Traders Corner   16 comments

We are set up for another pop today, but it looks like the futures are already anticipating it: The S&P 500 futures are up 0.37% as I type this.

The McClellan Oscillator dipped down into oversold territory at -71. When I saw this yesterday afternoon, I didn’t consider it as definitive by itself. But add in the Williams %R at -94, which is oversold for the 6th day, and the fact the S&P 500 closed below the bottom of the Bollinger Bands again (although by only a point), and this looks convincing.

But I am not convinced. While a pop is certainly possible today, I prefer McClellan to be at -80 or less. After the mixed message FOMC meeting minutes yesterday, I would actually feel more comfortable with SPXU today.

By the way, here is the Fed minutes summary, from the Wall Street Journal via Zero Hedge:

•FED STAFF A TAD MORE PESSIMISTIC ABOUT THE NEAR TERM ECONOMY, BUT STICKS TO ITS GUNS
•FED OFFICIALS ALSO SHOWED SOME ANGST ON THE ECONOMY
•FED OFFICIALS UNCONVINCED ABOUT LABOR MARKET IMPROVEMENTS
•MIXED VIEWS ON LOW INFLATION
•FED OFFICIALS THOUGHT THE MARKET HAD IT ABOUT RIGHT IN LATE JULY
•MIXED VIEWS ON THE DAMAGE OF RATE BACKUP
•NO CHANGE IN THE STANCE ON BOND BUYING
•OFFICIALS DECIDED THEY HAD ALREADY SAID ENOUGH
•CHANGES IN INTEREST RATE GUIDANCE ARE ON THE TABLE
•OFFICIALS CONSIDERED PATIENCE IN UNWINDING BOND PROGRAM

It is possible to read any part of that and walk away with whatever you already believed prior to the release. As for me, I am just more confused…

The S&P 500 levels to watch today:

UPSIDE: 1643 (bottom of the Bollinger Bands), 1645-1646 (2 data points), 1652 (August 16th’s low), 1654 (June’s high), 1656 (August 21st’s high), 1657 (50 day moving average), 1658-1659 (3 data points), 1663 (August 16th’s high), 1679 (August 15th’s high), 1682-1684 (4 data points and the 20 day moving average), 1686 (August 9th’s low), 1688-1693 (12 data points), 1695-1696 (3 data points), 1698-1700 (2 data points and July’s high), 1703 (August 5th’s low), 1705 (August 6th’s high), 1707 (August 1st’s high), 1709 (2 data points and the all-time high), and 1723 (top of the Bollinger Bands).
LAST CLOSE: 1642.
DOWNSIDE: 1639 (August 21st’s low), 1604 (July’s low), 1597 (April’s high), 1581 (May’s low), 1572 (March’s high), 1560 (June’s low), and 1553 (200 day moving average).

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16 responses to “Traders Corner

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  1. Sold TNA Sept 58 calls for 1.90. Bought at 60.07. Sold calls three times reducing my basis to 56.50. Market still looks weak. May end up trading options around this position. Sell them on up days and buy them back on down days.

  2. Great day for my portfolio. Up 1.26% right now. Am now beating index by 5 points for the year and am up 23% on year. My five new stocks I bought August 15th (AGX,CF,,FLR,KLIC and RPXC) are up 2.8% since the 15th versus -0.3% for index. SLCA is up 4% today and GTAT is up 3.4%. I did double my position in a European Financial company (Tetragon) today. I believe Europe is cheaper right now than the US markets, so am looking to increase my exposure there. Then I also sold my NSU position I bought on July 11th. I made a 10% gains (3.03 to 3.33) so am pretty pleased with that. I am steadily exiting precious metals space. My last position is TC-PT, which I plan to hold.

    • Marshall I sold my TCPT today (thanks for pointing them out) very nice 25% gain that I wanted to lock in. Also sold The BAC warrants you recommended for another very nice gain.

      I will rebuy is we get some downward motion.

      • Jeff – glad the trades worked for you. I intend to hold both positions for a while, TC-PT certainly until next spring and the BAC warrants until probably 2018. I think everyone keeps expecting a correction, but it is seeming like a long wait.

  3. Doubled my Emerging markets dividend equities exposure in my margin account by buying DVYE at 47.44. Previously bought DEM on 6/20 for 47.01 and received a .93 divy.

    Added to my SPLV(S&P 500 low volatility) and VCLT(long term corporate bonds) in my roth ira yesterday.

  4. Jeff – At what price points would you re- buy TC-PT and the BAC warrants?
    Marshall – Your thoughts?

    Thanks!

  5. Jeff – At what price points would you re-buy TC-PT and the BAC warrants?
    Marshall – Your thoughts?

    Thanks!

    • George, I’m looking for at least a 10% pullback before I rebuy. TC-PT has been very volatile and I’m guessing I’ll get in in September sometime.

      Not so sure on the BAC warrants, but I’ve locked in some very nice gains and am perfectly happy to keep them.

  6. George – always difficult to answer a question like that as both stocks are pretty volatile. They could pullback or move forward and never look back. I try to think about a fair value as my basis for investment decisions as I try to have a longer term outlook and can be patient. I think TC PT has a fair value in the $25 area. That being said, it is highly dependent on copper and molydenbrunmum prices. So I am saying if they stay where they are$25 is a fair value. If they start to go back up, $35 is very likely, if they drop, then $14 or $15 is reasonable. So I think upside outweighs downside, but there is risk. On BAC warrants, they are a function of where BAC price is at the start of 2019. The strike price is 13.30, and that will get lowered by dividend payments. So if BAC is $27 by 2019 and paid no dividends the warrant would be worth about $14. To me this is a no brainer and the warrants will almost certainly double by 2019 (with actually far greater upside).

    Personally, I would look for a 5 to 10% pullback in either stock before adding to my positions. But if you are patient, I believe you will good a good return in either security at today’s prices.

  7. Jeff & Marshall – thanks again for your valuable input!

  8. I just bought GAME today at 4.50 ahead of their earnings next week. They are a very inexpensive stock (in same space as GA and CYOU which I already own). They are actually the cheapest of all, as they have not been growing of late. A lot of the material I am reading suggests that they have a lot in the pipeline and may be restarting some growth, so I decided to buy before earnings. Full disclosure, this IS a Chinese company.

  9. TCPT and TC relationship. I was looking at historical relationship between TC and TCPT prices. My understanding is that Each share of TCPT is convertible into 5.388 shares of TC at any time. That expires in may 2015. If the price of TC is above 4.64, that ratio starts to decline until it hits 4.586 at TC price of 5.45.

    It would stand to reason that at a current price of 3.77 that TCPT should generally trade at 5.3x that price as I believe you could turn around and convert immediately. But it doesn’t. Right now the ratio is 5.18, though the ratio since I started keeping track in April is 5.39. So this mis pricing strikes me as an arbitrage opportunity. You could short TC and go long TCPT and I think pretty much guarantee a profit, until TC starts approaching $4.64. In addition, you would get the forty cent quarterly dividend on TCPT as a sweetener.

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