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The beat goes on. While the market rests trading opportunities abound. The number one strategy continues to be selling calls and our stocks during rips and buying our stocks or calls back lower and selling puts.
I continue to believe the markets will be range bound for the next 4-7 weeks. Selling premium against positions will work well. My favorite is selling 2-3 naked puts against 100 shares long on our stocks into weakness to further increase returns. See the latest stock recommendation. Call me if you wish to see this report. I should have been pleased but I wasn't.
Reader, This email sent by Stan Moore on 2009-04-22 has been converted to a PDF as it's a stock recommendation: ERF Stock Recommendation. Please open as a PDF file. Regards, Webmaster
The rally continues into seasonal strength that begins to ebb in May. We had a saying on Wall Street, sell in May and go away. Don't think that will work as well this year. However, in any case we will let the market tells us want it wants to do. Watch for the tells.
I wrote last week that our annual IRA Tax trade was coming up (NET Advanced Course material) and that we wanted to be a buyer of calls on any weakness into the 15th and beyond. The market rallied into Monday hitting a high at 861only to sell off into Wednesday, 4/15, to a large 40% buy level at 831 from April 1st. The 400 OEX monthly calls could have been purchased as low as $2.30. By Thursday the calls reached $8.60. The "Beat" goes on for 16 straight years and counting. It's in the "Bible"; read the book.
I hope your Holiday was the best. I hadn't planned to write a note this week with the Chart but one of the better trades during the course of the year is coming up - our IRS Tax Trade. The return was about 3X each year for 15 straight years. However, this year we have a conflict with "THEY" and the option expiration week.
Normally $$$ flow out of the market to pay taxes etc. until the April 15 then a large sum returns as new monies to be invested in IRAs. So, as monies exit market price retreats and we look buy calls into any Monday-Wednesday weakness. Then we sell into the expected strength over the following 2 days.
Today's email by Stan has been heavily edited due to a remarkable trade (setup) announcement only available to NET registered members. NET registered members can access the full email here. This trade has been successful for 15 years straight.
Fellow Traders, Our recommended stocks continue higher with a few breaking out to new multi-month highs. HUN explodes through $4.00 as the company negotiates new terms to their revolving line of credit. I see this giving them new flexibility to retire high-yielding debt sooner than later regardless of what happens with their lawsuit adding nicely to earnings. Good Trading, Stan Moore 702.267.0396
It's the best of times and the worst of times, all at the same time. No, not Charles Dickens, Stan Moore! We are up 25% in 4 weeks for the best bull move in history. That's just after hitting a new 12 year low. At the same time 5 million people are unemployed and millions more will lose their homes in the next few years. Right now all we truly know that commodity supplies are being cut back. Demand is not there yet. Bad news is having less of an impact on stocks. Recent economic numbers are less negative but not better. Whether the market is right or we are all hopeful things will get better is unknowable. Patience time will tell.
Doug Kass of Seabreeze Partners and TheStreet.com and is a short-selling specialist. I’ve mentioned him numerous times in the Chat Room and in print before. Doug has now turned vocally bullish right at the March low, using the '38 experience as his guide. Doug points out that the first leg of the '38 lift lasted 12 trading days and traveled 19%, quite like the recent move. Then there was a 60-day consolidation that corrected half of that gain, followed by another 30% rise over six weeks. Next comes another rest and a final upward thrust. This scenario is quite probable.
We have an early look at 1st quarter GDP coming out soon. The quarter could be down over 7%, while the Friday jobs number could be down over 700,000 with unemployment hitting 8.5 or higher. Furthermore, first quarter earnings start coming out soon. Earning will not make for pleasant reading. Seasonal strength turns down after April 30th, another reason to button-up some profits.
There is no question that in this environment caution is still warranted and I am not suggesting you should bet the ranch but one thing has changed. See Jonathan R. Laing's Wednesday Changed Everything Barron's article below. I could not have said this any better. We probably have a good S&P bottom in the 600-650 area locked in no matter how bad things get. Not sure how high is up yet. But now for the first time in awhile we can trade both sides. Not only is this more fun trading both sides and it’s more profitable as well. We are back to buying the dips and selling the rips.
