Iraq generates on average 2.38 million barrels per day, Oil Revenue for 2007 is estimated at around $70 billion...from wsj earlier. Normally, proper bases show a decline of 30% or 35%. In a bear market, bases may be 40% or 50% deep and still work out. "Remember, leading stocks may correct 1 1/2 to 2 1/2 times more than the major indexes." "In cup-with-handle bases, you may see handles that are much steeper than normal.
to get off the subject of oil for a bit...lets go to some chart education from IBD, even in Bear Markets, bases and handles can form in chart patterns of "Cup and Handle", and still work out.
The normal depth of a handle is 10% to 15%, yet the pressure brought on by a bear market can make a handle 20% or 30% deep without ruining the pattern."
Why do I feel that I have not been studying enough for my final that I have in the am.
MPM
Wednesday, April 30, 2008
send you off now
Gear Maker Graham Corp (GHM)
From Investor's Business Daily posted tonight under The New America, "Graham supplies gear that goes into building or upgrading oil refineries. There's a lot of that going on these days as refiners scramble to process more sour crude to meet heavy demand." Now, as we all now, Sweet and Light crude is most profitable and easiest to refine, and heavy, sour crude is a lower grade of oil, but it's fueling a "sweet business" for Graham Corp, based in Batavia, NY. Fiscal fourth quarter and full-year revenue and earnings have not yet been released. But in a statement in early April, Chief Executive James Lines said to expect $85 million to $86 million in full-year revenue. That compares with $66 million in the earlier year. Industry forecasts say chemical processing upgrades will stay strong through 2011 to 2013, Garner says. And 7.4 million barrels a day of additional refining capacity will come on line by 2012, he said, citing a forecast from OPEC. "So there's visibility in the cycle for another three to five years before we see weakness," he said. To read more or to follow up on this company, continue onto Investor's Business Daily website, under "New America"...this is most definitely an equity I am going to put on my watch list.
IBD's MARILYN ALVA reports, the price of West Texas sweet crude has soared, U.S. oil refiners have been adding capacity for sour crude."
She goes on to say that GHM "enjoys about 75% market share in the U.S. for its oil-refining products. Earlier this year, three U.S. refineries ordered $9 million in ejector systems from Graham to help process sour crude..."
Market Recap
Todays action included: S&P 500 Index: (-5.43) to settle at 1385.59.
Dow Jones Industrial average: (-11.81) to settle at 12820.13.
Dow Jones Transports: (-41.03) to settle at 5168.13.
Nasdaq Composite: (-13.30) to settle at 2412.80.
Crude Oil: (-1.03) to settle at 113.46.
USD/YEN: Today---103.90; yesterday---104.50
Euro/USD: Today----1.5619; yesterday---1.5565
QQQQ: (-0.39) to close at $47.21.
SPY: (-0.68) to close at $138.40.
IWM: (-0.34) to close at $71.40.
AAPL: (-1.10) to close at $173.95.
POT: (+2.46) to close at $183.95.
Treasurys, (Yields, which are inversely related to prices, were all RED today, means that prices on Treasurys were green today)
2 year Note: 2.266
5 Year Note: 3.020
10 year Note: 3.734
30 Year Bond: 4.477
The U.S. economy grew at an annual rate of 0.6% for the first quarter of 2008.MPM
FED decision
-Dow industrials top 13,000 for first time since January
-Crude fell $1.43 to $114.20 a barrel after Fed decision
DECISION: FED cuts key federal funds rate (short term interest rates) by a quarter point (25 basis points) to 2%, lowest since 2004. This is the 7th rate cut in seven months, as a method to stabilize financial markets.
"The FOMC emphasized higher inflationary pressures and downplayed risks to growth, a signal that the committee may leave rates steady at the next meeting."
Can the Blue Chips and the rest of the market hang on to their immense gains? Time will tell.
afternoon update
FTSE has best month in 5 years, London's benchmark index gained 6.8 percent this month..
Bullish signals?
Oil Investor's Business Part III
I am coining a few important terms from IBD, read and take U R mind off of the "spot" or "cash" market right now, after all, with FED decision, it is best to not “anticipate”, don’t be apart of the “knee-jerk” crowd either, but REACT. The answer isn’t as important as the language or to as what you do with the information given to you (you as in everyone).
1. P/E ratio
A valuation ratio of a company's current share price compared to its per-share earnings.
For example, if a company is currently trading at $43 a share and earnings over the last 12 months were $1.95 per share, the P/E ratio for the stock would be 22.05 ($43/$1.95).
