Monday, March 1, is 18 days before March options expire, 46 the April and 81 the May.
Blue chip stocks (SPY) closed the latest regular session at $110.74, up 0.06% from the prior close.
In total, 3.5 billion shares were traded on the three major U.S. stock exchanges, up 6.1% from yesterday.
On the jump, mediawatch, rules, econ reports, portfolio and a good book...
Friday, February 26, 2010
PALM: Mitigating massive loss
How I hate going into the weekend with PALM, a zombie position, staggering and drooling through my portfolio. It's almost an insult to the word "portfolio" to have such a beast on board.
One glance at PALM, and all self-esteem crumbles, and the trader knows his or her true place in the world: A worm, stomped into the dirt by the evil boots of Revenue Guidance.
Well, enough self pity.
The PALM shares, readers will recall, were part of a February covered call play that made a nice 83-cent premium from the sale of the options.
One glance at PALM, and all self-esteem crumbles, and the trader knows his or her true place in the world: A worm, stomped into the dirt by the evil boots of Revenue Guidance.
Well, enough self pity.
The PALM shares, readers will recall, were part of a February covered call play that made a nice 83-cent premium from the sale of the options.
2/26 Watchlist
Blue chip stocks (SPY) are mainly comatose at the top of Thursday's trading range. Long-term Treasury bonds (TLT) are trading at upside resistance set in late January and early February.
All in all, it's shaping up to be calm ending to a somewhat stormy week. But how could a week during which Ben Bernanke testified three times on Capitol Hill be anything but stormy?
The watchlist:
All in all, it's shaping up to be calm ending to a somewhat stormy week. But how could a week during which Ben Bernanke testified three times on Capitol Hill be anything but stormy?
The watchlist:
XRT mfi overbought
The retail exchange-trade fund, XRT, saw its money flow index move into overbought territory, a bear signal.
The price has risen 9.7% since Feb. 5, with a couple of small pullbacks along the way.
The macd has been in bull territory since Feb. 11 and continues a full 0.2 above the zero line.
Today's upward push slightly overshot the previous high set in early October 2009 and puts the price at a resistance level set in August 2007.
The price has risen 9.7% since Feb. 5, with a couple of small pullbacks along the way.
The macd has been in bull territory since Feb. 11 and continues a full 0.2 above the zero line.
Today's upward push slightly overshot the previous high set in early October 2009 and puts the price at a resistance level set in August 2007.
UNG mfi oversold
The money flow index for natural gas has moved into oversold territory, after a decline that has carried the natural gas exchange traded fund, UNG, down 20% since Jan. 7.
An oversold mfi is a bull signal. The macd remains in bear territory but this morning rose toward the zero-line.
Yesterday's low point, $8.63, put UNG slightly aove the low of $8.50 set on Dec. 3.
An oversold mfi is a bull signal. The macd remains in bear territory but this morning rose toward the zero-line.
Yesterday's low point, $8.63, put UNG slightly aove the low of $8.50 set on Dec. 3.
2/26 Morningline
The price of 20- and 30-year bonds issued by the U.S. Treasury (TLT) has gapped up for the second morning in a row.
At the high so far today, TLT is trading 3.5% above the low set Feb. 18, the day before the present rise began.
In six days of trading only once has TLT closed below its opening price.
Higher bond prices mean that traders expect lower interest rates ahead. The Federal Open Market Committee -- that's Fed Chairman Ben Bernanke and his merry band of bankers -- set short term rates. The longer term bonds tracked by TLT are far more market driven and move in response to a far more complex universe of causality.
At the high so far today, TLT is trading 3.5% above the low set Feb. 18, the day before the present rise began.
In six days of trading only once has TLT closed below its opening price.
Higher bond prices mean that traders expect lower interest rates ahead. The Federal Open Market Committee -- that's Fed Chairman Ben Bernanke and his merry band of bankers -- set short term rates. The longer term bonds tracked by TLT are far more market driven and move in response to a far more complex universe of causality.
Thursday, February 25, 2010
2/26 Almanac
Friday, Feb. 26, is 21 days before March options expire, 49 the April and 84 the May.
Blue chip stocks (SPY) closed the latest regular session at $110.67, down 0.1% from the prior close.
In total, 3.3 billion shares were traded on the three major U.S. stock exchanges, up 6.5% from yesterday.
On the jump, mediawatch, rules, econ reports, portfolio and a good book...
Blue chip stocks (SPY) closed the latest regular session at $110.67, down 0.1% from the prior close.
In total, 3.3 billion shares were traded on the three major U.S. stock exchanges, up 6.5% from yesterday.
On the jump, mediawatch, rules, econ reports, portfolio and a good book...
2/25 Watchlist
This is turning out to be a "don't worry be happy" kind of day.
The blue chip stocks (SPY), having gapped down this moning, have retraced back up into the low of yesterday's trading range.
The fear index (VIX), although far from sanguine, has turned less fearful that it was at the break of day.
Only the dollar has remained true to its intentions, sliding further against the yen (USD/JPY).
The blue chip stocks (SPY), having gapped down this moning, have retraced back up into the low of yesterday's trading range.
The fear index (VIX), although far from sanguine, has turned less fearful that it was at the break of day.
Only the dollar has remained true to its intentions, sliding further against the yen (USD/JPY).
Opened XHB bear call spread
I've opened a March bear call spread on XHB, with the stock price at $15.46 and the option spread providing a 49-cent credit.
XHB, as I noted earlier this morning, is showing a strong macd bear signal on a multi-day decline. The position could be played as either directional or as a direction-agnostic iron condor.
I went directional because I see maybe 8% downside through support, and a very strong macd signal. Also, the final day of trading March options is only 21 days away, so I'll get good time decay through less than weeks of exposure.
The spread is structured like this: I sold a $15-strike call, and I hedged it by buying a $16-strike call (-c15/c16).
The break-even point on this position is $15.49 on the underlying stock.
XHB, as I noted earlier this morning, is showing a strong macd bear signal on a multi-day decline. The position could be played as either directional or as a direction-agnostic iron condor.
I went directional because I see maybe 8% downside through support, and a very strong macd signal. Also, the final day of trading March options is only 21 days away, so I'll get good time decay through less than weeks of exposure.
The spread is structured like this: I sold a $15-strike call, and I hedged it by buying a $16-strike call (-c15/c16).
The break-even point on this position is $15.49 on the underlying stock.
XHB macd bear signal
The exchange-traded fund that tracks the homebuilders, XHB, is showing a strong bear signal on the macd, moving directly from well above the zero line to more than 20 points below.
XHB has declined every day since Monday and at today's low stood 6.6% below the high set on Feb. 17.
XHB, trading at $15.48, has been in a sideways pattern since August of 2009, ranging mainly between $16.30 and $14.20, with a few overshoots. This week's decline puts it within about 8% of the bottom of support, which is a fair amount of room.
XHB has declined every day since Monday and at today's low stood 6.6% below the high set on Feb. 17.
XHB, trading at $15.48, has been in a sideways pattern since August of 2009, ranging mainly between $16.30 and $14.20, with a few overshoots. This week's decline puts it within about 8% of the bottom of support, which is a fair amount of room.
SPY long-term for 401(k)s
SPY, which tracks the blue chips, remains well above the 12-month moving average on the decade chart. Shares are trading at around $109, and the moving average is at $100 and pointing up.
2/25 Morningline
Blue chip stocks (SPY) broke below their range of the last two days, gapping down 1.4% at the open. The retracement from the Jan. 14 high of $115.14 to the Feb. 4 low of $104.58 was in the neighborhood of a Fibonacci 61.8%.
Treasury long-term bonds (TLT) gapped up half a percent. Higher bond prices mean an expectation of lower interest rates.
The "fear index" on the S&P 500 (VIX) was up sharply, trading 11% above Wednesday's close.
Treasury long-term bonds (TLT) gapped up half a percent. Higher bond prices mean an expectation of lower interest rates.
The "fear index" on the S&P 500 (VIX) was up sharply, trading 11% above Wednesday's close.
Wednesday, February 24, 2010
2/25 Almanac
Thursday, Feb. 25, is 22 days before March options expire, 50 the April and 85 the May.
Blue chip stocks (SPY) closed the latest regular session at $110.82, up 0.9% from the prior close.
In total, 3.1 billion shares were traded on the three major U.S. stock exchanges, down 6.1% from yesterday.
On the jump, mediawatch, rules, econ reports, portfolio and a good book...
Blue chip stocks (SPY) closed the latest regular session at $110.82, up 0.9% from the prior close.
In total, 3.1 billion shares were traded on the three major U.S. stock exchanges, down 6.1% from yesterday.
On the jump, mediawatch, rules, econ reports, portfolio and a good book...
2/24 Watchlist
Very little movement of the indicators after the two 10 a.m. Eastern events, Bernanke's testimony on the Hill and the new home sales report.
Blue chip stocks (SPY) are contained within yesterday's trading range. Treasury 20- and 30-year bonds (TLT) have dropped back to within the upper reaches of yesterday's range.
Only oil (USO) is on the move, rising to 0.8% above yesterday's close and traversing 2.1% today, low to high. The weekly petroleum inventory report came out at 10:30 a.m.
Blue chip stocks (SPY) are contained within yesterday's trading range. Treasury 20- and 30-year bonds (TLT) have dropped back to within the upper reaches of yesterday's range.
Only oil (USO) is on the move, rising to 0.8% above yesterday's close and traversing 2.1% today, low to high. The weekly petroleum inventory report came out at 10:30 a.m.
BSX macd bull signal
BSX is showing the tiniest of macd bull signals, rising to 0.001107 above the zero line. Is that a bull signal we can believe in?
BSX gapped down hugely after earnings were released on Feb. 11, and has been trading mainly sideways for the past six trading days.
There was a Person's Proprietary Signal on the bull side on Monday. The money flow index dipped below the oversold line and has since move up to barely within the neutral zone.
BSX gapped down hugely after earnings were released on Feb. 11, and has been trading mainly sideways for the past six trading days.
There was a Person's Proprietary Signal on the bull side on Monday. The money flow index dipped below the oversold line and has since move up to barely within the neutral zone.
F macd bull signal
F(ord) is showing a macd bull signal and is trading 1.9% above yestreday's close, at $11.82.
