Monday, July 31, 2006

Buy IWM, Buy XLE

Buy IWM Russell 2000 exchange traded fund
sell Aug 68 call

Buy XLE Energy exchange traded fund
sell Aug 58 call

The calls are slightly in-the-money, so there is a modest cushion, and not much upside.

Friday, July 28, 2006

Another rally day

Another good up day, with a high ratio of advancers to decliners (link). The stocks that are down seem to have news. I place a buy order for IWM Rusell 2000 ETF but get cold feet and cancel it. GM General Motors up ten days in a row (chart). The cliche is that when the last bull buys in, a corrective decline will set in.

I am uncomfortable with a high percentage in cash, and yet am having trouble finding decent entry points and pulling the trigger. Better to be patient and wait for low risk opportunities, than to trade for the sake of trading.

Thursday, July 27, 2006

Does the dog wag the tail (NEM)?

NEM Newmont Mining earnings report sends the stock lower (chart). Spot gold moves up. XAU gold index lower. So the question is does the tail wag the dog or does the dog wag the tail? NEM hedges by selling futures against production.

am not a gold stock specialist and it is a bit much to try and sort out off the cuff. Traditional analysis would say that the divergence of a lower XAU with higher gold prices is bearish for the price of gold and for mining stocks.

AET Aetna bombs out along with CI Cigna. My position in PGR Progressive feels some of the shock waves. Casino stocks are weaker driven by earnings news from HET Harrahs and PENN.

Wednesday, July 26, 2006

Amazon dot bomb

Amazon dot bomb is an old phrase that was popular during the Internet bubble days. Many bears went broke shorting AMZN and other Internet darlings. Today, AMZN is 20% lower on poor earnings and guidance. I did not have the nerve nor the desire to try and trade AMZN today. Fast markets are not the best place for position traders. It is often easier and better to let the dust settle and see where support and resistance is established after a big volume news day. Day traders tend to want to move to the next hot stock and that is often where position traders step up to the plate to provide liquidity.

Today's dollar losers list features other household names such as Boeing, Panera Bread (the old Au Bon Pain), Black and Decker, Norfolk Southern. General Motors and Diamond Offshore are some of the gainers moving on earnings.

Tuesday, July 25, 2006

Trigger lock

I didn't pull the trigger today. I watched X US Steel, IWM Russell 2000-ETF, SNDK Sandisk most of the day but did nothing.

I wrote about feelings not having a place in the market. I can hedge that statement. When getting out, due to a stop loss, or the market moving against a person, feelings are often a trap. When getting in, this can often be the case, but it is not near as dangerous when feelings warn against entering a position. There is always another stock to buy or short. There is always another day to trade. Compare this to being in and refusing to get out, or doubling up on a losing position. For most mortals feelings will betray a trader. A few have the gift, but even those gifted traders have to exercise discipline at times.

Current positions:
ADM, EWJ, HPQ, JPM, MCD, PGR
all are hedged, long stock, short calls

Monday, July 24, 2006

Buy HPQ, Buy ADM

VLO Valero Energy and MAR Marriott International called away on expiration, so there is a big pile of cash to be put to use.

Buy HPQ Hewlett Packard/Compaq, sell Aug 32.5 call

Buy ADM Archer Daniels Midland, sell Aug 40 call

Not the best timing of the day for my buys. However, waiting for perfection is a dream, not the reality of trading. It is usually BSers playing with fantasy money that always seem to buy at the low tick of the day, not real traders working with real money.

As an aside, precious metals continue lower. Anecdotal sentiment is poor with newbies looking to buy in and posting bold predictions of higher prices. Anecdotal stories can be powerful. XAU holding up relatively well this morning considering the drop in the gold spot price. I am tempted to nibble here, but gosh, gold looks lower to these eyes. $600 is minor support, but real support is at the recent lows (3-month-chart) around $550.

Oil stocks up despite a drop in crude.

Friday, July 21, 2006

Sell BA Boeing, roll PGR call down

Sell BA Boeing, sell the stock, buy back the Jul 80 call
I exit with a breakeven profit, one of those where the broker makes more than I do.

