What's Frank Thinking? rss
What takes us higher now?

 

 
Wednesday, July 30, 2014, Rhinelander, Wisconsin, USA
 
One more day in July and two more weeks in the August monthly expiration cycle. Start looking for those In-The-Money (ITM)s on your sheets! Why have we almost nothing to do? Remember back in May when we said "Sell in May and go away" - that actually meant to sell both sides of the market, but do it all the way out to September, October, and in some cases - even November! Well the August monthly cycle was almost completely avoided. Yes, part of the reason was also our schedule, as we have to be at the San Francisco Money Show the week of the August monthly expiration, but our summertime option avoidance plan has worked for decades, and we have been enjoying our summers ever since the "sell-around" plan went into effect. We do have a few short weeklies, however, in Apple (AAPL*), Blackberry (BBRY*), Facebook (FB*), Interoil (IOC*) and Petrobras (PBR*), so if we are paying attention to anything in the very short-term it is in those high-flyers. 
 
Henry Ford (F*) was born on this day in 1863, as was Casey Stengel, in 1890. Tomorrow is July 31st, the day the second-half real estate taxes are due in many states - remember to try to smile as you write that big check! The SPUs are trading higher in the early morning, as are the Russell (RUT), oil (/CLU4*) and the dollar (/DXU4), while bonds (/ZBU4), the metals and grains are all lower. Is it Caterpillar (CAT) announcing their share buy back or Twitter (TWTR) coming in better than expected that are taking us higher? Perhaps it will be Amgen (AMGN) today, Netflix (NFLX), Yelp (YELP) or Sodastream (SODA)? Who knows, and as you noticed there were no asterisks after any of those newsmakers, so we don't really care! 
 
"He who wakes up and finds himself a success hasn't been asleep." -- Anonymous 
"It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages.” -- Henry Ford
“You gotta lose 'em some of the time. When you do, lose 'em right.” -- Casey Stengel 
 
Like us on Facebook (FB*) -- https://www.facebook.com/frank.walsh.169 or follow us on Twitter (TWTR) at whatsfrankthink or on Linkedin (LNKD) 
And also look for us in the daily Swim Lesson chat room from 10:30 - 1:30 central time, strarring option guru Don Kaufman, chief market technician Jeff Bierman, and a host of other great thinkorswim kids from the Chicago office.
 
FHW 
(* = FHW position)
fhwoption@hotmail.com
What's Frank Thinking? | 7/30/2014 7:23:42 AM | 0 Comments
Long-term IS the name of the game!

 

Tuesday, July 29, 2014, Rhinelander, Wisconsin, USA 
 
- Today is the 210th day of 2014 and the 39th day of the summer. On this day, in 1948, the first Olympic Games since 1936 opened in London. This was also the day, in 1909, that General Motors (GM*) acquired the Cadillac Automobile Co. for $4.5 million in GM stock. 7/29 is the birthday of: Benito Mussolini (1883); Dag Hammarskjold (1905); Elizabeth Dole (1936); and Milwaukee Brewer Ryan Braun (1980). 
- The 30-year bonds (/ZBU4) are still trading just over 138, has their new range reached 138 - 140? Most in the interest rate game have now been scratching their heads for years. Will rates ever uptick or will outsiders continue to buy our debt? The results of a bond auction come out this afternoon, so look for some possible bounces in the 30s and 10s (/ZNU4). Oil (/CLU4*) is trading over 101, a full two dollars lower than last week - as long as it remains in the 97 - 105 range for the September expiry (17 days) we are fine and will continue to short-term scalp it whenever we notice it bouncing around. Gold*(/GCZ4) has been stuck in the 1300 - 1325 range for a few weeks and is trading at 1310 as of this writing, just a few bucks higher than last week. The grains, corn (/ZCZ4*), wheat (/ZWU4) and soybeans (/ZSX4) have possibly seen the botom, with corn trading under 365 on 7/24 - now back closer to 375. Can corn get back up over 390? 400 would actually be just fine with us! The emini (/ESU4*) SPUs are drifting higher this morning - trading about 1975, near their overnight highs and just about where they were last week. Natural Gas (/NGQ4) is wrapped around unchanged and it now has been under 4.00 for almost two weeks. Has Nat Gas also finally found a bottom - could be... 
- As the SPUs trade higher, that nice round 2000 number is still within sight, and with them seemingly stuck near 1975 the question remains, will they hit the 2000 mark or fall back to 1950? Your guess is as good as ours. Trading small and staying small is the key, and adding any new long positions at these elevated levels still has to be questioned. This nutty investment world should remain a long-term endeavor with decades-long ownership in companies that you know and love, that pay dividends and you can sell some short-term options against. That is the name of the game! 
 
