Posts Tagged ‘CAT’

Monday Market Movement – Do We Ever Go Down?

breadth

We all go down for a piece of the moment
Watch another burn to the death to the core
And the roadshow thrills pack the freaks and the phonies
Sing: now is now, yeah! – Rob Zombie 

There is just no way to win betting against this market!  

Well, actually, there is one way and that's betting that each pop is nonsense and tends to have a subsequent pullback intra-day but, long-term, the cumulative effect of all that low-volume pumping has been a rousing success, to say the least.  

As you can see from Andy Thrasher's S&P chart, there has been some amazing underlying deterioration since the July 4th weekend with the Advance/Decline line falling back to trend and stocks above their 200-Day Moving Average dropping 15% in 3 weeks.  Stocks above the 200 DMA is a fantastic leading indicator for downside move – ignore it at your own risk. 

TNXPeople are panicking into bonds, dropping the 10-Year Yield 20%, from 3.1% to 2.45% this year but it doesn't matter because Central Banksters are pumping SO MUCH MONEY into the Global Markets that there's enough to buy all asset classes simultaneously – something that is unprecedented in Financial History – what could go wrong?

Well, one thing that could go wrong is you putting your money into Mutual Funds.  As it turns out, in an S&P study of actively managed Mutual Funds, only 2 (two) out of 2,862 actually beat the S&P over ANY of the fund's lifetimes (limited to 12 months or longer).  

That's even worse than the average performace of hedge funds, which only averaged a 0.59% annual loss when compared to just putting your money directly into the S&P.

 This dovetails with a conversation we were having this weekend in our Member Chat Room, where I identified 4 trade ideas for a $50,000 Portfolio that only used 1/4 of the buying power to generate $365,512 in projected profits over the next 15 years using CONSERVATIVE options strategies designed to MATCH the S&P, not beat it.…
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Federally Faked Thursday – The Unhappy Median

Look at this chart:

LOOK AT IT!!!!  This is America, damn it!  We peaked out in earnings in 2000 and it's been downhill ever since.  Even worse, this is America AFTER the Federal Reserve spent $4 TRILLION to boost the economy.  This is America AFTER our Government plunged another $6 TRILLION into debt – supposedly to save jobs and support the economy.  

This is a DISASTER!  If this were the chart of a company you owned – you'd be selling.  If there were a board of directors, we'd be looking to make changes, right?  Actually, there is a sort of board of directors and, as is often the case with Corporate Management – they're the only ones making any money!  

Only in Washington DC and Dick Cheney's Wyoming are people in this country still making as much money as they were in the good old days (Clinton years).  The rest of the country is in various states of decline – some of it fairly drastic – and in big states like Ohio, Michigan and Illinois, where people are earning about 20% less now than they did 14 years ago.  

Our standard of living is in decline, especially when you consider that inflation is chewing into those lower wages from the other end as well.  How much more evidence can we possibly need that the Bush Tax cuts were a complete and utter policy failure?  Yet you will hear none of that in the MSM.  What TV station owner or newspaper & magazine publisher is going to tell you that they should be paying 20% more taxes than they are paying now?

There's a reason that, despite the BS Employment Numbers put up by the Administration, that the #1 concern of US voters is JOBS!  People may HAVE jobs (actually 20% of the families in our country have NO ONE employed at the moment) but, clearly, from an economic perspective – the jobs suck!  Even people lucky enough to keep their jobs through the crisis haven't had raises in a decade but, of course, they are too afraid to leave because we all know people who lost their jobs and didn't find…
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Too High Tuesday? 10 Bullish Trade Ideas that Made Over 1,200%

SPY 5 MINUTEThis is ridiculous.

As noted on Dave Fry's chart, the S&P made a new record high with narrow participation and essentially all of the gains were one big move in the Futures to reprice the index.  I said yesterday we have been getting 50% of the day's volumes in the close and yesterday was no different and that closing volume is all dumping into the ETF, IRA and 401K suckers that are forced to buy.  

We took a couple of big bats against the Dow's move up yesterday, adding a DIA put at $166.80 (see yesterday's Member Chat for details) as well as going long on DXD at $26.20 – both with leveraged options plays, of course.  

SPX WEEKLY

We still have plenty of bullish trades to protect but, when we bein to cash out our winners and start buying short plays on the index – you can tell the winds are changing.  Our 500% trade on DDM from Thanksgiving was scheduled to top out in April anyway – and we sold in May to go away.  

