JT’s DAILY BLOG for Month 0f January 2012
All postings for the month are available here, sorted in descending order - i.e. most recent at the top
All times are Eastern Time - same as the NYSE
Final Posting Tuesday, 01/31/2012 6:55 PM
After a substantial pop at the open, the market spent the rest of the day giving it back, to close essentially flat, with the Dow30and the S&P 500 closing slightly down, and the other major indices closing slightly up. One reason cited by pundits was the uninspiring economic data that came out today, with each reading slightly worse than expected.
Earnings results and consequences for my stocks were:
Olin Corp (OLN) - Beat , Up $.11, Closed $22.26
Illinois Tool Works (ITW) – Beat, Down $.09, Closed $53.11
Pfizer (PFE) – Beat, Down $.15, Closed $21.43
United Parcel (UPS) – Beat, Down $.75, Closed $75.39
Exxon Mobil (XOM) - In Line, Down $1.69, Closed $83.80
Potlatch (PCH) – Missed, Down $2.40, Closed $30.60
RPM International (RPM) – It turns out that RPM reported on 01/05/2012. Another bad data point from my source had misled me into thinking RPM was yet to report.
No announcement yet from NLY. In checking the prior three Januarys, NLY reported in the February 2nd to February 4th time-frame, so that is when I expect to see it. It does seem odd that the company’s website does not provide this information. AZN, on their website, has stated that earnings will be reported February 2nd.
No trades today.
1st Posting Tuesday, 01/31/2012 9:00 AM
Asian markets were up, and European markets are all trading higher after yet another EU pact has been agreed to, with most European Union nations signing on for a stricter fiscal plan. U.S. futures are positive, indication the rebound that characterized the day yesterday will continue.
Economic readings due out today are:
8:30 AM – Employment Cost Index for Q4, from the Dept of Labor.
9:00 AM – Case-Shiller Home Price Index for November, from S&P
9:45 AM – Chicago PMI Index for January, from the Institute For Supply Management
10:00 AM – Consumer Confidence Survey for January, from The Conference Board
The only Upgrade/Downgrade action on any my stocks was Oneok Partners LP (OKS), downgraded from Outperform to Perform by Oppenheimer, citing valuation. (This means that there is nothing wrong with the company, it’s just that the stock has been bid up by the market to a level above what the rating entity thinks it is worth.)
There were three stocks that were supposed to report yesterday, NLY, AZN, and OLN. OLN did report after the bell, I will include OLN in the earnings recap for today. I still have no results for NLY and AZN.
Stocks (that I follow) due to report today are listed below, in some cases with results as I have learned. At the end of the day, I will recap with a summary of how the stock traded today. Note that “Beat” means the results beat analysts estimates, while “In Line” and “Missed” are as the terms would be interpreted by a normal human, not a stock junkie.
Olin Corp (OLN) - Beat
Illinois Tool Works (ITW) - Beat
Pfizer (PFE) - Beat
United Parcel (UPS) - Beat
Exxon Mobil (XOM) - In Line
Potlatch (PCH) - Missed
RPM International (RPM) – Not Yet Reported
An excellent article out this AM on MarketWatch’s “The Trading Deck”, from Bill Gunderson, entitled “A Very Healthy Dividend Payer”, is definitely worth a read. I may add the REIT he is touting, National Health Investors (NHI), to one of my lists, probably Tier2.
At this point, the short put I entered yesterday on Conoco (COP) is looking good. This is essentially a long position, although the worst case (I am forced to buy 100 shares of COP at $60.00 per share, but I keep the $250 I got when I sold the option) is a consequence I am prepared to accept.
Time to post and get ready for the day.
Initial Posting Monday, 01/30/2012 6:00 PM
Apparently buyers found their collective nerve and crawled out into the sunshine to buy stocks today, which resulted in the triple-digit Dow30 drop at the open being erased to only 7 points, a negligible amount.
After looking in several places, I cannot find any information on three stocks that were supposed to report today – NLY, AZN, and OLN. Both E*Trade and Yahoo Financial still say today is the day. I am especially interested to hear from NLY, a high-yield MREIT. I’ll keep watching, hopefully tomorrow we will see some results.
I took advantage of the downward start today to get filled on a Conoco (COP) put. After reflecting, I opted for an August 2012 put at a strike of $60.00, sold for $2.50. I was filled as COP hit the low of the day at $68.25, per the fill report, which showed the exact time of execution. COP rebounded with the market, closing at $68.72. I mention this because it doesn’t happen often. The market gods will probably punish me tomorrow for this! As to why this option, instead of what my prior post indicated, I decided this would be a better trade-off than the August $62.50 put for $3.00 and change. So, I now have an extra $250.00 in my account (less the $10.76 commission), and I have an obligation to buy 100 shares of COP at $60.00/share, which could come at any time between now and the third Friday in August, under certain conditions. If COP goes below $60.00, I could be assigned early, if someone on the other side of this trade wants to exercise and the option clearing authorities determine that I am chosen (this is a complex process). My experience has been that stocks can move well “into the money”, yet no assignment occurs – in fact, it is rare. If no early assignment occurs, the fate of the trade will be determined by where COP closes on the third Friday in August. If it is near the money, I may buy the option back for five cents on the dollar or so to avoid assignment. If it is above $60.00, I do nothing, I’m off the hook and I get to keep the $250.00. If it closes below $60.00, I still get to keep the $250.00, but I must buy 100 shares at $60.00, even if COP has fallen way under $60.00. Since this is in an IRA, I must maintain a cash balance of $6000 for as long as the option contract is open, although if the dang brokerage would pay anything on cash, I would collect some interest on the $6000, even though I can’t otherwise touch it.
That’s the short version of entering a put option. I’m suspecting no one cares to hear the long version. I usually have only one or two of these positions open at any given time. It is probably as close to “free money” as there is in the market, but I don’t like having my funds tied up, especially if the Euro crisis or something else should cause a “Lehman Moment”, i.e. a huge crash, when I want to be able to buy buy buy stocks!
Whew, I’m exhausted! Time to close down for the day. Or at least an hour or two, then it will be time to start the prep work for tomorrow. And to think, I used to believe I had a hard job as an IT manager, when I was usually done for the day by 6:00 PM or so.
