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Saturday, September 24, 2022

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Will We Hold It Wednesday?

Levels, we need levels

And what levels do we need?  How about last Monday's?  Last Monday we were hoping we had found a bottom at around 12,200 and were hopefully consolidating for a move back up to retest 12,750.  Notice the Big Chart of that day indicated the Dow was still above the "Feeling Better" line at 11,808 that we had drawn back in January as a key resistance point and holding it (more or less) Thursday and Friday is what kept us bullish last week.  New members (and welcome by the way) need to learn to love the Big Chart.  The Big Chart is wise and good and keeps us from panicking for no reason as well as telling us when we SHOULD be panicking.   

 

 

Week's

25%

20%

Feeling

200

Index

Current

Move

Terror

Horror

Better

DMA

Dow 12,156 -102 10,644 11,354 11,808 13,373
Transports 2,498 11 2,336 2,491 2,591 2,844
S&P 1,320 -11 1,182 1,261 1,311 1,488
NYSE 8,842 -128 7,790 8,310 8,642 9,775
Nasdaq 2,255 -3 2,146 2,289 2,380 2,614
SOX 350 5 419 447 465 472
Russell 673 -11 642 684 712 800
Hang Seng 23,442 323 24,000 25,600 26,624 24,364
Nikkei 12,861 -131 13,725 14,640 15,226 16,729
BSE (India) 16,086 -253 15,900 16,960 17,638 16,545
DAX 6,633 11 6,088 6,494 6,753 7,704
CAC 40 4,718 6 4,626 4,934 5,132 5,752
FTSE 5,785 -4 5,066 5,403 5,619 6,435

We added a green box in the Transports (surprising with oil up 5% since last week), the S&P held 1,311 and when I say held, we are looking at this chart week-to-week like a long-term investor, not like day traders – a bad habit I see many members slipping into!  The SOX remain the sector that NEEDS to rally and losing a level on the Russell was very painful but they also snapped back nearly 5% yesterday with a 29-point gain, another day like that and we will have nothing to complain about! 

Simiarly, the NYSE held it's line (more or less) as 24 hours below our line is simply a spike an nothing more in the grand scheme of things.  The Nasdaq made a real run at our 25% terror line on Monday but has snapped back 100 points in 24 hours off of that spike and is now just 34 points away from some real progress at the 20% line.  I'd say that will be the line to watch this week, we NEED that Nas 2,289 very badly but we are unlikely to get it if we don't get at least a 10-point move on the SOX that sticks.

The BSE is heading the wrong way to save Asia and (going back to last night's Churchill theme) if the FTSE can turn the EU markets around it will, indeed, be their finest hour.  Asia is up nicely this morning with the Hang Seng (427) and the Nikkei (202) both adding more than 1.5% but that will be a disappointment to FXI traders, who bid that ETF up almost 10% in what did seem like some very irrational exuberance yesterday afternoon.  Next time we'll remember to take those puts!

I mentioned yesterday that Japan's lack of an acting Central Banker is stopping them from chipping in with the financial relief so we'll see what else the World Bank's have up their sleeves to prop up our economy.  The BSE has been kept nervous by the unrest in Pakistan, who had a two-fer today with 25 dead in two terrorist attacks that are likely to continue until the public begs Musharrif to retake power at which point he will become far too busy to order more attacks – ah democracy!

Europe is up another 2% this morning as the ECB and the Central Banks of Britain, Switzerland, Australia and Canada all made moves to pump liquidity into the markets.  England is having their own housing slowdown, with home price surveys hitting 18-year lows and mortgage activity at the lowest measured levels (began in 2002).  This is being spun as a negative but don't forget the BOE RAISED rates to fight inflation – this is what's supposed to happen!  The ECB's rate is currently set at 5.25% after having run up to 5.75% in December (remember the letter the ECB had to write to the Prime Minister explaining why inflation was too high) and the only reason they lowered theirs was to bail us out a bit.  While they may have overshot the mark just a bit, they have certainly deflated their housing bubble with much less apparent damage than we have done to ourselves over here.

