Archive for 2007

Tuesday Tear-Down

Wheee – that was fun!

The Dow sold off early, went down 100 points to 13,320 by 11, then back to 13,450 at 2 when (surprise, surprise) the Budget Report came out and told us that we are a silly, immature country run by ineffective leaders who never met a spending bill they didn’t like.

May deficit spending came in at $67.7Bn (and this does not count the $102Bn Iraq "emergency spending"), up 58% from last year and that news came on top of a 10-year note auction that drew scant interest from foreign buyers.  Perhaps it is because, of the $232Bn the government spent last month, over $50Bn of it was on debt interest payments.  Another problem was that receipts were down 15% from the prior year as the vast wealth being amassed by corporations and high net-worth individuals continues NOT to trickle down on other parts of the economy (but SKS had a 37.5% increase in same store sales so perhaps they got something nice for the maid!).

Hopefully they got her a big bag because 90% more people are being forced to live out of one than last year as home foreclosures rise to one out of every 656 households in the month of May.  If this trend continues, in one year we will have one out of 54 homes in foreclosure for the year.  This trend may in fact ACCELERATE as interest rates shot up to 5-year highs today.

Once an area starts down the road to mass foreclosures, it’s likely to spread as momentum picks up. "Foreclosures are contagious to the rest of the community, It’s very hard for a market to scrub volatility out and become stable again," said Steve Schroeder, CoreLogic’s chief executive.  Foreclosure’s impact falls on every member of a community, not just the owners who lose their homes. When properties sit vacant and unsold, entire neighborhoods suffer as property values decline.

We did our  best to halt the decline of our virtual portfolio values today as it was a great day for swing trading, with the Dow up or down over 50 points every hour except lunch!

  • 9:48 – "10-year 5.2%, 30-year 5.31% They have got to be kidding trying to rally back on this!"
  • 9:54 – Took MU $12s for .10, sold later for .25 (up 150%).  Suggested shorting MS (dropped $2.30 EOD).
  • 10:18 – PBR $110 puts


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Tuesday Virtual Portfolio Moves

Posted June 12, 2007 at 9:35 am | Permalink (Edit)

Watch out for: NYSE 9,800. Nasdaq 2,550, S&P 1,500, Dow 13,350

Tight stops on Junes, including calls we sold as these are very nice gains that should be protected, we can always sell July if it turns again…

GOOG got a nice snap back already SLB tells me to dump my OIH puts. XXX

Posted June 12, 2007 at 9:48 am | Permalink (Edit)

10-year 5.2%, 30-year 5.31% They have got to be kidding trying to rally back on this!

DNDN dropped below $8

GM getting close to that magic $32.50 mark where they start to make a great short.

Posted June 12, 2007 at 9:54 am | Permalink (Edit)

MU crashing on that news??? I suppose I would keep the $12 lined up as a mo play at .10 just for fun if it comes back. XXX

JOSB – too much time to worry about it (this was a .80 credit spread and he’s got $2 in premium).

MS at an ATH, might be shortable. Poor HOV at 52 week low again. VNO going throught the floor along with BXP indicating the rest of the market is insane so be really, really careful!

Posted June 12, 2007 at 10:11 am | Permalink (Edit)

Holy Cow – Jackpot on X puts!

IGW – they opened way higher, can’t catch them all… The SOX puts were gettable at $5.50 at the open, now $6.25 – a nice, quick 15%, which is all you should be looking for on these plays.

Posted June 12, 2007 at 10:18 am | Permalink (Edit)

LEAPs – as long as volatility remains high we are in good shape but it’s all about position with leaps – as long as you can sell, you have no trouble.

Sold my OIH too soon! I have my eye on PBR $110 puts at .55 (craps roll) XXX

CNBC basically saying Builders conference is downright depressing.

NMX went crazy too – $125 puts for .48 (craps roll) XXX

Posted June 12, 2007 at 10:30 am |


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Telling Tuesday Morning

We get the Budget report at 2pm today and we know this country is incapable of restraining its spending so let’s not pretend to get all shocked when it comes out.

I’ll be watching to see how the markets react to this non-event but the real data days start tomorrow with Import Prices that will be higher, Retail Sales that are a wildcard, Business inventories likely to be lower, Crude inventories that could go either way and the Beige Book, that will rock the markets at 2pm.

Needless to say we will continue to remain cautious today!

The Shanghai finally got its act together today, with both A and B shares notching gains of about 2% but we decided yesterday that we don’t care about them anymore (what can I say, I’m fickle) and we are a lot more concerned about how we’re going to attract some money flow from Europe.

Dr. Brett Steenbarger over at TraderFeed points out that we had a pretty sharp drop off in money flow this month and it may be very hard to get to new levels if we can’t get some new capital into the market.  I noted last week that we should be very concerned at any sign of the slowdown in M&A activity and here, in week 2 of few deals, we are already seeing the effects.

Even the energy sector was not spared from the drop-off in monetary inflows, yet you would think it was from the way it mysteriously failed to have a natural pullback as the funds dried up but that gives us yet another opportunity to lay down some puts as T Boone and company make the rounds pretending they are still gung-ho on oil while they are pulling their money off the table.

