Stock Market Strategies
May 12, 2014
Stock Market Strategies Newsletter
Sample Issue
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Covering High Return Balanced Stock Market
Investing Strategies To
Make Money In Up Or Down Markets
Over 284% Gains In 2013
For Free Where To Invest Your Money Now
High Return Investments Trade Alerts
PrincetonResearch.com/alerts.htm
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
Stock Market Strategies
$10,000 Trading Account
Traders Comments
There are three open positions:
BA May 130 Calls
FB June 62.50 Calls
XLU May 43 Puts
Funds in Use $ 1698
Gain for the week $ 44
In 2013 YTD gains were $28,479
Over 284% Returns
A $10,000 Portfolio would be worth $38,479
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)
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As noted here last week, “The trend is your friend” played well this past week as it has on every one of the declines for the last 18 months. The difference with this pullback was the absence of a meaningful bounce in many of the momentum stocks. NFLX, AMZN, TSLA, TWTR, and others too
numerous to list are lower. However, there are many names that you are not hearing everyday on CNBC. PRO traded @ $41 in February closed this week @ $21.47; CLDX was $33 at the same time and is $12.76.
Unfortunately I could list a great many more that refuse to make any headway toward recovery.
The market has been great as long as you’ve stayed with the Dow-30.
Another adage, “sell in May and go away” didn’t work last year, but looks like it may be taking hold now in some of the financial and the grocery chains.
I am taking a neutral stand on the markets now and will look for names that we can own, but also write options against, and shorts that have not participated in the rallies………CAM
Stock Market Investing Strategies
$10,000 Trading Account
Trade Table
New Trades:
1) Buy 15 SAN December $ 10 Calls @ $ 0.45
| DATE | TRADES | PRICE | COST | PROCEEDS | RESULTS |
| 05/06 | Bought 6 June FB 62.50 Calls | 1.14 | 684 | ||
| 05/06 | Sold 10 BAC May 15 Calls ( 50% Loss Rule ) | 0.22 | 220 | 210 Loss | |
| 05/05 | Sold 2 BAC May 130 Calls ( 100% profit Rule )
Leaves 2 lots long |
2.54 | 508 | 254 Gain | |
| 04/30 | Bought 4 BA May 130 Calls | 1.27 | 508 | ||
| 04/29 | Bought 10 BAC May 15 Calls | 0.43 | 430 | ||
| 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.
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STOCK MArket STRATEGIES Laboratory
Weekly Changes For market Indicators
Prices are copied from Barron’s Weekly and Yahoo Finance and may be incorrect
| Dow
16,583.34 +70.45 +0.43% |
Nasdaq
4071.87 -52.03 -1.26% |
S&P 500
1878.48 -2.66 -0.14% |
Transportation
7719.30 +20.46 +0.27% |
Russell 2000
1107.22 -21.58 -1.91% |
Nasdaq 100
3555.70 -31.95 -0.89% |
| Gold (spot)
1287.30 -15.30 -1.2% |
Silver (Dec )
1912.1 -42.5 -2.2% |
Crude
99.99 +0.23 +0.2% |
Heating Oil
290.68 -1.55 -0.5% |
Unleaded Gas
2.8960 -0.0485 -1.7% |
Natural Gas
4.531 -0.143 -3.0% |
| 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 135-24 -14 3.448% +0.077% |
10 Yr Note
125-00 +11 2.59% +0.01% |
Copper
308.30 -1.30 +0.4% |
| CRB Inflation
Index 304.57 -2.57 -0.8% |
Barron’s Confidence
70.7% -0.6% |
S&P100
832.96 -0.90 -0.11% |
5 Yr Note 119-25 +103 1.626% -0.04% |
Dollar
79.87 +0.36 +0.5% |
DJ Utilities
539.55 -4.26 -0.78% |
| AAII
Confidence Index |
Bullish
28.3% -1.5% |
Bearish
28.7% -0.8% |
Neutral
43.0% +2.3% |
M1 Money Supply
+7.89% April28th |
M-2 Money
Supply +6.72% April28th |
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.
New Stock Market Strategies
Recommendations $ 100,000 account
1) Buy 5,000 shares GLXZ at $ 0.46 ( unable last week at $ 0.44 )
2) Buy 300 Bank Santander ADR’s ( SAN ) @ $ 9.78
3) Buy 300 Dynamic Materials ( BOOM ) @ $ 19.90
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) | ||
| SPXU 200
|
54.74 | 04/22 | 53.67sco | 04/25 sold 100 only@ 56.33
05/07 sold 100 @ 56.41 |
$ 159
$ 167 |
||
| 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 | |||||
| AAPL 5 | 636 | 10/9/12 | |||||
| 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 Stock Market 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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Stock Market Strategies
$100,000 Trading Portfolio
Recommendations And Overall Comments
1) Buy 30 SAN December $ 10 Calls @ $ 0.45
We had one closed out stock position and
two options positions last week and gained $ 255
Losses for the new year fell to $ 6,573.