We'll see if we get any follow-through today and, if not, we'll be covering up a bit but next week is going to be on wild, quadruple witching, end of quarter expiration period so we're going to want plenty of cash available for fun plays.  Speaking of fun plays, I'm already being punished this morning for not getting all out of HUM yesterday, which went from .75 to $1.35 on the April $55s but will be knocked from a near double to lucky to be 1/2 today as HUM cut guidance even farther than WLP did yesterday.  As we took some in the $25KP and those were not day trades, we'll have to work our way out of that jam but let's ask for .50 at the bell and be happy if we get it, otherwise we sell and roll most likely.

Anyone who thinks we don't need nationalized health care needs to take a look at the SHOCKING numbers being put out by the benefits providers.  We are only in year one of the Baby Boom generation turning 65 and already we're seeing cracks in the dyke of the private care system.  If we do not do something about it in the next administration, we may miss our chance to ever stop the slide into chaos that faces our country's health care future.  Rising costs, declining payrolls and companies cutting back on benefits even when they do offer them is not going to be very reassuring to the 80M Americans 55 and older who are just moving into their prime "needs" years.

I almost hate to say it but I love AET at $40 this morning as they already guided down 10% and just reaffirmed that, which makes them the star of the sector!  Let's see if we can pick up the Jan $40s for about $6 in the morning panic.  We can sell April $45s for $1 so I like the odds of this trade working out but we can hang out for a bounce and sell March first (.55 as of yesterday).

The hyena attack of the day is aimed once again at Apple as the news sources (including the WSJ) are splattered with the news that "Japan Investigates Possible IPod Defect" and AP carries the lead "Japan is investigating a possible defect in Apple Inc.'s iPod after one of the popular digital music players reportedly shot out sparks while recharging, a government official said Wednesday."  You have to go pretty deep in the article to find out that this was a single incident that happened way back in January.  This is a typical hyena tactic, dredging up old news at critical times in order to influence a stock, in this case aimed at stopping Apple from retaking key bullish levels at $132.  A bonus with attacking Apple is it has a very big effect on the Nasdaq.

There is a fantastic article in the WSJ about the psychological aspects of getting information on the Web that I HIGHLY recommend as it gives us great insight into the principal tool that hyenas use to turn investors into lab rats who punch the sell button at the first sign of trouble.  USC neuroscientist, Dr. Biederman, effectively accuses us (yes YOU, and me) of being information junkies, saying new and richly interpretable information triggers a chemical reaction that makes us feel good, which in turn causes us to seek out even more of it.  It is something we seem hard-wired to do, says Dr. Biederman. When you find new information, you get an opioid hit, and we are junkies for those. You might call us 'infovores.' "

I myself am a terrible information junkie and I've discussed with members how I can't have things like a Bloomberg terminal because I end us just staring at it all day and can never get enough.  I channel my energy into reading as many different news sources as possible, looking for the bigger picture but I could run a clinic on the different ways you can get sucked into data overload.

Today is very much a wait and see kind of day and we'll be looking for signs of strength and weakness in our individual holdings as well as in the broader markets. there is no major market-moving news to deal with so it's going to be a sentiment day more than anything else

Let's watch our levels and, as I said last night – GET OUT OF MARCH POSITIONS –  the last thing we need is a quick reverse wiping out all of yesterday's gains with no time to recover.  We WANT to sell calls, we need to have a good reason NOT to sell calls as the premiums we sell will be gone in 7 business days no matter which way the stock goes and we will still own our longer positions.

Turn down the opportunity to collect 50 cents a few thousand times and it starts to look like money – keep that in mind!  As I said on Monday though, I'm feeling good about the markets and it's starting to be fun again, that's somethng we haven't been havign for the past month so let's root for some follow-through or it's going to be a long, cold winter!

 

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CEO Astrology: Reading the Stars for Barry Diller, John Thain, Chuck Prince, and Steve Schwarzman

Many of you know celebrity astrologer Susan Miller as the uncannily accurate predictor of your fate. You’re in good company: She’s got A-listers like Kirsten Dunst and Orlando Bloom paying her to do their charts and gets fifteen million pag…

For a 110 billion dollar company, that’ll be a lot of Zealots LOL

hmmm… Asia is off 2%. Wonder what has them all worked up.

But seriously Sakiko, I’m just watching out for you guys. I phrased it wrong.

