December 15, 2014
Market Strategies Newsletter
Sample Issue
Read The December 15, 2014 Options Trading Market Investing Strategies Newsletter in .pdf Format — Click Here
Covering High Return Balanced Investing Strategies To
Make Money In Up Or Down Markets
A Publication of Princeton Research, Inc. (www.PrincetonResearch.com)
Contributing Staff: Michael King, Charles Moskowitz
Where To Invest Now and
Options Trading Newsletter Covering:
Options Trading Strategies
How To Trade Options
Stock Options Trading Alerts
Best Stocks To Buy December 2014
Where to Invest December 2014
Net Gain for the week $ 260
Year to date profit $ 18,758
Over 187% Returns
$18,758 Profits for $10,000 Trading Account
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Market Strategies
$10,000 Trading Account Traders Comments
We have 2 open positions:
NAT January 9.87 Calls and
STLD Dec 23 Calls
Funds in Use $ 1,613
Net Gain for the week $ 260
Year to date profit $ 18,758
Over 187% Returns
Week 49 was an example of why balance is the best approach. We were stopped out of our GLD position the very next day after getting filled at what I thought would be an area of solid support (50% down rule) and we sold the STLD position when the down rule would take us out anyway.
BUT, our hedge against a market fall, the TLT (20 yr. bond ETF) not only rallied to take us out of half on the 100% Up rule @ $278, but continued to rally and we another lot Friday @ $4.74 and they closed @ $5.20. This is what turned an ugly week in many sectors into a small gain of $261.
We still have 2 TLT calls worth $1040 even after taking out $749 from a position that only cost a bit over $800.
We also own FB January 77.50 calls with open equity of $1,248 and a cost of $780. All in all,
not too bad for a week where we saw huge multiple selloffs.
Funds in use are $1,613 and YTD gains are just under 190%.
The dramatic slide in oil has hurt a great many energy sector investors, but the real issue under the surface is that fact that many of those exploration and drilling deals are heavily leveraged in the high-yield (read:Junk bond) market and while they may be profitable all the way down to $40/barrel, the debt service needs stable and higher prices to keep them from problems with cash flow. Over 20% of the high yield market is energy related.
The position in FB is on at what I consider a good level. If it were to break my original stop @ $74.40 (on a closing basis) I would close it out with a small loss, but the risk/reward in this trade is so lopsided that it barely deserves mention. If you look at the weekly chart not only is the stock oversold, but the entire consolidation since the move to new highs in late July is over that breakout. This is the same situation that occurred in the S&P500 starting in March 2013 @ 1525 and has repeated itself every 8-10 weeks until the sharp selloff in early October to test 1820 before moving to new highs near 2,100. If we continue to compare with TWTR with FB, or any of the other social net-work, it makes it difficult to see why FB should not move to $100.
I am cutting back further on my trading for the balance of the year. While I look for some sharp and short rallies in oils, financials, and Facebook my focus is on current positions, not adding a lot of new ones unless they are incredibly compelling. Examples would be BA @$105-107, CSCO @ $25, or JPM @ $56. While these seem like extreme long shots, we haven’t had a lot of weeks with the type of declines that also closed on the low (not low end) of the range.
My next area of real major support for the S&P500 is 1928-1950. The only bright spot, (and with oil down over 30% recently) is the Transports. They are down but not broken. Volatility is huge having increased 29% last week. Our model of taking half profits on 100% gains and losses of 50% has been a real winner for everyone following my work.
…CAM
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Options Trading Strategies
How To Trade Options
Market Strategies $10,000 Trading Account Trade Table
New Trades:
Buy 4 Alcoa AA January 15 Calls @ $ 0.68 or better
All trades were based on your participation in the texting service to receive updates. Previous closed out trades not listed here may be seen in previous market letters.
| DATE |
TRADES |
PRICE | COST | PROCEEDS | RESULTS |
| 12/12 | This information is for Members.
Get The Best
|
4.74 | 474 | 335 Gain | |
| 12/09 | 0.25 | 200 | 160 Loss | ||
| 12/09 | 0.84 | 336 | 332 Loss | ||
| 12/08 | 2.78 | 834 | 417 Gain | ||
| 12/08 | 0.30 | 180 | |||
| 12/08 | 1.67 | 668 | |||
| 12/08 | 1.95 | 780 | |||
| 12/05 | 1.39 | 834 | |||
| 12/04 | 0.25 | 375 | |||
| 11/28 | 0.45 | 360 |
Remember, these trades are based on your participation in the
TEXTING SERVICE TO RECEIVE ALL UPDATES.
