Archive for 2007

Secrets to Explosive Stock Market Profits: Section 7

In the final section, I review the importance of money management and position sizing, and provide some thoughts on selecting a broker.

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Friday Virtual Portfolio Moves

Posted January 26, 2007 at 9:57 am | Permalink (Edit)
  • BP Mar $65 puts for $2.65
Posted January 26, 2007 at 10:18 am | Permalink (Edit)

Anyone who is still hanging on to positions needs to watch the NYSE, if that breaks down below 9,100 – the party is very likely over.

Posted January 26, 2007 at 10:31 am | Permalink (Edit)

LVS having a sad morning. Don’t be greedy! If the market comes back they will be very relieved.

  • Setting stop on LVS $100 puts at $4.50
Posted January 26, 2007 at 11:44 am | Permalink (Edit)
  • Bought more CY $17.50 puts for .20

Selling any FEB/MAR call that stops out – tracking them individually would be far to distracting!

I will buy DIA or QQQQ calls with the cash if I feel I"m going to miss out (but it’s not looking likely!)

Posted January 26, 2007 at 1:01 pm | Permalink (Edit)
  • WFR Jan ‘08 $50s are $10
    • selling the Mar $50s for $4 




Finally Friday

 

In keeping with this week's tradition of being trapped in an infinte loop, I am repeating last Friday's headline and will be reusing last Friday's comments to illustrate how nothing has actually happened and we should all be very thankful that we didn't drop (as we were expecting going into the weekend).

I'm going to use a different font rather than keep quoting things so I hope this works but I could almost just repost the whole article and go back to bed!

What a disappointment it’s been.  We’ll have to wait until next week to see how much of this action is option pinning and how much is a genuine change in market sentiment.

See, it's working already, no options this week but this week the story is "Live by the BS commodity rally, die by the BS commodity rally."

As is often the case, when I take a day to step back and objectively observe the markets, I still see a lot of underlying strength but that doesn’t mean we can’t have a nice, healthy correction here.  As I said on Wednesday the 10th:  "Are you prepared for a down 295 point day?  Let’s remember I am a bull with a short-term target of Dow 11,500!  I would like to say I would be pleasantly surprised to be wrong but I will not be able to really enjoy additional advances unless we get a long-overdue correction out of the way.  As I said yesterday, if the IPhone can’t inspire people to get back into tech, then we really do have to lighten up at this point."

Oh, that guy is good!  I wonder if he picks lottery numbers too?

We won’t know until next week – whether this week’s action was natural or the result of a massive manipulation of stocks to force long-standing leaps out of the money (see yesterday’s comments) so the best thing to do is wait and see:


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Thursday Thump

Ever feel like you are stuck in a rut?

The markets certainly seem to be stuck in  a rut (sometimes called a trading range) that they just cannot seem to get out of.

The Dow is treating the upper end of this range, currently 12,636, like an impenetrable barrier but, on the bright side, has not tested the lowest end of this rising channel, currently 12,400, since July.

I’ve been saying since New Year’s Eve that I won’t be able to get all gung-ho bullish until we get a nice pullback, and I have been lazily targeting 12,300 as that’s where it (the lower end of the BBand range) was at the time but continued market strength has pulled that low end up another 75 points and I can now say that a bounce at 12,375 would be a hugely bullish sign.

This may not make you very happy if you are holding a lot of calls but, if you are not very, very hedged then you sure haven’t been trading with us the past few weeks!

While it’s been frustrating to have a virtual portfolio where half loses money when the market goes up and half loses money when the market goes down, it’s better than having had all our bets in one direction or the other! 

Today, as predicted, we jettisoned the commodity thrusters that took us up to 12,600 (by the way, I use the Dow because it’s an easy reference, even though the NYSE and S&P are far more directly affected) but jettison may be too strong a word as they are only sputtering out right now.   When your booster rockets start to run out of fuel you need to dump them cleanly or the weight of them, as they become useless lumps of metal attached to your ship, will prevent you from going any higher.

So it remains to be seen whether we can finally dump the oil, metal and housing stocks while we engage the SOX drive that lights the Russell, NYSE and Nasdaq thrusters that will take us up and out of the atmosphere, into higher orbit.  Until we get a successful separation from our lagging sectors - we are still in grave danger of crashing back to earth!

