Posts Tagged ‘peg’

April 30th and All is Well – ROFL!

Is this time going to be different?

Sure, why not?  Don't let the fact that we had pretty nasty sell-offs the last 4 Mays dissuade you from being gung-ho bullish into this one – after all – it takes bulls and bears to make a market, doesn't it?  

We've been prone to focusing on the negative lately – mostly because the positive is pretty much all you hear in the Corporate Media and we like to have balance.  If they were too bearish, I'd make a bullish case but this weekend we focused on "Money, Power and Wall Street," and the deteriorating Global situation, which got no better this morning with Spain's -0.3% GDP Report, Eurozone Inflation above forecasts at 2.6%, the S&P downgrading 16 Spanish Banks, California's Tax Collections are running 26% behind schedule, gasoline is hitting record highs in Europe while Business Investment in Europe drops BELOW the 2008 lows:

SPY DAILYShould we be concerned?  Why should we be – look how high the market is!   Doesn't that prove that everything is OK?  It sure proved it in October of 2007, when the Dow was at 14,000 and it was still proving it on Monday, May 19th, 2008 – when the Dow was at 13,028 for the last time until March 13th of this year, when 200-point one-day pop sent us all the way to 13,177.  We topped out around and fell all the way to 12,700 a month later but now we're back and THIS TIME IS DIFFERENT, right?  

For one thing, the SNB spent $4.1Bn propping up the Euro in Q1 – that's a lot of money for a country whose entire GDP is just $500Bn!  Fortunately for the Swiss, their insane money printing did cause their gold holdings to rise by $1.2Bn so their net loss in manipulating the Global economy was "only" $2.8Bn so I'm sure they can sustain this farce for another quarter or two if they wish.  

Farce is too kind a description for the fraud being perpetrated by the Central Banksters, according to the Economic Policy Journal's Bob Wenzel, what had this to say in his speech to the NY Fed last week (the whole speech is a must read):  

Under Chairman Bernanke there have been significant changes in direction


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Wednesday Wheeee – No More QE For You!

SPY 5 MINUTEI hate to say I told you so but…

Oh, who are we kidding?  I could not be happier saying I told you so and neither could our Members as our "Sell in March and Go Away" strategy seems to have hit the nail on the head – and it's only April 4th!  

Back then (2/24), we were still bullish but the plan was to let the rally run its course and cash out ahead of earnings and our plays from that Wednesday (2/22) which I posted right in the morning post for all to see, have performed very well, of course.  

We had April SQQQ and DXD hedges that failed, of course, but those were paid for by the short sale of AAPL 2014 $300 puts for $15, which are already $10.75, so up 28% already on those pays for a lot of protection.  

Another offset we had looked at was the short sale of FDX April $80 puts at $1.10, which expired worthless (up 100%).  We also looked at longer-term put sales on SKX, with the Oct $12 puts fetching $1.55 per contract, now $1.25 (up 19%), and the T 2014 $25 puts at $2.15, now $1.75 (up 18%). 

Along the same vein, the XOM 2014 $65 puts at $5, now $4.05 (up 19%) were sold to pay for the SU 2014 $25/37 bull call spread for $6 for net $1 on the spread.  The bull call spread is still $6 but that's net $1.95 now – up 95% on the combo.  Our other bullish play on oil was the USO June $40/46 bull call spread at $2, selling he SCO Oct $26 puts for $3 for a net $1 credit.  The USO spread has fallen to $1.40 but the short SCO puts dropped to $1.65 a net gain of .75 – up a quick 75% on a fairly neutral oil play, which was BRILLIANT as it covered many, many of our aggressive oil shorts over the month that went VERY well

Our other trade ideas from the morning post (and the logic and strategies are detailed in the post):  

  • AA 2014 $10 puts sold for $2, still $2 – even
  • X at $28.49, selling Jan $25 calls for $8.50 and 2014 $20 puts for $2.95 for net $17.04/18.52 


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Wrong-Way Wednesday – No QE3 For You!

Yesterday, we talked about the BS that is Fox News.  