Previous closed out trades not listed here may be seen in previous market letters in the
Options Trading Strategies Notes: In Texting we have a limited amount of words. In the interest of brevity: we use 8=August , 9=September . The Quantity and Strike Price for each trade is specific.
We may trade weekly options and they are noted: SPY 1/25 147 for SPY Jan 25th 147 calls or puts.
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MARKET Laboratory – Weekly Changes
Prices are copied from Barron’s Weekly and Yahoo Finance and may be incorrect.
| Dow
17,280.83 -677.96 -3.78% |
Nasdaq
4653.60 -127.16 |
S&P 500
2002.33 -73.04 -3.52% |
Transportation
8836.88 -315.12 -3.44% |
Russell 2000
1152.45 -2.54% |
Nasdaq
4199.28 -112.29 -2.60% |
| Gold (spot)
1222.00 +31.90 +2.7% |
Silver (July)
1555.6 -90.3 -5.5% |
Crude
57.81 -8.03 -12.2% |
Heating Oil
201.60 -9.18 -4.3% |
Unleaded Gas
1.5973 -0.1761 -9.9% |
Natural Gas
3.795 -0.007 -0.18% |
| VIX
21.08 +9.26 +78.3% |
Put/Call Ratios
S&P 100 85/100’s -21/100’s |
Put/Call Ratios
CBOE Equity 72/100’s +11/100’s
|
Bonds
145-06 +3-21 2.78% -0.22% |
10 Yr. Note
127-174+1-204 2.12%-0.17%
|
Copper
284.60 -18.30 -6.0% |
| CRB Inflation
Index 243.75 -8.58 -3.4% |
Barron’s* Confidence
78.5% -0.3% |
S&P100
885.88 -33.78 -3.67% |
5 Yr. Note
119-127 +263 1.54% -0.05%
|
Dollar
88.32 -1.04 -1.2% |
DJ Utilities
597.56 +0.84 +0.14% |
| AAII
Confidence Index |
Bullish
45.0% +2.3% |
Bearish
22.3% -3.6% |
Neutral
32.7% +1.3% |
M1 Money Supply
+8.36% December 1st |
M-2 Money
Supply +5.92% December 1st |
* Component Change in the Confidence Index
M1…all money in hands of the public, Time Deposits Traveler’s Checks, Demand Deposits
M2.. adds Savings and Money Market Accounts both compared with the previous year.
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Stock Options Trading Alerts
Market Strategies Technical Information
Support Levels S&P 500 1985
Resistance S&P 500 2048
Support Levels DOW 17,165
Resistance DOW 17,460
Support Levels QQQ 100.85
Resistance QQQ 104.70
Support Levels NASDAQ 4585
Resistance NASDAQ 4758
Closes below support triggers sales/above highs buys
Best Stocks To Buy December 2014
Where to Invest December 2014
$100,000 Trading Portfolio Stock Positions and
New Stock Recommendations
Each stock is allocated a theoretical $ 5,000 share of the portfolio unless otherwise indicated.
| Stock | Purchase Price | Purchase Date | Stop/Loss | Price/Date Sold | Profit/($ 920Loss) | ||||
| This information is for Members.
Get The Best
|
100.80 | 11/25 | |||||||
| 74.18 | 11/24 | ||||||||
| 9.10 | 11/24 | 7.97 12/08 | ( $ 565 ) | ||||||
| 9.95 | 11/24 | 8.20 12/08 | ( $ 875 ) | ||||||
| 3.10 | 11/28 | ||||||||
| 9.92 | 11/17 | ||||||||
| 14.21 | 10/16 | ||||||||
| 34.99 | 09/09 | ||||||||
| 2.95 | 05/19 | ||||||||
| 0.407 | 03/14 | ||||||||
| 15.37 | 01/16 | ||||||||
| 32.64 | 12/23 | 32.21 sco | |||||||
| 4.08 | 8/12 | ||||||||
| 6.56 | 7/11 | ||||||||
| 12.10 | 5/23 | ||||||||
| 0.22 | 10/22/12 | .12 sco | |||||||
Recommendations will be both listed in this letter and texted to members.
