Daily Market Update (May 9, 2013 Reprint)

(see all trades this option cycle)  Daily Market Update - May 9, 2013 (Close) Quite a turnaround in the final hour. As went the dollar so went precious metals and the markets. Opposite directions, actually. Although there was also a rumor of a rumor that JP Morgan had indicated that the Federal Reserve was preparing to taper its support of Quantitative Easing.That rumor may have been the real stimulus behind the sudden direction reversal. Up until that final hour, there was really only a single story today and it had to do with some really large price movements in certain stocks after releasing their quarterly earnings. Tesla, Green Mountain Coffee, Rackspace. The list goes on. That was just yesterday. LinkedIn, Whole Foods, Amgen and many more came in the days before. That is the list of companies that reported earnings and had moves, in either direction, that were at one time unthinkable. You don't have to be a stock with a high beta, either to be the kind that responds with the kind of move that used to take an entire year to traverse. Ever hear of IBM? In-between you have companies that routinely release very pertinent information in the weeks before earnings are released that often send the shares jumping all over the place. YUM Brands, Abercrombie and Fitch and Cummins Engine are great for that sort of thing. Even worse, those typically happen without much, or any advance notice. It's not like a scheduled earnings release. They just blurt it out and all hell breaks loose. Then, of course, you have the unexpected news. Like Baxter International, that reported some disappointing news about some European drug trials. Or a couple of months ago when Petrobras announced lower than expected price increases. Most of the time, unless there's something truly and structurally defective about a company, such as accounting irregularities, all you can be, if you want to have a long term edge against the market, is a passive observer, who follows the biblical wisdom of Solomon and realizes that "this too shall pass." That's really hard to do. One of the reasons that I maintain patience in the face of a losing position is that I am a short term pessimist, but a long term optimist. In the case of a losing position, after deciding that there remains a possibility that all can be well at some point still within my life expectancy, I ask only one question. "What are the chances that the same idiot that selected this stock that's causing me so much grief can now go and sell it to use the moiney to buy a new stock that won't do exactly the same?" Of course, if you are a pessimist, the answer is "not very good." What's very difficult to do, besides looking at the paper losses, is to balance the lessons learned in many graduate business classes. The concept of "opportunity costs" is constantly a part of every analysis. "What is the next best thing you can do with your money, as an alternative to the stupid thing you're currently doing?" But that assumes that you'll be smarter tomorrow than you were yesterday or that you'll be doing the textbook thing and going into Treasuries. I stopped using opportunity costs a long time ago as a criteria leading me to change direction, although I still compare each trade to the S&P 500, as a reflection of possible opportunity cost. What's really clear to me is that the best way to offset paper losses is to first approach them without a sense of panic or hopelessness. Again, hard to do. But beyond that is the need to give up the belief that now you're smarter and can dump the loser in exchange for a winner. Other than taking advantage of tax losses, by and large dumping the losers is a good way to forever have mediocre returns. Or worse. So, speaking of mediocre returns, yesterday was another report of how hedge funds are scrambling to get investors and keep the old ones from pulling out. Due to their unique fee structures, the well known "2 and 20," trailing the index can mean that the hedge fund manager's kids don't get to eat in a year that trails the index. Since hedge funds do best when the market is either moving down or sideways, they haven't been very happy places to be this year and are probably rooting for a downturn even more than me. At least my kids are on their own now. For those that have enough money to be a client of a hedge fund, and who are old enough to have an historical perspective, the "2 and 20" is a bargain, especially since the frequency of trailing the market is pretty low. That's exactly why so much money goes into hedge funds. It's not necessarily to get great returns, but it's to beat the returns, especially in a down market. In terms of "opportunity costs" the hedge fund, during most market cycles is the standard to which to compare, except that it's unreachable for most investors. What will be interesting to see is whether the markets are in any way impacted by hedge funds starting to alter some of their hedging practices in response to a market that is single minded. To do so is to ignore another tenet of all of those business school classes. That is the concept of "sunk costs." The most common interpretation of "sunk costs" leads to the application that you shouldn't throw good money after bad money in order to rescue a flailing and failing position. However, another and less common interpretation is that you shouldn't let your failing position dictate how you proceed forward. Instead, take the opportunity to re-evaluate the processes that led you to success, without abandoning them. One last time, but that's hard to do. However, even dogs like Walter Energy and Cliffs Natural Resources aren't quite ready for the tax loss heap, quite yet. And those hedge fund manager's kids? Don't worry. Things will be so good that they'll be back on their way to developing Type II Diabetes before you know it.  OTP Sector Distribution* as of May 9, 2013   * Assumes equal number of shares in positions Intraday versions of the Daily Market Update are not archived. You may access prior day's Daily Market Updates by clicking here 
Friday? See Week in Review for summary statistics and performance Sunday? See Weekend Update for potential stock choices for coming week Any day? See Performance for open and closed positions 	The posting of these trades is not a recommendation to initiate positions nor to execute any trading positions, as they may represent time sensitive actions. Subscribers may see ROI statistics on all new, exisiting and closed positions on a daily updated basis.
	See all Trade Alerts for this monthly option cycle

