Phil's Stock World, Stock Options Trading & Information

Daily Stock and Options Tips & Updates; Get Our Daily Newsletter Here

Phil, those OIH $80 p that you recommended last week for ~$1 are now worth $5.50!

- Greg

Thanks Phil another great week of guiding us!

- Steven Parker

Phil I have been applying your arsenal (matresses, Edz plays, Ugl verticals etc.) to my gold holdings . So a big thank you for "teaching me how to fish" rather than just giving me the fish...

- Magret

As a fellow "low-end" investor I like Phil's Buy/Write strategy on solid stocks. Before I came here I loved to try to "figure things out" with very little success "TRYING TO FIGURE THINGS OUT"! I traded too much and fell in love with stocks that "should have done" what they didn't do. Now a majority of my accounts are in Buy/Writes suggested here or cash (waiting for a better time for more Buy/Writes). I use 15-20% of my total holding to short term trade and hedge. This is manageable with my full time job as a business owner. I have found Phil's system a more discipline way to achieve the returns I want without relying on my ability (more like inability to "figure things out").

- DCalrk41

1,000% on SKF - It was a freakin' monster into the center field bleachers! I saw it play out live and squawked it from the StockTwits ID which 14k people follow: Home run trade of the week @philstockworld just knocked cover off ball w $SKF puts. http://bit.ly/piBL Great trade bud!

- Phil Pearlman - StockTwits

Phil - Another excellent teaching article - when you write like that it blows me away. Thank you! I had the ideas from earlier articles but what I didn't have was enough understanding. The familiarity of ideas through repetition, re-working, revision - over time - the variation, the pulling out of implications - it all contributes to understanding and mostly thats on the student - but a good teacher (worth their weight in gold) makes understanding a pleasure. I wanted to learn about trading options because it makes my brain feel better - fitter, healthier. Actually mostly it makes me happy to think about the trade and trading options. You are a good teacher and I know that or I wouldn't value the subscription the way I do. It pays for itself through the pleasure of understanding alone.

- Redfern1

I have been very fortunate over the years as an investor. Last year was on of my best in terms of percentage gains. I have to attribute much of this success to my membership in PSW which gave me the best education available anywhere when it comes to the understanding of option trading , discipline and general trading strategies. I will be forever grateful to Phil and the many "highly skilled" traders that have offered their advice.

- Gel1

Its been a "perfect" month. Every stock I wrote calls against looks like it will be called away next week, every put I wrote will expire worthless. Thanks Phil, now I need some new buy/write candidates, or the new 100K portfolio….

- Barfinger

Hey Phil - writing to thank you! First of all, and I know you have heard this a few times form some others - the portfolio updates you have done - with entries and targets and even margin reqs are invaluable! I find myself understanding what is done here IN THEORY most of the time..however, there is a much bigger difference in placing and setting up the hedges properly than just understanding…This has been eye opening for me and Ifeel like I just took a major step in trading during the last week.

- Bcfla

Don't expect to get rich quick here, but you can get easy 30 - 50 % per year, just by buying good stocks at discount (as we often discuss), selling monthly premiums of calls and puts.

- Tchayipov

Man, what a week: Bought C at 1.40, sold half at 1.59 (relatively big position), another quarter at 3.04 just now. Ran SKF down from 270 with one April put, still holding some 115's expiring in a couple days. I'm going to gamble this position like a champion Friday. Bought FAS at all sorts of levels and started cashing out. Long HOV, stock and some nickel calls for fun - Mocha up your buy-out from 5 to 8 and that's 10,900% return for the May-2.50's . Ha!

- Biodieselchris

Phil, I don't know if I told you lately but you da man! I'm doing so much better following your guidelines. It's like you actually know what you are talking about. 8-) I've tried a lot of services and none of them are as comprehensive or honest AND successful. I appreciate all youz other guys/gals input as well…learning tons as a relative newbie to this game.

- Aclend

I have followed along with your commentary and alerts and have been flabbergasted at your quick analytical skills and your journalistic skills to explain it clearly. In a little over three weeks I have cleared almost 1000.00 dollars and got an intensive education at the same time. I would like to immediately upgrade my membership.

