OptionPundit

Tag: CAT

  • GM Doesn’t Need Money

    AP reports that General Motor’s (GM) CFO says they don’t need $2billions as cost cutting is bearing fruits. Quite interesting, and possibly a good sign for GM’s survival. But I think more than cost cutting, they need to have cutting edge car models and this cutting edge doesn’t mean high tech, but the models that will fit to the pockets and life style of the consumers of tomorrow. It’s not going to be the same world as it was few years back, and before oil reaches to the moon again (i don’t know when), they need to be ahead in the fuel efficient and possibly electric car models and streamline the supply chains. Net, a good news is a good news.

    S&P lowered General Electric (GE) long term rating one notch to AA+ from AAA with a stable outlook. They think GE’s capital is under increasing pressure that will result in rising credit losses. Interesting, but, guess what, the stock is up almost +10%.

    FSYS, AKS and DDUP Puts are active. TYC and DNA Calls are active.

    CAT covered call example that I shared in the free trade section is up +10.9% (as my account uses portfolio margining) and for account without margining it is up +4.5%.

    Have fun, markets are being released from deeply oversold levels. As I mentioned earlier, watch-out for-

    Coming back to Dow, the short term buy signal expects it to move further up, and once it crosses 7,286 (round it off to 7,300), the low that Dow registered on Oct 9, 2002, the next logical resistance level will be 7,470. We need to see if Bulls has what is takes to penetrate that level with sufficient degree of confidence as demonstrated by volume.

    Trade profitable, Trade Carefully, OP

  • Outperformance Continues at OPNewsletter

    When compared with broader markets, Feb was an excellent month for OPNewsletter coupled with a few good learnings (kinda reinforcement, been there done that, but forget that). Overall, OPNewsletter for Feb closed up +5.6% x-commissions and +2.6% including commissions. Capital preservtion and thus allocation was higher priority vs missing an opportunity.

    These results doesn’t include the speculative directional trade which were shared here (only OPN subscribers can see this thread) and here at my profile on InvesCafe (Free) which includes likes of RIMM +40%, V +7.8%, BIDU +5.2%, BAC +10% to +40%, ESI + 33%, SRS, STT, WHR, BTU, AXP, CAT, ISRG, BLK and many more. I opened multiple positions where some won some lost (due to inability to fill on time as I was away and didn’t want to autotrade). Hardly any of those missed the expectations except the VXX which I intentionally closed.

    Above all, this doesn’t include future opportunities via capital preservation due to early warnings. Hope you have been reading OptionPundit and thus were aware of the Bear Market Signal that was reconfirmed recently. And of course, at least one assett class probably would have been shining in your diversified portfolio.

    I have already started investing for March’09 portfolios. if you would to sign-up, pls click here.

    Cheers and profitable trading, OP

  • Outperformance : OPNewsletter Feb’09 +5.85%(Open)

    An excellent month for OPNewsletter so far. Overall, OPNewsletter is up +8.87% x-commissions and +5.85% including commissions. We didn’t have to make any major adjustments to our portfolios except one which rolled partially to next month. We closed one portfolio for +17.17% gains and except any major disastrous events on Tuesday market open, remainder portfolios stands to gain good theta decay over the long weekend. This is what OPN wants, portfolios to be as boring as possible. We didn’t get fills on two income portfolios else results would have been even stronger.

    These results doesn’t include the speculative directional trade which were shared here (only OPN subscribers can see this thread) and here at my profile on InvesCafe (Free) which includes likes of RIMM +40%, V +7.8%, BIDU +5.2%, BAC +10% to +40%, ESI + 33%, SRS, STT, WHR, BTU, AXP, CAT, ISRG, BLK and many more. I opened multiple positions where some won some lost (due to inability to fill ontime as I was away and didn’t want to autotrade). Hardly any of those missed the expectations except the VXX which I intentionally closed.

    Other highlights includes my warning on Friday when markets were going higher in anticipation of stimulus package which proved right. Not that I have crystal ball, but it’s an experience I have been observing in the events of past few years.

    Overall an excellent month except that we didn’t invest a lot of capital for income spreads (only a max of 26.5%), but as I mentioned earlier, capital preservation is higher importance than missing a potential opportunity, especially in markets like current ones. We may always make more money if we have trading capital preserved. Once trading capital is lost, we can’t benefit from any opportunity even if it is as sure as that sunrise.

    I shall be looking for March’09 portfolios. if you would to sign-up, pls click here.

    Cheers and profitable trading, OP

  • OPNewsletter (Feb’09) : +2.78% (X-commissions) and +0.1% (/w Comissions)

    Such is the bear market, it leaves no one. Those who thought that major price indexes had successfully tested the Nov’08 market lows and that move December onwards marked a new primary bull market, were taken by surprise and Jan closed on a negative note. Dow closing almost 9% down for the month and other indices almost in the same range. I have been saying this since Nov’07 and will repeat here again “In bear markets the winner is the one who loses the least” (it’s not my quote, I borrowed it from the net and don’t know who said this, but whoever did concluded it at best)..so stay very close. I also mentioned about the importance of 7,500 break for Dow that if that’s gone, just stay clear.

