Online Trading

Sorry for the lack of posts, new post in a few days

2005-09-13T05:50:00.000-04:00

Sorry for the lack of posts lately. I had an accident and I was hospitalized for some time, but I am recovering now, so I'll resume posting in a few days.

CNBC's raging bull

2005-09-01T16:05:00.000-04:00

An article about Jim Cramer's Mad Money (thanks to TraderMike for the link).

CNBC's raging bull
calendarlive.com
By Matea Gold, Times Staff Writer
August 29, 2005

ENGLEWOOD CLIFFS, N.J. — Stumble across Jim Cramer's show on CNBC and you may think you've come upon a music video featuring a balding, manic businessman.

It's "Mad Money With Jim Cramer," the former hedge fund manager's high-octane hourlong take on the world of stocks.

His fans track his advice with cult-like devotion, jumping to place orders for stocks as soon as he mentions them. Professional day traders have taken notice as well.

The result is a Wall Street phenomenon now known as the "Cramer effect:" The day after a stock gets a mention on "Mad Money," its price shoots up, at least temporarily, and its trading volume soars.

"It's amazing," said Damon Southward, manager of trader content on Briefing.com, an investor news service that began reporting Cramer's picks to subscribers a few months ago. "You see stocks that literally trade several times their average volume in reaction to Cramer."

Read further:
calendarlive.com: CNBC's raging bull

Today's Data

2005-09-01T08:32:00.000-04:00

Personal Income +0.3% vs ~~+1.0%~~ +0.5% (Briefing.com correction) consensus
Personal Spending +1.0% vs +1.0% consensus
Initial Claims 320K vs 315K consensus
Source: Briefing.com

Trading Through Katrina

2005-08-31T12:56:00.000-04:00

Trading Through Katrina
TheStreet.com
By Alan Farley
RealMoney.com Contributor
8/31/2005 8:55 AM EDT

"Hurricane Monday" gave traders their most volatile session since the London bombing in early July. Going into the morning, I started a diary to illustrate how I measured the risks and opportunities triggered by the event. This exercise will show you my thought processes when a quiet Monday gets turned upside down by bad news.

7:14 a.m. EDT: I'm at my trading screen. Katrina is down in size overnight. My weather graphics show the eye headed straight toward New Orleans. Crude oil opened Sunday near $71 and dropped off to $70 immediately, It's now hovering about 50 cents below this "round number" as traders gauge the storm's impact to the supply chain.

...

9:44 a.m. EDT: Halliburton (HAL:NYSE - commentary - research - Cramer's Take) is showing the biggest jump (up almost 4%) of all the energy stocks I'm watching. That's makes sense. Globex futures are trying to fill the opening gap. This isn't the right time for a big reversal, so I'm looking for renewed selling pressure once the market shakes out the short-sellers.

Read further:
TheStreet.com: Trading Through Katrina

Microsoft plans telephone service

2005-08-31T09:19:00.000-04:00

Microsoft plans telephone service
BBC
August 31, 2005

Microsoft is preparing to enable computer users to make a normal phone call from their PC.

The computer giant has increased its presence in the fast-growing internet phone sector by purchasing leading player Teleo for an undisclosed sum.

Yahoo is also in the process of introducing such a system, after it bought internet phone company Dialpad two months ago.

I am sure that Google is also planning to include PC-to-phone calls to their Talk program in the near future.

Read further:
BBC: Microsoft plans telephone service

See also:
Talking about Google Talk and Skype

Talim, Forecast to Become a Supertyphoon, Heads Toward Taiwan

2005-08-30T16:20:00.000-04:00

Do we see another spike in stocks that tend to jump on typhoons, hurricanes etc when the typhoon reaches Taiwan?

Talim, Forecast to Become a Supertyphoon, Heads Toward Taiwan
Bloomberg
August 30, 2005

Aug. 30 (Bloomberg) -- Typhoon Talim is strengthening and may become a supertyphoon as it moves across the Pacific Ocean in the general direction of the northern coast of Taiwan, according to the U.S. Joint Typhoon Warning Center's Web site.

Winds are expected to strengthen to 250 kph later today with gusts as high as 304 kph, the center said. That would make Talim, which means sharp, or cutting edge, in Tagalog, the language of the Philippines, a Category 5 storm under the Saffir-Simpson scale, or a supertyphoon under Pacific rankings.

Read further:
Bloomberg: Talim, Forecast to Become a Supertyphoon, Heads Toward Taiwan

See also:
Today: Katrina and Oil

Comparing the Two Indian Internet Stocks REDF and SIFY

2005-08-30T14:22:00.000-04:00

The Internet Stock Blog writes:

Look at this chart, and ask yourself why there’s such divergence in performance between these stocks [follow the link below to see the chart]...

Some (mutually exclusive) possibilities:

The REDF chart suggests that the stock has run up on sudden momentum, not fundamentals. In the longer run, the two stocks track each other relatively well.

REDF suddenly outperformed SIFY because REDF turned profitable in Q2, whereas SIFY is still losing money (including on a cash-flow basis)

REDF is a fundamentally better business than SIFY. Its revenue growth in the latest quarter was 53% in Q2, verus 31% for SIFY. More important, the Internet content business (REDF is a portal) should have far higher margins and operating leverage than SIFY’s corporate and retail Internet access business.

Final quick thought: If SIFY controls a large network of Internet cafes, can’t it make its own portal and services the default on the PC its customers use?

Read further:
The Internet Stock Blog: Comparing the Two Indian Internet Stocks REDF and SIFY

Stocks to Watch: ATYT

2005-08-29T16:17:00.000-04:00

ATI Technologies (ATYT) was halted just a little ago. News pending.

Update (August 29, 2005 4:26 PM):
ATI Tech lowers Q4 revenue guidance.

Update (August 29, 2005 4:34 PM):
ATYT revenue guidance for Q4: $465-480M, compared to the expected range of $550-580M provided earlier; Reuters cosensus $559M.
Despite ATYT is already at low historical levels, it will still gap down after the stock is opened for trading.

Update (August 29, 2005 4:55 PM):
ATYT down by 12%. Ouch.

Today: Katrina and Oil

2005-08-29T09:04:00.000-04:00

Today, Hurricane-related stocks in motion, see Briefing.com note below. High crude oil price is also affecting stock market.

Briefing.com:

09:03

Gapping Up

Hurricane-related stock moving higher on Katrina hitting New Orleans: ABIX +26%, TAYD +15%, IPII +13%.... Small cap energy plays running on Katrina: BDCO +15%, NGAS +13%, FUEL +13%, ABLE +9.4%, CNR +9.3%, ROYL +8%, IVAN +8%, GW +6%, Large cap energy also moving: SU +7%, SII +7%, CHK +4.6%, PTF +4%, VLO +3.3%, BP +3.1%, HAL +3%, FRO +3%, COP +2.6%... Alternative energy/fuel cell stocks also moving in part on Katrina: CPST +15% (also First Albany upgrade; tgt $6), MCEL +13% (also awarded Phase II funding), ENER +3.5%... Other News: NXXI +49% (FDA approves claim), NDC +7.3% (to be acquired by PSTI), MUSE +6% (Deutsche upgrade; $9 tgt), JOYG +3% (to join S&P 400), HD +2.6% (hurricane), LOW +2% (same), BMHC +2.7% (same).

The Power of Margins

2005-08-28T13:18:00.000-04:00

The Power of Margins
by David Meier (TMF HumbleServant)
August 17, 2005

If you want an edge in investing, you have to be able to think beyond the usual.

Traditionally, margins represent the efficiency by which companies capture portions of sales dollars. As an analyst, I find myself looking at small changes in margins and wondering what is going on. But that focus is too narrow. Margins can provide much more information.

Margins are important. But how you use margin information is more important to your investing success. So don't stay on the surface when analyzing margins. Your portfolio will thank you for it later.

Read further:
Fool.com: The Power of Margins

Swing Trading vs. Scalping: The Pros And Cons

2005-08-25T17:39:00.000-04:00

Swing Trading vs. Scalping: The Pros And Cons
By TradingMarkets Research
Wednesday August 24, 11:21 am ET

The smaller a timeframe chart, the more random price action appears to be. The further one dials out a view to larger charts, the clearer price action movement becomes. That is fundamentally true because the action slows down. It is easier to hit a slow-pitch softball than major league fastball. Right or right? Get real good at hitting a major league fastball (along with a few other skills) and profit potential there is enormous. But how many new baseball players are truly able to do that?

Scalp trading successfully requires THE GREATEST degree of focus on charts, speed of decision making, personal discipline, everything that is necessary for success.

Read further:
Yahoo! Finance: Swing Trading vs. Scalping: The Pros And Cons

See also:
My Trading Room: Link about Scalping Vs. Swing Trading

Update: Stocks to Watch: BCON

2005-08-24T09:53:00.000-04:00

BCON is making another amazing trading day, currently at $5.26 (+10.97%), yesterday's high is at $5.10.

See also:
Stocks to Watch: BCON

Stocks to Watch: BIDU

2005-08-24T09:44:00.000-04:00

Baidu is finally fading. If it doesn't show any strength later today, there's a big possibility that Baidu shares are heading to major falloff.

BIDU is trading at 76.34 (-6.9%).

News about Baidu in Briefing.com:

Baidu forecasts a slowdown in revenue growth -- FT

Baidu.com, China's leading internet search company, expects revenues to rise by between 11 and 16 per cent in the third quarter compared with the previous three months, a marked slowing in the new Nasdaq star's sequential sales growth. The revenues mainly come from the sale of advertising links that appear alongside its website's search results, a model that emulates that of global search giant Google.

However, questions have been raised about the sustainability of its "MP3" online music search service, which accounts for more than 20 per cent of traffic to the site but which has been targeted by music publishers for allegedly promoting piracy.

Talking about Google Talk and Skype

2005-08-24T08:50:00.000-04:00

Google is widening its scope again, a few days ago it presented a desktop sidebar, now it announced a brand new instant messenger – Google Talk. They have also included the possibility to take voice calls.

Google Talk is really bad news for Skype. Although, Google Talk does not have the features that make money for Skye (i.e. Skype out), it is just a matter of time when these services are included also in Talk. Yes, Skype has some edge, they were the first in the market, but Google has enormous amount of money. And Google has "Google". That's why Google Talk will probably get more downloads in the first day than some other applications during their lifetime.

