Stock Trading

Steve Auth on market direction through year (with a couple of names named)

Some thoughts on market direction from Steve Auth on market direction.  He has a decent record on making calls - at least recently (always need to make that caveat).




Bulls should hope he continues a streak, as he is calling for a significant upside by end of year.  My retirement program sure hopes he is right!

 

Tuesday, April 9th, 2013 Stock Trading No Comments

Thinking about trading Facebook? Might want to hold off a bit longer . . .

Facebook (ticker: FB) was perhaps the most highly anticipated (read: “over-hyped”) IPOs in years.  Probably the most talked about this century.  And, as everyone knows, it tanked horribly after a quick spike, which didn’t last through its first day of trading. 

But with the fervor behind it, and currently trading around 1/2 the price it debuted at, some traders and investors are starting to look at picking it up. 

I don’t generally muck about with fundamentals, so won’t jump into the argument over how they intend to increase their cash flow and whether that makes FB a good investment or trade, but one thing certainly gives me the shakes when I think about jumping on a stock trading site to buuy some shares: lockup periods ending. 

There are a ton of shares which are out of the game, right now, locked up for regulatory reasons.  Once they are released to the wild, we don’t know how many will immediately be for sale, but very recent history (see article below) suggests an answer: a lot. 

That could present an enormous head wind for any bullish position.   I’m not saying FB is a buy or a sell, but the prudent trader/investor should bear in mind that the next few months are likely to be difficult ones for the shares (and anyone holding them). 

-Timorous



Here’s When Other Facebook Insiders Can Sell Stock

Published: Tuesday, 21 Aug 2012 | 3:58 PM ET
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By: Reuters
 

Last week, Facebook’s early investors and some directors became eligible to sell stock they own in the social networking company. Others will have similar rights in the coming months.

Up to 1.91 billion more shares could flood the stock market — more than four times the 421 million shares that had been trading since Facebook’s [FB  19.22    0.061  (+0.32%)   ] initial public offering in May.

Facebook’s stock has fallen since last Thursday’s expiration of the first lock-up period. On Monday, it’s disclosed that Peter Thiel, one of Facebook’s earliest investors and a member of its board, was among the insiders selling stock after the lock-up period expired. He sold about 20 million shares through affiliates for $19.27 to $20.69 each.

(Read More: Investor Thiel Unloads Most of His Facebook Shares)

Here’s the schedule, as reported by Facebook in a regulatory filing:

  • Aug. 16: 271 million shares held by early investors and directors who had participated in the IPO, though CEO Mark Zuckerberg is excluded for unspecified reasons.
  • Unspecified date between Oct. 15 and Nov. 13: 243 million shares and stock options held by directors and former or current employees, excluding Zuckerberg.
  • Nov. 14: 1.22 billion shares and stock options, about a third of which is controlled by Zuckerberg.
  • Dec. 14: 149 million shares held by early investors and others who participated in IPO, except Zuckerberg.

(read entire article here)

Wednesday, August 22nd, 2012 Education, News, Stock Trading No Comments

Concerns Over Stock Trading Volume

Trading volume traditionally shrinks over the summer months.  Market participants – whether the retail trader or the hedge fund manager – find more entertaining things to do than sit around fine tuning their positions.  You know, things like going to the beach, going to picnics, going to the zoo, etc.  A lot of ‘going to’ that doesn’t involve sitting in front of a trading screen. 

Now, on top of the normal seasonal dynamic, securities insecurities has a number of traders and investors sitting on their hands, too.  Could be a problem for those of us sitting on any kind of profit resulting from the recent market gains . . .


  • August 16, 2012, 8:19 a.m. ET

Stock Trading-Volume Drop Can’t Be Blamed Only on Summer

 By Sue Chang and Laura Mandaro

Trading in the stock market has slowed to a somnolent pace, even after accounting for all the traders and hedge-fund managers escaping to their vacation homes in the Hamptons.

Get used to it. Volumes could bump along at below-average levels for another three weeks, as investors hang on to recent gains and avoid making big moves before what is seen as the next catalysts–upcoming Federal Reserve and European Central Bank events.