- Today's economic events:
FOMC meeting begins
ICSC Retail Store Sales
Redbook Chain Store Sales
S&P Case-Shiller Home Price Index
Consumer Confidence
State Street Investor Confidence Index
Results of $35B, 5-Year Note Auction
 
Notable earnings before Tuesday's opening:  ACI*, AET, AGCO, AIXG, AKS, ALLY, AMAG, AMG, ARW, AUDC, AVX, AXE, BP, CARB, CAS, CNX, CPLA, CRS, CVLT, CYNO, DIN, DSX, ECL, ENTG, ETN, ETR, FDP, FIS, FSS, GLT, GLW, GNC, GTI, HCA, HMC, HRS, HW, ICON, IP, IPGP, ITW, KLIC, LVLT, MDC, MDSO, MDXG, MHFI, MLM, MMC, MRK, MSO, NCI, NEE, NLSN, NMM, NOV, NYT, OSK, PCAR, PFE*, POR, RAI, RYN, SAVE, SIRI, SNCR, ST, TLM, TRW, UAM, UBS, UBSI, UDR, UPS, UTHR, VSH, WDR, WM, WYNN, XYL, YNDX;
and after today's close: ACHC, ACMP, AEC, AEGN, AEGR, AFL, AJG, AMCC, AMGN, AMP, APC, APU, ARI, AXP, AXS, BGFV, BLDP, BOOM, BWLD, BXP, CALX, CAP, CBG, CBL, CEB, CEMP, CHMT, CHRW, CINF, CLD, CLMS, CPWR, CRAY, CSLT, CVD, DLR, DOX, DWA, EEFT, EQR, ESRX, EW, EXAM, EZPW, FARO, FBP, FISV, GAS, GNW, GPN, GPRE, HTA, HURN, IGT, INAP, INVN, IPHI, IVR, KIM, LNDC, MAR*, MOVE, NATI, NCR, NEM*, NEU, NFX, NTRI, NUVA, PEI, PLT, PNRA, QGEN, RBC, RGR, RKT, RNG, RNR, ROG, RPXC, RT, RUBI, SB, SLCA, SM, SQNM, TMH, TRN, TWTR, TX, UGI, ULTI, USNA, VRSK, VRTX, WNC, WSH, WTS, X, XCO, XPO.
 
"Never measure the height of a mountain until you have reached the top. Then you will see how low it was." - Dag Hammarskjold 
 
- Like us on Facebook (FB*) -- https://www.facebook.com/frank.walsh.169 or follow on Twitter(TWTR) at whatsfrankthink, or on Linkedin (LNKD).
Look for us in the daily online Swim Lesson Chat Room - found up on Support/Chat on the thinkorswim (AMTD*) platform, and also remember the upcoming Money Show in San Francisco in August and the Market Drive in Los Angeles in November - see ya there. 
 
FHW
(* = FHW position)
fhwoption@hotmail.com 
What's Frank Thinking? | 7/29/2014 7:54:14 AM | 0 Comments
Scalping?

 

Monday, July 28th, 2014, Rhinelander, Wisconsin, USA
 
How the heck can this Friday be the first of August? In Rhinelander the talk has already turned from summer's first 80 degree day, to when will the first snow fall, and we are not too far from either. Last winter was one of the coldest AND snowiest in the history of the Northwood's of Wisconsin, and it took all summer for the landscape to recover. The burned-out grass spots finally did fill-in, and the day lillies, lilacs and hostas were finally blooming beautifully just weeks ago - not months. It seemed like springtime in Rhinelander came near the end of June, with low 40s at night on the 4th of July, and the heat on a week later as the overnight lows were in the 30s! The lake level (Lake Thompson) was near all-time highs after the record snow-falls, but never receded in mid-summer due to an incredible amount of May/June/July rains. The central air has only been on once, with only one day over 80, and the heat was on just a few days later! The globe might be getting warmer, but not Rhinelander.
 
Speaking of summer rains, we have been scalping the grains - mostly on "bounce days" centered on crop reports. Corn (/ZCZ4*), wheat (/ZWZ4) and beans (/ZSZ4) can act irrationally (read: crazy short term swings) like oil (/CLU4*) and gas (/NGQ4), when the report is announced, with the June 30th moves typically dramatic. Corn on that day went from 446 to 416, wheat from 592 to 567, and beans from 1158 to 1132, with hundreds of small bounces inbetween. All of the grains on that day closed on their lows, then opened even lower and continued down the following day. We didn't really care about the follow through, however, as our scalps are just that, scalps, lasting some times less than a second! The best place to trade futures in such short time frames is on the Active Trader page on the thinkorswim (AMTD*) platform, with entries on the sell side (above) and buy side (below), wrapped around the current price - sometimes being filled inside a second - ON BOTH! 
 