1st Posting Monday, 01/30/2012 8:45 AM
U.S. futures indicate a lower open for the markets, as both Asian and European indices are universally in the red. The usual culprits appear to be the cause, as concerns mount over the European crisis once again. A summit of European leaders has been set for later on today. Economic releases scheduled for today (at 8:30 AM) are Personal Income, Personal Spending, and PCE. Okay, pop quiz time – define PCE. The definition from Investopedia is:
A measure of price changes in consumer goods
and services. Personal consumption expenditures consist of the actual and
imputed expenditures of households; the measure includes data pertaining to
durables, non-durables and services. It is essentially a measure of goods and
services targeted toward individuals and consumed by individuals.
Also referred to as "consumption."
Similar to the Consumer Price Index (CPI), PCE
is a report (actually a part of the personal income report) put out by the
Bureau of Economic
of the Department of Commerce.
There are two broad indexes of consumer prices in the United States: the CPI and the Chain Price Index for Personal Consumption Expenditures (PCEPI). They are similar in many respects, but there are some important differences that can lead to large gaps between CPI and PCEPI inflation rates. The PCEPI uses a chain index, which takes consumers' changing consumption due to prices into account; the CPI uses a fixed basket of goods with weightings that do not change over time.
Like the last quiz, Net LT TIC Flows (see Daily Blog posting for 01/18/2012), PCE is one of those arcane measures that only an economist could love. For the rest of us, it is a measure of inflation that takes into account substitutions people make, responding to prices, as opposed to the more well-known CPI, which consists of a fixed “basket” of expenditures.
Moving on to upgrades and downgrades that have come out on this Monday morning, I have seen four on my stocks:
NuStar Energy (NS) – Downgraded from OutPerform to Market Perform by Raymond James.
Procter & Gamble (PG) - Downgraded from Buy to Neutral by UBS.
Norfolk Southern (NSC) -. Downgraded from OverWeight to Neutral by Atlantic Equities.
MicroSoft (MSFT) - Upgraded from Neutral to OverWeight by Atlantic Equities.
I have come to rely on MarketWatch for the round-up of Upgrades/Downgrades, it is a more comprehensive list than the one that E*Trade provides. You would think that analysts’ readings on stocks wouldn’t matter much these days, since the scandals of 2002, but surprisingly, stocks do seem to react to them in the short-term. Some analysts have more effect than others – an upgrade/downgrade from a big name can definitely weigh on a stock for a day or so.
Seeking Alpha did a major website upgrade over the weekend, and the filtered news feed feature which I had come to rely on is not working – they posted a message saying they were working on it. I will have to drop back to manual methods to try to stay on top of earnings releases scheduled for today regarding stocks I watch. Tentatively, releases should be coming out for:
AstraZeneca PLC ADR (AZN) – 01/30/2012
Olin Corp (OLN) – 01/30/2012
Annaly Capital (NLY) – 01/30/2012
One final note: I did manage to get a new article published on Seeking Alpha, “Dividend Stocks: Which Way To Go – Blue Chips Or High Yield?” I have received positive feedback on the composition, if not wholly on the message, which is to be expected any time an opinion is offered – see the comments for a more complete picture, there are some good ones. The link is also available from the "SA Articles" selection on this website.
Time to start the week.
Final Posting Friday, 01/27/2012 5:40 PM
The market did not like the GDP numbers, apparently, closing down over 70 Dow points, although the NASDAQ and the small stocks index (RUT) did manage to eke out small gains. Earnings results and consequences for my stocks that reported were:
Dominion Resources (D) – Missed, Down $1.29, Closed $49.56.
Chevron (CVX) – Missed, Down $2.53, Closed $103.96.
Proctor & Gambel (PG) – Beat, Down $.50, Closed $64.30.
NuStar (NS) – Missed, Up .24, $58.80.
Altria (MO) – Beat, Down $.52, Closed $28.14.
Nextra Energy (NEE) – Beat, Up $.25, Closed $59.92.
American Electric Power (AEP) – In Line, Down $1.31, Closed $39.95.
AEP was supposed to report on Tuesday, 1/31/2012, per the E*Trade “snapshot”, but I saw that the earnings came out today when I reviewed the filtered news flow (for news on just my stocks) on Seeking Alpha. The E*Trade ex-dividend date and other data presented in the “snapshot” has proven highly reliable, but apparently the next reporting date as shown requires verification.
An interesting tidbit on NS in their release was that Distributable Cash Flow (DCF), which for an MLP is the relevant number (instead of reported earnings) when considering whether the payout is supported, came in at $.95 for the quarter, while the dividend to be paid, which was also announced today, is $1.095, meaning the DCF is a bit shy of fully supporting the dividend. This is not unusual for an MLP, but it does bear watching in future earnings releases.
I attempted to sell a cash-covered put on Conoco (COP) today, but did not get filled. I’ll keep trying. Sometimes it takes several days to get the price I’m asking on one of these.
The only ex-dividend dates next week on my stocks are Realty Income (O), 01/30/2112, Norfolk Southern (NSC), 02/01/2012, and Southern Company (SO), 02/02/2012.
Earnings expected, to be considered tentative, per the semi-reliable E*Trade “snapshot”, are:
AstraZeneca PLC ADR (AZN) – 01/30/2012
Olin Corp (OLN) – 01/30/2012
Annaly Capital (NLY) – 01/30/2012
Illinois Tool Works (ITW) – 01/31/2012
Pfizer (PFE) – 01/31/2012
United Parcel (UPS) – 01/31/2012
Exxon Mobil (XOM) – 01/31/2012
Potlatch (PCH) – 01/31/2012
RPM International (RPM) – 01/31/2012
Northrop Grumman (NOC) – 02/01/2012
Enterprise Products Partners L P (EPD) – 02/01/2012
Gladstone Investment Corp (GAIN) – 02/01/2012
Kellogg Co (K) – 02/02/2012
Black Hills Corp (BKH) – 02/02/2012
Spectra Energy (SE) – 02/02/2012
Clorox Co (CLX) – 02/03/2012
Keep in mind that, for a dividend investor, the two most important data items about a company are the dividend and the date it is “locked in”, i.e. the ex-dividend date, and the earnings which support the dividend, reported quarterly on the earnings date.
Time to hit the health club, I’ve been sitting here too long today.