That trade was one of our "10 Trade Ideas That Can Make (and some have already made) 500% in a Rising Market" and I had just as much trouble convincing people to go long in November as I'm having convincing people it's time to cash out in May.  

Not all the trades are done, but a quick summary of those positions is:

  • ABX 2015 $13/18 bull call spread at $2.80, selling 2015 $15 puts for $2.05 for net .75, now $2.35 – up 213%
  • 8 QQQ Jan 2014 $75/80 bull call spreads for $3 ($2,400), selling 1 ISRG 2015 $300 put for $23.50 ($2,350) for net $50, now net $2,600 - up 5,100%


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Caterpillar Puts In Play

CAT – Caterpillar Inc. – Shares in the world’s largest maker of mining equipment are off 1.0% today at $82.86 after the company said global retail machine sales fell 12% in October from a year ago while sales of power systems declined 9%.

Options on CAT are more active than usual, with volume above 37,000 contracts versus the stock’s average daily volume of around 26,100 contracts. Trading in Caterpillar put options is outpacing that of calls, with the put/call ratio nearing 2.25 as of the time of this writing. The most traded options on CAT today are the Dec 06 ’13 $81 strike puts, with roughly 8,700 lots in play against open interest of 140 contracts. Time and sales data suggests most of the volume was purchased at an average premium of $0.53 each during the first half of the session. Put buyers stand ready to profit at expiration in two weeks in the event that Caterpillar’s shares slide 3.0% from the current level to trade below the effective breakeven point at $80.47. 


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Caterpillar Call Buyers Bet Stock Extends Gains Next Week

 

Today’s tickers: CAT, QLGC & CPRT

CAT - Caterpillar, Inc. – Trading traffic in weekly call options on the world’s largest maker of machinery indicates some traders are betting Caterpillar’s shares, up 3.75% at $87.43 as of 12:50 p.m. ET on Friday, extend gains next week. Bullish bets in weekly contracts expiring next Friday are heaviest at the May 10 ’13 $87.5 and $90 strikes. Upwards of 4,000 calls changed hands at the $87.5 strike, with the bulk of the volume purchased in the early going at an average premium of $0.51 apiece. The price tag on the $87.5 weekly calls has roughly doubled to $1.03 as of the time of this writing, with the stock sitting at the highs of the session. Traders long the calls profit at expiration next week as long as CAT’s shares exceed the average breakeven price of $88.01. More than 2,000 of the $90 strike weekly calls have traded as well. It looks like most of the contracts were picked up this morning at an average premium of $0.13 each. Premium on the $90 calls expiring next Friday has also roughly doubled since this morning, with the last traded price on the contracts up at $0.25 apiece. Overall volume in CAT options is above 51,000 contracts, topping the stock’s average daily volume of around 46,700 contracts, with the call/put ratio up above 2.0.

QLGC - QLogic Corp. – Shares in QLogic are bucking the trend today, sliding more than 7.0% to $9.71 during the first half of the trading session even as the S&P 500 Index and the Dow Jones Industrial Average rally to fresh highs. QLGC had been participating in the run up in U.S. stocks earlier this year, rising nearly 25% from the start of 2013 to as high as $12.35 in mid-March. During the seven weeks since then, however, shares in the name have dropped more than 20% to the current level. QLogic’s shares slipped to a fifteen-week low today after a number of analysts lowered target prices on…
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Wednesday Worries – AAPL Makes $76,103 While You Read This

$76,103 – That's not sales, that's profit!  

Every minute of every day, AAPL is making $76,103 (at $40Bn a year) on the sale of $316,120 worth of products.  No company on Earth comes close to that kind of metric and, overall, the stock's performance clearly indicates that but, if you listen to the MSM, you would think AAPL is finished.

We had a nice, in-depth discussion about AAPL in Member Chat this morning and we not only concluded it's still a buy but we came up with a lovely spread that has the potential to turn $3,000 into $45,000 between now and Jan 2015 if AAPL simply holds $600 – needless to say we're very proud of that as it's always nice to have a trade or two in your portfolio that returns 1,500% and we rarely get a chance to do them with a blue-chip stock like AAPL.  

Note in the above chart, that AAPL is still a relative outperformer this year – shown priced against HPQ, DELL, INTC, IBM, CAT and ISRG – all good companies that have simply failed to keep up.  We also like HPQ at this level, now $14.30 as their REDUCED guidance has them earning $3.62 per share next year after earning $4.05 this year and that's still 25% back on your money, which sure beats TBills and we're not even counting the $18Bn in cash they have on hand, which is quite a lot when you consider that their entire market cap is now just $28Bn.  Small wonder HPQ spent $9Bn buying back their own stock last year, when it was priced 100% higher. 

