Take #2: Time to Stock Up on Overstock.com?

Written By: DragonFly Capital

About a month ago I brought your attention to Overstock.com, $ OSTK, in Time to Stock Up on Overstock.com?. Technically it had been in a symmetrical triangle ready to resolve. Since then it did resolve. But to the downside. Incidentally, notice how all of the Simple Moving Averages (SMA) crossed when the move took place. It has only moved about 40% of the pattern expectation but is already showing signs that it may be ready to reverse back higher. The Relative Strength Index (RSI) is curling back up. In fact looking at the last move of the RSI off of the lows projects a near full reversal of the down move. The MACD has also hit an extreme low and is turned back up and crossed. These support a move higher. But you need evidence to get in. Look for a break back over 19.50 as the trigger to try this long against the base at 18.15. Conversely a failure and move under 18.15 would look for another $ 9.50 move lower.

ostk

With the reward defined as roughly $ 10 either way, perhaps a simple March 17.5/20 Strangle makes sense. Currently offered for about $ 1.45 it would make money on a move below 16 or above 21.50 and defines your risk to the $ 1.45 in premium spent. I put on a few today at $ 1.38.

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Interesting helicopter stuff (First Day of Heli-Expo)

Here are some impressions from the first day of Heli-Expo…

If you tend to carry an iPad with you on helicopter flights, the Gyronimo weight and balance performance app is a thing of real beauty and practicality.

If you’re wondering “What could be dumber than putting someone who doesn’t know how to fly a helicopter into a real helicopter?” then http://www.heliflighttrainer.com/ (site seems to be down right now) is for you. This is a standard industrial robot holding a Robinson R22 cabin with two people inside. Thus did essentially one person, Andreas Margreiter of Austria, manage to build a full-motion flight simulator. It costs in the neighborhood of $ 1.5 million, which is a lot more than an airworthy R22 ($ 150,000 average) but a lot less than a standard full-motion sim.

In an industry that is notorious for its lack of innovation, the Marenco SKYe SH09 (they could use some help from an American naming consultant) is inspiring. Some crazy Swiss people decided to go head to head with Airbus’s EC145, one of the world’s most popular helicopter. The SKYe SH09 has an all-composite body, fantastic visibility, and a single Honeywell engine (made in Canada currently but with additional production scheduled for Switzerland). It holds 8 people, including the pilot and has big doors in the back plus a safe fenestron tail rotor. So it should be ideal for medevac flights but will cost a little over $ 3 million instead of the nearly $ 6 million that people are paying for the EC145. Due to the ease of collaborating with the relatively nimble Swiss aviation authorities, the company expects European certification in 2015 with FAA certification taking an additional year (a flight school owner at the convention said “Everyone time I have to deal with the FAA I want to just take out a gun and shoot myself.”) The company has already sold 56 machines and will be profitable if it can deliver the machines ordered thus far. They are targeting production of 90 helicopters per year.

If you’re not happy with the results from sticking your smart phone up against the bubble, the designer of the Cineflex gimbal mount has come out of retirement in New Zealand with the the Shotover F1. For $ 350,000 plus a 4K camera and a $ 50,000 cinema lens, you too can make some very stable home movies from the helicopter. Don’t forget that you’ll need an A Star plus a mount to go with it; the ball is sadly much too large to fit on a Robinson (entrepreneurs: there should be a good market opportunity for a stabilized ball that can be mounted on a Robinson R44, which is much cheaper to operate per hour than turbine ships; acceptable 4K results should be obtainable with a compact camera such as the Blackmagic or maybe even some of the mirrorless systems).

Avidyne was there with some new avionics that can compete with Garmin’s GPS, radios, transponders, and audio panels. I’m not sure who is going to buy these because they are priced roughly the same as Garmin’s industry-standard products.

Pilatus was there despite the fact that they have nothing to do with helicopters. Pilatus is the world leader in turboprops, a position formerly occupied by the American company Beechcraft with its King Air (twin-engine) and single-engine military trainers. Pilatus introduced the PC-12 in the mid-1990s, which can handle the King Air’s job with just one engine. Beech decided not to invest in updating its design and slowly lost market share. Pilatus also leapfrogged Beech in making single-engine military trainer airplanes. The U.S. military couldn’t bear the idea of using an American design but they also couldn’t admit that they were going to import all of their planes from Switzerland. The solution turned out to be that Beech would assemble the Pilatus design here in the U.S. and give it the name of “Texan II”. This wasn’t enough to keep the company solvent and they went bankrupt in 2012. Now Pilatus is out to destroy what remains of the U.S. jet manufacturing business (Embraer has already out-competed U.S. companies in many categories) with their PC-24 design, due to be delivered starting in 2017. This is a 17,750 lb. twin turbojet that can operate from 2700′ runways (in theory) and operate from dirt/grass runways. It holds up to 10 people, including the two front seats, and is certified for single-pilot operation. About $ 9 million.

