Posts Tagged ‘CVX’

Which Way Wednesday – Fed Edition

Financial RoadmapWe're just waiting on the Fed today, as are the rest of the markets.

Yesterday's volume was the lowest since Sept 11th but not as low as Monday, which was our lowest volume since the end of June, just before we had a 5% correction.  June 26th and 29th were our last two consecutive ultra-low volume days but June 30th was much bigger (a down 100 day), July 1st was up again on low volume and then July 2nd was another big down day and we bottomed out on July 10th.  That was the time that the media was telling us we were forming a "classic" head and shoulders pattern and were doomed to revisit the March lows.  It was also the last time we enthusiastically bought stocks

At the time of that weekly review (7/11), we had CAL at $10 (now $16.82), CBS at $5.97 (now $12.58), COST at $43.45 (now $58.58), CVX – who we just shorted – at $58.20 (now $72.60), DIS at $22.41 (now $28.38), EXM at $6.05 (now $7.32), RT at $7.12 (now $8.85), SNDK at $14.47 (now $22.91), SPY at $87.96 (now $107.27), SPWRA at $22.35 (now $32.63), SUN at $22.09 (now $27.75), V at $59.86 (now $74.41), VLO at $15.57 (now $20.50), WFR at $16.61 (now 19.09), X at $30.77 (now $50.45), XLF at $11.10 (now $15.35), XOM at $65.12 (now $69.85) and ZION at $11 (now $19).  Of course our members had much better entries as we had been targeting our entries on all of those but anyone reading our weekend review on July 11th could have played along at home from those prices (we even spiked down at Monday's open) and when I say we are now bearish – it is that we are bearishly protecting these ridiculous profits – the kind of profits you usually don't get after 3 years, not 3 months!

Overall, the broader market is up 20% over that time so it can be argued that a monkey with a dart board could have made good picks at that time but, if you read that week's notes – you'll notice that this monkey was screaming for people to buy and was going against what pretty much EVERY other analyst was saying and I was confident enough…
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Ratio Call Spread Suggests Bullish Sentiment on Cabot Oil & Gas

Today’s tickers: COG, HPQ, ALGN, VIX, WLP, UNH, CVX, & OIH

COGThe oil and gas company appeared on our ‘hot by options volume’ market scanner after a ratio call spread was established in the September contract. Broad market declines did not spare COG today as shares fell nearly 4% to stand to the current price of $33.75. The bullish investor responsible for the spread looked to the deep in-the-money September 30 strike price to purchase 3,000 calls for an average premium of 4.15 apiece. The long calls were marked against the short sale of 6,000 calls at the higher September 35 strike for 1.15 per contract. Thus, the net cost of the spread amounts to 1.85 and yields maximum potential profits of 3.15 if COG rallies up to $35.00 by expiration next month. The investor has already realized profits on the transaction because shares are currently higher than the breakeven point at $31.85. But, the ratio of 2 short calls for each long call leaves the trader vulnerable to potentially unlimited losses in the event that shares of COG surge higher than $38.15 by expiration. – Cabot Oil & Gas Corp. –

HPQThe global technology company has experienced a more than 1.5% decline in shares today to $43.26 ahead of its third-quarter earnings release, which is scheduled to follow the closing bell on Tuesday afternoon. At least one investor was seen bracing for bad news or at least for continued declines in the price of the underlying. The trader established a ratio put position by purchasing 5,000 puts at the August 42.5 strike for approximately 89 cents apiece, spread against the sale of 10,000 puts at the lower August 40 strike for 25 cents per contract. The net cost of the bearish transaction amounts to 39 cents and yields maximum potential profits of 2.11 if the stock slips to $40.00 by expiration this Friday. Shares must fall about 3% from the current price in order for the trader to begin to amass profits beneath the breakeven point at $42.11. Maximum profits of $1,055,000 will be retained by the investor if the stock falls to $40.00 and the lower strike puts remain out-of-the-money. If shares were to slip lower than $40.00, the trader may have shares of the underlying put to him at expiration given the ratio of 2 short put options to each long contract in his possession. Investor uncertainty
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Options Expriation Day – Back Where We Started!

"And now we're back where we started,
Here we go round again.
Day after day I get up and I say
I better do it again.

Where are all the people going?
Round and round till we reach the end.
One day leading to another,
Get up, go out,
do it again." – Kinks

That's right, we often talk about various market scams but there is no bigger scam in the world than options expiration day when all the stocks are herded back to prices that benefit the largest number of SELLERS of options while the buyers of options can only stare in shock as momentum shifts and trend-lines break and stock after stock magically settles into a value that wipes out the most possible premium.  There is something in options called the "Max Pain Theory" that says that stocks will always settle at the strike where the most puts and calls expire worthless but I think that's a self-fulfilling prophesy as options activity tends to center around the strike as it moves so of course the strike is surrounded by the most options.

