Archive for 2007

Weekly Wrap-Up

What a crazy week that was!

I thought the 300-point run ahead of the Fed the week before was way overdone so I could not have been much more on the wrong side of Tuesday's rally if Uncle Ben had dropped his $200Bn cash bomb right on my head.  That's right, lowering the Fed Funds Rate against $40Tn of outstanding debt in this country by 1/2 a point works out to a neat off-budget government giveaway of $200Bn

Of course, you won't get that money.  The 2, 5 and 10-year notes went UP significantly as global investors bailed on a US dollar that seems to be backed by a printing press but the declining dollar was a boon for stocks and commodities as they were able to command more of our worthless currency per whatever.

On Wednesday I got very introspective, trying to see where I went wrong but by Friday I had decided I really don't think I'm wrong, just ahead of my time but we have vowed to go with the flow and we will see how the week opens before diving in.  It was quite a scramble to swtich gears from an overly bearish stance based on my assumption that the Fed would not be crazy enough to lower rates in order to fund record-high fuel prices.  Well, the Fed did and oil did as well.

Can we blame record high oil prices on Bernanke or on the dumping of over 370M barrels of crude that were scheduled for delivery on the NYMEX?  Perhaps a little of both but we managed to keep 47Mb on order, far better than last month's 28Mb so it will be interesting to see what kind of surprising inventory builds November may have in store for us (oil can be delivered to Cushing anytime during the month).

Trade-Weighted U.S. Dollar IndexBarry Rhitholtz still wins my quote of the week award with his great comment that "the Fed has become Wall Street's Bitch" and isn't that what capitalism is all about?   It seems we have indeed sold our country down the river in order to get "just one more fix" of low rates before the reality police show up and shut this party down

I often say we are partying like it's 1999 but let's keep in mind that 1999 was a…
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Friday Virtual Portfolio Moves

Posted September 21, 2007 at 9:36 am | Permalink (Edit)

Sorry that got posted late, I’m still watching GS to show me where the market is going.

Posted September 21, 2007 at 9:50 am | Permalink (Edit)

PCLN got a MS upgrade, lots of upgrades today all part of a mega-pump in the markets. Lot’s of selling into this rally so far, it’s going to be a very tough day for both sides I think.

Posted September 21, 2007 at 9:57 am | Permalink (Edit)

PKX – $7.70 for the Oct $190s sold against the Nov $190s is a great spread. XXX

Posted September 21, 2007 at 10:08 am | Permalink (Edit)

VIX is falling off a cliff, crushing option values. Really crazy action!

FSLR – I’m selling the Oct $105s at $8.55 agains my Dec $105s at $14.40. XXX

Posted September 21, 2007 at 10:13 am | Permalink (Edit)

Markets not weak, sellers giving up agian I think.

Posted September 21, 2007 at 10:25 am | Permalink (Edit)

NILE – could be a good top call, what a run!

Seeing some profit taking now.

Posted September 21, 2007 at 10:26 am | Permalink (Edit)

HAL – I’m out, BHI too, not trusting the weekend on the upside, tight stops on all uncovered calls. XXX

Posted September 21, 2007 at 10:36 am | Permalink (Edit)

RMBS – it was a rumor play and that’s all it’s good for, we had the Oct $17.50s for $1.30 but I don’t think I would have bought them without being able to 3/4 spread the current $17.50s for protection so perhaps that spread with Nov/Oct as it covers most of your premium while you hope they actually do get bought.

Posted September 21, 2007 at 10:45 am | Permalink (Edit)

SNDK – I’m happy with my LTP position on them.

DD on IRBT Dec $20 at $1.25…
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TGIF!

What a terrible rally week this was for me!

It's a funny thing, while I am very proud not to lose money in a big downturn, I do tend to feel really silly when I don't make money in a spike – human nature I guess but it's the same strategy and it works very well on those rare seemingly rare occasions where we do neither.

One of our members congratulated me for the gains on the positions we took off the table but I pointed out that those were the winners, there are some very large unrealized losses on the put side that, for the most part, balance them out quite nicely.  This was our worst option period in the LTP all year and the STP was saved by DIA calls I didn't believe in and gold plays that made massive gains – on the whole I'm not proud of the performance this week.

In last night's post I gave the last of my bearish statements (yeah, right!) as I resolve to start next week in full rally mode as we get ready to retest 14,000, just another 1% decline in the dollar away!