EPS is usually from the last four quarters (trailing P/E), but sometimes it can be taken from the estimates of earnings expected in the next four quarters (projected or forward P/E). A third variation uses the sum of the last two actual quarters and the estimates of the next two quarters. Also sometimes known as "price multiple".
A term I personally believe everyone should know;
2. Futures
A financial contract obligating the buyer to purchase an asset (or the seller to sell an asset), such as a physical commodity or a financial instrument, at a predetermined future date and price. Futures contracts detail the quality and quantity of the underlying asset they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash. The futures markets are characterized by the ability to use very high leverage relative to stock markets.
Futures can be used either to hedge or to speculate on the price movement of the underlying asset. For example, a producer of corn could use futures to lock in a certain price and reduce risk (hedge). On the other hand, anybody could speculate on the price movement of corn by going long or short using futures.
Oil Investor's Business Part II
Crude has seen 22 Bull Markets since 1986 (according to Barron's; rally of 20% or more coming after 20% or more decline). The average bull market for oil lasted 242 days and gained on average 68%.
As of late, the current bull run, "is twice as long and twice as strong". Crude has risen 136%+ since Jan 18, 2007 (465 days+).
The average bear market for crude oil lasted 125 days with a drop in prices around 32%. When a decrease in oil prices, it increases disposable income, which is "welcoming" news for discretionary companies, and lifts their stocks on average 10%. When Oil retraces (or when prices drop and crude enters a bear market) other average increases are financials adding 9.5%, transport stocks adding on average 9% and the S&P has gained on average 5.74% in a crude oil bear market.
Energy stocks that have gone up the most during the current oil rally will probably get hit the hardest," say analysts. Some have added as much as 120% to 150% since January 2007.
-Barron's, April 28, 2008.
What if OPEC cuts output, or if there is continued turmoil in Iran, conflict in Nigeria, et al.
My thoughts, Oil prices were below $100 dollars per barrel since the beginning of time, now that is major support for oil bulls. Thanks to the stimulus checks that most shall receive, now we can afford more expensive oil and other commodities.
But, if the FED does stop cutting rates (equities will perhaps already seen the worst..?) after this weeks monetary policy meetings, many think the dollar will strengthen, inflation fears will diminish and investors will take money out of commodities, pop the bubble and turn bullish on stocks..but, as long as India is growing, Russia and Japan demanding and places like China, Chile and Brazil developing, its not as clear as many may think, lets think long term.
As I depart to continue studying for these finals, Crude is below $115, in reaction to inventories data. From IBD this morning, "Nigerian unions restarted talks with Exxon Mobil to end a strike that has shut nearly all the company's output."
Supply and demand.
MPM
Oil Investor's Business
From 24/7 wall street.
-Hess Corporation (NYSE:HES) reported first quarter numbers, and they were predictably big. Earnings more than doubled from a year ago to $759 million on revenues of $10.72 billion, and $2.34 EPS vs. $1.17 a year ago. Analysts estimates averaged $2.02 EPS on revenues of $10.55. Virtually all the increase is attributable to a $32.54/b increase in the company's selling price of oil. Refining and marketing were off $85 million (84%). The company's stock is up more than $3.00 in pre-open trading.
Open: $109.62
High: $111.30
Low: $107.96
P/E:19.06
up $3.32 as of 11:00am
52-Wk High:
04/22:$116.81
Morning News
"I would rather be out, and wishing I was in...
Than in a market, praying I was out." LivewithOscar
"Stops are in, Emotions are out"
FOMC, considering The fed funds rate has already been slashed by 300 basis points since September, will 25 basis points be the end of cutting rates?
From the NY TIMES this morning....Your Health..
Senator and Presidential Hopeful McCain’s health care plan would shift the emphasis from insurance provided by employers to insurance bought by individuals, to foster competition and drive down prices. To do so he is calling for eliminating the tax breaks that currently encourage employers to provide health insurance for their workers, and replacing them with $5,000 tax credits for families to buy their own insurance, continue at NYTIMES.
Energy data:
CRUDE BARREL INVENTORIES, UP 3.8MILLION barrels, to 320 million barrels in the week ending April 25.
Technicals from Todd Harrison of Minyanville.
S&P 500; 1405, (but I think area as of now is like 1386-1397)
Dow transports: 5000; DOW JONES: 12,800; NASDAQ: 12,450; Russell 2000: 735.