What isn't a theory is what we can observe happening time and again.   This is why, at PSW, we primarily SELL options, not buy them.  Buying options is gambling, selling options is a business!  I often point out to members that options is the game in the world where you can be the "house" with no disadvantage.  In Las Vegas, you can bet with the house but they still have an edge but in options, there is no edge and day's like this remind us why selling options beats buying them – not EVERY time but certainly OVER time. 

Our last option expiration day was June 19th and I will give you today's levels to watch because they are the levels of June 19th:  Dow 8,540, S&P 921, Nasdaq 1,827, NYSE 5,934 and Russell 512.  All the markets have to do to take out the calls sold that day for a nickel or a dime is to hit those levels at some time today.  Of course, anything within 2.5% of those numbers is fine to as you can roll the calls you sold to the next month at no cost,…
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Stop the Week, We Want to Get Off!

TGIF for sure, it seems like ending the week is the only way to stop the markets from dropping!

We failed to take back our weak bounce levels I laid out in yesterday's morning post as the Dow failed to hold 8,250 on a very brief spike past it, the S&P failed right at 888 in the morning and again in the afternoon (where we were able to use it as a "go short" indicator), the Nasdaq flirted with 1,750 all day and barely held it, the NYSE also failed 5,700 in the afternoon and gave us a good, bearish indicator while the Russell never came close to 488 and failed our critical 480 mark at the close.  As I've been saying all week, we really don't have to watch anything but the NYSE, which will test the critical 5,600 mark this morning and failing that level would be, in technical terms: BAD!

Oil ($62) and gold ($920) also failed our levels so there was nothing to be bullish about in yesterday's action.  We were in and out of DIA puts and calls, using S&P 880 as our inflection point and we took the money and ran on our AA calls (up $330, 78%) and DIA calls (up $45, 20%) as our first two completed plays in our $5,000 Virtual Portfolio, which will now be tracked under Seeking Alpha's "Stock Talk" feature as an experiment for non-members.  We did a day-trade as well in the $5KP on MCD, picking up the $55 calls at $1.65 for a quick ride to $2, adding another $175 (21%) to the kitty for the week.  Our only open trade in this hit and run virtual portfolio is SGR, where we are in the $22.50 calls for $3.30, selling the $25 calls for $1.45 for a net $1.85 entry on this bullish $2.50 vertical spread (4 contracts).  Earnings were a slight miss but we're not worried as the order backlog is fantastic and we'll be buying more if the after-hours sell-off holds into the morning. If this play comes through for us we'll be up about $800 in our first week and well on-track of our goal to double up over earnings season. 

It will be a shame to have to play the dark side but we're back to neutral now after covering our bullish plays with DIA puts as…
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China Pays Too Much for Oil in Iraq – $16 A Barrel!

China wisdomHow much smarter is China than the US?

Well let’s see – The US has spent $1,000,000,000,000 fighting in Iraq and thousands of our soldiers have died and we have secured ZERO barrels of oil for ourselves.  China was not part of the coalition of the willing but, for just $8.8Bn, they are getting 550 Million barrels of oil, almost the size of the US’s entire strategic petroleum reserve, through the purchase of Addax Petroleum, and 20% of those reserves are in Iraq .  While Bush filled our reserve up "at any price" and became the single largest buyer of crude in the world, filling our SPR at a rate of 2-3Mb a week at times, China simply waited patiently on the sidelines and is now coming in and buying wholesale.  That’s pretty smart!

Iraq oilOf course patience is a renowned virtue of the Chinese and just one year after the US was paying over $100 a barrel to fill our own reserves, China’s Sinopec is doubling the country’s oil reserves with a single purchase at 1/6th the price.  Sure they have to pump it ($4 per barrel) and ship it ($3 per barrel) as it’s not local but sometimes you have to travel a little to find bargains. 