If Rupert Murdoch's $3 billion offer for Skype was not a rumour, I think Skype's venture capitalists lost their best opportunity to sell it.

See also:
Subzero Blue: Google Talk
Ambot ah!: Google Talk, the next best IM?
Connected Internet News: New Google Desktop - I'm not impressed
kottge.org: GoogleOS? YahooOS? MozillaOS? WebOS?

Coverage of $3 billion offer for Skype:
Asia Business Consulting: News Corp wants Skype - and what is their intention?
loose wire: Was the News Corp Offer for Skype Real?
Good Morning Silicon Valley: Fine, I'll just set aside the $3 billion for the bloody toll calls to Lachlan

Stocks to Watch: WES, WFSI

2005-08-23T15:00:00.000-04:00

Both, WES and WFSI are currently halted.

Briefing.com:

Westcorp confirms discussions regarding combination (63.30 +5.95)

Co confirms that it was in discussions regarding a possible business combination. Westcorp indicated that absolutely no determination has been made as to whether any business combination would be in the best interests of Westcorp's shareholders. As previously reported, the approval process for the conversion of Western Financial Bank to a California state commercial bank and the merger of WFS Financial into Western Financial Bank as a part of the acquisition of the minority interest in WFS Financial is taking longer than originally expected, and the co has been exploring other alternatives. Any such business combination would be an alternative transaction to the pending merger and related charter conversion, originally announced in Westcorp's May 24, 2004 press release. (Both WES and WFSI are halted.)

NYT on Providian Financial (PVN) Acquisition

2005-08-23T14:44:00.000-04:00

And They Call This Advice?
The New York Times
Gretchen Morgenson
Published: August 21, 2005

WILL shareholders of the Providian Financial Corporation, one of the nation's biggest credit card issuers, approve their company's merger with Washington Mutual?

Owners of Providian will vote on the proposed deal on Aug. 31. Under its terms, they will receive just under $19 a share in cash and Washington Mutual stock. That price represents a modest premium of 4.2 percent over the price of Providian just before the merger announcement.

David L. King, a portfolio manager at Putnam Investments, has said he will vote against the merger. The funds own 7.5 percent of Providian's shares. Officials at Providian have said that the deal is fair.

In its report, Glass Lewis said it believed that Providian was worth $21 to $24 a share. It said the company's business was performing well and could easily remain independent.

Providian Financial Corporation (PVN) is currently trading at $18.74, slightly below the possible take-over price.

Read further:
The New York Times: And They Call This Advice? (free subscription required)

It's a stock pickers market

2005-08-23T12:34:00.000-04:00

Jack Rothstein writes in his blog that the index funds are not performing well and it's a stock pickers market.

Cash rich in managed accounts this being the season of weakness. The shorts balance the longs in the fund. Selectivity is the key to success. It is a stock pickers market. You have little chance of index funds delivering a satisfying performance. The major market averages are flat to down for the year. It’s a flat market. Performing in a flat market requires the ability to pick stocks in a timely manner. Pick and clip advancing and declining stocks in a timely manner.

He highlights some long and short candidates and gives a comment for each (BCR, BEAV, GE, ISIL).

Read further:
Jack Rothstein: Longs & Shorts, Always

See also:
Saying Goodbye to Buy-and-Hold

Today's Earnings: WPTE

2005-08-22T16:05:00.000-04:00

WPTE crashes with earnings report:

Reports Q2 (Jun) loss of $0.02 per share, $0.06 worse than the Reuters Estimates consensus of $0.04. Revenues rose to $6.6 mln vs the $5.9 mln consensus. Overall gross margins were 33.7% in Q2 compared to 43.9% from prior year period. Co issues downside guidance for Q3, sees Q3 revs of $1.5-2.0 mln vs. $4.82 mln consensus. (Briefing.com)

WPTE currently halted.

ERES Insider Buying, Shares Up

2005-08-22T15:12:00.000-04:00

Insider buying in Eresearch Technology (ERES), Blum Capital Partners LP has bought a lot of ERES shares lately, see insider transactions at Form4Oracle.

ERES running up 5% today.

See also:
Roberto's NasdaqTrader: ERES Insider Buying

If the Contrarians Are at the Gate, They May Just Be Lost

2005-08-22T14:37:00.000-04:00

There is some reading about VIX in The New York Times:

If the Contrarians Are at the Gate, They May Just Be Lost
The New York Times
By Mark Hulbert
Published: August 21, 2005

The VIX currently stands at 13.42, which is lower than about 79 percent of the index's past readings. Its historical range extends from a low of 9.31 in December 1993, to a high of 45.74 in October 1998.

The exchange refers to the VIX as an "investor fear gauge," and the index quickly found a following among a group of market timers known as contrarians. They believe that the stock market rarely moves in the direction that the majority expects; therefore, they are bullish for the overall market when the VIX is high and indicating widespread investor fear. By the same token, they are bearish when, like today, the VIX is low and betraying investor complacency.

Researchers, however, have been able to find only partial historical support at best for this interpretation of the VIX. According to a recent Hulbert Financial Digest study, the stock market has indeed tended to turn in an above-average performance following very high VIX readings - just as contrarians say. But contrary to what contrarians believe, the stock market has also produced above-average returns following very low readings.

Read further:
The New York Times: If the Contrarians Are at the Gate, They May Just Be Lost

See also:
Raising Volatility
VIX conundrum
Low Market Volatility

Day Trader's Thoughts on Day Trading

2005-08-22T10:23:00.000-04:00

Trader Mike writes about his switch from swing trading to day trading. There are some good practical issues to memorize.

Mike writes about switching his commission structure at his broker and gives even a slight insight into his trading tactics. He also doesn't afraid to mention his win/loss ratio, which is 45.05% at the moment, but still making money (actually, it shouldn't be a surprise to anyone that it is possible to make money even if with a win/loss ratio below 50%, like it is possible to lose money with a ratio above 50%).

Read further:
Trader Mike: Thoughts on Day Trading

NYSE Short Intrest At Record Highs

2005-08-22T10:13:00.000-04:00

Roberto's NasdaqTrader:

Short interest on the New York Stock Exchange rose 2.7 percent to a new record high in August, signaling bearish sentiment, according to information the exchange released on Friday. As of Aug. 15, the number of short-selling positions not yet closed out rose to 8.59 billion shares, up from 8.36 billion a month earlier.

Notes about Trade-Ideas

2005-08-19T04:32:00.000-04:00

I added Trade-Ideas container on the left sidebar, it brings you real time market alerts. There is some positive feedback on Trade-Ideas, so I wanted to try it out myself.

If you have tried it, please share your thoughts with others.

See also:
Trader Mike: Watchlist for August 16, 2005 (comments about Trade-Ideas)
My Trading Room: Trade-Ideas
My Trading Room: Prime Trading Setup:Intraday Example

Update: Interview: Jim Rogers, co-founder of Quantum Fund

2005-08-18T16:02:00.000-04:00

Two months ago I posted a link to an interview with Jim Roger's. Now, there's another interview taken place with him (I saw the links on Random Roger's blog) by Investment U.

Investment U: Should there be a hard landing in China, do you anticipate a major consolidation in commodities?

Jim Rogers: Yes, I do. Something’s going to cause consolidations in commodities. We always have consolidations in every bull market in history.

Again, I wish I were smart enough to tell you exactly what’s going to cause them, and the timing, but I’m not. It’s pretty obvious to me that if we suddenly see headlines in the Wall Street Journal of some kind of turmoil in China, that commodities would be having a correction, or would go into a correction. But that would be a chance to BUY commodities.

You know, in the ‘80s and ‘90s, we had some huge corrections in stocks.

Likewise, in ‘94 or any of the other corrections along the way in the bull market in stocks in the 1980s and ‘90s, you made a lot of money. So if you see those headlines, I urge you to buy all the commodities you can. Probably buy all the China you can, too; but certainly, buy all the commodities you can, too.

Investment U: Commodities seem so simple on that level - supply and demand... How does investing in commodities compare with stock investing in terms of the average investor?

Jim Rogers: It couldn't get any simpler. And if you start looking into commodities, you'll see that commodities are a lot simpler and easier to analyze than stocks.

For instance, natural gas is pretty dumb stuff. If there's too much gas, it's going to go down. If there's too little, it's going to go up.

Natural gas doesn't know who Alan Greenspan is, or care; it just cares about supply-and-demand. And once you've made that analysis, it's a lot easier to buy and sell natural gas than to start analyzing 300 natural gas companies around the world, where you have to worry about management and balance sheets and stock markets and unions and environmentalists and dozens of other things.

Investment U: And you believe commodities can be less risky than stocks, too?

Jim Rogers: Well, Enron was a natural gas company. Enron went to zero. Natural gas can never go to zero. It can go down, obviously, but it can never go to zero.

Read further:
Investment U: Jim Rogers on China's Currency Revaluation (Part 1)
Investment U: Jim Rogers: Hot on Commodities (Part 2)

See also:
Interview: Jim Rogers, co-founder of Quantum Fund

Google plans to sell $4 billion of stock

2005-08-18T07:50:00.000-04:00

The most important news for today:
Google files to sell 14.2 million shares. GOOG is trading at 276.11 (-3.15%) in pre-market.

AP (Yahoo! Finance):
MOUNTAIN VIEW, Calif. (AP) -- Google Inc. said Thursday it has filed with the Securities and Exchange Commission for a proposed public offering of 14.2 million class A common shares.

Google shares, which have tripled since going public one year ago, closed Wednesday at $285.10 on the Nasdaq Stock Market, giving the offering an estimated value of $4 billion at that share price.

Read further:
Reuters (Yahoo! Finance): Google plans to sell $4 billion of stock
AP (Yahoo! Finance): Google Files to Sell 14.2 Million Shares

Stocks to Watch: ACAS

2005-08-17T14:50:00.000-04:00

Intraday sell-off in ACAS. Fell more than 1.5 points in some minutes, recovering.

