Two in a row.
What is this Google, some kind of juggernut or something? - Kevin Depew - 3:45 PM
- So, entering today, Google (GOOG) had already registered some important DeMark TD-Sequential 13s on both a daily and weekly basis. However, on a point & figure basis, the stock won't give its first sell signal until 376, basis 4x3 chart.
- That's one of the problems with point and figure charts as stand-alone trading tools. Sometimes a definitive sell signal (or buy signal) is too far away on the chart for a trader to base decisions on them.
- Note that Activision (ATVI) has broken a double bottom with the move below 14, with the nearest support at 11.
- Is NY Mets GM Omar Minaya a Minayan?
- Minyan Tripp just offered to buy beers for UK alums yours truly and Meehan if Kentucky beats the defending national champion Tar Heels in Lexington this Saturday. I hope he is prepared to bid in size. Alone, either one of us can handle a good amount of supply; together, there is likely to be "trading curbs" involved.
- Speaking of trading curbs, remember a few years ago when people used to regularly talk about such things? It would now take a 1,050-point decline in the Dow to trigger circuit breakers on the NYSE.
- The VIX has been below the legal drinking age since February 2004. No one talks about trading curbs anymore. Fair weather fans.
Minyan mailbag on Wynn Resorts (WYNN) - Fil Zucchi - 3:42 PM
Last night WYNN showed up on my daily technical scan as a possible long candidate. Here are a few reasons why. The daily chart is in a strong up thrust off a test of the bottom (as you mentioned in your chart as a "W" bottom) and is pulling back to the 20 EMA after a straight up run from late October. The monthly chart also has a stochastic divergence (see chart below) after completing an ABC type correction.
On the sentiment front the put/call ratio is off the charts with a reading of 1.12 in the 98th percentile of annual readings. Short Interest is also quite heavy with nearly 12 Million shares sold short, which takes about 8 days to cover based on the 30 day average daily volume. With the technicals improving there is a good possibility for a short squeeze. Couple of other stocks that came up as long candidates on this scan is HCA (HCA) and Intuit (INTU). I may take a position in WYNN on a pullback to 55. Stocks with heavy short interest and high put/call ratios rarely give such deep pullbacks but since the major Indices are extended and due for a deeper correction, I may get my wish. Just my humble opinion brother.
A good piece of analysis from a good Minyan. Thanks RK!!
It Puts the Lotion on the Level - Todd Harrison - 2:20 PM
Spot Gold ended the session with a five handle ($500.05). This is good news for metal bulls, particularly given the widespread belief that the precious ones would fail miserably once we tickled a finski.
It's also worth noting that the XAU is still hovering well off its recent high (XAU 120).
Mini-Minyan Mailbag - John Succo - 1:56 PM
With Vol so low are you a buyer of inverse spreads, if the math makes sense? My understanding of an inverse spread is to go out 6 months or so, short an in/at-the-money option & buy dollar equivalent of out-of-the-money options (say, short 1, long 5). If vol expands (and the stock hopefully moves toward your long strike price) you pick up more on your longs than you give up on your short.
If you had a bias on a particular name or group, would this be an intelligent way to play?
It is dangerous to generalize when talking about option strategies and I might mislead more than help. First of all, you are talking about trading options "technically." This means structuring trades to take advangage of relative moves in option prices, e.g. "expansion of vega."
This requires the correct platform, a professional one where commissions are very low and margin requirements are risk-based (not reg T). Most Minyans are not set up that way and I discourage them from trading this way. Leave this to the floor and upstairs hedge funds set up to do this.
To correct one comment you made, the last thing you want when long an option is for the stock to gravitate to the strike: no matter what happens to vega, the compression to the strike will result in loss over time.
Options for most people should be traded "strategically." This means structuring trades to take advantage of price moves in the underlying stock. Thus options are used to either hedge stock or speculate on stock.
Flashback! - Bill Meehan - 1:30 PM
This day in market history...
- Closing levels 10 years ago found:
- DJIA: 5105.56
- S&P 500: 607.64
- 10yr: 5.84%
- Crude: $18.27
- Gold: $386.50
Today in Minyanville history...
- Prof. McGuirk declared it to be Five O'Clock Somewhere, as summer got into swing in Sydney and gold was at $450.
In other news...
- In 1987, Belinda Carlisle's "Heaven is a Place on Earth" topped the charts. No comment.
Mini-Minyan Mailbag - John Succo - 12:43 PM
How much, if any, has the ability to hedge options in pennies and still write them in nickels, affected the amount of professional money playing the game in an otherwise low rate environment? Seems more dollars available for writing options might lower the price of risk (i.e. Vol) in general.