Earlier this year, Iraqi Oil Minister Hussain al-Shahristani gave approval for foreign companies developing oil fields in the Kurdish region to export their crude directly to international markets. Addax was a beneficiary of the change and has been shipping oil since the start of this month.  Addax is one of the largest independent oil producers in West Africa and the Middle East by volume. Aside from Kurdistan, it operates off Nigeria, an area that has seen huge exploration success in recent years.  The company produced 136,500 barrels a day on average last year, or about 1.7% of China’s daily consumption.

china oilSo why is China still paying too much for oil?  Sinopec is paying about $16 a barrel of proven and probable reserves. The average for African and Middle Eastern deals in 2008 — a year with triple-digit crude prices — was under $5 a barrel, according to consultants IHS Herold and Harrison Lovegrove & Co.  Throw in Addax’s possible reserves and contingent natural-gas reserves and the multiple drops to just over $7 a barrel of oil equivalent. Your average buyer would never factor in such rosy assumptions. But then Sinopec, 66%-owned by
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Phil's Favorites

Trump Tweeting As Much As Ever Amid Twitter Standoff

 

Trump Tweeting As Much As Ever Amid Twitter Standoff

By , Statista

President Trump has signed an executive order which aims to remove some of the legal protection given to social media companies, though it is expected to face significant legal hurdles. In a nutshell, it sets out to clarify the Communications Decency Act, handing regulators the power to file legal proceedings against social media companies for the way they police content on their platforms. Trump's decision to take action comes two days after Twitter attached a fact check to one of his tweets lambasting mail-in voting. He then threatened to close ...



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ValueWalk

Gold supply chain in recovery mode after pandemic shutdown

By Michelle Jones. Originally published at ValueWalk.

The gold supply chain was largely shut down as the COVID-19 pandemic spread around the world. However, things are starting to open back up, and production is beginning again. The World Gold Council studied the gold supply chain, how it was impacted by the pandemic, and how the disruption of the supply chain has affected investment demand for the yellow metal.

Q1 2020 hedge fund letters, conferences and more

Disruption to the gold supply chain

The World Gold Council said the gold supply chain is entirely global because the metal is mined on evert continent except Antarctica and refined in nume...



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Biotech/COVID-19

Antigen tests for COVID-19 are fast and easy - and could solve the coronavirus testing problem despite being somewhat inaccurate

 

Antigen tests for COVID-19 are fast and easy – and could solve the coronavirus testing problem despite being somewhat inaccurate

Antibodies are incredibly good at finding the coronavirus. Antigen tests put them to work. Sergii Iaremenko/Science Photo Library via Getty Images

Courtesy of Eugene Wu, University of Richmond

In late February, I fell ill with a fever and a cough. As a biochemist who teaches a class on viruses, I’d been tracking the outbreak of...



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Zero Hedge

Ted Cruz Accuses Twitter Of Violating Sanctions Against Iran, Demands DoJ Probe

Courtesy of ZeroHedge View original post here.

We've mentioned in nearly every single one of our posts about this week's dustup between the president and Twitter that the Ayato...



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Kimble Charting Solutions

Tech Indicator Suggesting A Historic Top Could Be Forming?

Courtesy of Chris Kimble

Tech stocks have been the clear leader of the stock market recovery rally, this year and since the lows back in 2007!

But within the ranks of leadership, and an important ratio may be sending a caution message to investors.

In today’s chart, we look at the ratio of large-cap tech stocks (the Nasdaq 100 Index) to the broader tech market (the Nasdaq Composite) on a “monthly” basis.

The large-cap concentrated Nasdaq 100 (only 100 stocks) has been the clear leader for several years versus the ...



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The Technical Traders

M2 Velocity Collapses - Could A Bottom In Capital Velocity Be Setting Up?

Courtesy of Technical Traders

M2 Velocity is the measurement of capital circulating within the economy.  The faster capital circulates within the economy, the more that capital is being deployed within the economy to create output and opportunities for economic growth.  When M2 Velocity contracts, capital is being deployed in investments or assets that prevent that capital from further circulation within the economy – thus preventing further output and opportunity growth features.

The decline in M2 Velocity over the past 10+ years has been dramatic and consistent with the dramatic new zero US Federal Reserve interest rates initiated since just after the 2008 credit crisis market colla...



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Lee's Free Thinking

US Southern States COVID19 Cases - Let's Give Credit Where Due

 

US Southern States COVID19 Cases – Let’s Give Credit Where Due

Courtesy of  

The number of new COVID 19 cases has been falling in the Northeast, but the South is not having the same experience. The number of new cases per day in each Southern state has been rangebound for the past month.

And that’s assuming that the numbers haven’t been manipulated. We know that in Georgia’s case at least, they have been. And there are suspicions about Florida as well, as the State now engages in a smear campaign against the fired employee who built its much praised COVID19 database and dashboar...



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Chart School

Is this your local response to COVID 19

Courtesy of Read the Ticker

This is off topic, but a bit of fun!


This is the standard reaction from the control freaks.








This is the song for post lock down!







What should be made mandatory? Vaccines, hell NO! This should be mandatory: Every one taking their tops off in the sun, they do in Africa!

Guess which family gets more Vitamin D and eats less sugary carbs, TV Show



...



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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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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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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

...

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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. Contact Ilene to learn about our affiliate and content sharing programs.