HPQ is a pretty good candidate for a buy/write, where we Buy the stock for $14.30 and Write 2014 $15 puts and calls (sell short) for $5.50 and that nets $8.80 on the trade and, if HPQ is below $15 in Jan 2014, then another round of shares will be put to you at $15 for an average entry on 2x of $11.90, which is 17% below the current price and, if HPQ is over $15 in 16 months, then you get called away at $15 for a $6.20 profit on cash (75%).  Buy/writes are our favorite tools for making long-term entries – see "How to Buy a Stock for a 15-20% Discount."

As we mentioned INTC in the above chart, let's look at a similar…
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Caterpillar Put Spread Preps For Further Downside Next Week

 

Today’s tickers: CAT, HAS & INTC

CAT - Caterpillar, Inc. – Shares in the world’s largest manufacturer of construction and mining equipment are getting some relief today, trading up 1.5% at $80.84 this morning as U.S. stocks snap a six-day losing streak. Caterpillar’s shares, hit hard in recent months on concerns of a global slowdown, are down 30% off the February 24th 52-week high of $116.94. Trading traffic in options with one week remaining to expiration suggests, however, that the rally in CAT’s shares may be short lived and the shares have further to fall in the near term. It looks like one trader purchased a 1,500-lot July $72.5/$77.5 bear put spread for a net premium of $0.71 per contract. The spread positions the strategist to profit in the event shares in Caterpillar slide 5% to breach the effective breakeven price of $76.79, with maximum possible profits of $4.29 per contract available given a 10% pullback in the stock by expiration. Shares in CAT last traded below $72.50 back in October 2011. The company is scheduled to report second-quarter earnings ahead of the open on July 25th.

HAS - Hasbro, Inc. – Put options are in play on game maker Hasbro this morning ahead of the company’s July 23rd second-quarter earnings report. U.S. stocks are broadly moving higher today, enjoying their biggest gains of the month thus far, but Hasbro failed to join in the rally with its shares trading 1.1% lower on the day at $32.52 as of 11:50 a.m. in New York. Traders positioning for further downside in the stock purchased 1,500 puts at the Aug. $32.5 strike for a premium of $1.33 apiece. Put buyers stand prepared to profit should the price of the underlying decline another 4.2% to breach the average breakeven point at $31.17 by August expiration. Bearish options are also in play at the Aug. $30 strike, with around 1,000 puts purchased at an average premium of $0.45 each.…
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Friday Failure – Weak Bounce Levels Turn Into Resistance

Resistance is, unfortunately, not futile for our indices.  

On Monday we discussed our expectations for a 2% weak bounce for the week, which would be a 20% retrace of the 10% drop I had predicted we'd have way back (and a bit early) in March.  That constitutes a WEAK bounce and not a rally and they almost fooled us on Monday by taking back most of that 2% on day one but, since then – it's been pathetic and we've essentially done nothing the rest of the week.  

The levels we were looking for were laid out in Monday's Member Chat and in Tuesday morning's post and were:

  • Dow – 12,750 (12,540 is 20% retrace/weak bounce), now 12,529 – off by 11
  • S&P – 1,343 (1,319), now 1,320 – off by 1
  • Nas – 2,900 (2,840) , now 2,839 – off by 1
  • NYSE – 7,720 (7,560), now 7,552 – off by 8 
  • RUT – 780, (765), now 766


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Bulls And Bears Take To CAT Options As Shares Extend Pullback

Today’s tickers: CAT, RRGB & ROC

CAT – Caterpillar, Inc. – Shares in machinery maker, Caterpillar, Inc., are down the most in the Dow Jones Industrial Average today, trading more than 4.0% lower this afternoon at $88.08 as of 12:15 p.m. in New York. The stock has fallen roughly 25.0% in the past two months after reaching a record high of $116.95 at the end of February. June expiry options trades initiated on CAT this morning suggest there are some strategists preparing for a recovery in the price of the underlying while others position for further bearish movement in the stock through expiration next month. A 1,500-lot June $80/$87.5 debit put spread established at a net cost of $2.20 per contract makes money if shares in Caterpillar decline another 3.2% to trade below the effective breakeven price of $85.30 by June expiration. Maximum possible gains available on the spread amount to $5.30 per contract should the stock plunge 9.2% to $80.00 in the next four weeks. In contrast, June $92.5/$100 call spreads established for a net premium outlay of around $1.55 each look for shares in Caterpillar to rebound sharply come expiration day. Finally, nearer term plays in the fresh weekly options issued on the stock were largely bearish in the first half of the session, with traders buying puts at the May 25 ’12 $80, $82.5 and $85 strikes that increase in value if CAT’s shares extend losses next week.