I’m not trying to be a little twat, I’ve been using AAPL products probably a lot longer than most of you. I’ve programed with it, worked with Xcode, and know many developers for it’s software. I’ve taken apart my laptop, overclocked mini’s, linux ipods, play around with the terminal easters… Everything and anything, I will hack and jack. By your definition, I should be an AAPL Zealot. Or atleast a computer Zealot, hackaday is my best friend.

Anyways, I just felt that people never really reflected on what it will take to change their minds about the company. I mean, have you thought of it? What could it possibily take you to say "It’s down 10%, and I’m not going to buy AAPL today"… Think of what you just said: "If it misses earnings… It’s just another opportunity to buy more"… Doesn’t this sound rediculous?

You’re right I shouldn’t care, but this is a community that I want to be part of and help develop.

I say some dumb stuff, and it’s to be taken half-heartedly. If I offended anyone by saying that "AAPL might not be a good buy today", then I apologize.

Look at VMW, it’s almost a 1/3 of it’s value, AAPL only went down by half. Both software companies… Blackstone, different sector, very cheap. I mean there’s value everywhere… and relatively, when framed against the traditional measures of financial strength, is AAPL that great?

HOV- nice look at a builder’s problems- the lay of the land, so to speak
Author: Maclintosh Kuhlengisa
123jump.com
Last Update: 3:11 PM EDT March 12 2008


The homebuilder reported a 6.1% drop in sales to $1.09 billion from $1.17 billion in the prior year due to a fall off in contracts per community as the number of open communities was down about 7%. The firm continues to focus on reducing inventories, maximizing cash flow and shrinking overheads as it steadily burns through the old land supply and replenishing supply with renegotiated lands.

 
Hovnanian Enterprises First Quarter Earnings Call
 
http://www.123jump.com/earnings-calls/Hovnanian-Enterprises-First-Quarter-Earnings-Call/26870/

rD2.0 – How long have you followed this? It’s a very interesting topic.

phil
since your post of this morning discussed neurological influences, thought you might enjoy this talk:
And now, when you’re ready, take 18 minutes to watch this astonishing talk from Harvard-trained brain scientist Jill Bolte Taylor. It drew a huge standing ovation in the first session of the conference and, by general consensus, counts as one of the most memorable TED talks of all time.
here’s the link too:  http://www.ted.com/talks/view/id/229

DM, I just follow horoscopes on astrologyzone.com..
I do not use it for stocks. I just brought it up yesterday because you asked about having a method of predicting the future. Astrology is the only method I know for that….
And the article that I just posted, I saw it mentioned on Fast Money today. But the woman the article mentioned- Susan Miller is the same, whose website http://www.astrologyzone.com I posted earlier in the day….
You can read your Feb, March horoscopes for your Sun Sign & Rising Sign on the website and find out if they make any sense…
 

"Look at VMW, it’s almost a 1/3 of it’s value, AAPL only went down by half"
DM, Growth traders chased these stock to new highs (120 and 200) and then sold and drove it to new lows…..
And now Value traders step in.,… when the PE gets low enough for a company to be a value buy
VMW P/E = 86, AAPL P/E = 27
AAPL is the value here…
When you see Karen Feinerman on Fast Money buying AAPL because its a value play (low P/E), you can be pretty sure all the other value buyers are also stepping in..
When smart money is going to support AAPL at this P/E, then not much the downside left…. High R multiple trade as Optrader would say. 1R downside, 10R upside

1R is the "stop loss" here. You decide how much you are going to lose on a trade, say 7-8%
You dont ride AAPL from 126 to 76 (if playing unhedged). You stop out at 7-8%… say $115…
And if stock does not go down, then you get the upside… 10R = $60-70
That’s what your favorite TV personality Jim Cramer also meant when he recommended Citigroup at $30 and said it has "$3 downside, $10 upside"

I never thought fund managers look at P/E on tech companies. But thanks for the R advice, it’s very easy to follow that way.