Remember, these trades are based on your participation in the
TEXTING SERVICE TO RECEIVE ALL UPDATES.
Previous closed out trades not listed here may be seen in previous market letters in the
For those of you who do not buy puts to protect your portfolio, there are many ETF’s that are the inverse of the DOW. The symbols are DOG, DXD, SDS,TZA and RWM, which go up when the DOW, S&P 500 and Russell 2000 go down and down when they go up. The DZZ goes up double when gold goes down.
Best Stocks To Buy December 2014
Where to Invest December 2014
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Market Strategies $100,000 Trading Account
Investing Strategies Summary
New Trades:
Large Account: Additional trades and stop losses will be Texted and E-Mailed
1) Buy 8 Alcoa AA 15 Calls @ $ 0.68
There were three closed out long option positions last week with a gain of $ 521.
There were two closed out stock positions, the MDBX with a loss of $ 565 and the DNR losing $ 875.
The two losses total $ 1440.
For the full year to date we have gains of $ 50,221.
Over 50% Returns
Open position losses fell to $ 9,788.
There are five Open Option positions:
FB January 77.50 Calls
MHR Jan 4 Calls;
January NAT $ 9.87 Calls
December 10 Calls and
Long the remaining 4 TLT Calls
The Stock table has the following remaining 13 positions:
AA, FB, FCX, GSG, INO, NBG (3), REPR, RPTP, SLXP, TEXQY, XRGYF
The options call for a $ 2,500 investment unless otherwise stated; each stock position requires $5,000 unless otherwise specifically stated.
We are basing money management on an hypothetical
$ 100,000 and are using a total of
$51,317 for 13 open stock positions plus five option positions requiring
$ 3,026 making a total of
$ 54,343 leaving
$ 45,657 in cash.
These figures are approximate.
We have not counted the dividends received from Apple, JP Morgan, Blue Capital Reinsurance and others.
We do not count commission costs and there may be errors.
Executions that have occurred at or near the open or close of trading sometimes vary from our actual numbers. For example, when something opens down and it is through our price, we take the next trade whether it is an uptick or continues lower. This sometimes results in a 50% trade that is slightly above or below the exact number.
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Previous Week’s Recommendations and
Rules for the Market Strategies
$100,000 Portfolio Trading Account
- All options count for about $ 2,500.00 for model portfolio calculations unless otherwise stated
- When the option has doubled sell half the position
- Stop Loss protection is either half or offered with each trade
- The cost of the option is the asking price (or the price between the bid and ask, whichever is more realistic)
- The options will be followed until closed out.
- Option Symbols are stock symbol with expiration month and strike price
| Option | Cost | Date | Sold | Date | Profit/(Loss) |
| This information is for Members.
Get The Best
|
Calls
0.30 |
12/08/14 | |||
| Calls
1.95 |
12/08/14 | ||||
| Puts
1.67 |
12/08/14 | 0.84
( Sold all on 50% Loss Rule ) |
12/09/14 | ( $ 664 ) | |
| Calls
1.39 |
12/05/14 | 2.78
( 100% Profit Rule Sold Half 6 lots)
4.74 Sold 2 lots |
12/08/14
12/12/14 |
$ 834
$ 672 |
|
| Calls
0.25 |
12/04/14 | ||||
| Calls
|
0.50
Sold against Long Position |
12/01/14 | $200 Credit Covered Write | ||
| Calls
0.45 |
11/28/14 | 0.25 Sold | 12/09/14 | ( $ 320 ) |
Remember, these trades are based on your participation in the
TEXTING SERVICE TO RECEIVE ALL UPDATES.