Oftentimes, when things are really active, much larger participation will prevail, and there might be a bid AND an offer in size that can be leaned on. We remember one of the best CBOE scalpers, who stood just behind us in the OEX pit, would constantly ask if we were still bid or offered and how many of each. He would then be a slightly higher bid or lower offer, knowing that he could always hit our bid or take our offer if his trade went against him. THAT is the best definition of a "lean", and although the electronic version is not as reliable as FHW used to be, there generally is enough size on each side to cover our very small amount of contracts (read: one!). We always stress "trade small and stay small" and in these futures contracts that can never be more important. We also constantly mention "know what you trade and trade what you know", so ALL elements of any new product should be completely understood. The "tick values", expiration cycles, and just about every other facet of each futures contract is different than every other, making due diligence, knowledge and experience  absolute necessities. Both the TDAmeritrade website and the CME or CBOT's web sites are loaded with all of the information you will need, and there is definitely something to be said for paper trading any new product or strategy before you actually begin "shooting in" real orders.
 
"C'mon, shoot 'em in! How many more ya got to buy?" Another 1,000, for a total of 5,000." "SOLD! What's another thousand, when you are getting your face ripped off?" -- KCH and FHW (OEX pit circa 1986)
 
Follow us on Twitter (TWTR): whatsfrankthink, like us on Facebook (FB*) - Frank Walsh Prescott, AZ or on Linkedin (LNKD)
Remember the upcoming San Francisco Money Show - Aug 21 - 23, for more info go to www.moneyshow.com - see ya there. 
FHW 
(* = FHW position)
fhwoption@hotmail.com
What's Frank Thinking? | 7/28/2014 7:36:49 AM | 0 Comments
Chipotle - higher thanks to college kids?

 

Thursday, 07/24/14, Rhinelander, Wisconsin, USA
 
- Today is the 205th day of 2014 and the 34th day of summer. Happy Birthday to Jennifer Lopez. Today was the day of the "Pine Tar incident" in 1983, in which a two-run homer by Kansas City Royal George Brett was nullified by the umpires at Yankee Stadium due to "excessive pine tar" - for the third out in the ninth, giving the Yankees a 4 - 3 victory.
- The SPUs (/ESU4*), as of this writing, are trading up about 4 handles to 1984.75, about 20 points higher than last week at this juncture, and darn-near all time highs. That most important 2,000 level is now just a stone's throw away - will it be today? Tomorrow? How many STOP orders will there be at that whole number? Will there be more on the buy side to drive it well-through 2000 - at least for a few minutes? Remember, there is usually a day or two of big resistence at any large whole number, so be careful getting into any new long positions at this top! 
- Oil (/CLU4*) has been relatively flat most of the week and is now trading just under 103. We would still like it closer to 100 but over 97 for it's September option expiry. Gold (/GCQ4*) is lower this morning, but still hovering over the 1300 level - if barely. The yellow metal did have a 10 dollar range overnight (1295 - 1305), and a close well under-or-over that 1300 price might be a key to it's next direction. The 30-year bonds (/ZBU4) are lower and trading in the mid-138 handle, and after testing the 139 level a couple times this week we began to wonder if 140 isn't around the corner. We remember when they were 128 to begin the year and how long they strugged in the 134 - 135 range. Can they go any higher? Can interest rates go any lower? But we repeat... The grains, that had been reaching multi-year lows, are continuing to trade flat to a little higher. Corn (/ZCZ4*) did get into the 365 handle on Wednesday (7/23/14) but are currently trading 372. Natural Gas (/NGQ4) has been getting beaten down, after trading near 4.50 for months finally cracked under and remains under 4.00. The weekly EIA Inventory number comes out this afternoon, so there might be some movement in Natural Gas - if scalping it - pay attention at 9:30 AM Central time. 
- Chipotle Mexican Grill (CMG) was the big mover earlier in the week, and we might have found the key to it's move higher when asking our 20-year old heir-to-the-mortgage, who attends college in Portland, Oregon: "Blair, why do we see all the credit card charges at Chipotle, with all the great places to eat in Portland, why there?" "The food isn't the greatest, dad, but it's where all the girls from Concordia hang-out." Aha! Too bad we didn't get long on that anecdotal information on Monday! 
- Earnings announcements are really beginning to pick-up-pace, so look for those corporate action icons on your sheets to prepare yourself for some possible surprises, and there are also some key announcments coming today - beginning with Initial Jobless Claims and New Home Sales.
 
News events: 
Initial Jobless Claims
PMI Manufacturing Index Flash
Bloomberg Consumer Comfort Index
New Home Sales
EIA Natural Gas Inventory
Kansas City Fed Mfg Survey
Money Supply
Fed Balance Sheet
 