Ironically, some of the "news" outlets that generally carry my articles (who's names shall be protected because they are wimps) decided it was too controversial for their readers so we know that's not a topic we're allowed to discuss in America, for fear of being black-listed.  Today we'll see if we can make it a two-fer in the Bracket of Evil, as I have a juicy resignation letter from Greg Smith of Goldman Sachs (thanks Rev Todd), who is no small player, but the head of the firm's US Equity Derivative Business in Europe, the Middle East and Africa.  Just a couple of excerpts:

I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it. To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money.

What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym. 

I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail.

So we established yesterday that you can't trust the MSM and clearly you can't trust your Investment Banker and we KNOW
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Fake News Friday – What A Fool Believes

Oil shot up  to $110.55 yesterday.

The news was that a pipeline in Saudi Arabia had been attacked and oil had been running up all day into this "news," which, funnily enough, turned out to be fake.  We caught the news at 3:05 in Member Chat (thanks Kustomz) and we had been waiting for oil to stop going up so we could short it.  The turn came at the $110.50 in the Futures (/CL) and we caught a nice run down to $109 and I reiterated, at 3:36, with oil still at $109.88 my love for the USO April $40 puts, which were $1.08 at the time and finished the day at $1.15.

As Malsg pointed out in Member Chat: "The pictures of the fire are taken in daylight … but Saudi sunset was several hours ago … the oil market only stared going nuts after the close."  A very good observation that gave us the resolve to stay short on oil – which is working out fantastically this morning as well. 

We also grabbed an aggressive short spread on BNO, as it seemed the whole day's run had been BS, with traders in the know stocking up ahead of the fake news so they could unload barrels into the retail suckers who bought into the spike.  Don't worry though – no one who bought oil up from $105 on Thursday to $109 ahead of the news will be arrested or even questioned – we'll just keep pretending the total farce of oil trading is a legitimate pricing mechanism, even though it costs people around the world hundreds of Billions of Dollars each year in excess charges (see "Goldman's Global Oil Scam Passes the 50 Madoff Mark").  

SPY DAILY Now, this is the part where I would usually point out how the economy is weaker than we think etc. but I'm not going to do that this morning because the S&P still over 1,360 and, if a stronger Dollar isn't going to stop this rally – nothing will.  Even yesterday, I joked to Members that I wasn't going to highlight negative news items in red anymore as there was no such thing as bad news in this market.  

As you can see from David Fry's SPY chart,…
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No Worries Wednesday – Top Ten Plays for the Bull Market

We're still waiting for a clear signal.

The S&P is finally over our 1,359 level but, so far, has not stayed over that line for a full session and we need two sessions over the line to confirm it.  However, I did promise not to be bearish if we're over 1,360 and I think I got it all out of my system in the last few posts, as well as last night and this morning's Member Chat, where I outlined my case for for the oil glut and the collapse of the EU, which will lead to the collapse of Asia and the US – but not today.  

Today there is a ton of money sloshing around in the system and we are clearly in a massive technical rally, which may (or may not) end at any moment.  We discussed our February trade ideas from our morning posts on Monday's morning so I won't rehash them here but I do want to take a look at ways to leverage some trades to take full advantage of this non-stop rally as we have VERY CLEAR stop lines (our 10% lines) where we'll have a clear signal to get out or cover if ANY of the major indexes fail.  

As with our early February trade ideas, we can add one more bullish trade each day that we're over the line and cash out the older trades that go well in the money and, of course, accumulate some Disaster Hedges (20-30% of your unrealized profits into protective hedges is a good rule of thumb as well as the cheapest form of protection – STOPS!).  

