Posts Tagged ‘DBC’

Technical Tuesday – 1,360 or Bust on the S&P – Again!

Here we go again!

It was only last Tuesday we were watching that 1,360 line on the S&P but, at the time, we were looking for it to hold as we finished last Monday at 1,370 – in a totally fake pump into the close.  Even early Tuesday morning, the Futures were being pumped up to reel in the suckers but I warned in the morning post

There is no particular reason for the move, other than this being Tuesday in a manipulated market.  Neither oil ($97.38) or gold ($1,628) or copper ($3.71) or silver ($29.73) or even gasoline ($2.97) give any indication of consumer demand for commodities.  "Fixing" the charts does not mean you have fixed the economy!

We all know what happened next – we failed to hold that 1,360 line on the S&P as the Euro failed to hold $1.30 and Greece was unable to form a coalition government (we also had disappointing Retail Sales numbers) and this morning (6:45)  oil is $94.74, gold is $1,558, copper is $3.53, silver $28.23 and gasoline is STILL $2.97.  

The last thing we should do is complain about gasoline prices – we still pay 1/2 of what Europe does and even China is paying $5.31 a gallon – 25% more than the US average $4.19.  At this point, gas prices are the only commodity not falling down and that's because they are the easiest to manipulate – the last bastion of the speculator – if you will.

With that mythical summer driving season on the way, even we stopped shorting oil at $94 and gasoline is now a joke at $2.97 as that's $124.74 per barrel – a 33% per barrel mark-up at retail.  At the pump, $4.19 a gallon means you are paying $175.98 at the pump – that's an 87% mark-up!  Actually, we shouldn't look at it as 87%, that's misleading – when oil was $60 per barrel, gasoline was $1.85 at the pump and that was $77.70 and the refiners were making very good money.  Why would it cost $81.98 to refine and retail a $94 barrel of oil when it only costs $17.70 to refine and retail a $60 barrel of oil?  See – it's a rip-off!  Somebody, somewhere is massively screwing you over – that much should be obvious to even a Republican Senator.  

DBC WEEKLYThis 400% increase…
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Tempting Tuesday – Baa, Baa to the Sheeple!

SPY 5 MINUTEWheeeee, what a ride!

As you can see from David Fry's chart of the SPY, we're all over the place but, notably, there's a method to the market's madness as high-volume selling is followed by low-volume buying – allowing the funds to dump out onto the retail bagholders at top dollar while the carnival barkers in the MSM tell the sheeple to buy those f'ing dips

Cramer said, in last night's show, that the Dow is composed of big international companies that were finally able to break free from concerns over Europe’s debt crisis. For the entire month of April, these stocks were held hostage to the Europe’s debt troubles. Cramer said most of these companies have no real ties to Europe, though, so the fears are overblown.

We ended up with what amounted to a frontsie-backsie day where all of the last month's winners, stocks that were unaffected by the weak euro and the miserable European stock markets, got pummeled, while the losers that had become risk free shorts because of an expected European decline were actually able to rally.

DBC WEEKLYWhat a moron!  Seriously – "frontsie-backsie"???  I guess he needs to treat his audience like they are 2 because bigger kids might realize that telling investors to ignore Europe would be just as idiotic as an Asian or European carnival barker telling the rubes over there to ignore America when making investment decisions.  Is it really possible, in this day and age, that people still believe America is immune to what is happening in the rest of the World?

Look at the downtrend in the Global Commodities Index – do you think you are immune from that?  I guess, to some extent we are, because CNBC's sponsors continue to use any excuse to pump up the PRICE of commodities, no matter how much DEMAND falls off (see yesterday's chart on gasoline volume consumption).  

As Fundamental investors, we can often be a bit ahead of the curve but we find the market usually catches up to reality at some point.  Cramer and his ilk know they can fool all of the people some of the time and some of the people all of the time (known as their "core audience") but even the mighty Corporate Media can't fool all of the people all of the time.  