Previous closed out trades not listed here may be seen in previous market letters in the
This Weeks’ Economic Numbers and Media Data
Before the Open on top of the Row; After the close below the Economics
| Monday | No Earnings Reports before the opening:
08:30 hrs Empire Manufacturing Dec ( 9.0 vs 14.0 ) 09:15 hrs Industrial Production Nov ( 0.7% vs -0.1% ) Capacity Utilization 79.4% vs 79.3% ) 10:00 hrs NAHB Housing Market Index Dec ( 58 vs Same ) 16:00 hts TIC Flows Net Long-Term ( NA vs $ 164.3Bln ) VeriFone ( PAY 0.41 vs 0.27 ) Willbros Group ( WG 0.07 vs -0.02 ) |
| Tuesday | Darden Restaurants ( DRI 0.27 vs 0.20 ) FactSet ( FDS ( 1.46 vs 1.19 ) Navistar
( HEI 0.43 vs 0.44 ) 08:30 hrs Housing Starts November ( 1035K vs 1009K ) Permits ( 1060K vs 1080K ) Heico ( HEI 0.43 vs 0.44 ) |
| Wednesday | FedEx ( FDX 2.19 vs 1.57 ) Gen Mills ( GIS 0.76 vs 0.83 ) Joy ( JBL 1.15 vs 1.11)
07:00 hrs MBA Mortgage Index 12/13 ( NA vs +7.3% ) 08:30 hrs CPI Nov ( -0.1% vs 0.0% ) CORE CPI ( 0.1% vs 0.2% ) 08:30 hrs Current Account Balance 3rd Qtr ( -$95.0Bln vs -$98.5Bln ) 10:30 hrs Crude Inventories 12/13 ( NA vs +1.454 Mln Bbls ) 14:00 hrs FOMC Rate Decision and Discussion for December Jabil Circuit ( JBL 0.47 vs 0.51 ) Oracle ( ORCL 0.68 vs 0.69 ) |
| Thursday | ConAgra ( CAG 0.60 vs 0.62 ) KB Home ( KBH 0.57 vs 0.31 ) Piedmont Nat Gas
( PNY -0.07 ) Rite Aid ( RAD 0.06 vs 0.04 ) Sanderson Farms ( SAFM 4.00 vs 1.97 ) Winnebago Inds ( WGO 0.45 vs 0.40 ) Worthington ( WOR 0.65 vs 0.32 ) 08:30 hrs Initial Claims 12/13 ( 292K vs 294K ) Continuing Claims 12/06 ( 2510K vs 2514K ) 10:00 hrs Philadelphia Fed Dec ( 26.5% vs 40.8% ) 10:00 hrs Leading Indicators Nov ( 0.5% vs 0.9% ) 10:30 hrs Natural Gas Inventories 12/13 ( NA vs -51bcf ) Cintas ( CTAS 0.77 vs 0.70 ) Nike ( NKE 0.70 vs 0.59 ) Pier 1 Imports ( PIR 0.20 vs 0.26 ) Red Hat ( RHT 0.40 vs 0.42 ) Sand Ridge Energy ( SD 0.00 vs 0.07 ) |
| Friday | Blackberry ( BBRY -0.06 vs -0.67 ) CarMax ( KMX 0.54 vs 0.47 ) |
Market Strategies Fundamentals
Both the Dow and S&P 500 had their largest weekly drop since 2011 as the markets were overbought and traders, who make more money on the short side pounded the markets, especially large hedge funds, most down on the year and trying desperately to earn back some lost capital.
The Dow fell 315.51 points as every Dow 30 stock was a loser. IBM ( $ 155.38 ) off $ 5.69 or 3.53% was the biggest loser. Goldman Sachs ( GS $ 188.82 ) -$4.72 or 2.44% was not far behind following news that they were fined in London for currency and gold manipulation.
No-one would be surprised if they were also involved in the demise of crude oil. Crude Oil is down again Sunday evening Dec 14th another $ 1.13 to $ 56.68. Exxon ( XOM $ 86.60 ) -$2.60 or 2.91% and Chevron ( CVX: $ 102.38 ) – $ 2.53 or 2.41% for the day and about 8% for the full week, were victimized by the onslaught but will eventually come out of it better and stronger than ever as they have no financial problems.
The S&P 500 plunged 73 points or 3.5% to 2002.33 or 3.5%. The Nasdaq Composite fell 127 points, or 2.66% to 4,653.6. The Transportation Average dropped by 315.12 or 3.44%. The Russell fell the least – 29.98 or 3.44%. Wal-Mart fell the least of all stocks, just 2 cents or 0.02%. All bull markets need corrections as we had discussed in last week’s tabloid. Traders should look at our support and resistance numbers, sell if the lower ( support ) numbers are hit, buy if the higher ( resistance ) numbers are exceeded. What to do now? Look at copper producers.