My favorite disaster hedges are playing for a correction in the Dow or the Nasdaq which, if you are a Dow Theorist, would seem very likely based on the chart on the left but, so far, nothing matters to the bulls – who have their story and they are sticking to it – regardless of those pesky facts.  Sorry, that's a bit bearish (bad habit).  Anyway, my favorite disaster hedges are:  

SQQQ April $13/17 bull call spread for .70.  This trade has a 471% upside potential by itself if SQQQ (currently $13.14) gains 30% by April expiration (58 days).  That's a lot but SQQQ is a 3x ultra-short to the Nasdaq so a 10% drop in the Nas, back to 2,650…
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Pessimism Apparent as Goldman-Bears Play with Put Options

Today’s tickers: GS, MU, PEG, CX, XRX, IYT, EEM, HOG, HUM & ALL

GS – Goldman Sachs Group, Inc. – Posturing in out-of-the-money put options on Goldman Sachs today indicates some investors expect the investment banking firm’s share price could erode substantially ahead of May expiration. Goldman’s shares slipped 1.5% during the trading session to stand at $160.94 as of 2:30 pm (ET). One pessimistic player invested in a debit put spread in order to position for continued bearish movement in the price of the underlying stock through expiration next month. The trader picked up approximately 11,700 puts at the May $145 strike for an average premium of $1.91 each, and sold the same number of puts at the lower May $120 strike for $0.16 apiece. Net premium paid for the put transaction amounts to $1.75 per contract. The trader makes money if Goldman’s shares fall 11% to breach the effective breakeven point to the downside at $143.25. Maximum available profits of $23.25 per contract are available to the options player should the financial services firm’s share price plummet 25% to $120.00 ahead of expiration day in May. Other bearish players engaged in plain-vanilla put buying at the June $150 strike where at least 3,600 put contracts were picked up for an average premium of $4.73 each. Put-buyers at this strike stand ready to accrue profits if Goldman Sachs’ share price slips 9.75% lower to breach the average breakeven point at $145.27 by June expiration.

MU – Micron Technology Inc. – A large-volume short strangle play employed on the manufacturer of semiconductor devices today suggests one big options player expects Micron’s shares to trade within a specified range through expiration in October. Micron Technology’s shares are up 0.10% to $10.81 as of 2:50 pm (ET). It looks like one trader sold approximately 24,000 puts at the October $9.0 strike for a premium of $0.73 each, in combination with the sale of about the same number of calls at the higher October $12 strike for $0.98 apiece. Gross premium pocketed by the strangle-strategist amounts to $1.71 per contract. The investor keeps the full amount of premium received today as long as Micron’s shares trade within the boundaries of the strike prices described through expiration day. Short positions assumed in both call and put options expose the trader to losses in the event that Micron’s shares rally above the upper breakeven price…
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The Forgotten Peg: Chinese Yuan and U.S. Dollar

The Forgotten Peg: Chinese Yuan and U.S. Dollar

Courtesy of Charles Hugh Smith, Of Two Minds

Many observers seem to have forgotten a weak dollar benefits Chinese exports due to the yuan-dollar peg.

china yuanFor those readers who tire of charts: enjoy!

As the "news" continues to trumpet the decline/collapse of the U.S. dollar, many observers seem to have forgotten that the U.S. dollar is the defacto "shared currency" of the world’s largest economy and its biggest rising-star economy. Yes, the U.S. and the PRC--China. China’s currency (officially the renminbi, a.k.a. yuan) is transparently pegged to the U.S. dollar at about 6.8 yuan to the dollar, down from 8+ a few years ago.

Given that Japan is the world’s second-largest economy by most measures, and that the yen is informally pegged to the U.S. dollar (trading in a band of 90-110 yen for years on end), then it could be argued that the world’s three largest economies all "share" the U.S. dollar.

Before we explore the consequences of this, let’s look at a standard-issue "the dollar is weakening" piece: Dollar’s Slide Poised to Continue U.S. Quietly Tolerates Drop, While Trade Partners Fret; a Long List of Negatives for the Currency.

Here’s one which actually mentions the trade benefits to China of a weak dollar: Dollar weakness sends ripples across Asia: Scramble to preserve capital and the Hong Kong carry-trade redux

And just to remind everyone that China’s leaders don’t sit around tolerating circumstances which are negative for their economy: China Targets Commodity Prices by Stepping Into Futures Markets

And lastly, let’s establish the primary context of China’s leadership: 1 billion poor citizens seeking a better job/wage/life. Here is a puff piece by former U.K. prime Minister Tony Blair which makes one key point: most of China’s citizens are still very poor, and thus the leadership is obsessed with "growth" and jobs above all else: China’s New Cultural Revolution: The world’s largest country has a long way to go, but there’s no question it’s changing for the better. (WSJ.com)

Superficial stories about China are accompanied by glitzy photos of Shanghai skyscrapers and other scenes from the wealthy urban coastal cities, but the fact is that the consumer buying power of China is roughly equivalent to that of England (51 million residents).

