
May 19, 2014
Market Investing Strategies
Newsletter
Sample Issue
Covering High Return Balanced Stock Market
Investing Strategies To
Make Money In Up Or Down Markets
Over 284% Gains In 2013
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High Return Investments Trade Alerts
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The last 3 years our gains have gotten progressively greater year over year.
284% Returns for $28,400 Profits In 2013
171% Returns for $17,100 Profits In 2012
77% Returns for $7,700 Profits In 2011 (only 33 weeks)
A Publication of Princeton Research, Inc. (www.PrincetonResearch.com)
Contributing Staff: Michael King, Charles Moskowitz
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Market Investing Strategies Newsletter
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Market Investing Strategies
$10,000 Trading Account
Traders Comments
There are 2 open positions:
BA June 135 Calls
FB June 62.50 Calls
Funds in Use $ 1168
Gain for the week $ 674
This week we are carrying only two positions after taking profits in both Boeing calls and XLU puts.
The profit for the week was $674
bringing the YTD loss down to $1,802 and
using only $1,168 in FB and BA calls.
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Again we had a week that showed “The trend is your friend.” We started off with a strong Monday followed by a new high again Tuesday and a sharp decline Wednesday and Thursday. The S & P 500 closed within $1 of last weeks close and the DJIA less the 100pts from its prior week.
We had both higher highs and lows. While we continue to have sharp but brief pullbacks, we are grinding higher.
The fly in the ointment for me is the Russell 2000. Since the high of 1,212.82 on March 4th the sell off has taken it to test the lows of October, February and this week all around 1,080. The issue is that the rallies are becoming narrower. The Russell is made up of 2000 stocks and is down 10%. The S & P 500 is 500 stocks, and the Dow is a mere 30 names. Major tops are generally made by the lack of confidence in the broad market as investors flee the small caps for bigger names. Add the lack of any meaningful returns in high-grade bonds or other savings products and you can see why the move to bigger names with “total returns” (dividend yields plus price appreciation) that give some possibility of future gains.
One last comment this week on NBG, the National Bank of Greece. We traded the long term calls for a 50% loss last year. If Europe is in fact getting better than the banks should participate in a big way. NBG has raised capital again, but this time it wasn’t bailout money from the ECB. This week Standard and Poors actually raised their rating on the bank. The fact that Greece can actually access the public market should be seen as a ray of hope. Our participation in the stock will be via the January 2016 calls and we will be watching for a place to be a buyer since for the most part, we don’t generally buy options on stocks in this price range. We try not to pay a premium for an option when we can outright own the stock for such a minor use of funds to have a position that does not expire…
..CAM
Market Investing Strategies
$10,000 Trading Account Trade Table
New Trades
1) Buy 15 SAN December $ 10 Calls @ $ 0.45
2) Buy 6 MRK June $ 55 Puts @ $ 0.96
3) Buy 6 UA June $ 47.50 Calls @ $ 1.30
DATE | TRADES | PRICE | COST | PROCEEDS | RESULTS |
05/15 | Bought 4 BA June 135 Calls | 1.21 | |||
05/13 | Sold 2 remaining BA May130 Calls | 3.80 | 760 | 506 Gain | |
05/12 | Sold 8 XLU May 43 PUTS | 1.16 | 928 | 168 Gain | |
05/06 | Bought 6 June FB 62.50 Calls | 1.14 | 684 | ||
04/30 | Bought 4 BA May 130 Calls | 1.27 | 508 | ||
04/21 | Bought 8 XLU May 43 Puts | 0.95 | 760 |
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.