RRGB – Red Robin Gourmet Burgers, Inc. – It looks like traders that sold Red Robin call options ahead of the restaurant chain operator’s disappointing first-quarter earnings report can have their burger and eat it too as shares in the name take a sharp turn to the downside. Shares in Red Robin Gourmet Burgers are off their lows of the session, trading down 11.9% at present to stand at $31.50 as of 1:20 p.m. ET. A review of open interest in the May $35 strike call, currently at 814 open positions, suggests some 478 of the contracts were sold at an average premium of $1.38 apiece between May 3rd and May 8th. With shares in the name taking a big hit today and with expiration on the horizon, it’s no surprise to see these contracts are now almost worthless. The far out-of-the-money May $35 strike call is trading at a premium of $0.05 each this afternoon.

ROC – Rockwood
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Free-Falling Thursday – Facebook Faces Fatal Friday Follow-Through

What a week to do an IPO!

Will Facebook save the markets tomorrow with a successful roll-out of the largest IPO of all time or will it be the straw that breaks the camel's back, with a disappointing open that sends the Nasdaq off a cliff along with their entire over-priced sector?  Either way – this is going to be fun.

We can argue the merits of Facebook's value (or lack thereof) all day long but, scam or not, it's very likely FB will set off a buying frenzy in the space and we finish the week off with a bang. If that doesn't happen – I will be very, very bearish but from what I'm hearing and the way they are extending the offer and raising the price – it's way oversubscribed.  Also, we have to consider that people are cashing out 1-5% of their holdings to raise cash for FB on Friday – sure it's moronic, but that's what people do so you have to put yourself in a position of someone who wants to put 5% of your portfolio in to Facebook (the way you wish you had put 5% into Google at $80 when they IPO'd) tomorrow – what would you be doing with the rest of your portfolio today?  

EZU WEEKLYMeanwhile, the rest of the World is falling apart with Europe turning sharply lower as Spain sells bonds at record high yields (5.106% for 4-year notes) this morning after announcing that their Q1 GDP was -0.4% at the same time as Moody's indicates they will be cutting the credit ratings of 21 Spanish Banks this evening AND, to top it all off – there is a run on Bankia, which Spain nationalized last week – with $1.3Bn pulled from accounts this past week!  This sent Spain's markets down 1.6% and Italy (who is next) fell 2%, sending the Euro down 1% to $1.2668 and the Pound followed it down to $1.5832 (while EUR/CHF holds steady at 1.2009 in the most blatant currency manipulation ever witnessed).

Wow – that's a lot of bad stuff!  Maybe too many bad things – as in a bit suspicious that all this bad stuff happens at once – as if maybe someone WANTS to force a panic bottom?  If so, I applaud them – we certainly needed to shake things up a little
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Zero Hedge

US Foreclosures Rise For First Time In 36 Months

Courtesy of ZeroHedge. View original post here.

One month ago we discussed why according to the recent data, the "Housing Market Headed For "Broadest Slowdown In Years." Fast forward to today, when we received the latest confirmation that the US housing market appears to have recently hit a downward inflection point: according to the just released July 2018 U.S. Foreclosure Market Report released by ATTOM Data Solutions, foreclosure starts in July increased by 1% from a y...



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Phil's Favorites

Saudi showdown spotlights Canada's energy insecurity

 

Saudi showdown spotlights Canada's energy insecurity

Khalid Al-Falih Minister of Energy, Industry and Mineral Resources of Saudi Arabia, has said the diplomatic dispute won’t affect oil exports to Canada. (AP Photo/Ronald Zak, File)

Courtesy of Larry Hughes, Dalhousie University

In mid-August, Khalid al-Falih, Saudi Arabia’s energy minister, announced that the diplomatic rift with Canada wouldn’t affect the flow of Saudi crude oil to the Irving refinery in Saint John, N.B.

There are at least two reasons why this decision should ...



