Morning Update: February 2, 2012

Feb 2, 2012

Happy Groundhogs Day!

Sorry about the late update today, but half of the office was traveling today and I just got in from my trip. And as far as the groundhog’s record of predicting spring…it turns out it is worse than a coin flip – just like analyst’s predictions. I guess even the groundhog theory is a random walk.

It is about noon eastern time, so I have the benefit if knowing where the market is going to open this time. This does not really help though as there is nothing going on in the news other than the election minutia of everything a candidate ate for breakfast being important in the media. Is anyone else already tired of the election process and missing Greece problems?

Markets

Dow – The market as a whole is just vacillating around unchanged on the day.

Metals – The only real movers are metals, which have been very strong since Bernanke’s last speech where he hinted that another round of easing might be required.

Oil – Oil is still on a slight advancing glide path, but nothing real strong, especially given the mild winter we are having and.

RUT – This index was up considerably yesterday despite the market’s mild movement. The Maui class has a position in this index as a paper trade example which needs to be addressed in a separate email.

AAPL- Apple Computer has been under-performing the rest of the market for the last few trading days which is normal for this stock after a big spike in share price following earnings. This is going to be a big point of discussion for the POT class tomorrow.

VIX – volatility has been hanging tough at about 18.5% for the last few days despite the market being slightly week, but not going too far down.

Morning Update: January 30, 2012

January 30, 2012

04:30 Maui time., 09:30 EST.

Aloha!

WORLD

What was fading from the forefront of our minds apparently got nudged back with a financial slap in the head. Europe is now back on the radar screen as it was during August, September & October. The stock index futures are all looking lower as a result of Germany and Greece bickering over budget measures. Funny how the child always is mad at the parent for not enough of an allowance after the kid already spent his money.

Since Greece has been unable/unwilling to conform to the terms of their agreement when receiving bailout money, Germany is (rightfully) upset and wants to control their budget. This has Athens upset which is not a real strong position politically to be in, but is apparently an emotional one for a country that wants everyone to be able to retire at 50, and continue with their hard working 5 hour a week (slight over exaggeration) work schedule.

The frustrating thing is that most American’s are fools. We get upset with the lazy government subsidized lifestyle of people like the Greeks, calling them lazy. Yet at the same time we have a large portion of the population not wanting to vote for Mitt Romney because he is rich, and he is part of the 1%. America use to be the land of opportunity. We idolized people who came from humble beginnings to make something of themselves as it was proof that the Heratio Alger stories could happen to us – if not, then our children.

I think the only thing Mitt Romney has going for him that he should be proud of is that he did make something out of himself. It could be worse. He could be financially irresponsible, and on welfare. Or he could have never had a job, like some candidate who will remain nameless, and think that he could fix the economic crisis simply by doubling the deficit and throwing money at the problem. – thus turning the US into a Greece in the making.

Grow up Greece and take your medicine or go bankrupt and start over. Russia did it with tremendous success. Retire at 65 like everyone else, and stop feeling entitled to something, rather make something of your God given talents.

MARKETS

The S&P futures are down $12 points in the pre-market. This is equivalent to about 100 Dow points based on fair value. The Euro/USD is down 1 ¼ cents as would be expected. AAPL is looking down $2. SLV is looking down $0.50. The VIX closed at 18.535 unable t rally despite Thursday and Friday being down days.

Recall the chart we put up last week showing how the last two years saw the first 3 weeks of the January markets for 2010 and 2011 to be higher, followed by a sell off late in the month. Looks like history does repeat itself.

Wednesday Night Group

Recall that we have on a paper trade 1-5 position for illustration purposes. We are long the OEX puts naked and short the SPX put spread as a hedge. This should work out wonderfully on the open as the OEX will likely be down over 1 strike.

Maui Class
Your paper trades will look awesome on the open. Recall that you have a couple bearish positions, most notably the short E-Mini future hedged by a long call butterfly (a la PLATINUM material).

