Traders Corner   39 comments

The S&P 500 levels to watch today:

UPSIDE: 1944 (June 10th’s low), 1947 (June 9th’s low), 1949-1950 (3 data points), 1955 (June 9th’s high and the all-time high), and 1965 (top of the Bollinger Bands).
LAST CLOSE: 1943.
DOWNSIDE: 1940-1942 (3 data points), 1928 (June 4th’s high), 1924-1925 (2 data points and May’s high), 1922 (June 5th’s low), 1918 (2 data points), 1915 (June 2nd’s low), 1912 (20 day moving average), 1897 (April’s high), 1886 (50 day moving average), 1883 (March’s high), 1867 (February’s high), and 1860 (100 day moving average and the bottom of the Bollinger Bands).

S&P 500 Daily Momentum: Bullish
S&P 500 Daily Overbought/oversold: Neutral
S&P 500 Weekly Momentum: Bullish
S&P 500 Weekly Overbought/oversold: Neutral (leaning overbought)
S&P 500 Futures (June): Flat (leaning positive)
Overall: Yesterday’s drop was just what the bulls needed: It relieved a lot of the overbought pressure on the markets. However, another up day could easily put the S&P 500 back in overbought territory.

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39 responses to “Traders Corner

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  1. One item that continues to frustrate me about GTAT is how their CEO continues to sell shares. He sold another $1.2m worth at start of June. So he has sold over $10 million in shares in 2014. The only saving grace is that a lot of his sales have been at much lower prices, so he does not have a record of selling at highs. He now only has about $3 million worth of shares, though it is possible also has options that are vested (I am too lazy to look). It is also very likely he will be getting additional awards at the start of 2015.

    There are many reasons for an executive to sell (taxes, college, divorce etc) but $10m seems excessive for those types of things. I will note he is selling through a 10b-5 plan, so it is set up in advance.

    Actually, I just reviewed their proxy and TG does have over 900,000 shares that were not vested as of 12/31/13. ANd at year end he also had 300,000 options. So I do think when one considers the invested component of his wealth tied up in GTAT, he is still very much aligned with shareholders.

    • Marshall,
      One important reason for him to sell shares is to diversify his holdings. If he still has $3 million worth of GTAT shares, that is more than enough for him to have a significant stake in the company, depending on his personal net worth.

      • Ed – I understand diversification, but I would suggest that $3m is extremely light holding for CEO of a $2.4b company. I work for a company worth about $3b and our CEO owns about $38m of company stock.

      • Marshall,
        IMO, you have to look at the CEO’s net worth to judge whether they are overdoing the diversification argument. If the CEO is worth $1 billion, then $3 million, or even $38 million, might not show much commitment on his part to the company. On the other hand, if the CEO’s net worth was $30 million, then $3 million is a reasonable dedication on his part.

      • Ed – you really would be ok with a CEO of a company who only had 10% of his/her net worth in company? That feels so lukewarm.

      • Marshall,
        I look at it from my perspective: If I have 10% of my investments in one stock, I pay much more attention to it.

  2. Sold my last position in FEYE for plus 70. 2.0%. It’s had a nice run since I first bought it on 5-20 at 29.52. I’ll wait for a pullback before I buy again. Even though the drop in the S&P this morning is small so far, the intraday technicals are making a strong move down. We’ll see how the day plays out, but the possibility of 1920-1930 is looking more likely. Should get a better idea at the end of the day. Congratulations to those who bought GTAT yesterday. Strong move this morning. Looks like the 1750 level will hold.

  3. can’t resist the gain. sold gtat at 18.42.

  4. Partial position in NSR @ 24.70.

  5. Ed, silver has made a nice move up since you sold AGQ. Are you looking to enter?

    • Trader,

      I’ve been watching and I’m waiting for a move above $19 with a nice volume boost before I make a move. I agree with Ed on this one that long term it’s heading higher. Just do not want to get caught in a bull trap, and watch it head lower.

    • Trader,
      Nah, but I have been enjoying the run SLW is having. πŸ™‚

      • Ed – you commented that you were early on silver and you still believe it will rise in August. What was the catalyst you expected?

      • Marshall,
        The end of the “London fix” pricing for silver. If you look at the price of silver, aside from a few notable spikes, it’s barely budged for decades. Inflation alone should have had an impact.

      • I don’t know Ed. I looked at a ten year chart and it has gone from $5 back in 2004/5 to 19.17 right now. I would say it has budged in past decade and has gone up faster than inflation. That is over a 12% increase a year in past decade.

      • If AGQ can break the 63-65 range could see 80 in this move up. Given geopolitical concerns and Obama opening his mouth the probability increases.

      • Marshall,
        Silver broke $5/ounce in 1975. Based on inflation since then, that would put silver at $22.03, about a 15% increase.

        Trader,
        Until now, I’ve never wanted to hear Obama speak. Finally, an incentive! πŸ™‚

      • Ed,

        What is the London Fix you refer to, and why does it have an impact? Pardon my ignorance but I rarely read or watch much news.

      • Ed, on Obama speak, that we can agree. πŸ™‚

      • mdistas,
        The London Fix is where several big banks get together at the end of the trading day and decide the price for both gold and silver. Seriously, that has been the process for decades. Don’t laugh.

  6. FYI to any MSFT holders: They are paying their 28 cent/share quarterly dividend today.

  7. Does anyone here have any thoughts about BRCD? They look pretty cheap.

    • Based on technicals it looks pretty good. Doesn’t look like it will rocket higher, but doesn’t appear to have much downside either. Call option premiums are very low which tells me the market doesn’t expect much volatility.

    • Marshall,
      In an industry that is expected to grow 15%/year over the next 5 years, BRCD is only expected to grow by 8%/year. Next year, their industry is expected to grow 30%, while they are only expected to grow by 3%. Even worse, next quarter, BRCD is expected to lose 8%, while their industry will grow 63%. You see the pattern? Basically, BRCD is an industry laggard. Based on that, I would call them fairly valued until they can make something happen. If you think they can, then I would recommend a buy.

  8. Trader (and other Chartists) – what do you make of TLT around 1pm? That strikes me as very unusual.

  9. Trader – almost definitely related to Obama. But does it increase the probability of an impending correction in equities? Is there anything an investor should do? Buy gold, oil or treasuries? I am unsure, though have been looking hard at four or five oil corporations.

    • Oh-oh! Not another red line?!

    • Marshall, there is no way to know if this is the start of a correction. I expected this pullback and this acceleration in the drop today is not a surprise based on how weak my indicators were this morning. We’ve reached the 1930 level I mentioned, now we’ll have to see if we hold or drop through 1920. The S&P has a long way to go before it reaches the 50 day ma which has been good support. I’m being cautious on longs and already am well hedged on the short side of the market. I probably wouldn’t do anything for at least a few days until we see how these geopolitical events unfold. If we do get a correction, there will be plenty of time to lock in some profits, and place some bets on the down side. Of course, this assumes we do not get some type of flash crash in which case all bets are off. If you don’t already own any oil or natural gas, a partial position would not be a bad thing.

  10. Bought some Tza as a hedge.

    • If we break 1920, you’ll be real happy with this move. Next level of support is around 1900. With the strong technical drop today, I would not be surprised if we see 1900 again.

      • Trader,
        The last correction we had, the 50, 100, and 150 day MA’s seemed to be the major support levels. With the recent run-up, the 50 day is all the way down to 1887.

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