The job fair for pilots was mostly medevac operators looking for high-time pilots. Thanks to insurance companies and Medicare willing to pay $ 20,000 for a 15-minute flight, there are a lot of pilots getting paid to surf the Web for 12-hour shifts. (I have heard that the state of Kentucky has more medevac helicopters than the entire country of Canada, for example.) A sightseeing operator reported that it was getting tougher to find qualified candidates: “It isn’t hard to find people with 1000 hours of experience, but once you get beyond the monkey skills of manipulating the controls the average person we interview is less qualified every year. We need people who can show up prepared for an interview, who will show up to work reliably, who can interact with customers. Those are getting fewer and farther between.” (This echoed a manufacturer’s technical support manager that I talked to previously. He said that every year the mechanics who show up to be trained are less conscientious and he therefore thinks that is becoming less safe to fly in American-maintained aircraft.)

Flight schools affiliated with four-year universities are busy. A few years ago the federal government began offering veterans 100 percent payment for flight training as long as they were also getting a college degree. So instead of paying 40 percent of a low cost at an independent flight school the veteran would pay 0 percent of a much higher cost, plus have the government pay a four-year college’s tuition and his or her own housing and food expenses. One of the features of this program is that the veteran can fly in any machine operated by the school. So instead of learning instrument flying in a $ 250/hour Robinson R22 or $ 350/hour Robinson R44, the veteran might be learning in a $ 1000/hour Jet Ranger. I asked one school owner “Could you get a Gulfstream G-650 and rent it out for $ 10,000 per hour as the basic instrument trainer?” “Absolutely,” was the response. Bristow Academy in Florida is doing contract training for budget-minded foreign militaries around the world. The students learn the basics of helicopter flying in a combination of $ 300/hour Schweizer 300s and $ 1000/hour Jet Rangers before heading home to fly more complex machines. I asked how much the U.S. military spent to train beginners in Jet Rangers. It is apparently over $ 4000 per hour. I asked if Bristow had approached the U.S. Army offering to do for them what it was doing for the foreigners, cutting the cost to taxpayers by more than 75%. “They weren’t interested,” was the response.

Anaheim may not be considered the most attractive SoCal neighborhood by locals, but the palm trees are a welcome contrast to a Boston February. Our drive from LAX to Anaheim was painful. If anyone reading this Weblog contrives to become dictator of the U.S., please make it illegal for any phone navigation app provider not to highlight every In n Out Burger along a route. I’m staying in Disney’s flagship Grand Californian hotel (about $ 400 per night, including tax). Speakeasy says that my room’s wired Internet speed varies between 270 kbps and 900 kbps for download (the WiFi network is almost completely non-functional, with a staff member explaining that “Apple devices are too advanced for our network”). Here’s looking out the window from a room that Disney staff characterize as either a “garden view” or a “woods view”:

Whoever at Disney thought up the idea of calling this a “woods view” could probably come up with a much better name for that SKYe SH09 helicopter!

 

Philip Greenspun’s Weblog

Big Intraday Trenders for February 25

As is our new custom, let’s take a look at the mid-day scan for “Top Trending” Stocks that provide potential Trend Day continuation opportunities, or aggressive reversals.

Either way, these stocks show up on our custom stock screen list of showing a high degree of Intraday Trend for additional study (and even swing trading opportunities):

Intraday Uptrenders

Our top names for today’s session include GameStop (GME), Trip Advisor (TRIP), Michael Kors (KORS), and Priceline.com (PCLN) – most of which have appeared in prior blog updates.

Intraday Downtrenders

The big intraday downtrenders so far include Expeditors International (EXPD), Tenet Health Care (THC), Nucor (NUE) which has appeared on a previous update and American Tower (AMT).

As always, these names call our attention for additional study for possible opportunities.

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Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning strategies.