Yesterday we had a check-list, hitting all the tops I set for the week on Monday, today we…
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Thursday Virtual Portfolio Moves

Posted January 25, 2007 at 10:21 am | Permalink (Edit)
  • Flipping my SNDK $45 caller at $1.20 to $42 caller at $3.40
    • This is against my Jan ’08 $40s
Posted January 25, 2007 at 10:24 am | Permalink (Edit)
  • Taking LVS $105 puts for $3.30
    • tight stops
Posted January 25, 2007 at 1:02 pm | Permalink (Edit)
  • CVX – looking to get out of 1/2 Mar $70 puts for $1.50 or better to erase DD
Posted January 25, 2007 at 1:43 pm | Permalink (Edit)

SPWR missed by .02, still such a huge gain, hard to tell what the reaction will be…

This expansion plan of SPWR is very ambitios and may spook short-term investors…

  • Stopping out of CY Mar $17.50s at $1 if I have to as I’m not blowing an almost double!
Posted January 25, 2007 at 2:01 pm | Permalink (Edit)
  • I can’t possible post all my stop outs, I’m basically taking calls off the table before they drop 20%.
  • Took CY $17.50 puts for .25

Posted January 25, 2007 at 2:23 pm | Permalink (Edit)
  • Out of TXN Apr $27.50s for $3.90
  • Out of YRCW Feb $40s at $2.40
Posted January 25, 2007 at 2:42 pm | Permalink (Edit)
  • Out of GOOG $510s for $12
    • the ones I own, not the ones I sold!
Posted January 25, 2007 at 3:17 pm | Permalink (Edit)
  • Out of Apple Feb $80 at $7 and $85 at $3.5,
    •  flipping to July $85 at $10.80
Posted January 25, 2007 at 3:51 pm | Permalink (Edit)
  • Sold DIA $125 puts for $1.20 against my June puts
  • 1/2 out LVS $105 puts at $4.50
    • applying $1.20 to $3.50 basis (now $2.10), regular stops
Posted January 25, 2007 at 4:00 pm | Permalink (Edit)
  • Sold MSFT Apr $30s that were not covered (2/3) for $1.75
  • Sold 1/2 MSFT July $30s for $2.45




Thursday Morning

Are we ready to take off again?

After Monday’s aborted moon mission you can understand why I’m a little leary of getting back on board that rocket, as it just blew up on the launch pad 3 days ago!  This time we’re going to triple check our levels and see if we can get the SOX drive working but the oil pressure is already over $55 and may scrub this mission before we even get to a countdown.

This is a tricky spot for us because we are long on tech and short on oil and builders, pretty much the exact opposite of Cramer’s advice from last week so, while we are looking for a Nasdaq led rally, we are also expecting to jettison two of the main booster rockets very soon.

BZH, one of our builder thrusters, has already flamed out, posting a 1Q loss of $1.54 per share vs. $2 in profits last year and far short of analysts’ expected .26.  There were $1.95 in write-offs and investors have been very forgiving of other builders (though for the life of me, I don’t see why) and continued to buy them as if they were the next big thing – behavior that is so 2004!

"Operating conditions remained extremely challenging for the housing industry during our first quarter of fiscal 2007," said President and Chief Executive Ian J. McCarthy. "Most markets across the country continue to experience lower levels of demand for new homes, high cancellation rates and significant levels of discounting."  I need a button with a very sarcastic sounding "BUYBUYBUY" for that one!

Quarterly home closings were off 31% and orders were off 54% – that’s the year fellas!  Cancellation rates are up to 43%, that’s 43 out of 100 people walking away from deposits rather than go through with a home purchase.  What happens when they don’t even want to make the deposits anymore? 

BZH also lowered guidance for 2007 to $1.25(ish), down from $2.47(ish) and WAY down from $8.89 last year.  Beazer’s stock gained 7% since 1/16, when we picked up CTX and other HB shorts on what seemed like some very obviously bad numbers coming out of the sector – we’ll have to see if reality catches up with them today.  Just be warned that bad builder news trickles down through the markets very quickly!

Asia trickled down a bit with the…
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Wednesday Wrap-Up

Wow I can’t  beilieve that worked!

On Tuesday I titled the post "Turnaround Tuesday" and said "I’m hoping if I put up a headline it might come true" and this morning I said "So no excuse will be given for a half-hearted rally, we want to see some numbers and we want to see them now!" and the markets obeyed me!  Congratulations, you are now reading the most powerful column in the Universe!

