Archive for 2010

The Oxen Report: Monday Market Hoping for Personal Spending and Income to Extend Rally, Update from Last Week

Last week was another great week for us. We had a sad ending to it with a couple misses, but it was still another good week overall. This week, the market is looking to get July started in the right direction. The market is looking to start off this week correctly with a good Monday that will be led by news from the G-20, personal spending and income, and foreign results. Our only open position left open for the week is Micron Technology (MU). We opened a position at 9.66 on Thursday, and the stock ended down about 2% on Friday. I am expecting a big day on Monday before after hours earnings, and we should get some great earnings for MU.

Let’s get to today’s plays and a weekly update from last week follows…

 

Buy Pick of the Day: Direxion Daily FInancial Bear ETF 3x (FAZ)

Analysis: The market was looking strong moving into important economic data this morning on great news that the G-20 that leaders are agreeing to work to cut budget deficits. Yet, the "air" of political candidates met nothing when it came to economic data. We got a mixed set of reports to start the week on personal income, spending, and savings. Personal income rose 0.4% from April’s levels, but economists were expecting a 0.5% increase. Personal spending did rise from April levels (0.3% vs. 0.1% expectations), but it was most likely overshadowed by a 4% increase in personal savings from April. The signs are there that people are making more money, but they are still very reluctant to put their disposable income into spending over savings.

On another sad note, Senator Robert Byrd died last night. The news is not good for the passage of the financial reform bill, and it should have a negative effect on financial stocks. The bill’s not passing is good for financials, but it will pass eventually. Now that the bill is stuck, it will most likely burden stocks. Especially after the rise financials got Friday from news that the bill would not hurt them as much, today we should see a healthy pullback. Direxion Daily Financial Bear ETF 3x (FAZ) dropped 7% on Friday in value, and with the market turning sour after the release of the economic data, FAZ now has some fuel to fire it upwards.…
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Swing trading virtual portfolio – Week of June 28th, 2010

This post is for live trades and daily comments. 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

 

Optrader 





Gauging the Risks of Recession

Courtesy of Leo Kolivakis

Via Pension Pulse.

Advisor Perspectives published John Mauldin’s latest weekly comment, Risk of Recession. It’s an absolute must read, and I highly suggest you read it all, but I will focus in on the following:

Jonathan Tepper (coauthor of the next book I am working on) sent me this piece from a group called EMphase Finance, based in Montreal. They wrote this back in April, as the Weekly LEI was beginning to turn over. They have found a bit of data that seems very good at predicting the economy of the US 12 months out. Let’s take part of their work:

“Many market participants are debating whether or not a double-dip recession will occur within the next quarters. As we are writing our report, ECRI Weekly LEI fell quickly to 122.5 points from 134.7 in April. This indicator did a good job leading U.S. Real GDP Y/Y by 6 months over the last two decades. However, ECRI Weekly LEI recently became quite unreliable as it increased up to 25% Y/Y in April, a level consistent with an unrealistic 8% U.S. Real GDP Y/Y! You can notice the problem on the left chart below.


“We discovered a new leading indicator to forecast U.S. Real GDP Y/Y, and it is simply the U.S. Terms of Trade (TOT). It is defined as the export price / import price ratio. We are pleased to be the first to document this, at least publicly. On the right chart above, TOT leads U.S. Real GDP Y/Y by 12 months. The only drawback: underlying time series are monthly instead of weekly, but this is not really an issue with that much lead. Also, the relationship still holds well if we extend to the maximum data (1985).”


Their conclusion?


“As you probably noticed earlier, TOT is suggesting a decline of U.S. Real GDP Y/Y to nearly 0% within the next 12 months. Q2 2010 Real GDP Q/Q Annualized to be released on the 30th July may match expectations as it reflects data of the last three months, which were positive in general. However, we are most likely


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The Winners of the Sabrient Technical Challenge Are . .

The Winners of the Sabrient Technical Challenge Are . . .

Courtesy of Scott Brown

The Challenge: Improve our fundamentals-based rankings with a technical overlay.

Many traders took up the challenge. Only two succeeded in besting our results. Now we’re offering trading alerts based on their two technical systems.

Meet Trader #1

Trader #1 is a rocket scientist, John Ehlers. John is a retired Senior Engineering Fellow from one of the largest aerospace companies in the world. He has been a private trader since 1976 and is a respected authority in the field of technical trading in the futures markets. He is also a well-known author of several books on trading, including Rocket Science for Traders and MESA and Trading Market Cycles. His approach is unique.  John uses theories developed to analyze sound, heat and digital waves to remove the "noise" inherent in those transmissions and he applies the same analysis to a time series of stock movements to help predict a stock’s direction.

