Yesterday, I said, “…taking the respective Feb-Mar range for SPX, we’d get 1400-1440. But, if things break down fast, as there’s definitely some panic on the market, we may have to look at 1380 for support!” Sure enough, after big losses in the Asian markets, people panicked and quickly pulled things down further. SPX 1400 wasn’t enough to make a stop!

SPX (15 minute, 5 days)
spx_8_16_07_15_minute.jpg
I don’t normally show an intraday chart, let alone a 15-minute chart. But, I thought this is very valuable to demonstrate. As you can see, the intraday MAs have very sharp down slopes, indicating that the downward momentum is high. This is why I didn’t think 1400 was enough to get the initial stop. SPX quickly penetrated 1380, but, bounced back (Point #1). At Point #2, SPX tested 1380 again. And, it held up. Notice how on the initial bounce from Point #1, it got held down by the 30-minute MA (black line). Once SPX cleared the intraday MAs, there was little intraday resistance, and it jumped all the way to close in the green!

SPX (daily chart, 6 months)
spx_8_16_07.jpg
On the daily…
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Better Than Pig Wrestling?

OptionSage submits:

Quotes of the day from CNBC’s Fast Money

“Was that better than pig wrestling?” – Dylan Ratigan

“I’m not sure anything is better than pig wrestling”. – Dennis Gartman

Why the beastly analogies?  Because if you just saw the closing prices you would have missed a beast of a day!  The Dow dropped over 300 points intra-day before clawing back a few hundred points before another triple-digit decline before going positive for the day before closing down 15 points!

The Volatility Index soared to 37.50 intra-day before closing at 30.44.  Bear Stearns was as low as $101.23 intra-day before closing at $116.44 having been as high as $119.44.  Goldman Sachs, Morgan Stanley and JP Morgan all had similar reversals off their lows….and on and on and on…. 

I am seeing some of the big names in the industry hit the panic button.  Tobin Smith had a long rant recently about how the bottom was close by before changing his mind and expecting the bottom to be 6-8 weeks away.  Indeed, he is claiming his best stocks will be 10%-20% lower soon.  In fact, he is calling for cash and heavy hedging (sounds much like almost every article we’ve written for the past few weeks!).  At PSW, Phil noted he went to cash BEFORE the rest of the world hit the panic button! 

Denis Gartman’s bottom line on CNBC was to “Sell strength not buy dips” – I think that’s exactly what we’ve been referring to in articles here over the past few weeks.  We noted the retracements, the strong rejections, the big leg down, the panic and now what…it won’t be any surprise to see us recover for a few sessions now and we can then evaluate whether another leg down is indeed likely.  Options expiration is tomorrow and it can play absolute havoc with the markets so we’ll have to wait until next week to see which way the market really wants to move. 

It sure is tough for those solely long the market but there are opportunities to go long.  A young trader asked…
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Do Not Panic Thursday

The market continued to break down today, in a big way! The Dow lost another 167 points; SPX gave up nearly 20; and, Nasdaq dropped more than 40 points, again! This basically takes the market back to where it was nearly 6 months ago, within the Feb-Mar range. We are now having a 10% correction from the July high!
indices_8_15_07.jpg
VIX had another huge jump. It is now above 30!! Most sectors continued to slide. Oil (USO) went up! The Chinese stocks (FXI) were among the hardest hits, following the big drop in the Asian markets.

Nasdaq
nasdaq_8_15_07.jpg
Nasdaq is now within the Feb-Mar range (2400-2475). The MACD went so low that it is almost off the 6-month chart!

SPX
spx_8_15_07.jpg
Similarly, taking the respective Feb-Mar range for SPX, we’d get 1400-1440. But, if things break down fast, as there’s definitely some panic on the market, we may have to look at 1380 for support!

We had further worries from the housing sector as CFC went down almost 13% on bankruptcy fear.  NTAP reported good earnings and announced $1 billion share buyback. NTAP is up more than +5% in AH. IRBT announced that the Pentagon plans to purchase up to 3,000 more robots. IRBT traded up +2.35% during the regular session and continues to rise after the market.

Well, according to a Fed member, St. Louis Federal Reserve Bank President William Poole, there’s no need for an emergency rate cut. In Asia, there’s definitely some panicking going on.  Last checked, Japan was down 600 points!!  Hong Kong was down some 600 points also, and China was down about 100 points!

