Archive for 2012

Swing trading portfolio – week of November 19th, 2012

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

Optrader 

Swing trading virtual portfolio

 

One trade virtual portfolio

 





Gauging Investor Sentiment with Twitter: New Update

Courtesy of Doug Short.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.


The Downside Hedge Twitter Sentiment indicator for the S&P 500 Index (SPX) showed a strong reading of +.22 last Monday. This was near a turning point in price. As we’ve noted in previous updates, extreme readings in the daily indicator near market turning points often act as an initiation thrust (in this case pointing to higher prices). The rest of the week brought those higher prices. However, sentiment started to diverge. Tuesday and Wednesday printed negative readings in daily sentiment as traders tweeted about consolidating Monday’s strong up move. Then Friday’s extremely strong price action generated a lot of tweets about the market running too fast on low volume. This has created a negative divergence in the short term, which warns that the market may pause in the next few days.

Smoothed sentiment has broken clearly above, and held, the zero line. This signals that there is more room for the market to rally over the intermediate term. Continued readings above zero will keep a positive bias in place. We’ll be watching for a negative divergence, a close below zero, or a break of the recent trend line on smoothed sentiment for clues that the rally has run its course.

Our Twitter Support and Resistance levels generally followed price this week suggesting that traders were chasing the market rather than setting targets for their trades. There were only scattered tweets above and below the market, which suggests that market participants are uncertain about future price movement. Even so, the tweets did have a slight bias to the upside, targeting resistance at 1435 and 1475. Support below is at 1400 and 1380. However, these targets were calculated mainly from prior resistance rather than a large volume of tweets targeting them as lows. We’ll want to see more tweets at 1400 and 1380 to have confidence that those levels are major support.


For background information on this indicator, see Gauging Investor Sentiment with Twitter.

Blair Jensen at Downside Hedge tracks Twitter sentiment and provides hedging strategies for individual investors.

 

 

 

 





On Surviving The Monetary Meltdown

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Via Detlev Schlichter of DetlevSchlichter.com,

Let us start by looking at the economy from 10,000 feet above: After 40 years of boozing on easy money and feasting on fantastical asset price inflations, the global monetary system is approaching catharsis, its arteries clogged and instant cardiac arrest a persistent threat. Most financial assets are expensive, and many appear to be little more than securitized promises with low probability of ever delivering payment in full. Around the globe, from Japan to the US, a policy of never-ending monetary stimulus consisting of zero interest rates and recurring rounds of ‘quantitative easing’ has been established aimed at numbing the market’s growing urge to liquidate. Via the printing press, the central banks, the lenders-of last resort, prop up banks and financial assets and simultaneously fatten the state, the borrower of last resort, which, despite excited editorials against the savage policy of ‘austerity,’ keeps going further into debt almost everywhere.

‘Muddling through’ is the name of the game today but in the end authorities will have two choices: stop printing money and allow the market to cleanse the system of its dislocations. This would involve defaults (including those of sovereigns) and some pretty nasty asset price corrections. Or, keep printing money and risk complete currency collapse. I think they should go for option one but I fear they will go for option two.

In this environment, how can people protect themselves and their property?

Disclaimer

Before I start sharing some of my own personal thoughts on this topic with you I should repeat my usual disclaimer: I provide economic analysis and opinion, food for thought. But I do not intend to give investment advice and certainly not any specific trade ideas. I provide a worldview, and an unconventional one at that. You alone remain responsible for your actions, and whatever you do, you do it at your own risk.

My three favourite assets

My three favourite assets are, in no particular order, gold, gold and gold. After that, there may be silver, and after a long gap of nothing there could be – if one really stretches the imagination – certain equities or commercial real estate.

Why gold?

We are,
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Key Global Event Risks For The Next Five Years (The Known Unknowns)

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The world is awash with liquidity and yet, despite (or perhaps because of) this, the greatest potential impacts lie from downside risks. The combination of macro growth risks, major economy elections (2013 looks busy), and the plethora of central bank policy meetings over the next year (heavy December) leave a path ahead of forlorn hope – or exuberant anticipation – for many. Summary below…

Growth risks…

 

Election Events…

 

and the next 12 months of hope…

 

Source: SocGen





The Three “Financial Structure” Paradigms Of Modern Finance

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

In a prior post, we discussed the implications of the global shadow banking system having risen to the unprecedented level of roughly 100% of global GDP. By now it should be quite obvious to even the most jaded optimists, that the reason why traditional leverage conduits are no longer applicable (and the only real source of bank credit creation is the Fed via the hopeless blocked up excess reserve pathway), and why credit money (and hence in a Keynesian world “growth“) has to come via deposit-free, unregulated “shadow” venues, is that there are no longer enough good money good assets for conventional secured credit creation, and viable levered projected cash flows for conventional unsecured credit creation. Yet not the entire world has gone all in on this gambit, which together with the Fed’s money printing, is truly the last bastion of “money’ creation. In fact, as the FRB demonstrated, there are three distinct paradigms when it comes to source of credit creation or as it puts it, “financial structure“: the US “massive shadow banking system” way, the German “conventional bank deposits funds loan creation” way, and the Saudi Arabian, and soon everyone else, “central planning to the max” way. In a nutshell, these are the three credit system structure extremes, with everything else currently inbetween. These can be visualized as follows:

Follows the FRB’s commentary on these three financial system “paradigms”

Three main groups of jurisdictions emerge when analysing the structure of financial systems based on the share of banks, insurance companies and pension funds, other NBFIs/OFIs, public financial institutions and central banks in the total (see Annex 2 and Exhibit 3-1):

  • A first group includes advanced economies characterised by a dominant share of banks combined with a limited share of OFIs that does not exceed 20%. Jurisdictions such as Australia, Canada, France, Germany, Japan, Spain fall in this category.
  • A second group includes economies where the share of OFIs is above 20% of the total financial system and relatively similar, or higher, to that of banks. For instance, the Netherlands, the UK, the US, fall in this category.
  • A third group includes emerging market and developing economies where the share of public financial institutions or the central bank is significant, often on account


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Chris Christie Provides Perfect Setup for Saturday Night Live

Courtesy of Mish.

Those looking for late Sunday evening humor can find in in this short YouTube clip of New Jersey governor Chris Christie.

Link if video does not play: Chris Christie on Twinkies
At a recent news conference, Christie was asked a question about Twinkies. He responded …

Really, seriously, you’re not asking me about Hostess Twinkies are ya? What’s the next question? I’m on Saturday Night Live enough. You think you’re getting me behind this microphone having me talk about Twinkies? This is a setup man, I know it. You people are the worst. This is a setup. I am not answering questions on Twinkies. No, no, no, no, no, no. It’s bad that I even said the work Twinkie from behind this microphone. You are not getting me to do that, no way.

That is so obvious, it almost appears as if Christie was trying to make the opening skit of Saturday Night Live.

In case you are not familiar with the Twinkies story, please consider Hostess to Liquidate if Bakers’ Strike Continues Through Thursday; End of Twinkies Hours Away?

The bottom line is the union would not give into demands and  the company filed a motion last Friday to liquidate. Shutting down the company will mean the loss of 18,500 jobs (less any jobs picked up by buyers of brands Twinkies, Ding-Dongs, Wonder Bread, Ho-Ho’s etc.)

There is plenty of blame to go around, including untenable wages and benefits, leveraged debt, untenable management salaries etc.

However, the enabling factor behind the debt is loose monetary policy by the Fed coupled with fractional reserve lending. Factor in unions and corrupt management and there is no way  the company could make it without huge concessions from the union.

Still, it is difficult to have much sympathy for those who vote to have no job in these trying times.

The union will likely see pension benefits slashed by 50% or more when handed over to the Pension Benefit Guarantee Corporation….



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Global Shadow Banking System Rises To $67 Trillion, Just Shy Of 100% Of Global GDP

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Earlier today, the Financial Stability Board (FSB), one of the few transnational financial “supervisors” which is about as relevant in the grand scheme of things as the BIS, whose Basel III capitalization requirements will never be adopted for the simple reason that banks can not afford, now or ever, to delever and dispose of assets to the degree required for them to regain “stability” (nearly $4 trillion in Europe alone as we explained months ago), issued a report on Shadow Banking. The report is about 3 years late (Zero Hedge has been following this topic since 2010), and is largely meaningless, coming to the same conclusion as all other historical regulatory observations into shadow banking have done in the recent past, namely that it is too big, too unwieldy, and too risky, but that little if anything can be done about it.

Specifically, the FSB finds that the size of the US shadow banking system is estimated to amount to $23 trillion (higher than our internal estimate of about $15 trillion due to the inclusion of various equity-linked products such as ETFs, which hardly fit the narrow definition of a “bank” with its three compulsory transformation vectors), is the largest in the world, followed by the Euro area with a $22 trillion shadow bank system (or 111% of total Euro GDP in 2011, down from 128% at its peak in 2007), and the UK in third, with $9 trillion. Combined total shadow banking, not to be confused with derivatives, which at least from a theoretical level can be said to offset each other (good luck with that when there is even one counterparty failure), is now $67 trillion, $6 trillion higher than previously thought, and virtually the same as global GDP of $70 trillion at the end of 2011.

