rovo's Market Journal -- 2011

[rovo]

If we could get a little tail wind Ford may break through $19.00 today. Go baby, go. $18.89 is the high for today, so far. March options are up a nickle from yesterday's close and are at 0.51B/0.53A. I have 100 contracts for sale at $0.75 and 300 at $1.00. I don't expect the $1 to be reached but one never knows for sure. My cost on the options is $0.05.

[livinincali]

F's RSI on the Daily and weekly are at extreme levels right now. Both are over 80. At this point F shows no signs that it's slowing down but once it does it's likely to take months to consolidate the overbought levels. It could certainly go more overbought and stay overbought but just figure that when this run is over you're probably not going to see much upside for at least a couple of months. In addition the upper channel is about to get hit so it made it's target of 19, 20 was a target if it took longer to get there. I can't predict the future but this one is probably one that you want to take profits on at the first sign of trouble.

[rovo]

Cali, I'm not going to argue with you over the short term price of Ford. As a trader you are much better than I am or that I will ever be. My 30K Ford common shares are a longer term hold and not a trade. I am using the Ford options as a short term trade. Ford may or may not be at a local high but looking out 12 months I still see about 50% to the upside.

[tyfighter3]

I totally agree on your F prediction ROVO.

[livinincali]

I am using the Ford options as a short term trade. Ford may or may not be at a local high but looking out 12 months I still see about 50% to the upside.

Long term F still looks good, but short term I could see a $20 2011 March Call getting creamed. As long as it keeps making higher highs and higher lows you should be fine but when the intermediate trend changes and the weeklys turn negative you'll likely run out of time before the next move higher. Just an opinion on my part. I certainly could be wrong, but it would be going against the historical probabilities. I'd expect F to make an intermediate term top somewhere in the next month or so and then consolidate for about 4 months. I.e. what ends up being the localized top in the near future will probably hold for at least 3 months and possibly longer. 50% upside in 12 months is a possibility, but I highly doubt it in the next 6 months.

Of course we just saw 50% gain in the last 4 months, so I'm not surprised that were all sitting here and saying yeah F could easily do another 50% in the next 12 months. Looking at history says that even if we get a repeat of the 1980's F would likely have a weaker year after 2 years of huge gains. I'd be looking for 20% or less in the next 12 months based on history but you never know. History doesn't repeat itself but it does tend to rhyme.

2009's 479% gain was the biggest ever and 2010's 72% gain was the 5th biggest ever. Last time F produced back to back 50% annual gains was 1997-1998. In 1999 it lost 16%. 1992-1993 it went almost 50% back to back and the 3rd year lost 22%. 1982-1983 produced 2 greater than 50% gains and 1984 only produced a 25% gain, so based on 2 big up years in a row we'd expect a somewhat weaker performance in 2011 but maybe not. 1982-1983 are similar in terms of gains and possibly recession, so it wouldn't surprise me to see an up year.

[tyfighter3]

Remember how you go away in May, take a vacation, go fishing, catch up on your golf game and so forth. Come back in September after that 10 to 15% sell off and get ready for the Christmas Binge.

[yclept]

So, we are all agreed. Ford stock will either go up or down or sideways. In any case after the nice run up it had last year, it doesn't appear that the Ford family will have to send Henry's Grand Cross of the German Eagle off to auction at Christie's any time soon.

[rovo]

The port took a small hit today, mostly from TBT and MSFT. Several other positions were in the red but only by pennies. Ford set another 52 week high at 18.97 but backed off and finished in the red by 3 cents.

[rovo]

re Ford.

I do have a plan but it may not look like it. I intend to sell off half of the 400 March contracts just prior to earnings on or about 28 January. A run up in price prior to earnings is expected by me. The other half, 200 March contracts, will be held on expectations of excellent earnings and other items of a upward stock price moving nature.

I just don't think the charts have much value when looking out past a few months. Ford is moving due to vastly improving fundamentals and these should continue to improve during 2011. That's my story and I'm sticking to it.