In addition the short call condor in the RUT should pull back as well. Lastly keep in mind that you are looking at the GLD weekly put BWB on the open. Please review the notes of the class as a refresher.

Wayne Dyer was very inspirational from my understanding, though I preferred to be scuba diving with the giant turtles in the caves. We can all learn a lesson and be more motivating of others. Have a great day.

Morning Update: January 12, 2012

Thursday January 12, 2012

Good Day!

So far the market has done exactly what it had done the previous January. Things should remain stable for a while, baring any news. Not until we are in Maui will things go nuts!!!!

IRAN

I still stand by my prediction made late in the summer. We will (or Israel) send Iran reeling back in time by 1,000 years. Yesterday some mysterious accident occurred where yet another Iranian nuclear scientist’s car exploded as two guys on motorcycles drove by. I would rather be in Pakistan as a bomb squad expert, than have a cozy desk job as a scientist in Iran.

In addition, this evening it was announced another carrier group is moving towards Iran. Russia, England and even the French are moving carriers into the region. This is likely in response to the threats Iran made regarding shutting down the Straights of Hormuz.

Oval Office

Thank goodness all the domestic and foreign problems are solved and Obama has time for chatting with Brad and Angelina. Quite honestly if I were running for re-election I would be hanging out with Clint Eastwood, Tom Cruise, Morgan Freeman, and Tom Hanks. Brad-Jolina is kind of a joke. Yet Obama did kill Bin Laden!!!

Morning Update: January 5, 2012

Thursday January 5, 2012

Salutations!

Today’s news and economic numbers have many elated about the possibility of 2012 being a great year despite it coming to an end on December 21 (Mayan calendar nonsense).

JOBS

ADP came out showing that 325,000 jobs were created in December, mostly for the Christmas season, and most for the the Apple Stores. A few retailers past their prime reported sluggish sales, but I don’t know when the last time I was in a J.C. Penney’s. As a matter of fact, I don’t even know where one is, and their name, product, and brand is stale. New claims for unemployment fell 15,000 last week.

BKS

Barnes & Noble (BKS) is doing horrifically at the pre-market, Looking down 3.74 at $9.81 (or off 28.71%) after more downward guidance. The company is considering spinning off their NOOK product. Keep in mind that people do not shop for the best product. Rather they shop for the most popular product as rated by their uneducated peers. And if you ever want to know what products are going to be hot, don’t ask analysts or do research – just ask a 10 year old. They are the pones on top of popularity.

Right now the implied volatility in this stock is at 104%, but likely to open much higher, which has us believing it will be a great possible candidate for the “5 Year Millionaire” strategy. We are NOT recommending this as a trade as that is not our business (we give education – not advice), but those looking for an example to PAPER TRADE will see this as a much more favorable template than the more risky pharmaceuticals.

GOP and Obama

The Republican congressional leaders are fairly crying “illegal” with regard to Obama’s appointment of Richard Cordray’s appointment to head the Consumer Financial Protection Bureau. Once again the self-proclaimed “most bi-partisan” President waited for Congress to recess to to do what he wanted – not what the constitution calls for.

Mitch McConnell (Rep. Senator) stated that Obama is doing a power play that “ARROGANTLY circumvented the American people”. The only thing surprising about this is that the Republicans were caught off guard, like they didn’t learn their lesson from OBAMACARE.

According to AP:

Added House Speaker John Boehner, R-Ohio: “It’s clear the president would rather trample our system of separation of powers than work with Republicans to move the country forward. This action goes beyond the president’s authority, and I expect the courts will find the appointment to be illegitimate.”

It is almost a surprise to the President that this is an election year and the American people are SICK and TIRED of politicians doing what they want – not what is legal.

AAPL

The market is looking lower, with Dow futures down 47. The S&P 500 futures are down $7. Despite this, AAPL is looking higher and set to open near $415.

Wednesday Night Group

Last night we discussed three different strategies/trades. The market is looking to open lower, which is unfortunate as we were hoping to show examples of selling into strength. The items discussed may be put off for a moment, depending on market movement, and we will see how the market reacts after the initial open.

