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 . . .
Showing posts with label KR. Show all posts
Showing posts with label KR. Show all posts
Thursday, February 4, 2010
Wednesday, January 27, 2010
Opened MCO Covered Call
I've opened a February covered call on MCO with a strike price of $30. The shares are trading for $29.18, but I bought them in May2009 for $29.85. The shares are zombies left over from an unexercised covered call.
The call went for a fairly low premium of 70 cents. I made $1.96 in premium from the May 2009 covered call, and 30 cents in dividends since then. So, altogether, with today's premium, I've taken $2.96 in income from the shares. That's 9.9 percent, not too shabby for eight months work. . . .
The call went for a fairly low premium of 70 cents. I made $1.96 in premium from the May 2009 covered call, and 30 cents in dividends since then. So, altogether, with today's premium, I've taken $2.96 in income from the shares. That's 9.9 percent, not too shabby for eight months work. . . .
1/27 Watchlist
Blue chip stocks (SPY) barely blinked at a Federal Open Market Committee announcement that left low to non-existent interest rates in place while dishing out some modest happy talk about the economy's prospects.
SPY is trading down a bit from yesterday's range, Treasury long bonds (TLT) and gold (GLD) within the range, the dollar against the euro (EUR/USD) is worth a bit more, and oil (USO) is straddling the yesterday's range in a downward move.
In other words, its just another day in 2010's low-volatility paradise. (The VIX is trading down for the third straight day.)
SPY is trading down a bit from yesterday's range, Treasury long bonds (TLT) and gold (GLD) within the range, the dollar against the euro (EUR/USD) is worth a bit more, and oil (USO) is straddling the yesterday's range in a downward move.
In other words, its just another day in 2010's low-volatility paradise. (The VIX is trading down for the third straight day.)
Saturday, January 2, 2010
Monthly Breakouts
I'm following up my discussion on Dec. 31 on long-term trading.
In my year-end review, I showed the blue chips (SPY) on a chart showing prices by month and analyzed them using a 12-month simple moving average.
The result showed that four trades based on that method would have turned what was a 23% loss for the decade of the 20-zeroes into a 78% gain.
The rules are:
I also scanned for etfs and shares that, having given signals within the last nine months, were trading around the entry price:
I haven't done a rigorous back-testing of this method. It looked like a pretty good match on SPY, but any moving-average crossover method will give whipsaws on occasion, and of course entering months after any signal is a riskier proposition.
Still, I think it's an interesting approach, and one worth looking at if you have some money that you're wanting to park for the longer term.
One ideal use would be to enter and exit a high-dividend fund, like JNK, which tracks junk bonds and is presently yielding 11.18% in dividends, or AOD, which also seeks dividend income and is yielding 16.14%.
You would profit from the dividends during bull periods, as well as, in theory, from capital gains, and also avoid the capital losses that wipe out dividend profits.
(I own both AOD and JNK for the longer-term money that I don't use for trading. My entry was after the bull signals, with little price gain between signal and entry for AOD and an 11% gain for JNK.)
Topics: Exxon-Mobil, Kroger, Research in Motion, Wells Fargo, Morgan Stanley, U.S. Bancorp, Kraft, oil, petroleum, groceries, Blackberry, bank, bonds, Ultrashort Treasuries, SPDR, Spiders, S&P 500, 401(k), IRA, Individual Retirement Account.
In my year-end review, I showed the blue chips (SPY) on a chart showing prices by month and analyzed them using a 12-month simple moving average.
The result showed that four trades based on that method would have turned what was a 23% loss for the decade of the 20-zeroes into a 78% gain.
The rules are:
- If the bar (or candlestick) during a month crosses the 12-month moving average, then
- Open a bull position if the closing price on the last day of the month is above the moving average.
- Open a bear position if the closing price on the last day of the month is below the 12-month moving average.
- Close the position under one or more of these circumstances:
- The price closes on the opposite side of the moving average from the price at which the position was opened.