Again, we’ve been telling people to be patient and keep cash.  Let’s not panic and allow the market to find a bottom.  With cash in hand, we’ll be able to take advantage of the potential opportunities once the market stabilizes.

Good night and HappyTrading! ™





Wednesday Morning

What a day it was on Tuesday!  The major indices broke below their support levels and made their lowest close in months! The Dow lost more than 200 points; SPX gave up more than 25; and, Nasdaq dropped more than 40 points!!
indices_8_14_07.jpg
SOX took a hit also, -11.21 points. XLF closed below 33, a support that we’ve been looking at. Oil (USO) and natural gas (UNG) rose, but, oil services (OIH) declined. Housing (HGX) continued to wobble, down more than 4%!

SPX
spx_8_14_07.jpg
SPX now is back below 1440, and its MACD is curving down again. There’s an immediate support at 1420, but, the stronger one is perhaps 1400.

Nasdaq
nasdaq_8_14_07.jpg
Similar story for Nasdaq.  Its next support is at 2475.

The Fed took a pause on Tuesday in its open market operations.  Globally, the central banks are also scaling back their cash injections.  Further, news about hedge funds having redemption concerns added more pressure to the market.  According to AP, "Confirmation that Sentinel Management Group Inc., which oversees $1.6 billion in assets, is seeking to halt investor redemptions exacerbated the selling. Other funds are said to have similar problems as they face withdrawal demands at a time it has become difficult to value low-quality debt."  Wal Mart’s profit outlook certainly didn’t help either.  All of these added together, helped to give the market its worst close in months!

Asian markets are down big, as expected.  Hong Kong was down over 600 points at one point.  Japan was down over 300 points.  China was down nearly 100 points!

So, after over a week, we’re back to this post that I wrote 2 weekends ago, looking for new support levels!  Near the end of that post, I used one of Phil’s quotes:

 "Really and truly I do not like to be a bear but I like even less to be an ostrich because we are investing real money in these markets and kidding ourselves is a very expensive game!  PSW is as much about money management as it is about picking stocks as it doesn’t do you much good to have 7 out of 10 winners if you blow half your virtual portfolio on pick number 8!"

We have been cautioning people to be patient and keep mostly cash.  The market has just pierced…
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No Alarms, No Surprises – As Expected a Big Down Day!

"I’ll take the quiet life….. No alarms and no surprises, no alarms and no surprises" – Radiohead

OptionSage submits:

In last Thursday’s article “Thumping Thursday & Ominous Omens” I wrote:

“The NASDAQ corrected from a high of 2725 to a low of 2525, then retraced 50% to 2625 before today’s correction to 2,556 – the low of the day!  The DOW dropped from 14,000 to 13,200, then retraced 50% to 13,600 before being strongly rejected also today, down almost 400 points!

THIS IS A BAD OMEN IF YOU ARE LONG THE MARKETS!”

Indeed in comments today I posted

“Happy and I were discussing last week’s 50% retracements in the Dow and NASDAQ back to 13,600 and 2625 following initial corrections (14,000 to 13,200 and 2725 to 2525 respectively) and the subsequent rejections from those retracement levels late last week. Often we see a few flat days before the next leg down and that seems to be playing out as per the script right now….Dow down 183, NASDAQ down 36 and still an hour and 15 to go.”

In fact, that last hour and fifteen minutes led to the further demise of both indexes as the Dow closed down 207 points while the NASDAQ closed down 43 points and the S&P 500 closed down 26 points. 

At PSW, we have been flagging our concerns almost on a daily basis so fair warning has been given ever since Phil highlighted a few weeks ago  that he had moved to 80% cash in his short-term virtual portfolio.  Since its peak in July, the Dow is down almost 1000 points and the NASDAQ is down about 225 points, landing today at its 200-day MA while the Dow still has a few hundred points to go before reaching its potential 200-day MA support level.

Our man optrader was ahead of the breakdown today when he posted at 1.26PM:

“Just looked at all charts on my watch list, and I don’t see much of anything I like . Not a very good sign. We are breaking down out of bear flags on almost all indices.”