- TokyoLife

Phil… My portfolio, in the past few months, has acheived a high degree of stabilization. I've noticed that on up days, down days, even days, it doesn't matter, my portfolio rarely varies more than 2%. And over the long haul it just slowly increases in value. I attribute this not to investment choices, but to style. Thanks to you and others on this site I'm paying close attention to position size, delta neutrality, downside protection, and concentrating on selling premium rather than buying it. I've developed increasing patience, not having to trade daily, or even weekly. I'm concentrating on the finer points of trading, letting the profits come to me, rather than the other way around. I appreciate the help everyone here has given in getting me focused on this principle. I'm pumped!…in a calm sort of way.

- Iflantheman

Wow, Phil, we pretty much made your levels. Your levels: Dow 7,404, S&P 775, Nas 1,466, NYSE 4,839 and RUT 402 My sceen is showing: Dow 7,404, S&P 777, Nas 1,462, NYSE 4,868 and RUT 404

- Jordan

Hi Phil, Thanks for the free disaster hedge ideas. I implemented variations of two of them on SDS bull call spreads and EEM bear put spreads (haven't done the TZA yet) and they really hedged my short term longs nicely today. Makes it seem a lot less like gambling. You are the man (of the people)!

- Howard Roake

I've recently done exactly what Phil described. I upgraded my ability to trade the IRA acct. by transferring acct. from TDA to TOS. TDA would not allow spreads; TOS does. Neither will allow naked options. With spreads I am able to buy calls or puts several months out then sell front month calls or puts over and over. This allows me to collect premium, which is, of course, the goal. This wasn't an original idea. Phil put me onto it. Since the transfer I've substantially increased my performance in the IRA!

- Iflantheman

Just closed out my V put for 50% in 24 hours thanks Phil!

- Humvee

Dear Phil, I have followed along with your commentary and alerts and have been flabbergasted at your quick analytical skills and your journalistic skills to explain it clearly. In a little over three weeks I have cleared almost 1000.00 dollars and got an intensive education at the same time. I would like to immediately upgrade my membership. It is hard for me to follow all evening as I am in Tokyo but I can join you at the beginning of the market and read the next day.

- Tokyolife

Well that was a fun day. Cashed out my GS 140 calls for about 35% profit and my AAPL calls for 38% gain. Not bad for 40 minutes of work. Back to 85% cash.

- Singapore Steve

I doubled down on our USO June $35 puts on Tuesday afternoon and listened to your posting yesterday and sold 1/2 midday and the rest I sold (luckily) at the top of the market yesterday with the last 1/4 of my contracts at 100% return in less than one day!

- Samlawyer

Peter D, Just a note of thanks. Eight weeks ago, I entered my first RUT strangles, when the RUT was at 625. Tomorrow, I will let them expire, with the RUT at 625 (give or take). I didn't care when the RUT went to 650, nor when it dropped to 590. Easiest, no touch money I've made in a long time.

- Judahbenhur

hil, I hit my targets for the year in my 401K (thanks in no small part to your site), so I cashed out of all positions a couple of weeks ago. Feels good... I'm conservative with this money –looking for 2% per month, which i've been able to do… thx.

- Lunar

Phil: I am always able to figure out your trades, including the rational when put in the right context of previous comments, etc. Keep doing what you're doing. It is much appreciated, and invaluable. Your hit rate of successful trades has been very high in my 1.5 months as a member, but even more importantly is your teaching of how to repair and DD positions that haven't gone your way yet. As with most members, we all have our ‘pet' trading interests, and learning how to think about trading is much more important than a specific trade, which could see the conditions behind it change an hour later. This is the classic case, of ‘Teach us to Fish', rather than just giving us a fish once in a while. Thank you!

- Neverworkagain

On Optrader's section yesterday he was asked how he works with AAPL as an investment. He replied that he just ‘plays with the covers'. I've got a separate portfolio where I use primarily this technique over the past 6 months. Up 60% The principles involved are stock selection, patience, patience, using covers to protect profits, rolling covers to maximize premium return, and exiting when covers are gone and stock price is high. Sometimes it's hard to remember where you learn to do this stuff, but much of it is from integrating principles I've learned here with thing I already knew. Thanks for the help on this, Phil and others.

- Roaster

Hi Mr. Phill, I am a Venezuelan lady tormented by our politicall situation, who use to be an emerging market trader, and many other executive positins in the finance "arena" and now is trying to built a new concept and service for asset management for clients on my own, I am in the trial and learning process at the moment, I also invest for some friends and myself. I want to congratulate you , because reading you fill my days with a touch of irony (besides ,of course the spectacular market insight) that happens to give me energy, its a joy the remarks and comments even the pictures used, sometimes I just read it for the fun, I completily agree with your thouhts, though we belong to totally different cultures and enviorements and certanly realities Your readings is like a little hand helping me out to be in the market and fight for my devastated country where every single day we looe inches and yards of liberty. You shoul try to writte a book!