Corey Rosenbloom, CMT
Afraid to Trade.com

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Corey’s new book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


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Seven Steps to Systems Success

Most platforms that run automated back testing and trading systems have extensive reporting capabilities to analyze performance. In these reports the software developers have included seemingly every possible statistical metric they could find. Reading these line by line quickly becomes information overload and can often leave the systems developer with more questions than answers.

So we have narrowed down the seven fundamental factors to consider when analyzing a quantitative trading strategy. We have placed these in the order that we feel is most important.

There will be seven additional articles that break each of these Read more […]
SMB Capital – Day Trading Blog

Tesla Earnings Trade Ideas Using Options

Written By: DragonFly Capital

These trades were given to subscribers at 1:30 today

Tesla, $ TSLA
tsla

Tesla, $ TSLA, has been moving higher since finding support at the lower Bollinger band and 50 day Simple Moving Average (SMA) in mid January. The bounce set up a harmonic Crab pattern with a Potential Reversal Zone at 242, still short of the target at 275 on an AB=CD pattern. It has an RSI that is bullish but falling with a MACD indicator that is leveling. There is no resistance higher over 206 and support lower comes first at 194 and 182 followed by 170 and 156 before 135. The reaction to the last 6 earnings reports has been a move of about 12.28% on average or $ 24 making for an expected range of 170 to 220. The at-the money February Straddles suggest a similar $ 23.25 move by Expiry with Implied Volatility at 200% above the March at 74%. Short interest is high at 34%. There were sellers of the 190/210 Call Spread at 410 yesterday, for protection to 200, and open interest for Friday favors the Call side but is large at 190, 200 and 210.

Trade Idea 1: Sell the February 185/205 Strangle for a $ 14.60 credit. Gives a range from 170.40 to 219.60.

Trade Idea 2: Sell the February 185/205 Strangle and buy the March 190/200 Strangle for $ 13. Looks for a tighter range through Friday and then a move.

Trade Idea 3: Buy the February28 195/200 Call Spread for $ 2.60 and sell the February 165 Put for $ 2.55, for a near free trade. You risk being put the stock at 165 next week on a severe drop and this takes margin.

Trade Idea 4: Buy the February/March 225 Call Calendar for $ 3.80. A bet that the options range and historical range holds through Friday.

Trade Idea 5: Buy the February 190/March 165 1×2 Put Diagonal (buy Feb and sell March twice) for a $ 0.40 credit. This takes margin and risks that you will be put the stock at 165 in March, but with a basis of 140 should it drop hard from the report.

My preference is #3 or #4, for upside. #2 gives a good range for this week and the ability to sell weekly strangles a few more times between now and March.

Get my book, Trading Options: Using Technical Analysis to Design Winning Options Trades from Amazon.

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Dragonfly Capital Views Performance Through January 2014 Expiry and sign up here for the free 7 day trial before you pay.

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Why does it make sense for Comcast and Time-Warner to merge?

Folks:

I’ve been reading about the proposed merger of Comcast and Time-Warner (example from The  Guardian). Comcast is the monopoly Internet supplier here in Cambridge, Massachusetts. They provide a sluggish service that no tech enthusiast in Romania, Latvia, Israel, South Korea, or Japan would pay for (see Figure 15 in this Akamai report). If they have enough money to pay investment bankers, management consultants, etc., wouldn’t they be better off improving their service in order to compete with Time-Warner and Verizon? Could it really cost more to offer Latvian-grade Internet to American consumers than to merge two cable monopolies?

[Alternatively, if Comcast can’t figure out how to deliver Latvian-grade services to Americans at a reasonable cost, maybe it would make more sense to merge with a Latvian cable/phone/Internet provider?]

Related: This BBC article on broadband costs worldwide; it turns out that Latvians pay very little for their luxurious Internet service.

Philip Greenspun’s Weblog

Top Trade Ideas for the Week of February 18, 2014: The Rest

Written By: DragonFly Capital

Here are the Rest of the Top 10:

BB&T, Ticker: $ BBT
bbt

BB&T, $ BBT, had a sharp pullback through January on declining volume. After touching the 50 day Simple Moving Average (SMA) it bounced higher and is testing the 20 day SMA and prior resistance.

Boston Scientific, Ticker: $ BSX
bsx

Boston Scientific, $ BSX, also pulled back with the market finding support at the 50 day SMA before bouncing. Now it is moving higher and at previous resistance with support for more upside.