MPM
Morning data
As I write, the DOW is 51 points in the green, S&P is up 4 @ 1397 and the NAS is up 7, in part thanks to GOOG and AAPL, each up nicely so far on the day. I do like to follow the Dow Jones Transports, and yet another day, they are in the green 24+points. For the Treasurys, the 2 and 10 year Notes are both up respectively (and their yield, which are inversely related to their prices, are down?) Interesting.
Look overseas, Hang Seng, Nikkei and Taiwan all close in the red, with Shanghai the only leader overnight in China. Gold is at $865+ per troy ounce, which results in the Dollar in the green as of late. According to marketwatch, " Crude for June delivery snapped back following a bout of selling Tuesday, adding 52 cents, or 0.5%, to $116.15", while "June natural gas also was on the rise, up 10 cents to $10.95 per million British thermal units."
This morning GDP surprised at 0.6 percent for the first quarter of this year, exports helped (with appreciation of the exchange rate, the dollar is cheaper). ADP also released reports saying that private payrolls were up 10,000 in April.
Hands up to First Solar for getting through the gates with better than expected earnings and an increased guidance towards full year 2008, which is helping prop up the solar energy stock more than 8% this morning.
According to this morning NYTIMES, "Inflation also remained elevated. Prices rose at a 2.6 percent annual rate on a surge in the cost of oil and food. Excluding food and energy costs, inflation rose at a 2.2 percent annual rate."
All eyes will be on the Fed, which at 2:15 p.m. Eastern time is expected to announce a rate cut of a quarter of a percentage point, to 2%.
I must go study for a Capital Markets final, good luck today all.
Tuesday, April 29, 2008
Recap for Tuesday 4/29/2008
Market Recap
S&P 500 Index: (-5.43) to settle at 1390.94
Dow Jones Industrial average: (-39.81) to settle at 12831.94.
Dow Jones Transports: (+40.17) to settle at 5209.16.
Nasdaq Composite: (+1.70) to settle at 2426.10.
Crude Oil: (-3.30) to settle at 115.63.
USD/YEN: 104.03
Euro/USD: 1.5565
QQQQ: (+0.36) to close at $47.60.
SPY: (-0.55) to close at $139.08.
IWM: (-0.64) to close at $71.74.
AAPL: (+2.81) to close at $175.05.
POT: (-12.01) to close at $181.49.
Treasurys
2 year Note: 2.362
5 Year Note: 3.120
10 year Note: 3.823
30 Year Bond: 4.551
NASDAQ SHORT INTEREST FALLS 0.7% ---Barrons
MPM
Uncertain as to the outcome. Blame the unlucky.
Article from the Economist..."Wither the Derivative."
Another great piece of information from the working paper; No Harm, No Foul: The outcome bias is ethical judgments by: Gino, Moore and Bazerman.
:Two studies investigated the influence of outcome information on ethical judgment. Participants read a series of vignettes describing ethically-questionable behaviors. We manipulated whether those behaviors were followed by a negative or positive consequence. As hypothesized, participants judged behavior as less ethical when it was followed by a negative consequence. In addition, they judged the behavior as more blameworthy and to be punished more harshly. Participants’ ethical judgments mediated their judgments of both blame and punishment. The results of the second experiment showed again that participants rated behavior as less ethical when it led to undesirable consequences, even if they saw that behavior as acceptable before they knew its consequences. Implications for both research and practice are discussed. ...
We show that outcomes of decisions lead people to see the decisions themselves in a different light, and that this effect does not depend on misremembering their prior state of mind. In other words, people will see it as entirely appropriate to allow a decision's outcome to determine their assessment of the decision's quality. ... The tendency demonstrated in our studies might lead people to blame others too harshly for making sensible decisions that have unlucky outcomes. ... Too often, we let ethically-questionable decisions slide for a long time until they result in negative outcomes, even in cases in which such outcomes are easily predictable.
"This makes morality look more like a social convention for who we can blame for what, rather than a direct guide to decision making. "
Technical Indicator from Marketwatch
Inverted Head and shoulder in S&P? Do we test 200MA between 1410-1420 this week, even with FOMC meeting tomorrow?
Michael Ashbaugh seems to think it is possible..marketwatch
Lets hope Dow Jones Industrial Average either way stays above 12750-800.
Regarding the DOW JONES TRANSPORTS AVERAGE...If Fed cuts 25 basis points, believe it or not, a boost to dollar, if they cut more, maybe no respect to the 200MA, as of late, Transports are above the 200MA.
