Posts Tagged ‘BRK.B’

What Me Worry Thursday?

What a freakin’ recovery!

As I said on Monday: "It’s a paper tiger of a straw man we’re building for $1Tn but you HAVE to respect $1,000,000,000,000 – you just have to…  Our 5% Rule series for the S&P over the 1,155 breakdown line is the very critical 1,170, followed by 1,185, 1,200 (critical), 1,215 and 1,230 and THEN we are on the way to recovery."  Wow, that guy is AMAZING!  Anyway, so here we are at 1,170, after two days of testing the 1,155 line as a bottom so now it’s onwards and upwards to 1,185 hopefully.  I also said on Monday: "Below that, we’re not too impressed but it also won’t be very surprising if all $1Tn buys us these days is some moderate lift that isn’t strong enough to break our major technicals."

We have been casting a wide and bullish net since the crash, finally pulling some of our sideline cash for long plays on ABX, APPY, BAC, BIDU, BRK/B, BSX, C, CAT, DIA (3), DF, ERX, GOOG, LIZ, LVS, MEE, MON (3), RIG, T (2), TBT (2), TZA (shorting it), UNG and WFR.  We’re hedging heavily, of course, but it feels good to have longs again after being in cash for a while.   Our short-term bearish plays (mostly DIA and TZA) have been crushing us so far, which is good in a rally but yesterday was a bit much for us and we got a little more bearish but it looks like the G7 has adopted the "Better Red Than Dead" mantra as the World racks up astounding deficits to put off admitting that this little debt problem is not isolated to the PIIGS nations. 

Nonetheless, the global markets are rallying in unison – even while the Pound ($1.47) and the Euro ($1.26) collapse and even the Yen jumped back up last night, falling off the very BS 93.63 to the dollar it hit at 3am to psych up the Nikkei exporters back down to 92.75 this morning.  I noted weeks ago how the Yen knocked down for Japan’s open and then drifts lower into the US open virtually every night – it’s what currency traders call the "Goldman Trade" because you can bet it every single day and have a perfect quarter.  Sure it’s blatant manipulation designed to fool an entire nation of investors but, what else is new – Fuggedaboutit

So, a TRILLION Dollars down the rabbit hole in Europe – Fuggedaboutit!  I pointed out to Members in yesterday’s
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Natural Gas Options Trader Enacts Bullish Risk Reversal

Today’s tickers: UNG, IP, EEM, CAH, TRA, UAUA, USO, WFMI, BRK.B & ANF

UNG – United States Natural Gas ETF – Shares of the natural gas exchange-traded fund, which mirrors the price and performance of natural gas, are down 1.85% to $9.67 with just under one hour remaining in the trading session. Options traders initiated bullish plays in the March contract despite the dip lower in the price of the underlying shares. It looks like one investor initiated a bullish risk reversal to position for a rebound in the price per UNG share by March expiration. The trader sold 8,250 in-the-money puts at the March $10 strike for a premium of $0.64 each in order to offset the cost of buying 8,250 calls at the same strike for $0.40 apiece. The trader pockets a net credit of $0.24 per contract on the reversal, which he keeps if shares of the fund trade above $10.00 by expiration day. Additional profits are available to the upside if and when the price per share exceeds $10.00 apiece.

IP – International Paper Co. – Global paper and packaging firm, International Paper Company, enticed bullish options traders to initiate optimistic positions in the March contract as shares of the underlying stock jumped 6% in late afternoon trading to $23.92. Plain-vanilla call buying took place at the March $25 strike where upwards of 10,000 contracts were purchased for an average premium of $0.45 apiece. Call buyers stand ready to accrue profits should IP’s shares rally another 6.40% over the current value of the stock to surpass the effective breakeven point on the calls at $25.45 by March expiration.

EEM – iShares MSCI Emerging Markets Index ETF – Shares of the emerging markets exchange-traded fund, which generally corresponds to the price of the MSCI Emerging Markets index that was created by MSCI as a benchmark for international stock performance, rallied 2.30% to $39.32 this afternoon. June contract options activity on the EEM suggests shares may stagnate near the current price through expiration in four months. It looks like options traders sold straddles in order to pocket premium on the sale of both calls and puts. Investors sold approximately 9,100 calls at the June $39 strike for an average premium of $2.95 apiece and sold 9,100 puts at the same strike for a premium of $2.65 each. Gross premium enjoyed by straddle-sellers amounts to $5.60 per contract. Investors…
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Wintery Wednesday – Are We Now Corrected?