Market Strategies Economic Data
The Treasury budget showed a deficit of $56.8 bln in November, down from a deficit of $135.2 bln in November 2013. The Treasury data are not seasonally adjusted, and the November data cannot be properly compared to the $121.7 bln deficit in October. But the improvements are obvious despite all the geo-political costs.
Most economists, including the Congressional Budget Office ( CBO ) expected a budget deficit of more than $61.0 bln. The November deficit at less then $ 57bln was a pleasant surprise, much smaller than expectations. Total revenues increased by $9.0 bln to $191.4 bln in November 2014 from $182.5 bln in November 2013. Total outlays declined to $248.3 bln in November 2014 from $317.7 bln in November 2013, a drop of $69.4 bln .Fiscal year-to-date, the deficit is $178.5 bln, $47.3 bln less than the comparable period in FY14.
Raw data available at http://www.fms.treas.gov/mts/index.html
| Category | NOV | OCT | SEP | AUG | JUL |
| Deficit (-)/Surplus | -$56.8B | -$121.7B | +$105.8B | -$128.7B | -$94.6B |
| Deficit (-)/Surplus Fiscal YTD | -$178.5B | -$121.7B | -$483.4B | -$589.2B | -$460.5B |
| Deficit (-)/Surplus over last 12 months | -$436.1B | -$514.5B | -$483.4B | -$514.1B | -$533.2B |
Considering the enormous amount of cash being horded by major U.S. international companies overseas, the budget seems to be doing well. Imagine, if the tremendous amount of inversions were just simple corporate taxpayers, the U.S. would have a budget surplus like Germany’s.
Undervalued Small Cap Stocks
We have bought positions in each of these companies.
Target Energy* ( TEX.AX 0.04 Australia ), In the USA, ( TEXQY: $ 3.50 ) a new ADR.
This company trading at a nickel could earn more than where it is now trading.
Perhaps 7 to 10 cents is in the cards.
Their business valuation exceeds market cap.
Leo Motors ( LEOM $ 0.08 )*
Has merged with LGM, a wholly owned subsidiary has filed two patents that will significantly improve efficiency in the refrigerated cargo transportation of fresh food while dramatically reducing the carbon footprint of bulk refrigerated vehicles.
They have the exclusive use of a new short-circuit technology for use in Cars, Boats, and energy storage world-wide.. Many new breakthroughs in electric energy are coming.
Please go to www.leomotors.com ( English Version ) Risk is 3 cents.
RMS Medical Systems, Inc ( REPR 0.39 )*
Has doubled this year already and can double again .
RMS designs, markets, manufactures portable easy to operate infusion devices, including needles and tubing. It is easy to handle by patients. The Freedom 60 is being marketed in Europe as well as gaining a footing among home-care professionals in America. The RescueVac is used in ambulances and planes for emergency suction.
Cleveland BioLabs, Inc ( CBLI $ 0.39 )*.
CBLI has done much research on cancer as well as developing a prevention for radiation sickness. This is a two for one play both cancer research and radiation protection. Just imagine the catastrophe if radioactive material falls into the wrong hands. The Russian Medical Federation has also invested heavily ( $ 23 million ) in this.
The Roswell Park Cancer Institute ( PPCI ) announced the publication of studies in “ Oncotarget” describing the preclinical efficacy of Curaxin CBLO137 as a single agent and in combination with the current standard-of-care therapy, gemcitabine, against different models of pancreatic ductal adenocarcinoma ( PDA ), including models of gemcitabine-resistant tumors. The studies were conducted by scientists at Roswell Park, SUNY Downstate Medical Center and Buffalo Biolabs, LLC. Pancreatic cancer is the fourth leading cause of cancer-related death in the United States and is one of the few cancers for which survival has not improved. Pancreatic cancer has the highest mortality rate of all major cancers; 94% of pancreatic cancer patients will die within five years of diagnosos. ( American Cancer Society: Cancer Facts and Figures 2014 )
Entolimod is being developed as a radiation treatment. Please go to www.cbiolabs.com for more pertinent information.
Top line sales growth is significant.. LTNC delivers labor solutions at assigned jobsites ready for work while other services are still sending candidates to be interviewed. Labor Smart delivers people-power to small and medium sized businesses in warehousing, freight handling, light industrial services, manufacturing, social events, and retail industries. They also support commercial construction and demolition industries with general labor and skilled trades people. Labor Smart was founded in 2011, is based in Hiram, Georgia and currently operates 30 branch locations in the Southeast and Central States. Their growth model includes both new office establishments in addition to acquisitions.
