Sunday, December 30, 2007
happy new year to all of my fans and wishing you and yours a healthy and wealthy 2008.
Tuesday, December 18, 2007
I made some sales at 1522 SPX and am fully loaded again at 1455. Look for a quick rally from these levels into 1490-1515, then a pause. Come January expiration, we should be ready to rally out of a flag into 1550 territory.
See Barry Ritholtz's Big Picture for some great economic insights, especially the negative real interest rate discussion. With all of this central bank liquidity flooding the system, it will keep a floor underneath financial assets for a while.
Wednesday, November 28, 2007
Gold had a nice dip last week, but I did not buy it. Oil missed 100, probably headed for 78. Aggressive traders could buy put spreads on oil ETF's. Volatility will crash on the way down. This is a commodity play, not an equity play. Stay away from energy stocks unless the chart looks like a breakdown.
Volatility is still high, would be a seller of OTM options vs stock, especially in financials.
Thursday, November 15, 2007
I. Buy writes. Get long a stock you like and sell a slightly out of the money call. Very simple, able to earn good returns with some downside protection. What every investor is looking for. Of course I look for large cap names that have a nice spread between the 30-day historical and implied volatility. Stay away from any event like earnings or merger plays. You want a flat to mild up trending stock. For example, if you bought KO when it broke 50, wrote 55 calls all year, rolled the last one up to 60, you would have easily turned a 20% gain into 30%. That buys a few extra cases of diet coke.
II. Straddles. When a stock hits a 52 week low, I like to buy the ATM straddle to see if we bounce or break. Look for more than 15 day paper, and keep the trade on a short leash. Some recently good trades were on the financials as panic selling created the waterfall and then a mild bounce.
Thursday, November 8, 2007
Tuesday, November 6, 2007
Stay with the winners in equities: tech, drugs, and consumer staples. You can bottom fish, but tax selling ain't over in some others. Financials are good values, but you will probably have to wait a year to get a good rally in them. Small caps are under owned, look at some charts for breakouts in beaten down names.
Still like buywrites with the VIX over 23.
Countdown to November 17 begins......now.
Tuesday, October 30, 2007
Now back to our regularly scheduled market, time to take a breather after a 68% retracement of the latest downdraft. I would not be surprised to see a test of 1515 SPX before we make new highs for the move. Still like the short vol play after 3Q earnings, tax selling, and mutual fund distributions. Set up them buywrites.
Friday, October 26, 2007
Speaking of financials, speaking to a prospect the other day, he asked my opinion of a beaten down mortgage company, suggesting he thought is was a buy. I said, how could it be a buy if the CEO just cashed out after they sold a convertible to a larger institution. Hey, I used to watch the CNBC Dennis Koslosky interviews with him sitting in Bermuda also. That stock was a buy at 8 too after crashing from 60, but the CEO was a crook, not a bad business model.
Saturday, October 20, 2007
If I was still a floor trader, probably take one of those 10-1 shots here on some cheapy puts. Something like buying a lottery ticket and you know what the last number is. However, now that I work with clients, I am already positioned with some cash and was able to be a net buyer on the day. If there is that "Black Swan" event, our portfolios are pretty diversified and bonds and commodities will do well.
Looking for 1495 SPX to hold, I would start to get nervous with a weekly close lower than that. Buywrites looking real nice here with VIX blowing above 21.
Thursday, October 11, 2007
1. Oil making new highs on expanding economy. Wait, I thought oil was a commodity not a consumer staple.
2. An old time naked put seller V.N. has closed up shop again after covering his out of the moneys. Last time he was forced to cover back in 1998, we had a 5% drop the next month.
3. Talking heads confused once again how the market can go from bad to good in a few weeks.
4. No real interest in the MLB playoffs.
I like buywrites on some defensive names here.
Monday, October 1, 2007
The Mets got what they deserved. Lollygaggers.
Seems the Yankees are hot, but I don't think their pitching holds up against the Indians.