Catamaran, Ticker: $ CTRX
ctrx

Catamaran, $ CTRX, is approaching the previously important 53 level with Bollinger bands opening higher. Over all of the SMA’s it has historically been able to move substantially higher before stalling.

Halliburton, Ticker: $ HAL
hal

Halliburton, $ HAL, is consolidating after a move higher off of 48 and a brief touch at the 200 day SMA. The consolidation has moved it back within the Bollinger bands as it builds a bull flag.

Visa, Ticker: $ V
v

Visa, $ V, also pulled back with the market in a sharp fashion, finding support at the 50 day SMA. Now moving through resistance, it has crossed the 20 day SMA as it rises.

Up Next: Bonus Idea

The Best

If you like what you see sign up for more ideas and deeper analysis using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits feed and on chartly.

After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which, heading into the holiday shortened President’s week sees the equity markets looking strong. Elsewhere look for Gold to continue in its uptrend while Crude Oil remains biased higher as it consolidates. The US Dollar Index looks better to the downside while US Treasuries look to be consolidating again. The Shanghai Composite and Emerging Markets are biased to the upside now. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, despite their strong moves higher this week. Their charts also look better higher with the QQQ and SPY perhaps a bit stronger looking than the IWM. Use this information as you prepare for the coming week and trad’em well.

Want to learn more about Dragonfly Capital Views?

Dragonfly Capital Views Performance Through January 2014 Expiry and sign up here for the free 7 day trial before you pay.

Get my book, Trading Options: Using Technical Analysis to Design Winning Options Trades from Amazon.

The post Top Trade Ideas for the Week of February 18, 2014: The Rest appeared first on Dragonfly Capital.

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NPR: Americans are ignorant; Employers should hire us

A friend pointed out an NPR story titled “1 In 4 Americans Thinks The Sun Goes Around The Earth, Survey Says”:

In the same survey, just 39 percent answered correctly (true) that “The universe began with a huge explosion” and only 48 percent said “Human beings, as we know them today, developed from earlier species of animals.”

Just over half understood that antibiotics are not effective against viruses.

As alarming as some of those deficits in science knowledge might appear, Americans fared better on several of the questions than similar, but older surveys of their Chinese and European counterparts.

In other words, Americans are, from the perspective of NPR reporters, woefully ignorant. But at the same time NPR talks about employers’ unwillingness to hire certain Americans as though it were a problem that could easily be solved with simple top-down directives from Washington, D.C. (example story).

Is there not an inconsistency here? If we are as ignorant as NPR says we are, why would employers be lining up to hire us, even with the pressure that NPR considers appropriate for politicians in Washington, D.C. to apply?

Related: August 8, 2010 posting asking whether unemployed = 21st century draft horse

Philip Greenspun’s Weblog

‘Trading Options’ is More Than Just Options – New York Times Book Review

Written By: DragonFly Capital

2-5-2014 9-08-58 AM

Well perhaps someday the New York Times will review my new book. Until then Amazon does a very good job of showing details about books that they sell including mine, Trading Options: Using Technical Analysis to Design Winning Options Trades. But if you haven’t been to Amazon or have a need to shop elsewhere let me give you the author’s skinny. This book is about a lot more than Options Trading. It was written to make Technical Analysis approachable to anyone, even the novice that never intends to get near Options.

It was written in 4 Parts that build on each other.

Part I is about Identifying the Trend. Since over 70% of stocks move with the trend this is critical for anyone making any kind of investment decisions. If all you have is a 401k that gives you a choice between a stock fund, a bond fund and a money market fund you can benefit from Part I.

Part II drills down to the next level and discusses then how to Find Individual Stocks that are moving with the trend. I use a mosaic process of multiple styles of Technical Analysis which are all touched on here. For the day trader to the long term investor that takes some control of their portfolio there are practical applications here.

Part III then moves into Options Strategies. This is the meat of the book. It starts with introductory material for the options novice and moves into building combinations of options that can substitute for stocks as a trading or investing vehicle. It is presented in simple terms with many examples using nothing beyond 3rd grade math.

Part IV then wraps up the book with a discussion on Trade Design and Execution. This section is applicable to both stocks and options and details how to create a plan, size positions, and how and when to adjust your plan.