Whats u r profit objective? What will you do if your targets are hit, what will you do if the market moves against you? Either way, volatile sessions may be ahead, if you aren't ready, stay on sidelines, if you are ready, wait, nobody is ever ready, continue to educate yourselves and never stop learning, one can never know to much, and good luck trading/or investing to new, seasoned and professionals, whichever you are.
in the words of Oscar..."stocks are in, emotions are out..."
MPM
Currencies
USD/JPY YEN: some amount of (---) yen buys 1 dollar.
104.20
in this case, 104.20 yen buys 1 dollar, I sense some inflation may be taking place in japan, and not just on our home front.
Euro/USD, Euro: some amount of (---) dollars buys 1 euro.
1.5655
in this case; 1.5655 dollars buys 1 euro; many would like to see the euro/usd exchange rate closer to 1.30, which would mean the dollar would need to appreciate against the euro.
Euro all time high against the dollar is just over 1.60.
USD/CHF; Swiss Franc: some amount of (---) francs buys 1 dollar.
1.0339
in this case, 1.0339 francs buy 1 dollar; the dollar is worth more, but not necessarily more valuable.
European markets closing prices
DAX: -0.58%
CAC: -0.71%
FTSE: -0.02%
this information is as of 1:00 pm eastern time and is not guaranteed, use at U R own risk.
MPM
Recap of Pres. Bush's speech, similar to Mr.Jeffery Sachs
"No quick fix exists for oil prices. Higher prices reflect basic conditions of supply and demand. The world economy – especially China, India, and elsewhere in Asia – has been growing rapidly, leading to a steep increase in global demand for energy, notably for electricity and transport. Yet global supplies of oil, natural gas, and coal cannot easily keep up, even with new discoveries. And, in many places, oil supplies are declining as old oil fields are depleted."
Pres. Bush is open to any ideas of how to handle high gasoline prices, and inflation and Commodity prices through the ROOF... at least Archer Daniels and many other earnings reports that have came out as of late, such as Potash Corp. have made record profit...do we take money supply out of economy, maybe buy domestic assets then in return use MS to purchase foreign assets, maybe increase interest raise rates, depreciate exchange rates, lower prices, increase demand, reduce supply, increase supply? what shall we do? ride our bikes, easy to say for urban residents whole live 1 minutes from their job, what about families, suburban citizens and people such as my friends, who tend to be lazy, all in all, no easy way, I will be studying Monetary Policy very closely, as I have been for many months now, fiscal can only help to get the checks out and increase aggregate demand here on the home front, what about off shores.
We wanted increase in Current Account, therefore, drop the buck and raise exports, while same time, we consume most imports? We haven't even began to visit the sub prime crisis and all other problems that I haven't mentioned because I must run now, really this time...
MPM
S&P...1387---?
as discussed last night, well maybe as I thought last night...S&P 500 is flirting with very important level of 1385-86 right now.
“With house prices falling, wages failing to keep pace with inflation and job worries growing, we suspect that both confidence and spending will remain under downward pressure,” wrote James Knightley from ING, therefore, that level will most likely be breached? I will take SPY's (S&P 500 SPDR ETF) from 137.05-.40 (1374-75 ----S&P) -140.40 (1409.75 ----S&P), by going with trend.
Oil: $116.50/barrel as I type.
(1 barrel = 42 gallons)
good plays long and short, XLF, XLE, QQQQ, SPY, IWM, AAPL...
if your "day" trading, keep that ratio to ideally 3:1, never try to gain 1 point and be willing to lose 3, makes no sense, be on the opposite side of that, profits will develop.
going to get the Journal and study, happy trading and good luck!
NY times from this morning...
-American homes are losing their value at the fastest rate in two decades, according to a closely watched report released on Tuesday.
In the 12 months ended in February, the Case-Shiller home price index, which measures the value of single-family homes in 10 major metropolitan regions, fell 13.6 percent, the worst decline since records began in 1987. A broader 20-city index dropped 12.7 percent.
The slump in home prices was more severe than the worst point of the recession of the 1990s, the last time values fell so far, so quickly.-
The Conference Board says the index fell in April to 62.3, from the revised 65.9 in March and 76.4 in February.Shall we go further....Pres. Bush is on CNBC right now, so I am out.
I'll bet you 10 Euros
I'll bet you 10 Euros that that Lakers will win at least 10 games this post season..
to hedge against possible loss, I will go long dollar once I see deterioration in the Laker's strategy, but as of late, I am not convinced of this, and Kobe and the Lakers shall make a good run this post season.
