Not much happening for me lately in stocks. I am still bearish on the S$P 500 and still buying SPXU. Do you think there will be a sell off in the markets?
I am still holding my SPXU position as I completely agree with this video I just saw on my CNBC app on my iphone. It expresses concern and a bearish outlook if the S&P 500 climbs around the 1350 – 1365 levels.
I have absolutely been shocked by this rally in the markets. I think the pull back could be just as sharp as the climb and that is why I have been dollar cost averaging into the SPXU ETF as the markets have been climbing. I am just sitting tight and being patient as I feel this pull back will be real at some point and am willing to wait for it.
Here are a couple facts and reasons I just do not feel this sustained climb in the markets is justified.
1) Europe is in a recession and still having real issues with the inevitable Greece default and instability in their economy and markets.
2) U.S is still in $15 Trillion plus dollars of debt and with no clear plan still to reduce it. Only talk of increasing the debt ceiling again.
3) When interest rates rise on $15 trillion of debt this will cause tremendous pressure to reduce the budgets.
4) Defense spending will have to be cut as well as other government programs. Ripple effects will be huge when layoffs start in the defense industry and through the suppliers.
5) More baby boomers retiring and pulling out of 401K and retirement plans thereby reducing inflows into stocks.
These are just a few key items why I am still bearish on the markets. Sure we are getting a short term bounce in the markets, but think the true picture is not good. At some point the reality of the U.S huge debt load is going to have to be dealt with. When this happens and true large cuts are implemented to balance the budgets and then to dig into current giant debt loads, this economy will potentially have to slow again.
Sure, tons and tons of money was pumped into our economy and everything looks rosy. I still feel it is an illusion and being pumped up by the media. Things seem stagnant and remember there is an election around the corner so all this good news makes for a positive for the elections. But, once people see through this and look at the realities of the debt load our country is burdening our citizens with as well as the problem of how do you grow an economy that is so far in debt and needs budget cuts, I think the markets especially the S&P 500 will pull back.
Time will tell. I am long Long SPXU. Listen to the video below as it gives some interesting technical analysis.
Quote from Video: Earlier we spoke about the s&p 500 maybe rising. are the technicals backing that up?
Marianne joins us. as i recall you were bearish on the s&p 500. where do you see the markets going this year?
“We are bearish”
Making Money Buying a Netflix NFLX CAll Option
I have not posted for a few days as I have been very busy working on my business ventures and with work in general.
But I love coming to the MakingaMillionDollars blog to discuss with you stock strategies and stocks in general. I find writing down my actual trades on this blog helps me document what I am doing right and wrong. Hopefully all of you readers are learning by my mistakes or successes.
I copy my timestamps and trades write here on the post so you can see exactly what I did in case you may want to try the same type of trades some day. Always make your own decisions and of course do you own homework.
Ok guys and gals, here was the Netflix (NFLX) Trade I did the other day.
Filled Buy to Open 1 NFLX Mar 17 2012 90.0 Call Market 9.50 – – 12:37:54 01/06/12
Filled Sell to Close 1 NFLX Mar 17 2012 90.0 Call Limit 13.75 – – 12:16:09 01/09/12
As you can see by the time stamps above from my trading account I bought a $90 out of the money March call option. As you can see I put a market order in and it cost $9.50 per share. Remember if you buy 1 contract which I did this will cost you $950 to hold 100 shares of Netflix Stock until March 17th.
If I would have bought the stock outright it was around $87 per share so it would have cost me $8700. So anyway I had a good feeling about the high volumes and momentum on Friday 1/6 so I decided to purchase the Call option for a quick trade.
Wow, I did not expect on Monday for NFLX to pop all the way up to $98 by the end of the day. Unfortunately I was so excited when I saw the $13.75 bid price for the option and that in total I was up by $4.25 x my 100 shares for my 1 contract that I put in a sell to close order and made a quick $425. Not bad for a days work?
Now if I would have held it to the end of the day it would have been worth much more and I probably lost a few hundred I could have captured.
But my saying is should of, would of, could of and I don’t like to dwell on the fact the stock shot up way higher that day than what I sold it for. I mean I am not greedy and was very happy with $425 quick profit and I was out.