The rise came on news of planned job cuts. The money flow index is trading in the mid-range, neither overbought nor oversold.
F has been trading sideways since it hit a peak of $12.14 on Jan. 11 and has generally stayed in a $12 to $11 range, with a overshoots in both directions.
The rise came on news of planned job cuts. The money flow index is trading in the mid-range, neither overbought nor oversold.
F has been trading sideways since it hit a peak of $12.14 on Jan. 11 and has generally stayed in a $12 to $11 range, with a overshoots in both directions.
2/24 Morningline
Fed Chair Bernanke, in prepared testimony released a half hour after the markets opened, again delivered the one-two punch that has been his main message of late:
Ka-pow! "The FOMC continues to anticipate that economic conditions--including low rates of resource utilization, subdued inflation trends, and stable inflation expectations--are likely to warrant exceptionally low levels of the federal funds rate for an extended period."
Bam! "...the Federal Reserve will at some point need to begin to tighten monetary conditions to prevent the development of inflationary pressures. Notwithstanding the substantial increase in the size of its balance sheet associated with its purchases of Treasury and agency securities, we are confident that we have the tools we need to firm the stance of monetary policy at the appropriate time."
Ka-pow! "The FOMC continues to anticipate that economic conditions--including low rates of resource utilization, subdued inflation trends, and stable inflation expectations--are likely to warrant exceptionally low levels of the federal funds rate for an extended period."
Bam! "...the Federal Reserve will at some point need to begin to tighten monetary conditions to prevent the development of inflationary pressures. Notwithstanding the substantial increase in the size of its balance sheet associated with its purchases of Treasury and agency securities, we are confident that we have the tools we need to firm the stance of monetary policy at the appropriate time."
Tuesday, February 23, 2010
Impressions
Trading is a matter of impressions, especially when you trade fast, as I do. I may think I am trading based on fact and logic, but ultimately all is filtered through my imperfect brain, buffeted by the winds of emotion, of fear and greed. I look, I feel, I let my instincts come into play. I decide. I act.
The Stoic philosopher Epictetus (55-135) wrote:
"We must remember this clearly, that man measures his every action by his impressions; of course, they may be good or bad: if good, he is free from reproach; if bad, he pays the penalty in his own person, for it is impossible for one to be deluded and another to suffer for it. The man who remembers this, I say, will be angry with no one, indignant with no one, revile none, blame none, hate none."
Your winning trades are your own. Be proud. Your losers belong to you also. Learn, and do better next time.
The Stoic philosopher Epictetus (55-135) wrote:
"We must remember this clearly, that man measures his every action by his impressions; of course, they may be good or bad: if good, he is free from reproach; if bad, he pays the penalty in his own person, for it is impossible for one to be deluded and another to suffer for it. The man who remembers this, I say, will be angry with no one, indignant with no one, revile none, blame none, hate none."
Your winning trades are your own. Be proud. Your losers belong to you also. Learn, and do better next time.
2/24 Almanac
Wednesday, Feb. 24, is 23 days before March options expire, 51 the April and 86 the May.
Blue chip stocks (SPY) closed the latest regular session at $109.81, down 1.2% from the prior close.
In total, 3.3 billion shares were traded on the three major U.S. stock exchanges, up 13.8% from yesterday.
On the jump, mediawatch, rules, econ reports, portfolio and a good book...
Blue chip stocks (SPY) closed the latest regular session at $109.81, down 1.2% from the prior close.
In total, 3.3 billion shares were traded on the three major U.S. stock exchanges, up 13.8% from yesterday.
On the jump, mediawatch, rules, econ reports, portfolio and a good book...
2/23 Watchlist
Blue chips stocks (SPY) have retraced slightly from today's low, and long-term Treasury bonds (TLT) have broken out of the recent range.
SPY was trading 1.6% below the near-term high st Monday, at an area of support set in late January. If it can break down past that level, then the next support is from $108 to $106, or 1.7% below the current price.
TLT has traversed 1.4% low to high so far today. The higher price for these 20- and 30-year Treasuries mean an expectation of lower interest rates. The media narrative gives great credence to a disappointing consumer confidence survey released before the market open, and in the case of TLT, I suspect that's a valid analysis.
SPY was trading 1.6% below the near-term high st Monday, at an area of support set in late January. If it can break down past that level, then the next support is from $108 to $106, or 1.7% below the current price.
TLT has traversed 1.4% low to high so far today. The higher price for these 20- and 30-year Treasuries mean an expectation of lower interest rates. The media narrative gives great credence to a disappointing consumer confidence survey released before the market open, and in the case of TLT, I suspect that's a valid analysis.
POT pullback confirms downtrend
The Canadian potash company POT is showing a sharp decline today after the money flow index moved into oversold territory yesterday. The stock was once the darling of long-term bull trend players but has since fallen -- both in price and out of favor.
POT is trading at $110.39, off 4.8% from the high set yesterday. The move gives POT a lower high than the $126.47 set on Jan. 11. There was a lower low on Jan. 29, so in combination, it certainly looks like a downtrend.
POT is trading at $110.39, off 4.8% from the high set yesterday. The move gives POT a lower high than the $126.47 set on Jan. 11. There was a lower low on Jan. 29, so in combination, it certainly looks like a downtrend.
TXN pulls back
Semiconductor giant TXN is showing the same pull back from a high as the sector's etf SMH did, a few days after moving into overbought territory.
SMH makes its move
The exchange-traded fund that tracks semiconductors, SMH, has made its move on the third day since it moved into overbought territory on the money-flow index.
I discussed that signal in a post on Feb. 19.
Today, SMH is trading at $26.02, or 2.8% below yesterday's close. Altogether the price has traversed 2.6% high to low so far today.
I discussed that signal in a post on Feb. 19.
Today, SMH is trading at $26.02, or 2.8% below yesterday's close. Altogether the price has traversed 2.6% high to low so far today.
Life imitates art
The book, mentioned on NPR's Morning Edition. piqued my interest as I downed my scrambled eggs and coffee after posting today's Morningline. Adam Haslett began researching his first novel, Union Atlantic, in the 1990s, long before the 2008 collapse of capitalist finance brought the world's economies to the brink of total ruin. "I’d become fascinated by this idea of the anonymous power that the Fed and other public and private bureaucracies have over our daily lives and I wanted to place a character at the pinnacle of one of those organizations, mostly to discover for myself how that kind of mind would work. That, in turn, gave me the idea of a troubled bank that the Fed would be regulating, and thus a banker," Haslett said in an Amazon.com interview. Here's a link to the Morning Edition story. Amazon link is to the right. |
2/23 Morningline
Blue-chip stocks (SPY) are trading at the lower end of yesterday's range, just one-tenth of a percent below yesterday's close.
The SPY exchange-traded fund, in today's early price action, has pulled away from a very near term high set yesterday. The lower high, if it stands, will mark the end of a rise that carried blue-chips up 6.7% from Feb. 5 to yesterday.
In a broader view, SPY began a downtrend in January after a 71.6% rise that began in March 2009.
The SPY exchange-traded fund, in today's early price action, has pulled away from a very near term high set yesterday. The lower high, if it stands, will mark the end of a rise that carried blue-chips up 6.7% from Feb. 5 to yesterday.
In a broader view, SPY began a downtrend in January after a 71.6% rise that began in March 2009.
Monday, February 22, 2010
Stock Picking - Cheatsheet
Here's a short cheatsheet on how I pick stocks:
- Volume per day:
- For options, 5 million shares or more
- For stocks, 1 million shares or more
- Technical Signal
- Macd: Bull or bear
- Mfi: Bull or bear
- Or something else. Just pick a tech sig or two. Don't overthink it.
The Art of Stock Picking
However complex your technical indicators, however subtle your use of the characteristics of options, whether your time frame is measured in Buffetesque years, or in the tiniest of ticks, in the end, your profit or loss all comes down to stock picking.
And not just picking "good" stocks and avoiding "bad" stocks. Your task, as a trader, is to pick stocks whose prices, in the future, will move as you think they will move.
In other words, tarot cards gripped tightly in your left hand and horoscope in your right, as a trader you're in the crystal ball business, and don't let anyone tell you different.
And not just picking "good" stocks and avoiding "bad" stocks. Your task, as a trader, is to pick stocks whose prices, in the future, will move as you think they will move.
In other words, tarot cards gripped tightly in your left hand and horoscope in your right, as a trader you're in the crystal ball business, and don't let anyone tell you different.
2/23 Almanac
Tuesday, Feb. 23, is 24 days before March options expire, 52 the April and 87 the May.
Blue chip stocks (SPY) closed the latest regular session at $111.16, down 0.2% from the prior close.
In total, 2.9 billion shares were traded on the three major U.S. stock exchanges, down 9.4% from yesterday.
On the jump, mediawatch, rules, econ reports, portfolio and a good book...
Blue chip stocks (SPY) closed the latest regular session at $111.16, down 0.2% from the prior close.
In total, 2.9 billion shares were traded on the three major U.S. stock exchanges, down 9.4% from yesterday.
On the jump, mediawatch, rules, econ reports, portfolio and a good book...
Opened WFC iron condor
I've opened an iron condor on WFC. The structure is a short put with a strike price of $27, and a short called with a $29 strike, hedged by a long put of $26 and a long call of $30.
The decision was based on the analysis I did during this morning's scan.
Briefly, the structure is a short put on WFC with a strike price of $27, and a short called with a $29 strike, hedged by a long put of $26 and a long call of $30.
The position provided a premium credit of 46 cents, and it expires on March 19, or 25 days away.
The decision was based on the analysis I did during this morning's scan.
Briefly, the structure is a short put on WFC with a strike price of $27, and a short called with a $29 strike, hedged by a long put of $26 and a long call of $30.
The position provided a premium credit of 46 cents, and it expires on March 19, or 25 days away.
2/22 Watchlist
Indicators are all trading as they were this morning, mainly within very narrow ranges. This is not a day to set the heart pounding. Volatility has gone missing. And good riddance, I say.
The wonderful thing about trading options is that Volatility can go missing and I can still make a profit. Iron condors, diagonal spreads, calendar spreads, covered calls -- are are ways to gain premium from selling options when stock prices are barely moving.
These are all high probability trades.
The wonderful thing about trading options is that Volatility can go missing and I can still make a profit. Iron condors, diagonal spreads, calendar spreads, covered calls -- are are ways to gain premium from selling options when stock prices are barely moving.