Karen Fienerman is a Hedge Fund manager… Acc to an article she is worth more than $100 million….
"When any millionaire talks, I listen…" 🙂

I’m not making fun RD2, I just didn’t realize. Buffett only deals with textiles, and values fundamentals that way. I thought it like valuing a biotech company based on it’s balance sheet… In my eyes a good product changes the game… Google with it’s search engine, VMW w/ it’s emulation, AAPL w/ it’s software, Nortel with fiberoptics (We’ve experienced what happens without lol), Dell w/ it’s manufacturing, Fedex w/ it’s delivery models, Lamborghini w/ it’s wedge shape…. I mean all these products shaped the company’s future….
Anyaws, I listen to Fienerman, as I think she’s smart too.
And I agree that AAPL has more good products than most, but has it bottomed? This isn’t a discretionary thing. It’s either going lower, or it’s going higher. There’s only one right direction… Everything else are guesses, educated or otherwise. There has to be a method.
I’m following the rabbit.
http://youtube.com/watch?v=BNOQUPmgbnY&feature=related

nice video DM.
Fibonacci Numbers are also similar to what you are searching for – patterns in the numbers of universe. Guy Adami on Fast Money loves them.
Fibonacci sequences appear in biological settings,[18] such as branching in trees, the fruitlets of a pineapple,[19] an uncurling fern and the arrangement of a pine cone.[20]. In addition, numerous poorly substantiated claims of Fibonacci numbers or golden sections in nature are found in popular sources, e.g. relating to the breeding of rabbits, the spirals of shells, and the curve of waves…
————————-
"but has it bottomed? " – that’s a trick question….
This might help…. Chapter 8 of Cramer’s book Real Money – "Spotting Bottoms in Stocks"
"If someone asked me what I do for a living, what’s my modus operandi, I would have to tell them I spot bottoms in stocks"
 

Thanks RD – How do you use Fibonacci? Your memory recall is peculiar.

Thanks much for your comments about my question!!

Startet with 27.000$ in Sept last year and now beeing at 14.000$. I´ll need to get back to even and than looking at the faults I made.
I´ll need to go to work for the next few years and live a simple life for save more money. I think I really need to have all the day to read and make decisions.
It´s not the best way to have a Job and Trade by the way. But this way the LTP is a good choice.

I must work harder and with more discipline, but the markets now are very choppy.

Thanks

 TED is incredible… http://www.ted.com/talks/view/id/229

DB
I cant say good morning today I’m afraid. UK getting slammed – Down 2%.
Dollar murdered against the £ and Yen.
Troubled Hedge Funds seem to be the cause.

windywheel – Thank you for sharing the Ted video!  Excellent…

Retail numbers will be released at 8:30 ET.  Consensus is: down 0.1%.  I’ll be interested in seeing if my amateur survey (which indicates a larger slowdown (0.6%)) has credibility.  The shadow in the number is that gas price increases will make the headline number mask the huge decline in retail again.   

111,000 barrels of oil were pumped into the SPR last week, priced over $100/bbl.   Over 1,000,000 barrels purchased by the taxpayers since the year began.  Now that is what we call market support!
 
 

Good morning all

Asia Markets : Thursday, March 13, 2008

(The following is from WSJ; please cross check with other sources to confirm.)

Japan*
12433.44
-427.69
-3.33%

Hong Kong*
22301.64
-1121.12
-4.79%

DJ Shanghai*
444.19
-12.42
-2.72%

S.Korea*
1615.62
-43.21
-2.60%

India*
15398.36
-729.62
-4.52%

Baltic Dry Index (BDI) -214 8346
 
 
 

* at close
Sources: Dow Jones, Reuters

INDEX VALUE CHANGE OPEN HIGH LOW TIME
DJIA INDEX 11,976.00 -148.00 12,132.00 12,133.00 11,959.00 05:32
S&P 500 1,291.60 -17.80 1,310.60 1,311.10 1,289.40 05:33
NASDAQ 100 1,712.75 -22.00 1,736.00 1,736.00 1,706.75 05:32
S&P/TSE 60 782.70 -5.40 787.20 789.80 779.00 03/12
MEX BOLSA 29,710.00 -66.00 29,670.00 29,670.00 29,670.00 03/12
BOVESPA 62,700.00 120.00 62,660.00 62,750.00 62,620.00 16:59

Asian Stocks Sink on Carlyle Default, Japan Sheds 3.3%
Asian markets sank Thursday with investors spooked by news that Netherlands-listed fund Carlyle Capital, expects its lenders to seize its assets and cause its likely liquidation. Carlyle Capital is an affiliate of private equity firm Carlyle Group.

