Archive for 2007

Weekend Reading – Unfinished

What would Warren Do?

I'm a big Buffettt fan and I'm always interseted in his virtual portfolio moves.  Lon Juricic from StreetInsider notes that the latest 13F reveals the following changes between 9/30 and 12/31:

New Positions:

  • Ingersoll-Rd (NYSE: IR) new 636,600
  • Unitedhealth Group, Inc. (NYSE: UNH) new 1,021,400
  • US Bancorp (NYSE: USB) new 23,307,300 (stake disclosed yesterday in delayed filing but firm held 6.1M shares at 03/31/06, 22.1M shares at 06/30/06 and 23.3M shares at 08/30/06)

Raised Positions:

  • USG Corporation (NYSE: USG) from 16,700,992 to 17,072,192
  • Wells Fargo (NYSE: WFC) from 190,641,600 to 204,022,100

Why does this give me the feeling that Warren does what I do, we have so much reading to do that we end up sorting things alphabetically and then we end up bunching up picks that are near each other

Reduced Positions:

  • Ameriprise Financial Inc. (NYSE: AMP) from 19.26 million shares to 8.27 million shares
  • H & R Block (NYSE: HRB) from 10,971,000 to 4,113,400

    • Watch out – we have this one, although that explains the weakness.
  • Comcast Corp (Nasdaq: CMCSA) from 11,110,200 to 8,000,000
  • OSI Restaurant Partners, Inc. (NYSE: OSI) from 1,818,800 to 0 (buyout)
  • Pier 1 Imports (NYSE: PIR) from 3,290,000 to 1,483,400
  • Sealed Air Corporation (NYSE: SEE) from 677,700 to 0
  • Target Corp (NYSE: TGT) 745,700 to 0

=====================================================================

But let's forget about Berkshire, Buffett is old news and the biggest name on the investment scene for the rest of this decade is my new man Lou Jiwei! 

[L J]"Who?" you may ask – and you'd be close because he has a cousin named Hoo but Lou Jiwei is the man slated to become the Deputy Secretary-General of the State Council (China's cabinet) and the former Vice-Minister of Finance will be put in charge of investing China's $1.07T in cash.

Did I say $1.07 Trillion?  That's $1,007,000,000,000.  For perspective, do you remember 30 seconds ago when you were oohing and ahing (you…
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Educational Update

Be careful to leave your sons well
instructed rather than rich,
for the hopes of the instructed are better
than the wealth of the ignorant
.
Epictetus

I’m very pleased with our education program so far but I wish you guys would leave more comments on the book site as we would really value your feedback!

This is just a quick update on the status of our first two plays:

On February 5th, we used BOBJ as the example of a long-call option.  The stock was at $38.70 and the contract for the March $40s was $1.65.  As we had $4,000 to invest and a goal of making or losing 10%, we suggested that, while you could purchase 4 March $40 contracts for $660, it would be wiser to do a calendar spread of 4 April $40s for $860 and sell 4 February $40s for $400.

Let’s compare the results:

Had you purchased the stock itself, you would have committed, let’s say $3,870 for 100 shares.  The stock is now at $39.48 so you would have gained $78On 2/12 the stock bottomed out at $38 so you would have gone down as much as $70 while you held it.

The 4 March $40 contracts are now worth just $520, a loss of $60 so far but those contracts traded as low as .70, a loss of $380, just about our limit!  Of course my members know I would have been doing a ‘mon back at .70 but trade management is the subject of another post!

Our recommended April $40s, on the other hand, closed trading on Friday at $2.05, $820 on our 4 contracts while the February $40s we sold expired worthless so we have a net profit of $360 on our $460 (net) investment in just 2 weeks!  The lowest level the April contracts fell to was $1.20 on the 13th and, even then, our loss on the spread was only $260, not as bad as the naked March calls.

This was the play we went with on the members site and, now that we’ve made a 74% profit, we need to set a stop at $1.75 to preserve a 50% gain or you can take half off the table, recouping $410 of the $460 that was laid out and setting
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Weekly Wrap-Up

 

Up, up and away – it's Super Market!

It's buget proof, oil proof, terror (threat) proof and pullback proof 4 days in a row!