Almost a month
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Put Plays Suggest Dim View Of First Solar Through Year End

Today’s tickers: FSLR, DBC, CDE & SNDK

FSLR - First Solar, Inc. – Put options are active on the world’s largest maker of thin-film solar modules this morning, with shares in the Tempe, Arizona-based company falling as much as 8.35% to touch an intraday low of $66.23. Shares fell after analysts at Cantor Fitzgerald lowered their 2011 EPS estimates for First Solar, cut their target share price to $55.00 from $88.00, and reiterated a ‘Sell’ rating on the stock. A debit put spread initiated in the December contract may yield maximum potential profits to one bearish trader if shares in FSLR drop to $55.00 at expiration. It looks like the trader purchased 2,000 in-the-money puts at the Dec. $70 strike for an average premium of $11.50 each, and sold the same number of puts at the lower Dec. $55 strike at an average premium of $4.83 apiece. Net premium paid to initiate the spread amounts to $6.67 per contract. The investor profits at expiration in December if shares in First Solar fall 4.4% off today’s low of $66.23 to breach the effective breakeven point on the spread at $63.33. Maximum potential profits of $8.33 per contract are available to the trader should shares plunge 16.95% to trade below $55.00 at December expiration. Options implied volatility on the stock is up 10.05% at 85.13% as of 12:30 pm EDT.

DBC - PowerShares DB Commodity Index Tracking Fund – Shares in the PowerShares DB Commodity Index Tracking Fund, an ETF that tracks the performance of the DBIQ Optimum Yield Diversified Commodity Index Excess Return, are down slightly by 0.20% to stand at $27.05 this morning. The price of the underlying has fallen 10.5% since the start of September, but options activity on the fund today suggests at least one strategist may benefit from…
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Breakout Defense Part Deux – 5 More Trades that Make 500% in a Rising Market (Members Only)

SPY 5 MINUTEHere we are again!  

The last time I wrote a Breakout Defense article was back on December 11th when I said: "Wow!  I mean wow! Will this market ever go down? My mother called me this morning and she’s raising her GDP outlook for 2011 too – that’s how crazy things have gotten out there. I’m just waiting for the Pope to come out and tell us to buy CMG and Netflix and THEN we’ll know it’s a sign."  Clearly, my Mom and the Pope nailed it as the the Dow is up another 500 points (4.3%) since then and CMG made a comeback yesterday and is a bit higher than Dec. 10th's finish at $238.22 and NFLX is well above $194.63 so the infallibility streak continues for the pontiff!  

As with last time, I would urge you to spend some time reading (and now viewing) David Fry's market commentary over at ETF digest.  Dave's take on the IWM, which we have been playing this week, is that it is still rolling over and that investors should not be fooled by the Dow.  I'm not here to debate the points – this is an article about what we can do to make sure we don't miss the rally train if it does leave the station and, like last time, it's very easy to set aside a small amount of capital into highly leveraged trades like this, which can make excellent returns on even small rises in the market.  On the whole, I remain cautious and still believing that we may be in a blow-off top but we have plenty of bearish short-term bets and we need some balance – just in case… 

We had just a 4.3% gain since our December picks and check out this performance on those already:

  • FAS Apr $20/25 bull call spread paired with the sale of the April $21 puts for net .15, now $3.98, up 2,553%. 
  • DBC Apr $27 calls at $1, now $2.05 – up 105%
  • 4 DBC Jan $22/27 bull call spread paired with the sale of the 3 USO 2013 $30 puts for net $170, now $740 – up 335%
  • DBC Jan $26/30 bull call spread paired with the sale of


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Fickle Friday’s Jobs Report

Gallup's U.S. Unemployment Rate, 30-Day Averages, January-December 2010 Trend I don't know what the Jobs will be but I'm betting on disappointment

I had said to Members yesterday that I liked the Jan QQQQ $56 puts at .77 and the Weekly (next week, not today) QQQQ $56 puts at .53 as good ways to play a jobs miss.  My comment in Member Chat was that I felt the ADP figures pushed expectations up significantly higher and now we would be much more likely to disappoint with almost any number short of 250,000 jobs added.  