MArket Laboratory
Weekly Changes For market Indicators
Prices are copied from Barron’s Weekly and Yahoo Finance and may be incorrect
Dow
16,491.31 -92.03 -0.55% |
Nasdaq
4090.59 +18.72 +0.46% |
S&P 500
1877.86 -0.62 -0.03% |
Transportation
7845.85 +126.55 +1.64% |
Russell 2000
1102.91 -4.31 -0.39% |
Nasdaq 100
3587.20 +31.50 +0.89% |
Gold (spot)
1293.30 +6.00 +0.5% |
Silver (Dec )
1932.9 +20.8 +1.1% |
Crude
102.02 +2.03 +2.0% |
Heating Oil
295.36 +4.68 +1.6% |
Unleaded Gas
2.9735 +0.0775 +2.7% |
Natural Gas
4.413 -0.118 -2.6% |
VIX
12.92 Flat +0.0% |
Put/Call Ratios
S&P 100 114/100’s -53/100’s |
Put/Call Ratios
CBOE Equity 68/100’s +7/100’s
|
Bonds
137-14 +1-22 3.348% -0.100% |
10 Yr Note
125-25 +25 2.52%-0.065%
|
Copper
314.70 +6.40 +2.1% |
CRB Inflation
Index 305.92 +1.35 +0.4% |
Barron’s Confidence
70.3% -0.4% |
S&P100
832.32 -0.64 -0.08% |
5 Yr Note
120-062 +132 1.556% -0.08%
|
Dollar
80.06 +0.19 +2.4% |
DJ Utilities
537.78 -1.77 -0.33% |
AAII
Confidence Index |
Bullish
33.1% +4.8% |
Bearish
22.6% -6.1% |
Neutral
44.3% +1.3% |
M1 Money Supply
+11.58% May5th |
M-2 Money
Supply +6.87% May5th |
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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New Stock Recommendations
$ 100,000 account
1) Buy 300 Bank Santander ADR’s ( SAN ) @ $ 9.78 ( Unable last week Maintain bid )
2) Buy 300 National Bank of Greece NBG @ $ 2.96
3) Buy 300 KIRK @ $ 16.75
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/(Loss) | ||
BOOM 300 | 19.90 | 05/16 | |||||
SPXU 200 | 52.79 | 05/13 | 54.94 05/15
55.36 05/15 |
$ 215
$ 257 |
|||
GLXZ | 0.46 | 05/12 | |||||
XRGYF 5000* | 0.407 | 03/14 | |||||
OSIR 300 | 15.94 | 02/13 | |||||
INSM 300 | 15.37 | 01/29 | |||||
GRPN 500 | 10.40 | 01/28 | |||||
RPTP 400 | 15.37 | 01/16 | |||||
AA 500 | 10.06 | 01/10 | |||||
WLT 300 | 16.22 | 12/23 | |||||
GSG 150 | 32.64 | 12/23 | 32.21sco | ||||
NBG 300 | 4.08 | 8/12 | |||||
TEXQY* 200 | 6.56 | 7/11 | |||||
NBG 300 | 12.10 | 5/23 | |||||
HL 1000 | 4.10 | 3/04 | 2.64sco | ||||
AAPL 10 | 538 | 11/08/12 | 580.23sco | ||||
AAPL 5 | 636 | 10/9/12 | 580.23sco | ||||
REPR* 5000 | 0.22 | 10/22/12 | .12 sco |
Recommendations will be both listed in this letter and texted to members.
Previous closed out stock and option positions can be found in past Market Investing Strategies Newsletter issues available in the Subscriber Members Area.
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.
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Market Investing Strategies
$100,000 Trading Portfolio
Recommendations And Overall Comments
( 1 ) Buy 30 SAN December $ 10 Calls @ $ 0.45
( 2 ) Buy 12 MRK June $ 55 Puts @ $ 0.96
( 3 ) Buy 12 UA June $ 47.50 Calls @ $ 1.30
We had two closed out stock positions and two options positions last week and gained $ 1,820
Losses for the new year fell to $ 4,753.
For the full year 2013 we had realized gains of $ 53,556.
We have open position losses now of about $ 14,324 some of which are in small cap bio-med stocks held over from last year.
We also have not counted dividends received on stocks like Apple, Nordic American ( NAT ) and JP Morgan.
We have two long options positions:
BA June 135 Calls and FB June 62.50 Calls
The Stock table has the following 17 positions:
AA, AAPL (2), BOOM; DSX, GRPN, GLXZ; GSG, HL, INSM,
NBG (2), REPR, RPTP, TEXQY, WLT, XRGYF
The options call for a $ 2,500 investment unless otherwise stated; each stock position requires $5,000 unless specifically stated.
We are basing money management on a hypothetical
$ 100,000 and are using
$ 2,336 in two options positions and
$ 65,804 in 17 stock positions totaling
$ 68,140 with
$ 31,860 in cash.
These figures are approximate. 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 ouractual 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
Previous Week’s Recommendations and
Rules for the Market Investing 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) |
BA June 135
8 lots |
Calls 1.21 | 05/15/14 | |||
FB June 62.50
12 lots |
Calls 1.14 | 05/06/14 | |||
XLU May 43
16 lots |
Puts 0.95 | 04/21/14 | 1.16 | 05/12/14 | $ 336 |
BA May 130
4 lots remaining |
Calls 1.27 | 04/30/14 | 3.80 | 05/13/14 | $ 1012 |
Note: Previous closed out stock and option positions can be found in past Market Investing Strategies Newsletter issues available in the VIP Subscribers Members Area.