Daytrading: Where You Can Find High Velocity Moves In This Market

2005-08-17T11:33:00.000-04:00

Where You Can Find High Velocity Moves In This Market
TradingMarkets.com
By Dave Floyd
August 16, 2005 1:30 PM ET

The high velocity moves that provide the most best day trades occur almost every day. But they are not easy to find by eyeballing charts. If you want to do this, you'll be looking for the 1 and 5-minute charts are in harmony as defined by the stochastics and a steep slope of the 20-period ema's etc.

The market was under pressure yet again this morning, presumably higher oil prices were the culprit – but frankly the reasons are not important. What was important was finding stocks that were strong relative to the market and playing those on any bounces in the S&P futures.

Read further:
TradingMarkets: Where You Can Find High Velocity Moves In This Market

Today's Earnings: HPQ

2005-08-16T16:04:00.000-04:00

Hewlett-Packard Co (HPQ) is trading up more than 5% in after hours on positive earnings data:
EPS $0.36 vs $0.31 Reuters consensus.
Revenues $20.76 bln vs $20.46 bln Reuters consensus.
Gross margin 23.2% vs 23.5% Briefing.com consensus.
Q4 EPS guidance $0.44-0.47 vs $0.43 Reuters consensus.
Q4 revenue guidance $22.4-22.8 bln vs $22.70 bln Reuters consensus.
(Data from Briefing.com)

Raising Volatility

2005-08-16T15:57:00.000-04:00

As Nasdaq has fell to new lows, implied volatility is raising. It was possible to buy QQQ September straddle with $1.45 earlier today, now you have to pay $1.70. CBOE Volatility Index (VIX) has spiked to 13.68. We will probably see raising VIX during the following days also.

Update 2: Analysis: NeuroMetrix Inc (NURO)

2005-08-16T15:36:00.000-04:00

There are some very interesting facts in Neurometrix (NURO) Form 10-Q. I have picked up the most important parts from this filing.

Form 10-Q for NEUROMETRIX, INC.

11-Aug-2005
Quarterly Report

We believe the ease of use, accuracy and convenience provided by the NC-stat System position it to become a standard of care for the assessment of neuropathies at the point-of-service.

In the first six months of 2005, our revenues grew 102.8% from the same period in 2004, generating $14.9 million in revenues, of which 88.1% was attributable to sales of NC-stat biosensors. Our gross margin percentage in the first six months of 2005 was 73.7%.

We derive our revenues from the sale of NC-stat biosensors, monitors and docking stations directly to end users, which are generally physician practice groups.

We have experienced and are likely to continue to experience an increased focus from third-party payers regarding the reimbursement of nerve conduction studies performed using the NC-stat System and an increased focus from third-party payers regarding the professional requirements for performing nerve conduction studies in general. Widespread adoption of the NC-stat System by the medical community is unlikely to occur if physicians do not receive satisfactory reimbursement from third-party payers for procedures performed with the NC-stat System.

A successful market expansion will depend upon, in part, our targeting of primary care and specialty physicians who traditionally have not been targeted by companies selling equipment used to perform nerve conduction studies and our ability to alter physicians' practices relating to the diagnosis of neuropathies. In order to successfully implement this growth strategy, we have increased our sales force to 30 regional sales managers as of June 30, 2005 and plan to more modestly increase our sales force.

In March 2005, we entered into an education and development program agreement with Eli Lilly and Company ("Lilly").

Eli Lilly and Company (LLY) is one of the factors to focus on. The agreement with Eli Lilly helps to spread the knowledge about NC-stat system among the physicians.

Through this agreement, our Company and Lilly expect to conduct a broad series of up to 84 educational and development programs across the country during 2005 and 2006. The focus of each program is on educating physicians regarding the treatment and diagnosis of diabetic peripheral neuropathy ("DPN"), nerve conduction studies, our NC-stat System and its application in DPN. During the second quarter of 2005, the first series of programs were conducted as originally planned. Lilly has a significant presence in the diabetes market, including drugs targeted at DPN.

Since our inception in 1996, we have incurred losses every quarter. We incurred net losses of approximately $8.7 million in 2001, $4.8 million in 2002, $3.7 million in 2003, $4.3 million in 2004 and $0.6 million in the first six months of 2005. We do not know whether or when we will become profitable. As of June 30, 2005, we had an accumulated deficit of approximately $58.1 million. We have financed our operations through the public and private placement of equity securities and through debt facilities including a line of credit.

Our financial objective is to achieve and sustain profitable growth. Our efforts in 2005 will continue to focus primarily on expanding our sales and marketing for the NC-stat System and continuing our ongoing program of making enhancements and improvements to the NC-stat System, with the goal of increasing our market penetration.

During the first six months of 2005 we continued efforts on improvements to our biosensors, on the development of new biosensors and on the development of a third generation monitor and docking station. We are also in the early stages of designing a drug delivery system for the minimally invasive treatment of neuropathies by both primary care and specialist physicians. We believe that the accomplishment of these goals will have a positive impact on our progress toward the objective of achieving profitability.

Biosensor units used:
2005 (three months ended June 30): 173,100 (change: 112.4%)
2004 (three months ended June 30): 81,500

The revenues of diagnostic devices have increased 79.4% and revenues of biosensors 89.9%.

The [revenue] increase was primarily due to an increased customer base for our biosensors, increased frequency of testing by our customers and the introduction of new biosensors.

During the 12-month period ending June 30, 2005, a total of 2,696 customers used our NC-stat System compared to 1,924 customers for the same period ending June 30, 2004. This represents a 40.1% year-over-year increase in the number of customers that used our NC-stat System.

We expect revenues to continue to increase in 2005 as a result of the recent expansion of our sales force.

However, our revenues could be negatively impacted by a variety of factors, including the level of demand for nerve conduction studies, potential for changes in third-party reimbursement for nerve conduction studies, the overall economy and competitive factors. In addition, we may experience seasonality in the third quarter of 2005 due to fewer patient visits and fewer physician working days during the summer months.

This may lead to a correction in the price of NeuroMetrix shares after the 3Q earnings release. As the potential setback is due to the seasonality issues, it might give a good opportunity to go long in NURO at that point.

Gross Margin

Diagnostic device gross margin percentage was 73.0% and 65.8% for the three months ended June 30, 2005 and June 30, 2004, respectively.

The increase in the gross margin percentage in the second quarter of 2005 compared to the same period in 2004 is primarily attributable to an increase in the list price of our NC-stat System from $3,500 to $4,000 effective January 1, 2005.

It seems that NeuroMetrix has found a really nice niche, if they can afford to raise prices but still grow the customer base.

Biosensor gross margin percentage increased to 74.2% for the three months ended June 30, 2005 from 73.8% for the same period in 2004. The small increase in biosensor gross margin percentage is primarily due to manufacturing cost reductions.

We anticipate our overall gross margin percentage will remain relatively consistent for the remainder of 2005. However, if sales volumes do not increase, if the mix of sales shifts further toward lower margin biosensors, if pricing pressures increase or if the cost of biosensors and diagnostic devices through our third-party manufacturers increases, then gross margin may be negatively impacted in future quarters.

Research and Development

R&D expenses increased $187,600, or 22.3%, to $1.0 million for the three months ended June 30, 2005.

As a percentage of revenues, R&D expenses were 12.8% and 19.6% for the three months ended June 30, 2005 and June 30, 2004, respectively. The increase in expenses was primarily due to an increase of $129,000 in employee compensation and benefit costs resulting from the hiring of additional employees in our R&D department, an increase of $112,000 in outside consulting costs and an increase of $92,700 in clinical development costs. These increases are primarily related to efforts expended on the development of a third generation monitor and docking station and improvements to our existing biosensors and the development of new biosensors.

For the remainder of 2005, we expect our spending on R&D will increase due to the hiring of several additional employees to support product development efforts and due to increased clinical study costs. We expect R&D expenses, as a percentage of total revenues, to continue to decrease slightly.

Sales and Marketing

Sales and marketing expenses increased $1.2 million, or 54.5%, to $3.5 million for the three months ended June 30, 2005 from $2.3 million for the same period in 2004. As a percentage of revenues, sales and marketing expenses were 43.3% and 52.7% for the three months ended June 30, 2005 and June 30, 2004, respectively. The change in expenses was primarily due to an increase of $1.0 million in employee compensation and benefit costs. This increase is due to the expansion of the sales force.

General and Administrative

General and administrative expenses increased $492,100, or 41.5%, to $1.7 million for the three months ended June 30, 2005 from $1.2 million for the same period in 2004. As a percentage of revenues, general and administrative expenses were 20.8% and 27.6% for the three months ended June 30, 2005 and June 30, 2004, respectively.

Total general and administrative expenses, as a percentage of total revenues, may increase in the second half of 2005 due to costs incurred in connection with Sarbanes Oxley compliance efforts.

Overall conclusion: things seem to go very well for NeuroMetrix. The stock price is also reflecting it, raising sharply from $10 to $30 in 4 months, and from $15 to $30 in 2.5 months.

Read further:
Yahoo! Finance: Form 10-Q for NEUROMETRIX, INC.

See also:
Update: Analysis: NeuroMetrix Inc (NURO)
Update 5: Live Action: Long NeuroMetrix Inc (NURO)

Overstock (OSTK) Insider Buy

2005-08-16T13:09:00.000-04:00

Patrick Byrne, the CEO of Overstock.com (OSTK) has purchased 20,000 OSTK shares yesterday. He has bought another 30,000 on August 11.

See also:
Mark Cuban shorting 10k of Overstock (OSTK) shares
Roberto's NasdaqTrader: Overstock Insider Buy

Mark Cuban shorting 10k of Overstock (OSTK) shares

2005-08-15T17:33:00.000-04:00

Mark Cuban writes the following:

In the interest of disclosure, I am short 10k shares of OSTK. I want to be short more, however the stock is impossible to borrow, the puts are expensive and it’s hard to get any volume off and I don’t know how to Naked Short a stock. If you or anyone you know has naked shorted a stock, or knows how or where I can,I would be curious to find out how it’s done, so please feel free to add it as a comment below.

Read further:
The Mark Cuban weblog: Wall Street - Fact is stranger than fiction

Will September be the Cruelest Month?

2005-08-15T17:13:00.000-04:00

The Big Picture referes to a Wall Street Journal's article:

The stock market doesn't always hit trouble in the fall, of course. But September long has been far and away the worst month for stocks.