We continue to take money out of the markets every week in the Chat Room. We do not care whether the markets go up or down. This will always be here for us. We can trade ranges, trends or whatever comes our way. Our option trades are a bonus that occurs during the later part of the week with cheap Weekly expirations. All the while we are building trading long or short positions to take advantage of the bigger swing trades that will come our way utilizing ETFs as well as individual stocks.
Things move rather quickly in the markets today including new government regulation and taxes! The reflation trades (stocks that benefit from inflation) I have focused on for these last 3-4 months really came to the fore this last week with significant profits. These stocks were totally neglected just a few months ago given the demand destruction of the commodity-related products that occurred this last year. Companies were forced to cutback, close or even outright cancel many commodity-related projects. When demand finally returns prices will explode higher as supplies will not be there. For example, a mine takes 5 or more years to bring or as many as 10 years to bring an oil find into production. Meanwhile alternative energy projects are failing as consumers cut back on these expenditures. Toyota’s Prius sales or off sharply. Solar panel sales are crashing. I still like our energy names just let then retreat a bit.
This week's Fed action will have a potentially negative impact on the mortgage REIT industry's earnings stream in the coming quarters. Both spreads and prepayment risks associated with a boom in refinancing could have a chilling impact on the group. However, these negatives could be offset by an appreciation in the value of their mortgage-backed securities holdings coupled with the ability to lever the balance sheets further. HTS and NLY are only leveraged about 7-1; in this environment, they could easily go greater than 10-1. My previous expectations for a positive valuation adjustment - namely, of an expanding price-to-book value - have to be tempered a bit now.
Should the REITs fall, I plan to add to my Hatteras (HTS) when under $22.00. Annaly (NLY) had already risen sharply from $12.00-15.00 these last few weeks giving us plenty of time to sell ITM or ATM calls for downside protection. If these companies do not increase their leverage I recommend that only income accounts looking for high yields hold them. I will use these stocks as a source of cash to swap into higher beta ideas. Stay tuned.
Someone bought over 800,000 shares of HUN at $3.06 just before the bell Friday after a significant market selloff near the close. Less than 30 minutes before I was buying HUN under $2.90. If there is no legal settlement before Monday, I'm sure the block will be sold into the market. HUN speculation is alive and well out there. It’s one big lottery ticket.
Monday we get news on toxic asset sales (i.e. bad mortgages) and how the Gov will help finance private investors purchases of these mortgages from the banks. The Gov plan could prove to an interesting wild card.
Looking ahead to next week excluding any Gov surprises I see market consolidation through earnings season starting next month then higher into late spring.
The Barron's Article: Wednesday Changed Everything (Many thanks to Barron's)
Markets, like history, don't always recognize game-changing events or, in the lingo of Wall Street, inflection points. Such a change, we submit, took place Wednesday when the Federal Reserve announced its plan to pump more than a $1 trillion into the economy by the purchase of $300 billion of long-term U.S. Treasury securities and an additional $700 billion or so into Fannie Mae and Freddie Mac guaranteed mortgage-backed securities and other debt.
This is the beginning of a financial surge by the Fed that not only will bolster the economy by bringing long-term interest rates down, but also augurs well for stock prices in the months ahead. In fact, we argued in two recent stories, "Shopping Season for Uncle Sam" (Dec. 1, 2008) and "Advice to Geithner: Don't Hold Back" (Feb. 9, 2009), that much of the despondency that both the economy and stock market have found themselves in was attributable to the timorousness and fecklessness of the Fed's policy response to the unprecedented crisis in the financial system.
To be sure, the Fed's move last week elicited a far more positive reaction in the bond than the stock market. Stocks actually traded down on both Thursday and Friday, more than giving up the gains made on Wednesday's Fed announcement.