Wednesday, September 19, 2007
So the Mets are now playing like minor leaguers. I cannot catch a break anywhere. My surprise pick in the NFL this year, the Oakland Raiders. They took Denver down to the wire on the road, I like them make it interesting in the AFC.
Sunday, September 16, 2007
Take a look at the consumer staples charts, they are quite strong as they should be. A falling dollar, slowing GDP, pricing power, all good things. Think about it, are you going to stop buying your favorite soft drink for a $.03 increase? I think not. The wife just bought 3-12 packs for $9.99, last year that deal was $8.99. Less than a penny, but multiply that by a billion and it shows on the quarterly earnings.
Oh by the way, did anyone see the Notre Dame offensive line? Cause they were not in Ann Arbor yesterday. Maybe there is somthing left in Lloyd Carr's tank. I'll take a win over Ohio State please.
Monday, September 10, 2007
Speaking of the brink, a lot of my technical brethren are calling for the market to retest the summer lows. September is normally a weak period, Financial stocks in bear markets, the Fed on hold. That is why I like the upside here.
Wednesday, September 5, 2007
By the way, $%^* Appilation State.
Friday, August 24, 2007
How about those Texas Rangers. They scored more runs in one game than they have since the All Star Break.
Thursday, August 23, 2007
Monday, August 20, 2007
If you looked at the market technically on Thursday's close, and added expiration, what happened was pretty in line. It was a coiled spring, just needed a push (thank you Sr. Bernake). As the yen begins it decent back to 120, we should see some upward push on stocks for a couple of weeks. Still need to close above 1500 SPX to reverse all of the techincal damage of the past month. I would use this time to take some quick trades and/or reduce risk.
Two weeks to college football season gets going. My Wolverines are #5 in the coaches poll. Big games include Notre Dame on 9/15 and Ohio State on 11/17 (my 40th, so a couple of tickets including flights to Ann Arbor would be a nice gift).
Thursday, August 16, 2007
Getting into the pennant races. Yankees making it interesting in the AL, Mets with a small lead over the Braves.
I really do not like Starbucks. Too much money for a mediocre product.
You really need to check out Cousin Keith, his writing is fantastic.
Monday, August 13, 2007
It is no longer flooding here in Texas, finally summer has arrived. 100 degrees and climbing. In the pool with the kiddos, on the golf course scrubbing up some clients.
For those who smoke cigars, I highly recommend the Cusano 18's. After being a Montecristo 3 for most of this decade, I find the Cusano a refreshing smoke at a reasonable price. Had one the other evening with a little Ruby Port. Ahhhhhh.
P.S. New line of cigars out from my man Kinky Friedman. Need to check out the Texas Jewboy.
Tuesday, August 7, 2007
"Its a simple game. You hit the ball, you catch the ball, you throw the ball. Some days you win, some days you lose, some days it rains."
Any other explanation of why things happen on a day to day basis in the market is pretty lame. There is no PPT, no black ops options team. It is fear and greed that causes individuals, traders, and fund managers to do what they do.
Saturday, August 4, 2007
Wednesday, August 1, 2007
Friday, July 27, 2007
Thursday, July 26, 2007
Monday, July 23, 2007
Wednesday, July 18, 2007
As posted previously, index break outs are usually short lived. Too many other factors are at work. Earnings season is upon us so crank up the volatility and keep to your discipline. Right now I like some tech names that have not really participated in this quarter's run up.
Back in baseball, the Yankees are toast. Yes, stick a fork in them, they are done. Its time to get Metsmorized.
Thursday, July 12, 2007
Massive short covering today. Especially the retailers. Sears misses and guides lower, all the hedgies get short any other retailer, and the first rally they scramble to cover. Index breakouts rarely work as a trade, I am guessing we get some overbought signals over the next week.
Friday, July 6, 2007
Tuesday, July 3, 2007
Enjoy the 4th.
Tuesday, June 26, 2007
Hearing a huge 4-way trade in NBA. Does it really matter?