MESA-Sabrient Trading Alerts (RS2)

John Elhers saw the outstanding buy-and-hold performance of Sabrient’s fundamentally ranked equities–Sabrient’s Watch List–i.e., stocks ranked by David Brown, a former NASA scientist who was part of the lunar landing team. John applied his technical timing system to the watch list and improved performance.  From September 1 through December 31, 2009, the trades were evaluated via back-testing, but from January 1 through May 7, the trades were in real time.

Take a look at the combined results:

September 1, 2009 through May 7, 2010
Profit Factor 2.94
% Wins 67%
Avg Trade Size $10,000


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Smack Down in Toronto

Courtesy of Bruce Krasting

As anticipated, Obama and Geithner went to the G20 and asked the rest of the world to keep rolling the printing presses for “a little while longer”. They got a resounding “NO”. The head’s of state from Germany, France, England and Canada said NO. Ever polite, the Japanese had not thing to say and every smart, the Chinese also had nothing to say. As of tonight there is no engine of growth in any corner of the globe. The US is going to try to go it alone with big fiscal imbalances. Based on this weekend’s lack of support for continued deficit spending outside of America the logical economic conclusion is that the US is going to be running up big trade and current account deficits with the rest of the world. We are also going to look pretty silly in about twelve months.

Our boy Tim G. did a lame effort in defending the US position at a press conference. The full Q&A is here. Some selected thoughts from the guy who has his hands on the tiller:

What we share in the G20 is a recognition that if the world economy is to expand at its potential, if growth is going to be sustainable in the future, then we need to act together to strengthen the recovery and finish the job of repairing the damage of this crisis.

One day Tim tells us that things are recovering very nicely and we have a sustainable economic outlook in front of us. The next day Tim says we are still in “crisis”. Tim talks from both sides of his mouth. He does it on the world stage. No one outside of the border seems to be buying this. After reading tomorrow’s headlines not too many inside the border will believe it either.

I would look to the language the President used in the letter he sent to his counterparts. You can see in that letter, again, the basic strategy we think makes sense, which is to make sure we’re focused on growth now.

Sorry Tim. No sale. You tipped the scales. Now they have to get back.

We do think it’s very important to continue to put in place a targeted set of additional


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Parsing Recent Carrier Strike Group Movements

Courtesy of Marla Singer

As with any Nimitz class carrier, the USS Dwight D. Eisenhower (CVN 69) doesn’t deploy alone.  Instead she sails with a number of other support vessels composing a “Carrier Strike Group.”  Within the Eisenhower’s traditional strike group (Carrier Strike Group Eight) are:

Command Destroyer Squadron Two Eight, composed of 8300 ton Arleigh Burke class guided missile destroyers focused on antiair, antisubmarine, antisurface, and strike operations using the AN/SPY-1D Phased Array Radar, an AEGIS upgrade, and the best-in-class AN/SQQ-89 integrated ASW Suite.  Originally designed to deal with former Soviet air threats (like Iran’s Su-25, MiG-29A (Fulcrum) and MiG-29UB aircraft?):

The USS Bainbridge (DDG 96)
The USS Barry (DDG 52)
The USS Laboon (DDG 58)
The USS Mitscher (DDG 57)
The USS Ramage (DDG 61)

Along with:
Arleigh Burke class guided missile destroyers:

The USS Carney (DDG 64)
The USS McFaul (DDG 74)
The USS Farragut (DDG 99)

…and 9600 ton Ticonderoga class guided missile cruisers:

The USS Hue City (CG 66)
The USS Anzio (CG 68)
The USS Vicksburg (CG 69)

Generally, Carrier Strike Groups are also escorted by two or three attack submarines as well.  Those aren’t talked about much.

Carrier Strike Group Ten, built around the USS Harry S. Truman, is composed of a substantially similar group.  It will, however, replace Command Destroyer Squadron Two Eight with Command Destroyer Squadron Two Six:

USS Hawes (FFG 53)
USS James E. Williams (DDG 95)
USS Kaufman (FFG 59)
USS Ross (DDG 71)
USS Oscar Austin (DDG 79)
USS Winston S. Churchill (DDG 81)
USS Elrod (FFG 55)

The presence of three Oliver Hazard Perry class frigates (FFG 53, FFG 59, FFG 55) is interesting.  Zero Hedge readers may remember the Oliver Hazard Perry class by its most famous member, the USS Stark (FFG 31) which was struck by not one but two Exocet anti-ship missiles launched from an Iraqi plane in 1987 and somehow managed to limp to Bahrain and was eventually repaired and returned to service.  Less famous, but more dramatic, the USS Samuel B. Roberts struck an Iranian mine, which blew a 6 meter hole in the vessel, flooded the engine room, and actually broke the keel.  For the unwashed, the end of the keel is typically the end of a warship.  Despite this, the Samuel B. Roberts was not only salvaged, but repaired and returned to action.