These are all high probability trades.
SBUX break down
SBUX is making a sharp move down this morning as the money flow index tips below the oversold line after moving above it on Friday. The price has covered 2% high to low so far today.
Today's fall off marks a lower high for SBUX, meeting the classic definition of a downtrend (lower highs/lower lows). Shares hit a high of $24.45 on Jan. 21, dropped to $21.26 on Feb. 5, and then rose 10.3% to $23.46 on Friday.
Today's fall off marks a lower high for SBUX, meeting the classic definition of a downtrend (lower highs/lower lows). Shares hit a high of $24.45 on Jan. 21, dropped to $21.26 on Feb. 5, and then rose 10.3% to $23.46 on Friday.
WFC bull signal
WFC is showing a macd bull signal as the money flow index drops down toward oversold territory (it's at 28, or 8 points above the signal line at 20).
WFC has been trading between $26.50 and $29.50 since last August, with a major breakout and breakdown to help keep everyone interested.
The shares are trading at $27.79, support is at $26.40 and resistance is at $29. So there's a fairly easy 6% of upside.
WFC has been trading between $26.50 and $29.50 since last August, with a major breakout and breakdown to help keep everyone interested.
The shares are trading at $27.79, support is at $26.40 and resistance is at $29. So there's a fairly easy 6% of upside.
2/22 Follow-up
A follow-up on the issues mentioned in Friday morning's scan:
The four stocks identified as overbought on the money flow index remain in overbought territory, with no change in macd signal nor any price breakout.
The one macd bull signal issue is in its second bull-mode day, without a price breakout.
The four stocks identified as overbought on the money flow index remain in overbought territory, with no change in macd signal nor any price breakout.
The one macd bull signal issue is in its second bull-mode day, without a price breakout.
CVS Exercise
Among my February options holdings that expired over the weekend was an iron condor on CVS (p28/-p31/-c34/c36).
Very late in the week, the price pushed up above $34, I was unable to make a market in the position, and the option was exercised, giving me 500 shares of CVS bought at $34.14.
The premium on the iron condor was 90 cents, so my basis for the stock is $33.24.
What to do? Clearly, 500 shares of CVS is more exposure than I want to have to this company. I mean, a good, aggressive pharmacy -- I used them when I lived in Washington, D.C. -- and I use their Caremark mail pharmacy service even today after moving to the Pacific Northwest.
Very late in the week, the price pushed up above $34, I was unable to make a market in the position, and the option was exercised, giving me 500 shares of CVS bought at $34.14.
The premium on the iron condor was 90 cents, so my basis for the stock is $33.24.
What to do? Clearly, 500 shares of CVS is more exposure than I want to have to this company. I mean, a good, aggressive pharmacy -- I used them when I lived in Washington, D.C. -- and I use their Caremark mail pharmacy service even today after moving to the Pacific Northwest.
2/22 Morningline
Blue-chip stocks (SPY) opened at Friday's high before dropping down to the level of Friday's close. The exchange-traded fund, which tracks the S&P 500, has been in an uptrend for 10 days, rising 6.1%. Today is the fourth intra-trend retracement.
SPY shows a still-strengthening bull trend on the macd, with the money flow index at 62, well below the overbought line at 80.
Treasury long-bonds (TLT) opened in the middle of Friday's range and barely moved. The price has been rangebound for three days, the macd bear signal is weakening for the second straight trading day, and the money flow index is at 39, well above the oversold line at 20.
Stocks this morning appeared to be waiting for the sound of Big Ben.
SPY shows a still-strengthening bull trend on the macd, with the money flow index at 62, well below the overbought line at 80.
Treasury long-bonds (TLT) opened in the middle of Friday's range and barely moved. The price has been rangebound for three days, the macd bear signal is weakening for the second straight trading day, and the money flow index is at 39, well above the oversold line at 20.
Stocks this morning appeared to be waiting for the sound of Big Ben.
Sunday, February 21, 2010
Reader's Guide
The Private Trader market letter at www.timbovee.com tracks trades on my own accounts, in real time, as I make them, with explanations of why I chose to make each trade.
My goal is to share with readers the trading approaches and techniques, and mental attitudes, that I have found to be useful, through book reviews, long-term studies and trading techniques and theory.
Theory without practice is of little use in the real world of the markets. I have often, during decades in the markets, wished that I could trade alongside someone, so we could both learn from each others successes and mistakes.
So every day I'm hands on in the markets, focusing the day with the Morningline, scanning for and analyzing possible trades during the market day, positioning for the crucial last half hour of trading with the Watchlist, posts telling about my trades -- what I did and why did it -- moments after they happen, analyses of trades gone bad (and good!), the Almanac setup for the next trading day, specialized scans for covered calls, and subtle jabs at Jim Cramer on every possible occasion.
It's the difference between hiking alone or with a friend. I'll take the friend on any trail. . . .
My goal is to share with readers the trading approaches and techniques, and mental attitudes, that I have found to be useful, through book reviews, long-term studies and trading techniques and theory.
Theory without practice is of little use in the real world of the markets. I have often, during decades in the markets, wished that I could trade alongside someone, so we could both learn from each others successes and mistakes.
So every day I'm hands on in the markets, focusing the day with the Morningline, scanning for and analyzing possible trades during the market day, positioning for the crucial last half hour of trading with the Watchlist, posts telling about my trades -- what I did and why did it -- moments after they happen, analyses of trades gone bad (and good!), the Almanac setup for the next trading day, specialized scans for covered calls, and subtle jabs at Jim Cramer on every possible occasion.
It's the difference between hiking alone or with a friend. I'll take the friend on any trail. . . .
Friday, February 19, 2010
2/22 Almanac
Monday, Feb. 22, is 25 days before March options expire, 53 the April and 88 the May.
Blue chip stocks (SPY) closed the latest regular session at $111.14, up 0.2% from the prior close.
In total, 3.2 billion shares were traded on the three major U.S. stock exchanges, up 6.7% from yesterday.
On the jump, mediawatch, rules, econ reports, portfolio and a good book...
Blue chip stocks (SPY) closed the latest regular session at $111.14, up 0.2% from the prior close.
In total, 3.2 billion shares were traded on the three major U.S. stock exchanges, up 6.7% from yesterday.
On the jump, mediawatch, rules, econ reports, portfolio and a good book...
2/19 Watchlist
Blue-chip stocks (SPY) continues to bump against the $111.30 level, in a region of resistance dating back to November 2009. The money flow index is pointing toward the oversold level, the macd continues to move higher into bull territory, and volatility continues to decline.
Altogether, SPY has risen 6.7% in nine days.
Treasury long-term bonds (TLT) are trading narrowly at the upper end of the range set yesterday.
Altogether, SPY has risen 6.7% in nine days.
Treasury long-term bonds (TLT) are trading narrowly at the upper end of the range set yesterday.
Private Trader Change
I'm trying out a new schedule today. I'll be doing the scans early, and posting individual items. The Watchlist before market close will update those items identified earlier.
The idea is to catch happenings earlier in the day, rather than coming up against an end-of-trading-day crunch.
The idea is to catch happenings earlier in the day, rather than coming up against an end-of-trading-day crunch.
AKS overbought
The steelmaker AKS has moved into overbought territory as it bounces up against resistance at around the $23.50-$24.50 level. This level was touched in January, September 2009, and was a break-out point in April 2007.
So it is a moderately significant level for AKS.
AKS is trading at $23.56.
The stock had a huge downtrend from July 2008, and has been rolling along sideway at the bottom of the mountain since October 2008, and at a slightly higher level, since June 2008.
So it is a moderately significant level for AKS.
AKS is trading at $23.56.
The stock had a huge downtrend from July 2008, and has been rolling along sideway at the bottom of the mountain since October 2008, and at a slightly higher level, since June 2008.
TXN overbought
TXN has moved into overbought territory on the money flow index. The macd continues in bull territory for the seventh day.
TXN has seen a smooth rise since Feb. 5, with only a single down day -- Feb. 17 -- when the price hit upside restance at around $25. This is an area of congestion that ran from November 2009 into January of this year. It was also the target of a downside gap in a major earnings-inspired price break on July 23, 2008.
TXN has seen a smooth rise since Feb. 5, with only a single down day -- Feb. 17 -- when the price hit upside restance at around $25. This is an area of congestion that ran from November 2009 into January of this year. It was also the target of a downside gap in a major earnings-inspired price break on July 23, 2008.
CSCO overbought
CSCO has moved into overbought territory on the money flow index, a bearish condition. The macd continues in bull territory for the ninth trading day.
Trading at $24.29, CSCO is about halfway up in retracing a decline from $25.10 on Jan. 15 down to $22.35 on Jan. 28. The stock has been trading in a sideways range since September 2009, roughly between $25 and $22.50.
So the stock has about 8% on the downside before it runs into bearish resistance.
Trading at $24.29, CSCO is about halfway up in retracing a decline from $25.10 on Jan. 15 down to $22.35 on Jan. 28. The stock has been trading in a sideways range since September 2009, roughly between $25 and $22.50.
So the stock has about 8% on the downside before it runs into bearish resistance.
AOD bull
AOD, the eclectic high-yield income fund, is showing a very slight bull signal on the macd after 20 days in bear territory. The stock today has traversed 3.5% low to high, an increase that moved it from the low end of the recent trading range to the high end.
AOD pays dividends monthly with a really high 17%+ annual yield. That means when it goes ex-dividend, as it did yesterday, it has a huge effect on the price. Today's upward move wipes out the ex-div penalty entirely.
AOD pays dividends monthly with a really high 17%+ annual yield. That means when it goes ex-dividend, as it did yesterday, it has a huge effect on the price. Today's upward move wipes out the ex-div penalty entirely.
SMH Overbought
SMH, the exchange-traded fund that tracks semi-conductors, has moved into overbought territory on the money-flow index. This technical analysis tool uses both price and volume to determine whether buyers or sellers have the greatest interest in a stock or etf.
SMH is in the sixth day of a strengthening macd bull signal, and the price is trading at the top of a range that has held for three trading days., within an area of congestion set last December and at a level touched several times during a sideways move that lasted half of 2009.
SMH is in the sixth day of a strengthening macd bull signal, and the price is trading at the top of a range that has held for three trading days., within an area of congestion set last December and at a level touched several times during a sideways move that lasted half of 2009.