And there is plenty to worry about this September: Oil is approaching $70 a barrel, the Federal Reserve is hard at work raising short-term interest rates, and September marks the quarter's end, when companies facing high analyst expectations may have to warn of profit disappointments.

Since 1900, September is the only month in which the Dow Jones Industrial Average has fallen more often than it has risen. The Dow industrials have fallen 1.2% in September, on average, making it the only month with an average decline of any significance.

More bull markets have ended in September than in any other month, according to Ned Davis Research of Venice, Fla.

Read further:
The Big Picture: Will September be the Cruelest Month?

Indices Testing First Level Support

2005-08-15T10:20:00.000-04:00

CANSLIM Investing writes:

After a fairly abrubt, unorderly pull back off the highs in the first couple days, this latest consolidation is actually shaping up to look fairly healthy. Friday's big drop wasn't a major concern considering volume levels were below average and less than the day before.

You see the Nasdaq bouncing off the first level of support of the upward trend line on Friday around 2150. The Naz looks as though it will hold that level, but if not the area of previous resistance around 2100 becomes the next major level of support.

See the link below for charts (with trend lines and supports).
I agree that the next major support is 2100 for Nasdaq. I'm afraid that the 2150 support doesn't hold for long, because other indices (DIJA, S&P 500) don't have the same formation and I think Nasdaq will run with them to lower levels.

Read further:
CANSLIM Investing: Indices Testing First Level Support

Shorting Baidu.com (BIDU)

2005-08-12T09:19:00.000-04:00

Reuters (via Briefing.com) about Baidu.com (BIDU):

Reuters reports that short sellers are licking their chops over Baidu.com Inc. with the stock still more than three times its initial public offering price even after ending down everyday but one since its spectacular debut. But nearly a week after the IPO, finding shares of the Chinese Web search engine to borrow and sell short is proving a major challenge, and those that are available command a hefty fee. "It's very hard to get," said one short-seller, who spoke on a condition of anonymity. He said he'd been trying to borrow the shares since they began their rocket-ship ride to $153.98 on Nasdaq on Aug. 5, their first day of trading.

Another trader who takes both long and short positions in stocks said that lending desks he's dealt with have told him that Baidu shares would be available to borrow -- but at an annualized interest rate of more than 50 percent.

Update: Today's Earnings: NVDA, DELL, CREE, DWA

2005-08-11T16:03:00.000-04:00

Update (August 11, 2005 4:03 PM):
DELL reports gross margin 18.6% vs 18.5% expectation. Trading down 4%.

Update (August 11, 2005 4:09 PM):
CREE EPS $0.29 vs $0.27 Reuters consensus; revenues $98.9 mln vs $99.59 mln Reuters consensus
CREE sees next quarter EPS $0.22-0.24 vs $0.29 Reuters consensus, revenues $101-104 mln vs $106.56 mln Reuters consensus
CREE trading down 5%.

Update (August 11, 2005 4:17 PM):
CREE issues guides for Q1, sees EPS of $0.27-0.29 vs. $0.29 consensus; sees Q1 revenues of $101-104 mln vs. $106.56 mln consensus.

Update (August 11, 2005 4:21 PM):
DELL reports EPS of $0.38 per share, in-line; revenues $13.43 bln vs the $13.71 bln consensus. Operating margin 8.7% vs 8.8 expectation; issues downside guidance for Q3, sees EPS of $0.39-0.41 vs. $0.41 consensus; sees Q3 revs of $14.1-14.5 bln vs. 14.63 bln consensus.
DELL -7%.

Update (August 11, 2005 4:24 PM):
NVDA $0.41 vs $0.34 consensus; revenues $575 mln vs $585.83 mln consensus.
NVDA reports gross margin 37.8% vs 36.5-37% company guidance. Trading up 1%.

Update (August 11, 2005 4:27 PM):
NVDA -1%. Still waiting for guidance, this should give the final direction. DELL is taking down the whole market, QQQQ -0.6% in after-hours.

Update (August 11, 2005 4:56 PM):
NVDA conference call about to begin. Yahoo! Finance: NVIDIA Corporation Earnings Conference Call (click to listen live audio stream).

Update (August 11, 2005 5:00 PM):
NVDA shares at $27.76 (-1.73%) just before the conference call meeting.

Update (August 11, 2005 5:20 PM):
NVDA trading at $29.58 (+4.7%) after giving outlook.
DWA reports EPS of -$0.06, revenues $35.4M vs $24.5M consensus, gives EPS guidance of $0.80-$0.90 vs $0.81 consensus. Shares trading up about 2%.

See also:
Today's Earnings: NVDA, DELL, CREE, DWA

Beauty stocks at bargain prices: Avon (AVP)

2005-08-11T15:40:00.000-04:00

Beauty stocks at bargain prices
MSN Money
By Michael Brush
8/10/2005

Problems have blemished the looks of cosmetics giants Avon and Estee Lauder. But their shares might prove attractive at reduced prices.

Sales at Avon Products (AVP, news, msgs) -- best known for its "ladies" going door-to-door -- were well below expectations last quarter in Europe, Russia and China. Its U.S. sales were down 6%.

The nastiest surprise for Avon shareholders last quarter came from China, where Avon sells beauty products through boutiques and department stores because the government -- until recently -- had a ban on door-to-door sales.

But their fears are misplaced, says Sophia Collier, a portfolio manager whose Citizens Value Fund (MYPVX) has been buying shares in the recent sell-off. "This is a little early to start saying China is not working."

One thing that will help: Avon remains the only company allowed to sell cosmetics door-to-door. That's just one reason Avon is about to see a return to rapid, yet sustainable, growth in China. The market could eventually be worth $1 billion in annual sales, the company says. Avon had $220 million worth of sales in China last year.

With this column, I'll add Avon to my Company Focus stock-pick portfolio for tracking, and we'll see how it does from here.

I'll add Avon's chart to this story:

Read further:
MSN Money: Beauty stocks at bargain prices

Today's Earnings: NVDA, DELL, CREE, DWA

2005-08-11T14:58:00.000-04:00

NVIDIA Corporation (NVDA)

EPS estimate:
current quarter $0.34 ($0.30-$0.36)
next quarter $0.33 ($0.26-$0.37)

Revenue estimate:
current quarter $585.69M ($555.00M-$600.00M)
next quarter $593.84M ($549.75M-$636.50M)

Briefing.com about Nvidia:

to keep sellers at bay, we think NVDA needs to hit the mark on Q2 expectations and provide guidance that doesn't allow for any potential downside relative to current consensus estimates for Q3 and the full year

NVDA earnings have a major impact on the price of the shares. So, you might expect at least 10% move on the financial data. I see NVDA more likely going down on the results. NVDA has made a great rally since the last report and there is not much room to go up. Markets have turned down lately, so investors might not forgive if Nvidia misses earnings or gives a down-guidance.

Other interesting companies announcing their results today:

Dell, Inc. (DELL)

EPS estimate:
current quarter $0.38
next quarter $0.41

Revenue estimate:
current quarter $13.71B
next quarter $14.63B

Although, Dell is a large-cap (market cap 95.32B) company, it's also easily able to make 5% moves.

Cree Inc. (CREE)

At first, notice the 16.80% of short interest. CREE is another big mover, can make at least 10% moves.

DreamWorks Animation SKG, Inc. (DWA)

EPS estimate:
current quarter $-0.07
next quarter $-0.02

Revenue estimate:
current quarter $27.68M
next quarter $32.34M

DreamWorks' life hasn't been easy, just 4 months ago it was trading above $40, now only at $24. There is considerably big possibility that DWA also makes a reasonable move on the earnings results.

So, don't forget to keep these companies on your watchlist today after market close.

Investors Intelligence Bull vs Bears

2005-08-11T14:11:00.000-04:00

Roberto's NasdaqTrader:

Bulls 59.1%
Bears 19.3%

Is that a major warning sign or what?

I agree, QQQQ has already come down to $39 from $40, but the Bulls/Bears ratio is still very high, so is implied volatility. I wouldn't be surprised to see QQQQ trading at $38 soon.

See also:
Strange options prices

Stocks to Watch: BCON

2005-08-11T09:48:00.000-04:00

BCON is currently trading at $2.88 (+19.5%). $2.98 and $3.05 are signifficant levels, first is yesterday's open price and the other is yesterday's highest and tuesday's close. Today's highest: $2.97.

Large-Cap Stocks to Watch

2005-08-11T09:34:00.000-04:00

Morningstar highlights some large-cap stocks that are selling at a discount in their opinion:

We began by screening for stocks that are part of the Morningstar Large-Cap Index. Next, we looked for companies that have consistently increased both revenues and earnings per share over the past several years. Finally, we added quality screens for return on equity and financial health.

They menioned the following companies:
3M Company (MMM)
Avon (AVP)
Johnson & Johnson (JNJ)
Paccar (PCAR)
Sysco (SYY)

Read further:
Morningstar.com: Large-Cap Stocks to Watch

Stocks to Watch: CMED

2005-08-10T11:46:00.000-04:00

China Medical Tech (CMED), having it's first trading day, is trading at intra-day support at $17. Watch this level carefully. If CMED shares bounce off or break this level, it's a trading possibility.

Positioning for fashion: BEBE

2005-08-10T11:38:00.000-04:00

Positioning for fashion
Reuters.com
10 Aug 2005

Bebe stores (BEBE) has been repositioning itself at a slightly higher price point while launching its BEBE SPORTS-branded stores. Its sales have started taking off, but other retailers are starting to miss earnings as the late, hot summer takes an early toll on the fall lines. Recently, the retailer appeared on the Reuters Select Strong Operating Margins screen. Investors might want to take a look at these fashions.

The company is not without risk, though. It wouldn't really surprise me if bebe were to miss its estimate for the fourth quarter of 2005.

My view on this, though, is that the company is making some good long-term changes, including an improved tracking system for its catalog customers, so it can start gearing mailings to individual shopping habits, and its price positioning. Retailers miss quarters, but if it's not a company-specific issue, it's not necessarily a big deal.

My analysis suggests a potential earnings growth rate of 21.3% for bebe stores, with the share price reflecting only about a 14.4% growth rate.

BEBE has bounced today to $27.17 (+2.34%), having support at $26.