This is truly a Market of Steel (and the recent movement of X underscores that) and looking at the movement of the past week we really do have to believe it can fly…

We had super performance in our open positions as they improved from 70 positions with a 16% average gain last week to 77 positions with a 33% average gain this week (25 average days held).  That's a great improvement and adding length to some of our positions and sticking with them (despite some bearish concerns) really paid off.

We closed out 23 positions for a 52% average gain (28 avg. days), which is pretty good considering we had to close out 5 dead positions:

  • IBN Mar $50s seemed like a good idea on 1/22 and they were, for the guy who sold them to me!  I still think this one will break out but India tightened up lending requirements the week after we bought these and they were just too painful to hold.
  • MO $90s (2/1) were a MOmentum play that ended up not having enough, although we did take the first half of this trade off for a nice profit, the remainder got wiped out and ruined the gain.
  • RTP $190 puts (1/18) just went the wrong way and kept going.  It's going down but we need to wait for a real sign as we were way too far ahead on this entry.
  • XOM $72.50 puts (1/19) were also not worth revisiting as we have plenty of Mar $75 puts that are well in the money already.
  • GOOG $530s (2/1) were the remainder of a successful play from last week but we shouldn't have let this ride as far down as we didThis market is still too choppy to leave good profits on the table!

We were saved by our doubles:

  • BTU Mar $40s (2/12) were the top of a spread and we took them off the table at $2 (up 100%) as that gives us a free ride on the downside.
  • GOOG Feb $470s


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Friday Virtual Portfolio Moves

Posted February 16, 2007 at 9:36 am | Permalink (Edit)

GOOG called an “attractive risk/reward” by C on expiration Day!

  • Bought way too many GOOG $470s for .20, selling 1/2 at .40 and crossing my fingers!
    • Out even if I can if it doesn’t move up by 11
Posted February 16, 2007 at 1:10 pm | Permalink (Edit)
  • COF – took a chance and took out caller for $2, waiting on selling march.
  • Taking pinning chance with FD, bought out $40 caller for $4.10
  • SHLD selling Mar $185s for $8 (now $7.20, no less than $7) against leaps
  • SNDK – took out $40 callers for .65

I guess I’m bullish because, other than leaving my DIA puts – I’m not into covering much

Posted February 16, 2007 at 1:12 pm | Permalink (Edit)

That’s it for GOOG – raising stops to .50, will waste a nickel on $480s if it starts running but not on greed by wishing it to break $470 while my premium expires.

Posted February 16, 2007 at 1:58 pm | Permalink (Edit)
  • Out of BTU Mar $40s for $2
  • Moved CHKP Apr $20 puts to Apr $22.50 puts for .05 addl (plus commis!)
  • DELL May $27.50s moved to May $25s for .80, selling Mar $25s for .70
  • GME DD on Mar $55s for $1.10

GOOG just did another huge stop flush (and there weren’t any) – MIGHT be setting up for another move.

Posted February 16, 2007 at 2:44 pm | Permalink (Edit)
  • DD on TDW Mar $50 puts at .55
  • VLO Mar $55 puts too tempting at $1.05
  • Same with Mar XOM $75 puts for $1.20 Happy to DD and roll to April – I’ll be right one day! (if not my Apr $80s will be in the money…)
  • Taking half the YRCW Apr $45s for $2.80

 





Fickle Friday Morning

We have to give the markets a pass today.

It’s option expiration day and any movement you see today needs to be taken with a rather large grain of salt. 

 

The Fed came out with a bold statement – that low unemployment may not necessarily lead to higher inflation.  This is part of the new global paradigm we’ve been discussing for the past 2 years (see all previous columns!).  As I’ve often said about outsourcing, we don’t just outsource the low-paying jobs, we outsource the pollution, the inadequate housing, the health, welfare, education and retirement burdens that come with employing 50M minimum wage workers who couldn’t be found in this country even if you wanted them.

Speaking of the globe – is it just me or is money getting cheaper? Here’s a 30 year chart of the 30 year note, you tell me why HB’s making a comeback.

Maybe the global markets have gotten so efficient that money can be profitably marketed for just 4% interest.  If we think of money as a product and think of Central Banks, the IMF and, of course computers as devices we use to increase manufacturing and distribution efficiency, it’s not so hard to see that maybe the cost of money has simply declined over the years.  Citibank certainly seems to be able to squeeze out a living in this environment…

China raised the deposit rates for lenders for the 5th time in 8 months, still trying to keep a 10% cap on their growth rate.  Starting 2/25, commercial banks must keep 10% of their deposits on reserve with the People’s Bank of China, compared with 9.5% previously.  "There is relatively large pressure to expand lending, and a further increase in the reserve requirement ratio was needed in response to changes in the liquidity situation," the central bank said in explaining the move.