Thursday, June 21, 2007
As they Mets take a month off from playing baseball, I am looking forward to the pre-season hype for college football. Here in Austin, its all Longhorns, all the time. I think Colt McCoy has a good chance of getting back into the quick pass offense that he was successful with last season. The rest of the Big 12 seems weak, so it should be another BCS bowl for Coach Mack Brown.
Sunday, June 17, 2007
The market had a nice bounce off of the 50day MA,(thanks Muckdog). With options expiration out of the way, and summer vacations starting, my best guess is the sideline cash has been put to work. That means the next dip, is going to be slower, and further. Probably a break of that 1515 pivot makes a nice short trade into the 200day around 1460, into late summer. Based on the earnings and now a normal yield curve, trend is still up for the next 12-18 months.
Getting back to the Mets and Yanks, El Duque getting lit up by his former team. I don't think the Mets have it with a starting rotation collecting Social Security.
Thursday, June 14, 2007
Off to see the Spurs sweep.
Tuesday, June 12, 2007
The SPX bounced off of that 1515 pivot I mentioned the other day. Mid day strength could not hold especially with the 10-yr note above 5%. Apple I-Phone news out so the stock reverses an all time high. Even with an upgrade today, you probably have seen a short term top in the name. Support in the 97-99 range for you dip buyers.
Keeping a keen eye on the Gold chart. Looks like the bugs have left and trend is down. As the dollar rally continues, watch for more downside action in the commodities. With gaps in material stocks from last week takeover rumors, it may be a good time to play some of these on the short side.
Friday, June 8, 2007
Watched some of the celebs in action, Kevin "Hercules" Sorbo was the most popular player, not so much the best. Also, the Major League Bubble gum champ of 1977, Kurt Bevaqua, at the table.
Many thanks to Rob at KASE 101, I think the turban would have worked great.
P.S. the market rallied off that fib line at 1500. First resistance 1515.
Wednesday, June 6, 2007
Speaking of the Gambler, I was invited to play in a charity poker game tomorrow night. All I keep thinking about is the scene in Ocean's Eleven with Brad Pitt and the young Hollywood crowd. "You don't want 4 cards, you want to fold. Ok, I fold". Maybe I can beat Haley Joe Osmet.
The market has started its long overdue corrective move. Fibonnaci retracement on the S&P looks first at 1500, then 1465. Since the moving averages are upward sloping, shorts should be quick and cash nibbling at the support levels.
Sunday, June 3, 2007
For any of you who grew up like me collecting baseball cards, you remember the color and style of the different years. Especially when you "flipped". When I was in elementary school, we flipped kind of like playing gin rummy. You had to match the other players cards. I vaguely remember some kind of shift in your hand when you had double of something that would always give you an edge. When I moved across town at the age of 12, they had a different way of doing it. Something about "Larry's". I never caught the grasp of it and now have only that brief memory of what, at that time, was the only subject I could concentrate on. Check out this link as the author describes his deflowering in relation to his baseball card collection:
Of course, I was the type who hated the kid who's Dad bought him the complete set. That's cheating in my book, I would scrunge up $.75 or so to get that 3-pack every week. Somehow, you always got stuck with a lot of trips that everyone else had. But you looked cool at school with the big "wad" of cards wrapped by that industrial strength rubberband.
Thanks again to Topps, without whom, I don't think I could have made it out of 6th grade.
Thursday, May 31, 2007
I mentioned spin-offs before, here the street is giving you a great entry. The big holders don't want these little stubbies on their books, so they dump'em. As long as you give yourself some room (remember time and price), then they can work fantastically well.
Wednesday, May 30, 2007
Woke up this morning, and the idiots on TV blaring the "Shanghi Swoon" alert. If a market goes up 30%, then down 10%, then up 40% in 6 months, do you really think it can't be down 6% in a day? The fact that it is the largest Socialist country on earth doesn't surprise you that they can get more tax dollars by raising fees on stock transactions? Doesn't anyone remember 1999? Beuller?