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 three long options positions:
BA May 130 Calls; FB June 62.50 Calls and XLU May 43 Puts
The Stock table has the following 15 positions:
AA, AAPL (2), DSX, GRPN, 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
$ 3,396 in three options positions and
$ 57,504 in 15 stock positions totaling
$ 60,900 with
$ 39,100 in cash.
These figures are approximate. We do not count commission costs and there may be errors.
We were unable to buy the GLXZ last week at $0.44.
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.
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Previous Week’s Recommendations and
Rules for the Stock 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) |
| FB June 62.50
12 lots |
Calls 1.14 | 05/06/14 | |||
| BA May 130
4 lots |
Calls 1.27 | 04/30/14 | 2.54 ( Sold half 4 lots on 100% Profit Rule ) | 05/05/14 | $ 508 |
| BAC May 15
20 lots |
Calls 0.43 | 04/29/14 | 0.22 ( 50% loss Rule ) | 05/06/14 | ( $ 420 ) |
| XLU May 43
16 lots |
Puts 0.95 | 04/21/14 |
Note: Previous closed out stock and option positions can be found in past Stock Market Strategies Newsletter issues available in the VIP Subscribers Members Area,
This Weeks’ Stock Market Strategies
Economic Numbers and Media Data
| Monday | 14:00 hrs Treasury Budget April ( + 114.0B vs + 112.9B ) |
| Tuesday | 08:30 hrs Retail Sales Apr ( 0.3% vs 1.2% revised from 1.1% )
Ex-Auto ( NA vs 0.7% ) 08:30 hrs Export Prices Ex-Ag Apr ( NA vs 0.5% ) Import Prices Ex-Oil Apr ( NA vs 0.3% ) 10:00 hrs Business Inventories Mar 0.4% Unchanged ) |
| Wednesday | 07:00 hrs MBA Mortgage Index 05/10 ( NA vs +5.3% )
08:30 hrs PPI April ( 0.2% vs 0.5% ) CORE PPI ( 0.2% vs 0.6% ) 10:30 hrs Crude Inventories 05/10 ( NA vs -1.781 mln Bbls ) |
| Thursday | 08:30 hrs Initial Claims 05/10 ( 325K vs 319K )
Continuing Claims 05/03 ( 2700K vs 2685K ) 08:30 hrs CPI April ( 0.3% vs 0.2% ) CORE CPI ( 0.2% Unchanged ) 08:30 hrs Empire Manufacturing May ( 4.6 vs -1.3 ) 09:00 hrs Net Long term TIC Flows ( nA vs + $85.7Bln ) 09:15 hrs Industrial Production April ( 0.1% vs 0.7% ) Capacity utilization Apr ( 79.2% vs Same ) 10:00 hrs Philadelphia Fed ( 9.1 vs 16.6 ) 10:00 hrs NAHB Housing Market Index ( 48 vs 47 ) 10:30 hrs Natural Gas Inventories 05/10 ( NA vs +74bcf ) |
| Friday | 08:30 hrs Housing Starts Apr ( 975K vs 946K )
Building Permits ( 1000 vs 990 ) 09:55 hrs Michigan Sentiment May ( 84.5 vs 84.1 ) |
Stock Market Strategies Fundamentals
As the world’s largest steel producer, Arcelor Mittal ( MT: $ 15.73 ) down 11.8% on the year, is struggling to find support. MT employs 232,000. Compare that to U.S. Steel ( X: $ 25.00 ) down 15.3%, for the year, which employs 38,500. Steel Dynamics ( STLD: $ 17.61 ) down 9.9% employs 6,800 and Nucor ( NUE: $ 51.66 ) off just 3.2% employs 22,300. AK Steel ( AKS: $ 6.72 ) off 18% on the year employs 6,400.
European demand does appear to be recovering, and steel prices in the U.S. are heading higher early in this second quarter. The key to maintaining this recovery will be construction activity. Construction accounts for about 50% of global steel demand and roughly one-third of demand in Europe. Auto production/demand is a close second-place driver, as that makes up close to 20% of EU steel demand. The steel industry does expect a growth of demand this year from a range of 1.5% – 2% to 2% to 3%. That was well anticipated last year with the huge rallies of all the steel companies into year-end 0f 2013. It may be worth following this sector as it is likely to bottom this summer prior to the rest of the market as the big sell-off is looming.
The steel company we would favor is Reliance Steel ( RS: $ 71.47 ) off only 5.8% for the year, employing 14,000 and moving heavily into Aluminum. As you can envision from Alcoa ( AA: $ 13.25 ) up 24.6% for the year, which employs 60,000, aluminum technology and usage is rapidly improving. We have done well with Alcoa.
Consumer Staples Stocks represented by the ETF ( XLP: 44.51 ) appear to be surging making new all-time highs last week. Consumer Discretionary Stocks ( XLY: 63.84 ) stopped last week right at the 13-day moving average. This group was poised to outperform, but got hurt by Amazon, the third largest participant in the group.