- Mindeyes

Being a bear is easy (and I am not convinced we are doing all that well on the whole as an economy), but one cannot fight the trend (didn't Phil say that a while ago)? Just cover, make 5-10-15-20% and move on. It really does add up by chipping away. All I can say is I am back to 2007 levels in my account b'f the crash with this run up and some very nice help on this board….so kudos to us (and me!!)…

- Pharmboy

Looking over your main themes last week, the "China may fall first" and "if you missed it previously, Thurs am gives you a second chance to short" were absolutely on target. I had to rely on stop-losses because of my schedule but just those two calls could have been worth a small fortune. Keep it up and I look forward to your new portfolio.

- Ocelli

Phil - FAS - I dont know whether to be happier I averaged down and sold calls or that I got myself out of FAZ the other day…thanks for that help

- BCFla

thanks for the DNDN recommendation last week phil. that was moneeeee….

- Kwan

Posts Tagged ‘DOW’

What’s Wrong With Expecting a 28,000,000 Dow?

by ilene - May 20th, 2010 6:16 pm

What’s Wrong With Expecting a 28,000,000 Dow?

Courtesy of Jr. Deputy Accountant

Listen, it’s not THAT unrealistic, look at the Dow from March 2009 to now! It’s a miracle!

Schwarzenegger economic adviser David Crane writes about the bizarre situation in WSJ saying in 1999, then governor Gray Davis signed into law a bill that made looting California legal and gave state pensioners quite a boost in income based on completely unrealistic projections of fund performance (you know, the sort of stuff prospectuses warn about).

WC Varones shares a bit of CalPERS math (via WSJ):

What Calpers failed to disclose, however, was that (1) the state budget was on the hook for shortfalls should actual investment returns fall short of assumed investment returns, (2) those assumed investment returns implicitly projected the Dow Jones would reach roughly 25,000 by 2009 and 28,000,000 by 2099, unrealistic to say the least (3) shortfalls could turn out to be hundreds of billions of dollars, (4) Calpers’s own employees would benefit from the pension increases and (5) members of Calpers’s board had received contributions from the public employee unions who would benefit from the legislation. Had such a flagrant case of non-disclosure occurred in the private sector, even a sleepy SEC and US Attorney would have noticed.

Hahahahahahahahaha a 28,000,000 Dow by 2099! Now that’s funny.

F%$k schools, f&*k roads, f*%k social services, as long as our state employees are taken care of, what the hell do we need the rest of that sh*t for?!

Tags: California, Calpers, DOW, Economy, Equities, fund performance projections, income, Jobs, public employee unions, Recovery, state pensioners, Stock Market

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Dow Plunges Nearly 1000 Points; Video of Riots in Greece; Dollar Melt-Up Continues; Treasury Bears Slaughtered

by ilene - May 6th, 2010 4:11 pm

Dow Plunges Nearly 1000 Points; Video of Riots in Greece; Dollar Melt-Up Continues; Treasury Bears Slaughtered

Courtesy of Mish

Treasuries and the US dollar both rallied hard today as panic broke out in Greece and equity markets worldwide.

Video of Greek Riots

That video is from yesterday. Tensions rose again today.

At one point the S&P futures fell all the way to 1056 from an opening at 1163. I have seen these kind of days close green, but the treasury market sure isn’t buying this rally.

Yield Curve as of 2010-05-06 3:15PM EST

Bullish Flattening of Yield Curve

That chart shows a bullish flattening of the yield curve as I expected. Those expecting a bearish flattening (yields rising) got their clocks cleaned today as treasury bears were slaughtered.

Mike "Mish" Shedlock

Tags: DOW, Greece, Stock Market, Treasuries, yield curve

Posted in Phil's Favorites | 2 Comments »

$8 per Gallon Gasoline Is Already Here (for some of us)

by ilene - May 5th, 2010 6:28 pm

$8 per Gallon Gasoline Is Already Here (for some of us) & Two Charts: the Dow and Dow/Oil

Courtesy of Charles Hugh Smith, Of Two Minds

$8 per Gallon Gasoline Is Already Here (for some of us)

I recently wrote about the possibility of $9/gallon gasoline in the U.S. $8/gallon gasoline is already a reality for some global consumers.