1st Posting Friday, 01/27/2012 9:15 AM
Asian markets closed up, except for Japan, which again was the exception, closing down by a small .09%. European markets are trading mostly in the red. U.S. futures are in the green, but not by much. That could change after the advance reading on 4th Quarter GDP is released at 8:30 AM. The only other economic release scheduled for today is the final reading on sentiment from the University of Michigan, due out at 9:55 AM.
Update: While I was writing, GDP was released, coming in at only 2.8% vs. 3.2% expected. The futures have accordingly turned negative.
Reviewing the day’s initial upgrades / downgrades, four of my stocks came up on this particular radar screen:
AT&T (T) – Initiated by Credit Suisse at Neutral.
Exelon (EXC) – Downgraded from Buy to Neutral by UBS.
Nucor (NUE) - Downgraded from Buy to Hold by Deutsche Bank.
American Electric Power (AEP) - Downgraded from Buy to Hold by Deutsche Bank,
citing regulatory concerns. This is not good news. Nothing affects a utility more than relations with regulators.
Moving on, two MLPs on my list go ex-dividend today, Kinder Morgan (KMP) and Oneok Partners (OKS). Also, six of my stocks report today, and in fact have mostly already reported. Beat, In Line, or Missed expectations of analysts are as noted:
Dominion Resources (D) - Missed
Chevron (CVX) - Missed
Proctor & Gambel (PG) - Beat
NuStar (NS) – Still Waiting for NS to report.
Altria (MO) - Beat
Nextra Energy (NEE) - Beat
I will post a long list of my stocks that report next week in a mid-day posting later on. I have learned that these dates change frequently, per the source I am using, which is E*Trade’s “snapshot” view. So consider the list to be a list of tentative earnings dates.
Time to post and get ready for the day’s action.
Final Posting Thursday, 01/26/2012 5:55 PM
Stocks finished the day modestly down across all the major averages. The economic data reported today was slightly under expectations, which seemed to weigh on the market as the day wore on. The 10:00 New Home Sales came in at 307K, vs. expectations of 321K. The Index of Leading Indicators was reported as up only 4%, vs. 7% expected. Earnings season continues, generally upbeat but not universally so. Results on stocks I follow are:
Colgate Palmolive (CL) – Beat, up $1.91, Closed at $91.35
Eaton Corp (ETN) – Missed, Down .61, Closed at $48.93
Lockheed Martin (LMT) – Beat, up $.74, Closed at $82.47
McCormick & Co (MKC) – In Line, Down $.79, Closed at $51.07
3M Co (MMM) – Beat, Up $1.10, Closed at $87.58
NStar (NST) – Reported EPS increase of 3.5% (I could not find a posting that related the results to analyst’ estimates), Up .44, Closed at $45.58
Novartis (NVS) – Missed, Down $.41, Closed at $54.80
Nucor (NUE) – Beat, Down $.39, Closed at $44.13 (This actually came out yesterday, I somehow had missed it.)
Valley National Bancorp (VLY) – Beat, Down $.79, Closed at $12.22
AT&T (T) - Missed, Down $.76, Closed at $29.45 (I missed T when I put out my list of stocks reporting today. This is happening too often, I will need to reconsider either my source or my method.)
Old Republic (ORI) – Missed, Up $.08, Closed at $9.56
I looked at several possible option sales today, but no moves yet. Stocks are too high to buy, and I’ve already sold everything I’m willing to let go of, so options are the only moves I am considering right now. If we have another up day tomorrow, I might make a move.
1st Posting Thursday, 01/26/2012 9:15 AM
Asian markets closed up, with an exception being Japan – the Nikkei closed down .4%. European markets are trading in the green at this moment. U.S. futures are modestly positive, but that might change after the release of the closely-watched weekly report of unemployment claims at 8:30 AM. Also on tap at 8:30 AM is the Durable Goods reading, which can also affect the market. The numbers just came out – Initial Claims for Unemployment increased slightly to 377K, still under the psychologically important 400K level. Durable Orders came in at +3.0%, better than the +2.0% expected. The futures have ticked up slightly, so we are still on track for a positive open. Additional economic data to be released today are New Home Sales and Leading Indicators, both scheduled to come out at 10:00 AM EST.
Moving on to the morning’s batch of upgrades / downgrades, to see if any new ratings have been issued for my stocks, I see that we have a couple:
Kinder Morgan (KMP) was downgraded from OutPerform to MarketPerform by Raymond James.
Southern Copper (SCCO) was downgraded from Hold to Sell by Dahlman Rose, citing concerns over political stability in Peru. This stock is in my high-risk Tier3 group. Adhering to my maximum buy price will compensate for the high risk. In addition to political risk, the stock is captive to world copper prices, which in turn are affected by world economic activity levels.
I see several interesting reads on Seeking Alpha this AM. Contributor Zvi Bar has confirmed my own thinking on the effects of yesterday’s Fed announcement on Mortgage REITs, in his article “Bernanke Buoys Mortgage REITs With Another Low Rate Time Extension”. There are a couple of others I will take a look at, and will suggest in my next post if I find them as interesting as the titles suggest.
A number of my stocks report today. They are:
Colgate Palmolive (CL)
Eaton Corp (ETN)
Lockheed Martin (LMT)
McCormick & Co (MKC)
3M Co (MMM)
Valley National Bancorp (VLY)
I will recap their results in my after-market post.
Time to send, it is getting late.
Final Posting Wednesday, 01/25/2012 7:00 PM
Today was an interesting day. First of all, I have to eat my words regarding my comments about the Fed. True, there was no suspense regarding the current Federal Funds Rate, which remains at .25%. But, the surprising new language in the Fed’s statement, that they expect to keep rates at extremely low levels into late 2014, caused stocks to turn around from the negative lows they were at, finishing in the green across all the major averages. The various pundits had much to say about this, but the consensus seemed to be that the Fed was still very nervous about the economy, recent modestly positive data not withstanding.
The earnings results and impacts, for one day at least, for the five stocks I was watching, plus another I had missed (Southern Company (SO), are as follows:
Abbott Labs (ABT) – Beat estimates, dropped $.75 on the day, closing at $55.23.
ConocoPhillips (COP) – Beat estimates, dropped $.63 on the day, closing at $69.98.
Excelon (EXC) – Missed estimates, up $.79 on the day, closing at $40.01.
Amerigas Partners (APU) – Missed estimates, up $.34 on the day, closing at $43.99.
