Friday, September 29, 2006

Ingredients don't bake the cake

Random Roger has this great line in his stock market blog (link)
"There is no question we have the ingredients for a decline. Ingredients however don't bake the cake. ..."

Elsewhere, RIMM Research in Motion had a great day on earnings news. Round number support at 100 is a plausible entry point. A pullback to the gap would not be unexpected.

Current positions: BA, DVN, EWJ all hedged longs, long stock, short calls

Wednesday, September 27, 2006

Tuesday, September 26, 2006

Sell MO Altria

Sell MO Altria
Buy back the Oct 80 call

Stock is too weak, too volatile, so instead of updating the hedge I dump it and take my loss. Phooey. Again, this kind of event is one of the risks of stocks with decent option premiums.

Monday, September 25, 2006

Thumped (MO Altria)

News of a ruling allowing a class action lawsuit to proceed, hits MO stock hard. So far I have done nothing, but plan to roll out and and down tomorrow. The temptation is to ride it out, but temptation usually leads one down the garden path to destruction.

The main reason MO and RAI have such relatively high option premiums is what happened today, court rulings. When one wants to dance the tune (pocket high option premiums), one usually has to eventually pay the piper (volatility).

Saturday, September 23, 2006

GDX gold mining ETF

True Contrarian mentions a relatively new exchange traded fund, GDX. It is gold mining stocks. Options trade for a decent premium, so it looks like an excellent trading vehicle for my purposes.

As I wrote a couple of days ago, my schedule has changed, so daily updates are on the shelf for now. I will still try to post soon after I make any moves.

Wednesday, September 20, 2006

Sell BA Oct 75 call

Sell BA Oct 75 call

Elsewhere, RAI Reynolds gets a downgrade, KMX up on earnings. Metals continue weak. Clive Maund posts his thoughts over at Kitco Commentary on 9/18 (link).

Tuesday, September 19, 2006

Buy BA Boeing and a change of schedule

Buy BA Boeing will probably sell the call tomorrow

My schedule has changed, so my trading style, post frequency, and update times, will be a bit different.

Monday, September 18, 2006

BA Boeing

I put in a limit buy order on BA Boeing today, but didn't get filled. Metals had a minor recovery day.

Saturday, September 16, 2006

Sell BAB, Sell MCD called away at exp

Expiration calls away two stocks, BAB British Air, and MCD McDonalds. On both, I would have made a lot more just owning the stock outright and not selling the calls. I bought BAB a couple of days before the recent terrorist scare involving transatlantic flights. I am pleasantly surprised at the strength of the stock considering the news.

McDonalds has been one of the strongest stocks in the Dow during the couple of months I have had it. My profit is small. I was tempted to roll up and out, and may buy back in at a later date.

Current positions MO, EWJ both long stock, short calls
Everything else was sold or called away.

Friday, September 15, 2006

More blog links

Here are links to lists of top stock market blogs:
Kirk report list
Trading Markets list

This is the first I have seen these lists, so I don't have first hand opinions of these blogs. Explore and enjoy.

Thursday, September 14, 2006

Gold continues to slide

That recent day when gold was up while oil was down surely got a lot of fish to bite and buy in. The decline after that day has been vicious and today the mining stocks took on more water. The HUI gold bugs index down another 4% below round number support at 300. Next stop looks to be 275 (HUI chart).

This is not the time to be a hero and call bottom. It is a time to accumulate gold, especially physical gold for the long term. Trading a waterfall decline on the long side is dangerous and risky. Shorts must also be on their toes as rallies tend to be sharp.

Wednesday, September 13, 2006

Buy MO Altria, add to EWJ Japan Fund

Buy MO Altria, sell the Oct 80 call

Add to EWJ, buy stock
also buy back the short Sep 13 call, sell the Dec 13 calls

Tuesday, September 12, 2006

GS Goldman leads the rally

I am caught flat footed by today's 100+ point rally. GS Goldman Sachs (chart) leads the way. Today's GS rally already took out the first price target of 160, distance of gap up is distance of the move (5-day-chart). The 52-week high of 169 looks to be the next target on the upside. The gap at 151 to 155 is likely support.