2/19 Morningline
There was a time when the raising and lowering of the Federal Reserve's discount rate was a signal for bulls and bears on the stock market.
Clearly, this isn't that time. Blue chip stocks (SPY) opened narrowly in the upper half of yesterday's trading range. The price so far has traversed half a percent low to high.
The Fed's decision to raise the discount rate from 0.5% to 0.75% was analyzed more as a marker of bank bail-out success than as signalling a shift of policy. And the Consumer Price Index this morning showed little sign of inflation. So perhaps the Fed's motives are exactly as they said.
(Having worked as a journalist in Washington, D.C., I personally never assume anyone's motives are transparent. Plots within plots . . . the Bene Gesserit, the Spacing Guild, the Fremen . . .)
Clearly, this isn't that time. Blue chip stocks (SPY) opened narrowly in the upper half of yesterday's trading range. The price so far has traversed half a percent low to high.
The Fed's decision to raise the discount rate from 0.5% to 0.75% was analyzed more as a marker of bank bail-out success than as signalling a shift of policy. And the Consumer Price Index this morning showed little sign of inflation. So perhaps the Fed's motives are exactly as they said.
(Having worked as a journalist in Washington, D.C., I personally never assume anyone's motives are transparent. Plots within plots . . . the Bene Gesserit, the Spacing Guild, the Fremen . . .)
Thursday, February 18, 2010
2/19 Almanac
Friday, Feb. 19, is the last trading day before February options expire, 28 the March and 56 the April.
Blue chip stocks (SPY) closed the latest regular session at $110.91, up 0.6% from the prior close.
In total, 3 billion shares were traded on the three major U.S. stock exchanges, down 3.2% from yesterday.
Burning Question: Is it scary that the 8th best-selling book on Amazon.com is called The Coming Insurrection, with The Invisible Committee listed as the author?
On the jump, humor prize, mediawatch, rules, econ reports, portfolio and a good book...
Blue chip stocks (SPY) closed the latest regular session at $110.91, up 0.6% from the prior close.
In total, 3 billion shares were traded on the three major U.S. stock exchanges, down 3.2% from yesterday.
Burning Question: Is it scary that the 8th best-selling book on Amazon.com is called The Coming Insurrection, with The Invisible Committee listed as the author?
On the jump, humor prize, mediawatch, rules, econ reports, portfolio and a good book...
2/18 Watchlist
There's no change in the indicators from this morning's trends. I won't waste our time trying to make something out of nothing new. Let's go straight to the scans.
Here's what's interesting among high-volume . . .
Here's what's interesting among high-volume . . .
Leading Indicators
As long-time readers know, I don't often discuss the contents of economic reports, focusing instead on their impact on the markets.
Today, however, my favorite among the motley crew was released: The Index of Leading Economic Indicators, the LEI, a synthesis of forward-looking pointers that supposedly forecasts the future direction of the economy.
The January numbers, released this morning, show the index up 0.3%. In face the index has risen every month beginning in May 2009, raising the question, if good times have been forecast for nine months running, when will the good times roll?
Could it be (gasp!) that the LEI isn't in fact the forward-looking policy tool that it's cracked up to be?
Just as with baking a cake, what counts in the art of indicator construction is the ingredients that go into mixing bowl.
Today, however, my favorite among the motley crew was released: The Index of Leading Economic Indicators, the LEI, a synthesis of forward-looking pointers that supposedly forecasts the future direction of the economy.
The January numbers, released this morning, show the index up 0.3%. In face the index has risen every month beginning in May 2009, raising the question, if good times have been forecast for nine months running, when will the good times roll?
Could it be (gasp!) that the LEI isn't in fact the forward-looking policy tool that it's cracked up to be?
Just as with baking a cake, what counts in the art of indicator construction is the ingredients that go into mixing bowl.
Opened GCI Covered Call
I've opened a March covered call on GCI.
The position is structured is stock purchased at $15.21 and an option, expiring March 19, with a strike price of $15 sold for a premium of 97 cents.
The position is structured is stock purchased at $15.21 and an option, expiring March 19, with a strike price of $15 sold for a premium of 97 cents.
2/18 Morningline
Blue-chip stocks (SPY) opened within yesterday's trading range and then rose, tracing half a percent low to high on a strengthening macd bull signal. The move puts SPY at resistance set in early February, and in an area of congestion dating back to December and November 2009.
The fear index (VIX) declined slightly.
Treasury long bonds (TLT) were a reverse image of stocks, opening within the day-before range. The decline high to low traversed 0.6%, with the macd bear signal strengthening on its sixth day of existence.
Low bond prices illustrate expectations of higher interest rates. Minutes released yesterday showed one member of the Federal Open Market Committee, Mr. Hoenig of the Kansas City Fed, turning a bit soft on ultra-low interest rates.
The fear index (VIX) declined slightly.
Treasury long bonds (TLT) were a reverse image of stocks, opening within the day-before range. The decline high to low traversed 0.6%, with the macd bear signal strengthening on its sixth day of existence.
Low bond prices illustrate expectations of higher interest rates. Minutes released yesterday showed one member of the Federal Open Market Committee, Mr. Hoenig of the Kansas City Fed, turning a bit soft on ultra-low interest rates.
Wednesday, February 17, 2010
2/18 Almanac
Thursday, Feb. 18, is 1 day before February options expire, 29 the March and 57 the April.
Blue chip stocks (SPY) closed the latest regular session at $110.26, up 0.5% from the prior close.
In total, 3.1 billion shares were traded on the three major U.S. stock exchanges. That's about the same as the prior day.
Mediawatch: Putting away the gyros and baklava, Greece forgotten, reporters returned the narrative to the old meat and potatoes fare, earnings and economic reports, as exemplified by the AP story. Ah, George Papaconstantinou, we hardly knew ye!
On the jump, rules, econ reports, portfolio, tasks ahead and a good book...
Blue chip stocks (SPY) closed the latest regular session at $110.26, up 0.5% from the prior close.
In total, 3.1 billion shares were traded on the three major U.S. stock exchanges. That's about the same as the prior day.
Mediawatch: Putting away the gyros and baklava, Greece forgotten, reporters returned the narrative to the old meat and potatoes fare, earnings and economic reports, as exemplified by the AP story. Ah, George Papaconstantinou, we hardly knew ye!
On the jump, rules, econ reports, portfolio, tasks ahead and a good book...
2/17 Watchlist
The indicators are doing now pretty much what they were doing at the opening. See today's Morningline.
The euro has almost precisely retraced yesterday's gains. It's though Tuesday didn't exist. So much for the staying power of global joy over prospects for resolving the Greek debt crisis. The EUR/USD pair continues to show a very weak macd bull signal; I have no confidence that it will remain and suspect it will turn out to be a ghost signal.
Gold (GLD has more than retraced yesterday's range, traversing 1% high to low on the third day of a strengthening macd bull signal.
The close-to-expiry drama that is a hallmark of iron condors is showing itself in my CVS February holding. The top of the maximum profit range is $34. The price has moved up to and slightly above that level.
The euro has almost precisely retraced yesterday's gains. It's though Tuesday didn't exist. So much for the staying power of global joy over prospects for resolving the Greek debt crisis. The EUR/USD pair continues to show a very weak macd bull signal; I have no confidence that it will remain and suspect it will turn out to be a ghost signal.
Gold (GLD has more than retraced yesterday's range, traversing 1% high to low on the third day of a strengthening macd bull signal.
The close-to-expiry drama that is a hallmark of iron condors is showing itself in my CVS February holding. The top of the maximum profit range is $34. The price has moved up to and slightly above that level.
2/17 Morningline
Blue-chip stocks (SPY) gapped this morning, opening half a percent above yesterday's close, before dropping back a bit and trading in a very narrow range. The move puts SPY right at resistance at $110.50 set Jan. 26 through Feb. 3. If it breaks past that level, then the next resistance is around $115.
The macd is showing a strengthening bull signal that appeared late yesterday. The long-term trend is sideways -- this baby has basically been going nowhere as it trades between $104 and $115. On a Fibonacci retracement trellis based on the rise from $67.10 last March to the $115.14 high set in mid-January, the $103.80 level is the 23.6% retracement level, a significant point in Fibonacci Thought.
The rise since Feb. 5 puts SPY about halfway between the 23.6% retracement and the January top.
In my experience, Fibonacci retracements tend to go deeper . . .
The macd is showing a strengthening bull signal that appeared late yesterday. The long-term trend is sideways -- this baby has basically been going nowhere as it trades between $104 and $115. On a Fibonacci retracement trellis based on the rise from $67.10 last March to the $115.14 high set in mid-January, the $103.80 level is the 23.6% retracement level, a significant point in Fibonacci Thought.
The rise since Feb. 5 puts SPY about halfway between the 23.6% retracement and the January top.
In my experience, Fibonacci retracements tend to go deeper . . .
Tuesday, February 16, 2010
2/17 Swing Map
All but one of the exchange-traded funds in my short-term swing trading stable have gapped in a direction opposite their targets, set new swing extremes. So, it's back to the abacus.
The exception, XHB, is overdue for a downward reversal. It hasn't happened.
The exception, XHB, is overdue for a downward reversal. It hasn't happened.
Opened AKS iron condor
I've opened an iron condor on AKS. It and another major steelmaker, X, both rose today on macd bull signals. The trade cleared just minutes before market close.
The rise was on news that AKS was raising it's prices. As I reading between the lines, I think they must be seeing signs of a global recovery. Other, why take the risk?
The rise was on news that AKS was raising it's prices. As I reading between the lines, I think they must be seeing signs of a global recovery. Other, why take the risk?
2/17 Almanac
Wednesday, Feb. 17, is 2 days before February options expire, 30 the March and 58 the April.
Blue chip stocks (SPY) closed the latest regular session at $109.74, up 1.6% from the prior close.
In total, 3.1 billion shares were traded on the three major U.S. stock exchanges. That's about 11.4% fewer than the prior day.
Mediawatch: No strong narrative today, so reporters fell back on a portmanteux. I was especially struck by the AP headline, which credited stocks' gains on "earnings, deals and hope." Those, of course, are the Three Virtues as practiced on Wall $treet. Elsewhere, they're known as Faith, Hope and Charity.