Of note is that while the US shadow banking system has been shrinking (something our readers are aware of, and a fact which in our opinion implies there is nearly $4 trillion more in Fed monetization still to come, as Bernanke has no choice but to offset the credit destruction within shadow conduits, which in turn are deleveraging to the tune of nearly $150 billion per quarter), that of Europe has been increasing.

The result:


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Weighing the Week Ahead: Can You Find Opportunity this Thanksgiving?

Courtesy of Doug Short.

We have a very interesting week ahead. Despite the gravity of the issues, not much will be happening. Congress, after convening for a few days, will be back on vacation recess. There is not much news coming on the economic front. Equity markets will be closed on Thursday and open only for the morning on Friday.

In many shops, the “A” team will be off all week, so initiating new positions will be limited.

Alert: The prices and trades still count. If you can find a bargain, you get it.

The non-stop fiscal cliff coverage remains intense. There is a lot of buzz right now about “protecting your portfolio.” This is amazing, since the underlying framework of these issues has been known for at least 1 1/2 years, and widely publicized (at this site and elsewhere) for months. By definition, anyone who is only now getting interested does not understand the fundamental issues.

For the average investor there is danger in these messages. Successful traders (like our Felix model) make relatively fast moves, responding to trends and rule-based systems. Unsuccessful traders learn that their system was flawed. None of the systems considers market fundamentals directly, expecting instead that anything relevant is part of the message of the market.

Successful investors do the opposite. They determine the value of a business and then see if they can invest at an attractive price. Think of it this way. Everyone ridicules the “greater fool” theory — buying an overvalued stock because you hope someone else will soon pay an even higher price for it. Selling an undervalued stock is no different. You are no longer investing, but instead guessing that the market will allow you a better future price.

No one explains this better than Warren Buffett, commenting on the “portfolio insurance” method of deciding when to sell:

If you’ve thought that investment advisors were hired to invest, you may be bewildered by this technique. After buying a farm, would a rational owner next order his real estate agent to start selling off pieces of it whenever a neighboring property was sold at a lower price? Or would you sell your house to whatever bidder was available at 9:31 on some morning merely because at 9:30 a similar house sold for less than it


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Adult Conversation About Income Tax Policy

Adult Conversation About Income Tax Policy

By The Banker

With the Fiscal Cliff[1] looming, kids, it’s time for “The Talk.”

By ‘The Talk,’ I mean yank our minds into the grown-up world.  We have been innocent about how money really gets made, and kept, and taxed.  The ‘adults’ know, but they haven’t felt comfortable sharing the real truth.  We didn’t know, and we didn’t think we could talk about it.  It seems embarrassing for some reason.  Almost dirty.  Maybe it’s the way we were brought up.  Nevertheless, now’s the time for ‘The Talk.’

Here it is in a nutshell: The way the ‘grown-ups’ – our elected officials – set tax policy tells us how they value different ways of making money.  They see three different ways to make money, and they clearly favor the first two.

Inherited Money

According to our tax code it turns out the very best way to make money is the old-fashioned way:  Inherit it.

As of this writing, the first $5 million from a deceased individual can pass to you tax free.  Our elected leaders want you to know that the best way to get rich is to be born into a rich family and have the right people die at the right time.[2]

Stated that way, it seems a bit un-American, no?  A bit, well, aristocratic.  Nevertheless, that’s far and away the best way to earn your first $5 million.  Our leaders want you, Richie Rich, to have your first $5 million tax free.[3]  Mwah!

Make money with your money

The second best way to get wealthy, according to the tax code, is to already have a lot of money, and then earn money on your money.

If you already have a lot of money, then a significant proportion, probably a majority of your income, will come from three sources: Tax Free Bonds, long-term capital gains on your investments, or corporate stock dividends.[4]

The best of these investment, tax wise, is Triple Tax Free municipal bonds, which are exempt from local, state and federal income taxes.  You earn just about 0.5% interest[5] these days, but if you’ve got $100 million in triple tax free muni bonds then you’ve got yourself $500,000 a year, tax free!  That pays for quite a few golf outings a year, with money left over for the lobster roll at


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Here Come The ‘Stock Market Vigilantes’

Here Come The 'Stock Market Vigilantes'

Courtesy of Joe Weisenthal at Business Insider

When you hear the word "vigilantes" in financial markets, it's usually referring to "bond vigilantes" the quasi-mythical creatures that drive interest rates up, and force governments and their central banks to either cut spending or tighten monetary policy.

The debate about the existence of vigilantes is tired, but it's a useful term in the sense that some market movements do inspire policy responses.

In Europe, high rates for government borrowing have prompted all kinds of action on the part of official figures.

In the US it's been ages since anyone cared about high interest rates, or saw them as a threat.

But the stock market is a different story, and there's this belief that if the Fiscal Cliff situation got too bad, then the market would tank, and that would force a resolution.