Morning Update: December 20, 2011

December 20, 2011

Only 5 days left until Christmas, the markets should be going into Christmas mode today or tomorrow. What is meant by “Christmas mode” is trading that is almost normal for the first 30 minutes after the overnight gap (up or down), followed by painfully boring trading the rest of the day.

I don’t know if things are anywhere as nuts on the floor as when I was down there, but back in the old days when I was a sprout things were crazy. Everyone was drinking on the floor. People would be racing radio controlled cars from one pit to the next with martini mixers for people to sample.

The brokers were handing out great presents, and clerks could expect to get as much money that day as their pay for the year. Cases of booze would be exchanged back and forth. And though traders typically didn’t give brokers gifts, I recall giving out 15 cases of Dom Perignon – none of which likely even made it home. Needless to say, not a lot got done.

Housing Starts Data

Up 9.3% – Better than expected. This sent futures up a little more than they were already up, and they are currently up $14 points. This is equivalent to about 105 Dow points higher. Also up are commodities such as gold, silver, oil, etc.
Things We Are Watching

OIH – the OIH clo0sed yesterday at $108.01, fresh lows, and we are looking for cute ways to get long in the Wednesday Night Class.

SLV – Enough is enough, and we think the majority of the margin calls that sent the stock lower are done.

AAPL – Apple reports earning next month, and we have been hitting home runs in that name. We will also place a trade in there this or next Wednesday night.

Morning Update: December 7, 2011

December 7, 2011

Good Morning!

Occupy Wall Street

Occupy Wall Street has now turned into Occupy Our Homes with protestors surrounding homes to retard the process of evictions. Their claim is that they are making it a “day of protest the mistreatment of homeowners by big banks”.

First, I am not going to go into the fact that while it is devastating for people to loose their homes, they entered into a legally binding contract that if they didn’t pay their loan they got evicted. Plain and simply. It stinks, but it is capitalism. If you want a free apartment turn back the hands of time and move to the Soviet Union. Except some responsibility for your situation like the rest of the world does.

But as I mentioned previously, this is going to keep expanding. People are upset, and rightly so, about corruption on Wall Street, the government, etc. CNN Money’s Les Christie is now saying, “Is this the end of OWS, or the start of something else?

Why do people hate Washington so much? It is not just the money, that is what people don’t understand in the media. It is because of inequity in everything. Congress is allowed to insider trade while getting on television pouncing on the public who does the same, proud they are watching the hen house.

In addition, there is a mood among many Americans that something can be done to restore the economy, but stupid tax cuts instead of training programs, spending on items that will not bring the money back, and black holes of back deals hidden in 2000 page legislation is what is frustrating. They are playing the same game they did 15 years ago, as if we have not learned how they rigged it for themselves. Denouncing Freddie and Fanny while getting campaign contributions from the same. This will continue to grow and get MUCH worse. This will be Greece.

Europe

There is a very optimistic stance Wall Street is taking that Europe will come to some agreement by Friday, which I think leaves little room for a run higher on Friday. Even if the news is good, the markets are expecting it.

Obama’s Speech

President Obama spoke yesterday stating “it is make or break time for the middle-class”. The talking heads are stating that many would argue that day came about 3 years ago when he was too busy jamming health care down people’s throats, a plan that will destroy the middle class because small business owners can’t afford health care for part time people. Oh, how the ones who supported him now turn and act like they didn’t vote for him.

And as great as Obama is at speaking, his words were short on details. Typically we find out the details of what he has in mind after a bill has been signed. That does have its benefits in that the American people can’t deluge their congressman and senator’s offices with emails and phone calls voicing their opinion – not that they care.

The one thing of substance he did say is that “America has to invest heavily in science education”. Interesting, I recall hears the same speech by EVERY president since I was a little kid. I was a science major in college. And if things are that bad, I might go back to school and get a PhD in chemistry. The way Obama is talking, I would have a monopoly on carbon bonds.