Some of the concepts you will have seen before and many will be new. All are part of a process that I have put in place. Each of you should put in place a process as well. So look at this as one example of how to do that too. I hope you enjoy reading it and find it useful and practical.

Recently I had a discussion on blogtalkradio about it as well here (mp3 audio file).

Get my book, Trading Options: Using Technical Analysis to Design Winning Options Trades from Amazon.

Want to learn more about Dragonfly Capital Views?

Dragonfly Capital Views Performance Through January 2014 Expiry and sign up here for the free 7 day trial before you pay.

The post ‘Trading Options’ is More Than Just Options – New York Times Book Review appeared first on Dragonfly Capital.

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What is going wrong at the Sochi Olympics?

Folks:

I’ve been watching some of the Sochi Olympics on television. They don’t talk about any of the athletes having trouble sleeping, getting food, or getting to the events. All of the technical infrastructure seems to be working. In the lead-up to this Olympics there were all kinds of articles (example; one about homeless journalists; one comparing Putin to Hilter) about what a disaster they were going to be. What if anything is going wrong in Sochi? Is there any evidence that the overall festival is running more or less smoothly than previous Olympics? The only negative that I have seen as an American TV viewer is a surprising number of empty seats at events such as figure skating (potential explanation but the most obvious one seems to be that these Olympics are being held far from any population center, e.g., a 25-hour train ride from Moscow or two-day drive).

Philip Greenspun’s Weblog

SPY Trends and Influencers February 15, 2014

Written By: DragonFly Capital

A weekly excerpt from the Macro Review analysis sent to subscribers on 10 markets and two timeframes.

Last week’s review of the macro market indicators suggested, heading into the week that the markets were giving a sigh of relief but not as strong as they could be. It looked for Gold ($ GLD) to continue to consolidate with a slight upward bias while Crude Oil ($ USO) continued higher. The US Dollar Index ($ UUP) seemed content to continue to move sideways while US Treasuries ($ TLT) were biased higher in the very short term in their broad consolidation. The Shanghai Composite ($ SSEC) and Emerging Markets ($ EEM) were biased to the upside with the Emerging Markets warranting some caution initially. Volatility ($ VIX) looked to remain subdued and biased lower adding a breeze to the backs of the equity index ETF’s $ SPY, $ IWM and $ QQQ. Their charts showed a desire for some short term caution to prove the recent moves hold, although the tone was bullish. The QQQ looked the strongest followed by the SPY and then the IWM.

The week played out with Gold pushing higher while Crude Oil consolidated around the round number 100. The US Dollar broke the sideways motion lower while Treasuries consolidated their recent move lower. The Shanghai Composite and Emerging Markets both moved higher, with Emerging Market still not out of trouble. Volatility made a move back lower, continuing last weeks fall after some early consolidation. The Equity Index ETF’s showed strength, continuing the move higher. What does this mean for the coming week? Lets look at some charts.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

SPY Daily, $ SPY
spy d
SPY Weekly, $ SPY
spy w

The SPY started the week with a promising look after the push higher into the prior consolidation zone. The potential Evening Star candle on Monday at the falling 20 day SMA kept the caution flags up, but they were tossed aside later in the week with the bullish engulfing candle on Thursday and confirmed higher Friday. This chart looks headed for new all time highs again. The RSI on the daily chart is rising and bullish along with the MACD, both supporting more upward price action. The Measured Move targets 194.12 higher and there is resistance at 185 along the way. On the weekly view the strong near Marubozu candle confirmed the Hammer from last week higher. The RSI on this timeframe is moving back up, but never turned bearish, while the MACD is leveling, perhaps for a turn higher as well. Also bullish on this timeframe. Support lower comes at 181.80 and 177.50 followed by 175 and 173.60-173.75. Continued Upward Price Action.

Heading into the holiday shortened President’s week the equity markets are looking strong. Elsewhere look for Gold to continue in its uptrend while Crude Oil remains biased higher as it consolidates. The US Dollar Index looks better to the downside while US Treasuries look to be consolidating again. The Shanghai Composite and Emerging Markets are biased to the upside now. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, despite their strong moves higher this week. Their charts also look better higher with the QQQ and SPY perhaps a bit stronger looking than the IWM. Use this information as you prepare for the coming week and trad’em well.

Join the Premium Users and you can view the Full Version with 20 detailed charts and analysis: Macro Week in Review/Preview February 14, 2014

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____________________________________________________________________________________________________

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