Notable earnings before Thursday's open:  AAL, ABC, ALK, ALXN, ARG, ASPS, BBW, BC, BCC, BHE, BKU, BMS, BMY, BPOP, BSX, CAB, CAM, CAT, CCE, CELG, CLF, CLFD, CLI, CMS, COG, CRI, CRY, CSH, CWEI, DAN, DFT, DGX, DHI, DLX, DNKN, DO, DPS, DST, ECA, EQM, EQT, F*, FAF, FLIR, GM*, GNTX, GPI, GPK, GRUB, HOT, HSY, IMAX, IMS, IQNT, ISSI, IVC, JAH, JBLU, KEM, KKR, LAZ, LLY, LTM, LUV, MHO, MMM, MTH, MTRN, NBL, NDAQ, NOK, NUE, NWE, O, ORI, OSTK, PCP, PDS, PENN, PHM, PNK, POT, PRLB, PTEN, QSII, RCI, RCL, RDWR, RS, RTIX, RTN, SCHL, SFE, SIAL, SQNS, SUI, SVU, SXC, TDY, TROW, TWI, UA, UAL, UFS, UNP, USG, VAC, VDSI, VIVO, WAB, WCC, WIT, WYN, ZMH;
and after today's close: ABAX, ACTG, ALGN, ALTR, AMZN, ATRC, AWAY, BAS, BCOV, BCR, BIDU, BJRI, BLDR, CB, CBI, CERN, CLS, COLM, CTCT, CYN, DECK, DGII, DLB, DTLK, ECHO, ELY, EPR, FET, FICO, FII, FLEX, FSL, GIMO, HBHC, IM, INFA, KLAC, LEG, LOGM, LSCC, MITK, MKTO, MLNX, MSCC, MTD, MTSN, MXIM, N, NR, NTGR, OLN, P, PACB, PEB, PFG, PFPT, QLGC, QLIK, RFMD, RGA, RGC, RSG, RVBD, SBAC, SBUX, SIVB, SPNC, SRCL, SWFT, SWI, SYA, TPX, TSRO, UHS, V, VR, VRSN, WOOF, WRE, WRI. 
 
"Adolescence - The stage between puberty and adultery." - Ambrose Bierce
 
Follow us on Twitter (TWTR): whatsfrankthink- like us on Facebook (FB*) - Frank Walsh Prescott, AZ  -- Look for us on Linkedin (LNKD)
The next Market Drive events will be in Los Angeles in November - go to www.tdameritrade.com/registerformarketdrive  
Tune in to the Swim Lesson Chat at 10:30 AM CDT - we will also see you in class. 
 
FHW
(* = FHW position) 
fhwoption@hotmail.com 
What's Frank Thinking? | 7/24/2014 7:55:54 AM | 0 Comments
Starbucks or Four Buck Chuck?

 

Wednesday, July 23, 2014, Rhinelander, Wisconsin, USA 
 
How about this reprint from this same time frame in 2007: 
 
"Two-buck Chuck? No, 3 bucks a cup - for acid reflux!" 
 
 "Over the course of the last few years, we have written many articles concerning various beverages. As we said in June of 2006: Not being "big" drinkers, as least since our crazy college days, we do, however, still enjoy, every-now-and-then, a good goblet of glorified grape, frosty stein of beer, or a small glass of fortified wine from Portugal's Douro Valley, known to most as Port." Touching on everything from $500 bottles of tequila, wines as wide-ranging as "Two-buck Chuck" to a nice Napa Cabernet from Silver Oak Cellars, beers like Negro Modelo, Budweiser and Wisconsin's - Leinenkugel, our daily missives have gladly gone the drinking distance and run the guzzling gamut. 
 We currently drink green tea in the mornings and "iced" with our lunch, but as the northern Wisconsin weather turns a little cooler, we are beginning to heat up at least our morning "sipper," and have even tried a warmed-over cup with dinner. But, up until the acidic properties in our daily coffee began to create some health problems, we were at least a three to four cup-a-day java enjoyer. Mud-like black at home and/or at least a "quad" latte at any of our favorite coffee houses, were our daily "perk-me-ups," and the price was usually of no concern. 
 There are 4 Starbuck's (now 8!) stores in our winter hometown of Prescott, Arizona, along with several other small coffee specialty operations. Until our acid malady of a few years ago, we would make a daily, early morning trip to our neighborhood Starbucks for a fresh "suped-up" latte, with sometimes as many as four extra shots of espresso. On warm days it might be a frothy Frapaccino or a Venti iced latte, but during most of the winter months, it was a steaming black coffee of the day or "skinny" (skim milk) hot latte. At just about any location and at every different dispenser of delicious "Jo," the cost for the instant blast of adrenaline would be between $2.50 and $5.00. And, yes, we were clearly "hooked," on the stuff, but thankfully a doctor's orders took the daily vice away. 
 Just about every stock/options investors knows the Starbucks story, from their first store in Seattle's Pike Place Market (1971), to it's current list of almost 9,000 outlets (now over 17,000), SBUX has continued to surprise just about everyone. Why the surprise? As we said, the cost for a "cup-of-jo" at just about every specialty coffee house is somewhere in the $3.00 range (now over $4), and with a flaky scone or bagel with cream cheese, it can get up to five, even six bucks. That seems pretty steep to us, but breakfast "out" is already a relatively expensive meal, when you consider most "combo" breakfast "deals" at fast food "joints" are between $3.50 and $5.00, and a real "sit-down first meal of the day" at a local diner will usually have at least a $10.00 tag. A restaurateur once told us, in fact, that breakfast has the highest percentage return per store in the industry, and he owned a chain of pancake houses. 
 But just how many consumers are willing to shell-out three-bucks-a-cup for some caffeine fusion? Statistics show, among coffee drinkers, that the average consumer drinks just over three cups a day. Are people really spending nearly 10 bucks a day on coffee? Specialty coffee stores now account for 10% of the $18 billion U.S. coffee market (2000), and their slice-of-the-pie is growing at about 20% a year. As of 2000 there were over 110,000,000 coffee consumers in the U.S., with the National Coffee Association claiming that a full 54% of the adult population drinks coffee daily, and that about 19% of these java junkies drink some form of "gourmet" coffee. Other interesting stats show that 65% of all coffee consumed is done at breakfast, which means that over 70 million cups are being brewed each-and-every morning and a total of over 400 million cups are enjoyed at some time during the day. 
 There will be an estimated 50,000 specialty coffee shops in the United States by the year 2010 (now closer to 70,000), and the average store sells between 200 and 400 cups per day. The U.S. imports over $4 billion worth of coffee every year from any of the 53 countries that grow coffee worldwide, and all of these lands lie along the equator between the tropic of Cancer and Capricorn. The world's largest coffee producer is Brazil with almost 4 million coffee trees, Columbia is second with about two-thirds of Brazil's production. The percolator was invented in 1827 by a Frenchman, and up until about the turn of the century, most coffee was brewed at home at a cost of pennies per week. Whew, at the current rate of three-bucks a cup, what you are really enjoying is a fresh brewed, mocha flavored blast of hyper coffee inflation. When we consider there are tens of millions of consumers sipping their expensive, spiffy, gourmet coffee every morning-noon-and-night, for some reason we begin to get that acid reflux feeling all over again." 
 