Read further:
Reuters.com: Positioning for fashion

Cramer's 'Mad Money' Recap: When to Speculate

2005-08-09T20:02:00.000-04:00

There has been a lot of critisism about Jim Cramer lately, but I found an article, where he talked very reasonably. He calls attention to some really nice snippets about stock markets.

Cramer's 'Mad Money' Recap: When to Speculate
TheStreet.com
8/9/2005 7:02 PM EDT

Speculation is something that can keep investors interested and enthusiastic about their money, and it can even be necessary under the right circumstances, Jim Cramer said on CNBC's "Mad Money."

"I've got a long track record, and almost all of my biggest wins have come from pure speculation," he said. "You must learn how to do it right. You've got to know the rules before I give you permission to use the tools."

"We do not want to speculate on companies with bad balance sheets. You can speculate in the young companies and the ones with good balance sheets."

"Luck should not be part of the equation," he said, and he recommended against using margin for speculation.

Cramer also spoke about the importance of market bottoms, which are good buying opportunities if called correctly -- and of course that's the hard part. Don't rely on technical analysis alone, Cramer said, because fundamentals must also be considered. Clues to a market bottom include sentiment reaching very low levels and bulls capitulating and becoming bearish.

For the strategy to work its best, "you need to be right, when almost everybody else in the market is wrong," he said.

I agree with his last words about acting controversially to others. This is basically the old saying: Buy when there's blood in the street.

Read further:
TheStreet.com: Cramer's 'Mad Money' Recap: When to Speculate

Update 5: Live Action: Long NeuroMetrix Inc (NURO)

2005-08-09T09:46:00.000-04:00

NeuroMetrix (NURO) break to all time high today in early trading, currently at $25.55 (+2.16%). NURO has raised already 56.5% since I made a trade less than two month ago. I am not selling it right now, hope to see even higher levels.

See also:
Update 4: Live Action: Long NeuroMetrix Inc (NURO)
Live Action: Long NeuroMetrix Inc (NURO)

Stocks to Watch: ELN

2005-08-09T07:07:00.000-04:00

Elan Corp PLC (ELN) is trading up 28% in pre-market. Biogen Idec and Elan Announce TYSABRI(R) Safety Evaluation Update.

See also:
Yahoo! Finance: Biogen Idec and Elan Announce TYSABRI(R) Safety Evaluation Update

Saying Goodbye to Buy-and-Hold

2005-08-08T16:59:00.000-04:00

Today, I ended up reading some articles about buy and hold strategy. Actually, on articles, saying that buy and hold is not going to produce satisfying returns.

Gregg Greenberg at TheStreet.com writes:

One such pro straying from the conventional wisdom is Jeff Knight, portfolio manager for the Putnam Asset Allocation Growth and Putnam Asset Allocation Balanced funds. Knight is forecasting a long-term, low-return world in which traditional buy-and-hold investing will not produce the kinds of returns to which American investors have grown accustomed over the past half-century.

Instead, Knight believes the best strategy for beating the indices going forward is to shuffle nimbly between asset classes and world markets.

Roger Nusbaum comment on Knight's viewpoint:

While I am not sure the extent to which I agree with the better returns through more trading, the argument is compelling and it is worthwhile to think about what you should do if we are going to have below average returns for a while to come.

More active trading, if you're good at it might make sense but I do not think this is easy for most people.

Jack Rothstein reveals his plans for near future:

Considering the current market and the action it displays, the ability to pick stocks is critical to achieve positive performance. This is a stock pickers’ market. The major averages are providing inadequate returns. The performance of the DOW has been a drag. Look at the tape and see the reality. Small and mid-cap stocks are making new highs. That is where the leadership is. That is where the money is being made during the current trend.

Nasdaq is cooling off a little and I agree that one shouldn't make too big bets on the rise at the moment. At least until Nasdaq manages to break the new minor downtrend. I don't suggest stock-picking, but just maybe staying off some days.

See also:
TheStreet.com: Saying Goodbye to Buy-and-Hold
Random Roger's Big Picture: "Saying Goodbye to Buy-and-Hold"
Jack Rothstein: Longs and Shorts

Stocks to Watch: NFLX

2005-08-08T15:57:00.000-04:00

Netflix (NFLX) showing strength, it may be carried on tomorrow.

Stocks to Watch: WRSP

2005-08-08T11:40:00.000-04:00

Worldspace Inc (WRSP) is trading at $17.59 (-12.05%), almost 3.5 points below it's recent IPO price.

Chinese Internet Sector: Baidu.com, 3721.com

2005-08-08T11:33:00.000-04:00

Google signs up first AdWords partner in China
Reuters
Monday 8 August 2005, 0:25am EST

SHANGHAI, Aug 8 (Reuters) - Google Inc. has agreed to sell its popular AdWords advertisements in China through a local firm.

China Enterprise, a provider of IT services and a subsidiary of Hong Kong-listed Sino-i Technology Ltd. (0250.HK: Quote, Profile, Research), has been authorised to sell the Google AdWords service -- used in markets around the world -- in China.

Rival Yahoo Inc. (YHOO.O: Quote, Profile, Research) made its big move into China in 2003, with the $120 million purchase of a popular local search site, 3721.com.

OK, what does this article tell us? First, Yahoo made a real bargain deal with 3721.com, paying only $120 compared to Baidu.com $4 billion market cap. According to Alexa.com, the traffic rank for baidu.com is 6, and the rank for 3721.com is 14. By the way, 3721.com has mp3 search as well.

Next, it's really tough for Baidu to beat China Enterprise, the local Google AdWords provider. I tend to believe that Google has more money and possibilities to make a revenue than Baidu (although, Google owns 2.6% of Baidu.com also). Taking this into account, why is Baidu.com trading at 35 times at sector revenue?

See also:
Reuters: Google signs up first AdWords partner in China
Roberto's Nasdaqtrader: Google Adwords Lands Chinese Partner

Quotes on the Baidu (BIDU) IPO

2005-08-08T08:15:00.000-04:00

There are some funny quotes on China Net Investor blog about Baidu's (BIDU) recent IPO (found the link via Trader Mike blog).

I'll cite some of those:

"Even with increased revenue and net income results for Q2 (around $8 million), this deal has got to have Benjamin Grahm rolling in his grave. Consider that CBS Marketwatch cited a IDC report as saying the entire China online ad market was $130 million in 2004. Now I think Baidu may surpass a $1.3 billion market cap by the end of first day of trading (China Net Investor: Baidu now has a market capitalization of $3.92 billion!), and if that happens, then I must say that I don't know of that many other companies that trade at 10x INDUSTRY revenues, even if the industry happens to be growing real fast."
Philip Lin, former executive at private equity firm, Kluge & Company; entrepreneur-in-residence at Kleiner Perkins

"This one is the return to the Internet bubble"
John Fitzgibbon, analyst in New York with IPODesktop.com

And the best one:

"Baidu.com's P-E ratio is sick"
Enzio Von Pfeil, chief executive of Commercial Economics Asia Ltd., who stressed he was speaking for himself and not his company.

Read further:
China Net Investor: Quotes on the Baidu (BIDU) IPO

See also:
Baidu.com (BIDU) IPO

Baidu.com (BIDU) IPO

2005-08-05T09:52:00.000-04:00

Trader Mike has a post about Baidu.com IPO (Briefing's profile):

Baidu.com prices its IPO at $27, above the $23-25 estimated range, which had already been raised form $19-21. The co, which is called the "Google of China" by some, is the most used Chinese language Internet search provider. Baidu.com was the second largest website in China and the sixth largest website globally, as measured by user traffic during JulQ.

Our Take: There is a lot of excitement about this deal as it's the largest search engine in a booming emerging economy. Also, its small size of 4.04 mln shares and the recent strong reports from fellow Chinese tech names (NTES, CTRP) is driving interest in the name. This is being led by CSFB and Goldman Sachs. Briefing.com Note: Telecom Communications (TCOM.OB) has seen a 49% advance since highlighted on Briefing Trader as a secondary play to the Baidu IPO.

PS! Baidu.com has been sued because of their mp3 search, but it probably won't slow down investor's exitement too much. Baidu.com had very successful IPO, so there are a lot of traders focusing on it right now.

Update (August 5, 2005 13:52):
Baidu.com (BIDU) is up more than 280%! Amazing!

See also:
Trader Mike: IPO Watch: Baidu.com (BIDU), the Google of China?

Performance Reviews

2005-08-05T02:02:00.000-04:00

There is a really good reading on The Kirk Report blog. A trader talks about his performance so far in 2005. The best part is his analysis why, compared with previous years, the performace is below the average. He points out some possibilities what came to his mind:

Failure to capitalize
Lack of focus
Sitting in cash
Incorrect position sizing
Too much day trading

I believe it will make some of you smile in recognition at the mistakes he did. At least I feel that these issues have dragged down my performance also and I should work on these.

Read further:
The Kirk Report: My Performance Review

How many stocks do you follow?

2005-08-04T16:33:00.000-04:00

Roger Nusbaum comments on Jim Cramer, the number of stocks one trader can follow and porfolio diversification:

According to what I heard, the judge has 37 stocks which Cramer feels is too many. Cramer said he has a research staff and even so only has time for 25 stocks.

Obviously I believe in using individual stocks where possible. Most accounts I manage have 40-45 stock holdings.

Clearly, thinking about all of these different things and building a portfolio to address all of them is not something that everyone will want to do or have time to do. This is where do-it-yourselfers can employ various tools to blend together a properly diversified portfolio.

Read further:
Random Roger's Big Picture: Interesting Comment

VIX conundrum

2005-08-04T11:47:00.000-04:00

Bill Cara on VIX:

VIX, in my view, may have been a good technical indicator in the past, but I too have recognized its dubious nature in the past year.

In addressing the VIX issue, and not my own concerns, I understand that VIX is a measure of how volatile future markets will likely be, according to the participants themselves. As the next reader comments, there has been a revolution in risk management, and I understand that as well.

I do not understand, however, how so many capital managers today can honestly believe they can trade out of situations caused by extreme events, such as the Kerkorian bid for close to a billion dollars worth of GM stock at very high prices, or a Crude Oil contract that could zoom or collapse, or a major dump of USD by an Asian Pacific central bank, and so forth.

