Cleveland’s Best Linkfest!

Written By: DragonFly Capital

Charts/Markets/Business/Economy You Might Not See Otherwise

Bristol-Myers Squibb to buy Amylin for about $ 5.3 billion Reuters

It was a big day but did you know Oil’s rise was the fourth biggest daily gain on record Reuters

Get Ready for the New Investment Tax – WSJ.com

The Intelligent Investor: New Ways to Weigh Your Adviser – WSJ.com

If you get a bad answer on your adviser: I, Robot, Am a Stupid Trader WSJ

Yahoo’s General Counsel Resigns DealBook

U.S. Supreme Court allows Cleveland homeowner to sue title insurer cleveland.com

Rush to rent, and build apartments Columbus Dispatch

Finally a great history of Quantitative Easing from the Calculated Risk Blog.

Cleveland Flair

It has been hot so Mr. Roboto if you have Cat Scratch Fever head down to Blossom Saturday for Styx and Ted Nugent

Everyone’s favorite wedding anthem singer, Neil Diamond is at the Q on Sunday

Too crazy for you? Well you are in luck as the Cleveland Orchestra has a 3 night run starting Monday in Public Square with a Star Spangled Spectacular, followed by Tuesday and Wednesday at Blossom with America the Beautiful and a Salute to America

Fireworks follow the Public Square performance, but if looking for your local fireworks try here.

The Tribe is back at the Jake starting Monday against the Angels, with the 4th being Sandy Alomar, Jr Bobblehead night

Dragonfly Facts

Dragonflies can reach forward flight speed up to 100 body lengths per second. Dragonflies do not walk.

Dragonfly Capital

No, the Greeks Aren’t Lazy. The Germans Are.

A lot of people out there seem to have the notion that Greece’s troubles are the result of laziness.

That really doesn’t seem to be true. OECD:

Average annual hours actually worked per worker 2000-2010

GermanyInformation on item 1473 1458 1445 1439 1442 1434 1430 1430 1426 1390 1419
GreeceInformation on item Information on row 2121 2121 2109 2103 2082 2086 2148 2115 2116 2119 2109

And no, labor force participation is not wildly different: 55% in Greece, 60% in Germany.

To quote my friend Katherine: “It’s those goddam hyper-efficient Germans with their ‘work smart not hard’ screwing things up for the rest of us.”

Tongue in cheek there, of course, but it does seem to be German productivity in a single-currency regime that makes it impossible for Greek banks to stay solvent.

And it’s not that Greek bankers, politicians, or workers are lazy. No matter how hard they work, the financial system doesn’t seem to make it possible for them to live a lifestyle in which they crush their grapes with their childrens’ feet. No matter how much they want the “liberty” to live that lifestyle.

Cross-posted at Asymptosis.


Angry Bear

Technical Picture – Correction Approaching 50% Retracement of Oct. 2011 Lows

The SPX weekly chart above shows that we usually get ample warning of significant market turns through the RSI divergence.  The exceptions were the flash crash of 2010 and the current market drubbing.

Also, of note is that the 2012 high lines up perfectly with the Fibonacci ambush short (green) that preceded the 2008 market crash. I’m not going to read too much into this last phenomenon beyond price has a memory.

In my last post, we were in Fib. extension longs and were expecting a short-term pullback into the ambush zone. Unfortunately, the ambush long failed and price fell precipitously.  The weekly RSI failed to provide a warning so we had to scramble to get on the right side of the new bear trend.

From the ES E-mini futures chart above, we can see clearly that extension shorts are in play.  The anchor is 1384.  Last week we traded half way back (HWB) short and reached the 23.6% FE overnight. The target lines up fairly closely with the lower ambush long support (anchor Thanksgiving lows).  It’s important to note that the 50% ambush long did get participation on its first test.  If the bulls can defend this 61.8% support level, we might be able to break the bearish trend. If not we look for the 50% Fib retracement of the Oct 2011 lows to 2012 highs to hold as support. That level lines up fairly closely with the 61.2% of the Thanksgiving low.  Either way, we expect a bounce very shortly. Futures rollover is Thursday and we don’t expect most bears will re-initiate their shorts into the Sept. contracts after such a big move.

For now, we use the 15 minute timeframe to guide our trades.  As depicted below, the shorts are holding the HWB level as resistance.  Next target is 1254.

Wall St. Warrior

Phat (or Fat) Trade Ideas

Written By: DragonFly Capital

With the approval of Arena Pharmaceutical’s, $ ARNA, weight loss drug, Boll Weevil or whatever it is called, I thought it made sense to look for ideas in the ‘food that makes you fat’ space, since now you can eat til you pass out and just take a pill to cure it (if they are chocolate flavored that would be perfect). Surprisingly the logical suspects, fast food and donuts, don’t look so great.