On the jump, rules, econ reports, portfolio, tasks ahead and a good book...
Blue chip stocks (SPY) closed the latest regular session at $109.74, up 1.6% from the prior close.
In total, 3.1 billion shares were traded on the three major U.S. stock exchanges. That's about 11.4% fewer than the prior day.
Mediawatch: No strong narrative today, so reporters fell back on a portmanteux. I was especially struck by the AP headline, which credited stocks' gains on "earnings, deals and hope." Those, of course, are the Three Virtues as practiced on Wall $treet. Elsewhere, they're known as Faith, Hope and Charity.
On the jump, rules, econ reports, portfolio, tasks ahead and a good book...
2/16 Watchlist
Blue-chip stocks (SPY) have moved up into a region of contegstion set in late January and early February. The exchange-traded fund is showing a macd bull signal for the first time in 17 trading days. The associated fear index, the VIX, is down slightly from Friday's close. A decline in the VIX generlly means a rise in SPY.
Treasury long bonds (TLT) have pulled back up from this morning's decline and are trading at the top of a three-trading-day range. It continues to show a macd bear signal.
High-yield corporate bonds (JNK) are trading at the top of the range set last week and have traversed 1.3% low to high in trading today. The macd is bearish, as it has been since mid-January.
Treasury long bonds (TLT) have pulled back up from this morning's decline and are trading at the top of a three-trading-day range. It continues to show a macd bear signal.
High-yield corporate bonds (JNK) are trading at the top of the range set last week and have traversed 1.3% low to high in trading today. The macd is bearish, as it has been since mid-January.
Bought AOD shares
I've bought shares in AOD as an income play. AOD is an exchange-traded fund that focuses on high dividend return. It is risky and subject to price fluctuation, as you could guess from the annual rate of return: 17.18%, paid monthly.
I've been in AOD off and on for several years, got hammered fairly badly in the autumn 2008 market break. These days I trade in and out based on my reading of the signals, and I'm fairly jack-rabbity on the get-out side.
I've been in AOD off and on for several years, got hammered fairly badly in the autumn 2008 market break. These days I trade in and out based on my reading of the signals, and I'm fairly jack-rabbity on the get-out side.
Opened CAL covered call
I've opened a covered call on CAL for $19.96 cost on the stock and $1.92 premium on the March call option with a strike price of $19.
My covered call scan, posted over the weekend, had three airlines: CAL, JBLU and AMR.
This morning AMR rose and the potential premiums had declined. JBLU's premiums had also declined.
My covered call scan, posted over the weekend, had three airlines: CAL, JBLU and AMR.
This morning AMR rose and the potential premiums had declined. JBLU's premiums had also declined.
2/16 Morningline
Long-term bonds issued by the U.S. Treasury (TLT) gapped down half a percent below Friday's close, and then moved back up a bit. The 30-year bond sold at auction for the highest interest rates since 2007. Prices move the opposite direction from rates and include traders' expectations for future interest rate changes.
Blue-chip stocks (SPY) opened higher on the second day of a macd bull signal. Gold (GLD) gapped higher by 2.3%, as did oil (USO), by 2.4% The dollar was stronger against both the euro (EUR/USD) and yen (USD/JPY)
Today opens a busy trading week dictated by the calendar. . .
Blue-chip stocks (SPY) opened higher on the second day of a macd bull signal. Gold (GLD) gapped higher by 2.3%, as did oil (USO), by 2.4% The dollar was stronger against both the euro (EUR/USD) and yen (USD/JPY)
Today opens a busy trading week dictated by the calendar. . .
Weekend Studies
I posted two studies over the weekend that may be of interest.
"March Covered Calls" screens 200 stocks and finds 11 that meet my criteria, six of which I like a lot.
"2/16 Swing Map" studies the position of the six exchange-traded funds I'm following for swing trades using the Taylor technique. See my essay "Swing Trading" for trading rules and a reading list.
"March Covered Calls" screens 200 stocks and finds 11 that meet my criteria, six of which I like a lot.
"2/16 Swing Map" studies the position of the six exchange-traded funds I'm following for swing trades using the Taylor technique. See my essay "Swing Trading" for trading rules and a reading list.
Monday, February 15, 2010
2/15 Market Holiday
Monday, Feb. 15, is President's Day in the United States, a stock market holiday. The markets will re-open Tuesday at 9:30 a.m. Eastern.
Sunday, February 14, 2010
March Covered Calls
I've analyzed the highest-volume 200 stocks priced between $5 and $20 to identify some reasonable covered call prospects for March. This week is prime time for the covered calls that expire March 19.
This time around I used fundamentals as a screening tool, something I haven't done so much in the past. But with the broad market having broken out of it's uptrend, I've gotten more cautious about owning shares that might head south, sticking me with yet another zombie position.
For this scan, I used the InvesTools scoring method for both the financials. There are many other ways to do it, whether you look at the trend of quarterly earnings or analyst rankings on one of the free finance sites, or some other method that gives you a comfort zone.
Altogether I came up with 11 possible trades, and I like six of them a lot.
This time around I used fundamentals as a screening tool, something I haven't done so much in the past. But with the broad market having broken out of it's uptrend, I've gotten more cautious about owning shares that might head south, sticking me with yet another zombie position.
For this scan, I used the InvesTools scoring method for both the financials. There are many other ways to do it, whether you look at the trend of quarterly earnings or analyst rankings on one of the free finance sites, or some other method that gives you a comfort zone.
Altogether I came up with 11 possible trades, and I like six of them a lot.
Saturday, February 13, 2010
2/16 Swing Map
Here's the status of exchange-traded funds I'm following for short-term positions using the Taylor Trading Technique.
Key: Symbol (implied volume) ->[swing] high | low $objective ~estimated_date (current_price); where -> means "looking for", [] means optional, | means "or", and ~ means "approximately".
"I'm looking for a swing low in EEM, which has a volatility of 0.38. The objective (or target) is $37.51 and I expect it to be attained approximately on Feb. 16. The shares last traded at $38.44."
Swing holdings: None.
See my essay "Swing Trading" for trading rules and a reading list.
I expect to post a note like this daily after the close.
Key: Symbol (implied volume) ->[swing] high | low $objective ~estimated_date (current_price); where -> means "looking for", [] means optional, | means "or", and ~ means "approximately".
- EEM (38) ->low $37.51 ~2/16 ($38.44)
- FXI (37) ->low $38.16 ~2/17 ($38.91)
- OIH (37) ->low $115.61 ~2/16 ($119.23)
- SLV (36) ->low $14.80 ~2/16 ($15.24)
- SPY (24) ->low $106.11 ~2/16 ($108.04
- XHB (34) ->high $15.58 ~2/12 ($15.88): Overdue by a day.
"I'm looking for a swing low in EEM, which has a volatility of 0.38. The objective (or target) is $37.51 and I expect it to be attained approximately on Feb. 16. The shares last traded at $38.44."
Swing holdings: None.
See my essay "Swing Trading" for trading rules and a reading list.
I expect to post a note like this daily after the close.
Friday, February 12, 2010
2/16 Almanac
Monday, Feb. 15, is a markets holiday. Happy President's Day!
Tuesday, Feb. 16, is 3 days before February options expire, 31 the March and 59 the April.
Blue chip stocks (SPY) closed the latest regular session at $108.04, down 0.08% from the prior close.
In total, 3.5 billion shares were traded on the three major U.S. stock exchanges. That's about 9.4% more than the prior day.
Mediawatch: The Greek narrative has been swapped out for a new Chinese narrative. China announced further limits on bank lending, and so stocks fell. (If you can consider 8/100th of one percent to be a fall. I mean, it looks more like a nervous tic.) AP writes it like this.
On the jump, rules, econ reports, portfolio, tasks ahead and a good book...
Tuesday, Feb. 16, is 3 days before February options expire, 31 the March and 59 the April.
Blue chip stocks (SPY) closed the latest regular session at $108.04, down 0.08% from the prior close.
In total, 3.5 billion shares were traded on the three major U.S. stock exchanges. That's about 9.4% more than the prior day.
Mediawatch: The Greek narrative has been swapped out for a new Chinese narrative. China announced further limits on bank lending, and so stocks fell. (If you can consider 8/100th of one percent to be a fall. I mean, it looks more like a nervous tic.) AP writes it like this.
On the jump, rules, econ reports, portfolio, tasks ahead and a good book...
Swing: XHB
I'm looking to go short XHB as soon as it hooks down from a swing high. The swing low was Feb. 5 at $14.60 with an objective of $15.58.
XHB for much of the day looked as though it were making a swing high above the objective.
It traded sideways from about 10:20 a.m. Eastern, swinging between $15.85 and $15.70, twice touching a high of $15.86.
However, in the last 10 minutes of trading it pushed above that high, and began to use $15.86 as support rather than resistance.
So I conclude that the upswing is still in force, and I'm not going short today. I'll wait and see what the morrow brings.
My earlier postings on this swing-trading series:
XHB for much of the day looked as though it were making a swing high above the objective.
It traded sideways from about 10:20 a.m. Eastern, swinging between $15.85 and $15.70, twice touching a high of $15.86.
However, in the last 10 minutes of trading it pushed above that high, and began to use $15.86 as support rather than resistance.
So I conclude that the upswing is still in force, and I'm not going short today. I'll wait and see what the morrow brings.
My earlier postings on this swing-trading series:
2/12 Watchlist
All the indicators I follow are trading within yesterday's range.
All are trading up from the open except for Treasury long bonds (TLT), which opened above yesterday's range but are now trading down. The etf has traced half a percent high to low so far today.
Gold (GLD) continues to show a macd bull signal, as does EEM.
The dollar is trading up against the euro and the yen.
To the scan. Here's what's notable among high-volume . . .
All are trading up from the open except for Treasury long bonds (TLT), which opened above yesterday's range but are now trading down. The etf has traced half a percent high to low so far today.
Gold (GLD) continues to show a macd bull signal, as does EEM.
The dollar is trading up against the euro and the yen.
To the scan. Here's what's notable among high-volume . . .
Swing Spreadsheet
Here's a spreadsheet of the potential swing trades I'm tracking (see my earlier post today).
XHB is the active issue. I'm looking for a new swing high so I can enter short.
The last two lines in the sheet show how far the objective is from the swing high or low.
