Posts Tagged ‘BNP’

Testy Tuesday – 1,072 or Bounce!

SPY DAILYHas it been a week already? 

That’s right – last Tuesday our title, after 3 bullish days, was "S&P 1,200 or Bust (again)" and bust we did!  At the time I said "It’s not that I’m flip-flopping – we’re simply playing the range and if the trip from the bottom to the top of the range is just 2 days – then flip-flop we must!"  Our bearish hedge in that morning’s Alert to Members was 30 DXD Oct $18/20 bull call spread at .70 ($2,100) offset by the sale of 10 GE Jan $15 puts at $1.05 ($1,050).  DXD is already at $21.34 and the bull call spread is $1.30 (30 = $3,900) while the 10 GE short puts are $1.75 ($1,750) for a net $2,150, up 105% in the first week – even if the short puts were not stopped out with a smaller loss.  

We also ran our Long Put List that morning (see Weekend Reading for recap of that strategy and list of short trade ideas) and those, of course, are up huge across the board as things got so bad yesterday we even had to short IBM – our list’s last brave holdout.  Another fun short we played that day was a ratio backspread on CMG.  

Taking advantage of selling into the pre-earnings excitement, we were able to add the following trade to our virtual $25,000 Portfolio:  

Earnings are on the 20th, the day before expirations so I like the volatility crush of selling 5 $340 calls for $9 ($4,500) and buying 3 Dec $350s for $15 ($4,500) for a free spread.  No matter what CMG does, $4,500 of premium will be gone from the callers on Oct 21st, then the Nov whatevers can be sold, hopefully for another $4,500 in premium or perhaps we can just pull the trade so let’s do one set in the $25KP and see how it goes. 

EEM WEEKLYCMG took a nice dip since then (now $292) and the 5 Oct $340 calls fell to $2.20 ($1,100) but the 3 Dec $350s have held $8.60 ($2,580) for a net profit of $1,480 off a trade that cost no cash just 7 days ago.  These are the kinds of trades we love around earnings season.  We didn’t need to hold it for a month and now we can free up the margin (about…
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Monday Meltdown – Global Edition

108%!

That’s how much Greece is paying today to borrow money for a year!  In theory, if you lend Greece $10,000 today, next year they will pay you back $20,800.  In THEORY that is because, at 108% – IF they actually borrowed at that rate, you could be very sure that they would not be around to pay you.  That’s the joke of this whole thing – we have these insanely unrealistic prices being set on bonds, which only hurts the people who have outstanding ones and need to redeem them as Greece doesn’t actually borrow money for even double-digit interest rates.  It’s all a silly, artificial construct that is only useful in spreading panic among investors.  

Unfortunately, investor panic is all you need to really destroy the Global economy – as we proved in 2008.  As you can see from the chart on the right, we are currently mirroring the same path we took 3 years ago as we head into October and, in fact, our financial sector is performing WORSE than it did when we had ACTUAL major bank and minor country failures – not just rumors of them.  

On Friday, Greece’s finance minister, Evangelos Venizelos, blamed “organized rumors” for renewed speculation that Greece would default, and said the country intended to comply with all terms needed for the bailout that European countries agreed to in July. But the fact that the details of the deal have yet to be locked down has unnerved some investors.

In a speech this week, Josef Ackermann, the chief executive of Deutsche Bank, said it was not justifiable for politicians to demand that European banks raise more capital, as Christine Lagarde (DSK’s evil replacement), the head of the International Monetary Fund, had done. “It’s obvious,” he said, “that many European banks would not be able to handle writing down the sovereign bonds they hold on their banking books to market levels.”

Patrick Chappatte - The International Herald Tribune - Stock market panic - English - Economy,USA,Finance,Subprime,Crisis,Stock Market,Wall Street,Crash,Bank,Speculation,Housing,FearBut, he said, it would “risk undermining the credibility” of European bailout packages “if politicians were to now send out the signal that they do not believe in the success of those measures.” And, he argued, forcing banks to raise capital now would anger investors by forcing the dilution of current shareholders

 "Risk undermining the credibility of European bailout packages?!?"  Is this guy freakin’ kidding?  Greece is being "bailed out" and the market rate on their debt…
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Options and My Patience Expire Today

Well now we're officially cashed out!