Price Of Gas Rises For First Time In Six Months

Correspondent Bram S. from The Netherlands recently submitted this insightful response to Adaptation, Habituation, Consumption and $9/Gallon Gasoline.

Bram observes that gasoline is already $8/gallon (when converted from liters priced in euros) in The Netherlands, yet auto owners still spend hours every day commuting to work.

And this is a small nation with an extensive (if expensive) pubic transit system.

To the degree that every dollar/euro/quatloo spent on petrol/diesel is a dollar/euro/quatloo which is not available to be saved or spent on other goods/services, it is in effect a tax (notwithstanding the high taxes already tacked onto petrol/diesel in most of the EU nations).

Why would people continue to drive despite massive financial disincentives to do so? Could the high cost of housing be a factor, as Bram suggests? Or is personal transport so addictive that we are like the lab rats who famously starved themselves to death by continually pressing the button which released more cocaine for their "enjoyment"?

That experiment may be apocryphal, and I mention it only to suggest that there are clearly powerful emotional attractors involved in our decisions to own and drive autos. That is, it is not only a financial decision. But could the economy/society be modified structurally to bring work and home closer together, or to at least ease the financial and social decisions to move the two into close proximity?

Here is Bram’s informative commentary:

I read your story about fuel prices today. Here in the Netherlands the fuel prices are skyhigh, but everyone is still driving his metal cubicle and waiting patiently in traffic jams. Talking about the rise of hidden taxes. In 1993 it was 46.1% tax. Now in 2010 it is 72% on gasoline.

Gasoline Excise Tax (Netherlands)
(If you are using the Google Chrome browser, just click the "translate" button in the top banner to read the entry in English)

The price per liter gasoline today is EUR 1.579 of which EUR 1.14 is tax….. In dollars per gallon: 7.95. Almost your estimation but no

…

Tags: DOW, nominal prices, oil prices, purchasing power

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Large Put Play Reflects Investor Optimism on General Electric Co.

www.interactivebrokers.com

by Andrew Wilkinson - May 4th, 2010 4:08 pm

Today’s tickers: GE, XLE, DOW, BP, SKX, IYR, ZION, RIG, AA & NTRI

GE – General Electric Co. – Shares of diverse conglomerate, General Electric Company, slipped 3.85% during afternoon trading to stand at $18.52 with one hour remaining in the session. Although a great deal of bearish activity took place on GE today, there was one sizeable contrarian options play on the stock that stuck out like a sore thumb. One investor, who apparently does not anticipate an all-out collapse in the price of the underlying stock, shed 19,000 puts at the December $14 strike to pocket a premium of $0.52 per contract. The trader keeps the full amount of premium received on the put sale, which adds up to a grand total of $988,000.00, as long as GE’s shares trade above $14.00 through expiration day in December. The investor receives the premium in exchange for bearing the risk that shares of the underlying stock do not exceed $14.00 through expiration. If the December $14 strike puts land in-the-money at expiration, the trader is apparently willing to have 1.9 million GE shares put to him at an effective price of $13.48 apiece. Shares would need to plummet 27% from the current price of $18.52 before the put-seller starts to amass losses beneath the breakeven share price of $13.48. Options implied volatility on General Electric Co. is up 15% to 31.94% ahead of the closing bell.

XLE – Energy Select Sector SPDR ETF – Two options strategies representing opposing sentiment on future share price moves for the XLE were enacted today in the June contract. One of the transactions, a ratio call spread, is bullish and positions one investor to benefit should shares of the underlying fund rally sharply by expiration. The other trade, a short straddle, yields maximum benefits to the responsible party if shares settle at $59.00 by expiration. Shares of the XLE, an exchange-traded fund that seeks investment results which correspond to the price and yield performance of the Energy Select Sector of the S&P 500 Index, fell 2.75% to $58.93 as of 3:15 pm (ET). The bullish trader responsible for the ratio call spread purchased 3,500 calls at the June $61 strike for an average premium of $1.36 apiece, and sold 7,000 calls at the higher June $64 strike for roughly $0.49 apiece. The net cost of the ratio spread amounts to $0.38 per contract, and…