[mtntigger]

rovo - I don't know if your ears were burning today or not, but Blue, wvu, Ken, 97 and I were talking about you & SI.
moneycentral.msn.com/community/message/thread.asp?board=EverythingElse&threadid=1838817&boardname=Hide&header=SearchOnly&footer=Show&linktarget=_parent&pagestyle=money1
Just in case you wanted to see it before it goes *poof* tomorrow.

[lovetobike]

Ag stocks are performing well for me these days

A bit of news: Fertlizer makers Potash Corp. ($168.75, $4.43, 2.7%) and Agrium ($93.45, $3.52, 3.9%) are benefiting from the U.S. Department of Agriculture's World Agricultural Supply and Demand Estimates report released earlier Wednesday. The U.S. government cut its grain harvest and supply estimates more than expected, which should bolster crop and fertilizer prices going forward.

Today's moves:
DE: +2.19% (total gain +139%)
POT: +0.08% (total gain +26.96%)
AGU: -1.02% (a little dip; total gain: 13.53%)
MOS: +1.10% (16.94%)

total % of port devoted to these stocks (combined): 15.3% - not too much in case things go crazy on me. DE, as posted by the S&P analysis on TDAmeritrade projects a target price of $100, if there is a pullback, I made buy some more shares for a short term trade. I'm loving TDA's new system where I can choose which shares I want to sell now.

Rovo, I'm thinking about your suggestion and may do the %trailing stop for my fertilzer stocks. I'm trying to decide if 5% is the best range - these guys can get pretty volatile and so it may hurt me.

[rovo]

lovetobike, Superimpose DXY on each of your ag. picks.

[lovetobike]

Rovo - DXY isn't bringing anything up for me.

[rovo]

DXY US Dollar Index Future - Spot Price (INDEX) Sometimes $DXY but it depends on the charting system you are using.

[rovo]

Order placed to buy 1K TQQQ at $164.30 for a short term trade. Price subject to adjustment.

Missed the boat again but at least I didn't fall into the water.
No trade and order canceled. Maybe I should watch GLD and GLL for a while.

[livinincali]

Trying TLT again although this play hasn't been working out for me lately. Looks like it might be ready to breakout yet again and the dollar is a bit weak so lower yields might be in the cards. Don't have a ton of confidence but let's see what happens.

[rovo]

I sold off another 700 shares of HI this morning at 22.10. A little over 10% gain on the trade. The next sell order is priced at 22.30. NOTE: This was a planned short term swing trade and I am not selling my major holding in HI.

[lovetobike]

AG stock update:

DE: +0.06% (total gain +140%)
POT: +1.07% (total gain +28.28%)
AGU: +0.63% (total gain: 17%)
MOS: +2.83% (total gain; 20.25%)

I know these are volatile and I'm looking at the SMA (15/50/200) to see if it looks like there is a correction in the near future but I'm not picking anything up. I'm thinking about putting Rovo's advice for a 5% trailing stop in for POT since I have the most invested there. I'm already got 100% cost basis for DE but may take some profits it hits the lower '90s.

I'd like to wait MOS out a little longer before thinking about taking some profits.

Anything that you can see to suggest another approach?

[rovo]

lovetobike, I looked at the 4 listed. Most are more than a little pricey based upon the PEs. I suspect the market is awaiting great earnings reports from the group. If they meet or beat estimates you may be OK but often just meeting earnings estimates isn't enough. Many times prices will increase going into earnings and collapse after the announcement. It is what is referred to as: Buy on rumor, sell on the news. Chart wise they are all well over bought but I've seen this condition many times. Let's just say they are all in dangerous territory and need to be watched carefully. This doesn't mean they are about to fall but it does mean the likelihood of a decline is much greater than further increases. Trailing stops on these stocks would be a very safe thing to do because if they fall they will fall fast. Again, just my opinion.

[rovo]

I was more than a little surprised by the action in my port today. It was looking pretty grim most of the day but everything, well most everything, perked up in the last 2 hours of the day.

TBT swung almost a dollar from the low to the high today and closed near the high. Ford declined by a few cents and will probably go horizontal for a while to digest the recent run-up. HI has been showing some strength this week and I do not know what the driver is.