As I always do before options expiration I reviewed our Buy List, which, this quarter, is a list of 37 stocks we've been playing since late December and, sadly, after reviewing 37 of our favorite investments very carefully this week – I could only conclude that cashing them out was the only decision I could be comfortable with this week.  Of 66 trades we had on our 37 stocks, 64 are winners with an average return since 2/8 of 28% – since most of the trades were designed to make 40% for the year – it just seems silly not to take the money and run now, on March 19th.

You are not supposed to have 64 out of 66 winners in 6 weeks, you are not supposed to make 3/4 of what you anticipate for the year in 6 weeks – that is NOT how the markets are supposed to work!  When the markets go against you in some ridiculous "black swan" fashion, it is easy to throw up your hands and walks away but when the markets go in your favor in some ridiculous, "white swan" fashion – maybe it's also a good idea to use those same hands to stuff your pockets with cash and walk away.

There's nothing wrong with cash – the Fed tells us there will be no inflation in the foreseeable future and, in fact, they are fighting deflation so our sideline dollars will gain more and more buying power while we wait.  Actually, despite my best efforts, there are still 15 positions that weren't worth getting rid of (too much reward, not enough risk), even in a worrying market.  Generally they are positions we expect to get at least another 20% from by January – still a pretty good return in this low-VIX market. 

Our plan is to take opportunistic trades between now and April earnings – we're still expecting a pullback and I'd be very motivated to go back into our old friends if they go back on sale but most of those picks were made for a defensive market posture that won't be necessary if we break over our levels from here and they certainly weren't worth riding back down after hitting 75% of our goal in 25% of the year! …
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Testy Tuesday Morning – $1.70 for a Pound? I Don’t Think So…

Has the dollar fallen too far?

The British Pound is now fetching $1.70, a huge break-out and well above the June highs, now valued higher to the dollar than any time since last October.  Britain has aggressively cut rates and expanded their money supply and Britain had banks falling like dominoes before being taken over by the government.   The UK's budget deficit as a percent of GDP is forecast to be 11.6% this year, the second worst on the planet, exceeded only by the US's projection of 13.5% but the UK is forecast to catch up in 2010 with 13.3% of their GDP taken up by debt.  Why then, you may wonder, is the British Pound up 25% against the dollar this year and almost 10% this past month?

The answer to that is the same as the answer to many irrational market moves – SPECULATION.  The dollar in general has been pushed back down to 1-year lows by currency speculators and the Pound is benefiting from their No-Euro policy that makes the UK a relatively safe-looking investment for currency traders who are worried that Eastern Europe will eventually prove to be a weight that drags the rest of the EU down.  With a population and economy about the size of California and the independence of a sovereign nation, any small sign of improvement (like the recent uptick in manufacturing data in the UK) can quickly pull money back to the Pound who, just 30 years ago, were the second strongest currency in the world and, for 500 years before that, was the undisputed global leader.  The UK, as it was 500 years ago, is still ruled by its powerful banking sector and again the fishbowl-like nature of the island nation tends to magnify small improvements we've seen in the UK banks, which causes Japanese housewives (who are very into FOREX trading) to push more money into British currency. 

Japan Housewife forexToday it may become apparent that the Japanese housewives have become a little irrational in their Pound exuberance as nationalized British Bank, Northern Rock, showed a 31% increase in first-half losses to $1.25Bn as bad loan provisions jumped to over $1Bn from under $300M last year.  Even worse for the bank – deposits fell 17% despite the bank's 100% government guarantee
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Phil's Favorites

The Real World

 

The Real World

Courtesy of 

“What’s going on in the stock market?”

This usually isn’t an easy question to answer. But we live in unusual times and right now the stock market is very easy to explain.

Look through a few dozen charts and you’ll find a very clean narrative. Today’s winners were last year’s losers and today’s losers were last year’s winners. Said differently, stocks in the physical world are outperforming stocks that live in the digital world.

Look at this chart which compares the two groups. In the physical world, we have Macy’s, Marriott, MGM, Royal Caribbean, Delta, Simon Pr...