Roll down PGR call, buy back the Aug 27.5 sell the Aug 25 call

It is a tough market. After the big rally day, both BA and CAL looked like they would be called as they rallied well into the money. Then the rug got pulled out and I got out. The word of the day is frustrating. My secure thought is that in this tough market I am finding a way to ferret out small trading profits.

Earnings news dominates right now. There have been nice gainers, bombshells, and non-events.

For some measure of stability, I am looking at IWM Russell 2000 ETF because the options trade nicely with decent premiums (3-month-chart). IWM has given back all of its gains from the big rally day. I am also looking at HPQ today, as it declines in sympathy with the DELL news of a weaker PC market.

Thursday, July 20, 2006

Sell CAL Continental Airlines

CAL earnings $1.93 three cents better than estimates of $1.90, but the stock opens lower and falls. I get out while I still have a small profit. Poor execution on the exit costs me, and as of this writing it is trading well off its lows. That big dip may well have been to take out stop loss orders sitting on the books. With the market the way it has been, booking a profit seems like a wise idea, even though it is a small profit, even just two days from expiration.

BA, MAR, VLO almost certain to be called away tomorrow, and that will leave me with a big pile of cash.

EWJ, MCD, JPM, PGR are other hedged positions (long stock, short calls)

Wednesday, July 19, 2006

A ridiculous rally

Yesterday was a tough day for my account. I sold my BBY at what felt like a bottom and it was close in time if not in price to a local bottom. I bought CAL and BA and watched them get hammered moments after I bought in. After the close, I told someone that tomorrow is another day. Indeed.

Today is a different day. As of this writing 28 of the 30 Dow stocks are up (link), with only MO Altria and XOM Exxon/Mobil down. Every time I line up a stock to buy it seems to jump before I can get in. Intraday swings are wide, and that makes for opportunities.

No one knows what the next couple of hours will bring, but for now I am enjoying the big rally day. Cheers.

Tuesday, July 18, 2006

Buy BA Boeing, CAL Continental Airlines

Buy/write BA Boeing
buy stock, sell the Jul 80 call

Buy/write CAL Continental Airlines
buy stock, sell the Jul 30 call

As of this writing both stocks are dipping and moving against me. The small premiums of the front month calls are small comfort.

current positions, all hedged, long stock, short calls:
JPM, MAR, MCD, PGR, VLO, BA, CAL
MAR and VLO are in the money and may be called this Friday at expiration

Sell BBY

Sell BBY Best Buy
sell the stock, buy back the Aug 47.5 call

BBY is again lower on a brokerage downgrade and lower sales projections from TGT Target. I have a strong feeling that this is the low, at least an intermediate term low. However, the loss has become too large, and my feelings have little to do with the market. So sell it is. The hindsight glasses show that I should have taken the profit when it was still available is so clear now. I did that on SHLD Sears/Kmart and a couple of other positions and it avoided the nastiness of riding out a decline.

Best Buy has been a bad luck stock for me, this is the second time I have been in it and taken a loss.

Thursday, July 13, 2006

Sell KMX, Rolldown BBY (vacation)

Exit KMX position (CarMax used auto dealer)
Buy back the July 35 call, sell the stock

Roll down and out on BBY (Best Buy retail electronics store)
Buy back the Jul 50 call, sell the Aug 47.5 call

You guys have not been taking good care of this market while I am vacation.

Monday, July 03, 2006

Happy 4th of July

Blogging will be light as I take off for some holiday travels.

I could not pull the trigger on Friday or today. Stocks I wanted included BA, MER, CEPH, RIMM. RIMM had a nice quarter. With resistance at 70, it looked like a relatively safe play. CEPH is similar with round number resistance at 60.

GM was the best performing Dow stock for the 2nd quarter, and one of the best stocks overall with a 40% gain for three months. Who knew? Not me, and with my hindsight glasses, I regret not buying back in when it dipped again below 20.

Have a safe and festive holiday. I will check in from time to time during the next couple of weeks, but I will not write entries every day. Cheers.