Was that it?

A 10% correction (David Fry chart on right) and we’re done?  If so, this is still a fairly bullish market, and it should be, as our sell-off last year was, beyond a doubt, way overdone.  Often people forget the fundamentals of investing and the biggest fundamental of them all is: "Where else are you going to put your money?"  There many fine companies out there with P/E ratios that are below 15.  That means if you give them a dollar, they will return 6.6% in earnings.  IBM has a PE of 12, which is an 8.3% return on my money and, according to projections, that will improve to 11 next year, generating 9 cents for each dollar I give them

Call me an optimist but I think IBM is a fairly safe place to keep my money.  Perhaps as safe as 4% TBills, or 7% Greek bonds or 3% Yen Notes or, Heaven forbid, a bank!  In fact, not many banks are paying 1.8% on your deposits but IBM does through dividends.  IBM was my example trade in the Weeekend Wrap-Up so I won’t get into strategies here but that is what our whole Buy List is about – picking up great long-term values and hedging them to even more effective entries.  

Not every stock is as rock solid as IBM but (going back to the Wrap-Up) who did we buy when the chips were down last week?  C, CCJ, TBT, GOOG, XLF, AAPL, AMED, CSCO, TM, LOW, AKAM, LLY, NLY, GE, TNA, USO, ABX, DELL, FXI, UYG, BRK/B.  Not exactly a radical collection of picks is it?  Yesterday, with the market up 2.5% from our shopping spree – we bought NOTHING.  Part of the "buy low – sell high" philosophy is waiting for the market to be either high or low.  Two weeks ago, on Jan 29th, I charted 10,058 on the Dow as a critical support line and, from our Buy List Update this weekend, I put up the following chart for Members:

And where did we finish yesterday on the Dow?  10,058.  See, this charting thing is easy – that’s why I don’t usually bother, it’s dullsville!  Let’s now turn our attention to our other major levels of 10,165 and 10,300 which, keep in mind, is nothing more than our predicted "weak bounce" off the drop from 10,700.  As I said in the above chart, we can expect
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Long-term Put Play on Intel Provides Protection through 2011

Today’s tickers: INTC, FXI, UFS, TM, BRK.B, X, QCOM, MCO, APC, COST, HNZ & DLTR

INTC – Intel Corp. – Shares of chip-making giant, Intel Corp., dipped lower in early trading, but rebounded this afternoon to stand 0.75% higher on the day at $20.15. Long-term protective positioning in the January 2011 contract on the stock suggests cautious optimism by Intel-option traders. One investor purchased a put spread by picking up 5,000 in-the-money puts at the January 2011 $22.5 strike for a premium of $4.05 each, marked against the sale of 5,000 puts at the lower January 2011 $12.5 strike for $0.35 apiece. The net cost of the transaction amounts to $3.70 per contract. The trader responsible for the spread is likely long shares of the underlying stock. The spread, in this scenario, serves as an insurance policy on the value of the underlying position should Intel’s shares slip beneath the effective breakeven price of $18.80 in the next year to expiration. The investor is protected even if shares of the semiconductor chip producer collapse down to $12.50 by January of 2011.

FXI – iShares FTSE/Xinhua China 25 Index Fund – Shares of the exchange-traded fund, which invests in twenty-five of the largest and most liquid Chinese companies, are down 0.75% to $38.27 with just under one hour remaining in the trading session. FXI’s share price has declined nearly 15% in the past few weeks, from a 2010 high of $44.53 on January 6, 2010, down to an intraday low today of $37.89. One option trader’s actions in the March contract today suggest he has had enough of the downturn, and is looking for a sharp rebound by expiration in two months. The investor initiated a three-legged combination play using both calls and puts on the fund. It appears the main portion of the trade is a ratio-bullish risk reversal involving the sale of 5,000 deep in-the-money put options at the March $41 strike for a premium of $3.66 each, spread against the purchase of 10,000 calls at the same strike for $0.70 apiece. The purchase of 10,000 puts at the March $35 strike for $0.85 each rounded out the third leg of the transaction. The investor pockets a net credit of $0.56 per contract on the trade, which he keeps if shares rally up to $41.00 by expiration. Additional profits accrue to the upside if shares bounce 7.15% higher to…
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Capital One Bears Out in Full Force in Options Land