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Zero Hedge

Kolanovic: Most Are Unprepared For The Coming Persistent Inflation Shock

Courtesy of ZeroHedge View original post here.

For the past two years, JPMorgan's head quant and resident permabull, Marko Kolanovic, has been periodically predicting an imminent rotation out of growth and into value stocks (a rotation which had failed to take hold until earlier this year when we finally saw some glimmers of value outperformance). Most recently, Kolanovic predicted in February that March would see a major move higher in commodity names as vol-control funds and CTAs started buying up commodity and reflation-linked stocks on the 1 year anniversary of the covid crash only to see the energy sector slump in the next two mont...



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Biotech/COVID-19

India COVID crisis: four reasons it will derail the world economy

 

India COVID crisis: four reasons it will derail the world economy

India is the fifth largest economy in the world. Deepak Choudhary/Unsplash

Courtesy of Uma S Kambhampati, University of Reading

The second wave of the pandemic has struck India with a devastating impact. With over 300,000 new cases and 3,000 deaths across the country each day at present, the total number of deaths has just passed the 200,000 mark – that’s about one in 16 of all COVID deaths across the world....



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Digital Currencies

Historic Reversal: For The First Time Ever Ether Options Trading Volume Surpasses Bitcoin's

Courtesy of ZeroHedge View original post here.

The world is gradually realizing that whereas bitcoin is a one-trick pony (one which may or may not be replaced by central bank digital currencies), it is ethereum that is the truly revolutionary architecture powering the new digital realm. We saw this on Monday when not only did ethereum soar as bitcoin prices stagnated, but that's also when Crypto derivatives exchange Deribit experienced an unusual trend for the first time ever: its ether (ETH) options trading volume (...



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Chart School

Yellen can not stop the dollar decline

Courtesy of Read the Ticker

Printing money results in a lower currency, so long as the currency does not fall too fast.

Previous Post: US Dollar Forecast - Weakness

Here are the very strong fundamentals for a lower US dollar: 

(a) US inflation exploding.
(b) Massive US twin deficits.
(c) Better conditions in Europe.

However French election worries in 2022 Q1 and Q2 may provide US dollar strength (via European weakness) after Christmas, but this strength may come after a low in the DXY near $84.  

It looks like Yellen knows a down swing in the US dollar is near because ...

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Politics

If China's middle class continues to thrive and grow, what will it mean for the rest of the world?

 

If China's middle class continues to thrive and grow, what will it mean for the rest of the world?

Over the past few decades, hundreds of millions of Chinese citizens have become part of the middle class. AP Photo/Ng Han Guan

Courtesy of Amitrajeet A. Batabyal, Rochester Institute of Technology

China’s large and impressive accomplishments over the past four decades have spurred scholars and politicians to debate whether the decline of the West – including the ...



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ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



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Kimble Charting Solutions

Will Historic Selloff In Treasury Bonds Turn Into Opportunity?

Courtesy of Chris Kimble

Long-dated treasury bonds have been crushed over the past year, sending ETFs like TLT (20+ Year US Treasury Bond ETF) spiraling over 20%.

Improving economy? Inflation concerns? Perhaps a combination of both… interest rates have risen sharply and thus bond prices have fallen in historic fashion.

Today’s chart looks at $TLT over the past 20 years. As you can see, the recent decline has truly been historic. $TLT’s price has swung from historically overbought highs to oversold lows.

At present, the long-dated bond ETF ($TLT) is trading 7.8% below its 200-...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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Promotions

Phil's Stock World's Weekly Webinar - March 10, 2021

Don't miss our latest weekly webinar! 

Join us at PSW for LIVE Webinars every Wednesday afternoon at 1:00 PM EST.

Phil's Stock World's Weekly Webinar – March 10, 2021

 

Major Topics:

00:00:01 - EIA Petroleum Status Report
00:04:42 - Crude Oil WTI
00:12:52 - COVID-19 Update
00:22:08 - Bonds and Borrowed Funds | S&P 500
00:45:28 - COVID-19 Vaccination
00:48:32 - Trading Techniques
00:50:34 - PBR
00:50:43 - LYG
00:50:48 - More Trading Techniques
00:52:59 - Chinese Hacks Microsoft's E...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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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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