Read further:
Bill Cara: VIX conundrum, Wed., August 3, 2005, 6:22 PM
Bill Cara: More on VIX conundrum, Thur., August 4, 2005, 9:46 AM

Update: Today's Earnings: SINA

2005-08-03T16:33:00.000-04:00

SINA EPS $0.21, revenues $46.1, both inline with estimates.
SINA sees Q3 revenues $49-52M vs $50.82M consensus.

SINA shares are trading at $27.70 at the moment, sudden dip from $30, but seems to be recovering already a little...

See also:
Today's Earnings: SINA

Today's Earnings: SINA

2005-08-03T16:07:00.000-04:00

Sina Corp (SINA) will announce its earnings later today.

Analyst estimates: EPS $0.21, revenue $46.49M.

SINA makes big moves on earnings, so keep a close eye on it tomorrow morning.

Update (August 3, 2005 4:20 PM):
We are seeing some action with SINA. Closed at $29.03, but now trading above $30.35 already.

Stocks to watch: NFLX

2005-08-03T15:39:00.000-04:00

Netflix (NFLX) is struggling with $21. There is a big order at $21 (ask) at the moment. If it breaks $21, it may surge up even more.

Update (August 3, 2005 3:47):
NFLX breaks $21, ran up to $21.17.

SEC Extends Compliance for Sub-Penny Rule

2005-08-03T15:34:00.000-04:00

Ant & Sons: Word on Wall Street writes:

The Securities and Exchange Commission extended the compliance date for Rule 612 of Regulation NMS, also known as the Sub-Penny Rule. Rule 612 will prohibit market participants from submitting quotations or orders in NMS stocks in increments below $0.01, except that quotations or orders priced less than $1.00 may be priced in increments as small as $0.0001. Brokerage houses will likely cheer this move as it will increase the spread on the bid and ask of most stocks. However, traders will not be smiling as the competitiveness of trading orders will be more limited than before, decreasing liquidity. Orginally, this regulation adopted a compliance date of August 2, 2005, but now that date has been extended until Jan. 31, 2006.

Update 2: Briefing.com Launches Special Situations Trader

2005-08-03T13:12:00.000-04:00

Briefing Trader:

Briefing Trader Beta Period Concludes Today

Thank you for previewing the Briefing Trader product. We appreciate all of the feedback and hope that we helped you make money while previewing the product.

They will continue to offer Briefing Trader with $300 monthly (or $3000 yearly) fee after today. Quite expensive service, but they do have some quick and accure comments. I don't know, if it is worth $300 a month or not, the beta testing time was too short for me. The news feed was faster than their Platinum subscription service offers.

See also:
Update: Briefing.com Launches Special Situations Trader
Briefing.com Launches Special Situations Trader

Strange options prices

2005-08-03T10:29:00.000-04:00

QQQQ (Nasdaq 100 index tracker) Aug $40 options calls are trading at $0.80/$0.85 and puts are trading at $0.70/$0.75. What makes it strange, is QQQQ price. QQQQ is trading below $40 (~~$39.50~~$39.95). Puts should be more expensive than calls in this situation, does everyone see the market in too positive light (and too less fear for correction)? If so, it might go just the opposite way than the market expects.

Update (August 3, 2005 11:56 AM):
In reply to the comments I'll add a chart to show some warning signs:

I am definitely not saying that QQQQ will go down (I would buy puts myself, if I was so sure), just pointing out that the rise is not so easycoming as the market predicts (according to the prices of QQQQ Aug $40 calls and puts).

Correction (August 3, 2005 12:34 AM):
Of course, QQQQ was trading at $39.95, not $39.50 as I wrote. Sorry for the typo!

August Selloff Beginning?

2005-08-03T09:31:00.000-04:00

John Mugarian writes:

Despite the recent rise in the market, insiders continue to sell at a rate of 3 sellers for every 1 buyer. In addition, many of the insider purchases are among "no name" stocks. While the tech stocks continue to be touted by guests on the financial channels, the technical rankings among the group has been moving lower. This indicates that stock prices have moved above earnings expectations.

We need to remember that the tech sector has not come back into favor, it is just drawing attention. The summertime move in tech reminds me of a similar move in 1994 just prior to a nasty selloff. While I cannot rule out another move higher later in the year, I need more confirmation among the entire sector before I get excited.

Read further:
John Mugarian's Investor Alert: August Selloff Beginning ?

Update 2: Live Action: IAC/InterActiveCorp (IACI) options

2005-08-02T07:52:00.000-04:00

IAC/InterActiveCorp (IACI) reports earnings of $0.30 per share (excluding non-recurring items), $0.05 better than the Reuters Estimates consensus of $0.25. IACI reports revenues $1.96B vs the $1.8B consensus.

See also:
Update: Live Action: IAC/InterActiveCorp (IACI) options
Live Action: IAC/InterActiveCorp (IACI) options

Stocks to Watch: MDII

2005-08-01T16:23:00.000-04:00

Keep an eye on MDII, it raised more than 80% today and is up even another 20% in after hours.

Update: Google – Heading to $300 or $280?

2005-08-01T15:50:00.000-04:00

Briefing Trader comment on Google:

After holding support at its 50-day simple moving average (286.92) on Friday, the stock is staging move towards Friday's high of 292.84 late in the day here. If you took this "gimme" at the 50-day sma when we pointed it out on Friday afternoon, would look to lock in some profits as it nears Friday's high and trail a stop for the balance.

Google – Heading to $300 or $280?

Live Action: Williams Companies (WMB) calls

2005-08-01T14:08:00.000-04:00

I just bought a few Williams Companies (WMB) Aug $22.5 calls with $0.25 as WMB made a new intraday (and 52w) high at $21.66.

Jack Rothstein has also featured this stock in his blog.

Update: Live Action: IAC/InterActiveCorp (IACI) options

2005-08-01T11:36:00.000-04:00

I got the "final" part of my IACI options position: IACI Aug $30 calls with $0.10.

I makes the total cost of the position $2.60.

I basically got a $27.50 straddle and $25/$30 strangle with this price.

Currently, the relevant options (to get the same position) are trading between $2.95 (bid) and $3.20 (ask). So, my position is already 13.5% to 23.1% in profit at the moment, but I am probably not selling any of it before tomorrow.

See also:
Live Action: IAC/InterActiveCorp (IACI) options

Update: About Options Trading, Implied Volatility

2005-08-01T11:27:00.000-04:00

Roger Nusbaum has also commented the Barron's Striking Price column:

This week's Striking Price column profiled a do-it-yourselfer who very successfully maintains an account with 10-12 positions of naked puts.

The article devoted a little space to the what can go wrong part of this strategy but I would have like to have seen a little more. I don't doubt the success of the investor profiled but the way the article was written it made it seem like he was taking a tremendous amount of risk by way of being over leveraged.

The downside of this is a drop in the market. If the market goes down by 3% a $500,000 account would go down in value by $15,000. That same $15,000 hit to a leveraged $100,000 portfolio is obviously a 15% hit.

This is quite much what I wanted to say. I don't doubt that it's possible to earn money by selling naked puts, but you really must be at home with options and trading. And you have to have a good money management to survive.

Read further:
Random Roger's Big Picture: Barron's And Naked Puts

See also:
About Options Trading, Implied Volatility

Live Action: IAC/InterActiveCorp (IACI) options

2005-08-01T10:17:00.000-04:00

I finished buying IAC/InterActiveCorp (IACI) options position. I got the following options (relative amount in the parentheses):
IACI Aug $27.5 calls (2 x): $0.575
IACI Aug $27.5 puts (1 x): $1.10
IACI Aug $25.0 puts (1 x): $0.25

The total price for this options position: $2.50.

I am thinking of adding some IACI Aug $30 calls with $0.10 to $0.15 also, but I am not sure of this yet.

IACI will release its earnings tomorrow before market open. Analyst estimate EPS of $0.25 ($0.23-$0.27) and revenue of $1.77B ($1.63B-$1.86B).

I expect IACI to make a big move on the earnings.

Google – Heading to $300 or $280?

2005-08-01T07:39:00.000-04:00

I read some of my favorite blogs and found that everyone is giving optimistic comments about Google (GOOG) at the same time.

Michael (Trader Mike) points out that GOOG is right on the 50 DMA and stohhastics show that the shares are oversold.

The Knight Trader says that "Google, Inc. the stock is getting oversold and sitting right at the 50 dma. If GOOG can get support at the 50 dma this might be a buying opportunity."

Roberto's NasdaqTrader:
"I picked up some (GOOG) call options here as the stock has held the 50 dma and the volume is light on this sell off. Stop will be right under the 50 dma."

Stephen Vita (Alchemy of Trading) in his Charts Of Interest about Google:
"Buy pullback to 50 day?"

I surely don't underestimate their knowledge and skills about technical analysis, I just don't like the situations where everyone gets too optimistic about a stock. It's 50:50 (or even 51:49 ;) ) for me at the moment. I see Google going down to $280 with the same probility as going up to $300. One thing I have learned by trading Google is that Google knows how to fool traders and it makes a lot of fake moves.

PS: Google is trading at $288.74 (+0.98; +0.34%) in pre-market.

See also:
Trader Mike: Charts, Charts and Even More Charts
The Knight Trader: GOOG Chart
Roberto's NasdaqTrader: GOOG Option Trade
Alchemy of Trading: Sunday Notes From The Trading Turret: Stra-Tee-Gerists

About Options Trading, Implied Volatility

2005-08-01T06:14:00.000-04:00

Stephen comments a Barron's column in his blog:

Barron's had some interesting stuff this weekend, and I was particularly intrigued by the decision of Kopin Tan -- who pens a lightweight column that leans heavily on useless "strategist" drivel -- to highlight the trading talents of a retail Put-Seller who brags, "if you had $127,730 and wanted to make 27% return a year", he asks, "how would you do it?"

That's a rhetorical question, you understand, and the answer is "put selling."

The more I think about it, the more amazing it is that Mr. Tan and his editor would publish something like this with Volatility plumbing the depths.

But what do I know.... according to Tan the guy "attended trading seminars to learn about options", so I suppose he qualifies as an expert.

And something else....I think that there is more of this sort of thing going on than you can imagine -- including Call Selling, a really, really suicidal gig -- but we won't know for sure until the Big Flood comes in and shows where all the bodies are buried.