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ValueWalk

Whitney Tilson:Tesla Should Raise Money Now

By Jacob Wolinsky. Originally published at ValueWalk.

Excerpted from Whitney Tilson’s latest email to investors

1) As part of our seminar on How to Launch and Build an Investment Fund, we teach an in-depth module on how to create a first-class, compelling investor pitch deck, using multiple real-world examples (as we do with everything we teach). The first example is my own deck, which I think was at best a B – decent but a lot of room for improvement, as I discussed in our webinar earlier this month – here’s the video of it: https://player.vimeo.com/video/285653427 (8 min).

Pease use “VW10” for a discount!

If you find what we’...



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Digital Currencies

Stop worrying about how much energy bitcoin uses

 

Picture via Pixabay

Stop worrying about how much energy bitcoin uses

Courtesy of Katrina Kelly-Pitou, University of Pittsburgh

The word “bitcoin” is as likely to garner feverish excitement as it is glaring criticism. The financial community sees speculative promise in the form of trade that currently has little to no regulation. Meanwhile, others argue that it’s a distraction that detracts from the overall longevity of U.S. financial institutions.

Bitcoin’s energy consumption has become a recent talking point in the debate. ...



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Kimble Charting Solutions

Doc Copper down 20%, sending a macro message?

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

Doc Copper has had a rough go of it over the past 7-years and especially of late.

Since the highs back in 2011, Doc Copper has created a series of lower highs and lower lows.

Since the lows in 2015, it has experienced a strong rally, creating a series of higher lows, as interest rates and several commodities did the same.

In June Doc Copper may have created a double top at (1), as it was testing last years highs. Since hitting 2017 highs at (1), Doc Copper has declined nearly 20% in the past 10-weeks.

The decline now has it testing potential dual support at (2...



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Insider Scoop

Goldman Sachs: Newly Public Aurora Mobile Set To Gain Market Share

Courtesy of Benzinga.

Related 28 Stocks Moving In Monday's Mid-Day Session Benzinga's Top Upgrades, Downgrades For August 20, 2018 ...

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Biotech

Approval of first 'RNA interference' drug - why the excitement?

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

 

Approval of first ‘RNA interference’ drug – why the excitement?

Single strands of ribonucleic acid (RNA) are now being used to treat disease. By nobeastsofierce / shutterstock.com

Courtesy of Thomas Schmittgen, University of Florida

Small interfering RNA sounds like something from a science fiction novel rather than a revolutionary type of medicine. But this odd-sounding new drug of...



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Chart School

Weekly Market Recap Aug 19, 2018

Courtesy of Blain.

A good amount of volatility this past week, but once again indexes are just sort of hanging around as we work through some news items, specifically facing trade issues.  We ended last week with some hand wringing over Turkey – while nothing was really resolved, U.S. markets looked past that… however emerging markets continue their struggle.  The U.S. indexes have simply been range bound for weeks on end.

The Turkish central bank pledged in a statement Monday to provide “all the liquidity the banks need.” It also said banks would be able to borrow foreign-exchange deposits from the central bank at one-month and one-week maturities. Analysts said T...



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Members' Corner

There Are 3 Main Theories That Explain Trump's Approach to Putin and Russia-Which One Makes the Most Sense?

What do you think?

Thom Hartmann suggests that the "Manchurian Candidate theory" is the least likely explanation for Trump's pro-Russia behavior in "There Are 3 Main Theories That Explain Trump’s Approach to Putin and Russia—Which One Makes the Most Sense?" (below).  disagrees and suggests that Putin probably has "the goods" on Trump in "Trump’s Plot Against America". (To be fair, Hartmann acknowledges that his three theories are not mutually exclusive.) Jonathan Chait argues ...



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Mapping The Market

Mistakes were Made. (And, Yes, by Me.)

Via Jean-Luc:

Famed investor reflecting on his mistakes:

Mistakes were Made. (And, Yes, by Me.)

One that stands out for me:

Instead of focusing on how value factors in general did in identifying attractive stocks, I rushed to proclaim price-to-sales the winner. That was, until it wasn’t. I guess there’s a reason for the proclamation “The king is dead, long live the king” when a monarchy changes hands. As we continued to update the book, price-to-sales was no longer the “best” single value factor, replaced by others, depending upon the time frames examined. I had also become a lot more sophisticated in my analysis—thanks to criticism of my earlier work—and realized that everything, including factors, moves in and out of favor, depending upon the market environment. I also realized...



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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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All About Trends

Mid-Day Update

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

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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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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