OK – I’m done being full of myself, let’s try to assess the situation objectively and see if the markets met all of my demands:

Wow!  Needless to say I went straight home and wrote a list out for my wife as well!  Since I’m on a roll…

Of course we can blame AMT for holding the SOX back but AMAT was poor too, KLAC was weak, MXIM flat, NSM down, and STM was flat.  TXN, MRVL and INTC were the shining stars of the SOX and the working theory is that people are buying big-screen TVs to the exclusion of everything else (computers, electronic toys…) except IPods and TVs dont have that many chips in them so it’s a narrow rally for chips.

That was one tough sell-off to hold out through and I was really close to giving up on Tuesday morning but we held our levels and, more importantly, held on…
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Oil – Drink Up America – You Have No Choice!

Oil plunged at the NYMEX open on big volume, down to $53.70 after a huge, surprise inventory build was (again) reported, and literally at 12:01 on the dot (the close of rational, European trading), they started to drive it back to $55.

It is beyond a joke how blatantly they manipulate this market but when the Pumper-in-Chief comes on after the inventory report (did you ever notice he always comes on a Wednesday around 10-11?) to announce he intends to purchase $41Bn worth of oil, you have to realize that there are forces at work here even more powerful than we may be able to stand up to!

Now I’m not Bush bashing here but I’ve found out why gold has gone up so much this week.  Other countries think he’s a complete lunatic and they see this plan to build the SPR as a foreshadowing of a plan to attack Iran!  I know that is not realistic (I hope) as it will take years to build the massive reserve Bush (and the oil companies) envision but it’s important to understand that other countries look at our leader the way we look at Chavez…

The people who are Bush bashing are the ones reviewing his "radical" (no comment!) plan to use every acre of land in the United States for ethanol production.  Let’s remember that ethanol, AFTER subsidies, costs $5 per gallon so adding it to gas INCREASES the cost (before including the cost of the subsidies).  So the gist of this plan is that you use more ethanol, which costs more than gasoline did at it’s peak and the price of corn (and all agricultural products) goes up like oil did causing every meal you eat to be about 20% more expensive.  What a clever solution!

Ethanol is a solution, not THE solution.  Americans use 385M gallons of gasoline a day!  You only get 19 gallons of gas out of a barrel of oil so that’s 20M barrels a day going into your gas tank (yes I know we use the other 23 gallons to make other things).  The average American car gets a pathetic 20 mpg.  Rather than try to ADD 20% ethanol to replace the oil and causing a strain on the agriculture industry, we COULD SIMPLY USE LESS OIL!  Increasing the mileage requirements on cars to 30 mpg over the…
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Wednesday Virtual Portfolio Moves

Posted January 24, 2007 at 9:46 am | Permalink (Edit)

I hate to tell you guys but I’m not liking the oil puts this week, they all have room to go (up that is) for the week so we just have to watch oil $55, firm eye on the Valero rule and see how far they are willing to take it.

  • STX – I am going to take half off with a .15 trailing stop here ($1.60)
    • setting a stop at a .40 trailing stop on the rest as this is a 52 week high and, as it was quiet for so long, I have a lot of it!
Posted January 24, 2007 at 9:53 am | Permalink (Edit)
  • DD on XOM $72.50 puts for .90
    • again, I HAVE A LOT OF COVER CALLS!!!!
Posted January 24, 2007 at 9:59 am | Permalink (Edit)

CTX cliff diving! Mortgage numbers not good.

  • DD CVX $70 puts at .90
    • tight stops on these new oil puts!
Posted January 24, 2007 at 10:05 am | Permalink (Edit)
  • Covering my new (today’s) oil plays with OII $40s for $1.75 (estimate) if it breaks $40!
Posted January 24, 2007 at 10:24 am | Permalink (Edit)
  • PBR $95 puts too enticing at $1.75,
    • I’m in (setting myself up for a whupping if I’m wrong in inventory!
Posted January 24, 2007 at 10:30 am | Permalink (Edit)
  • PTR $120 puts for $1.20  

Posted January 24, 2007 at 10:32 am | Permalink (Edit)

700K build in crude 4M build in gas 700K build in distillates – “Could be seen as slightly bearish” according to the weather girl!

Bwah ha ha!!!

  • VLO $52.50 puts for 1.65 make nice momentum plays!
Posted January 24, 2007 at 11:03 am | Permalink (Edit)
  • T - selling $35s


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Which Way Wednesday?