On Wednesday, the volume of shares listed on NYSE Euronext’s (NYX) New York Stock Exchange totaled a paltry 2.64 billion, the fourth straight day with less than 3 billion shares changing hands and roughly 29% below this year’s average volume. The month’s average of 3.3 billion has dropped more than 40% from last August’s daily average.

It is no surprise August volumes look iron-deficient compared to a year ago. In August 2011, investor anxiety about Congress’ bitter fight over raising the debt ceiling and the U.S. losing a triple-A rating led to intense swings on the indexes and a surge in trading volumes.

But even compared to prior Augusts, volume has been slight. NYSE composite volume is on track for its lowest month since December 2007 and its lowest August since 2006, according to the Wall Street Journal’s data group.

For stocks listed on Nasdaq OMX Group’s (NDAQ) Nasdaq Stock Market, 1.52 billion shares traded on Wednesday, which is about 12% lower than the average for this year.

Aside from the usual summer doldrums, a lack of fresh incentives, consolidation in the wake of robust gains over the past couple of months and uncertainties over what, if any, action policy makers in the U.S. and Europe will take to jump-start their economies, are keeping investors mostly in the wings. . . . .   Read rest of article.

Friday, August 17th, 2012 News, Stock Trading, Uncategorized No Comments

Volatility Trading Strategy from Larry Connors

 Larry Connors is the KING of mean reversion trading strategies, and this article reinforces that royal standing.  :)   In a nutshell, volatility – as a phenomenon – can swing higher and lower in the short term, but it strongly gravitates toward its own comfort zone.  That zone, the average (or mean), can move higher or lower over longer periods of time, but in the short to medium term time frame, it is where the volatility will hover.   This trading strategy is a good way of taking advantage of this reality.
 
One note though, and I’m a bit surprised that Mr. Connors didn’t make this explicit: this is a one direction strategy.  In the setup he discusses using RSI(2) over 90 as the trigger, and often an experienced trader will understand that an inverse strategy would work at the other end of the RSI spectrum.  But not in this case.  Primarily, this is because the VXX (the ETF being traded here) is continually falling (check out a year chart to see what I mean), so trying the same thing from the RSI(2) < 10 side of things is NOT indicated. 
 
With that caveat in mind, please read and enjoy!
 


 

A Low Volatility Strategy for Trading High Volatility

By Larry Connors | TradingMarkets.com | July 13, 2012 09:06 AM
 
 

 

We’re going to show you a volatility trading model for VXX which has correctly predicted the price of VXX 97.3% of the time since VXX started trading in 2009. The test results are up through the end of May 2012.Trading volatility, especially VXX, has become a big game among professional traders. You only have to look at the continuously rising average volume in VXX, combined with the many new volatility products that have been coming to the market over the past year, to know that volatility is beginning to join the ranks of other asset groups such as stocks, ETFs, options, forex, and futures.Much has been written about how to trade VXX; unfortunately the majority of the early volatility trading strategies were incorrect. Too many people were comparing VXX to VIX and had considered them the same instrument. They’re not.VIX is an index that settles on a value each day based on the underlying vehicles in the index. VXX is the expected future value of where traders believe volatility will be in the near-term future. One is today’s value (VIX). The other is the marketplaces prediction of where these prices will be in the future (VXX).

There are certain characteristics of volatility which are inherent (and sometimes in conflict with each other). The academic world has shown decades ago that volatility is mean reverting. When volatility gets too far away from its average price over a period of time, it tends to reverse back to its average . . . .  read the remainder of this excellent article here


3 Semiconductors for Traders

By The Hot List | TradingMarkets.com | February 06, 2012 05:47 PM
Symbols: NVLS, KLAC, TQNT
 

Being a semiconductor stock is like being from the “technology wing of the technology party.” Whether it is in PCs or mobile devices, due to the advent of smart cars and smart appliances or the rise of The Cloud, few things seem to drive the tech sector like the capacity of semiconductor companies to make our machines move faster, work harder and make our lives that much better.

This is why the group is considered the leader of the overall technology sector. This is why some traders look to such phenomena as divergences between the behavior of semiconductor stocks compared to technology as a whole for potential clues as to whether the larger sector, or even the larger economy, is due for a surprising move.