Stock trading in pennies, I think, really has not affected liquidity in a positive way. If someone wants to buy or sell a large amount of stock, day traders who trade in pennies get out of the way fast.
Sellers of options don't do less stupid things because they don't trade in pennies. In general, sellers of options are being stupid "right now" simply because they are selling options (in general) too cheaply relative to risk. It still might work out for them, but if it doesn't, their investors will have an unexpected and unpleasant surprise.
I remain a buyer of out-of-the-money calls that remain for sale.
Pulse of the Planet - Jonathan Schwartz - 12:22 PM
News, laughs and ideas beyond borders...
- Shell, Total, ExxonMobil and Eni begin oil production off Nigerian coast.
Indian government to become more hospitable to foreign investment.
Russian alcohol market to be state-owned in 2006. Democratic? Not really, but illegal booze trade makes up nearly 50% of market and kills 40,000 people via poisoning per year.
Hugo spends oil cash on war toys from Spain.
Get Your Motor Running - Adam Warner - 12:00 PM
Big put buying today in the cheapo Ford (F) and General Motors (GM) puts, at a monster-high volatility no less. Often, this gets misinterpreted as a bullish sign on a contrary basis. But the reality is that it's simply an arb against the gazillion debt instruments outstanding in each name that now trade well under water.
So pay no heed to any directional prediction for either stock that derives off this Put Fiesta.
Position in GM
Where it's at - Kevin Depew - 11:38 AM
Periodically, I take a look at the iShares foreign ETFs to see where the outperformers are, and how the US markets are performing relative to foreign markets. Nothing special about iShares compared to other foreign ETFs, they just have more foreign coverage than BLDRs, Vanguard and others, and the ETFs are convenient ways to pick up international exposure.
The S&P 500 is year-to-date up 3.8%, while the S&P 500 Equal Weight Index is up 6%, and the iShares Dow Jones U.S. Total Market Index (IYY) is up 5.4%.
Taking a look at the more than 35 country or region focused foreign iShares ETFs, almost half are outperforming US markets. Top performers include iShares MSCI Brazil Index Fund (EWZ), up 51.4%, iShares S&P Latin American 40 Index (ILF), up 53.8%, iShares MSCI Mexico Index Fund (EWW), up 38%, while underperformers include iShares MSCI Italy Index Fund (EWI), down 1.8%, iShares MSCI Malaysia Index Fund (EWM), down .4%, and iShares MSCI Taiwan Index Fund (EWT), down 3%.
Year end rally or year end fizzle? - Bennet Sedacca - 10:28 AM
Did ya know that since 1900, 12 peaks were made from the period between November 3 to January 19? And considering that the second year of a presidential term is the worst of the presidential terms in this century, could this year-end rally be the last gasp for this relatively old, at over 3 years, cyclical bull ?
With all of the optimism floating around the Street, I'll make my bet that this is the 13th peak since 1900. Not advice, just a heads up.
Bottoms Up - David Miller - 10:15 AM
Breadth on the NBI was horrific yesterday with only 19 advancers. The last dates we had similarly ugly breadth in the biotechs were March 29, April 28, and October 11/12. The common denominator to all those days? They were all bottoms.
Is it too cute to expect the same out of this iteration? Probably, but I will note the overbought condition on the NBI disappeared after two days of trading. Keep watching the NBI vs. BTK. When the NBI starts outperforming regularly is when it might start closing the considerable performance gap between the two indexes.
Say what? - Kevin Depew - 8:14 AM
A look at commentary, opinion and analysis from around the world:
Adam Cohen writes in the New York Times that what Google (GOOG) really needs to do is roll out a privacy upgrade. Google responds by telling Adam Cohen what he really needs to do is roll out an exercise plan and have somebody look at that mole on his thigh. Adam Cohen asks Google, "How did you know I have a mole on my thigh?" Google then says, "Uh... ahem... just a... er... lucky guess?"
The Asia Times reported recently that the US has reached out to the Taliban in Afghanistan in hopes of establishing a truce. Funny, don't remember seeing much about that in the media over here.
In recent weeks, China and Vietnam have given bird flu vaccines to millions of chickens to prevent them from dying of H5N1 bird flu. Unfortunately, scientists in the Netherlands suspect that the vaccine doesn't keep chickens from contracting bird flu, only from dying of bird flu. The chickens then spread the virus silently without showing symptoms. D'oh! That science stuff really can get you if you're not careful.
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