One of the reasons I think this option popped so much was on the news that Netflix opened up shop in the UK and Ireland. But, the negatives were to me that they have huge costs for media this year for the U.S and opening up in these new countries will be very expensive. They are not talking about even making a profit this year.
So I felt this was a good trade and today I see Netflix has dropped back down below $90. I would like to wait for it to drop more and might just buy another option on it.
I have a couple other stocks I have been eyeing to do the same. Stock options can be tough to understand at first, but it can mean really quick money on a trade if you play it right for a low initial investment.
I will be posting more on my options trades so if you want to learn more, come back and read my next few posts.
Talk to you all later,
Steve
How to Invest if Iran Closed the Strait of Hormuz?
If Iran actually follows through on a threat to blockade the Strait of Hormuz, it could fire up oil prices to all time highs quick.
Tensions are really high as the U.S continues to put tighter sanctions on Iran.
Iran has flexed it’s military muscle with a missile launch and a warning to the U.S to stay out of the Strait of Hormuz.
They have also stated that if their oil shipments are shut down due to sanctions, that no other oil will move through the Strait.
Is Iran just bluffing? Can the United States afford to go into the Strait and unblock it militarily if they do?
Some would say there is no way that Iran will actually go forward with blocking the Strait of Hormuz, but what if it does over the next month or two?
Is there a way to invest in a way to make money from the conflict. Now this is not something anyone wishes for, but these conflicts do happen and with tensions growing both countries are making threats and warnings which could lead to an actual conflict. If this happens and hits the news wires at CNN, CNBC and the local news channels I really believe it will be big, big news and you will see oil sky rocket.
I always like to use the ETF’s if I am going to speculate on things like metals or oil.
Today I tried something a bit different that is out of my comfort zone. I normally do not like speculating as it is like gambling and I normally always lose on these plays. But in this case, I wanted to test this out and you can give me your opinions and watch me either make money or lose money over the next 3 months on this speculative play.
I wanted to invest in BNO which is the United States Brent Oil ETF.
It is sitting at $79 per share and wanted to get 100 Shares. Instead of investing $7900 I bought the BNO out of the money $82 April call options and just 1 contract.
I am figuring if there is going to be a conflict it will happen in the next 90 days. This Option cost me $530
Filled Buy to Open 1 BNO Apr 21 2012 82.0 Call Market 5.30 – – 14:08:09 01/05/12
Now again the reason why I hate options is that right off the bat you are usually negative and I don’t understand what happened in the case of me buying this. It is already down 47% in after the first 10 minutes of buying it.
I am going to call TDAmeritrade to try to understand what happened. I do not really care at this point because if Oil does shoot up on tension I know I will make some money on this call option or I can then buy it at $82.
This may be a really stupid thing to do on my part, but I did not want to risk the full $7900 and have BNO drop to $71 and then be out $800 or more dollars. Again, this is an experiment and a completely speculative play.
If you are interested in how to buy options I can give you more information. This was a very unique situation and I have actually made some good short term trades using options with APPL Apple Stock and even NVDA.
It is just kind of discouraging when you buy an option and the same day it is worth half of what you paid for it in the case of this BNO option just purchased.
I will find out more and post the information so you can learn from my success or mistakes in the future.
I am still holding a large amount of SPXU and still think that could play out in my favor over the next month or two. Just being patient.
As always, if you have comments, suggestions or would like to do a guest post just shoot me an email.
Have a good one!
Steve
First off I would like to say to all my readers here on MMD, I hope you all had a wonderful holiday weekend and enjoyed spending time with family.
I thought I would do a quick post on a position I have slowly been adding to and that is my SLV Silver ETF.
I know I have heard Jim Cramer speak about the metals and he always says to stay away from Silver and focus on gold or the GLD Gold ETF.
I really like Jim and his show and like to listen to his philosophy and strategies. In this case I go against the grain and trade silver.
I have watched this ETF for awhile and have made some nice money with the silver trades because of its volatility.
I have a couple of rules I was following based on the charts on SLV. Now again, history is no predictor of the future but I try to use the highs and lows to start my selling of silver or the low range to start a dollar cost average buying strategy.
I have recently bought a couple hundred shares of SLV at around 28. Just a few weeks back it was sitting at 32. One reason why the silver ETF has dropped is due to the slow rise of the dollar over the last couple of months. Here is the chart on SLV below so you can see the trading range.