XHB is the active issue. I'm looking for a new swing high so I can enter short.
The last two lines in the sheet show how far the objective is from the swing high or low.
Swing Trading
I'm trying to work my way into a trading technique that's new to me. It's a swing-trading method, using cycles of 3 to 5 days, developed by a trader called George Douglass Taylor and published in 1950 in a somewhat inscrutable book called The Taylor Trading Technique
It's a rewarding read, but it doesn't come easily.
It has also been extensively written about by Linda Bradford Raschke on her LBR Group website. Her articles "Swing Trading: Rules and Philosophy" and "Classical Swing Trading" are especially useful.
In a thumbnail, the theory has these rules:
It's a rewarding read, but it doesn't come easily.It has also been extensively written about by Linda Bradford Raschke on her LBR Group website. Her articles "Swing Trading: Rules and Philosophy" and "Classical Swing Trading" are especially useful.
In a thumbnail, the theory has these rules:
2/12 Morningline
Currencies are on the move this morning. The dollar opened the U.S. trading day with a 1.2% rise against the euro (EUR/USD) and a 0.9% increase against the yen (USD/JPY).
In each of the currency pairs, the price then pulled back to within yesterday's trading range.
Which illustrates the general conservatism of the morning.
Blue chip stocks (SPY) opened 1% below yesterday's close, but didn't follow through. Treasury long bonds (TLT) opened half a percent above yesterday's close, and then sat spinning like a top -- lots of motion but little progress.
The fear index (VIX) mirrored yesterday's range. Where on Thursday fear dropped like the madly laughing operator of a runaway elevator, today it shot up like a paranoid fireworks display opening an Olympics.
In each of the currency pairs, the price then pulled back to within yesterday's trading range.
Which illustrates the general conservatism of the morning.
Blue chip stocks (SPY) opened 1% below yesterday's close, but didn't follow through. Treasury long bonds (TLT) opened half a percent above yesterday's close, and then sat spinning like a top -- lots of motion but little progress.
The fear index (VIX) mirrored yesterday's range. Where on Thursday fear dropped like the madly laughing operator of a runaway elevator, today it shot up like a paranoid fireworks display opening an Olympics.
Thursday, February 11, 2010
2/12 Almanac
Friday, Feb. 12, is 7 days before February options expire, 35 the March and 63 the April.
Blue chip stocks (SPY) closed the latest regular session at $108.13, up 1% from the prior close.
In total, 3.2 billion shares were traded on the three major U.S. stock exchanges. That's about 6.7% more than the prior day.
Mediawatch: It's back to the Greek/euro narrative. AP says stocks "charged higher" because the EU said they'd support Greece. (Anxious traders, streaming on to the New York stock exchange floor, gyros leaking in their briefcases, looking about nervously and sweating as they asked, "Yes, but what about Greece?")
On the jump, rules, econ reports, portfolio and a good book . . .
Blue chip stocks (SPY) closed the latest regular session at $108.13, up 1% from the prior close.
In total, 3.2 billion shares were traded on the three major U.S. stock exchanges. That's about 6.7% more than the prior day.
Mediawatch: It's back to the Greek/euro narrative. AP says stocks "charged higher" because the EU said they'd support Greece. (Anxious traders, streaming on to the New York stock exchange floor, gyros leaking in their briefcases, looking about nervously and sweating as they asked, "Yes, but what about Greece?")
On the jump, rules, econ reports, portfolio and a good book . . .
2/11 Watchlist
Blue chip stocks (SPY) moved up sharply today, traversing 1.4% low to high. Shares hit $108.25, topping the $108.15 high set two days ago, and then pulled back slightly.
Treasury long bond (TLT) prices pulled back from their low but remained below yesterday's open. High-yield corporate bonds (JNK) rose to the mid-range of yesterday's decline.
The move in stocks positioned SPY near a short-sell point for swing traders looking to profit from the 3- or 4-day trend reversals. The move comes on the fourth day since the cycle low, $104.58, on Feb. 5, a point that also serve as support for the shares.
A significant pullback before the close today, as I see it, would indicate a bear entry point, either by selling shares short or buying puts. (Traders who hedge could sell a bear call vertical spread.)
Lacking a pullback, I would expect the uptrend to continue in early trading on Friday.
Treasury long bond (TLT) prices pulled back from their low but remained below yesterday's open. High-yield corporate bonds (JNK) rose to the mid-range of yesterday's decline.
The move in stocks positioned SPY near a short-sell point for swing traders looking to profit from the 3- or 4-day trend reversals. The move comes on the fourth day since the cycle low, $104.58, on Feb. 5, a point that also serve as support for the shares.
A significant pullback before the close today, as I see it, would indicate a bear entry point, either by selling shares short or buying puts. (Traders who hedge could sell a bear call vertical spread.)
Lacking a pullback, I would expect the uptrend to continue in early trading on Friday.
2/11 Morningline
Bonds are opening the day in an unhappy mood. Long-term bonds issued by the U.S. Treasury (TLT) have opened slightly below yesterday's closing price. It's the third lower open in a row, and each has had a lower high, lower low and lower close.
High-yield bonds issued by corporations (JNK) showed a similar pattern, opening lower for the third day in a row.
From a broader perspective, TLT began a major decline in December 2008. A low of $87.69 was set in June, and another of $88.67 in January. Those form an important support level. TLT is presently trading at $90.14.
JNK began falling five years ago, hit a low in March 2009, and then began a steady uptrend. The decline that began in mid-January interrupted that trend. JNK is trading at $37.12, a support level, and has further support at $35.75 and $34 all the way down to the low of $25.55.
High-yield bonds issued by corporations (JNK) showed a similar pattern, opening lower for the third day in a row.
From a broader perspective, TLT began a major decline in December 2008. A low of $87.69 was set in June, and another of $88.67 in January. Those form an important support level. TLT is presently trading at $90.14.
JNK began falling five years ago, hit a low in March 2009, and then began a steady uptrend. The decline that began in mid-January interrupted that trend. JNK is trading at $37.12, a support level, and has further support at $35.75 and $34 all the way down to the low of $25.55.
Wednesday, February 10, 2010
Mediawatch Update
A more complex account of the day's market action than the AP story noted in today's Almanac.
Reuters asserts that stocks didn't move because Fed Chairman Bernanke's remarks on exiting the stimulus offset good news about the Greek debt crisis.
Since shares fell 0.2%, clearly Ben Bernanke's influence is worth 100.2% of Greece's. Talk about yer masters of the universe!
Reuters asserts that stocks didn't move because Fed Chairman Bernanke's remarks on exiting the stimulus offset good news about the Greek debt crisis.
Since shares fell 0.2%, clearly Ben Bernanke's influence is worth 100.2% of Greece's. Talk about yer masters of the universe!
2/11 Almanac
Thursday, Feb. 11, is 8 days before February options expire, 36 the March and 64 the April.
Blue chip stocks (SPY) closed the latest regular session at $107.01, down 0.2% from the prior close.
In total, 3 billion shares were traded on the three major U.S. stock exchanges. That's about 3.2 percent less than the prior day.
Mediawatch: An all purpose sort of day. Reports tied the market action, in terms of temporal juxtaposition, to Fed Chairman Bernanke's statement on how the Fed will dismantle its active stimulus. If stocks had gone up, it would have been in response to the statement. Had they gone down, ditto. They went nowhere. Ditto. Here's the AP version of the universal stock market cause-and-effect story.
On the jump, rules, econ reports, portfolio and a good book . . .
Blue chip stocks (SPY) closed the latest regular session at $107.01, down 0.2% from the prior close.
In total, 3 billion shares were traded on the three major U.S. stock exchanges. That's about 3.2 percent less than the prior day.
Mediawatch: An all purpose sort of day. Reports tied the market action, in terms of temporal juxtaposition, to Fed Chairman Bernanke's statement on how the Fed will dismantle its active stimulus. If stocks had gone up, it would have been in response to the statement. Had they gone down, ditto. They went nowhere. Ditto. Here's the AP version of the universal stock market cause-and-effect story.
On the jump, rules, econ reports, portfolio and a good book . . .
2/10 Watchlist
The price of Treasury long-term bonds (TLT) is down 1.2%, high to now, and has reached a near-term support level ranging from $90.50 to about $89. The macd is giving a bear signal, as is Person's Proprietary Signal. Falling bond prices means traders expect higher interest rates ahead, and the Federal Reserve has been looking at how to exit from the current very low interest environment.
Corporate high-yield debt (JNK) is also down considerably. It is in part influenced by the federal interest rates, but also by expectations of corporate default. Traders may well judge that higher rates would stop the present recovery in its tracks, so JNK would suffer on two counts.
The other indicators I watch are trading in the ranges set yesterday.
To the scans! Here's what's interesting in high-volume . . .
Corporate high-yield debt (JNK) is also down considerably. It is in part influenced by the federal interest rates, but also by expectations of corporate default. Traders may well judge that higher rates would stop the present recovery in its tracks, so JNK would suffer on two counts.
The other indicators I watch are trading in the ranges set yesterday.
To the scans! Here's what's interesting in high-volume . . .
TM: Toyota's Recall Blues
Toyota Motors, TM, shows how quickly things can change in a capitalist economy. Just a year after surpassing GM as the world's largest automaker, Toyota finds itself beset at every turn with allegations of unsafe accelerators and brakes, and a growing reputation as a company that ignores bad news rather than jumping to make things right.
The founding ancestor of Toyota Motors, Sakichi Toyoda, who enunciated the family "5 Whys" business principal, must be looking down aghast from Japanese Ancestor Heaven asking "Why Why Why Why Why" his descendants have managed to mess things up so badly.
How badly? About 22.6% worth of badly, if you can believe the stock's American shares. That's how much the price dropped from the near-term high set Jan. 19, when the present corporate crisis moved into overdrive, to the low set Feb. 4, the day earnings were released. Shares have since rebounded 6.9%.
The founding ancestor of Toyota Motors, Sakichi Toyoda, who enunciated the family "5 Whys" business principal, must be looking down aghast from Japanese Ancestor Heaven asking "Why Why Why Why Why" his descendants have managed to mess things up so badly.
How badly? About 22.6% worth of badly, if you can believe the stock's American shares. That's how much the price dropped from the near-term high set Jan. 19, when the present corporate crisis moved into overdrive, to the low set Feb. 4, the day earnings were released. Shares have since rebounded 6.9%.