Stocks to consider with a rising 50-day moving average are: Dynamic Materials ( BOOM: $ 20.84 ). They manufacture specialty hard-alloy explosion-clad metal plates for oil and gas drilling. The newly found Edwards formation in Texas is below the Buda, which is below the Eagleford and as lower depths are drilled sturdier equipment is required.Their products are used for shipbuilding, power generation and industrial refrigeration.
Also Kroger ( KR: $ 46.36 ) which has been on a tear right now to buy on any 2-days down. Supervalue, Inc ( SVU: $ 7.11 ) is a low priced stock making a major bottom and was recommended this week’s issue of Barrons. Barnes and Noble ( BKS: $ 16.60 ) is a buy at $ 14-15 on a dip.
At a time of major uncertainty and irregular market activity, it might also be a good time to purchase middle range convertible bond funds that have BALANCE between stock and bond sensitivity. Franklin Convertible Securities ( FISCX ) is our first choice. Their 15-year annualized return is at 8.5%. Vanguard Convertible Securities ( VCVSX ) and Calamos Convertible ( CCVIX ) deserve recognition.
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Stock Market Strategies Economic Data
A sharp increase in Auto Sales led Consumer Credit to expand by $17.5 bln in March after increasing a downwardly revised $13.0 bln (from $16.5 bln) in February. Revolving credit increased by $1.1 bln, from $855.6 bln in February to $856.7 bln in March. Non-revolving credit rose by $16.4 bln to $2,284.6 bln in March from $2,268.2 bln in February. Non-revolving credit has expanded for the past 31 consecutive months.
| Category | MAR | FEB | JAN | DEC | NOV |
| Total Credit | $17.5B | $13.0B | $13.4B | $15.6B | $8.1B |
| Revolving | $1.1B | -$2.7B | $0.7B | $4.1B | -$2.7B |
| Nonrevolving | $16.4B | $15.7B | $12.7B | $11.5B | $10.9B |
Nonfarm Labor Productivity declined 1.7% in the first quarter after increasing an upwardly revised 2.3% (from 1.8%) in Q4 2013. Wages, of course rose significantly causing the drop in productivity. Unit labor costs grew by 4.2% after declining 0.4% in the fourth quarter 2013 and 2.1% in the third quarter. Hourly compensation increased 2.4%, up from a 1.9% gain in Q4 2013. That was the largest increase since Q4 2012 when it rose 10.2%.
The initial claims level fell to 319,000 for the week ending May 3 from an upwardly revised 345,000 (from 344,000) for the week ending April 26. The continuing claims level fell to 2.685 mln for the week ending April 26 from a downwardly revised 2.761 mln (from 2.771 mln) for the week ending April 19.
Stock Market Strategies
Technical Information
Support Levels S&P 500 1846
Resistance S&P 500 1897
Support Levels DOW 16,380
Resistance DOW 16,680
Support Levels QQQ 84.90
Resistance QQQ 88.20
Support Levels NASDAQ 3920 – 4040
Resistance NASDAQ 4175
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Stock Market Strategies Cycles
Market research confirms our findings that not only has the market performed poorest in May-October, but it’s even worse in the midterm year. This trend is well-known and the market momentum has been muted this year. Price changes from the end of last year are miniscule.
For those that remember the “Great Stockbroker Fallout of 1987,” back then, young stockbrokers could have gone 5 years without realizing that what goes up can also go down.
Since early March the tech-dominated NASDAQ stock index is down 6.7%, with many of 2013’s beloved high-flying stocks falling far more. Just as these market darlings had a disproportionate positive broad-market sentiment impact on their way up, they are poisoning general psychology on their way down.
And this troubling divergence isn’t happening in a vacuum. The US stock-market valuations remain at very dangerous topping levels. As April waned after the great bulk of the elite S&P 500 component companies had reported their first-quarter profits, that index still traded at incredibly high valuations. On balance corporate earnings barely grew, leaving market price-to-earnings ratios extremely expensive.
On a trailing-twelve-month basis, the average P/Es of the S&P 500 component stocks were running at 22.6x when weighted by their market capitalizations and 25.9x in simple-average terms! This 23x to 26x compares to the century-and-a-quarter average fair in the US stock markets of 14x. 21x marks expensive levels, when stocks rarely enjoy positive returns in the coming years. And over 28x is actually bubble territory.
And stock-market fear is beautifully approximated by the famous VIX implied-volatility index. While it technically looks at evolving S&P 500 index-options pricing, it attempts to measure sentiment. Fear and greed are very disproportionate emotions. The current VIX shows a complete absence of fear at a time when the markets are unable to perform on the upside.
We have bought FB June Calls and would like to be long in the mid-fifties. Resistance looms at $ 59, the thirteen-day m.a. and again at $64, the fifty which seems to be in a declining mode. Traders might want to sell Calls against long positions to make income and conserve capital. FB remains one of the best in the beleaguered high- technical group. The QQQ has a similar chart pattern with a rolling over 50-day moving average. Traders who like FB may want to sell the QQQ as protection on rallies.
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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.
CONTACT
Please Direct All Inquiries To:
Mike King
(702) 650-3000
Princeton Research
3887 Pacific Street,
Las Vegas, Nevada 89121
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Stock Market Strategies May 2014