Speaking of cons, China is learning the western ways faster than we thought as their headline inflation rate touched a 2-year high (up 3.4%) but they have decided not to worry about it since "the big price gains remain maining in food and haven’t spread to a broad range of consumer goods."  Food prices, in fact, jumped 8.3% from a year ago.  3.4% average inflation (and don’t forget there are 1Bn people in China who make less than $2,000 a year so food is pretty much all they buy) is about .35% more than they get for putting money in the
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Monday Mop-Up

On the whole it was a disappointing day.

 

As promised, we made very few moves as we were comfortably in neutral and willing to take a pass on the day but by 9:52 oil broke up and at 10:09, despite the early run in the Dow, I said:  "As expected transports are dragging, RUT also not responding, NYSE not going green and we don’t get a real rally without them."

By 10:21 HOV made a 52-week low and that was enough to get me to call for a double down on our DIA July $132 puts.  The Dow went up another 50 points from there, up 90 from the 10:30 low but we mainly spent the day chatting and watching until 2:30 when we took advantage of the spike in the Dow to roll our DIA July $132 puts into DIA July $134 puts for just .60 more (leap-frogging our July $133 puts), a move that was rewarded less than 2 hours later as the Dow gave up a quick 50 points into the close.

That was it, other than a quick early trade on SWIR and short play on X and OIH (caught the top at $170) we waited patiently, now slightly more bearish than we were in the morning.  During the afternoon we discussed trading strategies, which all members should read until I have time to add the conversation to our strategy section.

So, on the whole, a pretty dull day in the markets but, obviously, the internals bothered me:

 

 

Day’s

Must

Comfort

Break

Next

Index

Current

Move

Hold


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Monday Virtual Portfolio Moves

Posted June 11, 2007 at 9:52 am | Permalink (Edit)

Oil – if it holds $65 for the day they will be able to rally around it into inventories.

Don’t forget to sell 1/2 DIS July $37.50s for .35 XXX

Posted June 11, 2007 at 10:09 am | Permalink (Edit)

DIS – I’m just saying as I have to go to a meeting so I’m setting a sell order…

As expected transports are dragging, RUT also not responding, NYSE not going green and we don’t get a real rally without them.

GOAX turning down too (Google, AAPL, BKX)

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

SWIR busting out – July $25s for $1,90 are a good way to go and you can sell the June $25s against when/if it calms down. XXX

Posted June 11, 2007 at 10:21 am | Permalink (Edit)

WTR rising, Dec $22.50s are still $1.50 (our entry was 5/18).

JOSB – Just what we wanted, right in line, should keep them in this range and destroy the July callers premium, nothing to do but to wait for expiration. $10KP was set up for safety and patience this month, maybe next week we can play but there’s nothing about this market right now that makes me want to stop playing it safe!

Posted June 11, 2007 at 10:23 am | Permalink (Edit)

DD on DIA Aug $132 puts XXX Bac, bad housing sector!

Posted June 11, 2007 at 10:31 am | Permalink (Edit)

DIA – of course I still have my Aug calls for balance so I am weighting back to negative here.

SWIR – goal is to pay less than $1 on the July/June $25 spread, was .90 when I called it.

30-year back at 5.25% – not good

Posted June 11, 2007 at 11:24 am | Permalink (Edit)

OIH, offering $1.50 for $170 puts – very risky but I think $170s a tough sell.

Speaking of index puts – I don’t have any QQQQ puts and don’t want them right now and I’m going to be rolling the July $132 puts to July $134 puts for +.60 by the end of the day (remember I am making money on the way up on my DIA Aug $138s so this is partly revenue neutral and will allow me to sell June puts against if the market keeps going up). XXX

 





Just Another Manic Monday

It’s all about the data this week.

Nothing of note today but starting tomorrow we get 4 big days of economic numbers that should give us some real action as we head into options expiration on Friday.

Date ET Release For Actual Briefing.com Consensus Prior
Jun 12 14:00 Treasury Budget May   -$71.0B -$60.0B -$42.9B
Jun 13 08:30 Export Prices ex-ag. May   NA NA 0.4%
Jun 13 08:30 Import Prices ex-oil May   NA NA 0.2%
Jun 13 08:30 Retail Sales May   0.7% 0.6% -0.2%
Jun 13 08:30 Retail Sales ex-auto May   1.0% 0.7% 0.0%
Jun 13 10:00 Business Inventories Apr   0.3% 0.2% -0.1%
Jun 13 10:30 Crude Inventories 06/08   NA NA 112K
Jun 13 14:00 Fed’s Beige Book          
Jun 14 08:30 Initial Claims 06/09   315K NA 309K
Jun 14 08:30 PPI May   0.7% 0.5% 0.7%
Jun 14 08:30 Core PPI May   0.2% 0.2% 0.0%
Jun 15 08:30 Current Account Q1   -$203.0B -$202.5B -$195.8B
Jun 15 08:30 NY Empire State Index Jun   14.0 10.0 8.0
Jun 15 08:30 CPI May   0.6% 0.6% 0.4%
Jun 15 08:30 Core CPI May   0.2% 0.2% 0.2%
Jun 15 09:00 Net Foreign Purchases Apr       $67.6B
Jun 15 09:15 Industrial Production May   0.1% 0.1% 0.7%
Jun 15 09:15 Capacity Utilization May   81.5% 81.5% 81.6%
Jun 15 10:00 Mich Sentiment-Prel. Jun   89.0 88.0 88.3