Tags: AA, BP, DOW, GE, IYR, NTRI, RIG, SKX, XLE, ZION

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Improve Your Market Timing: The Doji Candlestick Pattern

by markettamer - April 9th, 2010 10:47 pm

Courtesy of Market Tamer

The Doji occurs when the stock opens and closes at the same level.
It is an indication of major indecision in investment sentiment.
It is important that we interpret the Doji in the context of the market.
The Doji is a single candlestick pattern and is extremely powerful in foretelling a reversal.
There are many variations of the Doji- The Doji Star, The Long Legged or High Wave Doji, The Gravestone Doji and The Dragonfly Doji. Each has a slightly different story to tell.
The primary message that the Doji sends is that there is a "Tug Of War" going on between the bulls and the bears.
When found at the top of a trend, it may be prudent to sell if you are long the market.
Dojis at the bottom of the trend although very significant require more confirmation for a reversal.
Dojis found in a sideways channel are not very significant
The market will not always reverse immediately after a Doji, but many times the reversal will occur very shortly thereafter.
Dojis specifically and Candlesticks in general are extremely powerful when used in conjunction with other technical indicators that confirm resistance and support.

Where is the Market Headed?

Dow

S&P 500

Nasdaq

Tags: charts, DOW, Nasdaq, S&P 500, Stock Market

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VIX Draws Large Bearish Put Play

www.interactivebrokers.com

by Andrew Wilkinson - February 2nd, 2010 5:28 pm

Today’s tickers: VIX, MS, BAC, UNG, SU, RL, GIGM, FCX, CVS, SPF & DOW

VIX – CBOE Volatility Index – A massive bearish put position initiated on the VIX today is a bullish sign for the S&P 500 index. The VIX fell more than 6% during the current session to stand at 21.21 as the past two day’s uptick in equities serve to dissipate some of the fear and uncertainty felt by investors during the prior trading week. One investor anticipating further downside movement for the VIX picked up roughly 103,000 puts at the March 20 strike for an average premium of $0.70 per contract. The put options position the investor to accrue profits beneath a VIX reading of 19.30 through expiration. It appears the investor expects the so-called fear-gauge to head in the direction of the index’s 52-week low of approximately 17.49 attained on January 19, 2010. But, the VIX must fall another 9% from the current reading in order for the investor to breakeven by expiration. Furthermore, today’s reading is still 21.25% greater than the 52-week low described previously.

MS – Morgan Stanley – Global financial services firm, Morgan Stanley, attracted the attention of bullish options investors in afternoon trading. Shares are currently trading 1.00% higher at $27.83 with roughly one hour remaining in the trading day. A bull call spread stuck out like a sore thumb in the scantily populated March contract on the stock today. One investor purchased 5,000 calls at the March $28 strike for a premium of $1.35 each, and sold the same number of calls at the higher March $31 strike for an average premium of $0.34 apiece. The trader paid a net premium of $1.01 per contract for the spread, but stands to accrue maximum potential profits of $1.99 per contract should Morgan Stanley’s shares rally up to $31.00 ahead of expiration day. The call-spreader breaks even on the transaction as long as MS’s shares rise 4.25% from the current price to $29.01 before the options expire.

BAC – Bank of America Corp. – Optimistic sentiment on Bank of America appeared in the August contract today amidst a 0.65% improvement in shares of the underlying stock to $15.52. One bullish trader initiated a call spread to position for upward movement in BAC’s shares by expiration. The investor purchased 4,000 calls at the August $16 strike for an average premium of $1.52 apiece,…

Tags: BAC, CVS, DOW, FCX, GIGM, MS, RL, SPF, SU, UNG, VIX

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Global Chart Reveiw Shows Key Inflection Point

by Phil - January 25th, 2010 3:00 am

Chart Review by Michael Clark

“By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”

-- John Maynard Keynes

SO, IS THIS FINALLY THE ‘REAL’ CORRECTION?

What a week it was. The Bears gave the Bulls some payback. Obama got a wake-up call. And the banks got a well-deserved scare (and we hope they will get a well-deserved hair cut).

The markets reacted, as one might expect, with selling. Actually, the selling began before the Massachusetts election and before Obama sent a shot across the Goldman Sach’s bow. Last week Intel announced surprisingly strong earnings; and the stock started up and then sank. For the past half-year investor behavior had been the reverse: a buying spree for any stock that did not lose as much as it might have — beating ‘Street expectations’ that had been dumbed down over and over again during a quarter so that the company could report ‘surprising’ strength. Suddenly, now, even good earnings are being greeted with selling. Then came Massachusetts — wasn’t that a Bee Gees’ song?