Dunkin Brands, $ DNKN

Dunkin Brands, $ DNKN, has had a nice trend higher but recently pulled back to the 20 day Simple Moving Average (SMA). After a bounce it made a lower high today and completed a Bearish Engulfing candle, setting up for more downside if confirmed. With the extension from the 50 day SMA which has been support that looks like good target for an entry. Try selling some July 32.50 Puts.

Krispy Kreme Doughnuts, $ KKD

Krispy Kreme Doughnuts, $ KKD, was on the verge of breaking above a symmetrical triangle until it also printed a Bearish Engulfing candle Wednesday. With a Relative Strength Index (RSI) that remains in bearish territory a trip to the bottom of the triangle seems in order now. Nothing to do here on the long side until it is over 6.75.

McDonald’s, $ MCD

McDonald’s, $ MCD, also looked promising, after the Spinning Top confirmed higher Tuesday, but a Bearish Engulfing candle took away those hopes today. This also has a RSI that is in bearish territory. Wait for a long entry until over 90.60 or go short under 87.60.

Arcos Dorados, $ ARCO

Arcos Dorados, $ ARCO, or the McDonald’s of Latin America, is the one exception. It broke out of an ascending triangle and over the 50 day SMA to close near the high with a Marubozu candle. The target on the breakout is 17.60. I bought a small position on the close and will look to add in the morning.

Dragonfly Capital

The assumption that markets are ‘natural’

by Brenda Rosser
re-posted from Econospeak with permission from the author

The assumption that markets are ‘natural’

I’ve just begun to browse the pages of David Graeber’s  2011 book entitled ‘Debt – The First 5,000 Years’.  Graeber is an anthropologist who makes no bones about the historical errors made by many economists on the evolution of markets and the use and nature of money.
 
On pages 44-45 Graeber writes:
“People continue to argue about whether an unfettered free market really will produced the results that [Adam] Smith said it would; but no one questions whether “the market” naturally exists….we simply assume that when valuable objects do change hands, it will normally be because two individuals have both decided they would gain a material advantage by swapping them.  One interesting corollary is that, as a result, economists have come to see the very question of the presence or absence of money as not especially important, since money is just a commodity, chosen to facilitate exchange, and which we use to measure the value of other commodities.  Otherwise it has no special qualities.
 
“….Call this the final apotheosis of economics as common sense.  Money is unimportant.  Economies – “real economies” – are really vast barter systems.  The problem is that history shows that without money, such vast barter systems do not occur….It’s money that had made it possible for us to imagine ourselves in the way economists encourage us to do:  as a collection of individuals and nations whose main business is swapping things.  It’s also clear that the mere existence of money, in itself, is not enough to allow us to see the world this way. …
 
“The missing element is in fact…the role of government policy…”
 

Graeber goes on to explain how government foster ‘the market’.  Laws, police, monetary policy, pegging the value of currency to precious metals, altering the amount of coins in circulation, regulating banks etc.
On page 49 Graeber asks a key question: “…what exactly was the point of extracting the gold, stamping one’s picture on it, causing it to circulate among one’s subjects – and then demanding that those same subjects give it back again?”
 
“This does seem a bit of a puzzle.  But if money and markets do not emerge spontaneously, it actually makes perfect sense.  Because this is the simplest and most efficient way to bring markets into being.”
Money brings markets into being.  Not the other way around, as most economists would have it.  If this is true then Graeber’s concluding thought has some authenticity:  “Perhaps the world really does owe you a living.”


Angry Bear

Market Recap with USD and Commodities Analysis

Markets were up slightly today after some decent US economic news. Europe still remains in focus though as the EU begins its two day meeting tomorrow to discuss the crisis which few expect anything important to come out of.

(UPDATE: On my ipad at home and just watched a great interview with Barry Ritholtz, stock blogger extraordinaire, on Daily Ticker with Aaron Task discussing the current market. “It’s the economy, stupid!” Highly recommend it. link.)

Today’s StockCharts.com had a nice chart on the US dollar bumping up against resistance, comparing it to several commodities which traditionally have an inverse relationship. From the post,

If the $ USD chart stalled or falls at this level, it should help the commodities or the mineral miners. I don’t know if its a new bull market, but if the USD kept falling as it has done 3 previous times at this line, it would be bullish for commodities.

