PGH

One of our basket of Canadian Royalty Trusts, PGH has broken out on its Daily chart.  It has also broken out on its Weekly chart and in the process, taken out the overhead resistance of its 200-Week MA.  PGH has also moved above its 50-Month MA on the LT Trend.

We like a 2-5% opening entry here with the goal that we may own 3-5 of these Trusts at a total investment of no more than 10% of our Core Portfolio.  The Trust is currently paying a monthly distribution of $.07 / Unit which translates to an annual return of ~7.5%

Though the tax status is undetermined at this point, past distributions have generally been “qualified” which means they are taxed at LT Capital Gains rates rather at ordinary income tax rates, making it an excellent candidate for a spot in your after-tax trading or investment account, rather than in an IRA account.

Other CAD Energy Trusts we are watching for entries are… BTE, ERF, PDS, PVX & PWE

Coach BD

ARMH - Arm Holdings Limited

ARM Holdings has been a Core Position for us over the past 8 - 10 years, though not the past 2 years, as we thought they were in kind of a rut.

Well… they are clearly out of their rut and finally getting the attention they deserve.  ARM processor design IP is in more than 60% of all cell phones on the planet, and there are now an average of 2.4 ARM designed processors in each of those phones.

We believe they are entering what’s known as the hockey stick growth phase…  We will be buyers of ARMH on a clean, high-volume BO above $10.00

We are looking at the Synthetic Long JUL 2010 - 10 Call/Put Combo.  SELL the Puts to buy the CALLS.  Today we could have entered this position for a ~$.30 CREDIT and at a $.10 DISCOUNT to the closing price @ $9.81

Keep an eye on ARMH.  They are a young Gorilla in the mobile market and are expanding their IP reach into new technologies, much like RMBS without the litigation. 

SOLF

We have made an adjustment to one of our LT Solar Option trades in SOLF, as well as adding a Mid-Term (MT) Hedge and a ST upside Spec Trade.

We executed the following… (Equal lots of each)

ROLLED - JAN 2010 - 5 Calls >>> JAN 2011 - 2.5 Calls, for a $1.15 DEBIT

BOUGHT - SEP 2.5 Puts @ $.70

BOUGHT - MAR 5 Calls @ $.20

We believe that the Solar trade in general will thrive over the next year plus, and will carry many with it, including SOLF.  We are also looking at opening new positions in several other solar trades and creating a basket of these stocks that will, in our opinion, benefit from the new administration’s commitment to alternative energy.   We will post a list of those we are watching closely after the close.

Coach BD

We are again becoming interested in Canadian Royalty Trusts.  They have been hammered along with the rest of the energy sector but are beginning to show signs of reversal in many of those we like, or have owned previously.

Most of these have maintained their distributions (dividends) and some are paying more than 30% per year with monthly distributions.

We are watching for some good volume upward movement through resistance on several including… AAV, BTE, HTE, PDS, PGH, PVX & PWE.

Stay tuned for new entries. These were very good trades for us last year even though we decided to bail out of them as Oil prices collapsed.  Normally we would want to hold these great dividend stocks for the longer term but after that unbelievable run-up in Oil that took all of the energy with it, we decided to take our significant appreciation and dividend profits and wait for the washout, which appears may be nearing it’s end.

Coach BD

Ouch…

The S&P made a new low for 2008, and all were down on bigger volume than any day since January.  All this talk about capitulation is premature, at least in our opinion, since all the markets started weak and got worse throughout the day, closing at or near the lows.

Capitulation usually includes a huge spike downward followed by a reversal back to the upside… See 1/22 & 23, 3/17 and 7/15/2008.  Those were capitulation days.  Today is very scary though the FED may step in and cut rates, which could probably cause a ST rally back up into resistance.

The news is clearly that financials are in deep, deep trouble…  BSC, FNM, FRE, LEH Bankruptcy today and AIG in serious trouble.  It is very ugly out there.  Keep your powder dry for now and watch the carnage.

We had to hedge several positions further today and will update those later, or early tomorrow.  Of course it’s expiration week…  LOL.  What else would it be… ;-)

Coach BD

LDK Solar

Below is a discussion on a LT Straddle Strategy based on an inquiry from JoeF.

Coach BD

continue reading "Strategy Discussion - LDK LT Straddle"

Thanks to Steve for this great article on our current credit crisis by Bob Hoye.  Steve believes…  “Bob Hoye is the best market historian I have read” .

Coach BD

http://www.safehaven.com/article-10890.htm

So today ended our second consecutive quarter of a 7.5% loss on the DOW, with JUN recording the largest Monthly drop since AUG 1998…!!!  That followed a 6.5% drop from the OCT high to the end of 2007.

For the first time since NOV 2003, the DOW also closed this quarter below the 50-Month MA.  The S&P also closed below its 50-Month MA for the first time since JUL 2004.

Only the NAZ has held above this important LT trend-line, but it is now within just 20 points of this crucial LT trend.  It certainly doesn’t appear, at least from the overall market action, that either the DOW or S&P will be offering any significant help in keeping it from closing below this LT trend for the first time since SEP 2004.

Clearly the BEAR is here, and looks to be settling in for the summer without some significant change in market sentiment.  The only possible event on the horizon that we could see possibly boosting this broken market is to see gasoline and oil inventories rise substantially, causing a major correction in the escalting price of oil and other commodities.

In light of this quarterly close, we have decided that the prudent move is to lighten up on many of our LT positions, rather than continue managing the downside, which is becoming consistently more difficult.  A mistake that we have made in the past is being over-confident in our ability to manage these cycles, and more than once we have paid for that over-confidence.  This time, however, most of our LT positions are still healthy but we are beginning to feel that twinge of “over-management”.

Our experience has taught us that when we begin making adjustments too regularly, that this is the time to cut back our activity, and our exposure, and wait for a better environment to emerge.

As a result, beginning tomorrow we will start closing portions of many of our LT Long Positions and reducing our risk considerably, thereby reducing the amount of management time required, especially in some of our larger positions, like AAPL, ATVI, ELON, NVDA, SNDK, USNA and HLF. 

We also will be looking to trim some of our Long Stock positions, specifically our Royalty Trusts that have had great runs over the past few months but have seemed to stall over the last couple of months.

More updates tomorrow or Wednesday, depending on market.

Coach BD 

Ugliness continues…

We are now in process of rolling out our hedges and will be selling more ATM, and even ITM Calls on some of our LT Longs.

Lots of bad news today…  We are now looking at Shorting the market, and some of the strongest and biggest gainers over the past 6-12 months.  We’re talking the AG stocks here…

No matter their business, these are still basically commodity companies, and commodities with 30-50 forward PE’s must come back to earth eventually.  Historically these stocks trade at around 5-15 PE’s.

Once these start to weaken if the market continues down, and there is certainly no sign that it won’t, these will begin falling fast and hard.

Expiration should be very interesting indeed.  We still love RMBS, and V and MA on a healthy pullback.

Coach BD

ESLR

Has made a perfect gap filling consolidation on declining volume following the MAY 22 earnings BO and bounced off all of the ST trend support yesterday and today.

If it moves higher tomorrow on higher volume we will make our initial entry, unless it closes near the bottom of its range like it did in other recent failed BO’s on 5/14, 19, 22 & 23.

We don’t like those…

Coach BD