While I am on a rant, last night I read an article in one of these wealth advisors magazines. The supposed "financial writer" who contributed to this article on OTC derivs really blew my mind with his ignorance. He compared a bond fund that sells the CDS on its holdings is equivalent to covered call writing in equities. When in real life, we all know that the fund manager is simply doubling his bets. It is actually the equivalent of selling puts, not calls on his bonds. But that really doesn't matter, does it?
One item flying low on the radar is the amount of spin-off activity. While not as sexy as private equity cash deals, spin-offs allow you to trade like an arbitrageur with a hell of a lot less risk.
Monday, May 28, 2007
Thursday, May 24, 2007
Cousin Keith over at Turbulence of Dreaming would like me to translate some of the terms I use. Let's look at the previous post:
Yes, Gordon Gecko, Boesky, and Dennis Levine are all back. made a lot of cash insider trading in the '80s both fake and real Private equity investors, not junk bonds, are the new rocket fuel for the merger game. idea here is that Wall Street needs to do deals in order to survive Adam Warner (AMEX Alum) over on the Daily Options Report brings up some really good facts. Blue Horshoe loves everything. another former market maker from the American Stock Exchange who blogs it real good, reference to the movie Wall Street Market opens up to new highs and sells off on Greenspan. Yep, that's correct, my great uncle Al said that China was a "bubble"and the spoos decided to hit the mattresses. My grandfather's name was Greenspan, the stock market closed on its lows after trading to a new high, reference to The Godfather WRONG. Its Moors not Moops. Seinfeld episode where George plays Trivia Pursuit with Bubble Boy This market has been toppy for 2 weeks already. NDX way underperforming, 30-yr rates backing over 5%, dollar, gold and oil all reversing trend. Liquidity drying up so assets need to be sold.random thoughts on what my gut tells me is going on in the markets after being involved for nearly 2 decades. I would wait till the price hits 1450, by then all the suckers will be out. Mr. Valentine sets the price. where the SPX index chart shows some support, and a Trading Places reference Happy Shavuos to all, and to all a good night. what Charles Dickens might have said to his Jewish neighbors on the day we celebrate when the Law was received at Sinai.
I hope this helps Cuz! using old school exclamation point because I can't remember how to do those smiley faces!!!
Wednesday, May 23, 2007
Market opens up to new highs and sells off on Greenspan. Yep, that's correct, my great uncle Al said that China was a "bubble"and the spoos decided to hit the mattresses. WRONG. Its Moors not Moops. This market has been toppy for 2 weeks already. NDX way underperforming, 30-yr rates backing over 5%, dollar, gold and oil all reversing trend. Liquidity drying up so assets need to be sold.
I would wait till the price hits 1450, by then all the suckers will be out. Mr. Valentine sets the price.
Happy Shavuos to all, and to all a good night.
Tuesday, May 22, 2007
Thursday, May 17, 2007
Very scary to be leveraged up on the long side here. Gold/oil has started to diverge which should create a squeeze in dollar/yen as it has the last 2 years. 10yr also backing up to 4.75 which should send in the asset allocators soon. But I forgot, TTID.
Wednesday, May 16, 2007
1. None of these stocks are going to be takeover candidates, just investments.
2. When you have $1billion to invest, you really can't park it in any old tech stock.
3. As investors, these guys are good. As traders, you could do a lot better. One of Buffets top holdings, Coke, has done nothing until this year. You would have done better in cash and waited for the breakout.
4. Markets will be liquid until they are not. Just last week C traded 15mm in blocks at the 53 level. Where were those buyers in March at the 49 level? Running screaming "sub-prime" disaster. Hey in 2000 we had the biggest M&A activity of all time, did not keep the investors happy forever.
All I am saying is be careful. Diversify and do not chase. There are times to load up, but I don't see this as one of them.
Missed the Country Music Awards last night, did Kenny Rogers win anything? Go Utah, would love Jazz-Cavs Final, all three people would be watching this on TNT. Whats with the World Series going later in the year? November in Boston, that is really the place for the Fall Classic.