 "...on a clear day you can look through the windows and see as many as 6,000 coffee breaks at once.” -- Frederic Morton
 
Like us on Facebook (FB*) -- https://www.facebook.com/frank.walsh.169 or follow us on Twitter (TWTR) at whatsfrankthink or on Linkedin (LNKD) 
Also look for us in the daily Swim Lesson chat room from 10:30 - 1:30 central time, and at the Money Show in San Francisco in August or the Market Drive in LA in November.
 
FHW 
(* = FHW position)
fhwoption@hotmail.com
What's Frank Thinking? | 7/23/2014 7:11:41 AM | 0 Comments
Flying Burrito Brothers?

 

July 22, 2014, Rhinelander, Wisconsin, USA 
 
- Today is the 203rd day of 2014 and the 32nd day of the summer. On this day, in 1934, FBI agents shot and killed John Dillinger at Chicago's Biograph Theatre, we played softball some 40 years later for a tavern, Papa's lll, directly across the street! Happy Birthday to Don Henley from the Eagles - Is this "The End of the Innocence" or "The Heart of the Matter"? 
- The bonds (/ZBU4) are trading just over 138, a point higher than last week and two full handles higher than the week before. Oil (/CLU4*) is trading just over 103, and after threatening to drop under 100 last week, we don't know which way crude will go. We questioned last week if oil price could continue lower with all of the unrest in the world - guess we got our answer! Gold*(/GCQ4) has been stuck in the 1300 - 1325 range for a few weeks and is trading at 1306.50 as of this writing. The grains, corn (/ZCZ4*), wheat (/ZWU4) and soybeans (/ZSX4) continue to trade lower, with corn futures breaking under 400 last week and staying there. The emini (/ESU4*) SPUs are drifting higher this morning - trading about 1973, near their overnight highs and a few points higher than where they have been the last couple of weeks. Natural Gas (/NGQ4) is lower and it might be difficult for it to get back over 4.00 - 4.50, where it had been for months. 
- As the SPUs trade higher, many of the components are also looking up this morning, with Apple (AAPL*), Google (GOOG), Netflix (NFLX), Microsoft (MSFT*), Blackberry (BBRY*) and Facebook (FB*) all looking to open higher. Apple announced orders for 70 - 80 million of the new iPhone 6, a large uptick from the iPhone 5S and 5C, and Microsft touching 45 on Monday amazed most market mavens. The Flying Burrito Brothers was one of our favorite bands in the late '60s/early '70s, as the members came from the Byrds and led to the above mentioned Eagles. They were a great band but most famous for being the guys on stage when the fights broke out at the 1969 Altamont Free Concert. Well, the burritos must be flying over the counters at Chipotle Mexican Grill (CMG), as they beat their estimates and the stock is soaring as high as an eagle - up about $60! 
 
- Today's economic events:
ICSC Retail Store Sales
Consumer Price Index
Redbook Chain Store Sales
FHFA House Price Index
Existing Home Sales
Richmond Fed Mfg.
 