    Here we are, our OPNewsletter portfolio are at break even after commissions in its 1st week of opening in spite of a weak market. Saying it another way- +2.78% excluding commissions and +0.1% after commissions.This doesn’t include bonus trades like CAT and ISRG which I shared via real-time alert on InvesCafe, and entry/exit on OPN forum. I closed CAT directional trade for +25.5% and ISRG for +46.6%.

    We have invested 24.27% of capital. This is also a month I didn’t open a RUT iron condor as risk/reward wasn’t good.

    Trade carefully, trade profitably, OP

  • Make or Break?

    Up, Up and then Doooown. That’s the simplest way I could define the stock market’s pattern these days. Should the markets attempt another move higher, which could be sparked by today’s release of the Nov. unemployment report, initial resistance should be at the Nov. 28 reaction high at 8831 for the DJIA, 896 for the S&P 500 and 1535 for the NASDAQ. Still, the strength needs to be demonstrated by strong volumes.

    I have been cautioning OPN subscribers time and again..here is what I wrote y’day…

    Doubts abound in these “last few hrs rallies”. Barron’s confidence index continues to fall amidst these rallies jobless claims, I have my doubts on govt statistics… market breadth isn’t significantly positive when compared with obvious rallies…is this advance that started from Nov 20 coming to an end soon? more and more questions than I can find answers…still on sidelines..”

    Y’day, The Dow gave up over 300 pts in last hour before recovering alomost 100points in last 6mins. The slide primarily was due to, I think, traders wanting to move to the sidelines ahead of today’s employment report. Treasuries are yielding multi-decade low (currently -0.106 at 2.570%), representing a continued move into safe haven assets. This is also reflected in “Barrons Confidence Index”.

    The biggie today is the job’s report. Nonfarm Payrolls is expected to drop ~330K. Markets have been handling negative economy data quite well for the past few days. We have seen selling pick up ahead of economic releases over the past few days (ahead of the Beige Book, ahead of initial claims data), which often results in a positive reaction to poor economic data. The number will have to be worse then expected with severe downside revisions to previous months to trigger a sharply negative reaction in stocks. A surprise smaller than expected decline in payrolls could spark rally. It is anyone’s guess as to how the data will turn out and how the market will react to it, but with a late day deterioration ahead of the data, the market might have already priced in some bad news.

    In the unusal options trading section, HANS Dec calls saw interest probably due to renewed KO-for-HANS takeover speculation. SBUX Dec 10 calls saw heavy interest around midday. PCLN Jan’09 70 calls also saw heavy activity where 12.8K contracts exchnaged hands vs. 1.1K open interest. Other notable call was CAT Jan’09 45 calls 11K volume vs 3.8K open interest.

    These days markets needs to watched almost daily. It seems as if every other day is a record day. While thinking about market actions, here is an interesting chart worth pondering to review rate of returns for common stocks purchased by the Treasury from financial institutions.

    Trade Carefully, Profitable Trading, OP

  • American Express Beats on Earnings (AXP)

    American Express, AXP posted third quarter earnings of $0.74 per share, which is $0.15 better than consensus estimate of $0.59 per share. The company’s revenue totaled $7.16 billion vs. analysts’s estimates of $7.31 billion in revenue. Consolidated provisions for losses totaled $1.4 billion, up 51% from a year ago. The third quarter net loan write-off rate in the U.S. Card Services segment was 5.9%, up from 5.3% in the second quarter.

    The company believes consumer and business sentiment is likely to deteriorate further, translating into weaker economies around the globe well into 2009. Cardmember spending is likely to remain soft. Loan growth will be restrained partly because of company efforts to reduce credit risks.

    The shares were up in the after market hours trading. This was also a bullish pick for OPNewsletter. We’ll see how it performs when market opens. Albeit, Moody’s Investors Service lowered the long-term senior ratings of American Express Co. (Amex) to ‘A2’ from ‘A1’, citing negative asset quality trends and lending exposures, particularly within geographic markets in the United States that have experienced sharp home price declines. According to the report, about $75 billion of debt securities are affected by the action. The rating outlook is negative.

    On the other hand Texas instruments (TXN) missed on both revenue as well as earning’s estimates. To make matter worse, TXN has also lowered the guidance. The week is packed with action, we have lot of companies announcing results including Caterpillar (CAT), Coach (COH), Manpower (MAN), Pfizer (PFE) and US Bankcorp (USB) to name a few that are going to set the tone for market action today.

    Profitable trading, OP