Japan’s GDP grew at 4.8% in Q4 and they are complaining that their consumers are asleep at the wheel!  What will happen when they wake up and start shopping?  What if American consumers start saving like the Japanese do?  LOL – well of course that’s not going…
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Thursday Wrap-Up

What a nice day that was!

[ecocharts-indpro.gif]

Nothing matters when you look down at all these little earthbound problems from the height of Dow 12,800, they are all just little ants on the ground on a planet so far away that you can't even feel the pull of its gravity anymore

Onward and upward is our goal and we are heading straight for the moon, just a little bit higher and we escape the last vestiges of our old levels, tethered only by the SOX who hold us down with the longest cord.  The SOX were stretched all the way to 560 last February and snapped back to 385 in July, dragging the whole market down with them, until we cut that cord, we will have a hard time being sure we have truly broken free.

Nothing to complain about in the markets but I took some DIA Mar $127 puts just in case:


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Thursday Virtual Portfolio Moves

Posted February 15, 2007 at 9:45 am | Permalink (Edit)
  • Sold 1/2 BHI at $3.20 as it was DD’d twice! $2.70 stop on rest with a .50 trail
  • CTX – trying to pin $52.50 going to take the Mar $50 puts for .80
Posted February 15, 2007 at 9:46 am | Permalink (Edit)
  • Dumped rest of BHI at $3
    • didn’t want to risk the .30 ahead of gas report
Posted February 15, 2007 at 10:34 am | Permalink (Edit)
  • In on ECA Mar $50 puts for $2
Posted February 15, 2007 at 11:08 am | Permalink (Edit)
  • BA, will buy back $90s for .25 or less
  • CAT rolling $60 caller for $7.50 to Mar $67.50 caller for $1.55
Posted February 15, 2007 at 11:50 am | Permalink (Edit)
  • FXI - if market closes up again I must take out my caller
  • Took out HET $85 putter for .05, not worth the risk. Setting a stop at $2 on leaps
  • LEN – rolling Aug $45 puts for $1.40 to May $50 puts for $1.70
  • TIE sold Mar $35s for $1.80
Posted February 15, 2007 at 12:16 pm | Permalink (Edit)
  • SHLD .75 trailing stop on March $180 calls I’m selling (now $9.80)
  • Picking up DIA Mar $127 puts at $1.25 as protective puts with a .15 stop
Posted February 15, 2007 at 12:36 pm | Permalink (Edit)
  • SHLD – buying the June $190s for $11.50 and selling the Mar $185s for $6.70
Posted February 15, 2007 at 1:11 pm | Permalink (Edit)
  • SU spread – Buy Jan ‘08 $75 puts for $7.6
    • Sell Jun $75 puts for no less than $4.75 but hopefully sell the Mar $75 puts for $5 on a dip.




Follow Through Thursday? – In Progress

It's not a rally if we don't keep going.

I'm sorry, and I know my readership goes down when I'm bearish (as discussed back in November when I revealed the dirty little financial writing secret) but that's why you are lucky to be reading a member supported, rather than ad supported, site – I can afford to tell you the truth (or at least my version of it, which is all anyone can really tell you).

So if you are looking for a rah-rah, go markets commentary this morning you'd better leave now because we're just not there yet…

I was, as I'm sure you were too, rereading the Fed's last report (July 19th) to see what has really changed and I noticed that, while jobs are up and inflation is down (good things), the outlook on the GDP has dropped from: "3 percent to 3-1/4 percent in 2007." to "2-1/2 to 3% in 2007."  That's a $140Bn difference on the low end!

The Fed projects unemployment even lower than they did in June and places the slowdown squarely on the shoulders of (and I know you can guess this one) homebuilders!  "This difference partly reflects an expectation of somewhat greater weakness in residential construction during the first part of this year than we anticipated last summer."

I wrote back in October about how there is nothing inherently bad about a deflating housing bubble with respect to equities but it's always a neat trick to get that balance just right – effectively it's like playing roulette and, given the choice to put our money on a 50/50 bet of red or black, we say "no thanks, I like that green number."