I still want to see what really happens next week but starting Monday, we'll have to play the momentum but turning a virtual portfolio around is a painful thing.  Today is quadruple witching for options and futures plus the end of quarter for funds so there may be a "window" dressing component to this as funds pull out all the stops in order to get a good print for the quarterly report.

Once we get past a retest of 14,000, there is nothing stopping the dollar from slipping to 75, a 5% drop from here, which means we can see Dow 14,500 before the general rally turns back to a stock picker's market.  14,500 would mean oil at $86, but at that point we'll be conditioned to be happy it isn't $90 and our refining cartel is doing their best to keep gas prices low so the people don't complain while oil prices go through the roof.

Happy Trading sees the S&P and the Nasdaq holding up nicely but we still need to crack the critical 1,530 and 2,675 marks

 

We're keeping an eye on the QQQQs
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Thursday Wrap-Up – Bye Bye Dollar

That was no thump.

That was a pretty minor pullback and, like I said this morning, "if we hold 13,700 for the week there is nothing to do but be bullish as the chartits will rule the day."

I'm just going to go on record saying I think it is total nonsense, I feel we are following a massively irresponsible policy that is sweeping a billowing financial catastrophe under the rug but – what can you do?  If everyone is going to buy into this BS there is a lot of money to be made, until there isn't and I will be starting our new virtual portfolios next week with that attitude. 

We will continue to hedge to the downside as I certainly smell smoke, gold is rising out of control and the dollar is falling so fast we are pushing towards a massive inflation event in the US but, as I often say, stocks are themselves a commodity and are simply rising along with gold and oil as our ever declining dollars simply don't buy as many shares of companies as they used to.

David Fry postulates that there will be intervention by the Foreign Central Banks to prop up the dollar but I'm not so sure they are ready to bail us out, they all seem to be having problems of their own

Notice there was some stepping in to support the dollar at 84 and 82.50 and 81.5 and 80 but we just flew past 79 without looking back and gold is continuing to fly as we hit the magic decline number (10% for the year) that will cause the World's rich to call their brokers and move out of US dollars.

No one knows how many dollars are out there.  In March of '06, in preparation for the regime change to Paulson/Bernanke, the Fed stopped measuring the M3 money supply, the only reliable measure we had to see how many dollars there were in the world.  At the time I postulated that they were doing this in order to begin running the printing presses at full speed so we could inflate our way out of a deficit

Image:Components of the United States money supply.svg

How many more dollars has the Fed thrown onto the fire since last year.  From they above graph $1T would not be
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Long Term Virtual Portfolio Review

 

I hope this is helpful,  I can actually put these together in a timely fashion:

 

Description

Qty

 

 

 

 

 

 

Basis

Current

Sale Target

         
Jan 2009 95 CALL [BA @ $101.25 $1.23] 20 $14.60 $17.60 I have faith
Jan 2008 17.5 CALL [BSX @ $13.70 $0.02] 20 $1.00 $0.30 Backstop to spreads
Jan 2009 43 CALL [GDX @ $45.82 $1.79] 5 $3.30 $9.20 Too much $$ must sell
Jan 2009 65 CALL [JNJ @ $64.79 $0.30] 10


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Thursday Virtual Portfolio Moves

Posted September 20, 2007 at 9:31 am | Permalink (Edit)

All gold plays are good, I rolled mine yesterday as they were up too far, the same contracts I took off the table in last nights post at the next just out of the money strike are best. GDX is my current favorite as we don’t know if any individual miner may miss on costs.

GS, I would expect a muted reaction until tomorrow as they try to get rid of callers like you but how can they not go back to their highs on those earnings?

Posted September 20, 2007 at 9:35 am | Permalink (Edit)

CKR – I’d leave them alone on the short side. We didn’t expect a great report and lots of the internals look like they could perk up.

Ouch, dollar off .67 at the open. That’s real bad for the markets to dip while the dollar does.

Posted September 20, 2007 at 9:43 am | Permalink (Edit)

Since most of my callers are in the money and I am certain I will be around to do it tomorrow, I am going to hold off on rolling them. At the moment, if we are flatlining through tomorrow, I will try to roll my guys up one bracket. If we turn down, I will roll to the same strike price, keeping more insurance in exchange for less premium. If the market skyrocket, I will be tragically wrong!

