Stock World Weekly
by ilene - November 14th, 2010 10:28 pm
The latest Stock World Weekly Newsletter summarizing the events of last week, and discussing next week, is now available here. As always, we love feedback. - Ilene
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Week Gone By at Phil’s Stock World
by ilene - September 4th, 2010 5:29 pm
Week Gone By at Phil’s Stock World
By Elliott and Ilene
Globalism is featured in several of this week’s Favorites articles. The ever insightful Paul Craig Roberts asks whether “economists have made themselves irrelevant” in his article "Death by Globalism".
Michael Synder points out that globalism is no longer "something that is going to happen in the future", but is instead a hard reality that is currently annihilating our middle class in his article "Winners and Losers." Of our new global economy, Michael writes:
"…American workers are just far too expensive. So middle class manufacturing jobs are fleeing our shores at a staggering pace.
Since 1979, manufacturing employment in the United States has fallen by 40 percent.
Are you alarmed yet?
You should be.
The truth is that we did not have to merge our economy with nations like China. China does not have the same minimum wage laws that we do. China does not have the same environmental protection laws that we do. In China, companies can treat their workers like crap. As a result of open trade with the United States, scores of shiny new factories have opened all over China while once great manufacturing U.S. cities such as Detroit have degenerated into rotting war zones. We continue to expand trade with China even though their communist government stands for things that are absolutely repulsive and has a list of human rights abuses that is seemingly endless.
But politicians from both parties swore up and down that globalism would be so good for us. Now we have created a network of free trade agreements that would be virtually impossible to unwind…"
What is the result? We have the disparity of multinational corporations doing remarkably well in the face of a weak and sickly U.S. economy. The large corporations are relying on the U.S. consumer less and less. They have moved their factories overseas, avoided U.S. taxes, laid off U.S. workers, and taken advantage of cheap off shores labor. And their earnings may continue relatively unharmed by a lull, double dip, or continued recession in the U.S. – depending on whose perspective. (See Consumer Metrics Institute’s report on the U.S. consumer and our economic malaise.) The result of this corporate earnings/U.S. economy disparity is reflected in the stock market’s performance which seems to have decoupled…
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How to Buy Quality Stocks for a 10%-20% Discount & Get $500
by Sabrient - September 2nd, 2010 4:02 pm
Scott Brown at Sabrient has set up a deal with OptionsXpress for those who want to subscribe to PSW and/or Sabrient, and open an account at OptionsXpress. Here’s the OptionsXpress deal, first with Sabrient. The same deal is available for new and renewing Phil’s Stock World subscribers. (Keep reading below.) - Ilene
How to Make Money in Stocks and Still Sleep Well at Night … and Get $500!
In this wild and crazy market of 2010 the Sabrient Investor’s (H)Edge Virtual Portfolio is UP +6.74% YTD while the S&P 500 is DOWN -0.91%! The Sabrient Investor’s (H)Edge Virtual Portfolio is a balanced long/short virtual portfolio which aims protects our subscribers in ALL markets.
How?
Based on Sabrient’s highly predictive Company Outlook Rank, we can identify the fundamentally strongest stocks with the best valuations and the most upside potential, as well as the fundamentally weakest stocks that should lag no matter what the market does. The resulting long/short virtual portfolio lets you capture the performance spread between the longs & shorts.
A balanced long/short virtual portfolio like Sabrient’s Investor’s (H)Edge is a great approach to a volatile, unpredictable market. Every Thursday, David Brown reviews one long and one short, and either renews or replaces the stocks, depending on their current rankings and fundamentals. Take a look at the latest selections HERE - And click the 2009 Virtual Portfolio link on that page to see all the trades from last year.
Our backtested, forward-tested and time-tested strategies have averaged +34.1% per year since 2000, providing safety in the 2008 meltdown and on virtually every down-market day in the past two years. The Investors’ (H)edge virtual portfolio has a beta of .25, an alpha of 28.6% and a Sharpe ratio of 1.36, and is designed to profit from both up and down market moves.
The Sabrient Platinum Subscription:
Investor’s (H)Edge Virtual Portfolio is part of our Platinum Subscription, which also includes:
• The Select Opportunity Virtual Portfolio, a long/short virtual portfolio for active traders, which is averaging 3.5% per stock trade, with an average holding time in each trade of 16 days.
• MyStockFinder, a powerful stock search program for finding stocks that match your particular investing requirements, such as stocks with high insider buying or recent analyst upgrades; stocks with high growth rates or strong dividend yields.
• The Sabrient Ratings Reports that let you see at a glance how Sabrient rates a stock, any stock…
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What “the plot” is all about
by revtodd64 - August 19th, 2010 2:40 pm
What “the plot” is all about
Courtesy of Rev. Todd, Rev Todd’s IRA Plot
For several years I have been a wandering stock market pilgrim seeking the holy grail of trading. I started with $2500 from a tax rebate and started climbing the volatile active volcano of penny stocks. I barely escaped the lava and moved through a series of gurus. I journeyed through the lands that were infested with gold bugs; flew (and crashed) with the iron condors, traveled with a trading tribe of “turtle traders” until whipsawed unconscious; and flew too near the sun with Icarus-like option traders. None of these proved to be the holy grail, since I either had too little cash, too little time or too little patience since I work full-time and cannot devote myself to day trading.