Yet the switch at the Fed has been flipped. One can expect far more aggressive purchases in the future to reliquify the financial system, particularly in longer- maturity corporate securities, where punishingly high interest rates threaten the future of many firms seeking to roll over debt. Concern seems miscast over the Fed's printing new money and thereby creating inflation and weakening the dollar. Looming deflation is now the enemy. Fed buying is the only game in town in the wake of the seize-up in private credit markets and the huge wealth destruction that has taken place in both the corporate and consumer sectors. Now, at least, there's some hope for both the economy and the stock market. And it's about time.
One of the most profitable saying on Wall Street is "Buy the Rumor and Sell the News". Now just what is this news you may ask? Not all news is created equal. Not just any news - only news that can move the market. My job is to teach you the news that matters and how to interpret that news. News interpretation in regards to trading can take years and many market cycles but you do need to understand the news fundamentals if you wish to become a superior trader.
These markets get more exciting every day. Friday morning before the market opened I mentioned in the Chat Room that I would be trying 5 long trades Friday. Why you might ask? I've been doing just about 4 shorts to every long trade these last few months quite successfully. My mantra has been to sell rallies until we lose money. In this case, the market was down about 7% this past week coming into Friday and down 12 out of 15 days. On Friday and with some rather interesting news items this coming week, the shorts would look to cover to protect profits while the longs would try to jam them.
After 1 short and 4 longs we were headed into an EOD move about 3:30 PM near S&P 665. I had already alerted my chart readers about a 663 buy area for calls on the 2:00 PM "B" chart. The OEX 320 calls selling around $0.65-$0.85 were an interesting throwaway trade. The calls closed over $5.00 in 45 minutes. This handsome profits setup or weekly Money Charts - see the attached chart.
Not much has changed from last week to this. The market marked time waiting for the stimulus package to became enacted and no one really wanted to be short going into this week. Obama fails to deliver, the market sells off until next passage and so on.
Another week of rather profitable hedging trades if you are so inclined. http://www.screencast.com/t/SGd1U4FHs enjoy the video. Go forth and make me proud. I had planned to take Sandi away this week before she started radiation treatments but the doctors wanted her to start tomorrow so I will be in all week, miss Monday and back @ my desk Tuesday 2/4. Good trading, Stan Moore Ph 702.267.0396
We have just come through one of the worst Januarys that I can remember. The market was down over 10% in a week or so. This is normally the best month for $ inflows into the market. Imagine what this means for the seasonally weak months starting in May and throughout the summer. When Qbama takes the oath this Tuesday I believe the market could begin a rather expanded rally certainly to S&P 950 again and maybe even to 1000. Interest rates in general are low and the expected stimulus package coupled with low oil price just might be enough to lift animal spirits. After this potential up move all bets are off.
Stock Updates
HTS gave us a chance to add to positions as it tested and bounced off its 50 DMA @ $24.40 and then closed over $26.00. The $1.00 dividend should hit our accounts on the Jan 22nd. LINE caught a great bounce from the Barron's write-up reaching well over $16.00 giving us a great option-writing opportunity in the Feb $15 calls at $1.50 or higher. The stock should go ex-dividend about $0.60 the first week of Feb - the reason calls were a bit cheaper than normal due to the ex-dividend.
NLY, nothing new to report. HUN tagged the December low giving us an opportunity to add to our holdings. All we have to do is wait. I'm sure you didn't know but insiders own over 34% of the outstanding stock and bought millions more on the recent price break.
If you notice oil is currently trading about $35. However, if you note, the Mar '10 futures contract is $60. This is as good as any idea where oil will sell in the future and tells us unless we are in a global depression. Cutting supplies takes time. I believe Saudi Arabia wants the price lower to kill alternative sources of power. Already we are reading of substantial cut backs in a number of costly drilling projects. These are planned years in advance and can't be turned back on a dime.
Current Thoughts
You now begin to understand why I prefer oil to gold in the big inflation to come down the road and why I love Oil and Gas (O&G) MLP's so much. One of my favorite plays is a Canadian company called Enerplus Resources Fund (ERF) which sells near $22 and pays a $2.50 dividend. Recently ERF cut back on dividends to build cash reserves to buy cheap energy assets. Normally, the dividend would be closer to $3.50. I love the stock under $20.00 and selling puts at $17.50 and $20.00 is a safe and low-risk entry below the market. There may be further good news coming on the tax front for Canadian oil and gas producers.