Boeing (BA) – Beat estimates, up $.46 on the day, closing at $75.82.
Southern Company (SO) – in-line with estimates, up $.22 on the day, closing at $45.12.
Looking at the statements above, the oft-used phrase, “what’s wrong with this picture?”, comes to mind. As I have noted previously on numerous occasions, stock price movements frequently make no sense in the short-term.
So, the rally is back on, at least for today. I have moves I want to make either way – I just require some movement, again, either way. For example, considering just this small group, moves I would consider are:
ABT – Initiate a new position at $52.00 or less. (Called away recently at $55.00.)
COP – Sell another put, probably at a strike of $60.00, if it can be sold for $2.00 or so – which will require COP to go lower. (Sold a $57.50 put a few months ago, which expired last week.)
EXC – Add to my position under $38.00. (I already added recently at $39.37.)
APU – One of the few MLP’s not bid up to ridiculous levels, I would consider starting a position at $42.00 or less. This propane dealer is depressed because of a warmer than normal winter, so far at least – but not depressed enough for me.
SO, BA – Extended so far up in price that they are not on my radar at all these days.
Perhaps opportunities will arise on these or other stocks I’m watching tomorrow or Friday. That’s the approach, decide what you’re looking for, then watch and wait until something happens that demands action. Most days, there is no action called for. But when there is, you try to make some money.
1st Posting Wednesday, 01/25/2012 9:25 AM
Asian markets closed in the green, while European markets are all trading down. At least there is consistency on each continent. U.S. futures are down modestly, except for the NASDAQ, which is up +15 points or so on the strength of Apple’s (AAPL) “knock the cover off the ball” earnings results. Economic releases coming out today are the weekly MBA Mortgage Applications, Pending Home sales, FHFA Housing Price Index, Oil Inventories, and (yawn) the FOMC announcement. “Back in the day”, as we oldsters sometimes say, the FOMC announcement was a big deal, and unintelligible comments from Greenspan could move the markets in a major way – but no more.
There have been several downgrades today on my stocks:
First Energy (FE) – Downgraded from OutPerform to MarketPerform by FBR Capital, new price target $40.50. Not good news for me, I’m trying to sell a $45 strike call.
McDonalds (MCD) – Downgraded from OutPerform to Perform by Oppenheimer.
McDonalds (MCD) – Downgraded from Buy to OutPerform by CLSA, on valuation.
Kimberly Clark (KMB) – Downgraded from OutPerform to UnderPerform, by CLSA.
Kimberly Clark (KMB) – Downgraded from Buy to Neutral, by UBS, new price target $75.00.
Nestle (NSRGY) - Downgraded from Buy to Hold by Collins Stewart.
Diageo PLC (DEO) – Downgraded from Buy to Hold by Collins Stewart.
I believe most of these downgrades are based on valuation, not because these firms suddenly have dim prospects. When the market has had a run like we’ve had, these types of downgrades are common. Since I have specified maximum buy prices on all recommended stocks, I believe I have this covered.
Earnings coming out today are Abbott Labs (ABT), Boeing (BA), ConocoPhillips (COP), Excelon (EXC), and Amerigas Partners L P (APU).
Time to buckle in and get ready for today’s action.
Final Posting Tuesday, 01/24/2012 6:45 PM
Today marks the first time since I started this website that I had an outage at my web hosting service (Earthlink). It lasted all day, and even when it was “fixed” I had to rebuild the website, it was wiped out by their “fix”. This is the most stress I’ve had since I retired – I had forgotten how much fun an IT outage can be. Anyway, the site is back up.
Other than that excitement, it was another dull day. The averages finished mixed. McDonalds (MCD) reported outstanding earnings results, but the stock declined anyway. Kimberly Clark (KMB), DuPont (DD), and Johnson & Johnson (JNJ) all reported so-so results. KMB traded down, while DD and JNJ ended up flat on the day. Molson Coors (TAP) dropped over 2%, presumably from the downgrade from UBS. So, my GTC option sale order on TAP went nowhere. Consolidated Communications (CNSL), from my Tier3 (high-yield, high-risk) list, dropped quite a bit today, on no news that I could find. The point of all this is that in the short term, stock price moves frequently make no sense whatsoever. If a company is profitable and dividends are being paid, don’t worry about short-term movements, other than to take advantage of them occasionally.
One error from last Friday’s post was that I had noted that two of my stocks would be reporting on Monday. Finding no data, I investigated and learned of my error. For the record, American Electric Power (AEP) will report on Thursday, January 26, and Altria (MO) will report on Friday, January 27.
Using my time wisely today, I determined that Seeking Alpha allows a (registered) user to define a portfolio, or several portfolios, and then see a filtered news feed for just the stocks in a portfolio. This is great for checking up to be sure you are not missing any developments that you want to be aware of. Just another reason why any serious investor needs to register (it’s free) and make use of this website.
I hope tomorrow is better than today. The weather here in Austin was right up there with my mood, with rain and hail!
1st Posting Tuesday, 01/24/2012 8:45 AM
Up early this AM. As I’m eagerly awaiting receipt of my General Electric dividends this week, I was reminded of the famous quote from John D. Rockefeller, the most famous of the “robber barons” of the 1800’s, which, slightly paraphrased, was “the only thing that gives me pleasure is to see my dividends coming in”. That, and the fact that we have the same first name and middle initial, is where the similarities between myself and the oil magnate end, unfortunately. In verifying the quote, I got sidetracked reading his biography on Wikipedia, which is fascinating – he will likely always be the world’s richest man, estimated at his death, at age 97, to be in excess of $600 billion in today’s dollars. The dividend quote was, presumably, after he retired from active business management. He must have enjoyed a comfortable retirement income from his dividends.
As promised, I have located a couple of free resources for analyst upgrades / downgrades. MarketWatch has a selection for “Analyst Ratings” in their “Before the Bell” section, which produces a list. You can click on an individual entry to get details, per “theflyonthewall.com” website. Another source is The Street.com, Research, Upgrades/Downgrades, per the daily article, "Analyst Actions". Much more comprehensive than what I’ve been getting from E*Trade, this daily recap, usually out by mid-morning, reports not only Upgrades / Downgrades / Initiations of Coverages, but also analysts’ earnings estimate revisions. I intend to check these resources daily from now on. Another handy news feed source that I use is Think or Swim, the massive trading platform available through TD Ameritrade. The LIVE NEWS (as opposed to what – DEAD NEWS?) “Gadget” resource is useful to check for any recent news on a stock – just enter the stock symbol and press ENTER, and a filtered list of news articles will be presented, going back as much as several weeks, with the most recent at the top. If the symbol area is blank, all news is shown, which is more than any mortal could possibly absorb. I’m trying to find a way to filter the feed per a stock list, not just one stock, which would be really useful. I would have thought that would be possible, but so far I can’t see a way to do it.