Today’s tickers: COF, CAT, XRT, XLY, XLB, XLF, KRE, BRK.B, MCD & ISRG

COF – Capital One Financial Corp. – Better-than-expected fourth-quarter earnings of $0.83 per share, which blew straight past average analyst estimates of $0.45 a share, failed to shield the stock from the massive beating received during the trading session. Shares plummeted 11% to an intraday low of $38.18 after analysts at FBR Capital Markets slashed their forecast for COF’s earnings. FBR analysts cited “shrinking margins and new U.S. credit-card regulations” as reasons for the reducing earnings estimates according to one Bloomberg article released this morning. Bearish option traders are out in full force, populating both the call and put sides of the stock with pessimistic transactions. Investors purchased put options as low as the February $35 strike where 1,200 contracts were picked up for an average premium of $0.57 apiece. Traders long the puts are perhaps bracing for an additional 9.80% shift down in the price of the underlying to the breakeven point on the puts at $34.43 by expiration next month. Approximately 2,000 nearly in-the-money puts were purchased at the higher February $38 strike price at an average premium of $1.46 apiece. Call selling added to the bearish picture as some 2,100 contracts were shed at the out-of-the-money February $40 strike for a premium of $1.43 per contract. Finally, one trader initiated a pessimistic stance in the January 2012 contract. Perhaps this investor believes today’s turmoil is just the beginning of Capital One’s troubles, or, alternatively, the trader may simply be looking to keep the dollar credit on the following transaction. The trader purchased 1,500 puts at the January 2012 $30 strike for a premium of $4.36 each, spread against the sale of 3,000 puts at the lower January 2012 $25 strike for which he received $2.68 apiece. The investor pockets a net credit of $1.00 per contract on the spread, which he keeps if shares settle above $30.00 by expiration.

CAT – Caterpillar, Inc. – Surprisingly bullish trades befell machinery maker Caterpillar today. CAT’s shares commenced the trading day with higher shares, but slipped lower during the session, and currently reside 1.35% lower on the day at $56.09. Investors expecting shares to recover by expiration in March shed 5,000 in-the-money put options at the March $57.5 strike for an average premium of $3.76 apiece. Open interest at that strike of 5,169 lots suggests this transaction…
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Testy Tuesday – Dow 9,650, Berkshire $60 Edition!

Wheee, this is fun!

Just two weeks ago, on October 17th, I warned in the Weekly Wrap-Up that it was "Dow 10,000 or Bust" for the next week and we failed that one and last Wednesday we were looking to hold NYSE 6,900 and THAT failed too.  Now we enter into the second phase of our limbo game where the deep-voiced guy asks the question "how low can you go?" and we’ll be setting our next bar at our long-standing 9,650 target for the Dow,  which we are already hitting in pre-market trading.  If that fails, we’ll have to look down to S&P 1,000.  As you can see from Jesse’s Chart, we took a nice bounce off serious resistance yesterday but we’re just not feeling it yet, even though the market is now as technically oversold as it was in March

Yesterday was like a roller coaster and my first Alert to Members of the morning targeted 9,775 as the on/off line for our bullish/bearish posture on our DIA covers.  We whipped past that line right about 10 am as we got good reports from ISM, Pending Home Sales and Construction Spending but by 12:45 we had broken back down so I sent out an Alert calling to refocus back to 55% bearish by adding the DIA Jan $100 ($5) and Jan $102 puts ($6.20), already covered by the Nov $99 puts ($2.50). 

The reason we mess around with our covers is we don’t want to flip in and out of our option positions, which are generally either straight bearish or well-hedged long positions, is because options carry a relatively large bid/ask spread and cost you money every time you get in and out.  So, on the whole, we’d rather let our over-riding cover plays, like our DIA spread, adjust our stance as conditions change, making a single adjustment that keeps us balanced as we ride out the market waves. 