Here our take on semiconductor stocks is in many ways more pedestrian. Many of these stocks have had great runs. And many traders who have benefitted from those runs appear to be at least starting the process of taking profits. And if that profit-taking continues, many of these semiconductor stocks could be available at their lowest, most oversold levels in weeks if not months.

The semiconductor stock that is most interesting in this regard right now is Novellus Systems (NASDAQ: NVLS). Shares of NVLS rallied to new, 52-week highs late last week, and have pulled back over the past two days as traders have locked in gains and taken profits. Down more than 2% and trading midway between recent, short-term highs and recent, short-term lows, NVLS has a positive edge of more than three-quarters of a percent and neutral ratings of 6 out of 10.

Other semiconductor stocks that have begun to sell off significantly as the week gets underway are Kla-Tencor Corporation (NASDAQ: KLAC), whch pulled back by more than 2% to finish at its lowest level in a week. KLAC has a positive edge of half a percent in the short-term, and has earned a two-point ratings upgrade based on Monday’s selling alone. Additional weakness in the stock could help KLAC earn another two-point upgrade which would put Kla-Tencor in our “consider buying” category in the near-term.

Sellers have already appeared to take control of Triquint Semiconductor (NASDAQ: TQNT). Unlike KLAC and NVLS, shares of TQNT are trading below their 200-day moving average – and have been since the summer of 2011. The stock had rallied into overbought territory on Friday, after climbing for four consecutive sessions. Shares of TQNT sold off by more than 2%, and still have “consider avoiding” ratings of 2 out of 10.

Want more stocks? Read our latest from 7 Stocks You Need to Know: “The Intel Pullback as Pitstop: Three Down, Six Up”

David Penn is Editor in Chief of TradingMarkets.com

 
Tuesday, February 7th, 2012 News, Stock Trading No Comments

What to expect from US GDP?





Friday, January 27th, 2012 Education, News, Stock Trading No Comments

What Up, Dawgs? GE Now Part of the Dow Dog Pound

Published: Wednesday, 25 Jan 2012 | 12:04 PM ET
By: Jeff Cox
CNBC.com Senior Writer

 

Sebastien Bozon | AFP | Getty Images
 

The Dogs of the Dow – those high-yielding stocks that are supposed to represent the bottom of the blue-chip barrel – have some unlikely company.

General Electric once stood as the bellwether of American industry but now sits among the 10 Dow stocks that produce the highest yield and, theoretically at least, represent the most risk for investors.

GE’s [GE  19.121    0.281  (+1.49%)   ] yield is clocking in at a robust 3.6 percent, more than double the 1.7 percent that Dow stalwart Caterpillar [CAT  107.43    1.14  (+1.07%)   ] produces. (GE is minority owner of CNBC.com-parent NBC Universal.)

Joining GE as newcomers to the 2012 Dog pound is Procter & Gamble, with a 3.2 percent yield.

The two companies replace Chevron [CVX  107.071    0.351  (+0.33%)   ] (3 percent) and McDonald’s [MCD  99.22    0.47  (+0.48%)   ] (2.8 percent), both of which boosted the Dogs to the status as one of the top trades of 2011.

As the Dow 30 gained about 5 percent and the Standard & Poor’s 500 finished flat for the year, the Dogs posted an average total return of 16.7 percent, according to calculations from Bank of America Merrill Lynch.

 

But the strategy has been a loser so far in 2012.

The Dogs, as tracked through their ETF proxy, the Deutsche Bank ELEMENTS Dogs [DOD  9.77    0.03  (+0.31%)   ] has gained just 1.2 percent even though the Dow had gained 3.7 percent and the S&P 500 4.5 percent heading into Wednesday trading.

That’s been the story of trading this year: What worked in 2011 has faltered in 2012. High-yield boomed last year but has faltered this year; high short interest worked as a contrary indicator then but not so much now, and non-domestic stocks are crushing their U.S.-based counterparts, again reversing a 2011 trend.

Still, the Dog collar hasn’t chased away those who believe the hunt for yield will resume.

“Yield is expected to remain scarce as the 76 million baby boomers head into their retirement years,” said Mary Ann Bartels, technical research analyst at BofA. “The equity market is supplying an abundance of yield and investors can get paid to wait for price appreciation.”