Monday, September 11, 2006

so much for September (gold)

Schaefer's include the comment (link):
The big loser today is metals, as the AMEX Gold Bugs Index (HUI) is down a massive 26 points or seven percent - so much for September being the most bullish month for metals

Seasonality can be a useful factor. However, I rank it down the list, below news, below technicals, below fundamentals. I was strongly tempted to stay long AU Ashanti Gold, especially after being whipsawed out of GM and JWN a few days earlier. That is often the way the market seems to work, to "trick" traders into thinking it is going one way then hammer them for being undisciplined.

I did not see much in the way of useable analysis at Kitco Commentary (link), but gold watchers can watch that space in the coming days.

Friday, September 08, 2006

Sell WYNN puts

Sell WYNN Oct 70 puts
So far I am wrong on this one and am exiting.

Sell AU Anglogold

Sell AU, buy back the Oct 45 call
I take my lumps as gold continues to crater downwards. Today could be the bottom, but I am taking the emotion out and getting out with my loss.

Thursday, September 07, 2006

Word of the day: whipsaw

whipsaw:
3. To cause to move or alternate rapidly in contrasting directions: “The bond market... continues to be whipsawed by fears of rekindled inflation”

They could have also put up a picture of today's WYNN chart. Home builder stocks also see this whippy price action. These kind of wild rallies are one reason I prefer to purchase puts rather than short the stock. Sometimes the short covering rallies are extremely powerful. Sometimes a stock gets a takeover bid and gaps to the moon.

There is no right or wrong with shorting vs. buying puts. Over the years, I have found puts to fit my style and personality better.

Gold has a terrible day. The linkage to oil may be back in play, after a one day respite. NEM Newmont gets downgraded. The HUI goldbugs index (chart) is back to its breakout point of 349/350. Looks like the rally day was a phony push to get more excited bulls into the pen, so they could be slaughtered on the next leg down.

This isn't the time to be the hero, not in this treacherous market. I will stay cautious, trade small, and almost always hedge. Small, even tiny profits like today's RAI Reynolds are welcome in these stormy seas.

Short WYNN (buy puts)

Buy Oct 70 puts WYNN
Readers know I prefer to sell options, not buy them. However, for shorting, puts limit risk, and also give a time stop. The obvious downside is the time decay and the option premium. A put buyer has to be correct on direction and time--not an easy trick.

RAI Reynolds called away early for the dividend. A tiny profit, with neglible risk, and there was a chance at the 1% quarterly div.

Wednesday, September 06, 2006

Missing the boat

I missed the boat on HOC Holly Corp, as it continues lower.

WYNN looks like a decent short in here (chart), but I am reluctant to pay the high option premiums. The new casino in Macau just opened. The stock has had a big run in anticipation of that event. Analysts have mixed reviews on WYNN and LVS.

DVN Devon Energy looks like it wants to fill the gap. Any revenues from the oil discover are likely to be three or more years out. The more likely scenario is a takeover where some other company wants to boost their reserves, especially relatively safe reserves in U. S. waters.

Tuesday, September 05, 2006

Gold up, oil down, big oil find in the Gulf

Gold finally has a big up day without the backing of oil. Also in the news is a big oil find in the Gulf of Mexico. I took a good hard look at DVN today, but this wasn't the day. The rest of the market continued to have a bullish bias. The Dow was flattish, but the Russell 2000 continued strong.

Someone else made the observation that technical analysis is more like a wind sock than a crystal ball. If used properly it might also be a barometer, so folks can take shelter before the storm hits (usually the air pressure drops well before the rain and wind hit).

Friday, September 01, 2006

Landry talks about exiting too early

Dave Landry at TradingMarkets.com has an hour long video presentation at this link. One of the topics he covers is micro managing, how some of his clients can't bear any discomfort and exit as soon as the position goes against them, before the stop is hit. His term for this is micro managing.

Readers might even waggle their finger at me, as I exit to protect a profit. The difference is one of style. As I have said, I see myself as analogous to a singles hitter in baseball. Where gains are small, and the winning percentage is [hopefully] very high. Losses too are kept small. Landry's style is that of a momentum player, where home runs and doubles are much more common, but the percentage of winning trades is not so high.

In any case, if a person has time this long weekend the entire video is worth a look. It starts off a bit slow. If a person is primarily interested in Landry fielding questions on different stocks, that part is about 37 minutes into the hour long video.

Have a nice weekend.