Daily Market Update (May 8, 2013 Reprint)

(see all trades this option cycle) Daily Market Update - May 8, 2013 (Close) My only thought for today is that this market is incredible and I'm not certain how I can keep believing otherwise. The only thing that keeps me going is the incessant peering at the bottom line and periodically taking profits from shares and adding them to the option premiums and dividends. Looking at how the day went from absolute mediocrity to a complete turnaround isn't really stunning in and of itself, but given how unlikely all of this seems and how little justification there seems to be, well, that's stunning. Maybe I just need to get out more. I don't often venture very far from my La-Z-Boy perch on Mondays through Fridays. I usually resent any need to do so because you never know when an opportunity may present itself in the markets. Lately, I haven't necessarily felt the same exact urgency to be glued to the La-Z-Boy as I'm not exactly eager to spend. In fact, as I look at the Cash-O-Meter right now, I don't have as much sitting around in anticipation of bargains as I would like. But yesterday was one of those few times that I didn't mind stepping outside of my comfort zone. Not the psychological comfort zone, the emotional comfort zone or the investing comfort zone. I already stepped out of the investing comfort zone by finally buying shares of Sunoco Logistics the other day. It's a company that I've been following for a year but was always reluctant to purchase and cover because the volume was so low. It, however, proved to be an excellent example of the Double Dip Dividend, as the differential, that is the difference between the share cost and the bid premium prior to going ex-dividend was about $59.11. However, after going ex-dividend $0.57 yesterday, the differential was $59.43. In other words, $0.32 of the decrease in price that occured as a result of the ex-dividend was offset by the option premium. Someone paid you to get a dividend. How great is that? We'll see if the rest of the story plays out as they report earnings this evening. Parenthetically, I'm also a little surprised that shares of British Petroleum were not assigned this morning, as they were in the money by more than $1 and the dividend was $0.54. That would have given someone a more than $0.50 cushion if they exercised their option in anticipation of immediately selling their shares. But exercising an option is actually very much out of the comfort zone for many option buyers. That too, is to our benefit. Anyway, as you can see from the photo, it's not that difficult to have a travelling office and to transport the physical comfort zone. Although the law may be pretty clear that you can't text and drive at the same time, I don't know if it says anything about trading and watching the ticker. I also am not aware of whether there is any prohibition against a "selfie" while driving. For those that don't know, a "selfie" is a smart phone photo you take of yourself. Get your mind out of the gutter. For those that emailed or texted me yesterday, my responses were uncharacteristically brief as I'm not a big fan of texting and driving, especially at highway speeds and in the rain. But the reason for the little trip and what made it seem as if it would be alright to leave all of the comfort of the La-Z-Boy behind was to see Herb Greenberg as he spoke to a group of college journalist students. I always enjoy the opportunity to see or speak with him. I think he is one of the very few personalities that always makes you exercise a thought process in response to his appearances. Agree or disagree with his positions, he often gives great reasons to question orthodoxy and popular sentiment. He was spectacular yesterday as he presented a really great historical perspective on how journalism has changed over the past 40 years and how there are so many great opportunities, especially in business journalism. I have some attention deficits in addition to many other deficits, so sitting still in a lecture isn't easy for me. This one was easy, however. Interesting topic and a very relaxed presentation manner. Unlike with my own history of presentations, Herb didn't have to rely on joke slides to get people's attention. Turns out, I can get some credit for my past college courses, but I'm not certain I'll be looking to re-invent myself in the very near future as I didn't see many La-Z-Boys on campus. Now, if you are on Twitter, you may know Marek Fuchs. He was a one time stock broker, who amazingly knew my own broker who passed away very unexpectedly. Marek was for many years a contributor to TheStreet.com and currently writes for Yahoo Finance, in addition to being a book author on completely unrelated topics, including a great pictoral homage to firefighters and a really gripping true story of another murder in a small town that was no stranger to high profile murder.. He is also a Journalism professor and invited Herb to speak to his students. I went for the free coffee and to search for the patch of grass I think I had vomited upon some 40 years earlier. The patch was still dead. Believe it or not, neither before, during, nor afterward, not a word discussed about the markets or stocks, other than to illustrate journalistic processes. That alone made the trip worthwhile. DId I mention the coffee? But today is back to normal and still wondering just how long this market rally can really go on. What does please me a little is seeing some positions that lead me down now take the role of leading me higher. That is so often the case. Whatever momentary feelings I may have had about Petrobras, Caterpillar, Whole Foods and others, they're pretty much forgotten. It finally looks as if they will achieve my objectives in owning them, even if it sometimes means losing shares to assignment well above the strike price. Just look at Whole Foods. As unnecessary its price move was going down to about $81 and creating a sense of nervousness, especially as every talking head was criticizing it and forecasting its tenuous grip of the premium market. Now that earnings have been released and were very optimistic, those same talking heads have completely re-spun their opinions. It's all good now. Most likely, Whole Foods will fall somewhat from its new level and will offer another opportunity. It pretty much follows the ancient ashes to ashes cycle, except that there's a lot of life in-between. By the same token I've had an abiding faith that the beaten down shall lead us up, just as they led us down. Yesterday Petrobras, tomorrow Baidu. Today was a day to reward that feeling, but there need to be many more. There is a sense of rotation and new life taking place that will start pouring some favor in the direction of basic materials. Freeport McMoRan, Cliffs Natural and Walter Energy. A single upbeat whisper from China would do wonders. If the US can consistently revise numbers, China can do it ten-fold and the result would be sudden and swift, even if not necessarily accurate. Maybe journalists strive for that accuracy stuff, but I can take it or leave it.   OTP Sector Distribution* as of May 8, 2013 Click chart to see component positions or click here to enlarge * Assumes equal number of shares in positions Intraday versions of the Daily Market Update are not archived. You may access prior day's Daily Market Updates by clicking here 
Friday? See Week in Review for summary statistics and performance Sunday? See Weekend Update for potential stock choices for coming week Any day? See Performance for open and closed positions 	The posting of these trades is not a recommendation to initiate positions nor to execute any trading positions, as they may represent time sensitive actions. Subscribers may see ROI statistics on all new, exisiting and closed positions on a daily updated basis.
	See all Trade Alerts for this monthly option cycle