 


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Let Your Stocks Tell You What To Do By The Action They Exhibit

Let Your Stocks Tell You What To Do By The Action They Exhibit

Courtesy of David at All About Trends 

Follow The Leaders!

While everyone is fixated on the indexes we prefer to focus on the leaders.

While the indexes have gone lower the the last few days breaking into new lows during this pullback off the 1130 level on the S&P 500 a fair amount of names have stood pat, broke to new highs, or just pulled back to support levels or even the 50 day average.  Relative to the indexes these names are showing strength! Just look at the charts of three or our current positions:

NFLX — Netflix

AKAM — Akamai

SNDK — Sandisk

 

What we want to you to notice is two things:

1. Look at the charts and ask youself what is the overall trend of these issues?

2.  Is this what your whole account looks like? If not, why not?

It’s the end of the quarter and if they want to run the markets into quarter end, it may have started with Friday’s positive reversal.

While the indexes haven’t shown us anything, many of our current positions staged positive reversals Friday and those that haven’t have pulled back in an orderly manner and are right at key support areas such as the 50-day and their upward trend lines.

That said, the following statement applies to our trading decisions:

“Let Your Stocks Tell You What To Do By The Action They Exhibit”

To learn more, sign up for our free newsletter and receive our free report. 





Destined to Fail – Magical Thinking at the G20

Destined to Fail – Magical Thinking at the G20

Courtesy of Chris Martenson

The G20 meeting has revealed two important things that tell us something about our combined economic future. First we learned that the US lost the battle to try to get everyone back on the Keynesian print-a-thon bandwagon. This tells us something about US leadership in these troubled times. Once-upon-a-time, the US could dictate such things, and those days are apparently over which deserves to be noted.

I am a supporter of austerity as the least worst of two paths which I will outline below (the other being printing), but I want to be sure to give the global rejection of the US position on stimulus the proper attention it merits. Here’s the relevant information:

TORONTO — Despite President Obama’s pitch at the summit meeting for developed nations here for continued stimulus measures to prevent another global economic downturn, the United States will go along with other leaders who are more concerned about rising debt and join in a commitment to cut their governments’ deficits in half by 2013, administration officials said on Saturday.

(Source – NYT – all quotes below from same article)

In the lead-up to the G20, the US was lobbying heavily for a very different outcome. The US wanted continued stimulus and thin-air money printing and made its plea for this policy stance very publicly in the days and weeks leading up to the G20 meeting.

The reasons for this stance are numerous and complex, but one stands out prominently: Elections are coming up. If you are an incumbent, now is not the time to cut off the stimulus efforts.

The story here is that the US wants to stay on the path of printing, borrowing, and government stimulus, but a significant portion of the rest of the developed world has decided this is not a direction that makes sense. Such fundamental splits in philosophy are what great historical turning points are made of.

The second thing we learned is that, despite these differences in how to fund future growth, there is nothing yet to indicate that any the world leaders are aware that the very concept of perpetual growth is an unworkable fallacy. It’s obvious, hopefully to even the most casual of thinkers, that someday, sooner or later, whatever growth one is engaged in will have to stop. Nothing grows forever;…
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Stock Market Data Storm Just Ahead

Stock Market Data Storm Just Ahead

Courtesy of John Nyaradi

40 Y/O MALE PATIENT AFTER THALLIUM STRESS TEST

Weekly stock market and ETF commentary from Wall Street Sector Selector

This week was full of economic excitement and stress in the stock markets of the world but was nothing compared to what lies just ahead.

We’ll talk about the economic data storm coming this week in just a moment, but first I’d like to discuss the biggest potential news item of last week and that is that Fed Chairman Ben Bernanke appartently is rounding up support at the Fed for a renewed round of quantitative easing. 

As reported on June 24th in the Telegraph.co.uk, a British newspaper and web site, Dr. Bernanke is considering expanding the Fed balance sheet from $2.4 Trillion to true nosebleed territory of $5 Trillion. 

Dr. Bernanke looks at the same data we do every week and has come to the same conclusion; the economy is slowing and we’re at risk of a double dip recession and global deflation.  

If new quantatative easing on the part of the Fed should actually take place, this would be a radical “game changer” indeed. 

Looking at My Screens 

This week’s mostly bad news pushed markets down sharply almost all week until Friday when we had a short rally in response to the financial regulation bill finally getting off the table and the highest consumer sentiment readings in two years. …
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Arbing The Decoupling Between CDS And Out-Of-The-Money Equity Puts In Distressed Names