Now on to the usual daily pre-review. Asian stocks closed up, while European markets are trading down, as the Euro crisis continues. U.S. futures are down significantly, indicating a negative start. Upgrades / downgrades so far on my stocks are:
Molson Coors (TAP) - Downgraded from OutPerform to MarketPerform by UBS
Merck (MRK) – Downgraded from Buy to Neutral by ISI Group.
Earnings are to come out today for Johnson & Johnson (JNJ), Kimberly Clark (KMB), McDonalds Corp (MCD), Norfolk Southern (NSC), and Du Pont E I DE Nemours (DD).
Seeking Alpha’s “Wall Street Breakfast”, generated daily before the open, provides an excellent summary of earnings scheduled and recent results.
No economic releases are scheduled for today.
I’m not looking to do much today. I’m still trying to sell a covered call on TAP, but it doesn’t look good at this point. Now that I have my First Energy (FE) position restored, I may consider a call sale on these shares.
Time to publish. I’ll be back with an update after the close.
Final Posting Monday, 01/23/2012 7:30 PM
I’m running a little behind schedule today in getting my end-of-day recap out, but I guess if I’m going to be late, at least I picked a dull day. The major averages all finished slightly up (NY Composite, S&P 500) or slightly down (Dow 30, NASDAQ, Russell 2000).
Right after I posted this AM, Stifel Nicolaus downgraded Proctor & Gamble (PG) from Buy to Hold. A press release I managed to locate on Think or Swim’s news feed stated that the concern was impacts of currency exchange rates and higher input costs, and that PG’s price increases had cost them market share. I guess those reasons are good enough, although it seems to me that all companies producing consumer products for mass consumption face those issues today, same as it has been for the preceding 50 years. Anyway, PG did drop down $1.23 today. While still not a great buy, it is a better buy by $1.23 than it was Friday. My maximum buy price is $58, so it is still some distance away.
More puzzling to me was a downgrade of ConocoPhillips (COP) by UBS from Neutral to Sell. A brief note on the same news feed gave no details as to why this downgrade was made. UBS also lowered the price target from $68 to $60. My maximum buy price is $55, but my max buy levels are all seriously out of date since they were set last fall after the October swoon. As I have said before, I’m going to hang tough through the end of the 1st quarter of 2012, and if this insane rally continues past then, I’ll have to increase my buy levels on most of my stocks. All I can say about this downgrade is UBS must know something no one else knows (COP closed today at $70.56) about COP. Usually analyst downgrades to Sell should be taken seriously, unlike all other analyst calls.
Lastly, Fifth Street Finance (FSC), one of my Tier3 BDCs, dropped today (modestly, actually) after announcing a 10 million share secondary offering. A news feed article stated that FSC will use the funds to invest in more companies (that’s what BDCs do), which means if they allocate wisely, FSC will be $10 million more valuable. Secondary’s often present a buying opportunity upon the inevitable drop after they are announced, although in this case FSC didn’t drop much, only $.54 today. If you want to know more about BDCs, read my recent article on Seeking Alpha per this LINK.
Reader’s of this post will recall I recommended buying NuStar (NS) a month or so ago when it dropped on the news of a new offering, to around $53. Today NS closed at $58.93. I did take my own advice, but unfortunately I did not buy very much.
That’s it for the wrap-up. No trades today for me.
1st Posting Monday, 01/23/2012 9:00 AM
As is my custom, the first thing I look at in the AM is how the Asian & European markets fared since I last looked, in this case since last Friday. The Chinese (Hang Seng, Shanghai) and Indian (Sensex) markets finished higher, while the Japanese (Nikkei) ended flat. European markets (FTSE 100, CAC 40, DAX, FTSE MIB, IBEX 35 IDX), still trading at this moment, are all up on the day.
The next item I look at is the U.S. Futures. At this moment they are modestly bullish.
My preferred source for these observations is MarketWatch.
Next I scan to see if there are any scheduled economic releases on tap today. There are none on this Monday. I use my E*Trade account for this, which requires one to have an account there. An excellent free source for this data is Seeking Alpha’s “Wall Street Breakfast”, which is available every morning. I also use E*Trade to review their round-up of analysts’ upgrades, downgrades, and newly initiated coverages to see if any stocks I follow have been listed. I don’t have a free source to list for this item at this time, I’ll try to locate one for a future posting.
Now, with about an hour to go until the open, I scan Seeking Alpha, MarketWatch, and a couple of additional websites to see if there are any articles that grab my attention. If an article really gets my attention, I will mention it. The latest missive from noted economist and writer John Mauldin, available to all as a free email newsletter subscription (Click HERE to sign up) , in his “Thoughts from the Frontline” series, really grabbed my attention. Entitled “Staring into the Abyss”, it is a must-read. If anyone thinks the EURO crisis has blown over (which recent market action seems to reflect), they need to read this article, it will add greatly to one’s perspective.
Finally, I reflect on any moves I might be considering. Per last Friday’s 2nd post, only two of my stocks report earnings today, American Electric Power (AEP) and Altria (MO). Also as per last Friday’s post, 1st posting, Clorox (CLX) goes ex-dividend tomorrow. As is the case for all of my stocks, I would not be a buyer of CLX at the current elevated price.
As anticipated in my final posting last Friday, my short put on Conoco (COP) expired worthless (thank you Mr. Market for the free $150.00), and my short put on First Energy (FE) was assigned (thanks for nothing, Mr. Market, for letting me buy a stock for $43.00 that closed at $41.53, costing me an extra $147.00, although you did at least kick back $71.00 to me, so my excess cost was only $76.00). These trades are discussed in detail in my final posting from last Friday.
Time to release this masterpiece of a posting and get ready for the market day.