Says BofA's Ethan Harris:

Historically the bond market has been a disciplining force for policymakers. When the Fed was too soft on inflation or the fiscal deficit was out of control, interest rates spiked higher. In our view, this has changed and today the stock market is the disciplining force for Washington. Stocks have generally endorsed Fed policy. We estimate that stock prices rose a cumulative 15% in the past three years in response to Fed announcements or actions. While some investors have misgivings about what the Fed is doing, the overall market likes it. By contrast, the stock market is giving a clear no-confidence vote to fiscal policymakers. This was particularly clear when the TARP bailout plan failed to pass and at the end of the debt ceiling debate.

Today, the stock market “vigilantes” are gathering again. In early September we argued that “there is a high risk of a risk-off trade in the markets after [the Fed meeting on] September 13.” We argued that market focus would shift from Fed and ECB easing to fiscal policy risks. In the event the Fed meeting did mark a turning point in the markets, and with the election over and the fiscal cliff taking center stage, the downward pressure has accelerated. This weakness has occurred despite better news on the economy and an unremarkable earnings season.

It's possible that the latest market selloff is being over-fitted to the Fiscal Cliff negotiations, and that the relationship is weaker than assumed.

For one thing, there really…
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Zero Hedge

Johns Hopkins, Bristol-Myers Face $1 Billion Suit For Infecting Guatemalan Hookers With Syphilis 

Courtesy of ZeroHedge. View original post here.

A federal judge in Maryland said Johns Hopkins University, pharmaceutical company Bristol-Myers Squibb and the Rockefeller Foundation must face a $1 billion lawsuit over their roles in a top-secret program in the 1940s ran by the US government that injected hundreds of Guatemalans with syphilis, reported Reuters.

Several doctors from Hopkins an...



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Phil's Favorites

This Is The One Chart Every Trader Should Have "Taped To Their Screen"

Courtesy of Zero Hedge

After a year of tapering, the Fed’s balance sheet finally captured the market’s attention during the last three months of 2018.

By the start of the fourth quarter, the Fed had finished raising the caps on monthly roll-off of its balance sheet to the full $50bn per month (peaking at $30bn USTs, $20bn MBS, although on many months the (balance sheet) B/S does not actually shrink by this full amount which depends on the redemption schedule) and by end-Q4 markets also experienced some of the largest volatility and drawdowns in nearly a decade.

As Nomura&...



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ValueWalk

The Competition For Capital Has Made Stocks Cheap

By Michelle Jones. Originally published at ValueWalk.

The new year is upon us, and now is the time many investors look at what 2018 was and prepare for what 2019 might be. Recession jitters are starting to pick back up again, especially now that the full picture of 2018 is in the books. But what if you could pick only one theme for 2018? Jefferies strategist Sean Darby and team have a suggestion which is especially timely given that it appears to mark the end of an era.

StockSnap / PixabayVolatility carries into the new year

This past year was one of extremes, and the markets ended i...



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Kimble Charting Solutions

Stock declines did not break 9-year support, says Joe Friday

Courtesy of Chris Kimble.

We often hear “Stocks take an escalator up and an elevator down!” No doubt stocks did experience a swift decline from the September highs to the Christmas eve lows. Looks like the “elevator” part of the phrase came true as 2018 was coming to an end.

The first part of the “stocks take an escalator up” seems to still be in play as well despite the swift decline of late.

Joe Friday Just The Facts Ma’am- All of these indices hit long-term rising support on Christmas Eve at each (1), where support held and rallies have followed.

If you find long-term perspectives helpf...



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Digital Currencies

Transparency and privacy: Empowering people through blockchain

 

Transparency and privacy: Empowering people through blockchain

Blockchain technologies can empower people by allowing them more control over their user data. Shutterstock

Courtesy of Ajay Kumar Shrestha, University of Saskatchewan

Blockchain has already proven its huge influence on the financial world with its first application in the form of cryptocurrencies such as Bitcoin. It might not be long before its impact is felt everywhere.

Blockchain is a secure chain of digital records that exist on multiple computers simultaneously so no record can be erased or falsified. The...



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Insider Scoop

Cars.com Explores Strategic Alternatives, Analyst Sees Possible Sale Price Around $30 Per Share

Courtesy of Benzinga.

Related 44 Biggest Movers From Yesterday 38 Stocks Moving In Wednesday's Mid-Day Session ...

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

Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

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

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

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



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Members' Corner

Why Trump Can't Learn

 

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

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

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

 

Opening Pandora's Box: Gene editing and its consequences

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

Courtesy of John Bergeron, McGill University

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

...

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Mapping The Market

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

By Jean-Luc

Maybe we should simply try him for treason right now:

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

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

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

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



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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

 

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

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

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

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



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

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

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

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

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

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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.

Market Shadows >>