Too all you local Austin Independent Businesses from the meeting yesterday, thanks for the drink tickets, 12 year old Glenlivet really hit the spot on a Tuesday evening.
Monday, May 14, 2007
Thursday, May 10, 2007
Finally, the dip buyers get stopped out. Chart support for spoos in the 1450-1460 range. Still watching 120 dollar/yen as to global liquidity. OIH trades lower even though spot crude up. Will be interesting to see how Asia trades over the next week, leading or lagging?
Wednesday, May 9, 2007
Can you spell c-o-n-u-n-d-r-u-m. I thought you could. Now repeat 3 times, I will not fight the yield curve. Gee, a lot thats done, I guess, TTID. (this time its different).
Caught a "private equity" fund manager on boob tube today. Guy sold his internet biz to EBAY in 2000 so it makes him a market guru today. Says this rally is saudi fund managers putting petro dollars to work. Could be, but I thought they were buying the T-Note? Theory is the same, world consumption of oil brings riches to Saudi Princes, who buy our securities, which keeps down interest rates, which increases consumption. And so on and so on. So I guess until oil hits $35 again, we are in a bull market. Interesting fact he brought up that they do not buy oil stocks. Hmmm, OIH underperformed today, maybe.
If you want to see how far the FED can go, check out Volcker's crew in the '70s. Fun stuff.
Market opens lower, dip bought, shorts afraid of FED. Two scenarios. First, FED unchanged, market sells off on "profit taking" and "wording of statement". Second, FED CUTS, market euphoria creates blowoff top. Balance, focus, power Danielson.
Monday, May 7, 2007
GOOG testing 465. Market telling us they like MSFT/YHOO.
Leaders in materials and consumer stocks like AA, ATI, XOM and KO.
Transports down with lower energy prices.
VIX moving up with new highs in SPX.
Still watching 120 dollar/yen level for global liquidity.
Nasdaq definitely the laggard, flight to quality of big caps.
These divergences create fuel for the bears, but no trigger yet. Need to see what happens on the next dip. Will the FED create selling event?
Too bad about that Investment Banker at CS. Only made $7.5mm on insider trades. That's why he got fired, should have been up $20mm at least.
Friday, May 4, 2007
Not really an NBA fan, but the Spurs look like champs. Held AI and Melo's Nuggets to 80 the other night. Parker and Ginobli look like they are playing a different game than the rest of the guards in the league. It remimds me a lot like Showtime in the 80's.
Starting to feel the heat, high of 90 today in Austin. Its like a sauna in here.
Wednesday, May 2, 2007
Watch dollar/yen at the 120 level. A major battle is brewing here and will give direction as to global liquidity and risk tolerance.
Sunday, April 29, 2007
"I think one of the significant issues of this business that we are all struggling with is that there is an inverse correlation between compensation and drive,” said Mr. X. president of an investment advisory firm. “In many cases the incredible wealth that is created by this incentive compensation structure has a propensity to dull the senses and dull the drive."
You want someone who is hungry and has a vested long-term interest in your portfolio. That is why my clients come to me: the short term skills that lead to long term results.
Saturday, April 28, 2007
Is Brady Quinn the next Brady? Tom or Greg is the question. Personally, since Vince Young was not the highest QB drafted, the NFL obviously does not know talent. Watch both '05 and '06 Rose Bowls and tell me that there are any better players around. All you need to do is draft defense that will keep him in the game, and you will win 10 every year. Go Titans.
Stocks were mixed with Mister Softee saving the day with in line numbers. Gas/Crude crack spreads at widest ever. Probably some hedgies short and covering a la Nat Gas spreads last year. Will we sell in May and go away? Tune in next week. Same Bat time, same Bat channel.
Friday, April 27, 2007
A-Rod has come back to earth, who really cares about the NFL Draft, the NBA playoffs, or the Democratic Party Debates? Wouldn't you like to see both houses of Congress in the State of the Union address chanting "Rudy, Rudy" instead of that lame golf clap anyway?