The rest of the current Dog pack: AT&T [ATT  25.388    0.006  (+0.02%)   ] , DuPont [DD  50.16    0.75  (+1.52%)   ] , Intel [INTC  26.9001    0.0051  (+0.02%)   ] , Johnson & Johnson [JNJ  65.16    0.16  (+0.25%)   ] , Kraft Foods [KFT  38.31    0.01  (+0.03%)   ] , Merck [MRK  38.71    -0.07  (-0.18%)   ] , Pfizer [PFE  21.661    0.001  (+0.01%)   ] and Verizon [VZ  37.5999    -0.1901  (-0.5%)   ] .

 

Want to read original post? Click here.

Wednesday, January 25th, 2012 Education, News, Stock Trading No Comments

Amazon on Fire From Kindle Sales, But Can it Last?

The Kindle has enflamed (pun intended) interest in Amazon’s stock – but will that interest translate into price appreciation?  It’s tough to say – I know I love the Kindle I got my hands on just the other day – but the analysts in this piece seem to have some good thoughts.  Take a read:


 
Published: Monday, 28 Nov 2011 | 6:30 PM ET
By: Bruno J. Navarro
Producer
 

The Kindle Fire sold like hotcakes on Black Friday, but other factors may hold down Amazon.com[AMZN  189.2635    -4.8865  (-2.52%)   ]stock, “Fast Money” experts said Monday.

“At the $199 price point, I think it’s very easy to see this device continuing to sell really well through the rest of the holiday period,” analyst Ken Sena of Eyercore Partners said. “The iPad had such a hold on the tablet market that to see the Kindle Fire actually rival and in some examples surpass the iPad is a bit of a surprise.”

The issue now, he said, was what impact the Kindle Fire will have on the company’s first-quarter guidance.

Last quarter, Amazon.com reported an operating margin below 1 percent.

“Once you do start to see some of that inflection occur, you’ll be layering on very strong revenue growth — 40 percent plus — in addition to margin expansion. I think at that point, the story looks very good,” Sena said. “We just don’t know when that inflection exactly will be.”

Sena said over the past two years, Amazon.com was trading at a 50 percent premium to its 200-day average.

“At this point this year, it’s below,” he said. “While there is excitement over the revenue of what the Kindle Fire could bring, I think there is some concerns over margin weighing down.”

In its favor, Amazon.com delivers customer purchases preloaded on the Kindle, which also provides a platform for future online purchases, Sena said.

“That bodes well for Amazon,” he said.

Looking at options activity for the day, trader Scott Nations said Amazon.com stock price found a floor.

“I think the interesting option play here, though, is in Barnes & Noble [BKS  16.88    -0.30  (-1.75%)   ],” he said.

BKS sells the Nook, yet another rival to the Kindle Fire.

Nations noted that four calls were traded for every put, with call volume at three times the daily average.

“I was really surprised. I didn’t think there was room for a third tablet option,” he said. “The stock is on fire and people want upside.”

Karen Finerman said the issue wasn’t whether the Nook was good.

“The question is: Can they make the transformation? That’s a much, much more difficult thing to do,” she said.

In a related note, host Melissa Lee noted Barclay’s “overweight” rating of Corning[GLW  13.065    -1.715  (-11.6%)   ].

“This is a name I think you can own here,” hedge fund expert Tim Seymour said. “Especially if all the things we’re saying about Apple and these guys are true.”

Joe Terranova called the sustainability of Corning’s strength into question.

“When you look at today’s price action in Best Buy[BBY  27.77    1.28  (+4.83%)   ]it tells you that there potentially is not this overall sustained theme,” he said.

Tuesday, November 29th, 2011 Stock Trading No Comments

Jim Cramer’s Top High-Yielding Stocks

I am not familiar with how each of the stocks below trade, so am not recommending any of them.  But I like the way Mr. Cramer looks at each of them. 
 
One thing that is often overlooked: while you can certainly look at dividend payments as a buffer against capital loss (as Cramer does here), you can also use them as a technical indicator.  Look for upcoming post on the mechanics of doing that very thing.