Daily Market Update (May 7, 2013 Reprint)

(see all trades this option cycle) Daily Market Update - May 7 2013 (Close) It's a little frightening when a well known (and fellow Hungarian) and other respected analysts are making comments comparing things to 1999. I don't see that no matter how hard I try. Maybe the early morning move in Yahoo! evokes some memories, but certainly the analogy can't be basedon the perfirmace of technology stocks, that are only now just beginning to awaken, after long under-performing the market. It can't be based on a deluge of over-subscribed IPO offerings and their subsequent meteoric rises. For the most part the process has been pretty orderly. Laszlo Birinyi, and no, my dog is not named after him, isn't one to exaggerate things, so it is at least worth listening when he makes comments like that. It is a interesting to note that Birinyi is still a bull, albeit a self-proclaimed reluctant bull. What is clear is that as stocks have moved up they have been punished if opffering weak earnings, especially if their matched by weak guidance. Emerson Electronics which is a bigger name worldwide than in the US reported earnings today. It was one of the companies that I was considering this week but didn't have a good enough risk/reward to warrant the trades. Emerson gave weaker guidance this morning saying that it saw no economic impetus for the next 6 to 9 months. Hearing reports like that from a company that deals in smaller applicances for the most part does make you wonder about growth. If the market truly discounts the future by 6 months or so, you really do have to wonder om what basis it is going higher and higher. Beats me, but it's hard to argue with reality.     OTP Sector Distribution* as of May 7, 2013   Click chart to see component positions or click here to enlarge   * Assumes equal number of shares in positions Intraday versions of the Daily Market Update are not archived. You may access prior day's Daily Market Updates by clicking here 
Friday? See Week in Review for summary statistics and performance Sunday? See Weekend Update for potential stock choices for coming week Any day? See Performance for open and closed positions 	The posting of these trades is not a recommendation to initiate positions nor to execute any trading positions, as they may represent time sensitive actions. Subscribers may see ROI statistics on all new, exisiting and closed positions on a daily updated basis.
	See all Trade Alerts for this monthly option cycle

Professor Marek Fuchs Plays Host to Herb Greenberg

And just for good measure, an obligatory self-promo

Daily Market Update (May 6, 2013 Reprint)