2/10 Morningline
Markets are marking time this morning waiting for . . . Who knows?
Given the back-to-back blizzards in the Midewest and East, it's no surprise that this snow day is a slow day.
Blue chip stocks, Treasury long bonds, gold, oil, emerging markets -- waiting.
The greatest excitement among the indicators was a two-thirds of a percent decline in emerging markets that left the price within the range set the past three days.
Given the back-to-back blizzards in the Midewest and East, it's no surprise that this snow day is a slow day.
Blue chip stocks, Treasury long bonds, gold, oil, emerging markets -- waiting.
The greatest excitement among the indicators was a two-thirds of a percent decline in emerging markets that left the price within the range set the past three days.
Tuesday, February 9, 2010
2/10 Almanac
Wednesday, Feb. 10, is 9 days before February options expire, 37 the March and 65 the April.
Blue chip stocks (SPY) closed the latest regular session at $107.22, up 1.3% from the prior close.
In total, 3.1 billion shares were traded on the three major U.S. stock exchanges. That's about 29 percent less than on Friday.
Mediawatch: AP credits Tuesday's rise to the European debt crisis, just as it credited Monday's fall to the European debt crisis. So, a 1.3% rise vs a 0.7% decline means that we are now 0.6% net optimistic about whether the EU will help Greece solve its problems. Question: Did anyone really thing the EU wouldn't help Greece solve its problems? Just asking.
On the jump, rules, econ reports, portfolio and a good book . . .
Blue chip stocks (SPY) closed the latest regular session at $107.22, up 1.3% from the prior close.
In total, 3.1 billion shares were traded on the three major U.S. stock exchanges. That's about 29 percent less than on Friday.
Mediawatch: AP credits Tuesday's rise to the European debt crisis, just as it credited Monday's fall to the European debt crisis. So, a 1.3% rise vs a 0.7% decline means that we are now 0.6% net optimistic about whether the EU will help Greece solve its problems. Question: Did anyone really thing the EU wouldn't help Greece solve its problems? Just asking.
On the jump, rules, econ reports, portfolio and a good book . . .
2/9 Watchlist
SPY (blue chip stocks) whipsawed higher and lower before retreating to the upper end of yesterday's trading range. Altogether, the exchange-traded fund plowed through three-quarters of a percent, low to high.
Long-term Treasury bonds (TLT) are down, indicating an expectation of higher interest rates ahead.
Crude oil (USO) has gapped up and is trading 3% above yesterday's close. Gold (GLD) is also on the rise, as are emerging markets.
The dollar is up smartly above the euro (EUR/USD), but against the yen is holding close to yesterday's trading range.
To the scans. Here's what's interesting in high-volume . . .
Long-term Treasury bonds (TLT) are down, indicating an expectation of higher interest rates ahead.
Crude oil (USO) has gapped up and is trading 3% above yesterday's close. Gold (GLD) is also on the rise, as are emerging markets.
The dollar is up smartly above the euro (EUR/USD), but against the yen is holding close to yesterday's trading range.
To the scans. Here's what's interesting in high-volume . . .
2/9 Morningline
The action this morning is in stocks.
Bear signals flashed Jan. 21 on the macd continued as blue chip stocks (SPY) moved to the top of yesterday's trading range. The 20-day moving average moved deeper below the 50-day, an inverse pattern shouting "Bear!" to knowledgeable traders. The money flow index stayed in oversold territory, below the 20-line.
However, the VIX declined 4.8% open to current, an indicator of increasing confidence among traders. The "fear index" remains in a range where it has traded often since Jan. 22, so there isn't any decisive break to the downside.
Bear signals flashed Jan. 21 on the macd continued as blue chip stocks (SPY) moved to the top of yesterday's trading range. The 20-day moving average moved deeper below the 50-day, an inverse pattern shouting "Bear!" to knowledgeable traders. The money flow index stayed in oversold territory, below the 20-line.
However, the VIX declined 4.8% open to current, an indicator of increasing confidence among traders. The "fear index" remains in a range where it has traded often since Jan. 22, so there isn't any decisive break to the downside.
Monday, February 8, 2010
2/9 Almanac
Tuesday, Feb. 9, is 10 days before February options expire, 38 the March and 66 the April.
Blue chip stocks (SPY) closed the latest regular session at $105.89, down 0.7% from the prior close.
In total, 3.1 billion shares were traded on the three major U.S. stock exchanges. That's about 29 percent less than on Friday.
Mediawatch: AP alludes darkly to worried about the European debt crisis but leads with the Dow Jones Industrial Average closing below 10,000, which became a habit beginning Oct. 10, 2008, amid the collapse of capitalist finance. The habit persisted until Nov. 2, the last close before that level. Meaningless, actually.
On the jump, rules, econ reports, portfolio and a good book . . .
Blue chip stocks (SPY) closed the latest regular session at $105.89, down 0.7% from the prior close.
In total, 3.1 billion shares were traded on the three major U.S. stock exchanges. That's about 29 percent less than on Friday.
Mediawatch: AP alludes darkly to worried about the European debt crisis but leads with the Dow Jones Industrial Average closing below 10,000, which became a habit beginning Oct. 10, 2008, amid the collapse of capitalist finance. The habit persisted until Nov. 2, the last close before that level. Meaningless, actually.
On the jump, rules, econ reports, portfolio and a good book . . .
Opened CSCO iron condor
I've opened an iron condor on CSCO intended to gain some premium off of its long-running sideways movement. The trade executed with the stock at $23.54 and earned 42 cents credit.
The stock options are structured so that the trade shows a maximum profit at expiration on March 19 if the price of the stock is from $23 to $25. Those are the strike prices of the options I sold. The insurance options I bought are $1 either side of the shorts.
Schematically, it's p22/-p23/-c25/c26.
The stock options are structured so that the trade shows a maximum profit at expiration on March 19 if the price of the stock is from $23 to $25. Those are the strike prices of the options I sold. The insurance options I bought are $1 either side of the shorts.
Schematically, it's p22/-p23/-c25/c26.
2/8 Watchlist
SPY, which tracks the S&P 500 index of large companies, has barely budged all day. The macd technical indicator remains in bear territory, and has spent the last three days without a clear direction.
The 20-day moving average has moved below the 50-day, a bearish sign, and both are trending downward. The money flow index (mfi) has dived below the 20-line, indicating an oversold condition. The slow stochastic, having pushed above it's 20-line, has reversed course and is heading down again.
All in all, not a happy time for stocks, if you're bullish at least. Neutral to bearish, let the good times roll!
The 20-day moving average has moved below the 50-day, a bearish sign, and both are trending downward. The money flow index (mfi) has dived below the 20-line, indicating an oversold condition. The slow stochastic, having pushed above it's 20-line, has reversed course and is heading down again.
All in all, not a happy time for stocks, if you're bullish at least. Neutral to bearish, let the good times roll!
2/8 Morningline
Street Authority and others are blaming lingering worries over the euro for today's slightly lower opening on blue chip stocks (SPY). Personally, I blame the downward move on the distraught Colts fans, who are cashing in shares to pay off the bets they made on an Indiana victory in yesterday's Superbowl XLIV. Also, buying lots of Jack Daniels to drown their sorrow. Sorry, Colts. Great second half, Saints.
Personally, I'm positioning for the big 10.3% post-Superbowl gain in the markets. (Well, not.)
SPY is trading within the range set Friday, as are Treasury long bonds (TLT), gold (GLD), oil (USO), corporate high-yield bonds (JNK), emerging markets (EEM), the euro (EUR/USD) and the yen.
Monday mornings are a bear, you know? (Or maybe a bunch of bull.) It's hard to get moving. Even the sprightly VIX -- the so-called "fear index" was within Friday's range, albeit up a bit.
Personally, I'm positioning for the big 10.3% post-Superbowl gain in the markets. (Well, not.)
SPY is trading within the range set Friday, as are Treasury long bonds (TLT), gold (GLD), oil (USO), corporate high-yield bonds (JNK), emerging markets (EEM), the euro (EUR/USD) and the yen.
Monday mornings are a bear, you know? (Or maybe a bunch of bull.) It's hard to get moving. Even the sprightly VIX -- the so-called "fear index" was within Friday's range, albeit up a bit.
Sunday, February 7, 2010
Saints win worth 10.3%
Based on Business Week's pre-game analysis, here's what the Saint's win in Superbowl XLIV is worth to your bottom line in the stock market (or maybe in the options market, in which case you're nicely leveraged):
So, SPY closed Friday at 106.66, and 10.3% above that is 117.6, which puts it above the high of 115.13 set on Jan. 15, and just below the low of 117.70 set on Sept. 26, 2008.
Happy days are here again, yes?
- Saints win: +9%
- NFC win: +15%
- Low scoring game: +7%
- Bottom line: The market will rise 10.3% sometime after today.
So, SPY closed Friday at 106.66, and 10.3% above that is 117.6, which puts it above the high of 115.13 set on Jan. 15, and just below the low of 117.70 set on Sept. 26, 2008.
Happy days are here again, yes?
Friday, February 5, 2010
Super Bowl Effect
A very nice read from Business Week on the "superbowl effect" on the markets. Saintly bulls, bearish colts. Or not.
2/8 Almanac
Monday, Feb. 8, is 11 days before the February options expire, 39 days the March and 67 days the April.
Blue chip stocks (SPY) closed the latest regular session at $106.66, up 0.2% from the prior close.
In total, 4.4 billion shares were traded on the three major U.S. stock exchanges. That's about 2 percent more than the day before.
Mediawatch: News reports says the European debt crisis and the government's U.S. employment report caused shares to decline. Repeat after me: The debt crisis is not new. Employment is a lagging indicator. Not new. Lagging indicator. All priced into the market before, unless traders are terribly, terribly stupid.
On the jump, rules, econ reports, portfolio and a good book . . .
Blue chip stocks (SPY) closed the latest regular session at $106.66, up 0.2% from the prior close.
In total, 4.4 billion shares were traded on the three major U.S. stock exchanges. That's about 2 percent more than the day before.
Mediawatch: News reports says the European debt crisis and the government's U.S. employment report caused shares to decline. Repeat after me: The debt crisis is not new. Employment is a lagging indicator. Not new. Lagging indicator. All priced into the market before, unless traders are terribly, terribly stupid.