All the lights went out in Massachusetts

Anyway, readers want to know where the markets stand today, after the sell-off this week. My view of it — my ‘view’, not my gut-feeling — is that we are, so far, merely correcting from an over-extended rally. This rally has been bizarre, to say the least. This has been a ‘fear rally’ — usually the ‘fear’ side of the equation is when selling comes in, ‘greed’ driving the expansion. But fear of systemic failure has driven this rally; and Ben Bernannke has been the captain sailing the ‘Boat of Fear’, Ben’s logic — that more debt will solve the insolvency crisis — has a shadow side, the logic that a collapse in stock prices will result in systemic failure, international chaos, revolution, repression…made him believe that preservation of the status quo was requiired, at any price. A ‘make-believe’ recovery could be jump-started, perhaps, if the Fed could just stimulate (and simulate) another asset-bubble. After all – that is how his mentor and predecessor, Alan Greenspan, had become the darling of the coctail party crowd, leading member of Time Magazine’s ‘Committee to Save the World’; and that was how he, himself, had become Time’s ‘Peson of the Year’.

Logic was thrown…

Tags: CRB, DAX, Dollar, DOW, EPI, FTSE, Gold, HSI, IDX, QID, REW, RSX, Shanghai Composite, SOX, Spain, SRS, SSMI, TBT, technical analysis of charts, Transports, VIX

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Which Way Wednesday – Beige Book Boogie

by Phil - January 13th, 2010 8:07 am

The futures were boogying "all night long."

THIS is why we love being born-again bulls. China’s Hang Seng down 578 points on the Hangs Seng (2.5%) – It doesn’t matter! Shanghai down 3.1% – It doesn’t matter! Europe down half a point – It doesn’t matter! Germany’s economy contracted 5% in 2009, the worst decline since WWII (the big one) – It doesn’t matter! ABC Consumer Comfort Poll drops 11% with just 9% of Americans rating the economy postively – IT JUST DOESN’T MATTER - because WE are those 9% of Americans, right! OUR economy is just fine and we don’t know what that 91% contingent of babies is whining about do we?

Yes, it’s been a while since I dubbed us in a Meatball Market. The last market I labled as such was November 30th, 2006, when the Dow broke through 12,000 on the way to 14,000. Our bullish picks that day included BA, CAT, COF, DOW, GE, HD, JWN, QQQQ, TIE, TIF, XLE and XOM. Those were all, of course, fantastic picks but what I want you to do is read the October 2nd, 2007 article, where I began to turn cynical on the "Meatball Market" and I made the following statement:

Up, up and away – it’s Super Market! It’s bugdet proof, oil proof, terror (threat) proof, housing proof, inflation proof and pullback proof - 3 weeks in a row!

This is truly a Market of Steel (and the recent movement of X underscores that) and looking at the movement of the past week we really do have to believe it can fly… Is the US consumer (driver of 2/3 of the economy) really impervious to harm? What, if anything, is our stock market Kryptonite?

Unstable currency, runaway commodity prices, spiraling inflation, low savings rates, hedge fund collapses, declining home values, banks writing down their portfolios, hundreds of thousands of layoffs, millions of foreclosures — it simply does not matter as long as they are LOCAL problems for the US as we are a smaller and smaller cog in the great global economy, one day we may even be granted emerging market status by our Chinese masters!

Doesn’t sound like much has changed in 2 years does it? Unfortunately, that also happened to be the day that Alan Greenspan (now working for PimpCo) decided to call China, with the Hang Seng then…

Tags: BA, CAT, COF, DOW, GE, HD, JWN, QQQQ, TIE, TIF, XLE, XOM

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Why You Should Care About DJIA Priced in Gold

by ilene - January 10th, 2010 11:12 pm

Why You Should Care About DJIA Priced in Gold
"The Real Dow" has proven to be a good leading indicator for nominal DJIA.

Courtesy of Vadim Pokhlebkin at EWI

The following article is provided courtesy of Elliott Wave International (EWI). For more insights that challenge conventional financial wisdom, download EWI’s free 118-page Independent Investor eBook.

————-

Of the many forward looking market indicators we at EWI employ, one of the most interesting tools (and least discussed in the financial media) is the DJIA priced in gold — "the real money," as EWI’s president Robert Prechter calls it.

We’ve been tracking the Dow/Gold ratio for many years and it has served our subscribers well. It’s not a short-term timing tool, yet in the longer term, as our January 6 Short Term Update put it, "the nominal Dow eventually plays catch up to what is transpiring in the Dow/Gold ratio."