Final Posting Friday, 01/20/2012 5:25 PM
It took all day, but the rest of the market more or less caught up with the Dow30 (which was aided greatly by IBM’s big jump up by $8.00) to turn positive, except for the NASDAQ, which finished down ever so slightly, as four of the major NASDAQ bellwethers (GOOG, AMZN, NFLX, and APPL) traded down, proving to be too much for the NASDAQ average to overcome. Volatility has been down markedly all week. For example, consider today’s TICK readings: the TICK went above +1000 once, and did not go below -750 all day.
The positive day wasn’t enough to bail me out on my short put on First Energy (FE), which closed at $41.53. I will be privileged to buy it at $43.00, having sold a January put at that strike, which expires today. With a $.71 put premium, I will be paying an effective price of $42.29 per share, thus paying $.76 per share more than today’s close. So my first venture into the realm of deliberately selling a put near the market (at that point) with a good chance of being assigned, thus using a put as a contingent purchase strategy, did not work out very well. Still, if I instead had just purchased the shares on that day (which was 01/03/2012), my position at this point would be poorer by more than $.76 per share, as FE was trading above $43 at that point. All of the preceding ignores commissions, which are of course greater with the contingent purchase via a put as opposed to just buying stock. Of course, I could have just waited to buy and gotten a better price, but considering the stock had been above $45 only a few short weeks earlier, I had to consider the possibility the stock might go up and cost even more to acquire. This just illustrates some of the debate one must have with oneself when deciding upon a strategy.
My other short put, ConocoPhillips (COP), at a strike of $57.50, was more typical of the put selling I normally engage in. Sold for $1.50 on 08/03/2011, I’m pretty sure I have a winner here, after-hours trade is not likely to change much from COP’s closing price of $71.20. (See my article on Seeking Alpha here for an explanation of option “pin risk” and possible effects of after-hours trading on expiration Friday on option positions.) This was as close to “free money” as you’ll ever find in the market, in my opinion - $150.00 less only one option trading commission.
So, considering both option trades, I’m ahead, and we have the NFL conference championships on Sunday, so life is good!
Until next week…….
2nd Posting Friday, 01/20/2012 10:05 AM
MarketWatch’s headline on GE was misleading. Seeking Alpha’s Wall Street Breakfast column reports GE EPS rose 11% and beat expectations, although revenue dipped 8%. GE’s infrastructure order backlog of $200B is the largest in it’s history, indicating GE is well-positioned going forward. I guess you just can’t read too much into a headline designed more to get attention than to inform.
Stocks on my lists reporting next week:
American Electric Power (AEP)
Johnson & Johnson (JNJ)
Kimberly Clark (KMB)
McDonalds Corp (MCD)
Norfolk Southern (NSC)
Du Pont E I DE Nemours (DD)
Abbott Labs (ABT)
Amerigas Partners L P (APU)
Colgate Palmolive (CL)
Eaton Corp (ETN)
Lockheed Martin (LMT)
McCormick & Co (MKC)
3M Co (MMM)
Valley National Bancorp (VLY)
Dominion Resources (D)
Nothing much to comment on in the first 30 minutes of trade. ENI S P A (E) has been moving up lately, for no specific reason that I can see. I'll keep a watch on it.
1st Posting Friday, 01/20/2012 9:15 AM
Asian markets closed solidly in the green, while European markets are trading in the red. U.S. futures currently indicate a lower open. Per MarketWatch, GE’s earnings report has contributed to the negative tone, with profit off 18%. MarketWatch’s Howard Gold has an interesting new article on Gary Shilling, the noted economist, who proclaims “a new global recession is here”.
Economic releases finally slow down today, with only a 10:00 AM release of New Home Sales on tap. Two downgrades came out on my stocks: Realty Income (O), from Outperform to Market Perform, by FBR Capital; and Intel (INTC), from Buy to Hold, by Kaufman Bros. Nothing to react to here.
The only stock on my lists with an ex-dividend date next week is Clorox (CLX), 01/24/2011.
I will release a 2nd post at mid-day of stocks on my lists with earnings next week. It will be a long list.
Time to get ready.
Final Posting Thursday, 01/19/2012 6:25 PM
This was a low-volatility day, although it did manage to finish up slightly higher, per all the major averages. Intel’s (INTC) earnings, as per the headline on MarketWatch, posted a modest gain, beating estimates. MicroSoft’s (MSFT) profit was down slightly from the year-ago quarter, although it came in high enough to exceed analyst’s estimates. Revenue was up over the comparison period. MarketWatch’s brief synopsis also reported that INTC was up slightly in after-hours trade, while MSFT was up 2% in after-hours.
I missed one upgrade / downgrade this AM. Digital Realty (DLR) had coverage initiated by Collins Stewart at Neutral. While technically not an upgrade or a downgrade, I also report initiations or resumptions of coverages on any of my stocks in my AM roundup, as collected up by E*Trade.
I raised my bid enough to add to my position in Exelon (EXC), buying at $39.37, which I consider to be a pretty good price. EXC closed at $39.50, and the day’s range was $39.35 - $39.86, so per Dr. Elder, I rated out as an ‘A’ trader, for this one day, at least. (Dr. Alexander Elder, author of several trading books, rates a trade based on where it was executed in the day’s range, with buys close to the bottom and sells close to the top receiving the top ‘A’ rating.) Of course, one day’s smart move can look quite dumb a few days down the line – that’s just the nature of the game.
One day to go in the trading week – with three up days in a row just finished, the betting would be in favor of a down day tomorrow, but of course news can always overcome any expected tendencies.
Until the AM……
1st Posting Thursday, 01/19/2012 8:30 AM
Asian markets all finished up over 1%. European markets are likewise trading in the green. U.S. futures are indicating yet another positive open, although there is still over an hour to go before the open. Helping the positive tone, Bank of America (BAC) reported better than expected results this AM. Less encouraging, but expected, Kodak filed for bankruptcy protection. As for earnings reports on stocks I follow, Kinder Morgan (KMP) reported (yesterday) increased revenue and profits on increased natural gas transportation activity. The El Paso acquisition is still the major news related to KMP. Intel (INTC) and MicroSoft (MSFT) report today.
I just last night got around to reading John Mauldin’s latest email newsletter (you can subscribe free at www.frontlinethoughts.com), “Outside The Box” edition, which was a guest commentary from Hoisington Investment Management. The picture as presented in this essay is not encouraging.