The brokers had an awful…
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Where-To-Next Tuesday

The U.S. market basically didn’t go anywhere on Monday.  The day had started out very well, with the market rallying right from the open. But, it quickly faded. Even though there were several attempts to turn back upwards, the market eventually closed just slightly down. The Dow was down just 3 points; SPX down 0.72 points; and, Nasdaq was down 2.65 points.  It is interesting to note that INX2 (Internet Index) and BTK (biotechs) closed up, and SOX (semiconductors) closed above 500.

Although the broader market did make a higher high and a higher low today (comparing to Friday), the way that it closed wasn’t quite convincing. The market still looks “undecided” to me and we’ll see if we can get clearer signals tomorrow. Still keeping cash!

SPX
spx_8_13_07.jpg
SPX attempted to break above 1460 today. But, it wasn’t able to keep that altitude for the close. It came back down to within its support range (1440-1460).

Nasdaq
nasdaq_8_13_07.jpg
Very similar picture for Nasdaq.

SHLD announced $1.5 billion of share buyback today, sending its shares up more than $7!! ENR got an upgrade from SunTrust this morning and its shares closed up more the 10% today! Oil transporters seem to have caught people’s attention today as OSG, TK, and FRO all made solid gains (OSG +7.91%, TK +3.68%, FRO +2.8%). CSC also jumped today, more than +9%!! It confirmed its June quarter forecast, while delaying the

actual report.

In Asia and Europe, the central banks are maneuvering funds to help to get their banking systems back to normal.  In Japan, according to Reuters, Bank of Japan (BOJ) actually had to "drained money from the country’s banking system as surplus funds drove down the call rate."   The European Central Bank injected another $65.29 billion in overnight funds on Monday.  The Asian markets are basically flat, fluctuating up-and-down in tight ranges, on Tuesday morning.

Good night and HappyTrading! ™

 





Monday Morning

Believe it or not, last week, after all the craziness, the broader market came out ahead!  The Dow closed up +56.73 points, at 13239.54, for the week; SPX was up +20.58 for the week, closing at 1453.64; Nasdaq added +33.64 for the week to close at 2544.89. Here’s a quick snapshot of the actions last Friday:
indices_8_10_07.jpg
SPX actually closed green on Friday! Wow! =) SOX kept above 500, pretty good! OIH made a bounce. GLD (gold) and UNG (natural gas) both made some solid advances.

Over in Asia, the central banks are taking further steps to inject more money into the banking system.  Asian markets are slightly up in the morning session, with Hong Kong and Japan being from flat to slightly green, but China is gaining +1.7%!

This week, we’ll be watching our market closely to see if it can confirm a double-bottom.  On Friday, our major indices tested their support ranges and bounced back.  We’ll have to see if they can make some higher highs and higher lows from here.

SPX
spx_8_10_07.jpg
SPX tested the recent bottom on Friday and bounced back. It is still within its support range of 1440-1460. Let’s see if SPX can make some higher highs and higher lows from here, and thus, confirms the double-bottom.

Nasdaq
nasdaq_8_10_07.jpg
Nasdaq shows a very similar pattern. We’ll also need to see it go higher from here to confirm the double-bottom.

Over on Wang’s World this weekend, I also discussed some interesting sectors to watch:

OIH
oih_8_10_07_weekly.jpg
This sector got quite a few upgrades last week. It has fallen quite a bit with the broader market (from 190 to 170). But, its weekly chart still shows good strength. It is sitting on its 20-week MA, and the weekly MAs are still in their bullish formation. This sector could go up from here if the market confirms the double-bottom.

SOX
sox_8_10_07_weekly.jpg
SOX held up really well last week, as it kept above 500. Its weekly chart is very strong with the weekly MAs still rising nicely. Semiconductors have a lot of room to go up and I believe they are just getting started on their long-term uptrend.

XLF
xlf_8_10_07_weekly.jpg
XLF has been weak and is still on its weekly lower BB. One good sign is that it managed to close this week green and stayed above…
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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 ...



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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 readtheticker.com 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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Biotech

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

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

 

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

A map of DNA with the double helix colored blue, the landmarks in green, and the start points for copying the molecule in red. David Gilbert/Kyle Klein, CC BY-ND

Courtesy of David M. Gilbert, Florida State University

...



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ValueWalk

More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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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 >>