The key is the seasonal adjustments but there was already some very disturbing jobs numbers in the Gallup Poll, which came out last night and showed unemployment RISING from 9.3 to 9.6% in December and, even worse, the number of Underemployed workers shot up from 18.5 to 19%, just 0.5% lower than we were in January of last year.  

Gallups Job Creation index showed no improvement in December but it is holding +10, which is the best net level we've had since October of 2008.  So we have ADP going one way, yesterday's unemployment numbers were flat and Gallup says things are getting worse.  8:30 will be very interesting indeed.  

While we wait for the number, let's take a look at last week's post to see how things are tracking.   Monday morning I mentioned we liked FCX short at $120 (a trade that was reiterated Tuesday morning) as we felt the run in copper was overdone.  It was a rough week but FCX is down at $116 now so we're on track at the moment of course we took a spread in chat, which was the Feb $119/110 bear put spread at $3.60, selling the Jan $120 calls for $3.60.   That spread is now $4.60 and the calls have dropped to $2.30 for a nice net $2.30 gain already.  

I said that $90 was already ridiculous for oil and we shouldn't go any higher.  We picked up the USO Feb $40 puts on Tuesday morning in Member Chat at $2.10 and those are now $3.70 so a nice $1.60 gain there, which is about the same as if we had just shorted the stock as it dropped from $39 that…
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Thrilling Thursday – Comedy or Tragedy?

Russell 8-0-0, Russell 8-0-0! Wherefore art thou Russell8-0-0?  Deny thy dollar and refuse to fall, or, if thou spike not, be but consolidating at resistance and I’ll happily Capitulate….

If it's good enough for fair Juliet, it's going to have to be good enough for us as the Russell finally makes it over our 800 target – the last barrier that was keeping us on the bearish side.  Above these lines – it's time to stop worrying and love the rally as we romanticize the deadly combination of QE2 the Obama tax cuts as: "A pair of star-crossed lovers take their life, whose misadventured piteous overthrows doth with their death bury their parents’ strife."

Of course Willie Shakespeare has nothing on Jimmy Cramer, who's pearls of wisdom are also sure to be repeated centuries from now.  Last night the Bard of Wall Street sang a veritable sonnet in praise of the stock market and foretold a tale of woe for anyone dumb enough to take profits into this rally:

 

We got the correction this morning, Dow fell 35 points…  Today's action was proof positive that you need to stop worrying and learn to love corrections…  What scares me, and what should scare you, is that if you sell your stocks here, you won't be able to get back in.  You should be worried about stocks getting away from you, because I think we can be on the verge of something big – something very positive.   FORGET the fact that stocks have run up a lot in the last 6 months.  For more than 10 years, this market has done nothing, THAT is the most important frame of reference…

What's changed?  We are finally starting to see big breakouts from a slew of breakouts from several large cap companies including: CAT, UTX, FCX, SWK, CBE, ETN, CSX, UNP and so many other big industrials.  Ladies and gentlemen, we have waited over a decade for this move and what do people want to do now that it has arrived?  They want to sell!  That's right, they want to sell.  That's right.  They want to dump the stocks (sell button sound effect) because they are up


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Testy Tuesday – Topping or Popping?

 Looks like we picked the wrong week to short FCX! 

Copper hit a new all-time high in Shanghai this morning (as the guy who owns 90% of London's closed for the holiday exchange supplies sold it to himself for more money than he did yesterday) and gold is back at $1,400 in the futures and that should give us a better entry on FCX puts than we expected for round 2 but Paul Krugman has me worried now that maybe commodity prices are just high because the World hasn't got enough of them to go around.  Usually Paul and I agree but i think he may be discounting the effect of a 10% decline in the dollar a little too much – which is understandable as he is still arguing for more stimulus while I'm arguing that the way they are stimulating now is causing this problem and can not and should not be sustained.  