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This Weeks’ Market Investing Strategies
Economic Numbers and Media Data
Monday | Campbell Soup earnings before the open: ( 0.59 vs 0.62 )
Valspar ( VAL: $ 1.04 vs 0.91 ) |
Tuesday | Home Depot ( HD 0.99 vs 0.83 )Medtronic ( MDT 1.12 vs 1.10 )
Stage Stores ( SSI -0.35 s –0.02 ) TJX ( 0.67 vs 0.62 ) After the close earnings: Salesforce ( CRM: 0.10 vs 0.10 ) |
Wednesday | PetSmart ( PETM: 1.10 vs 0.98 ) Target ( TGT: 0.72 vs 0.77 )
Tiffany ( TIF: 0.77 vs 0.70 ) Trina Solar ( TSL: 0.05 vs -0.90 ) 07:00 hrs MBA Mortgage Index 05/17 ( NA vs +3.6% ) 10:30 hrs Crude Inventories 05/17 ( NA vs +0.947 Mln Bbls ) 14:00 hrs FOMC Minutes |
Thursday | 08:30 hrs Initial Claims 05/17 ( 305K vs 297K )
Continuing Claims 05/12 ( 2700K vs 2667K ) 10:00 hrs Existing Home Sales Apr ( 4.66M vs 4.59M ) 10:00 hrs Leading Economic Indicators Apr ( 0.5% vs 0.8% ) 10:30 hrs Natural Gas Inventories 05/17 ( NA ve 105bcf ) DryShips ( 0.00 vs – 0.10 )Gamestop ( GME: 0.57 vs 0.46 ) Gap ( GPS: 0.57 vs 0.71 )Hewlett Packard ( HPQ: 0.88 vs 0.87 ) Marvell ( MRVL: 0.22 vs 0.19 ) Ross Stores ( ROST: 1.15 vs 1.07 ) Shoe Carnival ( SCVL: 0.49 vs 0.47 ) |
Friday | Foot Locker ( FL: 1.06 vs 0.91 )Hibbett Sport ( HIBB: 1.09 vs 1.00 ) |
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Market Investing Strategies Fundamentals
Stocks made new highs last week. The S&P 500 set a new all-time high at 1897.45. The Dow reached 17,715.44. Even with pockets of strength, both the Russell and Nasdaq were very weak as pessimism abounds among hedge funds that have sharply reduced positions. There is plenty of cash on the sidelines.
Treasuries were very strong making new highs for the move. The Barclays 20 year Treasury ( TLT: 113.54 ) + 2.30 or + 2.1% for the week, the highest levels since June 18th last year as the ex-Fed Chairman Bernanke at a series of dinner interviews with top hedge fund managers left an impression that the economy had far too much slack for interest rates to go higher. Attending the $ 250,000 dinners were top hedge fund managers like Paul Tudor Jones of Tudor Investment Corp, and David Einhorn of Greenlight Capital. Also David Tepper, the hedge fund manager who earned $ 3.5 billion in 2013, to rank as the industry’s best paid investor, said that he attended meetings but regretfully did not make good personal use of the information. Surprising to many, bonds have made a new high even as the Fed is winding down their huge stimulus of quantitative easing. None of the attendees would comment to the press concerning their opinions after the dinners. The former Fed Chairman was careful not to disclose “inside information” or contradict any of the Chairman Yellen’s public comments.
Market Investing Strategies Economic Data
Industrial Production declined 0.6% in April after increasing an upwardly revised 0.9% from 0.7% in March.
Production levels declined in most manufacturing sectors in April. Auto assemblies fell to 4.05 mln from 4.13 mln. However Truck assemblies actually increased to 7.43 mln from 7.35 mln units. Utility output fell 5.3% due to warmer weather. Capacity Utilization fell to 78.6% in April down from 79.3% in March which was higher due to the extreme unusually cold temperatures.
Category | APR | MAR | FEB | JAN | DEC |
Industrial Production | |||||
Total Index | -0.6% | 0.9% | 1.1% | -0.2% | 0.2% |
Manufacturing | -0.4% | 0.7% | 1.5% | -0.9% | 0.2% |
Utilities | -5.3% | 0.6% | -0.2% | 3.3% | 0.1% |
Mining | 1.4% | 2.0% | -0.1% | 0.9% | 0.1% |
Capacity Utilization | |||||
Total Industry | 78.6% | 79.3% | 78.8% | 78.1% | 78.4% |
Manufacturing | 76.4% | 76.9% | 76.5% | 75.5% | 76.4% |
Market Investing Strategies
Technical Information
Support Levels S&P 500 1856
Resistance S&P 500 1897
Support Levels DOW 16,380
Resistance DOW 16,680
Support Levels QQQ 85.70
Resistance QQQ 88.20
Support Levels NASDAQ 3960 – 4040
Resistance NASDAQ 4245
Market Investing Strategies Cycles
Six stocks that deserve attention are Kimberly Clark ( KMB: $ 111.06 ); KMB has a rising 13 and 50 day moving average. AMGN ( AMGN: $ 111.94 ).appears oversold and can rally to its 50-day m.a. at $ 118.
Other stocks that seem to be in a bottoming cycle are Home Depot ( HD: $ 77.36 ) Select Comfort Group ( SCSS: $ 18.91 ) Kirklands ( KIRK: $ 16.87 ) and Santander ( SAN: $ 10.03 ).