Summary and Conclusions for MLP Investors
Although I see no near-term catalyst [meaning a limited price range] for the MLP energy group. Over time I expect the MLP's to resume making acquisitions and growing distributions to unit holders (i.e. the ability to finance growth through the capital markets should return, likely in 2010). HTS just did a large secondary offering to grow their EPS and dividends in '09.
Generally, these energy MLP's are well equipped to survive crisis. For investors willing to take a longer term view. I generally believe the Exploration and Production (E&P) MLP's offer a compelling risk/reward proposition, an above-average yield, a distribution supported by an aggressive hedging program, no need to access the capital markets to maintain production/distributions and a relatively clean balance sheet with no significant debt maturities in the near term. On that basis, I urge you to use price declines and/or sell puts to add to positions and sell calls on rallies to substantially increase overall returns.
Option Trades
This past week was a rather good option expiration week with two call trades profiting from the "They" up trade into Friday morning's S&P option close. There even was an option put trade for 3 X Friday morning as a result of the market jam that took place just prior to expiration. There was a final call trade from mid-day into the close. There were also numerous opportunities to engage in some very profitable "hedging and parlaying" activities. An excellent 30-minute 2-part training video can be found below. Money Chart of the week from Thursday's option markup is attached.
Subjects: Renewal of NET Intraday Charts/Alert Emails, Indicators and Video Subscription Services. New Attached NET Stock Recommendation – HUN. Strong follow-on buy from Barron's for Linn Energy and a new 3-Part 60-Minute Webinar Video on our beloved Oscillator.
Dear NET Traders, Subscribers and Friends,
I hope this finds everyone had a great holiday and are now looking forward to a healthy, Happy New Year and a most profitable one!
Without your support these many years New Era Trader would have never reached its current level of success. I owe every one of you a great debt deal of gratitude as I continue to grow as a mentor and trader. Almost daily I hear from students who have done quite well with the new trading methodologies introduced with the new book (The Definitive Trading Bible), emails, videos et al.
I know many of you have gone on to success these last 18 months. Our chat room continues to grow and our students seem to regard it very well and the room brings the book's methodologies to life.
Looking back I pretty much nailed the high last Aug-Sept '07 and advised everyone to exit the market. I just began to reenter the market with extremely high-yielding Master Limited Partnerships (MLPs) these last few months with great success. My emails provided both short (options) and longer-term trades on stocks, bonds and currencies, general financial environment information for traders, has proved quite profitable in '08 and should benefit all NET traders going forward.
Despite the extremely poor economic outlook for the world's economies in '09, NET traders will be able to trade both sides of the market aggressively next year. Not all stock sectors will move down in unison like '08. Stock pickers will be in their glory. The Fed's $Trillions and Obama's $1T over the next two years should allow the economy to recover somewhat. After that we'll have a new set of challenges. I will handle those as well as I have past challenges. I've been here 18 times before; I've seen it all at least once.
Once the automated email list is setup the quantity, quality and timeliness of the alert emails will improve dramatically. Trade recommendations will be covered in the emails before I setup trades in the NET Chat Room. All Alert Email subscribers will receive advanced notices for all recommendations (stocks, bonds, currencies, options etc.). Intraday Chart subscribers will retrieve their charts via www.NewEraTrader.com.
This brings me to the subject of this email. It's that time of the year to renew your NET service(s). Imagine, just a single idea or recommendation might pay your subscription fee for the whole year. I expect numerous trading ideas for '09. In fact one of the best ideas I've had in the last five years is attached to this email. If my Huntsman (HUN) call works the way I think it should, this pick alone should pay for all my services for quite some time.
NET has become a very profitable service. Please take advantage of these services and profit greatly in the New Year. Our services will never be this inexpensive again. Miss the deadline and NET may be more expensive. Either way, go forward and prosper. Stay behind and miss out.