If you look at the Proshares Dollar index UUP, which I use as a reference you will see this climb. The dollar just spiked today and volumes and lack of traders has dropped silver again down below 27 to 26 and some change. I look at this as an opportunity and inched into another 100 shares. I have attached a chart of UUP below so you can see what the dollar has been doing over the last couple months.
I really think that we still have allot of unstable things out there right now around the corner going into 2012. We have our U.S Debt ceiling problems as well as a lingering pain in the side from Europe which I do not see going away any time soon.
You then have allot of geopolitical issues with Iran and many of the other oil countries. There is just so many things that can happen to create instability and this tends to get people to jump back into Gold and Silver.
If China continues to slow it’s government will just stoke the fire and get its economy going again. There are lots of manufacturing industries as well as jewelry buyers that will drive Silver demand.
This is a cyclical play and I will buy it down here at these lows with the anticipation of it growing over the next few months back up to the levels where I can sell it off at a nice profit.
If it goes lower, I will buy another 100 shares.
During the slight Santa Clause Rally I sold most all of my stock positions off and took some profits.
I am holding a very nice position in SPXU waiting on the S&P500 to make a move to the downside. I am dollar cost averaged in very low and think I should be able to make a nice profit when this move happens and I sell out of the position.
This is my strategy for now and will maintain and monitor these positions.
So what are you looking at buying this coming year? What do you think about Silver? Leave your comments please.
Have a fun and safe New Year’s Eve!
Steve
I think allot of people are wondering if we are going to get a Santa Claus Rally and are hoping stocks take off for the year end 2011.
Well, here is my opinion for what it is worth.
Oh and by the way in my last trade on SPXU which bets against the S&P 500 a few days ago I was able to squeak out another $1200 profit and sold at around $14.80. I had to mention this quickly as it was the main topic of my last post.
Now with that said I have not bought back into SPXU yet and here is why.
Most of the stocks I watch like SODA, S, BIDU and SLV were at great prices and have bought into them. Right now I am sitting at break even. But when I look at the charts on all of these they were very low and I took half positions. This means that if they would drop below these historical lows that I have targeted I could buy more and dollar cost average down and hold.
I actually like all of them as longer term plays so would be willing to buy and hold.
Do I think they could go up the closer we get to the end of the year, you bet. I think that money managers could drive the rally especially as volumes are very low. This is my strategy and I have set reasonable sell order in on these stocks to trade them as they go up and like I said if the strategy goes south I am ok with that to and will just buy the second half of my position.
But I am hoping on the Santa Claus Rally in the stock market. This way I can sell these stocks for a nice little conservative profit and hopefully reposition into SPXU.
It will be interesting to re-evaluate my strategy once the year end is over and see what my next move is as this always seems like a chess game to me.
It is a tough market to play out there and I want to continue to develop my strategies to always be in a winning position.
As always leave your comments and suggestions. If you have a different strategy please offer it up to everyone, I would love to hear it.
Here was an interesting S&P 500 Index History chart showing very close similarities between the 2008 financial crisis and the new 2011 Forecast.
It is almost scary how close the relationship is in the drops. I am attaching it so that we can document this history. Not to say it will predict the future, but based on all the other drops it will be interesting to see if we will drop off the cliff like this chart seems to predict. I am glad I am still using SPXU for the big drops. By the way using the SPXU and UPRO have been working very well for me and others that I have shown the technique to.
Let me know you opinion on this comparison and leave us a comment on what direction you think the markets are going.
In my last article I was saying things just seemed too negative, but now think it is going the opposite direction.
I am now becoming more of a bear and here is why. Everyone is buying, the markets are shooting up and everyone is positive. I like to think against the grain. I do not see any logical reason for all this optimistic thinking. Look at the chart below and hopefully you see what I do.
I know they say the trend is your friend and the trend right now is up. But is anyone asking why the markets have shot up like a rocket so quickly?
The (SPY) or S&P500 is now bumping into its resistance point by almost touching 122. But, if you look at the Stoch chart below which is showing an over bought condition being up over 80 at this point tells me we are getting ready for a fall in the next few days.
This has caused me to start positioning into the (SPXU) Which dropped below 17 which is normally my trigger point. We are now seeing the UltraShort to the S&P500 falling down to almost 16 which is almost at its low of around 15. Wow, to me technically this just looks like a great time to position into a short the S&P500 position.