Yes, then we'll know which Option Sellers completely relied on Normal Curve and Textbook Probability Distributions, not understanding the concept of "Fat Tails."

If you think I'm talking anatomy, then you and Copin' Kopin are on the same wavelength.

I couldn't agree more with Stephen on this issue. Selling naked options today (I don't take into account stock-picking, but we are talking about overall market, ain't we?) is real suicide. Take a look at the following graph, showing the implied volatility of QQQQ (NASDAQ-100 Index tracker):

I have done the exact opposite way and have a QQQQ straddle bought recently in my account. As you see, the volatility is at extremely low levels currently. You always have to look the price/risk ratio. How much room there is for QQQQ volatility to go down? And how much room for growth? What do you think global uncertainties (London bombings, the death of Saudi's King, etc) will do with volatility? Sure, it will help to boost it up.

See also:
Alchemy Of Trading: Sunday Notes From The Trading Turret: Stra-Tee-Gerists

Breaking News: King Fahd of Saudi Arabia has died

2005-08-01T05:19:00.000-04:00

Saudi King Fahd dead
CNN
Monday, August 1, 2005 Posted: 0815 GMT (1615 HKT)

(CNN) -- Saudi Arabia's King Fahd -- whose reign was marked by unprecedented prosperity, but whose close ties with the United States stirred the passions of Islamic militants -- has died, Saudi Arabia's information minister announced Monday.

Dalek Weblog:

King Abdullah has stated that the Saudi oil policy will remain intact.

Gopinion:

Crude-oil futures topped $61 a barrel early Monday on news of the death of King Fahd. Oil prices already were higher on U.S. refinery outages, but the Saudi king’s death gave them an additional boost.

Front-month September light sweet crude reached a high of $61.11 a barrel in electronic trading on the New York Mercantile Exchange, before falling back to $60.88 a barrel, was up 31 cents.

Read further:
CNN: Saudi King Fahd dead
BBC News: King Fahd of Saudi Arabia dies

See also:
Dalek Weblog: the king is dead, long live the king
Gopinion: King Fahd dead

Human Behaviour – The Greatest Barrier To Trading Success

2005-07-31T10:59:00.000-04:00

Australasian Investment Review writes about human psychology, rationality and how it affects investing and trading. They point out that overtrading is one common mistake of overconfidence which drags down annual returns. The Big Picture has added some comments to this article. You can also read 2 posts in my blog about overtrading (see the links below).

Human Behaviour – The Greatest Barrier To Trading Success
Australasian Investment Review
May 30 2005

Have you ever held on to a stock too long, in the vain hope it would return to the price at which you bought it, even though you knew in your heart of hearts this was unlikely to happen? Well, you’re not alone.

Tilson suggests that one of the biggest problems facing human investors is that they tend to be overconfident in their view of things. Not just "robustly", but "wildly" overconfident. He provides the following statistical examples:

- 82% of people say they are in the top 30% of safe drivers;
- 86% of Harvard Business School students say they are better-looking than their classmates;
- 68% of lawyers in civil cases believe their side will prevail;
- 81% of new business owners think their business has at least a 70% chance of success, but only 39% think any business like theirs would be likely to succeed;
- Mutual fund managers, analysts, and business executives at a conference were asked to write down how much money they would have at retirement, and how much the average person in the room would have. The average figures were $5 million and $2.6 million respectively.

Tilson explains overconfidence by suggesting that people generally remember failures very differently from successes. Successes were due to one’s own wisdom and ability, while failures were due to forces beyond one’s control. Thus people will tend to believe that with a little better luck or fine-tuning, the outcome will be much better next time.

Overtrading is a fine example of overconfidence, Tilson suggests. In a study of 78,000 individual investors at a large US discount broking house during 1991-96, average annual turnover was around 80%. The least active quintile, with an average annual turnover of 1%, scored a 17.5% annual return. The S&P return was 16.9% over the same period.

The most active 20% of investors, with annual turnover of greater than 100%, scored a 10% annual return.

Read further:
Australasian Investment Review: Human Behaviour – The Greatest Barrier To Trading Success

See also:
The Big Picture: Human Behaviour as a Barrier To Trading Success
Saving Money by Doing Nothing
Avoid Overtrading By Pausing After Losses

Market Anomalies

2005-07-29T18:14:00.000-04:00

RoboTrader writes about well known (plus some not so well known) market anomalies:

"The Efficient Market Hypothesis on Trial: A Survey", by Philip S. Russel and Violet M. Torbey, contains references to interesting research and commentary on:

The January Effect. "...higher mean returns in January as compared to other month...support a tax-loss selling explanation of the effect."

Other Seasonal Effects, e.g., holiday and turn of the month effects. "US stock returns are significantly higher at the turn of the month, defined as the last and first three trading days of the month...returns are, on average, higher the day before a holiday

Read further:
RoboTrader: Market Anomalies

Update: Live Action: Yahoo (YHOO) puts

2005-07-29T15:58:00.000-04:00

I sold my Yahoo (YHOO) Aug $35 puts with $1.80. Total profit +38.46% in 2 days with YHOO options. I believe that YHOO trades down next days, but I didn't want to stay over the weekend with the options (due to the time decay).

See also:
Live Action: Yahoo (YHOO) puts

Stocks to Watch: ITWO

2005-07-29T09:25:00.000-04:00

ITWO trading at $21.10 (+62%) in pre-market. ITWO beated earnings expectations.

See also:
Today's Earnings: JILL, BOBJ, LEXR, ITWO

Today's Earnings: JILL, BOBJ, LEXR, ITWO

2005-07-28T17:12:00.000-04:00

Some movers on earnings reports in after hours trading.

The J. Jill Group Inc (JILL)
Reports EPS of $0.19 vs consensus of $0.00; revenues $117.4 mln vs $115.9 mln consensus
Trading at $15.50 (+9.54%)

Business Objects SA (BOBJ)
Reports EPS of $0.32 vs consensus of $0.27; revenues $262.4 mln vs $254.5 mln consensus
Trading at $31.50 (+9.00%)

Lexar Media Inc (LEXR)
Reports EPS of -$0.06 (including one-time items) vs consensus of -$0.15; revenues $189.3 mln vs $200 mln consensus.
Trading at $5.02 (-6.52%)

I2 TECHNLOGIES NEW (ITWO)
Reports EPS of $1.66 vs -$0.23 consensus; revenues $98.5 mln vs $75.65 mln consensus
Trading at $14.85 (+14.23%)

Trade Center Inc. Interview: Dean Hoffman

2005-07-28T16:55:00.000-04:00

There is an interview between Scott Hicks of Trade Center Inc. and Dean Hoffman on Michael Covel's web site. Quite interesting.

Trade Center Inc. Interview
July 26, 2005

Scott Hicks. What is your entry method to the market?
Dean Hoffman. My primary entry is based on some form of trend recognition. It is not merely a function if price but rather a combination of algorithms and filters. I also use money management overlays for position sizing considerations, as it's a critical component.

Q. How important are the entry and exit points for you?
A. Entry's and exits are much more important than they used to be.

Q. You are a systematic trader, what do you tell clients who believe in using fundamentals in trading?
A. Good luck, I've never seen it work over the long run. The problem is that the leverage in futures is so large that even if your long-term fundamental opinion is correct you can still lose all your money 100 times before the market goes the anticipated direction.

Q. As a trend-follower, I can assume that you don't shoot for 100% winners. What are your goals in terms of successful winning trades?
A. I'm happy with 40% winners. Percentage of winning trades has very little to do with success. Some of the worst systems I know of have a very high percentage of winners. Focusing on percentage of winning trades is fools gold.

Q. Is there such as thing as an optimum time frame to hold a position?
A. I've found it very difficult to build good winning systems with time frames much under a few weeks.

Read further:
Michael Covel: Trade Center Inc. Interview

Update: Live Action: BUD calls

2005-07-28T12:48:00.000-04:00

I was forced to close my BUD options position. I had a limit order at $0.40 and it was executed just some time ago (I was away from my computer at this very moment) as BUD made a nice intra-day rally from $44.50 to $45. I bought the calls with $0.35 and had a really small amount, so it didn't make me rich to profit +14.28% (but still only $0.05 for a contract) ;)

See also:
Live Action: BUD calls

Trading during Earnings Season

2005-07-28T12:44:00.000-04:00

There is a post in Earnings Trader blog that writes a little about trading in earnings season. He focuses on straddles, this is what I also do occasionally. Straddles are definitely not free launch in Wall Street, but if you are good enough in picking the right stocks, then it can be profitable (like any other strategy or trading system).

There are many traders who often use option straddles to play earnings. Basically, with straddles you dont care which way the stock moves. All you care is that it MOVES. A long straddle is long 1 call and long 1 put at the same strike price and expiration and on the same stock. Such a position makes money if the stock price moves up or down well past the strike price. The beauty of this approach is that risks are limited, and there's a potential unlimited (hmmmm) profit potential.

As they say, every system, every model, every style, generates losers eventually. But in trading, if we can win two out of three times, and exercise sound money management principles, we can generate profits.

Here are a couple of links that describe in brief how straddles work.

Event-Driven Trading

Straddles and Strangles

Read further:
earnings trader: Earnings report for July 29

Hedge fund cash flow still strong

2005-07-28T12:24:00.000-04:00

I found the following Financial Times article via Hedge Fund Street blog:

Hedge fund cash flow still strong
Financial Times
By Tony Tassell
Published: July 27 2005 17:42

Hedge funds continued to see inflows of new money in the second quarter, defying concerns that lacklustre investment returns from the asset class might trigger a rush of redemptions.

The global hedge fund industry saw net inflows of $10.9bn in the second quarter, lifting total assets under management to a record $1,025bn, according to data from Hedge Fund Research.

Read further:
Financial Times: Hedge fund cash flow still strong

Live Action: BUD calls

2005-07-27T15:42:00.000-04:00

I just bought some BUD Aug $45 calls with $0.35. Playing on the bounce, BUD support at $44.62. Currently BUD shares have dipped slightly through the support, but I still believe, it closes above it today.

Too bad I sold my puts so early, they are trading at $0.90 at the moment (+64%).