Courtesy of Tyler Durden

In his latest analysis, Goldman credit strategist Charles Himmelberg resumes the firm’s party line of claiming the market is overestimating the risk impact of “fat tail” events, because presumably, as Goldman’s Javier Pérez de Azpillaga showed previously, even though Spain is insolvent, is facing a massive budget deficit, has a huge debt-roll problem, and has a banking system that is locked out of capital markets, all is good (full report here) and all those who are betting on Europe’s demise are about to lose money (how this Eurozone optimism jives with Goldman’s recent downgrade of the EURUSD to 1.15 is beyond non-lobotomized comprehension, so we’ll just leave it be as yet another fully expected Goldman inconsistency). Yet, as ever so often, inbetween the conflicts of interest, Goldman does tend to provide that occasional piece of useful, actionable information. In this case, Himmelberg has done a very relevant analysis comparing Jump to Default costs for CDS and for out-of-the-money equity puts on distressed public names, and concludes that purchasing CDS provides a far better, lower-costing entry point to hedge against default. As he notes: “Our results show that pricing in the two markets follows the same trend, but that credit protection may be cheaper in many cases.” Specifically, anyone wishing to arb the mispricing of credit and equity downside protection would be wise to put on a pair trade basket where one buys CDS/sells OTM Puts in SFI, LIZ, BC, MIR, NYT, and DDS and the inverse (sells CDS/buys OTM Puts) in F, AMR, MGM, TSO, SFD and LEN on a DV01 neutral basis, and wait for risk normalization between equity and credit to lead to a recoupling in the spreads. 

As we have demonstrated in presenting the daily decoupling and subsequent recoupling in the EURJPY-ES pair, technical divergences such as this particular one will likely not persist for long as in this fundamental-less market, any divergence from the norm in technicals is promptly (if with a slight delay) filled in. the For those interested in pursuing this further, here is Himmelberg’s elaboration.

Credit default swaps are frequently used by equity investors to hedge the risk of distress across their names, similarly to put options. And if we assume that a stock goes close to zero in case of default, then a


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Zero Hedge

Americans' Economic Hope Has Collapsed

Courtesy of ZeroHedge. View original post here.

Which came first, the confidence or the stock market rally?

One thing is for sure, the crash in stocks in December has crushed the hope of Americans that their economic future is going to be better under President Trump.

Overall confidence dipped to 58.1 - a 4-month low, but, U.S. consumers this month were the most downbeat on the economy since November 2016, a third straight drop after expectations reached a 16-year high just three months earlier, as the partial government shutdown wears on toward a fourth week.

...



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Kimble Charting Solutions

Triple Breakout Test In Play For S&P 500!

Courtesy of Chris Kimble.

Is the rally of late about to run out of steam or is a major breakout about to take place in the S&P 500? What happens at current prices should go a long way in determining this question.

This chart looks at the equal weight S&P 500 ETF (RSP) on a daily basis over the past 15-months.

The rally from the lows on Christmas Eve has RSP testing the top of a newly formed falling channel while testing the underneath side of the 2018 trading range and its falling 50-day moving average at (1).

At this time RPS is facing a triple resistance test. Wil...



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Phil's Favorites

Brexit deal flops, Theresa May survives -- so what happens now?

 

Brexit deal flops, Theresa May survives -- so what happens now?

Courtesy of Victoria Honeyman, University of Leeds

As the clock ticks down to March 29 2019, all of the political manoeuvring, negotiating, arguing and fighting is coming to a peak. In the two and a half years since the 2016 EU referendum, views on both sides have hardened and agreement still seems as far away as it was the day after the referendum.

With Theresa May’s withdrawal agreement disliked by all sides, and voted down by an unprecedented majority in the House of Commons, everyone is wondering what can and should be done next?

...



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Digital Currencies

Crypto-Bubble: Will Bitcoin Bottom In February Or Has It Already?

Courtesy of Michelle Jones via ValueWalk.com

The new year has been relatively good for the price of bitcoin after a spectacular collapse of the cryptocurrency bubble in 2018. It’s up notably since the middle of December and traded around the psychological level of $4,000... so is this a sign that the crypto market is about to recover?

Of course, it depends on who you ask, but one analyst discovered a pattern which might point to a bottom next month.

A year after the cryptocurrency bubble popped

CCN...



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ValueWalk

D.E. Shaw Investment Calls For Leadership Change At EQT

By ActivistInsight. Originally published at ValueWalk.

Elliott Management has offered to acquire QEP Resources for approximately $2.1 billion, contending the oil and gas explorer’s turnaround efforts have done little to lift the company’s share price. The company responded and said that a thorough review of the proposition is imperative in order to properly act in the best interests of shareholders, “taking into account the company’s other alternatives and current market conditions.” The news came only a month after Travelport Worldwide agreed to sell itself to Siris Capital Group and Elliott’s private equity arm Evergreen Coast Capital for $4.4 billion in cash and two months after Athenahealth was bought by Veritas and Evergreen for $5.7 bi...



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Insider Scoop

UBS Says Disney's Streaming Ambition Gives It A 'New Hope'

Courtesy of Benzinga.

Related DIS Despite Some Risks, Analysts Still Expecting Double Digit Growth From Communications Services In Q4 ...

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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