(see all trades this option cycle) Daily Market Update - May 6, 2013 (Close) I expect that this will be a fairly quiet week, at least for my trading purposes. For the first time in a very long time, I entered a new week without any contracts set to expire at the end of the week. I hope there's some opportunity to change that, but I don't think that there will be too many. After another strong week in the market it's just so hard to see value, even though by some historical standards there are lots of seemingly good values. The problem is that living in the past isn't as good as learning from the past. The fact that many good stocks are still priced significantly below their 2007 prices still doesn't indicate value. Value is all relative and is easier understood if you live in the moment. Using that as my standard what doesn't look expensive? Since I still have my sights on maintaining adequate cash and went on a mini-shopping spree last week, I'm below the level that I had set as my goal. WIth that in mind, whatever purchases I do make this week are likely to be of lesser total value. Since all covered positions are currently set to expire in 2 weeks or more (except for CAT), the cash position isn't likely to be boosted very much unless some uncovered positions finally go to work and make some income. I've been repeatedly tempted to finally put Intel back to work, but along with some others, I think it may have greater value in the near term left uncovered. Sooner or later I have to believe that there will some kind of recovery, especially in the materials sector. As the morning started off very slowly it was a good opportunity to look at the week ahead. I often look at the upcoming economic calendar to simply have an idea of what macro-economic winds may be out there that could potentially impact upon markets. This week looks to be a very quiet week. Europe also seems quiet, so the most likely of catalysts are taking a break, although there is already some speculation that Slovenia is next on the list for those in need of an EU bail-out. How is that my problem? Of course, recent escalation of tensions in the Mid-East can never help, but unlike past flare-ups that involved Israel, there doesn't appear to be much likelihood of oil being used as an economic weapon. Partially because many countries might be happy to see Israel take a lead role in weakening the Assad regime in addition to the fact that the world seems awash in oil and doesn't really need any more impetus to expand its own reserves. Isn't it nice when it gets harder to be held hostage? But still, un-nerving news from the area can have an influence on the markets, but not likely the kind that would result in a sustained market reaction, unless some heretofore unthinkable actions were reported, such as widespread use of chemical weaponry. Quiet weeks on the newsfront don't necessarily mean quiet weeks in the market, however. Quiet weeks, especially if accompanied by low volume can see relatively large moves. I don't know if that will be the case, but I do like the cushion right now between current price and strike price for many of the positions, as long as the market either stays at these levels or goes down. I still remain convinced that we can't go higher, despite reality and evidence to the contrary. So far "Sell in May" doesn't seem to be working out. The only hint of a drop, which came on Wednesday, was immediately an invitation to buy shares on the dip. Momentary weakness this mornings was barely even "momentary." WIth two weeks to go until many potential expirations, I would like to see some pullback, within reason. A nice combination of assignments and expirations near the strike prices would be lovely, but 2 weeks is a long time to sit back and be a relatively passive observer. It's almost like "Buy and Hold." The avalanche of analysts that are increasing their S&P targets used to be considered at one time as a contra-indicator. It's funny how everyone is talking about a continually higher moving market, yet they are also describing this rally as one of the least liked and respected. They just don't have their hearts in it, but thet have no reason to set themselves apart from the crowd by taking a firm bearish position. Being an inveterate viewer of CNBC, it was telling that there was a very muted background cheer when the Dow Jones passed 15000 on an intra-day basis. Although analysts will always tell you that these milestones are just numbers, there's no doubt that people on the floor typically find reason to celebrate with sound. But not so much this time. I think that one of the reasons for the subdued reaction is that there's still not as much new money coming in to really fuel a rally and to really get these guys excited. They may be wondering what it's going to take to bring the old days of excess and speculation back. Until then, even for them, it's only a number, full of little sound and little fury, signifying nothing.     OTP Sector Distribution* as of May 3, 2013   Click chart to see component positions or click here to enlarge   * Assumes equal number of shares in positions Intraday versions of the Daily Market Update are not archived. You may access prior day's Daily Market Updates by clicking here 
Friday? See Week in Review for summary statistics and performance Sunday? See Weekend Update for potential stock choices for coming week Any day? See Performance for open and closed positions 	The posting of these trades is not a recommendation to initiate positions nor to execute any trading positions, as they may represent time sensitive actions. Subscribers may see ROI statistics on all new, exisiting and closed positions on a daily updated basis.
	See all Trade Alerts for this monthly option cycle

Week in Review - April 28 - May 3, 2013 (Reprint)

Option to Profit Week in ReviewApril 29 - May 3, 2013

NEW POSITIONS/STO	NEW STO	ROLLOVERS	CALLS ASSIGNED/PUTS EXPIRED	CALLS EXPIRED/PUTS ASSIGNED	CLOSED
7/7	3	0	2	2	0

Weekly Up to Date Performance

April 29 - May 3, 2013

For the week, new purchases beat the trade time adjusted S&P 500 by 0.7% as well as beating the unadjusted index by 0.2%, as the market had its second consecutive great week.

When the market climbs by 2% and you're still selling calls, that's a surprising outcome, but it's the second week in a row that the strong market didn't outstrip the abilities of covered positions. Likely, opening up more than a bare minimum of new positions helped to avoid being dragged down by a single position, as has happened in the past.