Japan’s Nikkei finished down 3.3 percent, hitting a new 2-½ year closing low. The dollar hit a 13-year low against the yen and exporters extended losses on growing fears of a U.S. recession. Major banks were battered as well. South Korea’s KOSPI retreated 2.6 percent led by transportation shares. LG Display, previously called LG.Philips LCD,  closed down 8.82 percent on news Dutch electronics giant Philips sold about $1 billion worth of shares in the South Korean flat screen joint venture. Fuel-cost sensitive transportation stocks slidas well.

Australian shares closed 2.3 percent lower, erasing nearly all of the previous day’s gains, as doubts over the U.S. central bank’s latest move to ease credit problems hit financial firms. Also hurting sentiment in the banking sector, data showed that jobless rates at home hit fresh 33-year lows, reviving worries about another hike in interest rates. Hong Kong stocks shed more than 3 percent, as weak U.S. and mainland stock markets damped investor confidence, undoing gains from the last session when global equity markets cheered a credit bailout by central banks. China Railway Construction posted respectable gains in its first day of trade, after drawing record demand for its $5.4 billion Hong Kong IPO.

China’s Shanghai Composite Index tumbled over 3 percent, below the 4,000 level for the first time since July last year, hit by concern about the possibility of tighter monetary policy and the market’s ability to absorb large new supplies of shares. Financial stocks, among the most vulnerable to tighter monetary policy in response to high inflation, which hit a new 11-year high in February, were among the biggest losers.

Not helping sentiment on the mainland was weaker than expected data that showed a 15.4% increase in China’s industrial output during the January

Carlyle Capital Collapse Hurts Euro Shares
Commodities, currencies and trouble at fund Carlyle Capital led to selling of European stocks in early trading Thursday.

Carlyle Capital faced $400 million in margin calls recently and said it has now defaulted on $16.6 billion of debt, left with just mortgage-backed securities as assets. Banking stocks were among the hardest hit in Europe, with the Dow Jones STOXX banking index off more than 2 percent. Basic resources stocks and auto stocks also struggled.

Looking to corporate happenings, Swiss food behemoth Nestle raised its target for 2008 sales growth after a strong start to the year. Shares jumped 3.3 percent in early trading.

In Germany, auto parts supplier Continental lost 5 percent after a report that problems at its powertrain business are worse than expected.

British building products company Wolseley was the biggest loser on the FTSE-100, falling more than 5 percent after Goldman Sachs cut the stock to "sell" from "neutral" based on expectations for more weakness in U.S. homebuilding.

Shares of Italian bank UniCredit fell more than 1 percent after it reported 2007 profit below analyst expectatio

FTSE : -1.9%
CAC  : -2.28%
DAX  : -2.37%

Dollar Slide Picks Up Steam; Breaks Below 100 Yen
The dollar plumbed fresh depths on Thursday, hammered to a 12-year low versus the yen below key support at 100 and record troughs against the euro on mounting worry about the health of the U.S. economy and financial sector.

The dollar [100.29    -1.47  (-1.44%)   ] dropped to a low of 99.77 yen against the Japanese currency, according to Reuters data, a mark last seen in late 1995. It also hit a lifetime low against the euro beyond $1.56 and near parity against the Swiss franc, as escalating troubles sparked by the U.S. subprime mortgage crisis eroded confidence in the world’s top reserve currency.

The euro [1.5587    0.0038  (+0.24%)   ] rose as high as $1.5610 against the dollar, according to Reuters data, by 0912 GMT after briefly trimming its gains after European Central Bank President Jean-Claude Trichet expressed concern on excess moves in FX rates.

The dollar also hit a record low against a trade-weighted basket of six major currencies at 71.910 and a historic low at 1.0057 Swiss francs
[ 1.0084    -0.0059  (-0.58%)   ] .

Oil Steadies Below $110 on Dollar Slump

Oil held steady above $110 on Thursday, trading just below a record high as a weak dollar overshadowed an increase in U.S. crude inventories.

