Traders Corner   33 comments

The S&P 500 levels to watch today:

UPSIDE: 1988 (August 20th’s high), 1991 (July’s high and the all-time high), and 2000 (top of the Bollinger Bands).
DOWNSIDE: 1982 (August 19th’s high), 1977 (August 20th’s low), 1971-1972 (2 data points), 1968 (June’s high), 1964 (August 15th’s high), 1958 (August 18th’s low and the 50 day moving average), 1955 (August 14th’s high), 1951 (20 day moving average), 1947-1948 (2 data points), 1944 (August 11th’s high), 1941 (August 15th’s low), 1927-1939 (July’s low and 9 data points), 1924 (May’s high), 1922 (100 day moving average), 1921 (August 4th’s low), 1916 (August 1st’s low), 1909-1913 (3 data points), 1904 (August 7th’s low), and 1902 (bottom of the Bollinger Bands).

S&P 500 Daily Momentum: Bullish
S&P 500 Daily Overbought/oversold: Neutral (leaning overbought)
S&P 500 Weekly Momentum: Bearish (weakening)
S&P 500 Weekly Overbought/oversold: Neutral (leaning overbought)
S&P 500 Futures: Positive
Overall: It looks like yesterday’s FOMC minutes gave the bulls a second wind, albeit a somewhat weak wind. With the S&P 500’s daily momentum looking strongly bullish, the only thing to worry about is the market’s conditions becoming overbought. But the futures are pointing to a bullish opening, so this run may still have some legs.

33 responses to “Traders Corner

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  1. Ed, it isn’t to late to ride some upro. I’m over stuffed with gtat. I guess you have been busy this summer you’ve been quiet.

    • bought back 1/2 of my UVXY calls for .05 originally sold for 2.05. Continuing to reduce basis by $2.00 to 31.20. Have a ways to go before this particular tranche is profitable.

  2. I added to tcmcf this morning. I now have a full position and will be very happy just to collect dividends and wait until may 2015 for the TC conversion. Thanks again Jeff fir pointing out b

  3. I did also buy back into CAMT this morning. This is a micro cap I owned for short stretch in July. I had a buy order in at start of week, but it gapped up this morning, so I bought in at 4.08. Speculative buy, but this is a small company with great balance sheet and some high growth opportunities in 3d printing.

  4. Wow, CBI is up over 6% since I bought it. I’m thinking of selling some in the money calls or selling it. Hate to let this quick gain disappear? What do you guys think?

  5. Marshall, nice timing on your gtat sell. I thought Trader was the market timer here. Are you going to buy some back?

    • Bill – in hindsight it was good timing. I suspect every hindsight good call I have made, I have a bad one as well. It would rally have to drop (say to $15) for me to add to my position. Keep in mind the Eason I sold was that GTAT had become 11% of my entire portfolio and I think I would have to add up #2, 3 and 4 to pass it up. So as a risk management tool, I do not want to get back in that position unless I got a real puke price.

  6. It is funny, I just got authorization from Fidelity to start trading options with them. I have had the ability to write covered calls in my Merrill Lynch account (the smaller of my two brokerage accounts) for about six months. I have only written to covered calls, TSL September at $13 and GTAT September at $22. Both look like “wins” for me. I bought back the GTAT on a dip for 55 cents and I had sold at 2.40, so that was a real windfall. The TSL is still open, TSL is north of $13, but it really needs to go through $14 before I lost the upside (as I got more than $1).

    Looking at my fidelity holdings, I really do not see a single stock I want to write a cc on. All my mfi stocks are to be held for a year, so I do not want to risk selling early if called out. My dividend stocks are pretty dull and the calls are either lightly traded or not attractive. Other stocks like GNW are so under valued in my opinion, I do not want the potential of losing the upside.

    I think I am going to do some more research (perhaps the answer is buying calls on stocks I think have strong upside) and derive a strategy – I really do not want to be heater skelter with something so leveraged.

  7. Marshall, BBEP is currently yielding 12.33% dividend based on my buy price and is also up 35.78% since I bought 13 months ago. Thanks for the recommendation.

    • Tom – that was perfect timing on BBEP. If you pulled up a two year chart you’d be hard pressed to have picked a better price. It has worked well for both of us and is my #3 holding.

      • I am very happy with the current yield and therefore am not thinking of selling. Marshall, do you have a time period for your holding or a sell price in mind?

      • Tom – I am treating BBEP as a long term hold. No plans at all of selling. I am actually very pleased with recent purchase, I think it will be accretive.

  8. Not sure if anyone followed me on my purchases of BAC warrants on 8/6 and 8/18. They are up 7 and 10% already as BAC has spiked 65 cents today on putting the mortgage mess behind them. There may be a better entry down the road, but the BAC warrants are very interesting. They work almost exactly like buying a call with an expiration date of 1/16/2019. The strike price is currently $13.29 (my calc). But that strike price will be loweredby the quarterly dividends paid by BAC over a penny until expiration. So to do the math, BAC just bumped up the dividend to a nickel. If we assume it is a nickel from here until 2019, the final strike price will be $12.55. If they raise it to a dime a year from now, it would drop to $11.85.

    So beside the strike price, you have to ask yourself, where will BAC stock price be in January 2019? Well, they are currently at 16.17, which is 80% of book value. If we assume they grow book value by 10% a year and they trade at book by 2019, we get a stock price of $32.50. If the strike price is 11.85, that means each warrant would be worth 32.50 – 11.85 = $20.65. The warrants are trading at $7.21 right now, so that is a tripling of your money in 4.5 years. Obviously that is a single outcome, everyone may have their own opinions on where BAC goes in 4.5 years. But for me it is an intriguing investment. It is my #12 position, so I am unlikely to buy more. But I would encourage everyone to play with the numbers and be prepared if the price drops sometime in the next year (a virtual certainty with the way the markets tend to swing).

  9. Sorry to be chatty today, guess things are slow. I had two companies report earnings this evening. GPS, which appears to be decent, they are trading up after the bell. Then BRCD, which at a quick look seems very good to me.

  10. Hi Marshall,
    I am new to investing. Might look like a basic question. How do I buy warrants? Do they have different ticker symbol? I have brokerage with tradeking but not sure how to buy warrants.

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