Overall the port closed the week with a month-to-date gain of 6.42% and a new yearly high. Yesterday the % was 5.92% so it gained about 1/2 percent today.

Holdings in order of value:
CASH, F, HI, TBT, ATW, MSFT, WHX, SIRI, Ford options, PSTR.

The cash position is unacceptable in this rising market but I'm holding some cash for a possible play against gold and I'm trying to buy some ISRG. Still much to much cash on hand.

[rovo]

This is of minor importance but I did try to pick up some "CALL" option contracts on GLL on Friday. I tried to buy 100 contracts but ended up acquiring 1 contract. That really sucks because the fees associated with buying one contract almost insure it will be a money loser. Maybe the market in the Calls was trying to help me by not filling my order as I was jumping the gun on the Short gold play.

[rovo]

D.I., I'm still confused on selling Puts and/or Calls and the benefit thereof. Can you explain in detail your previous post so I can understand the play?

[rovo]

Yeah, but in #182 your assumption A) If I thought gold was going to drop hard the play was to be as you described. Assumption B) is irrelevant for a what / if type of play. I'm trying to reconcile the play described in #182 with your assumption A).

[clarkrl2]

rovo this week cash became my number one position as well at about 20%. I am expecting to be put shares of MRK on Fri. but I will also likely have my position in MSFT called. I had sold a 35/30 put spread on MRK for $1/contract and the current price was in the low $34s. I had sold calls at a 27.50 strike against MSFT and the current price is in the low $28s. At any rate I think after all the adding and subtracting is done I will still have cash as my largest position after options exp. on Fri.

Frankly I'm more than a little concerned about the overbought condition of many stocks right now. Also with the VIX being so low options on most of the stocks I'm interested in don't have enough premium to warrant selling the contracts. I really don't mind being 20% cash so I'll probably sit with what I have for a while although I've been following the short gold thread and might try a small position there. I am also interested in F, TER, and CVX at the right price.

Have a nice holiday.

[rovo]

clarkrl2, No offense meant but I hope you don't see Ford at the right price to buy. LOL

[rovo]

D.I., Thank you for the explanation of the proposed option trade. I fail to see anything compelling in the proposed trade as the potential return is trivial, percentage wise, based upon the amount of cash tied up until the trade is closed or the option expires. In general I fail to see any benefit to selling un-hedged options in a rising or falling market. To me, this type of action only makes sense in a stagnant market, one moving horizontal. Then again, I don't know much about the type of trade you proposed so I'm probably just failing to see the benefit.

[rovo]

Forget the size of the plays I make or you make. I'm talking percentage return. Why would I settle for a 3.5% dividend return when I can make 10%? The markets are presenting one of the rare opportunities to make large percentage returns and I've learned over the years to take advantage of these opportunities because they only occur a few times in a persons lifetime.

[rovo]

I am seriously looking at making plays tomorrow morning in both FAS, +3X Financials, and TQQQ, +3X QQQQ. Earnings for the major players in both symbols are due this week. I'm looking at equal dollar amounts for each play and entry points of FAS = $31.00 and TQQQ = 168.00. Of course, better prices may occur at or near the open. At this time I would expect to hold both issues until late Friday unless the play goes bad. Both issues have had substantial run-ups lately so there is always the chance of them getting sold off on the earnings reports. I don't think it will happen that way.

[rovo]

I will have to re-evaluate my proposed play in TQQQ tomorrow. I may avoid it all together or I may just buy on the dip. The AAPL news item will severely affect the price of the Qs and TQQQ tomorrow morning.

[rovo]

I did place orders this morning for TQQQ and FAS but the prices are below where I expected them to be before the AAPL news and the C release.

Buy 500 TQQQ at $160.00 and Buy 2K FAS at $30.00. FAS seems to be basing at 30.71 but the day isn't over yet.

I sold off another 1K shares of HI this morning at $22.50. This is still off-loading a swing trade that didn't work out as expected. Cost was $20.00 so even though it didn't work out as originally expected, it is a very profitable trade. I still have 2K shares in this trade to get rid of.