U.S. light, sweet crude for April delivery [  109.82    -0.10  (-0.09%)] was flat. It hit a record high of $110.20 on Wednesday. London Brent crude [106.11    -0.16  (-0.15%)] for April, which expires on Friday, fell, off the record $106.45 also struck on Wednesday.

Investors have rushed into commodities over the past month to hedge against inflation and the softening dollar. That has contributed to oil’s recent rally despite concerns over a recession in top oil consumer the United States and rising fuel inventories.

Renewed political tension in Nigeria, Africa’s largest oil exporter, provided additional support. The risk of violence in the oil producing Niger Delta may increase because militants are frustrated by a lack of concrete results from peace talks, a key negotiator said on Wednesday.

Oil prices rebounded after a drop on Wednesday caused by U.S. government data that showed crude supplies rose more than expected last week and gasoline stockpiles were at a 15-year high.

Copper edges lower amid renewed weakness in global equities
Copper edged lower as yesterday’s price rebound ran out of steam amid renewed weakness in global equity markets, which prompted risk aversion and worries over long term demand prospects.

At 9.29 am, LME copper for 3 month delivery was down at 8,350 usd a tonne against 8,400 usd at the close yesterday. Elsewhere, tin matched yesterday’s all time record high of 19,600 usd a tonne amid worries over supply from top producers Indonesia and China. Yesterday, the metal closed at 19,400 usd. In other metals traded, aluminium was down at 3,090 usd a tonne against 3,124 usd amid further LME stock builds, lead edged up to 3,125 usd against 3,115 usd, zinc fell to 2,605 usd against 2,630 usd while nickel rose to 32,150 usd against 31,875 usd.

Gold eyes record as high oil, weak dollar spark new round of investment
Gold soared and eyed a record above 990 usd as high oil prices and persistent dollar weakness sparked another round of investment.  At 9.05 am, gold was trading at 990.40 usd an ounce against 979.00 usd in late New York trade yesterday. On March 5 gold hit a record 992.90 usd.

"The yellow metal should now look to challenge resistance at 992.30/992.95 usd, clearance of which could open the way to test 1000 usd/oz," an analyst said.

Silver followed gold’s path higher to trade at 20.36 usd an ounce against 19.89 usd yesterday. Among other precious metals, platinum rose to 2,093 usd an ounce against 2,064 usd, while palladium edged up to 507 usd compared to 506 usd at the close yesterday.

DB
Miserable trading morning in the UK , not helped by the $. (Most my money in $USD – Bad)
Watching US futures get worse its difficult to find anything to "trade". Just cover more I think. Perhaps the retail figure will help. !!

Well I have reviewed all information I have available and I can’t see anything that shows some rapid change in our rollercoaster daily experience, so I am going to switch most of my holdings into longer LEAPS and sell short calls against these as opportunities arise and to ensure enough cover to allow for rolling down as required, I will need to re-read Phil’s recent LTP review as there are many gems in that entry.
Carlyle group is a huge blow to confidence and I think this will have a heavy reflection in the market, perhaps this is the cataclysmic event everyone has waited for. If the FED lowers rates again on Tuesday, I suppose Bernankes approach to the deficit is simply to devalue the USD as a way out of it, I think it would be good if someone started to realise that when you spend over ability you need to tigthen your belt, not the direction I see the US economy being directed towards, it’s spend spend spend… borrow borrow borrow… I heard a frightning correlation between the late Ottoman empire and the US on the BBC Daily business podcast today, the correlations are scary. Anyway if this is my capitulation I don’t know, but it is clear to me the short-term game will need to be played by another type of investor than me. Interestingly this is also the conclusion that my own trade plan review has come up with, so good fit.
So sad that SIGMA is down $3.5, but very glad I am holding JAN 2009 call’s at $25, I don’t think there is reason to panic on this one, there is plenty of time and APR $22.5 have a theo value of $2.33 at stock price of $21.5, which covers a roll down to JAN$20, so this will take some time to get paid off, but then again there are 9 months to do a repeat performance on, which gives some return, not great, but then I still have my $20 calls and my expectation is that in 10 months the price will be above $20, hopefully by quite a lot. Nice to have so many options when you are in the LTP game.
 

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