Thursday, June 28, 2007

Blackberry Bonanza at RIMM

RIMM Research in Motion leaps 15% to 195/200 in after hours trading on their earnings report. Many believe the Apple IPhone will spur additional demand for Blackberries.

Tuesday, June 26, 2007

M for MARKET

William O'Neil in his legendary CANSLIM approach, stresses the last letter M for Market. In a TickerSense blog entry, this idea is reinforced, that it is difficult to fight Mr. Market (link), that the storm will sink all boats, as the rising tide will lift all of them. In the article 29 of 30 Dow stocks moved with the market 447 out of the S&P 500 stocks moved with the market. Long odds for those seeking to trade the other way.

VIX (Option Volatility index) is trading up, so there may be a tradeable short term washout soon. As always, virtually no one buys at the bottom, so I don't expect any different this time.

Market churns lower

Monday's reversal from a 134 point Dow gain, used up quite a bit of dry powder for short term traders. Today's smaller reversal is making folks ever more cynical of any rallies. For the most part, the retreat looks orderly. Seasonally, the summer is the weakest of the four seasons. I expect more bear market days ahead, though I doubt it will be a straight drive down.

LEN Lennar's earnings report shows that bottom is no where in sight for the housing market. Most home price declines have been modest, in the 2% to 3% year over year price declines. That won't scare anyone into selling. A few regional markets are worse, some are better.

Silver craters down 59 cents to $12.20. I think it is too early to look to be aggressive on the long side. Those thinking long term can continue to accumulate and build a long term position of about 3% in gold and silver.

My sole position is TXN hedged long.

Thursday, June 21, 2007

Cover short BBY (sell the July 45 puts)

Cover short BBY Best Buy (sell the July 45 puts). I am taking the tiny profit and running. Broad market is rallying, BBY is not. Front month options are always risky to own, a profit is there now and I am taking it.

That leaves me with long TXN as my only position.

Sell MRK (Buy back short July 50 puts)

Sell MRK (Buy back short July 50 puts) big percentage loss on option, about a dollar on the $50 stock. I don't like the way MRK melted through support at 49. As always, my posts are not a recommendation for readers to buy or sell.


Positions: long TXN, short BBY, both hedged positions

Wednesday, June 20, 2007

Bears finally score

The Bears finally win one. Of the stocks I am holding:
MRK Merck gets hit hard on an analyst downgrade. The glass half full interpretation is the filling of the gap. (I am short the July 50 MRK puts)

BBY Best Buy breaks support at 45. I am looking for 43.25. (long the July 50 puts)

TXN Texas lower, still above strong support at 35. (long stock, short the July 35 calls).

The calendar still has a bullish bias until early July. The election cycle is modest support. However, as of this writing, I am looking for more bearish days into the summer. July to early October are statistically a weak time for the stock market (sell in May and go away and buy back in October).

Tuesday, June 19, 2007

Short BBY Best Buy (buy July puts)

Short BBY Best Buy (buy July puts). BBY lower on earnings miss of 10 cents. Stock has minor support in the 45 area. However, in my experience, support often folds when the news is bad. This is also a decent time of the cycle to be long options.

IDV High yielding foreign stock ETF

Article on the new ETF, symbol IDV. I recently wrote about Aussie banks looking like an interesting play. This new ETF has a heavy weighting in Australia, and financial stocks. The chart with the article shows a 40% one year gain in the index that the fund is going to mirror.

Monday, June 18, 2007

Barron's column recommends

Adams option blog, quotes Barron's option column, where Goldman strategists recommend selling three-month puts on Target (TGT), AT&T (T), PepsiCo (PEP), Coca-Cola (KO), Comcast (CMCSA), Oracle (ORCL), Sears (S), IBM (IBM), Wells Fargo (WFC), Merrill Lynch (MER), Johnson & Johnson (JNJ), Morgan Stanley (MS), Amgen (AMGN), General Electric (GE), and Disney (DIS).

Friday, June 15, 2007

The rally continues

A tame inflation number adds fuel to the fire for the bulls. Option expiration bias was up, probably because of the 400 point Dow tumble earlier in the month, got a lot of bears to buy puts.

Notable stocks moving lower today include BA and BNI. Some breakouts that I observed include HANS, FFIV, ASCA, KNDL.

Positions, long TXN and MRK both hedged

Wednesday, June 13, 2007

Buy MRK Merck (sell puts)

Sell the July 50 puts on MRK Merck (equivalent to buying the stock and selling the July 50 call). Chart shows decent support at the 49 to 50 level.

Tuesday, June 12, 2007

Gold looks terrible

Gold has another bad day, chart looks terrible right now. I still have a long term bullish bias towards goal because of macroeconomic factors. If I did not have that bullish view, it looks like a short in here with the failed rally to bring in another wave of would-be-bulls.

TXN Texas Instruments narrows their guidance and the stock gets hit. The long term chart has that amazing breakout from a five year base. It isn't often that a stock bases for such a long time, and because of that I'll give it some more rope.

Market is sending mixed signals. Bonds are still leading the way lower. Big name leader stocks such as AAPL, AMZN, GOOG have not capitulated. It is difficult for me to believe that the leaders will not get hit before this is over. If they don't a rally back to the just made highs would be a low risk shorting opportunity.

Monday, June 11, 2007

Steel down on NUE forecast

Nucor NUE down hard on a disappointing forecast. Bias is down though shorts have to pick their spots.

Friday, June 08, 2007

I did nothing on rally day

I looked at several stocks including MRK, SNY, DDS, and did not pull the trigger on any. It is difficult to sit still when the market is moving, though often times that is better than jumping into a fast moving river and getting swept away.

Only position: TXN hedged long

Thursday, June 07, 2007

Sell JWN (cover short puts), Aussie banks

I buy back the Nordstrom JWN July 50 puts, equivalent to selling out of a long position. Rule #2 is never let a profit turn into a loss. A big percentage gain if looking at the option position only, a tiny barely measurable gain if looking at the price of 100 shares of Nordstroms stock.

Market looks terrible, even though big name, big cap leaders such as AMZN, AAPL, GOOG, RIMM are still up today. This looks like a case of frustrating the shorts. When the majority of shorts capitulate and cover, these leading stocks will get hammered hard.

Aussie banks look like an interesting play. ANZ, NAB, WBK are three that I am looking at. They are high yielders. The Australian economy benefits greatly from the boom in metal prices. All of them have had a good run, so it isn't like getting in on the ground floor. No options, and light volumes, and often wide spreads are considerable negatives for traders.

Wednesday, June 06, 2007

Best time of month for options

From Adams Option Blog (link)
>>>
Well, as a general guideline I would time option purchases around this. In other words, the end of the week post-expiration is the best time to buy options.I would confirm this anecdotally (with a big caveat being the timing of holidays).

Conversely, the best time to net-sell options is early in a calender month, about a week before expiration.

Again, I am going to insert a caveat here. These are normalized options with 30 days of duration. I wouldn't go crazy selling near month options with a week to go. It's a VERY risky strategy.

Tuesday, June 05, 2007

Market leaders: AAPL, AMZN, CROX, GOOG

An observer might not think that today is a down day, given the leadership on the Nasdaq gainers board (FRT link). Also in the news has been a couple of sharp down days in the Chinese stock market, and weakness in bonds. The latter seems more of an immediate concern for U. S. stock traders. Weakness in bonds also correlates with higher mortgage rates. Housing stocks have come off their lows, however, a significant bump up in mortgage rates will quickly derail any positives.

Positions: long TXN, JWN both hedged positions