We have earnings of note from JOSB and TTWO today, LEH on Tuesday and BSC, GS and ADBE on Thursday but if LEH doesn’t come in with good guidance then it is doubtful we’ll get a boost from Goldman.  This is the second Monday in a row I’m not seeing a lot of big deals but if oil can’t settle down below $65 lack of deal flow will be the least of our problems…

Asia had a decent morning with the Hang Seng up 100 points…
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Zero Hedge

For The First Time Since The Crisis, Companies Spent More On Buybacks And Dividends Than They Earned...

Courtesy of ZeroHedge View original post here.

It will hardly come as a surprise to many, but according to the latest cash flow analysis from Goldman Sachs, 2018 was a record year for S&P 500 cash spending: not only did aggregate spending on capex, R&D, cash acquisitions, dividends, and share repurchases rose by 25% to $2.8 trillion, "the fastest year/year growth in 30 years"...

...



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Phil's Favorites

Fed's Balance Sheet Spikes by $253 Billion, Now Topping $4 Trillion

Courtesy of Pam Martens

By Pam Martens and Russ Martens: October 18, 2019 ~

Shhh! Don’t tell Congress that the Federal Reserve is back to electronically creating money out of thin air to throw at a liquidity problem (of an, as yet, undetermined origin) on Wall Street. And be sure not to mention that the Fed’s balance sheet has shot up in a period of just 42 days by $253 billion. And, of course, don’t remind Congress that before the last Wall Street crisis was over the Fed had secretly, with no oversight from Congress, piled up ...



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Insider Scoop

48 Biggest Movers From Yesterday

Courtesy of Benzinga

Gainers
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Kimble Charting Solutions

Bank Index Breakout? Stock Market Bulls Sure Hope So

Courtesy of Chris Kimble

One of the most important sectors of the stock market is the banking industry and bank stocks.

When the banks are healthy, the economy is likely doing well. And when bank stocks are participating in a market rally, then it bodes well for the broader stock market.

In today’s chart, we look at the Bank Index (BKX).

As you can see, the banks have been in a falling channel for the past 20 months. As well, the banks have been lagging the broader market during this time as well – see the Ratio in the bottom half of the chart above.

That said, th...



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The Technical Traders

Currencies Show A Shift to Safety And Maturity - What Does It Mean?

Courtesy of Technical Traders

Recent rotation in multiple foreign currencies hints at the fact that a new stage of the “Capital Shift” process is taking place and that skilled technical investors need to pay very close attention to how these currencies continue to react over the next 3 to 6+ months.  In the recent past, most of the world’s foreign currencies were declining in value while the US Dollar continued to strengthen.  In fact, we authored many research articles about these trends and how weakness in foreign currencies will drive new foreign investment into the US stock markets for two simple reasons; strength and security. 

Now that a few of the world’s most ...



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Chart School

Review of Andrew CardWell RSI with Wyckoff price waves

Courtesy of Read the Ticker

RSI measures relative strength of price action of a set period versus prior set periods. It helps review the price swings or waves, the power of each price thrust into new ground, or lack of it. Price thrust like many things relies on energy, and energy is not a constant, it has a birth, a life and a death and relative strength helps us see that cycle. 

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Digital Currencies

Zuck Delays Libra Launch Date Due To Issues "Sensitive To Society"

Courtesy of ZeroHedge View original post here.

Authored by William Suberg via CoinTelegraph.com,

Facebook is taking a much more careful approach to Libra than its previous projects, CEO Mark Zuckerberg has confirmed. 

“Obviously we want to move forward at some point soon [and] not have this take many years to roll out,” he said. “But ...



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Lee's Free Thinking

Look Out Bears! Fed New QE Now Up to $165 Billion

Courtesy of Lee Adler

I have been warning for months that the Fed would need new QE to counter the impact of massive waves of Treasury supply. I thought that that would come later, rather than sooner. Sorry folks, wrong about that. The NY Fed announced another round of new TOMO (Temporary Open Market Operations) today.

In addition to the $75 billion in overnight repos that the Fed issued and has been rolling over since Tuesday, next week the Fed will issue another $90 billion. They’ll come in the form of three $30 billion, 14 day repos to be offered next week.

That brings the new Fed QE to a total of $165 billion. Even in the worst days of the financial crisis, I can’t remember the Fed ballooning its balance sheet by $165 bi...



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Biotech

The Big Pharma Takeover of Medical Cannabis

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

 

The Big Pharma Takeover of Medical Cannabis

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The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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How IPOs Are Priced

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Funny but probably true:

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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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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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