Stanley Druckenmiller on the economy and IBM

Druckenmiller and Warsh op-ed in the WSJ

Yesterday I exited my position in MRO call options

The crude oil market hysteria has died down somewhat, as it becomes more clear that the main Iraq oil production for export is further south than the Islamic State is likely to reach in the near future. Oil supplies are unlikely to be disrupted in the next little while. With only 4 days left until expiration of the July call, I thought it best to exit the position which was 'in the money.'

The Iraq Oil Report is a website with useful information about the situation.
http://www.iraqoilreport.com/

I also like to read Army Times Early Bird Brief

Shift in Supply Curve Bearish for November Soybeans

Falling corn prices mean falling returns for farmers.  Some of them decide to plant soybeans instead.  Result, the supply curve for soybeans shifts to the right.  Prices for soybeans also fall.

Graph of Supply and Demand for Soybeans

Markets react to Monday's USDA crop report

Trading futures is like playing with dynamite.  You better know what you are doing.

Hedging Upside Risk in Oil Prices for the next Thirty Days

I took an "at the money" July call option position in MRO on Friday to protect against the risk of oil prices heading higher over the next thirty days, due to volatility in the middle east, etc.

How Low Can Grains Go?

Intelligence from the USDA Office of the Chief Economist (World Agriculture Supply and Demand Estimate) June 11, 2014, report (WASDE 560).

WASDE 560 the complete report

Preliminary conclusion:  Could be some money to be made on the short side of grains, somehow.

Hypothesis Testing--VIX Shows Bull Market Intact

I am still holding GOOGL, GOOG and PCLN, despite several technical sell signals.

My hypothesis is that with VIX remaining low, the bull market is intact.  This idea is causing me discomfort, because my stocks have been sinking, causing me that well-known feeling that I should sell.  It is somewhere around anxiety or fear for me as I wait for the VIX to prove me right.  As far as I can tell, the correlation between Google and S&P500 is .76.  It seems to be a little less at the moment.  Even so, I ask myself if I would buy Google at this price and I say 'yes.'  But holding it is still uncomfortable.

Hypothesis Null

I made a small bet last week that the Crimean Crisis would move the oil market.  That hypothesis was null.  It seems in the global economy, at least for now, what Janet Yellen says is more important than what Putin does in the Ukraine.

Yesterday, I took profits in Gilead Sciences, Inc. (GILD) on a technical sell signal.  Then I put the freed up cash into Google (GOOG).  That leaves me holding Google and Priceline only.

Toppy

The New York Stock Exchange Bullish Percent indicator flashed "Bear Confirmed" on January 27.  Last June it did the same thing, but the signal was false.  Last time I took the signal and got out of the market.  This time I'm wondering if this may be a 'normal' correction and I should wait it out.

Last June the VIX moved up near 22, which is relatively low in terms of a fear reading.  Today it is reading close to 21, so the number is comparable.  Last June the VIX peaked and then fell back to 12 while the market rallied.  A peak in the VIX is a short-term buy signal.  I am watching carefully to see which it is this time.  That's why they pay me the big bucks.

St. Louis Fed Shows Household Credit Debt Increasing Again

A sign that economic recovery is picking up speed.  Is it an increased confidence or families needing to borrow again willy nilly?

Market Loves Taper--Let The Santa Claus Rally Proceed

Today's Federal Reserve Statement

Gilead is a Strong Buy

Big Pharma isn't going anywhere.  Get used to it.  Healthcare is science, business and politics all rolled into one.  Standard and Poors gives Gilead a Strong Buy rating.  The point and figure chart gave a buy signal today.  Check the link for more information.

Standard and Poors Report on Gilead

I took a position in Gilead today.

Facebook Not Rising

It seems that Facebook is not granting me any favors.  By my risk management procedure, I closed the position.  I am still happy with my positions in Google and Priceline.  I have no currency position at the moment, so by default I am long the US$.  I still like Wolfram Alpha's analysis of stocks and portfolios.

Facebook Rising--Double Top Breakout

I took a position in Facebook stock today on the basis of the Point & Figure chart buy signal (double top breakout).  Holding an unleveraged position in the stock should be less like riding Fortune's wheel than the recent options experience.

Judgement Call

Facebook's uptrend is still intact, but October so far has been a roller coaster, considering the government shut down and all.  My October 48 calls may have been directionally correct, but the timing was not the best, since they expire on Friday.  With the expiration date looming and the implied volatility at 56 earlier today, I decided to protect capital and exit the position at 2.50 for a small loss of .16.  Naturally the market went higher after that.

Holding a position in the stock would have been easier.  Directional plays in options are more like gambling against the pros.  A near-the-money call gives you pretty much a 50-50 chance of losing all your premium.  Sometimes it still seems like a good idea, like adding an extra sail to your sailboat when the wind is right.  Or it can be more like wrestling an alligator.

I remain long Priceline and Google.  I have no position in currencies at the moment.  I am 60% in cash.

Dovish Fed Creams Dollar

After the market had "baked-in" a small taper and a likely Larry Summers Fed, surprise surprise!  The clock has been turned back. Ten-year bond rates had gotten ahead of themselves, resulting in too much dollar strength.  Emerging markets were wilting at the prospect of tightening monetary conditions.

The equity market bull is back for the short term.  I took positions today in Google and Priceline.  I expect to be short the US$ soon.  

Druckenmiller Not Short AUD/USD Any More--Waits for new Fed Chairman

I am no longer short AUD/USD.

Action Determines Character

With EPD continuing its "high pole warning" signal, I closed my position and retreated to the sidelines waiting character revealing actions in the Middle East.

I have no positions in the stock market for now.  I remain short the AUD/USD.  I attribute this week's rally in the OZ to the market pricing-in the change of government after tomorrow's election.  The more conservative government may be good for the Australian $, but time will tell.

Google Gives Another Sell Signal

I closed my position in GOOG near the close today based on
the point and figure chart sell signal, the 13% jump in the VIX,
and the market's agitation over the Syrian situation.

Oil is up 3%, gold and silver are up, and 10-year treasury note yields
are lower today.

Lagarde at Jackson Hole

Click here for Lagarde's story

I remain long EPD and GOOG.  Short the AUD/USD.  Subject to change.

Mobile Internet Opportunities

Both Facebook and Apple are on buy signals in the Point & Figure way of looking at things.  Both stocks have been beaten down for the past year, and I'm inclined to give them a green light on these signals.  Disclaimers, etc.