Posted September 20, 2007 at 10:03 am | Permalink (Edit)

BIDU continues the insanity.

MT at ATH. NUE Oct $60s are $2.62 and you can sell the current $60s, now .60 if it has trouble breaking over. XXX

Posted September 20, 2007 at 10:03 am | Permalink (Edit)

BIDU continues the insanity.

MT at ATH. NUE Oct $60s are $2.62 and you can sell the current $60s, now .60 if it has trouble breaking over. XXX

Posted September 20, 2007 at 10:05 am | Permalink (Edit)

Buy program kicking in – big one!

Posted September 20, 2007 at 10:08


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Thursday Morning

I was tempted to title this article Thursday Thump but I am trying to stay positive.

Perhaps I will change my mind after GS and FDX report but, just so you know, at 7:30 am, I'm not that sure which way we will go.  I still want to be positive, really I do – especailly as we are starting 3 new virtual portfolios next week so I'll be hoping we hold on here and manage to rally on the global story, rather than fall on the local one…

I'm not the only one who was concerned by our "weak" 76-point gain yesterday.  The Nikkei got off to a good start but dove over 100 points mid-day and was rescued from negative territory by a late afternoon rally that left it up just 32 points.  The Hang Seng took a rest and only gained 146 points today.  Another "Duh" stock has IPO'd in China (Chinese stocks whose name alone means you should throw money at them) as the Bank of Beijing closed up 81% for the day.

Hong Kong Banks (through which flows half the world's money) cut rates by only a quarter of a point, not quite matching the Fed's half-point cut.  That puts their lending rate at 7.5%, sitll quite a bit higher than US rates (and their economy is thriving, imagine that!).  The Hong Kong Monetary Authority, Hong Kong's de facto central bank, said yesterday it would match the Fed's move by cutting its base rate by a half percentage point, to 6.25% from 6.75%. Hong Kong typically follows Fed monetary policy because the Hong Kong dollar is pegged to the U.S. dollar. But commercial banks in the city don't always follow the monetary authority's rate moves.

Over in Europe the markets are of a bit over half a point in early trading.  The Euro hit $1.40 against the dollar, its highest level ever and gold is flying on the International exchanges, up about $7 in overnight trading.  Publicly traded hedge fund, Absolute Capital froze redemptions and announced that 25% of its assets are "tied up in illiquid assets."

Ah, here's Goldman's earnings!  Significant losses in loans were offset by short positions on mortgages – Yay!  These guys are geniuses; it's almost as though they know what the government
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Wednesday Wrap-Up

The Fed has become "Wall Street's Bitch." - Barry Ritholtz

Now that's funny (and, sadly, true).

"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it". -- Congressman Louis T. McFadden in 1932 (Rep. Pa)

"The [Federal Reserve Act] as it stands seems to me to open the way to a vast inflation of the currency… I do not like to think that any law can be passed that will make it possible to submerge the gold standard in a flood of irredeemable paper currency." -- Henry Cabot Lodge Sr., 1913

 "A great industrial nation is controlled by it's system of credit. Our system of credit is concentrated in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the world--no longer a government of free opinion, no longer a government by conviction and vote of the majority, but a government by the opinion and duress of small groups of dominant men." -- Woodrow Wilson

"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs." — Thomas Jefferson

There was another drawdown in crude today, 3.2M barrels, that makes 15M barrels this month and the country is now has 48M barrels less oil (out of 1.71Bn) than it had last August.  That is to be expected because all but 28M barrels of the 420M barrels that were originally contracted for delivery to Cushing, OK on the September crude contract were cancelled before the contracts settled in August.  Cushing can usually handle about 40Mb of crude per month and this is the 3rd consecutive month it has been underutilized.

So stocks went up, oil prices went up, gold
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Wednesday Virtual Portfolio Moves

Posted September 19, 2007 at 9:37 am | Permalink (Edit)

I have to call this a watching day for me. Let’s see if we get our breakouts before we start buying everything. Oil report will be a market mover I think (radio show on www.mn1.com at 10:25).

Posted September 19, 2007 at 10:12 am | Permalink (Edit)

OIH puts – yes but I’m scared to read anything into it, maybe just someone covering their gains or maybe oil is setting up for a disappointment. That will knock the markets down fast if it happens.