Thus those who believe the vast Chinese manufacturing-export…
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Phil's Favorites

The War on All Fact People

 

David Brin shares an excerpt from his new book on the GOP's 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: ...



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Chart School

SP500 Kitchin Cycle Review

Courtesy of Read the Ticker

The biggest known news date in the next 18 months is the US Election. The biggest unknown news date is when the US believes it is in a economic recession.

The Kitchin Cycle is still working.

We must conclude the major 900 period low is now in, and we are now in a up swing, which may top out ate 2020 or late 2021. Any future top out may only generate a 10% to 20% correction, of course this can be deemed very mild. This is expected, but the expected does always play out. 

Rolling the dice to get '7' does not always work. Post US elections seasonal's aligned with a poor start of the decade seasonal trends, add on high global recession risk, add on a stock market slump tends to occur in the years ending 9,1,2,3,4 (like 1973, 1...



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Zero Hedge

Haftar Blocks All Libyan Oil Exports Day Before Berlin Peace Conference

Courtesy of ZeroHedge View original post here.

Given Libyan commander Khalifa Haftar has over the past two years captured the majority of the oil and gas rich country's energy producing regions, he's now playing his biggest card yet to leverage international peace talks in his favor amid a final push for his Libyan National Army (LNA) forces to take Tripoli. 

Bloomberg reports Saturday that the Benghazi-based 'rebel' general has now "blocked oil exports at ports under his contr...



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The Technical Traders

Energy Continues Basing Setup - Breakout Expected Near January 24th

Courtesy of Technical Traders

After watching Crude Oil fall from the $65
ppb level to the $58 ppb level (-10.7%) over the past few weeks, we still
believe the energy sector is setting up for another great trade for skilled
investors/traders.

We are all keenly aware that Winter is still
here and that heating oil demands may continue to push certain energy prices
higher.  Yet Winter is also a time when
people don’t travel as much and, overall, energy prices tend to weaken
throughout Winter.

Over the past 37 years, the historical monthly breakdown for Crude Oil is as follows:

December: Generally l...



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Insider Scoop

10 Biggest Price Target Changes For Friday

Courtesy of Benzinga

  • Citigroup lifted Caterpillar Inc. (NYSE: CAT) price target from $145 to $170. Caterpillar closed at $147.87 on Thursday.
  • UBS cut Twitter Inc (NYSE: TWTR) price target from $37 to $35. Twitter shares closed at $34.19 on Thursday.
  • Morgan Stanley boosted the price target for Yum! Brands, Inc. (NYSE: YUM) from $113 to $118. Yum! Brands closed at $102.16 on Thursday.
  • Jefferies lifted the price target on Ventas, Inc. (NYSE: ...


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Kimble Charting Solutions

Tesla About To Run Out Of Energy Here? Short-Term Peak Possible?

Courtesy of Chris Kimble

Tesla (TSLA) has been screaming higher of late, as very impressive gains have taken place.

Is Tesla about to run out of energy/take a break/experience some selling pressure? A unique price setup is in play, that bulls might want want to be aware of.

This chart applies Fibonacci to the 2016 lows and 2017 highs at each (1). The impressive rally of late has it testing its 161% extension level, based upon those price points.

At the same time, it is hitting its 161% extension level, it finds itself at the top of a 7-year rising channel, with momentum hitting the highest ...



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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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Members' Corner

Tobin Smith: Foxocracy, the 2020 Election, and the Stock Market

 

Fox News has been spreading false information and hooking its audience into an angry, xenophobic and paranoid worldview for decades. It's no mystery that Fox was instrumental in the 2016 election -- but how did it do it? Tobin Smith, CEO of Transformity Research, Inc. and former Fox News contributor and talk show host, explores this phenomenon and discusses Fox News’ emotionally predatory and partisan propaganda media strategies and tactics in his new book, Foxocracy: Inside the Network&...



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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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