As far as I am concerned, the SPX is forming inverted head shoulders, but is the 30year treasury ready for a fall off the right shoulder? The Markets will go up and down, and it will do both, I do know, not one person can effect it, I also know, that following smart money is smart. Lets hope 1385-6 is "REAL" support. Don't Chase the market and don't jump in front of a fast, moving train, go with the trend because it will stay course until an external force changes direction, and right now, so many external forces, this is why I like corn, LOL. I also am not sure about the CRB index right now either, I mean, we all have a potential direction with targets and pivots, but anticipate is only as good as it may seem. One must research, react, have plan B and C "just in case", be quick and have superior vision. Everyday is a New day. I must get back to my international finance studies, as well as continue to follow futures right now. Best wishes.
Monday, April 28, 2008
New Chapter and Bear Market territory, still? Welcome everyone.
Recap:
"Stocks rallied modestly for most of Mon., but gave up gains in the final 40 minutes. The Nasdaq rose 0.1%, but the S&P 500 fell 0.1% and the Dow dipped 0.2%. Volume fell on both exchanges. M&A activity failed to give the market much of a lift. Several leading stocks lodged gains in solid trade, though farm stocks retreated. The 10-year Treasury yield fell 4 ticks to 3.83%"
"Oil prices jumped to an intraday record of $119.93 a barrel before settling up 23 cents at $118.75. A Scotland refinery strike and militant attacks in Nigeria have forced a cut in global output of nearly 1 mil barrels. Prices also gained as the dollar slipped ahead of the Fed's meeting. U.S. retail gasoline prices have now risen above $3.60 a gallon."
U.S. troops engaged in heavy street battles with Shiite militants, killing at least 45. Amid a sandstorm Sun., militants unleashed rocket and mortar fire on Baghdad's Green Zone and attacked a security checkpoint. Tank-backed U.S. forces struck back, driving deep into the hostile slum to try to secure the area closest to the Green Zone. Mortar attacks killed 3 U.S. soldiers in E. Baghdad."
-Investor's Business DailyI will be restructuring, or developing for better words this blog into a short term daily and weekly market recap to add information from throughout the day such as, Market data, Currencies (Euro, Yen, USD, CHF, etc..), Bonds, Oil prices and other commodities, as well as much more information. Basically a daily recap, with long term goals of having analyst type newsletter, with information on Apple, POTASH, QQQQ, IWM, and SPY just to name a few. I will include technical and fundamental analysis and I do plan to incorporate overseas data, since we are a "global economy" from other markets such as Hang Seng from Hong Kong, Nikkei 225 from Tokyo, DAX in Germany, FTSE and others.
This blog will also include International Monetary Fund facts, research, articles and information (imf.org), so, we can get a picture on trade and exchange, as well as interpret their forecasts of growth, inflation, output and supply and demand data.
I will be posting other information as it is necessary for all to read. It will range from FOMC meetings, $120 oil, President Bush announcements, Bernankes speeches, quotes from the Times, WSJ, IBD or Financial Times, to name a few...now I just hope that I can get the time, I mean, I do have the time, but now, I am looking for a job, in the Financial sector, and as we all know, it is very tough right now. But, we are only as good as the challenges that we take (Prof James Holmes, Economist, University at Buffalo, told me that and I have never looked back), therefore, let the games begin and we will turn crisis into opportunity.
Did I mention, I am graduating next weekend from college. This is why I guess I am coming back to my blog, I have so many things written down, all over the place, literally my walls, hundreds of books, newspapers, word documents and such, that I think its time to turn hydrocarbons into liquid form, maybe even lite and sweet "crude" if you shall prefer. I want to give back, while stay persistent and motivated to learn, develop and grow each and everyday. A Long will come the new opportunity, and right now, or after graduation, it's time I start trying to sell "Me, Inc." and start a new chapter in my life.
Anyone see Intrepid Potash's initial public offering the other day, 50% in one day...I saw it, told my friends about it the week before and I did clip the article out of Investor's Business Daily the following day to show my kids one day(if I ever have any) that I have made some decent choices in life, LOL.
Maybe all of this doesn't make sense, maybe it will never make sense, I hope all who I will meet in the future, as well as all who I never meet, enjoy this blog and use it to their benefit, as soon I get in rolling with more financial information. Posts will be random, and will include most up to date and informed material, but I assure you, I won't waste a minute of your time because I realize how valuable time is.
MPM