If you look at all the ups and downs over the last 3 months, whenever it has the Stoch chart has gotten above 80 we see a drop. The other thing if you look at volume it is still relatively low. Plus we still have the fear factor.
It is so funny to me that a week ago everyone was bailing out of the markets. The media and the folks on CNBC were fairly negative and glum. Now all of the sudden because Europe has said they have a plan to make a plan we are going into Euphoria. This is a riot to me and just shows how things change and the view for individual investors would be to start jumping into the markets at these overbought positions.
I just don’t buy it and have moved my retirement accounts to cash after this nice ride up. I have sold all my positions and have been dollar cost averaging into SPXU which is to short the S&P500. Why you may ask?
OK here are a few reasons:
1) I don’t believe things have changed that much in a week to cause this steep climb. Still trading within a range.
2) I think Europe is in big trouble if they need 3 weeks to delay to think about a plan.
3) Think the European debt situation is much worse than anyone really wants to believe. Sure just print more money, lol.
4) The World including the U.S is still in a tremendous amount of debt in the trillions of dollars. How are we going to reduce it without severe spending cuts which will stifle growth?
5) China is slowing due to U.S and Europe demand declines.
6) Millions still out of work or in low wage service type jobs with no benefits.
7) Millions underwater on their homes and growing.
Thousands of College Students with almost a trillion dollars in student loan debt and no jobs to show for it. How will they pay it back?
9) Banks holding back on loaning money for good reason. They will only loan to the people with excellent credit. Most people these days have poor credit due to losing homes and jobs.
10) All negative indicators but everyone smiling on CNBC and happy like everything is behind us. People short covering and others jumping in. Time to sell! Just my opinion.
Ok maybe a more than a few. But right now I just do not see a real catalyst for the markets continuing to climb. I mean what is so positive?
I am moving to cash and positioning to short the market now that it has climbed so high so fast. I am playing the extremes. Now if the S&P moves much lower, I will then buy the UPRO and ride the craziness back up. I hate to say it, but think it will remain volatile over the next year and playing the indexes at the extremes will be my strategy.
Good luck and be careful out there.
I was reading my Bloomberg News reports as usual and saw this headline about FCX or FreePort mining company having a major strike with its labor union in Indonesia and they failed to resume talks to end a strike at the company’s Grasberg mine in Papua.
The story goes on to say “the strike at Grasberg, which has the world’s largest recoverable reserves of copper, has raised concern it may widen a global metal deficit and boost prices.”
With the emerging markets still buying lots of Gold as well as other countries still demanding it, I am happy with my recent purchase of GLD call options and will be interested to see if GLD or the Gold ETF as well as other metals gets a boost.
It still amazes me why people are flocking to the U.S Dollar with all the money printing, debt and dilution that has occurred. It just goes to show you what fear will do.
Gold is to me the only real measure of true monetary value and will stick with my gold play. I really believe Gold as well as Silver will bounce back in the next few weeks.
Here is the link to the Bloomberg story about the strike for you to read for yourself at Freeport, Workers Fail to Resume Talks as Pay Offer Rejected
Then there was also some good news in regard to China. We keep hearing about a hard landing and that China is slowing down so much. I am just looking at the facts and yes China has raised rates to purposely slow their economy down some.
The Purchasing Managers’ Index published Oct. 1 by the China Federation of Logistics and Purchasing rose for a second month, to 51.2, readings above 50 signal expansion. Now they say they are not out of the woods with all the other economic factors with Europe and the U.S, but this is still much more positive than things are being displayed.
Here is the article on China manufacturing at China Manufacturing Counters ‘Hard Landing’.
We are seeing copper plummet to extreme lows as well as oil. Do you really think with this index reading on China’s manufacturing that they are not using metals or oil? It does not make sense to me and think in the months ahead we will see the tides turn and oil as well as the metals will be back up.
I also see U.S manufacturing still being strong. I mean just because unemployment is high, corporations are utilizing less people more efficiently and there are still millions of people that are employed that are out shopping and eating at restaurants. The last time I was out the stores were packed and I had to wait an hour for a table. So where is the recession?
Commodities are cyclical and the markets are all about psychology. Is the media spooking the markets? There is also an election around the corner.