Published: Wednesday, 9 Nov 2011 | 7:34 PM ET
By: Drew Sandholm Producer
 

For investors looking for protection from a chaotic market environment, Cramer on Wednesday outlined his top high-yielding stocks.

Windstream[WIN  11.86    0.07  (+0.59%)   ]: This rural telco provider’s stock sports an 8.5 percent dividend yield. While Windstream’s wire-line phone business is in decline, the company has been focusing on areas of growth, such as broadband and business services. Of Cramer’s top high-yielding stocks, he said Windstream’s dividend is the least safe, even though it has enough free cash flow to cover the payout. For investors looking for a safer play, though, he suggests Verizon[VZ  37.39    0.50  (+1.36%)   ].

Solar Capital[SLRC  23.41    1.07  (+4.79%)   ]: This specialty lender’s stock pays a massive 10.7 percent dividend yield. Cramer would typically view a yield that high as a red flag, but this is a special case. As a business development company, Solar Capital lends money to small- and medium-sized companies that are too tiny or risky for most people to invest in. Solar Capital then returns 90 percent of its profits to shareholders by way of a huge dividend, Cramer explained. He likes the stock at current levels.

Energy Transfer Partners[ETP  43.3999    0.5299  (+1.24%)   ]: This pipeline master limited partnership yields 8.3 percent. Cramer thinks of this company as a “steady toll operator for moving oil and gas around.” Thanks to recent oil and gas discoveries, demand for new pipe has skyrocketed, benefitting ETP. Some investors are upset that the company did a massive stock offering that knocked its stock price down, but Cramer sees it as an opportunity to get shares at discount.

American Electric Power[AEP  38.83    0.40  (+1.04%)   ]: This utility company is committed to paying out higher dividends, Cramer said, and the stock already has a 4.9 percent dividend yield. American Electric Power is one of the U.S.’s top generators of electricity and has the country’s largest transmission system. Cramer prefers this utility to others, though, because he thinks its utility portfolio is among the strongest in the country and it provides power to the “Heartland” where manufacturing is “very strong.”

Sanofi[SNY  33.49    0.63  (+1.92%)   ]: This drug company pays a 5.4 percent dividend yield. Cramer likes Sanofi because it’s a defensive play that doesn’t need a growing economy for business to be good. In addition, it has the lowest exposure to Medicare of any big pharma company. So any potential cuts U.S. lawmakers make to the program are less of a concern. Meanwhile, the company is moving into faster growing areas, such as vaccines, diabetes, generics and more.

Read on for Cramer’s Top Dividend Stocks 2011

 

 

 

When this story was published, Cramer’s charitable trust owned Sanofi.

Thursday, November 10th, 2011 Education, Jim Cramer, Stock Trading No Comments

Jon Najarian Spots Unusual Activity In Specialty Retail

Mr. Najarian has a knack for using options activity to spot impending stock moves.  Check this one out for American Eagle.

Published: Monday, 24 Oct 2011 | 1:15 PM ET
By: Lee Brodie Producer

Halftime Report

Trader Jon Najarian has spotted unusual activity in a major specialty retailer.

He tells us his proprietary OptionMonster heat seeker has identified an unusually high number of November 15 calls that recently traded in American Eagle[AEO  13.383    0.383  (+2.95%)   ].

”It’s not my number 1 pick in the space but there’s not doubt big investors have their eye on this stock, It’s a lot of upside buying.”

It suggests at least some institutional investors expect the stock to make a sharp move higher.

Elsewhere in the space trader Zach Karabell is watching VF Corp [VFC  136.93    4.24  (+3.2%)   ], Bed Bath & Beyond[BBBY  62.3802    0.5702  (+0.92%)   ], Nike[NKE  94.98    0.63  (+0.67%)   ]Limited [LTD  43.90    1.19  (+2.79%)   ]and Ralph Lauren[RL  157.85    7.11  (+4.72%)   ]which all hit record highs.

”High end retail is keyed into the discretionary spend. If people have money they continue to spend it.”

JJ Kinahan agrees. “For the high end this could be a much better holiday than many investors expect.”

Monday, October 24th, 2011 News, Options, Stock Trading No Comments