Here’s the chart and note ticker WTIC is oil,

Click to enlarge

Alongside this, Bespoke had a great chart of oil inventories which continue to remain high. So much for those record gas prices we all predicted at the beginning of the year. From the post,

Crude oil inventories (from the Department of Energy) for the latest week fell 133K barrels, which was much less than the consensus forecast for a decline of 1.3 million barrels. The chart below updates the current inventories of US crude oil and compares them to the average of the last ten years as well as the average going back to 1984. As shown in the chart, crude oil inventories remain near all-time record highs and are nowhere near where they normally are at this time of year.

Click to enlarge

Lastly, alongside the market indices tonight I have included an updated look at Oil. Stay frosty (sharp) out there and I will see you tomorrow!

Original post: Market Recap with USD and Commodities Analysis




Stock Trading To Go

No Healthcare Ruling—But Three Other Very Important Rulings—Today

The Court will announce its healthcare ruling on
Thursday.  Tom Goldstein, founder of
Scotusblog, said after this morning’s opinions were issued that, in light of
the Court’s informal division-of-labor routine, and based on which justice
wrote which of today’s majority opinions, it looks pretty clear that (as
everyone has been predicting all along) Roberts will write the majority opinion
in the healthcare case, possibly (Goldstein said) with assistance from
Kennedy.  In other words, it’s likely
that Roberts will write the part of the majority opinion that addresses the
individual mandate and related penalty and that Kennedy may write the majority
opinion on at least one of the other three issues in the case. 
Interestingly, at least to me, veteran LA Times Supreme
Court correspondent David Savage has an article today in which he offers the
possibility that—er—I’m right.  Here’s
the relevant excerpt from Savage’s article:
The healthcare case has been
fiercely debated as a test of whether Congress can require individuals to buy
health insurance under its power to regulate commerce. Opponents have likened
it to forcing Americans to buy healthy food, such as vegetables.

Lurking in the background is a way to decide the case on tax law grounds. No
one can be prosecuted, punished or fined for violating the mandate. In fact,
the word “mandate” does not appear in the law. In “practical
operation,” the administration argued, it’s just a tax law.

If the mandate is really just a tax, that would be supported by the
Constitution, which says Congress “shall have the power to lay and collect
taxes … to provide for the common defense and general welfare.”

So, in the end, the justices could agree the law’s required tax payments are
constitutional, while also making clear the government does not have broad
power to mandate purchases.

Late last year, Judge Brett Kavanaugh of the U.S. Court of Appeals in
Washington, an influential appointee of President George W. Bush and a friend of the chief justice,
wrote an opinion arguing for treating the mandate as a tax law, not a
regulation of commerce.

During oral arguments in March, the conservative justices sounded highly
skeptical of giving the government the power to mandate purchases. But at one
point, liberal Justice Sonia Sotomayorasked whether it would be constitutional
for Congress to assess a tax for health insurance and include an exemption for
everyone who had insurance.

“The government might be able to do that,” said Paul D. Clement, the
lawyer for the Republican states suing to overturn the healthcare law. If so,
the liberals asked, why can’t Congress require people to have private insurance
or pay a tax penalty?

Having the law upheld on tax grounds would be a big win for the president.

(In my June 15 post, I paraphrased Sotomayor’s question and
erroneously attributed it to either Roberts or Kennedy.  I said I couldn’t remember which of the two
had asked the question, which is no surprise since neither of them did.  Ah; I should have known.)
Now on to today’s big rulings.  The most significant—and it is huge—is a big surprise.  In a 5-3 opinion (Kagan did not participate)
written by Kennedy and joined by Roberts in Arizona
v.
United States, the Court
struck down on “federal preemption” grounds almost all of the major provisions
in Arizona’s stop/demand-citizenship-papers/detain-upon-suspicion-of-being-an-illegal-alien
all Hispanic-looking-or-sounding-folks law. 
“Federal preemption” is a legal doctrine, based on the Constitution’s
Supremacy Clause, that bars states from enacting laws that conflict with a
federal statute or that intrude into a policy area in which the Constitution
grants the federal government sole control (e.g., national defense and foreign
policy) or in which a federal statute indicates Congress’s intent to make federal
statute the sole arbiter in that area of policy. 
On the only remaining major provision—which appears to
allow the detention by state prison officials of anyone arrested on other
grounds, in order to allow the officials to verify the person’s citizenship—the
Court rule that it is too early to know whether or not federal law preempts that
provision, because the state courts have not yet “interpreted” it.  The opinion makes clear, though, that if the
state court interprets the provision to permit a detention or an extension of a
detention in order to enable the citizenship check, this provision, too, likely
would be preempted.  And the opinion says
explicitly that even if the state court interprets the provision narrowly
enough to survive preemption on the grounds argued in this case, the provision
may be preempted on other grounds or it may violate another provision of the
Constitution.  In a separate lawsuit, the
law is being challenged on Fourteenth Amendment equal protection (racial
profiling) and due process grounds. 