A long list of economic releases will be coming out shortly, before the open, to include the weekly unemployment Initial Claims, CPI, Housing Starts, and Building Permits. Then, later on, the Philadelphia Fed manufacturing index will be released at 10:00 AM, followed at 11:00 AM by the weekly Oil Inventory report.
No upgrades / downgrades on any stocks I follow. The only planned move I might make today would be to add to my position in Exelon (EXC), which is approaching “buy territory “, as it has moved under $40 recently.
Time to cinch up the seat belt and don the helmet, the hour approaches.
Final Posting Wednesday, 01/18/2012 7:50 PM
It was a great day for the bulls, from start to finish. Unlike some recent days where the market popped up at the open, then gave back a portion through the day, it started quietly, and kept stair-stepping up all day, finishing out at the highs. It has to be terribly disappointing to the “doom & gloom” crowd, but it appears the end of the world has been delayed, yet again.
I sold my “orphan” position in 3M (MMM). Purchased during the October swoon, at an average price of $71.67 over two increments, I couldn’t resist cashing out at $85.00. I did collect one dividend, also. A couple of statistics on this trade: annualized return comes in at 74%; the capital gain equates to over six years of dividends. Although I expect MMM will increase the dividend regularly over the next six years, but based on past increases, not by enough to significantly affect the calculation.
If we have another swoon like October, I’ll be a buyer of MMM once again. It is unquestionably a great company, one of the bluest of blue chips, but not overly generous as far as dividends are concerned.
Two more trading days to go this week. It would be unusual for the up trend to continue without a pull-back, but we shall have to wait and see.
1st Posting Wednesday, 01/18/2012 9:20 AM
I just noticed yesterday’s post said Monday, not Tuesday. I hate it when that happens. Although that’s not as bad as when writing a check I can’t remember what year it is. Anyway, markets are a little less positive than yesterday. Asian markets finished mixed, with the Nikkei and Hang Seng up, Shanghai and Sensex down. Europe is trading mostly in the red. U.S. futures are modestly positive. Economic releases thus far are the MBA Mortgage Index, up a whopping 23.1%, plus PPI / Core PPI coming in at -0.1 % / +0.3%. The MBA Index indicates refis are not slowing down, which means continued pressure on MREITs. We have a full plate of economic data today, with readings on Net LT TIC Flows, Industrial Production, Capacity Utilization, and finally, the NAHB Housing Market Index. I’ll bet if you ask the proverbial “man on the street” to define “Net LT TIC Flows”, you’ll get a blank stare. Heck, that’s what you’d get if you asked me. The definition, from a posting by MERK Funds, is:
“The sum of gross purchases by foreigners from US residents minus gross sales by foreigners to US residents. The components used to calculate long term flows are US Treasury bonds and notes, US government agency bonds, US corporate bonds, US corporate stocks, foreign bonds and foreign stocks. (TIC signifies: Treasury International Capital Flows)”
So now you know. You can quote this and amaze your friends. Moving on to upgrades / downgrades, Nestle (NSRGY) received an upgrade from HSBC Securities, from Neutral to Overweight. No other upgrades / downgrades on any of my stocks.
On Marketwatch’s The Trading Deck, author Michael A. Gayed goes against the consensus outlook in his article “The mother of all buying opportunities?”.
The only move I might make today (excepting, of course, the occasion of an unexpected opportunity) is sell a small position in 3M (MMM), acquired at a bargain price during the October mini-crash. Unfortunately, I didn’t buy much, thinking at the time a bigger swoon was in store because of the Euro crisis. Since it now looks like I have an “orphan” position, ”I’ll just take the money and run” if I can sell it for $85.00 or so. I could have done so yesterday early, but I hadn’t made that momentous decision (to sell) yet. Note: an “orphan” position is a small, starter position bought at a good price, but then the stock reverses and jumps up significantly, such that I can’t buy more without seriously increasing my cost basis.
Time to get ready.
Final Posting Tuesday, 01/17/2012 5:40 PM
Stocks hit multi-month highs intraday, then sold off somewhat, yet still finished solidly in the green. Later in the day, Howard Weil, an energy investment boutique, upgraded Statoil (STO) from Market Perform to Market Outperform, and downgraded Exxon (XOM) and Royal Dutch-Shell (RDS.A) from Market Outperform to Market Perform. While the notation on Shell specified RDS.A, I would assume the opinion applies equally to RDS.B, since both symbols apply to the same company. (To avoid foreign tax withholding, buy RDS.B, not RDS.A, if buying stock in this company.) All three stocks are above my buy levels, same as all my other stocks. In fact, before today’s run up, I was planning to buy more shares (actually, units in the case of an MLP) of NuStar Energy (NS) if it went below $55, which looked likely before today, and then sell a covered call. I missed it, as it popped up $56.51, closing at the day’s high. The next NS distribution, though not yet announced, should occur in the next two or three weeks. Even though I would not be averaging down on NS if I had been able to buy at $55, the dearth of opportunities sometimes requires deviation from the ideal script.
First Energy (FE) looked like it might move above the $43 strike, hitting an intraday high of $42.66, before selling off to close down just below $42.
One move I made today was selling all holdings of Provident Energy (PVX), a former Canadian Trust, taking advantage of a pop up of $2.00 and change, as it was announced that PVX would be acquired by Pembina Pipeline (PBNPF), which trades on the Toronto exchange and over-the-counter in the U.S. I effectively broke even on PVX, after buying on 5/24/2007 for $11.61, and selling today at $11.40, but I did manage to collect $368.92 in dividends (net of withholding) over the time frame. You win some, you lose some, and some end up as a tie.
1st Posting Tuesday, 01/17/2012 8:45 AM
Asian markets finished up solidly, European markets likewise trading in the green, U.S. futures positive, all indicating a positive open should be in store today.
The only scheduled economic release is the Empire State Manufacturing Index, to be out at 8:30 AM. It just now came out, 13.5, quite a bit above the 10.0 expected. So far so good on this week.
No upgrades/downgrades so far on any of my stocks.
I have two options expiring this week, both puts, which is unusual for me. Details:
Cash-covered Put on Conoco (COP), strike of $57.50, sold 08/03/2011 for $1.50. I never really expected COP to get this low, and it hasn’t. I would have been happy to buy it there, who wouldn’t, COP has ranged into the 70’s since then. This put was “free money”.