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DARK HORSE HEDGE
by Sabrient - August 2nd, 2010 3:14 am
DARK HORSE HEDGE Weekend Catch-Up
By Scott at Sabrient and Ilene at Phil’s Stock World
Hedging into the week of August 2nd, the Dark Horse Hedge (DHH) is in a BALANCED tilt (long to short ratio) with 8 LONG and 8 SHORT positions. We used Phil’s BUY/WRITE strategy to enter two of our LONG positions (IM and GCI) at a 10-20% discount to the market. As you can see from the chart, the SPX wandered between the 50 and 200 day moving averages (MAs) all week before whimpering towards the bottom of the channel Thursday and Friday. The 12-26-9 MACD which is the faster of the 2 technical direction signals we follow has flat-lined at just above +6 and the slower RSI 14-day still remains just below 50.
Without some impressive economic reports coming this week or much better than expected earnings reports, we believe the market will drift down towards and test the 50 day MA. If a bullish tone sets back in, it is doubtful that it could easily push through the 200 day MA. Resistance points as well as the 50 and 200 day MAs all which fit into a fairly narrow trading channel.
[chart from FreeStockCharts.com]
We are happy with the positions we put on in DHH’s first 30 days of existence and we look forward to capturing more profit as the companies report earnings this week. We will continue to take profits "after the news" and rotate into newer, fresher positions while keeping an eye on the overall market to adjust our tilt for maximum Alpha,* which is why we write and read DHH.
Summary of DHH positions in the virtual portfolio
LONG: XRTX, WDC, GCI, IM, DLX, GME, FRZ, and TEO
SHORT: AIV, STI, HUSA, USG, CLDA, TEX, RAIL, and JOE
Read previous DHH actions and follow our latest virtual portfolio moves here. >
*We are aiming to be hedged in our market exposure by being long stocks with the greatest potential to rise and short stocks with the greatest potential to decline. To identify these winner and loser stocks, we use Sabrient’s Value Change Up (VCU) assessment system. Sabrient’s VCU system is a multi-factor quantitative ranking system that scores over 2,000 stocks and allows us to enter LONG positions in the best ranking stocks and SHORT positions in worst ranking stocks.…
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Gilead – Not Your Run of the Mill Mid-Tier Pharma
by ilene - July 25th, 2010 2:54 am
Gilead – Not Your Run of the Mill Mid-Tier Pharma
Courtesy of Pharmboy
At PSW, we have been hemming and hawing about inflation/deflation, how to right Washington, oil exploration, solar flairs, irrational exhuberance in the market, and why Gilead (GILD) has lost its prominence in the market’s eye. Experts say it is the company’s pipeline, as one of its flagship drugs is expiring in 2013. Others allege that the company is being shorted by hedge funds because the short interest is currently trading at 1 day.
Gilead Sciences, founded in 1987, is a leading pharmaceutical player, with more than 2,500 employees. With headquarters in Foster City, California, and operations spanning across the globe, it focuses its research and clinical programs on antivirals, antifungals and antibacterials. Gilead’s portfolio of 13 marketed products includes a number of category firsts and market leaders.
Gilead’s first significant entrant into the HIV market in 2001 was Viread (a nucleotide analog reverse transcriptase inhibitor, or NtRTI). Viread was recently approved for the treatment of chronic hepatitis B. It was followed in 2003 by Emtriva, and then in 2004, Gilead’s current blockbuster product Truvada (a combination of Viread and Emtriva) was launched. Gilead’s newest HIV product is Atripla, a combination of Truvada and Bristol-Myers Squibb’s (BMS) Sustiva, which has achieved rapid sales uptake since its launch in 2006. Below are Gilead’s main income drivers, and as one notices, the HIV franchise is the majority of the company’s income.
In July 2009, Gilead announced a collaboration with Tibotec (a division of t Johnson & Johnson) to develop and commercialize a fixed-dose combination (FDC) of Truvada and Tibotec’s TMC278 (rilpivirine). This decision was to develop, in essence, a second generation Atripla. This was a wise move by Gilead because GSK has its own integrase inhibitor, GSK1349572, which has shown positive Phase II results and will eventually compete with GILD/JNJ’s fixed dose combination. In addition, GILD will lose patent protection on Atripla in 2013, so doctors (or GSK) could combine the new GSK drug with BMS/s Sustiva, thus inceasing the pricing pressure on GILD. Teaming with JnJ should help maintain Gilead’s already dominant FDC market share which is projected to be 40% of the HIV market.