Still, we have to be pragmatic.  That's why, this weekend, I posted our "Secret Santa Inflation Hedges for 2011" as a follow-on to the "Breakout Defense – 5,000% in 5 Trades or Less" ideas of the 11th and, in the week between the two, we had bullish bets on  HMY, XLF, CAKE, TNA, IWM, CCJ, CHK, EXC, TNA, XLF, UNG, GLD, AAPL, GLW, TOT and AXP – which I had mentioned on the 19th in the weekend post "It's Never too Early to Predict the Future."  Just because I think there's going to be a disaster doesn't mean we can't go with the flow while we wait, right?  

We don't have to like the market to buy it above our breakout lines but we do need to keep in mind that this is a very thin rally that is very likely nothing but window dressing aimed at dragging money off the sidelines so the IBanks who have been propping up the markets can, once again, stick the retail shareholders with the bag as they load up on puts (watch the VIX to confirm) and crash the markets once again.  I've seen it happen in 1999, I saw it happen in 2008 and, both times, the rally lasted longer than seemed logical but the smart play was to hit and run – not to leave your money on the table but
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Secret Santa’s Inflation Hedges for 2011

Merry Christmas!

I hope you got everything you wanted this holiday season and, most importantly, I hope you had time to spend with your family.  I'm waiting for mine to wake up – waiting for my children to come out of their rooms so I can videotape (gosh I'm old, there's no tape anymore) them in those first moments of Christmas morning – how can I not be of good cheer anticipating that?

It occurred to me, though, that I have something I can give you.  Not peace on earth but perhaps peace of mind heading into the New Year – a way to help insure some future prosperity with a few inflation-fighting stock picks that can brighten up your virtual portfolio, which also can be used to help balance the budget against unexpected cost increases.  

This isn't an options seminar or one about risk or leverage – these are just a few practical ideas you can use to hedge against inflation as it may affect your everyday life using basic industry ETFs and some simple hedging strategies to give you an opportunity to stay ahead of the markets if they keep going higher.  

Idea #1 – Hedging for Home Price Inflation

Let's say you have $20,000 put aside for a deposit on a home but you're not sure it's the right time to buy.  On the other hand, let's say you are worried that home prices will take off again (I doubt this but you never know).  XHB is the homebuilder's ETF, currently at $17.46 and they bottomed out at $7.77 in 2009 and were in the $40s back in 2006.

You can sell 20 contracts of the XHB 2013 $14 puts for $1.70 each ($3,400) and that obligates you to buy 2,000 shares of XHB at $14 (20% off the current price) and you can use that money to buy 30 2013 $15/18 bull call spreads for $1.40 ($4,200) so another $800 out of pocket and you have 30 $3 contracts for net $800 that pay back $9,000 if XHB simply gains .54 by Jan 2013.  These bull call spreads, however, do not pay off early – the ETF needs to be above $18 at Jan 2013 options expiration day (the 18th).  

So you…
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Just Another Manic Monday – Stagflation Official in China

Wheeee, everything must be great! 

We are crushing our levels as the market flies ever higher.  Our 11,500 target on the Dow looks sure to be tested and we're already flipping bullish with our "Breakout Defense" trades, in which our goal is to make 5,000% in 5 trades or less.  We are not ashamed to jump on the bullish bandwagon – if they are giving away money, we'll stand in line with everyone else, only we'll take a larger share – thank you very much.  We certainly know how to use leverage just like a Bankster – we have a spread and we're not afraid to use it!  