We’re out on all levels, hard to imagine how it could turn with CPI and Builder data out of the way. Nat gas is still missing the party…

Posted September 19, 2007 at 10:16 am | Permalink (Edit)

XLE – I’m trying to roll my caller to the 9/30 $73s for a .30 credit, hoping time will heal that wound, then I will roll my guy back to the Oct $74s for $1, net .70 out of pocket but I pick up a lot of time and some premium and I’m down a buck on the position anyway as it stands. With luck, a buck gets knocked off my caller this week or next and either way I’ll probably roll back and sell again but right now December is too expensive.

Posted September 19, 2007 at 11:07 am | Permalink (Edit)

Rolling DIA puts to Oct $140s at $3.20 already sold 1/2 Sept $140s against half, now 2 as a mo play.

Posted September 19, 2007 at 11:21 am | Permalink (Edit)

GOOG – going to roll back to Dec on my spread ahead of earnings, too in the money now anyway… Rolling my deep in the money caller to the $540s and then I will roll those to October if I have to. Market really going nuts though.

RMBS – have to leave the insurance on for now, very unlikely a deal is announced by Friday so downside more likely than up.

Posted September 19, 2007 at 11:31 am


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Which Way Wednesday?

Let's see if I learned anything…

We had a hell of a day yesterday and I watched it happen with a dumbfounded look on my face as I never imagined this country was willing to go even further in debt to support the massive commodity bubble that is impoverishing more than half the nation – silly me!

Over in Asia the Hang Seng jumped 977 points and the Nikkei soared 579 points as part of the global celebration of the rate cut.  The BOJ voted to keep their rates steady as well, despite the recent turmoil that has led to the resignation of the Prime Minister over there

India's BSE jumped 4%, up 653 for the day to lead the rest of Asia.  "The Fed's move on interest rates will improve buying interest, with all of Asia-Pacific expected to perform well this week," said Grant Williamson, an adviser at Hamilton Hindin Greene in New Zealand. Asian investors had been worried that the credit crisis sparked by the collapse of U.S. subprime mortgage lending might drag on growth in the U.S. economy, on which Asian exports are heavily dependent.   "Certainly these markets are not out of the woods yet," said Mr. Williamson. "What we have seen is a very short-term solution and we will have to see if the U.S. economy improves."

A VERY short-term solution is what I said it would be yesterday as well but today let's just see if we can make money during that short-term… 

Europe was also thrilled with Bernanke's gift to the markets but not so much the foreign securities investors.  The monthly Treasury International Capital Report (TIC) showed net foreign buying of long-term U.S. securities fell to $19.2 billion from $97.3 billion in June (down 80%).  Well, at least it can't get worse!  Private foreign investors sold a net $2.5 billion in Treasury notes and bonds in July, after making net purchases of $20.1 billion the previous month. Meanwhile, foreign official institutions such as central banks sold a net $6.9 billion of these Treasurys, compared with net purchases of $6.4 billion the previous month.

The U.S. has to borrow more than $2 billion a day to cover its trade deficit. A serious pullback by foreign investors could drive the dollar down and
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Zero Hedge

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

Courtesy of ZeroHedge. View original post here.

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

Several doctors from Hopkins an...



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Phil's Favorites

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

Courtesy of Zero Hedge

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

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

As Nomura&...



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ValueWalk

The Competition For Capital Has Made Stocks Cheap

By Michelle Jones. Originally published at ValueWalk.

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

StockSnap / PixabayVolatility carries into the new year

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



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Kimble Charting Solutions

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

Courtesy of Chris Kimble.

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

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

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

If you find long-term perspectives helpf...



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Digital Currencies

Transparency and privacy: Empowering people through blockchain

 

Transparency and privacy: Empowering people through blockchain

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

Courtesy of Ajay Kumar Shrestha, University of Saskatchewan

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

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



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Insider Scoop

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

Courtesy of Benzinga.

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

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Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

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

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

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



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Members' Corner

Why Trump Can't Learn

 

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

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

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

 

Opening Pandora's Box: Gene editing and its consequences

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

Courtesy of John Bergeron, McGill University

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

...

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Mapping The Market

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

By Jean-Luc

Maybe we should simply try him for treason right now:

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

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

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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

 

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

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

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

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



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

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

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

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

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

Some other great content in this free eBook includes:

 

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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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