See also:
Update: Live Action: BUD puts

Update: Live Action: BUD puts

2005-07-27T15:02:00.000-04:00

I covered the BUD options position at $0.60. Total profit +9.09%. I missed the best place to sell ($0.75).

See also:
Live Action: BUD puts

Live Action: BUD puts

2005-07-27T14:33:00.000-04:00

I just bought some BUD Aug $45 puts with $0.55. BUD missed the earnings and lowered guidance.

Live Action: Yahoo (YHOO) puts

2005-07-27T10:25:00.000-04:00

I just bought a few Yahoo (YHOO) Aug $35 puts with $1.30 on technical reasons (see below). Implied volatility is also low at the moment (around 23%), so it minimizes the risk. I have a possibility to get profit if YHOO shares fall and/or implied volatility rises.

I'll probably stop out if the shares rise above $34.55.

Choosing the best option

2005-07-27T08:45:00.000-04:00

Peter Stolcers writes in Options Trader Magazine how to choose the best options for swing trading instead of buying stocks directly. In my opinion, his story is a little too simplified and doesn't reflect the full reality (especially when he speaks about point-for-point moves). It's still worth reading to get some idea of options trading.

Choosing the best option
Options Trader
By Peter Stolcers
July 2005

In today’s market, an overnight stock position can cause insomnia and devastating losses. Swing traders who typically hold positions for two or three days should consider buying options to potentially limit their risk. Finding the “right” option to trade plays a large role in the success of this approach. Options may or may not be a suitable trading strategy for you.

If the options have more than a week until expiration and are trading within 50 cents of their intrinsic value, they present an opportunity because they are a low-cost, limited-risk approach that controls the shares of the underlying stock without being
exposed to time premium decay. If the options have more time premium than 50 cents, you may need to go one strike further in-the-money.

This is a surrogate stock position with less risk since you can only lose what you paid for the option if you buy one option contract for every 100 shares of stock you intend to purchase. This is an important point. Many traders will increase their leverage by trading more options. Why? Because they can. More is better, right? Wrong!

To find options that are trading close to parity, we need to focus on the front month because those options don’t carry as much time value.

Front-month options that are only one or two strikes in-the-money generally have good volume. This normally narrows the bid-ask spread and may make it easier to get in and out of the trade.

Read further:
Options Trader Magazine (free subscription required)

Merrill Lynch: Hedge funds buy dollars, sell euro; long Nasdaq 100

2005-07-26T08:18:00.000-04:00

A Merrill Lynch research about hedge funds action lately (via Roberto's NasdaqTrader).

Hedge funds buy more dollars, sell euro -Merrill
Reuters
Mon Jul 25, 2005 10:52 AM ET

LONDON, July 25 (Reuters) - Hedge funds bought more dollars, added to their short euro positions and went long of U.S. technology sector benchmark Nasdaq 100 in the week to July 19, research by Merrill Lynch showed.

Hedge funds covered record net short positions on the Nasdaq 100 and took on a net long position. "The long position is not near an extreme level, leaving room to add to the positions," Merrill said.

Read further:
Reuters: Hedge funds buy more dollars, sell euro -Merrill

Today's Earnings: CNET

2005-07-25T14:59:00.000-04:00

Today's earnings:
American Power Conversion Corp. (APCC), EPS estimate $0.20;
CNET Networks, Inc (CNET), EPS estimate $0.03;
Netflix (NFLX), EPS estimate $0.01;
Nissan Motor Co. Ltd. (NSANY);
Volvo AB (VOLVY), EPS estimate $1.24;
Zerox Corporation (XRX), EPS estimate $0.23.

SmartMoney bets on CNET ahead of earnings (via The Internet Stock blog). Some of the key points according to SmartMoney:

Acquisition target
Strong growth
Strong growth in Internet advertising
Stock price momentum
Strong growth in retail electronics spending
New products
International improvement

Talking Emerging Markets With Mark Madden

2005-07-25T08:41:00.000-04:00

Talking Emerging Markets With Mark Madden
TheStreet.com
By Gregg Greenberg
7/22/2005 7:26 AM EDT

OK. How much longer can this bull market run?
Emerging markets began outperforming most developed markets in 2001. Nevertheless, 2001 and 2002 were dramatic down years in the global equity markets, so the emerging markets were also down modestly in those years. Even so, the outperformance relative to the developed markets began in 2001 and has continued since then. We expect overall outperformance to continue for several more years.

Which developing markets show the greatest promise?

In our view, some of the more attractive markets are Brazil, Turkey and India.

What are your prospects on the dollar?
I believe the direction of the dollar from here will depend on the U.S. consumer. If consumption continues to be strong, then I would expect the dollar to remain stable at these levels; however, if the consumer slows down and the economy hits a rough patch as a result of it, I would expect the Fed to back off on rate hikes and perhaps even reduce rates again while simultaneously allowing the dollar to weaken further.

Read further:
TheStreet.com: Talking Emerging Markets With Mark Madden

Update 6: Live Action: Sandisk (SNDK) straddle

2005-07-22T15:14:00.000-04:00

I sold the last part of SNDK puts also with $0.15.

The total price for the options position was $5.30. This makes the total profit of +30.86% as I purchased the options with $4.05.

Update 5: Live Action: Sandisk (SNDK) straddle
Live Action: Sandisk (SNDK) straddle

Update 5: Live Action: Sandisk (SNDK) straddle

2005-07-22T09:37:00.000-04:00

Huh, busy morning... SNDK spiked up very nicely and hit even $32.81.

I closed most of the SNDK options position.

I sold the calls with $5.00 and half of the puts with $0.15. Therefore, I got $5.15 in total, which is 27.16% more than I paid ($4.05).

I am still holding half of the puts. So, I may still get some more money out of the position.

See also:
Update 4: Live Action: Sandisk (SNDK) straddle
Live Action: Sandisk (SNDK) straddle

Update: Today's Earnings: GOOG, MSFT

2005-07-21T16:17:00.000-04:00

MSFT, GOOG trading down on earnings report. I was fool enough to close GOOG short on the very first spike on the results. Currently, GOOG trading at $306.73; MSFT at $25.80.

Sandisk (SNDK) trading up, at $30.

See also:
Today's Earnings: GOOG, MSFT

Update Live Action: Google (GOOG) short

2005-07-21T16:03:00.000-04:00

Buying back GOOG at $315.80. Total loss of -0.76%.

See also:
Live Action: Google (GOOG) short

Live Action: Google (GOOG) short

2005-07-21T15:52:00.000-04:00

I would short Google (GOOG) right now at $313.43. See links for the reason doing so.

NB! This trade is not with real money, I am just checking my trading strategy.

See also:
Google Ahead of Earnings
Today's Earnings: GOOG, MSFT

Update 4: Live Action: Sandisk (SNDK) straddle

2005-07-21T15:46:00.000-04:00

Implied volatility of SNDK options has surged today and it is possible to get $4.35-$4.50 for the options position I have. The buying price was $4.05. But I still expect big move on the earnings, so I won't sell it right now.

See also:
Update 3: Live Action: Sandisk (SNDK) straddle
Live Action: Sandisk (SNDK) straddle

Stocks to Watch: EBAY

2005-07-21T14:18:00.000-04:00

eBay (EBAY) currently struggling with $42 resistance. Keep an eye on EBAY, it may go down from this level.

Google Ahead of Earnings

2005-07-21T13:51:00.000-04:00

Bernie Schaeffer has written an article about Google (GOOG). A great and interesting reading, indeed! He has some nice charts on the site to illustrate his story. The basic idea: everyone is very optimistic and there is no fear of negative report, therefore, Google is very vulnerable.

He shares basically the same fear that I have (read Today's Earnings: GOOG, MSFT).

Schaeffer on Charts: Google Ahead of Earnings
Schaeffer's Investment Research
Bernie Schaeffer
7/21/2005 8:50 AM ET

There is no fury like an investor scorned. Just take a look at Yahoo! (YHOO: sentiment, chart, options) and Intel (INTC: sentiment, chart, options) yesterday. Both companies reported earnings that were "in line" with the Street estimate, yet both got slammed - YHOO plunged 11.5 percent, while INTC got off relatively easy with a 4.6-percent drop.

Heading into GOOG's earnings report, options speculators have loaded up on call positions. The fact that call and put implieds are running neck and neck reflects very little fear of a negative report. In fact, I infer just the opposite - the dreaded and dangerous high expectations.

Not surprisingly, there has been a continued drop in the stock's Schaeffer's put/call open interest ratio (SOIR), which now sits at 0.59. While we don't yet have a full year's worth of data for GOOG's SOIR to calculate an annual percentile ranking, the current reading is only slightly above its all-time low of 0.52 and continues to hover in the lower quartile. Such an abundance of call positions ahead of the company's earnings report sets the expectation bar at a level that GOOG may be hard pressed to clear.

Read further:
Schaeffer's Investment Research: Schaeffer on Charts: Google Ahead of Earnings

See also:
Today's Earnings: GOOG, MSFT

ViroPharma (VPHM) Intraday Sell-off

2005-07-21T13:28:00.000-04:00

There was a ViroPharma (VPHM) sell-off today, see the 1 minute chart below. It was probably just a trading error. Did someone lost his job because of that?

Does it look similar to Intel (INTC) sell off 2 months ago? They have exactly the same formation.

Chart courtesy of Prophet.net.

Stocks to Watch: ADLR

2005-07-21T11:59:00.000-04:00

ADLR spikes up with increased volume: $10.22. If no news follow and it loses its momentum, ADLR is a short opportunity, otherwise it's a long.

Today's Earnings: GOOG, MSFT

2005-07-21T09:55:00.000-04:00

Two IT giants and rivals are coming with earnings results today after close: Microsoft (MSFT) and Google (GOOG).

I must be crazy, but I just can't share the optimism what is dominating right now and don't believe that Google manages to beat the market expectations. The sentiment is so positive for Google at the moment that even a slight slip in its report should send the shares down-wards. If you look at the risk/profit ratio, I think it's not a bad idea to buy a few puts ahead of Google's earnings. Although, I am not sure yet, if I do it myself. If Google should fail, there are support areas at $290 and $280. Google shares are trading at $316.39 (+1.41%).

Chart courtesy of StockCharts.com.