So today and tomorrow we face a real market test.  If we do not move UP from here then we can only conclude that we have not really broken orbit yet and will be taking another rangebound pass at market neutrality.  If this is a REAL rally, then the Fed, global shenanigans, housing, options scandals etc.. . JUST WONT'T MATTER! 

US futures are looking flat (7:30) but except for discovering the best finance website of 2018 we have more bad news on the home loan default front with the WSJ ripping off my "hot potato" analagy and
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Wednesday Wrap-Up

Wheee!  What a day!

Thanks to our man Ben (see below) we got just what we needed to get this party started – now let’s see if we can follow through tomorrow and Friday, another 100 points should do it.

We had pretty much a perfect day for my levels, first time in a long time:

Disney's Tinkerbell Bev Napkin 16 pc - click to enlarge

Oil did it’s thing today, giving up another dollar even though the actual dollar gave up half a point as soon as Ben said he wasn’t worried about inflation.  A .61% drop in the dollar saved oil from the embarrassment of closing below $58 but not for long as only the front-month March contract fell $1.06.  Other contract drops were worse and worse down the line: April $58.57 (down $1.28), May $59.25 (down $1.36), June $59.82 (down $1.40)….

More barrels were traded in our 4 closest months today (498M) than yesterday (487M) as traders continue to play hot potato with the remaining 140M barrels still on scheduled for March at $58 (down 32M).  April shot up to 307M (up 25M), May jumped to 103M (up 11M) and June held firm at 102M.  The only person making money in all this frenzied trading is NMX!

There are now 650M barrels of oil contracted for delivery between now and June 30th at less than $60.  The entire US imports 11M barrels a day so that’s 1/2 of our total import consumption already guaranteed below $60 through Memorial Day plus one month!  That is just 50M barrels less than the entire Strategic Petroleum Reserve!

  • Add to that the 330M barrels we have in private storage
  • Add to that the 230M barrels of gasoline in storage (not counting gas


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Big Ben’s Stock Market Valentine!

As expected Chair Man (of the Fed) came through today and gave the market just the shove we needed to hit some new highs!

He stuck to our prepared speech, which I posted right here last nightHere’s what I said yesterday:

"Uncle Ben knows what to say:  The economy is strong and will remain strong because of a new global paradigm and we must embrace the free markets to keep the flow of capital around the world.  There is no reason to loosen policy because rates are still historically low and the excess liquidity has formed a commodity bubble that is already losing steam and may achieve a soft landing of its own."

Here’s what Ben said today :

"As we anticipated in our July report, the U.S. economy appears to be making a transition from the rapid rate of expansion experienced over the preceding several years to a more sustainable average pace of growth. The principal source of the ongoing moderation has been a substantial cooling in the housing market, which has led to a marked slowdown in the pace of residential construction. However, the weakness in housing market activity and the slower appreciation of house prices do not seem to have spilled over to any significant extent to other sectors of the economy. Consumer spending has continued to expand at a solid rate, and the demand for labor has remained strong. On average, about 165,000 jobs per month have been added to nonfarm payrolls over the past six months, and the unemployment rate, at 4.6% in January, remains low."

(The economy is strong and will remain strong)

"Outside the United States, economic activity in our major trading partners has continued to grow briskly. The strength of demand abroad helped spur a robust expansion in U.S. real exports, which grew about 9% last year. The pattern of real U.S imports was somewhat uneven, partly because of fluctuations in oil imports over the course of the year. On balance, import growth slowed in 2006, to 3%. Economic growth abroad should support further steady growth in U.S. exports this year."

(because of a new global paradigm)

"In the five policy meetings since the July report, the Federal Open Market Committee (FOMC) has maintained the federal funds rate at 5-1/4%. So far, the incoming data have supported the view that the current stance of policy is likely to
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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 ...

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

Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

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

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

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



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Members' Corner

Why Trump Can't Learn

 

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

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

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

 

Opening Pandora's Box: Gene editing and its consequences

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

Courtesy of John Bergeron, McGill University

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

...

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Mapping The Market

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

By Jean-Luc

Maybe we should simply try him for treason right now:

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

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

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

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



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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

 

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

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

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

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



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

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

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

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

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

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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