While my cash position decreased this week and is now further from its target 40%, it was a good time to avoid going into a full bear mode. For yet another week there appeared to some relative bargains among the stocks that had not kept up with the S&P's run higher and that had no compelling reason for having been left behind. However, with the market up nearly 4% in two weeks, finding those kind of opportunities gets more difficult.

The market gained a sizeable adjusted 1.5% for the week, while the unadjusted S&P 500 gained 2.0%. New purchases gained 2.2% for the week, well exceeding the 1% threshold, however the use of monthly options pads that number, although less than would be expected because of very, very low forward volatility.

Past purchase open positions, which do not include profitable closed positions increased in value and beat market's performance, predominantly due to some catch up gains by some long depressed positions, such as Petrobras, Intel, Caterpillar and others. 

Only 2 new positions were added to the "2013 Closed Position" results. For positions opened in 2013 and subsequently closed, performance exceeded that of the S&P 500 by 0.8%. They are up 21% besting the market by 58%

Talk about "much ado about nothing."

There were a lot of potential hurdles this week and the market handled them beautifully, despite a short lived and delayed negative reaction to the release of the FOMC minutes.

After today's Employment situation data, there's another opportunity to ask why the markets so often react with exaggerated moves after economic data is released, when so often the subsequent revisions are completely thesis altering.

That was definitely the case today.

For the past two days all the talking heads were able to talk about was their fear that Friday's employment numbers would be disappointing. Everyone, certainly including me, was ready for a sharp move downward.

Of course, I've been ready for a while.

Somehow, however, despite a very strong week in the markets, especially with today's fluorish, all was well in Covered Call Land. That's not something that you really expect to be the case when the market is moving strongly higher.

But that's being a little too rosey.

Having gone to the use of far more monthly options there is a price to be paid in the event the market goes even higher. While on the one hand we have a two week cusion based upon the time remaining on many of the contracts, in hindsight that may be a two week concrete block, if the market just keeps on going even higher.

I've been there before. I don't particularly like looking at everyone else having a good time when I can't join.

At some point I may concede the shift to a more cautious mode was poorly conceived, but probably not until I see that the use of longer term options really results in a significant fall behind. By my calculation the market retreat starts in 3, 2, 1...

Now, as far as the component stocks go, the latest theory sweeping across the market is that the industrials are going to start leading the market. That would be great news for those holding the building blocks of the industrials. Metals and coal.

Normally, I like to see Fridays that are on the weak side, especially if weakness allows better opportunity to roll over posiitons. However, we don't have much to roll over. remember? Monthies, not weeklies.

Then, I love to see weak Mondays so that the bargains can pop up.

But now, with not much in the way of new cash being freed up and still clinging to the belief that cash may be king, there's a reluctance to go on a buying frenzy.

In this case, I'd still like that weak Monday, but I'm not certain that I would take quite the same opportunity to pick up as many new positions as we did this week. Although I wasn't expecting to open as many new positions as would turn out to be the case, the opportunities did sporadically appear. You can't let an unproven thesis get in the way of making some money.

For the coming weeks until the end of the May contracts many exisiting positions have a cushion to withstand price drops. In a perfect world, those would then either be rolled over to the next period or closed to build up cash. The problem is that I don't see much of a need to go beyond about 40% cash and am concerned about having too much, especially if the market doesn't show any signs of slowing down.

Then again, that's still 2 weeks away. Why think about all of that right now when revisions can change everything in the blink of an eye.

Besides, maybe I'll just use the cash on the Kentucky Derby.

Anyone know who the long shot is?

This week's details may be seen in the Weekly Performance spreadsheet or in the PDF file, as well as as in the summary below. NOTE: Links are deactivated in TheAcsMan reprint articles

(Note: Duplicate mention of positions reflects different priced lots):



New Positions Opened: BAX, BCS, CSCO, JOY, JPM, KSS, PFE

Puts Closed in order to take profits: none

Calls Rolled over, taking profits, into the next weekly cycle: none

Calls Rolled over, taking profits, into extended weekly cycle: none

Calls Rolled over, taking profits, into the monthly cycle: none

Calls Rolled Up, taking net profits into same cycle: none

Put contracts sold and still open: none

Put contracts expired: none

Long term call contracts sold: none

Calls Assigned: CSCO, MOS

Calls Expired: BIDU

Puts Assigned: none

Stock positions Closed to take profits: none

Stock positions Closed to take losses: none

Calls Closed to Take Profits: none

Ex-dividend Positions: BCS (ex-div 5/1 $0.06), MOS (ex-div 4/30 $0.25 - majority had shares assigned early), PBR (ex-div 4/30 $0.21), INTC (ex-div 5/3 $0.22)





For the coming week the exisiting positions have lots that still require the sale of contracts: AGQ, CLF, EMC, FCX, INTC, JCP, MCP, X, WLT (See "Weekly Performance" spreadsheet or PDF file)