Wednesday, April 25, 2007
Did they forget the DOW 13K hats today on CNBC? Couple of large value funds long a ton of AMZN blew the doors off the competition today. Like I always say, buy the fund manager, not the fund style. Yesterday X dips after beating earnings, today ATI does the same. I guess comparing materials stocks '06-'07 to fiber '99-'00 is too easy. Another round of short covering/long chasing takes us to new highs. Does anyone care about the FED anymore?
How about a Reality TV ETF.
Tuesday, April 24, 2007
5:15 clock radio alarm goes off. Get local news and happenings from Rob and the Morning Crew
on KASE 101.
5:30 log on to crackberry. See if anything pending from overseas. Check spoos, Asia and Europe. Bloomberg and Reuters usually have some lame comment from a large long side player like "the market needs to rest".
5:45 - 6:15 S,S,S.
6:15 Fonzie arrives.
6:30 hit the kitchen for breakfast and lunch detail.
7:00 pull out for the long haul. Sirius check with Howard, Ferrell recap from last night, check Bloomberg once again.
7:30 log on to workstation (if it is online, ready to put it in the woodchipper). Pull up Morning Research. Get good info on the Austrailian/Singapore industrial readings.
8:00 Check please.
We lost one of our greatest authors yesterday. If you have not read anything by Halbertstam, ping me and I will give some good insight into his work.
Speaking of baseball games, I received a call from the Round Rock Express yesterday. They are having a game televised in June and want to fill the house. The offer includes a Nolan Ryan Bobblehead. It seems if I get this one, then I just need a Jerry Kooseman to complete the '69 Mets pitching staff.
So we are in the midst of earnings season and no blowups yet. I guess the analysts have lowered expectations or the CFO's have come up with more creative accounting. This rally feels like short covering and performance chasers than anything else. I see a lot of good charts but like to pull the trigger on pullbacks to support (see 1st week of March). In the immortal words of Sgt Joe Esterhause: Be careful out there.
Monday, April 23, 2007
Since I am pretty technologically inept, Tech stocks are usually not good indications of where I look to invest. Although I do trade a four letter name here and there, the trades are mostly chart based. One area I like for bargains here are the homies. Yes, I think the real estate market is in the crapper, but the stocks already reflect that view. Buying some of the big names in the group at 6-8x earnings is a good place for money right now. Someone usually shouts out at this point that you can't get too hurt falling off the curb. Besides, with the market making new highs, would you rather buy homies on the cheap or material stocks tied to the price of tea in China?
Sunday, April 22, 2007
Of course those with recording capabilities should watch it after the Yankees-Red Sox rubber match on ESPN.
Saturday, April 21, 2007
Friday, April 20, 2007
Lunched at local establishment that claims to have ties to the Lower East Side, maybe of El Paso, not New York. Mets blow out Marlins to grab a piece of 1st with the hated Braves.
Family dinner outing tonite, wife's birthday tomorrow, probably go for a run early Sunday. I'll be back later that evening to preview the week ahead.
Keep your feet on the ground and keep reaching for the stars.....Scooooob.
Thursday, April 19, 2007
China GDP up 11%, market sells off on rate hike fears, Spoos down 10.
Good thing Blackberry was working, never knew that the umbilical cord is actually used to make PDAs.
Reasons market rallied off of open: financial's earnings looking good. Sub-prime fears already played out. Everyone remembers that since that bottom in March, market has made new highs. Hence, buys the dips until it doesn't work. Tomorrow is options expiration, getting paid to have that gamma.
Merger arbitrage still active. Clear Channel gets higher offer, IPS trades up with material stocks lower.
Biotech madness continues with a nice double off the wall in left center for Amgen.
Getting a lot done in the banking world. Seems demand for capital at these levels is strong. Commercial Real Estate investors don't mind the 6% returns.
See you soon.