Notable earnings before Tuesday's opening: ABG, AMTD*, AOS, ARMH, ATI, BTU, CIT, CMCSA, CNC, COL, CS, CSL, DD, DFRG, DPZ, EDU, EXAS, FMER, GCI, HOG, HUB.B, IR, KMB, KO, LMT, LPT, LXK, MCD, MJN, MO, MOSY, NEOG, OMC, PII, PLD, RESI, RF, SAH, SBNY, SILC, SNV, STT, TRV, UTX, VZ, WAT, WRLD:
and after the close: AAPL*, ACC, ACE, BRCM, CBST, CVA, DFS, EA, EXP, FBC, FNB, FTI, FULT, HA, HTS, IEX, IRBT, ISRG, JNPR, LLTC, MANH, MSFT*, NBR, QDEL, RHI, TSS, UIS, VASC, VMW, XLNX, XOOM, ZIXI.
 
"It is not the mountain we conquer, but ourselves." -- Sir Edmund Hillary
 
- Like us on Facebook (FB*) -- https://www.facebook.com/frank.walsh.169 or follow on Twitter(TWTR) at whatsfrankthink, or on Linkedin (LNKD).
Look for us in the daily online Swim Lesson Chat Room - found up on Support/Chat on the thinkorswim (AMTD*) platform, and also remember the upcoming Money Show in 
 
San Francisco in August and the Market Drive in Los Angeles in November - see ya there. 
 
FHW
(* = FHW position)
fhwoption@hotmail.com 
What's Frank Thinking? | 7/22/2014 7:59:17 AM | 0 Comments
Marriage Theta decay?

 

Monday, July 21, 2014, Rhinelander, Wisconsin, USA 
 
Several years ago we told a friend, who was struggling-along in a difficult marriage, not to get a divorce - "just buy another house or two." Well, he took our sage advice, and constantly thanks us; as both the added real estate has up-ticked in value, and the relationship has also benefited from some up-ticks. Investing, to some, is also looked at as a relationship, and in some cases might be more stressful a financial one than a even a rocky marriage. But, do we have to be married to a stock forever, like we are supposed to be to our spouse? Yes, being tied to a stock (married) can sometimes be just as difficult as dealing with that "nagging wife" or "good-for-nothing husband", and pain is never very fruitful in any personal or investment relationship. 
 
We also followed our own above-mentioned advice, and own a few homes in a couple of states, along with a basket of stocks, all with both calls and puts sold against. The multiple homes have helped our marriage, and the sale of option premium has dramatically lowered the cost basis of our portfolio. We are also short several underyings, but haven't figured out a way to short a spouse. Too bad there isn't an exchange offering options on marriages or other relationships. Calendar spreads would be one way to go, as the volatility levels would certainly be all over the place. Relationship butterflies could pinpoint certain marital events. Naked strangles - well, we better not go there! Would we sell marriage call verticals or buy marriage put verticals - perhaps both! Divorce calls and puts could definitely be used as a hedge against some form of marriage inflation or deflation - whatever the case may be. And pairs trades - we better not go there either! 
 
"Only do what your heart tells you." -- Princess Diana 
"The most dangerous of all falsehoods is a slightly distorted truth." -- Georg Christoph Lichtenberg 
 
Follow us on Twitter (TWTR): whatsfrankthink, like us on Facebook (FB*) - Frank Walsh Prescott, AZ or on Linkedin (LNKD)
Join us in the daily Swim Lesson chat at 10:30 AM Central and come see us at the next Money Show in San Francisco (8/21 - 8/23) or Market Drive in Los Angeles (11/1).
FHW 
(* = FHW position)
fhwoption@hotmail.com
What's Frank Thinking? | 7/21/2014 7:02:37 AM | 0 Comments
Churchill - Volkswagen & Fiat?

 