Labor Smart, Inc. ( LTNC: $ 0.005 )*
Top line sales growth is significant. They have grown with higher sales every month the last two years
They deliver labor solutions at assigned jobsites ready for work while other services are still sending candidates to be interviewed.
Labor Smart delivers people-power to small and medium sized businesses in warehousing,
freight handling, light industrial services, manufacturing, social events, and retail industries.
They also support commercial construction and demolition industries with general labor and skilled trades people.
Labor Smart was founded in 2011, is based in Hiram, Georgia and currently operates 30 branch locations in the Southeast and Central States. Their growth model includes both new office establishments in addition to acquisitions.
See Corporate Site
SEE Small Cap Stock To Buy Research Report – Click Here
Southern ITS (SITS: $ 0.08 )*
Southern ITS delivers proprietary innovative electronic security systems to highly regulated market sectors. Such installations include Gaming Properties, Medical Marijuana (MMJ) dispensaries and similar businesses with high compliance mandates.
Their systems go beyond simple security and are designed to support their clients in dealing with the expanding burden of compliance and financial auditing. Greeniosk is complete system that allows Medical Marijuana (MMJ) Dispensaries and Recreational Marijuana (MJ) Dispensaries to document and provide an audit and verification trail of each individual MMJ/MJ dispensary transaction.
The majority of MMJ Dispensaries have limited bank service access mainly due to requirements of the Racketeer Influenced and Corrupt Organizations Act (RICO).
The Greeniosk system incorporates a large physical ATM Kiosk, with a state of the art CRM reporting system that provides a detailed financial transaction audit trail and addresses and resolves issues of the propriety of the dispensary operations. MMJ Dispensaries currently transact between $250,000 and $5,000,000 in annual revenues. The majority consist of cash transactions, however small numbers of dispensaries accept debit card payments.
Because RICO concerns cause the majority of banks to decline dispensary deposits, they also miss out on potential MMJ credit card transactions.
Stocks To Buy On A December Dip
Notice the Flexibility for whatever the market direction. Both the VIX and SPXU protect against declines while the UDOW and various stocks are from the long side. Last week the UDOW long lost 10.3%. However the VXX gained 29.7%, while the SPXU added 10.3%. We said last week, The UAL has had a nice run but should now be sold. Last week we mentioned We would also sell the BELFB . We sold Canadian Oil Sands COSWF. The XOM was stopped out with a profit. We bought shippers in both wet and dry cargo.
| Symbol | Name | Business Description | PE | P/S | MV mln | Price | Buy Limit | Stop Loss
Or sold |
| AA | Alcoa | Aluminum and Metals | 14.30 | 0.8 | 17.53B | 14.87 | 14.57 | 13.60 |
| DSX | Diana Shipping | Dry Cargo Shipping | N/A | 3.7 | 611 | 6.63 | 6.60 | 5.60 |
| STNG | Scorpio Tankers | Oil Transportation | 26 | 5.6 | 1.47B | 8.53 | 7.46 | 6.48 |
| IIIN | Insteel industries | Metal fabrication | 29 | 0.7 | 411 | 21.64 | 21.22 | 21.22 |
| KR | Kroger | Retail Food | 17 | 0.24 | 24.6K | 61.48 | 48.90 | 46 |
| XOM | Exxon Mobil | Energy | 13.4 | 1.1 | 420K | 86.94 | 90.50 | 92.50 |
| UAL | United Cont Hld | Transportation | 16 | 1.2 | 18.1K | 64.27 | 46 | 48 |
| UDOW | Ultra Pro Dow 30 | ETF | 130.28 | 104.81 | 131 | |||
| DE | John Deere | Farm Equipment | 9.4 | 0.80 | 29.0K | 86.56 | 80 | 83 |
| BELFB | Bell Fuse Inc B | Electronics | 9.5 | 0.74 | 276 | 25.28 | 23 | 24.50 |
| SPXU | Ultra Short S&P | Hedge purposes | 41.60 | 43.20 | 38sco | |||
| DD | DuPont | Chemicals | 21 | 1.71 | 61.3K | 69.48 | 64.80 | 63 |
| VXX | VIX Volatility | Hedge Portfolio | 33.86 | 27.10 | 26 | |||
| MOS | Mosaic Company | Agriculture Chemicals | 70 | 2.10 | 15.3K | 44.63 | 42.28 | 42.70 |
Market Strategies Cycles
Just two weeks ago, executives from Goldman, and JPMorgan were hauled in front of a U.S. Senate committee and grilled about their “control of physical commodities and related businesses”. http://www.zerohedge.com/news/2014-11-20/here-are-highlights-senates-fin…
Regulators fined six major banks a total of $4.3 billion (2.73 billion pounds) for failing to stop traders from trying to manipulate the foreign exchange market, following a yearlong global investigation. Gold might be trading at much higher levels if it weren’t for their manipulation.