It’s been a couple of weeks since we had a good, old-fashioned stick save but we got a mother of one yesterday (as seen in Dave Fry’s chart) which was right on schedule as Kustomz bought it up in Member Chat at 3:09 and I agreed at 3:19 that "It does feel like a pre-stick move" and we grabbed VIX $25 puts at .85 to protect ourselves from a sudden surge in complacency.

By 3:33, my next comment to Members was: "The stick lives!" but…
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Zero Hedge

Italy's Luigi Di Maio Resigns As Five Star Leader

Courtesy of ZeroHedge View original post here.

With his once-vanquished partner-turned-rival Matteo Salvini breathing down his neck, Luigi Di Maio, the longtime leader of Italy's anti-establishment, left-of-center Five Star Movement, has stepped down from his position at the head of the party, though he will continue to serve as Italy's foreign minister in a coalition government with the centrist Democrats.

Di Maio

News of Di Maio's departure is a harbinger of more political turbulence in a...



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The Technical Traders

Junior Gold Miners Setting Up For Another Rally

Courtesy of Technical Traders

Our recent research suggests the US stock market may be entering a period of volatility that may include a broad market rotation/reversion event.  We believe this volatility event could begin to happen anytime over the next 10 to 30+ days.  The rally in the US stock market ending 2019 and carrying into 2020 appears to be setting up a “rally to a peak” type of price pattern. Please take a minute to review the following articles we’ve posted recently about this topic and how it relates to opportunities in
Metals/Miners.

January 20, 2020: ...



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Insider Scoop

Economic Data Scheduled For Wednesday

Courtesy of Benzinga

  • The MBA's index of mortgage application activity for the latest week is schedule for release at 7:00 a.m. ET.
  • The Chicago Fed National Activity Index for December will be released at 8:30 a.m. ET.
  • The Johnson Redbook Retail Sales Index for the latest week is schedule for release at 8:55 a.m. ET.
  • The FHFA house price index for November will be released at 9:00 a.m. ET.
  • Existing home sales report for December is schedule for release at 10:00 a.m. ET.

Posted-In: Economic DataNews ...



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Phil's Favorites

Oil Is The Only Way Back Up For Venezuela

Courtesy of OilPrice.com, Editorial Dept.

There’s only one path to rebuilding Venezuela, and it’s paved with oil. For the time being, that path leads nowhere.

The key to controlling everything now lies with the National Assembly, the only body with the power to hand out oil licenses—and Maduro’s recent scheme to retake control of the country’s oil may just have been foiled by more Trump sanctions. 

Venezuela is the 12th largest oil producer in the world and home to the world’s largest oil reserves--all of which is irrelevant as long as it remains in the throes of a deep economic and ...



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Kimble Charting Solutions

Hang Seng Index Double Topping At 2007 Highs?

Courtesy of Chris Kimble

Could the Hang Seng Index be “Double Topping” at its 2007 highs? Possible, yet not proven!

The Hang Seng Index attempted to break above its 2007 highs at (1), only to see a key reversal pattern take place the following month.

After the reversal pattern, the index has created a series of lower highs, just below falling resistance.

So far this month, the index is attempting to break above falling resistance, where it could be created a bearish reversal monthly pattern at (2).

What would it take to prove that a double top was i...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Monday, 16 September 2019, 05:22:48 PM

Click for popup. Clear your browser cache if image is not showing.


Comment: This chart says SP500 should go back to 2016 levels (overshoot will occur of course)



Date Found: Tuesday, 17 September 2019, 01:53:30 AM

Click for popup. Clear your browser cache if image is not showing.


Comment: This would be HUGE...got gold!


...

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Members' Corner

The War on All Fact People

 

David Brin shares an excerpt from his new book on the relentless war against democracy and how we can fight back. You can also read the first, second and final chapters of Polemical Judo at David's blog Contrary Brin.

The War on All Fact People 

Excerpted from David Brin's new book, the beginning of chapter 5, Polemical Judo: Memes...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Digital Currencies

Cryptos Have Surged Since Soleimani Death, Bitcoin Tops $8,000

Courtesy of ZeroHedge View original post here.

Bitcoin is up over 15% since the assassination of Iran General Soleimani...

Source: Bloomberg

...topping $8,000 for the first time since before Thanksgiving...

Source: Bloomberg

Testing its key 100-day moving-average for the first time since October...

...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

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

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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