Here’s a good example. Remember when the nominal DJIA hit its all-time high? October 2007, just above 14,000. At that time, most investors expected new highs still to come. But our Elliott Wave Financial Forecast warned five months prior, in May 2007:

One key reason [for a coming top in the DJIA] is the undeniable bear market status of the Dow Jones Industrial Average in terms of gold, the Real Dow…

Notice, by contrast, the relative strength of the Real Dow versus the nominal Dow, the index in terms of dollars, from 1980 to 1982. By August 1982 when the Dow denominated in dollars bottomed, the Real Dow was rising strongly from its 1980 low… The nominal Dow soon played catch-up, and they both rallied more or less in sync until 1999.

Now, instead of soaring the Real Dow is crashing relative to the nominal Dow. In fact, it’s barely off its low of May 2006. This dichotomy reveals the weakness that underlies the financial markets’ push higher. When mood turns and credit inflation reverses, the ensuing drop in the nominal value of the market should be dramatic.

Dramatic drop" did indeed follow: Between October 2007 and March 2009, the DJIA lost 53%, high to low.

For more information, download Robert Prechter’s free Independent Investor eBook. The 118-page resource teaches investors to think independently by challenging conventional financial market assumptions.

Tags: DJIA, DOW, Elliott Waves, EWI, Gold

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The Last Charts of the Decade!

by Phil - December 30th, 2009 11:38 pm

OK, I got a new toy today so I’m going to put up some charts!

Rather than my usual spreadsheets, I thought a visual representation of what I think is going on would be appropriate. So far this week, we have failed to break my levels, which were predicted by our own 5% rule way back in July. I don’t have a drawing tool for the 5% rule but I’ll try to give you an idea of what I see when I look at a chart, now that I can capture them for you.

First of all, let’s look at the S&P, which the analysts are ga-ga over as they make a 50% retracement of the March dive:

Notice the 50% mark is right about our 1,127 watch zone but we didn’t get 1,127 from that spot, we calculated 1,127 as it was a 30% move off the real floor of 867, which is our 5% rule drop. The 5% rule sensibly tells us to throw out spikes and, while it’s hard to think of a 3-month, 200-point drop as a spike, in the grand scheme of things it still is. Here’s how the same Fibonacci series looks if we take 867 as a bottom, rather than 666:

Not quite as impressive a recovery is it? Do you see how the adjusted chart makes far more sense on the way down – with support at the 61.8% line, then at the 50% line and then clearly at 0. The big difference is, in my view of the action, it has been an easy slog to make the effectively dead-cat bounce back to 38.2%. This recent action proves nothing as we have yet to test 1,135, which should provide heavier resistance. It’s going to be a long time before we do a "life cross" (where the 50 wma moves above the 200 wma) so that 1,220 mark is going to weigh very heavily in the future as well, probably all the way into August before the S&P is ready to make a real move up (assuming we don’t fall down in between).

Running the same series on the Dow, we get this:

Of course the problem with the Dow is that the Dow we have now is NOT the same Dow that fell last year. We jettisoned GM and C for CSCO and TRV – a very good trade…

Tags: DOW, Nasdaq, NYSE, Russell, S&P

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Phil's Favorites

Jobless Claims Improve, Leading Indicators Decline: Economic Report Card

September 22nd, 2011 5:36 pm

Courtesy of John Nyaradi.

Jobless claims improve while leading indicators decline in today’s economic report card

by Wall Street Sector Selector Staff

Weekly jobless claims declined to 424,000 from last week’s 432, 000 but stubbornly stayed above the all important 400,000 level for another week.

August Leading Indicators came in at +0.3% compared to 0.5% for July, as the economy continues registering weakness.

Good news came from July Home Prices which rose to +0.8% from the previously reported +0.7%.

But the biggest economic news of the week came yesterday when the Federal Reserve said it saw “significant downside risks to the economic outlook, including strains in global financial markets.”

Global stock markets responded negatively yesterday an...

Insider Scoop

Priceline.com Trades Higher on Q1 Earnings Results (PCLN)

May 5th, 2011 5:10 pm

Courtesy of Benzinga

Shares of Priceline.com Incorporated (NASDAQ: PCLN) are trading higher in the after-hours following the release of its Q1 earnings results. Currently, shares are up 2.74%, trading at $548.60; they closed the regular session down 0.67 %, at $533.97.

The company said that its Q1 EPS came in at $2.66 on revenues of $809.3 million; this compares to the Street's estimate of $2.46 per share on revenues of $779.5 million. Revenues rose 38.6% year over year.