- The price crosses a stop/loss set at a distance from the opening price of twice the average trading range over the last three months.
I also scanned for etfs and shares that, having given signals within the last nine months, were trading around the entry price:
I haven't done a rigorous back-testing of this method. It looked like a pretty good match on SPY, but any moving-average crossover method will give whipsaws on occasion, and of course entering months after any signal is a riskier proposition.
Still, I think it's an interesting approach, and one worth looking at if you have some money that you're wanting to park for the longer term.
One ideal use would be to enter and exit a high-dividend fund, like JNK, which tracks junk bonds and is presently yielding 11.18% in dividends, or AOD, which also seeks dividend income and is yielding 16.14%.
You would profit from the dividends during bull periods, as well as, in theory, from capital gains, and also avoid the capital losses that wipe out dividend profits.
(I own both AOD and JNK for the longer-term money that I don't use for trading. My entry was after the bull signals, with little price gain between signal and entry for AOD and an 11% gain for JNK.)
Topics: Exxon-Mobil, Kroger, Research in Motion, Wells Fargo, Morgan Stanley, U.S. Bancorp, Kraft, oil, petroleum, groceries, Blackberry, bank, bonds, Ultrashort Treasuries, SPDR, Spiders, S&P 500, 401(k), IRA, Individual Retirement Account.
Wednesday, December 16, 2009
12/16 Watchlist
Today it is 30 days before expiration of the January options, which means we're into prime time for covered calls. I'll be taking at look today and in subsequent Watchlists at high-volume stocks priced below $20 showing signals that might make them good covered call candidates. See the end of this posting.
A covered call stock needs to meet these criteria:
USO is showing a bull signal on a 2.6 percent rise followed by a partial pullback. The trend has been sideways since June. Otherwise, no new indicator signals.
No new signals from the currency pairs or my holdings.
High-volume stocks and etfs priced at 20 or greater:
The bear signals on those two issues are counter-trend, but I shall look hard at them at the next bull signal.
BRCM's with-the-trend bull signal pushes prices to upside resistance, the second test of those levels in the past four days. A possible trade if it breaks above 32.
High-volume shares and etfs below $20 that are possible covered-call candidates:
A covered call stock needs to meet these criteria:
- Slightly bullish to neutral prospects. I.e., I don't want the shares to come crashing down, but I also don't want them to have huge rise.
- Price sufficiently low so that I can afford 100 shares. Calls come in 100-share units, so there's no way to sell a call against fewer than 100 shares.
- Volume sufficient to provide liquidity. Basically, the higher the better, but not below 1 million shares.
USO is showing a bull signal on a 2.6 percent rise followed by a partial pullback. The trend has been sideways since June. Otherwise, no new indicator signals.
No new signals from the currency pairs or my holdings.
High-volume stocks and etfs priced at 20 or greater:
- CVS, bear signal, sideways trend since a huge gap down in November
- KR, bull, sideways since a huge gap down on Dec. 8
- BRCM, bull on a 4% rise, up since November
- EBAY, bull, down since September
- CIT, bear, unknown trend after five trading days since shares resumed trading
- ESRX, bear on a 4.7% fall, up since March; shares are trading where they were on Nov. 30, so it's not as apocalypic as it might sound.
- MHS, bear on 4.6% fall, up since March
- BBD, bear, up since March
- BA, bear, up since March (with some fairly deep pullbacks)
The bear signals on those two issues are counter-trend, but I shall look hard at them at the next bull signal.
BRCM's with-the-trend bull signal pushes prices to upside resistance, the second test of those levels in the past four days. A possible trade if it breaks above 32.
High-volume shares and etfs below $20 that are possible covered-call candidates:
- GE, 15.71, bear mode, sideways since October,
- EWJ, 10.03, bull, sideways since September (with deep pullbacks)
- EWT, 12.40, bear, sideways since August
- LVS, 15.88, bull yesterday, sideways since July
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