NOTE: Links are deactivated in TheAcsMan reprint versions of this posting

Daily Market Update (May 2, 2013 Reprint)

(see all trades this option cycle) Daily Market Update - May 2, 2013 (Close) So far, no disaster. Far from it. The couple of hours delay to the FOMC was fairly muted, despite adding an additional 70 points to the Dow's loss and the ECB lowered interest rates for the first time in a while. Threats neutralized. Add to that a reasonably good jobs number and it's really as if none of it ever happened. That brings us back to the S&P level of April 19. That was two weeks ago. If my hypothesis about the early part 2013 mirroring the same period in 2012, this is where the rubber hits the road, as the decline occured immediately after a 2 week period revovery. The market has just kept going higher and now has only one barrier remaining this week, tomorrow's Employment situation. The talk of the day was how worried everyone was about the prospects for miserable numbers. They certainly didn't act like that today and there was no evidence of anyone fiddling on the floor of the NYSE as the specialists areas were going up in flames. In fact, Even a bad jobs report may end up leading to more market gains if the numbers are better than the worst case scenarios that are currently being entertained. While I look at the portfolio, there are the obvious disappointments, including Walter Energy's earnings report this morning. In addition to a further drop, I'm disappointed I didn't sell weekly puts in anticipation of the report. But perhaps my biggest disappointment of the day came from Intel. I've been holding two large uncovered lots for quite a while and have really been perplexed as to why its shares have stayed mired. I certainly understand the issues of decreasing PC use and Intel's lack of real presence in the mobile markets, but their costs have been decreased and they are as efficient as ever. More importantly, when the announcement months ago came that its CEO, Paul Ottellini was retiring, it raised hopes that he would be replaced by someone that could bring glory back to Intel. Ottellini hasn't set the world afire, as have his legendary predecessors. Quietly, people have voiced the opinion that the Ottellini tenure was a failure and suffered from an inability to be forward looking and embrace new technologies. That's quite an indictment for a company that has always been on the leading edge in design and manufacture. The new CEO, Brian Krzanich, is the current Chief Operating Officer, so there's not likely to be a big shake-up or large deviance from current strategies. This is one of those situations where you wonder whether Intel would be best served by bringing in an outsider at a critical juncture in its history. Given the culture and given the liability associated with changing gears, as well as the time necessary to made substantive changes, staying on the inside probably makes most sense. When the news initially came the market was underwhelmed. The share price, which has been quietly strengthening over the past 3 months went lower on the news on a day when the markets and technology were both strong. Too bad. I was actually considering selling calls on one lot of Intel shares yesterday or the day before as it was within pennies of $24. The problem is that shares go ex-dividend tomorrow and for the past months the only thing going for the shares has been the dividend. But tomorrow brings new opportunities, maybe even with Intel. The fact that shares strengthened along with the market as the day wore on was already an indication that the appointment is now ancient news. What turned out to be the lone opportunity of the day, came in the form of Joy Global. What makes it a bit of an outlier as far as recent selections go, is that it is in my MOMENTUM category and I've been largely staying away from those. Of course, buying anything on a Thirsday is itself an outlier kind of action. In the case of Joy Global, I think that both the selling of heavy industrials is done for the time being, now that Cummins Engine has come out with earnings and the fears of a Chinese slowdown will take a rest. Joy Global is heavily reliant on China and isn't necessarily in the best of business, making mining equipment to extract coal and ores. Double whammy. I just think that it's Joy Global's turn, but I don't expect the turn to last very long. Much of what we see is of a cyclical nature. Both individual stocks, sectors and markets seem to have some periodicity and regularity. The frequency and the amplitudes may be highly variable, but there's a reason why a stock like Apple is so exciting to everyone, at least while in a climbing pattern. We rarely see prolonged upward moves. Apple had everyone's attention because it was able to defy the basic rules that we all know wouldn't allow that sort of thing. Apple was among a handful of stocks that in the course of your lifetime was able to sustain such a course for an abnormally long time. Most stocks just don't do that. Sectors don't do that. Markets don't do that. At some point, this market will realize that, just as Apple did and perhaps may do again, in a much smaller way, after an unexpected bond fueled rise. Otherwise, today has the makings of a day like yesterday. With only Baidu and Cisco having option expirations this week, there's not too much rolling over opportunity. Instead, whatever opportunities to sell some calls on Intel-like positions would be welcome while I sit back and take it all in. I suggest you consider doing the same.    OTP Sector Distribution* as of May 2, 2013   Click chart to see component positions or click here to enlarge     * Assumes equal number of shares in positions Intraday versions of the Daily Market Update are not archived. You may access prior day's Daily Market Updates by clicking here 
Friday? See Week in Review for summary statistics and performance Sunday? See Weekend Update for potential stock choices for coming week Any day? See Performance for open and closed positions 	The posting of these trades is not a recommendation to initiate positions nor to execute any trading positions, as they may represent time sensitive actions. Subscribers may see ROI statistics on all new, exisiting and closed positions on a daily updated basis.
	See all Trade Alerts for this monthly option cycle