Morning Update: December 6, 2011

Tuesday December 6, 2011

Good Day!

The markets are looking stronger today despite S&P downgrading of Europe’s debt. As with almost all news, it is not what is in the news that matters, rather how the market wants to interpret it. Is the glass half empty or half full? Three weeks ago this news would have sent the markets in a tail spin, but today it is taken as a positive that this move might be what is needed to force Europe to come up with a plan.

Today

All things remaining constant and no surprise news, this is likely to be a very boring day. We will open higher, sell off and then drift around.

Another Election Scandal?
Mitt Romney, in second place for the GOP presidential ticket, is now under scrutiny over computer scrubbing. Apparently after leaving office of Governor he spent $100K of tax payer money to get rid of old computers, have some scrubbed of all data, and changed all computers in the office with new ones.

Wednesday Night Class

Hopefully by now you have received the remainder of the non-proofed article that will be about 70 pages when done being proofed. According to the office it should be done by this time next week, and the final copy sent to you at the same time. The “Using In-The-Money Calls Instead of Stock” article will then be put onto a highly detailed Webinar that will be created for E-Walk. This will obviously take a tad longer than a week from now.

VIX is hovering at 28%, and hopefully it will get down a tad more by tomorrow night.

Insider Trading on Pennsylvania Avenue Street.

The House is to hold a hearing on insider trading in Congress. As I stated in one of my predictions for the year, I stated that people being fed up with government would have Occupy Wall Street turn into Occupy America.

One of the biggest scams that all of us would be in prison for a long time about is insider trading. Yet is is legal for the House Members to trade illegally. There has been a bill to stop this since 2006, but it was never going to be heard on the floor as when it comes up every member leaves the floor so no one can vote on it.

Amazing, it can pass an unpopular 2000+ page health care bill after getting the bill 8 hours earlier, but this one simple common sense thing has been wasting away and collecting dust for 5 years.

It has become such a sore spot that now House members are very reluctantly going to vote on it shortly. I stated that Gingrich would likely be forcing this through if elected, but it looks like Congress has too much egg on their face to wait until 2013.

Morning Update: December 5, 2011

Alot of things to cover today!

First – “You Pick The Topics Seminar”

This Friday and Saturday is our “You pick the subjects seminar”. There are still 2 seats left before we close the doors, so if you are thinking about showing up…..now is the time to call 302-525-6469 to get in the class. Scott is busy making the slides as people have come up will many questions that will be covered. Thank you for your suggestions, and we look forward to hosting you at one of our Delaware offices.

Second – ITM call instead of stock.

As he does every couple of months, Scott has written a free write up for the people participating in the Wednesday Night Advanced Class. This has taken a week or two longer than he wanted, but it is also about 30 pages more than he originally anticipated. The booklet will be roughly about 70 pages when done being proofed.

Those in the class will have the rough draft later today, and the corrections will be available in about a week. Lastly, after the seminar he will do a 1-2 hour webinar on the subject and we will put it on E-walk for those who are not in the Wednesday Night Session.

Third – Newsletter

As we have mentioned, Random Walk is starting a free monthly newsletter which started being created December 1. Starting January 1 it will be available online to everyone who wants to download it in a PDF format.

So we are keeping track of all pertinent items, statistics, comments and events from Dec. 1 to Dec. 31. This material will be in the newsletter set for its first release on January 1.

 Big Weekend For Markets

Politics

Herman Cain’t officially dropped out of the Presidential race and he now endorses Newt Gingrich. Though Jim Cramer is predicting Obama as winner, we are sticking with our predictions that Newt will win. In Vegas we are taking Gingrich and giving the field.

Markets

The Dow and overall markets are looking to continue their recent rally. The markets have moved well beyond the strategic technical number of SPX 1220 we have been watching it vacillate around.

SPX cash is looking at roughly $1,260, well above the resistance/support line, and $-$5 points from piercing the 200 day moving average. This would be an extremely bullish move.