I'm also including links to a Barron's article regarding Linn Energy and a 60-minute webinar on the Oscillator. It's truly the world's greatest indicator bar none. I'll bottom line my Linn Energy (LINE) recommendation for you. Two Wall Street analysts believe LINE should double some time in '09 if the $2.50 dividend holds and it should. LINE has hedged 100% of its energy production through 2011 and 66% through 2012 at substantially higher prices than currently available - in some cases as high as $120.00. Right now LINE is my #1 buy yielding nearly 25%. I still love HTS and NLY. NLY just went ex-dividend of $0.50 last Friday.
Here are links to my December 18, hotComm “World’s Greatest Predictive Indicator” presentation. The video was so large we split it into three parts:
For many of you, the specific services I believe coming up for renewal are: access to the NET Training Videos - $600/year, use of the NET Indicator Package - $600/year and access to the Intraday Charts/Alert Emails - $2,400/year. I am only addressing those students whose subscriptions expire 12/31/08. The rest of you can relax & enjoy the attached info.
Bundled, these services cost over $3,500/year. With my holiday discount to you I'm offering this total NET Bundled Package for just $2,000. This substantial discount (43%) is another way of saying thank you. At this time payment is by PayPal or check only.
As another bonus - all renewal purchasers will receive a free month in the NET Chat Room - a $299+ value. This heavily discounted, seasonal offer will only be available through January 13, 2009.
I look forward to seeing all of you in the chat room sometime next year. If you're too active to trade in the Chat Room full-time, then maybe just the Chat Room on a few Thursdays or Fridays when the option trading really gets exciting.
Call me with specific questions. I welcome the chance to thank all of you personally. 2009 should be just as exciting as 2008.
Happy New Year!
Stan Moore New Era Trader Ph 702.267.0396
Attachment -> NET Stock Recommendation December 29, 2009 - HUN
HTS. Hatteras, a mortgage REIT, closed the week at $26.20 after letting us re-enter as low as $22.00 last week after our $27+ sale on 12/8. That’s a low risk, rather handsome 30% return in less than 5 weeks. It’s like Merry Christmas, Happy Hanukkah and a Happy New Year - all rolled into one week!
NLY. More good news on my NLY recommendation. This week J.P. Morgan recommended Annaly, another mortgage REIT, with a $20.00 target. NLY just declared a $0.50 dividend for holders on record on 12/25. The stock rallied to over $16.00 where calls could have been sold. I'm thinking J.P Morgan must feel the mortgage REIT's should sell to return 10%, something which I have said all along.
My HTS stock pick, entry, profit-taking and re-entry timing was near perfect. Ben Stein, a noted financial author and FOX business contributor, recommended HTS on Saturday cable show followed by CNBC’s Cramer on Monday afternoon. HTS rallied right into the middle of our designated profit-taking area hitting an all-time high of over $27.27. Last week’s email suggested this resistance area ($26-28) was an area to take profits. After the close Monday, HTS registered a 10M share secondary nearly 50% greater than the original filing.
To make the offering a blow-out success "They" must have been tipped to the pricing because the stock fell to $24 and the offering was priced at $22 Tuesday night. HTS never traded below $22.61 and then closed the week near $24. HTS will go ex-dividend the first week of Jan for a $1.00. I still would own the stock here and plan to collect my dividends well into ‘09.
The Past and Training This last week was near picture perfect trading range. We sold all the rallies near previous highs and bought declines at previous lows. All this was outlined in my early morning Chat Room comments last week. Using options on Wed, Thur and Fri you could have made between 10-15Xs your $$$'s.
The two hardest things to do when trading is to sell rally highs into bullish news and to buy dips into bearish news. The key to successful trading is to combine the technicals with the upcoming week's fundamentals. Using this "indicator" combination is outlined in The Definitive Trading Bible Advanced Edition. Of course, it helps when you understand why the market should do what is dictated by the near term fundamentals. I've just finished a very effective 26-minute advanced video that should help you understand these concepts better known as buy-the-rumor-and-sell-the-news or vice versa. And, as a bonus, I have included another video from a few weeks ago.