Daily Market Update (May 1, 2013 Reprint)

Submitted by TheAcsMan on Sat, 01/12/2013 - 08:03

(see all trades this option cycle) Daily Market Update - May 1, 2013 (Close) ADP. ISM. FOMC. That collection of today's economic news acronyms leaves only 16 unused letters in the alphabet. Don't forget tomorrow's ECB. That brings us to 14. With some sluggish public sector employment numbers from the ADP Report and some deflationary fears, that for whatever reason didn't really exist yesterday, the market took a quick 70 point drop this morning. As expected, it simply bided its time until the 2 PM FOMC release. In the meantime, the usual victims of the fear of an economic slowdown took the brunt of the nervousness, just as they were relatively strong just the day and two before. Things change quickly, even when there's no evidence of change. Metals, energy, financials and industrials are no one's favorite when fear strikes that the economic machinery is slowing down. Not reality, just fear. When faced with either fear or the actual reality of a falling market one of the most difficult decisions is when to "buck the trend." If you believed all of the speculation that was swirling about all of the money that has remained on the sidelines since 2008, due to the fear of being caught yet again in a down draft, you can get a sense of how paralyzing that fear can be. But even in a falling market or even when your over-riding expectation is for generalized weakness on the horizon, there are always sound investing hypotheses out there. I looked at today's drop in JP Morgan as one of those hypotheses. Just yesterday there was talk about 2014 and Quantitative Easing being eased out itself and the thought of the inevitable need to raise the Federal Funds rate. The latter, especially would be good for financial institutions. I can't really blame them for being reluctant to lend out money at such low rates as we have now when they may end up being saddled with those on their portfolio in an environment of climbing rates. Yet, JP Morgan, in the absence of any company specific news, dropped 2%. Other than Citibank, which is much more of a speculative play and trades with far greater volatility, no other major bank came anywhere close to that kind of decline this morning. JP Morgan is not uniquely at risk for a Federal Reserve surprise. So even in an environment where I want to conserve cash, JP Morgan looked good today. Not good enough for a weekly contract, though, as there has to be some protection against more sudden and irrational moves. And so, as planned for the rest of the morning and early afternoon I just sat back and looked at the flickering reds and greens. If the past year has been any guide the equity markets save their reaction to the FOMC minutes release until the next day, although the precious metals markets, often presage the minutes, as they did today. As it would turn out the additional sell-off that did ensue in the afternoon came about an hour after the release. Based upon the past, I now expect a higher day tomorrow, unless the ECB announcement is terribly unexpected by the markets or is underwhelming in its scope and commitment. WIth tomorrow being a rollover day, there aren't too many positions that are rollover candidates, as the transition to monthly positions is fairly complete. That likely means a quiet day tomorrow and Friday, despite still having cash on hand. Which reminds me, based upon some occasional questions from subscribers regarding my personal cash position, I've started posting my "Cash-O-Meter" Yesterday it was at 32%, today, following the JPM purchase it has gone a bit lower. My goal is to be at 40-50% before the big one hits and generally at 20-40% at the end of an option cycle. While there may be some relative comfort in the sedate world provided by the longer term contracts, there's not much doubt for me that the tumult of the weekly world is far more exciting and profitable, as well. By Friday morning we may havce a reasonable idea of the short term market sentiment. These days there's very little reason to believe that anything will ever provide anything other than short term guidance, with the exception of some nuclear holocaust or world-wide ravaging bird flu. Let's hope it doesn't get there, although there is some comfort to be taken in the certainty that either can provide after treading so long in uncertainty.    OTP Sector Distribution* as of May 1, 2013   Click chart to see component positions or click here to enlarge     * Assumes equal number of shares in positions Intraday versions of the Daily Market Update are not archived. You may access prior day's Daily Market Updates by clicking here 
Friday? See Week in Review for summary statistics and performance Sunday? See Weekend Update for potential stock choices for coming week Any day? See Performance for open and closed positions 	The posting of these trades is not a recommendation to initiate positions nor to execute any trading positions, as they may represent time sensitive actions. Subscribers may see ROI statistics on all new, exisiting and closed positions on a daily updated basis.
	See all Trade Alerts for this monthly option cycle

Daily Market Update (April 30, 2013 Reprint)