The other major ruling today in a fully briefed and
argued case—two cases, actually; one from Alabama, the other from Arkansas—extended
the Eight Amendment’s bar to cruel and unusual punishment to strike down as
unconstitutional state statutes that mandate life imprisonment without possibility
of parole when the statute is applied to minors.  This was a 5-4 opinion written by Kagan and
joined by Kennedy.
In the final ruling of broad significance, the Fab Five
summarily reversed (i.e., without full briefing and oral argument) the Montana
Supreme Court in the case in which that court had upheld the constitutionality
of a longstanding Montana campaign-finance statute despite Citizens United.  I had
called this one wrong in postings on AB, saying that I thought the Court would
agree to hear the case, but a week ago I realized that I probably was wrong.  The Court had initially scheduled its
decision for last Monday on whether or not it would hear the case next
term.  When it put off its announcement
until today, I knew what that meant.
The dissent, written by Breyer and joined by the other
Dem appointees, says that while they had the minimum number of votes (four) to
force full briefing and oral argument, the four decided not to do so because
they recognized that there was no chance that any of the other five would vote
differently if the case were argued.  I
think the four should have forced full argument next term, not because there
was a chance that one of the five would switch sides—there was not—but because
this case would have educated the public about a critical fact that most of the
public probably does not know: that in Citizens
United
, the 5-4 majority didn’t hold that the First Amendment speech grounds
are absolute—a ruling that would have required them to expressly overrule the
Court’s longstanding election-law precedents—but instead based its ruling on a “finding”
of utterly fabricated and baseless fact.  The 5-4 majority simply declared, based on
nothing at all, that they “find” that unlimited campaign “expenditures” by
outside individuals, groups and corporations does not “give rise” to corruption
or to the appearance of corruption.
Had the Court been forced to have a full hearing on the
Montana case, complete with oral argument, the public would have learned that in
election-law cases, this 5-4 majority simply fabricates facts and casually
varies the standard under which the Court can strike down a statute as
unconstitutional, depending on what is required for the majority rule in a way
that (significantly) helps Republican candidates.  In Citizens
United, for example, the majority not
only decided on its own to raise the issue of the constitutionality of the campaign-expenditure
limitations in the McCain-Feingold law; they also required that Congress have
vast, specific evidence that unlimited expenditures cause corruption or the
appearance of corruption, and then denied the government the opportunity to
gather and present that evidence, instead simply coopting for themselves the
writing of the “facts.”  Yet, in a case a
few years ago that challenged the constitutionality of a state law that
required a government-issued photo ID in order to prevent voter fraud, the 5-4
majority required no evidence whatsoever by the state that widespread voter
fraud existed—and ignored the evidence that such voter fraud is almost
nonexistent. 
In my opinion it is this aggressive but quiet altering of
procedural and standard-of-review law in cases that could affect election
outcomes, in a manner that baldly favors Republican candidates either directly
or indirectly, that makes this 5-4 majority so dangerous.  But for the moment, I’ll rejoice in the
outcome of the two opinions in argued cases that I discussed above.
And on Thursday, we’ll learn whether Savage and I are right or whether instead almost everyone else is.

—-
UPDATE: Here’s an outstanding discussion of the Arizona-statute opinion at Scotusblog.


Angry Bear

Technical Picture – Daily Ambush Short Has Triggered

In my last post we noted that the SPX daily ext. short had reached its 23.6% FE target at 1267.  From there we traded all the way back to the new ambush zone (same anchor1391, new low 1267).  We reversed midday following the disappointing Bernanke testimony.  The new target for the daily ext. short is 1238, however, from the 15 min. ES Emini futures chart below, we will be interested to see if futures bounce HWB long between 1296 and 1288 (ambush zone) on the June contract (Sept. contract values are a few points lower).  If these levels hold as support, we could form an inverse H&S bottom. Notice how these levels held and bounced numerous times on the way down.

Wall St. Warrior

How does one remove photos from an iPhone 4S?

Folks:

How does one remove photos from an iPhone 4S? My “camera roll” folder is full of photos and videos (about 1500). Apple is saying that I need to buy more iCloud storage, which I don’t want to do. I plugged the device into a Windows 7 computer and the phone shows up as a drive. I was able to copy all of the photos onto a local disk for backup, but not able to delete any (an easy operation on an Android phone, which functions like a legitimate USB drive when plugged in).