Well we made it through the State of the Union, now let's see about the state of the markets:

 

The Nikkei posted another 6-year high (yawn) and China is growing at 10.5% (yawn), yielding a 50% increase in GDP over the past 4 years.  Much like Google, China is bound to run into "the law of large numbers" as it moves up the ranks to become the World's 4th largest economy, behind Germany, Japan and the US.

It's kind of funny that no one ever talks about "shocking" increases in German oil consumption or Japanese fuel use when both economies are still substantially bigger than China's.  Of course, all three combined are still just half the GDP of the US, now chugging along at $13T per year.  It needs to be remembered also that China's per capita GDP is just $2,000, compared to $42,000 in the US and $35,000 in Japan so when you hear about the "stunning" 10% growth, it's really only enough money for you to have dinner and a movie with the family.

I was going to say, unless you're a Chinese reader but then I remembered I don't have any Chinese readers as this Website is (proudly) banned in China!  That's right, one of my traveling readers wrote to me that the Chinese censors have deemed my content "inappropriate" for 1/5 of the world's population!

I think it will take a while for them to catch up to us with that attitude!

Another interesting Chinese attitude is the continuation of the "one-child policy" limiting urban families to a single offspring and rural families to two.  This has led to an imbalance of 118 boys for every 100 girls – Hmm, 100,000 Chinese millionaires with just one offspring (probably male) who can't find a girlfriend?  My daughters say "Hen gao xing yu xian ni!" boys!

Europeans can have as many children as they want, they just don't seem to want to anymore.  Europeans average just 1.3 children per family and their population is aging and declining, putting their "Entitlement Crisis" years ahead of ours.  That doesn't seem to bother the DAX, CAC, FTSE or the LSE which all moved up nicely in
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Phil's Favorites

Legal cannabis celebrates its first anniversary in Canada: What's next?

 

Legal cannabis celebrates its first anniversary in Canada: What's next?

Montrealers hold up a Canadian flag with a marijuana logo on it outside a government cannabis store in the city Oct. 17, 2018. THE CANADIAN PRESS/Graham Hughes

Courtesy of Michael J. Armstrong, Brock University

This week marks the first anniversary of Canada’s recreational cannabis legalization. It’s an appropriate time to review what happened last year and consider what’s coming next.

Legalization brought big changes for some folks. About 9,200 employees now work at cannabis producers, with ...



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Zero Hedge

Pork-Panic Sends China CPI To 6 Year Highs As Factory Deflation Deepens

Courtesy of ZeroHedge View original post here.

China's producer prices deflated for the 3rd straight month, slumping 1.2% YoY - the biggest deflationary impulse since July 2016 - but, thanks to the explosion in pork prices (as 'pig ebola' spreads), Chinese consumers are facing the worst inflation since 2013.

  • China Sept CPI +3.0% YoY (2.9% exp and 2.9% prior)

  • China Sept PPI -1.2% YoY (-1.2% exp and -0.8% prior)

...



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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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Chart in video

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Kimble Charting Solutions

Banks Should Send Critical Message To Stocks This Week!

Courtesy of Chris Kimble

Bank earnings could go a long way to impacting the broad market in a big way this week. Wells Fargo, Goldman Sachs, Bank Of America, JP Morgan, Morgan Stanley all announce earning the next couple of days.

As these earning announcements are to take place, the Bank Index (BKX) finds itself facing a key breakout test.

The index remains inside of bullish rising channel (1), as it has created a series of higher lows and higher highs over the past 8-years.

The index has little to brag about over the past 20-months, as it has created a series of lower highs and lower lows inside of falling chan...



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The Technical Traders

Daily Market Analysis and Trade Setups

Courtesy of Technical Traders

CLICK HERE TO GET REAL TIME TRADE ALERTS!

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Insider Scoop

22 Healthcare Stocks Moving In Tuesday's Pre-Market Session

Courtesy of Benzinga

Gainers
  • Reata Pharmaceuticals, Inc. (NASDAQ: RETA) stock surged 45.2% to $146.07 during Tuesday's pre-market session. The market value of their outstanding shares is at $2.8 billion. The most recent rating by Cantor Fitzgerald, on October 15, is at Overweight, with a price target of $180.00.
  • Aphria, Inc. (NYSE: APHA) stock increased by 18.6% to $5.16. The market value of their outstanding shares is at $1.8 billion. According to the most recent rating by CIBC, on July 26, the current rating is at Underperformer.
  • ...


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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

Courtesy of  , Visual Capitalist

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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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

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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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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