Morning Update: December 1, 2011

Thursday December 1, 2011

YESTERDAY

Yesterday was the largest up move we have had in 2 years. Most of this was due to major central banks agreeing to make cheap loans for struggling countries.

JOBLESS CLAIMS

Jobless Claims came out at 402,000. Economists were expecting a total of 390,000 compared to 393,000 in the prior week. Considering that they have been averaging over 400,000 for the last year, these were optimistic projections. Yet, most of that optimism is certainly centered on temp jobs being added for the holidays.

The S&P futures were exactly unchanged going into the numbers. This sent the futures down only $2 in the following 5 minutes.

NOVEMBER MANUFACTURING

Economists were expecting a reading of 51.5 compared to a 50.8 in October.
SPAIN

The country aims to raise 2.75 billion euros to 3.75 billion euros in a bond auction today. This could be good or bad news for the markets depending on the results.

ELECTIONS

Herman Cain adamantly says that he is in the campaign for the long haul, but will talk to his wife before deciding if he is going to drop out. Well, he does sound waffling enough to be a President.

This will essentially bring the Republican ticket race down to Romney and Gingrich. The others are simply staying in with the hopes they can pull of a Secretary of State or Vice President role.

Predictions for 2012 That Will Affect the Markets

These predictions are made a few months earlier than last year, and a month before the media makes their predictions. Mine are not an attempt to be Nostradamus, rather what looks like is certain to happen and will affect the markets going forward.

• We will bomb and/or go to war with Iran. Period. 
• Relationships with Russia will cool off more up to the point of a new cold war. 
• Noneof Herman Cain’s accusers will be eligible for a post-scandal spread in Playboy (this prediction was just for fun). 
• Newt Gingrich
  • Newt will change the focus of his campaign slightly away from the economy and Obama to also cover corruption in government.
  • Newt will win the Republican primary.
  • Newt will win the White House 

• Occupy Wall Street will grow larger. I originally thought that this movement would die out faster than the Tea Party, but mayors across the country are handling the protests wrong. With any movement the more attention people get the more married to the cause they become. Had the mayors simply let the protestors wear themselves out and start freezing with the December weather coming they would pack up and leave, only to return when the next spotted owl dies. Yet, the mayors are making mass arrests which is like a packing ticket with a 2 hour jail tour. This is simply enraging people more and embedding them into the cause. 
• Occupy Wall Street will turn into Occupy America. This will become more organized and actually cause new legislation to come into affect. 
• Their main goal of redistributing wealth will not occur, but even if it did it would not mean anything. Their utopian ideas are ridicules. How many times have you heard of people winning the lottery and within 5 years they are broke again? How many athletes do you need to see like Mike Tyson blow $400 million and become poor again? You could take away all the money from billionaires and give it to the poor. Within 5 years the new rich would be poor again and the one time billionaires would be rich again. It is not about unfairness. Quite the opposite. The rich are rich not because of unfair taxation, but because of good money habits and education. It comes with hard work. While the poor are protesting (because it is more fun than working) the rich have been up for hours working. 
• 2 Years after Newt is President (3 years from now) there will begin to be a sway in people’s steps and a general optimism in America. It is not because I like Newt that I am saying this. Rather it is that we are stuck at a bottom and bouncing ever so slightly in the economy. When people see a crack down in government waste, spending and stealing as well as unemployment dropping and housing prices to start higher again (though at a slow pace) confidence will come back. A sense that “that whole housing and banking thing sucked, but we got through it….” will prevail. 
• More market educational firms will go bankrupt or be forced to sell out to brokerage houses. This will put Random Walk in the forefront of respect, but not sales. We are not focusing on being the biggest, nor do we want to. We only want serious people who are serious about their education. No high pressure 4 hour sales speeches at every seminar. Our business is built on attraction rather than promotion. 
• Random Walk will offer to put their traders against any other education firm’s traders in a “trade-off”. No company will accept the challenge. 
• Gold will break $2,000 an ounce and interest rates will spike higher. The TLT will trade under $100.

Cyber Sale Starts Friday November 25, 2011