Thursday, 07/17/14, Rhinelander, Wisconsin, USA
 
- Today is the 198th day of 2014 and the 27th day of summer. Disneyland opened in Anaheim, California on this day in 1955, and 20-years later the US and Soviets met in space when the Apollo and Soyuz spacecrafts were docked together. Birthdays: James Cagney (1899), Art Linkletter (1912), Phyllis Diller (1917). 
- The SPUs (/ESU4*), as of this writing, are trading down about 12 handles to 1963, but that is still 12 points higher than last week at this juncture. There has been some intraday movement in not only the S&Ps, but the RUT (/TFU4*), the metals, grains, and just about everything we follow have had some dramatic short term swings, but many are about where they were several weeks ago. Now do you see what we always say about summertime and why to try to avoid it like the plague? Had you simply sold stuff on both sides of the market (out to Augs and Septs) in May, you would still be sitting pretty as long as we continue to hover near these lofty levels. 
- Oil (/CLQ4*) has been a mover, however, after being in the 106 range a few weeks ago, it got down to 99 on Wednesday, but has rallied back to just over 102. 100 would be perfect for us, as long as it is still over 97 for the September option expiry. Gold (/GCQ4*) is higher this morning, and after hovering between 1280 - 1300 for weeks, had busted through all kinds of resistance points last week and looked like it was headed to 1350, but it too fell when all asset classes dropped on the Yellen speech on Wednesday when it touched 1292 - it is now trading over 1305. The 30-year bonds (/ZBU4) are higher and trading in the high-137 handle, just about where they were last week. The grains, that all had been reaching multi-year lows, have been trying to rally, but are mostly lower this morning. Natural Gas (/NGQ4) has been getting beaten down, after trading near 4.50 for months is now trying to hold over 4.00. The EIA Inventory number comes out this morning, so there might be some movement in Natural Gas - if scalping it - pay attention at 9:30 AM Central time. 
- Apple (AAPL*) looks flat to slightly lower, as do GOOG, TSLA, INTC and MSFT*. Speaking of MSFT and Intel - what the heck was "UP" with them yesterday? The market cap move was huge when you consider Intel's 5 Billion shares being up about $2 and Microsoft's 8 Billion being up about $1.50 - do the math! Wow! Blackberry (BBRY*) clearly didn't like the AAPL & IBM announcement, as that 11 dollar stock dropped about 10% of it's value, but there are only 500 million shares out, so it was well-surpassed in overall market cap movement by the large moves higher in MSFT and INTC. Will the Germans and the Italians really get together again? No not militarily, but Volkswagen (VLKAY) might be looking to buy Fiat (FIATY) in an attempt to gain greater access to the Fiat/Chrysler U.S. distribution chain. Where is Churchill when you need him? 
- Earnings announcements are really beginning to pick-up-pace, so look for those corporate action icons on your sheets to prepare yourself for some possible surprises. Make sure to check the MMM (Market Maker Move) for some idea of how much of a move the underlying MIGHT make.
- Tomorrow is July monthly expiration - anything In-The-Money (ITM) or close-to-it HAS TO BE DEALT WITH! If you dont know what to do, ask for help from the trade desk at 866 839 1100.
 
Another big day in news events: 
Housing Starts
Initial Jobless Claims
Philly Fed Business Outlook
EIA Natural Gas Inventory
Fed's Bullard: U.S. Economic Outlook and Monetary Policy
Money Supply
Fed Balance Sheet
 
Notable earnings before Thursday's open: ADS, AN, BAX, BHI, BX, CP, CY, DHR, DOV, FCFS, FCS, FITB, GWW, HLSS, KEY, MAT, MS, MTB, NEO, NTCT, NVS, ORB, PM, PPG, PVTB, SAP, SHW, SNA, SON, SYNT, TSM, TZOO, UNH, UTEK, WBS, WSO;
and after today's close: AMD*, ASBC, ATHN, BGS, CE, COF, CPHD, CYT, EFII, GOOG, GRT, IBM, PBCT, SLB, STX, SWKS, SYK, VMI, WAL.
 
“Never give in, never give in, never; never; never; never - in nothing, great or small, large or petty - never give in except to convictions of honor and good sense.” Winston Churchill 
“Mr. Attlee is a very modest man. Indeed he has a lot to be modest about.” -- Winston Churchill
“Lady Nancy Astor: 'Winston, if you were my husband, I'd poison your tea.'
Churchill: 'Nancy, if I were your husband, I'd drink it.'”  
 
Follow us on Twitter (TWTR): whatsfrankthink- like us on Facebook (FB*) - Frank Walsh Prescott, AZ  -- Look for us on Linkedin (LNKD)Tune in to the Swim Lesson Chat at 10:30 AM CDT - we will also see you in class. 
 
FHW
(* = FHW position) 
fhwoption@hotmail.com 
What's Frank Thinking? | 7/17/2014 7:41:39 AM | 0 Comments
JP Morgan or Janet Yellen?

 

Monthly expiration hump-day, July 16, 2014, Rhinelander, Wisconsin, USA 
 
"Thanks Janet" could be the new most popular phrase among market bears, as Ms. Yellen spoke on Tuesday Morning most asset classes dropped precipitously. The emini (/ESU4*) or as we call them, the SPUs, weren't thrilled with the Fed Chair, but either were the metals, grains, bonds, notes, or darn-near anything else we monitor. Gold had a crazy uptick in the early session, spiking up from 1300 to almost 1315 in seconds, but then suffered a sharp move to the downside, falling from 1306 to 1294 in an emphatic and dramatic heartbeat. In the same time frame literally every equity that we follow went from green to red, as all asset classes and sectors were driven lower. 
 
Gosh, we thought of J. P. Morgan, no not the bank (JPM) that reported strong earnings, but the man that once was even more powerful than our current Fed Chair person, as he almost single-handedly and consistently bailed out the U.S. banking system in the panics of the late 1800s and early 1900s. But our Fed Chair's power cannot be overlooked. The Continental Congress established our first currency, known as "Continentals", to finance the American Revolution, but they issued so many that inflation exploded and the early American citizens lost faith in what would become our dollar, coining, so to speak, the phrase "Not worth a continental" - meaning just about worthless. Our slightly different and possibly even less valuable current currency of today actually held up very well with yesterday's non-inflationary Fed prognostications. And the markets? Well, of course they shrugged it all off and rallied. 
 