Banco Santander has paid an average of 7% dividend over the past five years and at the current stock price yields 6.4%. Sheila Bair, former chairman of the FDIC ( 2006 to 2011 ) is now a director.
They have thousands of offices in countries that are growing faster than the U.S. especially in Latin America. They are strong in emerging markets like Argentina and Brazil. Emerging market stock market performances can be seen the cycles chart at the end of this section.
The Investors That QE Left Behind
The U.S. stock market appears sound following another eventful week. After exploding to new all-time highs on Monday and Tuesday, stocks were turned back at the 1900 level on the S&P 500 Index (SPY) and finished the week effectively flat from last Friday. But while the stock market uptrend remains firmly intact, signs of erosion continue to accumulate under the surface. Stocks continue to trade at considerable premiums on a trailing 12-month and cyclically adjusted 10-year price to earnings ratio basis. And they are doing so at a time when the pace of economic growth remains sluggish.
Summary
QE has been great for the U.S. stock market over the last five years.
But not all investors have benefited especially small and micro-cap industries.
Many other asset classes both domestically and around the world have struggled in recent years, which may present attractive upside opportunities for investors going forward.
Since 1881, the market has traded around 16.53x trailing ten-year earnings. It currently stands at 25.33 or about 50% overvalued. This is disconcerting for long term investors.
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Quantitative easing from the U.S. Federal Reserve has certainly been great for the U.S. stock market over the last five years. But that does not necessarily mean that it has been great for everyone. Just as there is no free lunch, the cost for first rescuing the global economy and subsequently inflating asset prices including stocks in a failed attempt to generate sustained economic growth through the ‘wealth effect’ has been borne directly by retirees and those living on fixed incomes that have been forced to take on greater risks with their savings to generate income with interest rates pinned effectively at 0%. Not all investors have benefited equally. For while the U.S. stock investor has certainly been blessed in this sluggish growth world over the last several years, the same cannot be said for those allocated across many other asset classes.
The benefit from QE for the U.S. stock investor has been abundantly clear since the bottom of the financial crisis in March 2009. As mentioned in previous articles, the key characteristic of the program that has helped juice stock prices is the daily purchase of U.S. Treasuries.
For if the Fed is not engaged specifically in daily U.S. Treasury purchases, the stock market (SPY) has may have languished. Taking this one step further, when the Fed is not actively engaged in any stimulus program whatsoever such as Operation Twist that was in place from October 2011 to December 2012 right up to the launch of QE3 in January 2013, or if they are not flooding the speaking circuit with promises of fresh new rounds of stimulus being imminent, the direction of the stock market has been lower.
In 2013, the US found itself in the top half of the list in terms of stock market performance around the world. So far this year, however, its weak returns put it in the bottom half of the list. With a year-to-date gain of 1.17% (S&P 500), the US currently ranks 46th out of 75. If you were to use the Dow (-0.87% YTD) instead of the S&P 500, the US would rank 56th out of 75, and if you were to use the Nasdaq (-2.88% YTD), the US would rank 63rd out of 75. bounding faster than in the U.S.
Of the G7 countries, the US currently ranks 5th out of 7 in terms of year-to-date performance. Italy is up the most with a gain of 8.87%, followed by Canada (+6.71%), France (+3.57%) and Britain (+1.39%). Germany ranks behind the US with a YTD gain of just 0.78%, while Japan ranks last with a YTD decline of 13.47%. Japan actually ranks dead last on the entire list, even behind Russia, which is currently down 13.08% YTD.
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Rule 17B Attestations
Princeton has approximately 2,581,578 shares of AIVN both free and restricted and represents them for I.R.. Princeton also has about 40,000 shares of TXGE. Princeton is paid $ 1,500 per month from RMS Medical Products. Princeton has bought 81,100 shares of RMS Medical Products. Princeton Research has been paid $ 2,500 to write a report on Xinergy.
Princeton has been engaged by Target Energy. No contract is currently in place. When there is no movement in penny stocks, even though there is none or very small losses, we will liquidate ( sold AIVN on stop ) even though we like the company, if money is needed for better opportunities.
We now believe REPR represents upside opportunity. The Target ADR trades at about $ 4.50 in U.S. vs 0.045 in Australia. Princeton owns 400,000 Australia shares and about 500 U.S. ADR’s. Princeton is paid about 500,000 shares of Leo Motors.
Pursuant to the provisions of Rule 206 (4) of the Investment Advisers Act of 1940, readers should recognize that not all recommendations made in the future will be profitable or will equal the performance of any recommendations referred to in this Email issue. Princeton may buy or sell its free-trading shares in companies it represents at any time.
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CONTACT
Please Direct All Inquiries To:
Mike King
(702) 650-3000
Princeton Research
3887 Pacific Street,
Las Vegas, Nevada 89121