Speaking of Banksters, the must-read article of the weekend is the NY Times piece that goes into surprising details of secret bank meetings that are regularly held in NY where the Gang of 12 (just 9 of them) do their best to manipulate the derivatives market, influence regulations and regulators and, of course, crush their competition.  The article even goes so far as to name my old friends at ICE as possibly maybe having something to do with these shenanigans and I am SHOCKED at these allegations as the good people at ICE were so good about telling me how I had things all wrong when I made similar statements last year (which I now legally know cannot be proven and therefore must not be true).  

And thank goodness that the commodity and derivatives clearinghouse that was founded by Big Banks and is controlled by Big Banks cannot be proven to be operating in favor of Big Banks because we wouldn't want to think that the Big Banks had some preferential treatment (beyond the access to the discount window and the TARP money and the POMO money, etc.) – that would just be unAmerican.  By unAmerican, I mean the old America that they write about in the Declaration of Independence and the original Constitution, of course – not the Corporate Kleptocracy this country has developed into.  Under the new guidelines, leveraging your influence and having the government rob the people to increase your profits on which you don't pay taxes is the very definition of patriotism, isn't it?  

VIXAh well…  As I said last…
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Trillion Dollar Tuesday – More Free Money!!!

Thank you Republicans!  

The party of fiscal responsibility has strong-armed the President and what little is left on the Democrats in Congress to extend the Bush Tax cuts for another two years at a cost of "just" $830Bn to the little people who still have to pay taxes.  They accomplished this by allowing the Democrats to extend $56Bn of additional unemployment relief to the 2M families who were cut off on Friday and were about to go their first week without checks with just 17 shopping days left until Christmas.  Of course, the Democrats don't just bend, they BREAK and the Republicans also got a 30% reduction in the estate taxes that are projected to cost an additional $66Bn to the people who don't have $5M estates.  Merry Christmas, rich folks – Lloyd bless us, everyone!  

"But Phil," you may ask "who actually does pay taxes?"  When your deficit is about as high as your net collections – the answer is: No one really – or no anyone who matters, anyway.  As I've often told you, our Corporate Overlords actually pay just 2.4% of our GDP in taxes, just $138Bn last year which was less than the $6Tn in bailouts they collected by a factor of 43 – no wonder they are doing so well!  As you can see from the chart, Estate and Excise taxes are barely a point on the graph and Individual income taxes are barely 6% while Employment Taxes have jumped from 1.5% of GDP in 1950 to 7.5% today – that's a 400% increase but don't worry, it only affects your first $106,800 in income – after that, ZERO!  That way, if you earn $1M, the jump in payroll taxes from $1,250 to $6,250 is just 0.5% of your income vs the 5% increase borne by a person earning $100,000 or less.  

Imagine if all 140M US workers were given an even $6,000 break ($840Bn divided by 140M) on their take-home pay by just eliminating those SS deductions (it's not like they'll ever get that money back anyway)?  Why everyone would immediately be taking home $500 more per month.  Of course we know that the poor people would only "waste" it on food, shelter and clothing so our wise government has guided the bailout to the places it will…
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Phil's Favorites

10 ways to spot online misinformation

 

10 ways to spot online misinformation

When you share information online, do it responsibly. Sitthiphong/Getty Images

Courtesy of H. Colleen Sinclair, Mississippi State University

Propagandists are already working to sow disinformation and social discord in the run-up to the November elections.

Many of their efforts have focused on social media, where people’s limited attention spans push them to ...



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Members' Corner

10 ways to spot online misinformation

 

10 ways to spot online misinformation

When you share information online, do it responsibly. Sitthiphong/Getty Images

Courtesy of H. Colleen Sinclair, Mississippi State University

Propagandists are already working to sow disinformation and social discord in the run-up to the November elections.

Many of their efforts have focused on social media, where people’s limited attention spans push them to ...



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Zero Hedge

"The Scope For Pain Is Immense" - China's Consumer Default Tsunami Has Started

Courtesy of ZeroHedge View original post here.