The history of the Fed and both the early U.S. banking days is fraught with manipulation - both from the political side and the private banking side. Wars, inflation, depressions, market crashes, bank failures and other financial catastrophes have all been struggled through, yet survived. The incredible move higher in our equity markets since the most recent crisis (2008) may be feeling somewhat top-heavy, but overall our economy remains on stabile ground. If there is one thing that should worry everyone, it is debt and the credit markets. Are we digging a hole that can't be climbed-out-of from all sides? Individual, corportate, regional, state and federal debt is what we are most concerned with, and we don't know if Janet Yellen and the Fed will be able to fix that situation if it ever comes down to it. Too bad we can't call on the ghost of John Pierpont Morgan? 
 
"Bring in old man Otis." "Old man who?" "Otis, as in the elevator. He surely knows what goes up must come down." -- HUH and FHW (OEX pit circa 1985)
 
Like us on Facebook (FB*) -- https://www.facebook.com/frank.walsh.169 or follow us on Twitter (TWTR) at whatsfrankthink or on Linkedin (LNKD) 
And also look for us in the daily Swim Lesson chat room from 10:30 - 1:30 central time, strarring option guru Don Kaufman, chief market technician Jeff Bierman, and a host of other great thinkorswim kids from the Chicago office.
 
FHW 
(* = FHW position)
fhwoption@hotmail.com
What's Frank Thinking? | 7/16/2014 7:25:58 AM | 0 Comments
Retail and Yellen Tuesday.

 

The Ides of July, 2014, Rhinelander, Wisconsin, USA 
 
- Today is the 196th day of 2014 and the 25th day of this mostly higher stock market summer. Ford Motor (F*) took their 1st Model A order on this day in 1903, and the Nintendo game debuted in Japan on this day in 1983. Linda Ronstadt, Jesse Ventura and Forest Whitaker are all celebrating birthdays today. 
- Will the Ides of July be the beginning of the much anticipated sell-off in the overall market? If we dip, will it just be to 1900? 1800? On the other hand, we have those that are now calling for at least 2050 for the SPX by the end of the year - now only 6 months away. If you are invested for the long term, as you should be with a large percentage of your money - you shouldn't really care either way. Let the money flow in hopefully both directions over the short-term, that makes those of us who sell option premium all the happier. 
- The bonds (/ZBU4) are trading right on 137, a point higher than last week, but still in the range they have been for the last month. Oil (/CLQ4), which had been up to almost 107.50 a few weeks ago, and was 103 last Tuesday, is now precariously close to breaking the 100 level. Can the fall in oil prices continue with the unrest in the Middle East? Although, wait a second, that unrest has been around since camels were the "vehicle" of choice. So, who knows? Gold*(/GCQ4) has fallen from last week's 1325 level to just over 1300 - and thankfully our short futures positions were all covered yesterday. The grains, corn (/ZCZ4*), wheat (/ZWU4) and soybeans (/ZSX4) continue to trade lower, with corn now under the 400 level. Beans were 1125 last week - now 1080, while wheat has gone from 560 to 534 in the last week. 
-The emini (/ESU4*) SPUs are wrapped around unchanged this morning - trading about 1970 - exactly where they were last week at this time, as the summer's incredible cold weather (39 in Rhinelander this morning), seems to have added some molasses to the mix. AAPL* hit highs on Monday and looks to open slightly higher, while most of our other notables might open relatively flat. Retail numbers come out today, so if you have any positions in the recently whacked retail sector - pay attention. And Fed boss Yellen will present testimony at 9:00 this morning (Central time) - hopefully lending some hints as to interest rates and the general direction the Fed thinks the economy is headed - the SPUs might move dramatically while she is talking - so be careful if scalping any futures. 
- Today's economic events:
ICSC Retail Store Sales
Retail Sales
Import/Export Prices
Empire State Mfg Survey
Redbook Chain Store Sales
Business Inventories
Yellen delivers semi-annual monetary policy testimony
 
Notable earnings before Tuesday's opening: CBSH, CMA, GS, JBHT, JNJ, JPM, WWW:
and after the close: ADTN, AIR, CSX, CTAS, IBKR, INTC, YHOO.
 
"Any fool can make something complicated. It takes a genious to make it simple." -- Woodie Guthrie 
 
- Like us on Facebook (FB*) -- https://www.facebook.com/frank.walsh.169 or follow on Twitter(TWTR) at whatsfrankthink, or on Linkedin (LNKD).
Look for us in the daily online Swim Lesson Chat Room - found up on Support/Chat on the thinkorswim (AMTD*) platform, and also remember the upcoming Money Show Las Vegas in November - see ya there. 
 
FHW
(* = FHW position)
fhwoption@hotmail.com 
What's Frank Thinking? | 7/15/2014 7:27:49 AM | 0 Comments