There is undoubtedly a large amount of rampant speculation by large moneyed groups including their high-speed traders. The CME Group just raised the collar on gold to $ 100.00. That means after it moves by that amount it ceases trading after a specified period of time. Could this latest move by the CME Group be a signal that The Banks will soon be forced to exit ALL of the metals and commodities sectors that they currently control? Maybe. We can only hope.
Let me begin this dissertation by stating that Gold is in no way in a bull market. It is in limblo.
Veteran gold trader Jim Sinclair quickly offered an answer on his website: ‘Manipulation such as the sale of $1.3 billion dollars worth of paper gold at an illiquid time period today is not to protect the dollar or bull the general equity market. ‘It is to make money for the manipulators that want here to cover their shorts and initiate to expand their long positions. That sale was a pure construct as there was no news to sustain the sell or to initiate it in the time span of its occurrence.’
It is not often that manipulation is so blatant. But the timing so soon after the Bloomberg piece on Goldman’s bearish stance on gold is perhaps mere coincidence. Gold prices are up almost a $100 in the past few trading sessions while in percentage terms the advance in silver prices is a cracking 17 per cent to $17 an ounce, eliminating losses for the year. The recent sell-off in precious metals seems to be over with a massive increase in long positions in the Comex powering prices to the upside.
Why did the naysayers at Goldman Sachs get this wrong? A cynic might suggest they have been the biggest buyers having pushed the gold price down too far. More realistically what looked like a breakdown in the gold chart actually proved to be a capitulation bottom.
Let’s consider a stock that mirrors the price moves of copper. The chart below has Global Brass and Copper Holdings (BRSS) prices overlaid on copper. This company primarily operates in the U.S. as a converter, fabricator and processor of copper and brass products. BRSS is not a mining company; they are essentially a recycler that produces sheet, strip, foil, rod, tube and similar products from processed scrap, used copper cathodes and other refined metal sources. Although based in the U.S., BRSS also has some operations in China, Japan, United Kingdom and Germany.
Year-to-date, BRSS has had a difficult year, down roughly 25% as of today’s trading. Revenues are down with the price of copper, but BRSS remains profitable and is paying a dividend. Should typical seasonal strength in copper materialize, BRSS is highly likely to climb higher with copper.
Although BRSS’s technical picture is improving with a recent MACD buy confirmation signal and improving relative strength, it could still be susceptible to further tax-loss selling pressure before yearend. BRSS could be bought on dips below $12.33. If purchased, a stop loss of $10.05 is suggested. This trade will be tracked in the Almanac Investor Small-Cap Stock Portfolio.
Freeport-McMoran ( FCX: 34.89 ) had a nice week in the terrible bear onslaught. Look for a place preferably around $ 33.35 for a position.
Yet another option to take advantage of copper’s seasonal move is iPath DJ-UBS Copper TR Sub-Index ETN (JJC).
As a reminder, ETNs differ from ETFs. An ETN is debt whose current value is based upon an index return. In the case of JJC, it is linked to the Dow Jones-UBS Copper Total Return Sub-Index which represents the potential return of an unleveraged investment in copper futures. JJC ( JCC: 38.43 ) has rallied sharply although trading volume is on the light side, trading a little more than 20,000 shares per day on average over the past three months, but it does pick up when copper moves. JJC could be bought on dips below $34.75. Once purchased a stop loss of $32.50 is suggested. Alcoa ( AA: 14.87 ) had a good year and should be bought as it fills an October gap at $ 14.60.
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