As a side note, the total market sales of antiretroviral medications in 2009 were estimated at $11.8 billion – and Gilead owned more than 20% of those net sales. But new…
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THE DARK HORSE HEDGE
by Sabrient - July 13th, 2010 2:00 am
THE DARK HORSE HEDGE
By Scott Brown of Sabrient and Ilene of PSW
I’ve been down on the bottom of the world full of lies
I ain’t lookin’ for nothin’ in anyone’s eyes
Sometimes my burden is more than I can bear
It’s not dark yet but it’s gettin’ there.
[Bob Dylan]
Seeing no compelling reason to be more bullish on this uninspiring market, we are maintaining our 67% short tilt (weighing) with three new positions to enter this morning.
For reference, we started this virtual portfolio with $100,000 in cash and we allocated $90,000 for intermediate to long-term positions, and $10,000 for occasional swing trading positions. To date, we are short four stocks and long two. Today, we are going to add two more short positions and one more long position.
We are aiming to be hedged in our market exposure by being long stocks with the greatest potential to rise and short stocks with the greatest potential to decline. To identify these winner and loser stocks, we use Sabrient’s Value Change Up (VCU) assessment system. Sabrient’s VCU system is a multi-factor quantitative ranking system that scores over 2,000 stocks and allows us to enter LONG positions in the best ranking stocks and SHORT positions in worst ranking stocks. This method enables us to achieve greater Alpha (return over market return) and Sharpe Ratios, while maintaining a near zero Beta for Absolute Return.
Because we are working towards 12 long and 12 short positions, and starting with $90,000 to invest in this strategy, we allocate $7,500 for each long and short position (90,000/12 = $7,500). (The extra cash generated by short positions is not counted in this calculation.)
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The Dark Horse Hedge
by ilene - July 1st, 2010 5:24 pm
The Dark Horse Hedge
By Scott Brown at Sabrient, and Ilene, at Phil’s Stock World
Scott Brown, Managing Director – Retail Division at Sabrient, is launching a newsletter with Phil’s Stock World based on the highly successful and popular Investors’ (H)Edge product. The Dark Horse Hedge newsletter is a Long/Short retail portfolio taking advantage of technical market trends to tilt the balance of LONG vs. SHORT in bearish, bullish or range bound markets for added Alpha (the measure of return on a risk adjusted basis). Long and short equity positions taken in The Dark Horse Hedge portfolio will be chosen using to Sabrient’s rating system, which is primarily based on fundamental criteria. Because the stock positions will generally be held for intermediate to long periods, these positions are ideal for using with option strategies taught by Phil Davis, of Phil’s Stock World.
The Dark Horse Hedge (DHH) newsletter will follow a number of guidelines in an attempt to minimize systemic risk, or “Beta.” Beta is a measure of the volatility of a portfolio in comparison to the market as a whole. To keep beta low, the DHH portfolio will have both long and short positions. Consequently, dramatic moves in the market will always be in the direction of at least part of the portfolio.
Using Sabrient’s rating system, we will focus on being long high quality stocks, and short low quality stocks. Long positions should fare better than average during market selloffs. In contrast, the short positions, selected from the lowest ranking stocks, should perform well during selloffs. These stocks are also expected to underperform higher quality names in a stronger market. This strategy is designed to balance the goal of attaining Alpha with the desire to keep Beta relatively low.
We will follow this list of guidelines in building the DHH portfolio.
1. When fully invested, the Portfolio will have 24 positions. However the portfolio may not be fully invested.
2. Tilting (or weighing) of the portfolio will be based on the position of the SPX relative to its 50 and 200 day Moving Averages
- If the SPX is below both its 50
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Basic Technical Patterns: The Foundation of Common Pattern Identification
by Chart School - April 1st, 2010 2:23 pm
Pharmboy’s latest chapter in his TA eBook – Chapter 7! - Ilene
Links for previous chapters:
1. Understanding Market Cycles: The Art of Market Timing (Chp. 1),
2. Dow’s Theory of Markets (Chp. 2),
3 & 4. Fundamental vs. Technical Analysis and Types of Technical Trading (Chps. 3 & 4).
5. Stock Charting Basics: How to Read & Understand Stock Charts (Chp. 5 here.)
6. Using Moving Averages for Long and Short Trades (Chp. 6)
Basic Technical Patterns: The Foundation of Common Pattern Identification
Courtesy of Pharmboy of Phil’s Stock World
In Figure 1 below, typical up trends and down trends are shown. These zigzag patterns are seen all the time, but why do they form? Let’s say someone bought a stock at a certain point. If that stock went up, but pulled back to the original purchase price, they will often think that it’s an opportunity to buy more at their original price, thus adding to their position. This is also the same for shorts when they are able to short a stock at the same price they shorted previously. Then why do peaks form? People sell (or cover) to take profits. Obviously, any increase in selling will pull the stock back. Those who bought at a lower level may start buying again. This repeats and repeats until 1) there is no more stock left for people to buy, or 2) there is too much supply and not enough buyers. On a larger scale, this is how bull and bear markets begin and end.
Figure 1 Typical up and down trends.
The following basic chart…
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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...
Ilene is editor and affiliate program
coordinator for PSW.