Isn’t it funny how volatile the markets have been with the big swings up and down? Right now is the time to by buying these commodities at these ridiculously low prices with everybody throwing the baby out with the bath water.
It is hard to be an optimist with all this bad news in the media and do understand there are financial issues in Europe, but just think people still will be using these commodities as the emerging markets continue to come online. I mean things have not come to a grinding halt, not even close.
Again these are just my opinions and would welcome yours. Comments are appreciated.
I have spoken about Sandridge Energy before and still really like their business model.
Yes they have allot of debt, but they have some great assets including operating oil fields and oil rich lands they are setting up new rigs in.
A few weeks ago, Sandridge was up to over 12+ a share. They are currently trading under $6 and this morning was $5.82.
Here is a video below of Jim Cramer discussing them as a good buy at around $7 per share. They are now below $6 and now I am really interested at buying this energy company at wholesale prices. Check out the video, it has some really interesting information on the company and you get to hear from their CEO. There change in strategy and business model is very smart.
I personally believe this is a screaming buy and have been dollar cost averaging into these shares at this price.
I really believe this stock is being dragged down by the drumbeat of the recession we are in and of course the drop in Oil prices.
To tell you the truth, I just think it will be a matter of time when we see a reversal in oil prices. I mean it seems to me we have been in a recession.
There are certain sectors still growing well in the U.S. and companies are still using lots of oil. There is also China and other emerging markets that are using large quantities of oil even with there supposed slow down.
China is still growing at a good pace even with a talk of a bit of a slow down for them. Inventories will be used up. This also bars any more craziness in the middle east or some event happening somewhere in the world that will shoot oil prices back up.
Once this happens, I think anyone buying Sandridge Stock at or under $6 bucks a share is going to be smiling all the way to the bank. This is my new trade and strategy and hopefully I will be able to trade this short term for a nice profit or possibly hold it a bit longer term and really make some nice cash.
This is just my strategy right now based on oil prices being beaten down and how cyclical it seems to be. Now that I think oil has pretty much bottomed I just think Sandridge has an opportunity to pop.
Have a great weekend!
Hi Everyone,
Hope you are all making money in the markets with your trading. In my last post I told you I sold out of BLOAQ and bought into NFLX Netflix.
This was just a quick trade below.
As I had already seen the price of Netflix drop to all time lows I thought this might be a good opportunity. As you can see per my
date stamps below I dollar cost averaged into NFLX back on the 21st and 22nd. The came Monday and it was announced that Netflix had signed a deal with DreamWorks.
The stock jumped at one point up to around 137 and I should have sold it at that point. I was sitting in the Chevy Dealership at the time though watching all this occur in the waiting room while my car was being serviced. From my iPhone I watched on my CNBC and Stock Trading APPs. I saw it starting to drop after being up almost $800 and sold out at a nice $$600 profit. You can do the math below. I know I am close and these are the sweet trades I like.
Filled Sell 100 NFLX Limit 134.711 – – 09:38:37 09/26/11
Filled Buy 25 NFLX Limit 128.67 – – 12:02:56 09/22/11
Filled Buy 50 NFLX Limit 129.839 – – 11:11:29 09/22/11
Filled Buy 25 NFLX Limit 132.04 – – 10:16:00 09/21/11
But, I will be totally honest. I decided later in the day to purchase a call option when the stock dropped back down to 129. It then dropped about $200 and more negativity on the company was coming out in the news and even heard Clark Howard on CNN bashing the company and giving alternatives so I closed the option out.
Yes it could go higher, but it is hanging around 128 even in a strong market and I do think Netflix reputation has been tarnished and for some reason people want to bash the company and see it go lower. I am out for now. I think it might be a good long play but for now I am trading as the markets are too volatile to hang in on something like this for too long. You can always jump in later if you see some momentum.
Right now I have gone in defensive mode and purchased the UltraShort against the S&P500 yesterday at $17.50. It is doing well right now and up. I also bought some SLV Silver shares and GLD Gold ETF call options that expire in December. I am still long Gold. To buy myself some insurance I bought a 100 shares of the ZSL and GLL which short the metals in case they fall more. Thought this could be good as I can make some money both ways on the volatility.
Let me know what you all think of my strategy. I see these markets going up, but am still nervous about all the volatility, global bad news and uncertainty and am remaining defensive.
Have a great week.
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