Only 2 times in 27 years has the S&P market reached such oversold conditions. As we predicted, on 10/10/08 the S&P rallied over 2,000 DOW points in less than 40 hours. Last Friday the market moved over 500 DOW points in less than 2 hours. As long as the VIX trades over 70-80, a measure of extreme market volatility, we will continue to see 40-50 S&P point moves intraday.
Large point moves, if traded well, offer exceptional returns. We at New Era Trader are very opportunistic with our trading through the use of OEX options, stocks and other investments coupled with specialized trading techniques. There will be many more days like the last two Fridays to earn anywhere from 3-20X with a little help from your friends at New Era Trader.
Friday's Weekly Money Chart (attached) is a great example. If traded optimally using standard New Era Trader indicators Friday's late afternoon OEX calls returned 20X in about 2 hours - probably unbelievable to non-New Era Trader.
I will release a video further outlining these trade setups.
There was a different trade comment in the room Friday. We mentioned selling December Puts on Citi Corp. The stock was trading well below $4.00 with its DEC $2.50 puts selling between $0.66 & $.85. There was no way the Gov could let it fail. Over the weekend a plan to further save C was released. Stock is trading near $6 & the put premium should collapse for a nice profit. Just being Opportunistic again.
Another idea presented in the Room after Treasury Bonds exploded $5-$9 for longer dated maturities was to sell them. Bonds fell almost $3 the next day.One trader in the room was a happy camper the next day.
Believe the market should allow us the continue trading both sides of the Uni Bands with maybe an up bias into year end.
Hatteras Financial was up 10% after our Sunday email hitting $22.75 allowing us to take a quick profit. A nice retreat back under $21.00. Let's us get back in and gives us another chance to sell some time soon yet again into today's buy recommendation from Merrill Lynch.
Enjoy your Thanksgiving Holiday.
Please feel free to call with any questions or if you want more information on our training services.
Friday we went to Option Trading Heaven with a 9 bagger. Cheap expiring options have returned these last few weeks. Volatility remains creating even bigger opportunities than we could have ever imagined. For the second time in as many weeks we had a great end-of-week option put trade. I documented this trade in our NET Weekly Money Chart, see the attached. If traded optimally, you could have made 9X in 90 minutes - it’s just standard NET trading methodology. Enjoy these two trading explaining this week’s Money Chart:
I'm continuing to focus on high yield stock ideas coupled with option writing strategies for additional income. I call this trading strategy “Mortgage REIT Heaven”.
With LIBOR making a dramatic move lower, mortgage REIT’s Hatteras Financial (HTS) and Annaly Capital Mgmt (NLY) could be off to the races. The 2-10 yr interest yield curve, known as the TED spread, now stands @ 250 basis points - the steepest in 5 years. With widening spreads a 7-to-1 leverage ratio produces returns on equity of nearly 25%. Both REITs trade around 1.2X's book. The current REIT high-dividend yield only adds to the mix. If you can only own one, I suggest HTS. I'm expecting a $5.00+ dividend next year versus $4.20 annualized so far in 2008. The stock sells for about $21.00. I could see it reaching $26-$28 sometime next year. That's about a 50% return sometime in 2009. In a market with little confidence and clarity, these REITS are truly attractive. Looking ahead, spreads, earnings forecasts and expected dividends will increase. Name me any other market sector or group that has all these positives!
If you can you should join our Chat Room -more ideas, more opportunities to make money. Alternatively, you can subscribe to my Intraday Charts/Alert Emails service. This is what we do – make money.
Let me know if you have questions. Call me. Please pass on to your investing friends.
We are nearing a time that may offer one of the greatest profit-making opportunities in a generation!
Reader Note:Some of the concepts presented below are extracted from The Definitive Trading Bible Advanced Edition - only an overview is provided below.
Dear Friends, Traders and Prospective Students,
This week on the Money Chart we take a bit of a deviation.Normally we highlight great setups and trades taken during the week.For this Money Chart we prognosticate.Hopefully, you can greatly benefit financially.
Looking at the attached weekly Daily chart with NET Oscillator shown, technically, fundamentally and from market intelligence, I am the most bullish I have been in the last two years for a short-term, high-probability rally. I expect a short-term rally as signaled with other confirming long indicators.