On the jump, rules, econ reports, portfolio and a good book . . .
2/5 Watchlist
The indicators I follow are all undergoing aftershocks after yesterday's marketquake.
SPY down, TLT up, JNK down, GLD down, USO down, EEM down.
Yesterday's moves were mainly blamed on the debt crisis in the euro zone, especially Greece. Today's reports are following the same line.
But I wonder. Search the Google News archive for last year and you'll find plenty of news stories about the debt crisis in Europe. This is old news.
SPY down, TLT up, JNK down, GLD down, USO down, EEM down.
Yesterday's moves were mainly blamed on the debt crisis in the euro zone, especially Greece. Today's reports are following the same line.
But I wonder. Search the Google News archive for last year and you'll find plenty of news stories about the debt crisis in Europe. This is old news.
FNM: Sampling the Kool-Aid
Hard to believe, but Fannie Mae (FNM) has been tracing a series of high highs and higher lows since November 2008.
Any other stock, I'd say, "Wow!", and park some long-term money in shares to ride the trend.
But Fannie, of course, played a starring role in the collapse of capitalist finance in 2008. That's why the stock, which once traded above $70, tumbled to 30 cents a share.
Any other stock, I'd say, "Wow!", and park some long-term money in shares to ride the trend.
But Fannie, of course, played a starring role in the collapse of capitalist finance in 2008. That's why the stock, which once traded above $70, tumbled to 30 cents a share.
2/5 Morningline
Blue chip stocks (SPY) declined further the first half hour of trading after opening at the lower end of yesterday's sharp decline, approaching a key level in the retracement of the rise from last March.
Otherwise, among the financials, think steady.
Treasury long bonds (TLT) held steady at the midpoint of yesterday's range, and corporate junk bonds (JNK) were also steady, at the low end. The VIX, also steady, near the top of yesterday's rise (a rising VIX is bearish for stocks).
Otherwise, among the financials, think steady.
Treasury long bonds (TLT) held steady at the midpoint of yesterday's range, and corporate junk bonds (JNK) were also steady, at the low end. The VIX, also steady, near the top of yesterday's rise (a rising VIX is bearish for stocks).
Thursday, February 4, 2010
2/5 Almanac
Friday, Feb. 5, is 14 days before the February options expire, 42 days the March and 70 days the April.
Historically, it tends to be an up day of the week on an up date of the month in an up month of the year.Actually, Friday's tend to be the risingest days of the week.
Historically, it tends to be an up day of the week on an up date of the month in an up month of the year.Actually, Friday's tend to be the risingest days of the week.
2/4 Watchlist
Conditions noted in the Morningline remain as I described them, except more so. The stunning movement comes with the U.S. dollar declining by 2.8% against the Japanese yen (calculated high to low), and rising 1.3% against the euro.
Reuters says it's because recent news has increased an aversion to risk. But I ask, in today's markets, how is it less risky to vote for the yen and for the dollar in trading on the same day? Either side of these trades, there's risk galore. As for the VIX . . .
Reuters says it's because recent news has increased an aversion to risk. But I ask, in today's markets, how is it less risky to vote for the yen and for the dollar in trading on the same day? Either side of these trades, there's risk galore. As for the VIX . . .
Thinking about the CVS iron condor
Today's 2.3% decline (so far) in CVS sets me up for a tough decision.
My position is an iron condor (p28/-p31/-c34/c36), profitable if at expiration the price of the stock is between the strike price of the short put, $31, and the strike of the short call, $34.
Shares are trading at this moment at $31.61, and falling.
The last trading day before expiration is Feb. 19. CVS's earnings will be released before the market opens on next Monday, Feb. 8.
If the position is within the maximum profit range $31-$34 at expiration, I'll make 90 cents profit. If I close now, the profit will be about a third of that.
What's a trader to do?
My position is an iron condor (p28/-p31/-c34/c36), profitable if at expiration the price of the stock is between the strike price of the short put, $31, and the strike of the short call, $34.
Shares are trading at this moment at $31.61, and falling.
The last trading day before expiration is Feb. 19. CVS's earnings will be released before the market opens on next Monday, Feb. 8.
If the position is within the maximum profit range $31-$34 at expiration, I'll make 90 cents profit. If I close now, the profit will be about a third of that.
What's a trader to do?
2/4 Morningline
SPY, the exchange-traded fund that tracks the blue-chip stocks, ended its two-day head-fake with a gap down from yesterday's trading range, and then a decline into the trading day.
The trading pattern for nine days has basically been a sideways track contained by the 61.8% and the 38.2% Fibonacci retracement levels.
Treasury long bonds (TLT) are on the rise, meaning interest rates are on the decline. TLT is in the second day in macd bear territory. High-interest corporate bonds (JNK) are trading down at levels not seen since December, suggesting traders see an increased risk of corporate defaults.
Gold (GLD) glistens not. It gapped down by 1.8% with a bearish macd. Oil (USO) also gapped down with the macd showing bull signals.
Down the emerging markets. Down U.S. dollar against the Japanese yen (USD/JPY). Up the dollar against the euro (EUR/USD).
The end of the world as we know it?
The trading pattern for nine days has basically been a sideways track contained by the 61.8% and the 38.2% Fibonacci retracement levels.
Treasury long bonds (TLT) are on the rise, meaning interest rates are on the decline. TLT is in the second day in macd bear territory. High-interest corporate bonds (JNK) are trading down at levels not seen since December, suggesting traders see an increased risk of corporate defaults.
Gold (GLD) glistens not. It gapped down by 1.8% with a bearish macd. Oil (USO) also gapped down with the macd showing bull signals.
Down the emerging markets. Down U.S. dollar against the Japanese yen (USD/JPY). Up the dollar against the euro (EUR/USD).
The end of the world as we know it?
Wednesday, February 3, 2010
2/4 Almanac
Thursday, Feb. 4, is 15 days before the February options expire, 43 days the March and 71 days the April.
Historically, it tends to be an up day of the week on an up date of the month in an up month of the year. Uppity.
Historically, it tends to be an up day of the week on an up date of the month in an up month of the year. Uppity.
2/3 Watchlist
Despite the apocalyptic headlines on some market stories ("U.S. Stocks Falter"), the distance between the open and close in blue chip stocks (SPY) today is at this point measured in a few cents. Not much on a stock trading for 109.84.
It's not yet the end of the world. But remember, 2012 (a level hit by the Dow 23 years ago) may be just behind the corner.
So relax! Don't worry!! Be happy!!!
It's not yet the end of the world. But remember, 2012 (a level hit by the Dow 23 years ago) may be just behind the corner.
So relax! Don't worry!! Be happy!!!
2/3 Morningline
Blue chip stocks (SPY) opened at the top end of yesterday's trading range, and the price stands near the 38.2 percent Fibonacci retracement level. The key thing to note is that the macd is consistently and rapidly moving up toward the zero-line. This is a bullish indicator.
Treasury long bond prices (TLT) gapped down by nearly half a percent, and the macd gave a potential bear signal. Oil (USO) is trading higher at the top end of yesterday's range and the macd is showing a potential bull signal.
Treasury long bond prices (TLT) gapped down by nearly half a percent, and the macd gave a potential bear signal. Oil (USO) is trading higher at the top end of yesterday's range and the macd is showing a potential bull signal.
Tuesday, February 2, 2010
2/3 Almanac
Wednesday, Feb. 3, is 16 days before the February options expire, 44 days the March and 72 days the April.
Historically, it tends to be the day of the week with the second highest increase, the date of the month with the fifth highest increase and the month with the ninth highest increase.
Call it an up up up sort of day. . . .
Historically, it tends to be the day of the week with the second highest increase, the date of the month with the fifth highest increase and the month with the ninth highest increase.
Call it an up up up sort of day. . . .
2/2 Watchlist
Blue chip stocks (SPY) are trading between the 50 percent and 32.8 percent Fibonacci retracement levels. The macd remains in bear territory for the ninth consecutive trading day, and for three days has been trending upward toward the zero line.
A Person's Proprietary Signal (pps) bull signal is showing 90 minutes before the end of the trading session.
A Person's Proprietary Signal (pps) bull signal is showing 90 minutes before the end of the trading session.
2/2 Morningline
Near-range trading on all of my indicators this morning, except for gold (GLD), which has gapped up again.
Blue chip stocks (SPY) are up slightly from yesterday's range and contnues to hover around the 50 percent Fibonacci retracement level.
23.6%, 38.2%, 50%, 61.8% -- What's so magic about these retracement levels?
Blue chip stocks (SPY) are up slightly from yesterday's range and contnues to hover around the 50 percent Fibonacci retracement level.
23.6%, 38.2%, 50%, 61.8% -- What's so magic about these retracement levels?
Monday, February 1, 2010
2/2 Almanac
Tuesday, Feb. 2, is 17 days before the February options expire, 45 days the March and 73 days the April.
Historically, it tends to be the day of the week with the third highest increase, the date of the month with the highest increase and the month with the ninth highest increase.
What's the short way to say that? The third uppest day of the week on the uppest date of the month in the ninth uppest month. If you can say that three times quickly . . .
Historically, it tends to be the day of the week with the third highest increase, the date of the month with the highest increase and the month with the ninth highest increase.
What's the short way to say that? The third uppest day of the week on the uppest date of the month in the ninth uppest month. If you can say that three times quickly . . .
2/1 Watchlist
Blue-chip stocks (SPY) are trading up within the range set in Friday's decline. After retreating from the 61.8 percent Fibonacci retracement level, SPY came close to the 50 percent retracement, but didn't cross the line.
The fear index (VIX) is in its movements today an inverse image of SPY (as it is designed to be).
The fear index (VIX) is in its movements today an inverse image of SPY (as it is designed to be).
Weekend Studies
2/1 Morningline
Blue chip stocks (SPY) and their associated fear index (VIX), Treasury long bonds (TLT), and oil (USO) are trading within the ranges they set on Friday.
Gold (GLD) has gapped up, and the price of junk bonds (JNK), the latter suggesting high interest rates to cover an increased likelihood of corporate default. This is pessimistic for the recovery.
Gold (GLD) has gapped up, and the price of junk bonds (JNK), the latter suggesting high interest rates to cover an increased likelihood of corporate default. This is pessimistic for the recovery.
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