I’ve Googled around a bit and there does not seem to be a straightforward way to delete all of the photos on the phone without selecting each one (1500!) with a touch. There was a hint that someone who purchased a Macintosh ($ 1000+?) would be able to delete photos by regarding the phone as a disk drive, but I can’t find anything for the Windows crowd.

Thanks in advance.

Philip Greenspun’s Weblog

Market Recap – Rumors Rips Market Higher, 10 Must Watch Stocks

PLEASE NOTE – I will be taking a vacation from the market and work starting next week, Monday the 11th, and will be MIA (missing in action) for two weeks. The cord will be cut so to speak while I am off so expect posting to resume on Monday the 25th.

Headlines once again took front stage. The main story circulating the wires today centered around rumors that Europe will be rescuing Spain’s troubled banks.

Rumors aside, both the S&P 500 and the NASDAQ closed well above their 200 MAs and completely recovered last Friday’s losses. Both positive signs for bulls, atleast for the short term.

It is hard to not condone testing the waters on a day like today and putting some cash to work in better looking stocks like Apple (AAPL), Chipotle (CMG), Amazon (AMZN), Ulta Salon (ULTA), Papa Johns (PZZA), Whole Foods Market (WFM), Questcor (QCOR), GNC Holdings (GNC), Athenahealth (ATHN), and Expedia (EXPE), among others. The market’s charts often deceive but they still must be respected. The days ahead will give us much more information and help to paint a better picture (CANSLIM traders should now keep an eye out for a confirmation day).

Updated market analysis below.

Original post: Market Recap – Rumors Rips Market Higher, 10 Must Watch Stocks




Stock Trading To Go

Buying Arena Pharmaceuticals before Wednesday is Gambling

Written By: DragonFly Capital

How Do You Define Gambling vs Investing?

Some people would call any money placed into a stock a gamble. Others would say that the difference is that you can control risk when you trade or invest. Although I agree about risk control in trading, you generally cannot lose more than you bet in gambling either, so I don’t buy that definition. But then I trade off of technicals so most investors think that everything I do is gambling. How does someone that trades off of lines on a chart and a feel for sentiment define gambling. Simple.

Buying Arena Pharmaceuticals before the FDA Decision Wednesday.

Ok, if there are any of you are still left to read this now that I have upset the your fairytale let me explain why. The daily chart below for Arena Pharmaceuticals, $ ARNA, shows that the stock has run up over $ 8 or 325% since getting an FDA Advisory approval May 10. Let me repeat that in bold 325%. That is a lot by the way. In doing so it has also moved the technical indicators to extreme overbought conditions. The Relative Strength Index (RSI) at over 92 is incredibly high. In fact the weekly RSI is also in the high 80′s. This is an oscillator that can only travel between zero and 1 and it is at 0.92. That should raise some caution flags. It is also 128% above its 50 day Simple

Moving Average (SMA). Do you know how many other stocks are more than 100% percent over their 50 day SMA? If you limit market cap to over $ 50 million the answer is zero. Not one. If you look at sentiment it gets worse. Below is the Stocktwits Heat Map for the Heathcare Sector. The size of the box is relative to the number of posts about the stock. This is a $ 3 billion company that is part of more than 2/3 of the discussions of all Healthcare stocks. I would say that sentiment is elevated.

No screw it, it is off the charts. Stocks can stay overbought for a long time and sentiment can certainly go higher. I understand that and I am not advocating that you sell the stock if have participated in the run up. It probably would not be a bad idea to take some profits or to hedge your position with some downside puts or a collar. But if you are planning on buying this stock now and not selling it before Wednesday then you are just gambling.

Disclosure: I have a long biased position, short June 29 Weekly 6 Strike Puts, as of this writing.

Dragonfly Capital

Trader Education, Charity, & a Father’s Day Discount

On this Father’s day, and as I continue to take a break from late spring and early summer blogging, I wanted to once again extend a $ 250 discount opportunity for those interested in pursuing the 8-week Jellie trader video course chronicling & documenting the journey the initial beta Jellie team traveled as they learned and implemented the principles required to successfully navigate the S&P and DAX trading markets.

As many know, the Jellie effort was initially undertaken in response to repeated inquiries for me to give back to the industry after recently reaching the top of the industry for my asset class, and a portion of the proceeds continues to support our charitable causes that have included the American Diabetes Association, Grow Uganda, and most recently, the Commodity Customer Coalition which is providing free legal support to traders impacted by MF Global.

If you’re interested in pursuing the discount, simply email me at don@donmillereducation.com and I’ll email a special discounted PayPal invoice.   More information regarding the course, its history, and intent can be found on the formal educational site.

Enjoy the early summer and markets, and look for a revamped blogging effort in the very near future.

Don Miller’s S&P Trading Tank