One month ago we reported that "China Faces Financial Armageddon With 85% Of Businesses Set To Run Out Of Cash In 3 Months", in which we explained that while China's giant state-owned SOEs will likely have enough of a liquidity lifeblood to last them for 2-3 quarters, it is the country's small businesses that are facing a head on collision with an iceberg, because ...



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Biotech/COVID-19

The world before this coronavirus and after cannot be the same

 

The world before this coronavirus and after cannot be the same

Gettyimages

Courtesy of Ian Goldin, University of Oxford and Robert Muggah, Pontifical Catholic University of Rio de Janeiro (PUC-Rio)

With COVID-19 infections now evident in 176 countries, the pandemic is the most significant threat to humanity since the second world war. Then, as now, confidence in international cooperation and institutions plumbed new lows.

While the on...



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Digital Currencies

While coronavirus rages, bitcoin has made a leap towards the mainstream

 

While coronavirus rages, bitcoin has made a leap towards the mainstream

Get used to it. Anastasiia Bakai

Courtesy of Iwa Salami, University of East London

Anyone holding bitcoin would have watched the market with alarm in recent weeks. The virtual currency, whose price other cryptocurrencies like ethereum and litecoin largely follow, plummeted from more than US$10,000 (£8,206) in mid-February to briefly below US$4,000 on March 13. Despite recovering to the mid-US$6,000s at the time of writin...



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Insider Scoop

'Psyched': Hawaii Considers Resolution For Shrooms, Champignon Eyes Ketamine Products

Courtesy of Benzinga

Psyched is a bi-monthly column covering the most important developments in the industry of medicinal psychedelics. We hope you follow us periodically as we report on the growth of this exciting new industry.

Champignon Brands Buys IP Company and Adds Ketamine and New Formulations To Its Portfolio

On March 19, Champignon Brands Inc. (CSE: SHRM) (OTC: SHRMF), a Canadian healt...



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The Technical Traders

These Index Charts Will Calm You Down

Courtesy of Technical Traders

I put together this video that will calm you down, because knowing where are within the stock market cycles, and the economy makes all the difference.

This is the worst time to be starting a business that’s for sure. I have talked about this is past videos and events I attended that bear markets are fantastic opportunities if you can retain your capital until late in the bear market cycle. If you can do this, you will find countless opportunities to invest money. From buying businesses, franchises, real estate, equipment, and stocks at a considerable discount that would make today’s prices look ridiculous (which they are).

Take a quick watch of this video because it shows you ...



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Kimble Charting Solutions

Broadest Of All Stock Indices Testing Critical Support, Says Joe Friday!

Courtesy of Chris Kimble

One of the broadest indices in the states remains in a long-term bullish trend, where a critical support test is in play.

The chart looks at the Wilshire 5000 on a monthly basis over the past 35-years.

The index has spent the majority of the past three decades inside of rising channel (1). It hit the top of this multi-decade channel to start off the year, where it created a monthly bearish reversal pattern.

Weakness the past 2-months has the index testing rising support and the December 2018 lows at (2).

Joe...



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Chart School

Cycle Trading - Funny when it comes due

Courtesy of Read the Ticker

Non believers of cycles become fast believers when the heat of the moment is upon them.

Just has we have birthdays, so does the market, regular cycles of time and price. The market news of the cycle turn may change each time, but the time is regular. Markets are not a random walk.


Success comes from strategy and the execution of a plan.















Changes in the world is the source of all market moves, to catch an...

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ValueWalk

Entrepreneurial activity and business ownership on the rise

By Jacob Wolinsky. Originally published at ValueWalk.

Indicating strong health of entrepreneurship, both entrepreneurial activity and established business ownership in the United States have trended upwards over the past 19 years, according to the 2019/2020 Global Entrepreneurship Monitor Global Report, released March 3rd in Miami at the GEM Annual Meeting.

Q4 2019 hedge fund letters, conferences and more

The Benefit Of Entrepreneurial Activity ...

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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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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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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.