"In the 1st quarter, the Group benefited from strong growth in our global hotel business, particularly at Booking.com and Agoda," said Jeffery H. Boyd, Priceline President and Chief Executive Officer.

He added, "Room nights booked grew by 55.8% and our international gross bookings grew by 79% compared to prior year...

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Zero Hedge

Fukushima Explosion Update: Core Presumed Intact As Sea Water Used To Bring Temperature Down, Radiation Level At 1015 Microsieverts/Hour

March 12th, 2011 9:41 am

Courtesy of Tyler Durden

The damage control to the Fukushima explosion reported earlier is coming fast and furious. According to CNN, "the explosion at an earthquake-damaged nuclear plant was not caused by damage to the nuclear reactor but by a pumping system that failed as crews tried to bring the reactor's temperature down, Chief Cabinet Secretary Yukio Edano said Saturday. The next step for workers at the Fukushima Daiichi plant will be to flood the reactor containment structure with sea water to bring the reactor's temperature down to safe levels, he said. The effort is expected to take two days." While the government is trying to play down the threat from the explosion, it has nonetheless double the evacuation zone radius from 10 to 20 kilometers: "Radiation levels have fallen since the explosion and there is no immediate danger, Edano said. But authorities were nevertheless expanding the evacuation ...

Chart School

The Mega-Bear Quartet and L-Shaped "Recoveries"

March 12th, 2011 9:35 am

Courtesy of Doug Short

Note from dshort: I retired this chart series last summer in deference to my prefered inflation-adjusted series that aligns the S&P 500 2000 high with the Nikkei peak in 1989. However, I continue to receive requests for this version, despite the "V" shape of the the recovery since the March 2009 low. This chart series overlays the current S&P 500 with the L-shaped "recoveries" after the Dow Crash of 1929, the Nikkei 225 after Japan's 1989 bubble, and the post Tech Bubble NASDAQ. Click the chart below for a larger version and use the links to see various comparisons.

Click for a larger image

I've ...

Sabrient

Sabrient Risers - 3/12/2011

March 12th, 2011 12:00 am

Top 5 RisersStockRatingAnalysisVLOSTRONGBUYAn increasingly positive growth rate of past earnings, along with improving expectations for long term growth, make Valero a good prospect for high returns.KROSTRONGBUYKronos Worldwide has been gaining recognition from analysts as a good canditate for achieving higher than expected earnings along with higher overall projected valuation.SFIBUYiStar is one of the top candidates projected to achieve both higher than previously projected earnings in the short run and a higher earnings growth rate in the long run.AMATSTRONGBUYApplied Materials has been...

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Option Review

Bulls Scoop Up Sprint Nextel Corp. Calls

March 10th, 2011 4:33 pm

Today’s tickers: S, FTR, JTX & SBUX

...

OpTrader

Swing trading portfolio - week of March 7th, 2011

March 6th, 2011 11:25 pm

This post is for live trades and daily comments. Please click on "comments" below to follow our live discussion. All of our current virtual trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.

Please feel free to participate in the discussion and ask any questions you might have about this portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading portfolio (strategy, performance, FAQ, etc.), please click here

Optrader

Swing trading portfolio

One trade portfolio

...

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Stock World Weekly

March 6th, 2011 8:22 am

Here's the newest Stock World Weekly: Illusion Based on a Fantasy

Comments welcome... share your thoughts.

Download Newsletter 3/6/11

Stock World Weekly archives here >

...

more from SWW

Pharmboy

Biotech Junkies Update and Momenta Pharma Moving Forward

March 1st, 2011 9:42 am

February is now past, and the Biotech Porfolio is loaded with winners and a miss (PLX). MRK is down a bit, but I expect that trade to recover, and one could be more agressive and double down on it, or play another round at the Jan13 $30 options for roughly the same price. Below is the summary, and note the grey boxes are ones that did not fill. I am still a fan of BMRN, and like DEPO as well. Now let's look at a few others.

Table 1. PSW Biotech Plays Since January 2011

&amp;amp;amp;amp;amp;amp;amp;nbsp;

Our newest play is Momenta Pharmaceuticals (MNTA), who is pursuing a three-part business model which includes complex generic equivalents in partnership with the Sandoz division of Novartis, proprietary compounds, and follow-on- biologics (FOB). It seems that this company is tied up in competition/litigation wit...

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Why You Should Care About DJIA Priced in Gold
"The Real Dow" has proven to be a good leading indicator for nominal DJIA.