(see all trades this option cycle) Daily Market Update - April 30, 2013 (Close) Surveys are tools that aren't necessarily useful, even if the methodology is sound. I know, because my earliest "scientific" publications were based upon surveys. It amazes me that some are still cited in the literature 25 years later. They certainly don't have much in the way of predictive value, especially when the survey is to see what kind of predictions are being made for the future. It's one thing to take a survey to see what is actually going on, but it's quite another to survey people on what they think will be going on at some point in the future. In general' "futurists" have a spotty record, regardless of the topic. Just pick up any year old issue of TIME magazine. Politics, finances, fashion, sports, the arts. You name it. The experts are invariably wrong when it comes to predicting future trends and what the "market" will find enticing. Today's survey of interest was taken among some 50 noted US economists. More than 90% of them believed that Quantitative Easing, the Federal Reserve strategy of pumping liquidity into markets would be extended into 2014 and that Federal Reserve rate hikes would be further delayed. They may be right. Either way it's not likely that anyone will ever look backward to see just how good the predicitive value of this particular survey turned out to be. Depending on how you interpret things, as an optimist or as a pessimist, that kind of outlook can either be good or bad. If you believe that our stock market performance has been enhanced by the Federal Reserve's easing, then you'll likely see the silver lining. But if you're the kind that wonders why the Federal Reserve has to keep propping up the economy, you may have your concerns. All that brings us to tomorrow afternoon's release of the FOMC minutes. As the market gets more tethered to the entitlement that QE has become, and has greater expectations for its continuance,you have to wonder how it will react at the first sign that the program will come to an end. Any change in the usual wording in the press release tomorrow will be scoured by any number of algorithms and responded to in accordance with the underlying bias of the software engineer that created the algorithm. That means someone who wrote the algorithm introduced his own optimism or pessimism into the script to interpret the words in a subjective manner and perform some kind of an action. The same for the next guy's algorithm. Given that the job of a hedge fund is to protect their client's money, especially during a downturn, it makes sense that the algorithms would shoot first and ask questions later. They are going to be more likely to interpret with a negative bias. Protecting client's assets is a combination of hedging instruments and dumping shares at signs of potential negative factors. Isn't it comforting to know that the result seen in the markets may have absolutely nothing to do with fundamental issues? Yesterday, despite being a Monday morning and despite having pockets over-flowing with assignment cash, I found it difficult to find any new trades in the face of a triple digit gain and with potentially important and market moving news coming later in the week. In addition to the 10 or so stocks that I highlight each week, I have a number that are also in the "alternate" column. Sometimes I look to those when the primary stocks are just not doing when I was looking for them to do; namely trading at a price that wasn't too expensive. This week, many of those alternate stocks were scheduled to be reporting earnings. However, given the kind of market we opened the week with even the shares that were getting ready to announce earnings were all going higher, as well. That's unusual, in that people tend to be a bit more cautious in advance of earnings. Although earnings also brings out speculators, the activity on Monday was a generalized increase in shares. Not likely that speculators were spreading themselves so thin, just more likely that the buying was fairly indiscriminate. But with even those shares going higher, the opportunity to consider earnings related trades decreased as the risk for moves downward increased, while the premiums did not. Since it's all about the risk-reward profile, sometimes you have to resist following the script once improvisation begins. Although Monday was fairly fruitless, I thought that the early drop on Tueday morning might offer some opportunities but it proved to be a head fake. The manner in which the market erased a 70 point loss and then hovered around the flat line for most of the day was at least impressive in the turnaround. Of course, the pessimist will say that the inability to mount a rally beyond the baseline is evidence of a stalled market that's just poised for a decline. That's probably why it's best to put the television on mute and not read anything. Don't even read this. For now, it looks as if this will be another quiet week of trading as we watch and wait to see how the markets will respond to what could be big news over the course of the next three days. Maybe a trade here, maybe a trade there, but not too much to make it look as if I'm making a commitment.    OTP Sector Distribution* as of April 30, 2013   Click chart to see component positions or click here to enlarge   * Assumes equal number of shares in positions Intraday versions of the Daily Market Update are not archived. You may access prior day's Daily Market Updates by clicking here 
Friday? See Week in Review for summary statistics and performance Sunday? See Weekend Update for potential stock choices for coming week Any day? See Performance for open and closed positions 	The posting of these trades is not a recommendation to initiate positions nor to execute any trading positions, as they may represent time sensitive actions. Subscribers may see ROI statistics on all new, exisiting and closed positions on a daily updated basis.
	See all Trade Alerts for this monthly option cycle

Thanks, but Joining the Darkside

Effective April 13, 2012, pages maintained only for historical reference and do not reflect current opinions nor events.

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To all my past blog readers, you know that it's always been about the money, so now I'm off to the Darkside, where money talks, and everyone else? Well, you know what they can do. But in the meantime, thank you so much for giving me a piece of your day. It has always been very gratifying for me, and thanks to the modern miracle of website analytics, I know where all of you live and get your dry cleaning done.

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