Cash-covered Put on First Energy (FE), strike of $43.00, sold 01/03/2012 for $.71. I had just been assigned in December on an FE covered call at $45, and FE goes ex-dividend in early February (02/03/2012), so I wanted to get back in before then. I usually sell puts expecting them to expire worthless. In this case I sold with the expectation that I would be assigned, picking up FE comfortably ahead of the ex-dividend date, with an effective price (ignoring commissions) of $42.29. If FE jumps up and I am not assigned, I plan to buy some anyway the following week, with the caveat that I don’t want to pay more than $44.00. Stay tuned.
Time for the 2nd cup of coffee.
Final Posting Friday, 01/13/2012 5:30 PM
Stocks dropped at the open and stayed down all day, although they did not close at the lowest levels reached during the day. The big news of the day was the downgrade by S&P of nine European nations: France, Austria, Slovenia, Slovakia, Spain, Malta, Italy, Cyprus, and Portugal. Italy had the distinction of being downgrade two levels. If this had occurred a few months ago, it probably would have caused a 500 point drop in the Dow30 average. It looks to me like U.S. markets have become almost immune to the shock effect of European troubles.
No trade actions today. Next week is options expiration week, which is always interesting. I have a couple of plays in progress, which I’ll be talking about.
Monday is a holiday, markets will be closed, so I’ll be back here Tuesday.
1st Posting Friday, 01/13/2012 9:15 AM
Asian markets finished up except for Shanghai, which declined 1.3%. European markets are trading up except for the FTSE, which is off a tiny fraction. U.S. futures are moderately off “fair value”, as J.P. Morgan Chase (JPM) reports revenue was off 17% for the recent quarter. Economic releases out at 8:30 AM were so-so, not particularly inspiring, but not seriously amiss either. Import Prices (ex-oil) were down .2%, Export Prices (ex-ag) were up 1%, and the Trade Balance (actually, imbalance) came in at -44.0 billion. All that remains is the University of Michigan Sentiment Survey for January, due out at 9:55 AM, which is predicted to come in at 73.0.
One of the stocks I follow, Excel Energy (XEL), received a downgrade from Outperform to Neutral from Robert W. Baird. The utility’s market price is extended above what I would be willing to pay (as is the case for all of my stocks at the moment), but other than valuation, I don’t see any reason for the downgrade, so I’m not changing my recommendation on XEL.
Stocks on my lists that will either go ex-dividend or report earnings next week are:
Ex-Dividend – none
Report Earnings – Three companies:
Kinder Morgan (KMP), 01/18
Intel (INTC), 01/19
MicroSoft (MSFT), 01/19
As we move deeper into earnings season, these lists will grow considerably longer the next few Fridays. As I stated on Monday, I will present this data weekly. After thinking it over, I have decided that Friday is the day I will put this data out, so if anyone is interested, they would have time to do something before the next week, which would be too late for any stocks going ex-dividend on Monday of the next week. (Moot point for next Monday, which is a market holiday due to MLK day.)
Time to get ready.
Final Posting Thursday, 01/12/2012 5:30 PM
Another slow day. But at least the market overcame the early disappointments on the economic news front to avoid a loss.
I have been noticing that Molson-Coors (TAP) is on the upswing lately. I own it, so I decided to attempt to sell a call against my shares. The strike ranges are pretty wide ($5.00 increments), so I settled on the July $50.00 strike call, trying for $.90. I usually require at least $1.00, but with a strike $5.00 out of the money, I’ll settle for $.90. Figuring (correctly) that it probably wouldn’t get there today, I also made the order a GTC instead of a DAY order, again something I don’t normally do. I’ll leave this one in for a while and see if it flies.
The American Institute of Individual Investors (AIII) weekly survey out yesterday shows that the per cent bullish is up to 49.1%, while the per cent bearish is down to 17.2%. While no single indicator is foolproof, when the AIII survey has reached these types of extreme readings in the past, it usually has meant that we are at a market top.
1st Posting Thursday, 01/12/2012 9:15 AM
Asian stocks fell, but European stocks are in the green so far. U.S. futures, while still modestly positive, took a hit after a couple of lackluster economic releases at 8:30 AM. Initial Claims rose to nearly 400K once again, and Retail Sales fell short of expectations. Remaining economic releases for today are Business Inventories at 10:00 AM, and the Treasury Budget at 3:00 PM. Two of the stocks I follow received downgrades today from KeyBanc Capital Markets; Digital Realty Trust (DLR) from Buy to Hold, and HCP Inc (HCP) from Hold to Underperform. While I never like to see a stock I have favored downgraded, I’m not going to over-react to this one.
Final Posting Wednesday, 01/11/2012 6:20 PM
Another lackluster day with hardly any movement after the opening bell. The TICK readings never went above +1000 or below -1000.
I did make one move, however. I added a small, incremental amount to an existing “legacy” position in Frontier (FTR), at less than $5.00. Recall that a “legacy’ position is stock I own left over from when “I didn’t know what I didn’t know”, that is not on my recommended list, but is still paying so I’m keeping it for now.
Well, college football is all finished, nothing left in life to look forward to but the NFL playoffs. This weekend will be a full plate. Yea! Until tomorrow…
1st Posting Wednesday, 01/11/2012 8:50 AM
Asian stocks closed mostly in the green, European stocks are trading down, U.S. futures are moderately negative. Earnings season will not get into high gear until next week. The only economic release today of any significance is the weekly oil inventories at 10:30 AM. The Fed Beige Book will come out at 2:00 PM, but the Fed’s releases these days are yawners’, nothing like the old days when unintelligible comments from Greenspan could move the markets in a major way. Since I said that, just watch, today will be different.
No upgrades/downgrades on any of my stocks so far today, or for that matter, so far this week.
Well, I played a dangerous game and lost. I had sold a January call against my Abbott (ABT) shares with a strike of $55, and I was assigned at the close yesterday. This was an early assignment, triggered by the fact that today is the ex-dividend date for ABT’s upcoming dividend. I hate it when that happens, because by the time I realized I had been assigned, it was too late to buy ABT back to get the dividend. I had been watching ABT, and my plan was to buy the option back on expiration Friday if I could still exit the option trade with a gain. That would have required ABT to dip back below $56, certainly a possibility. Oh, well, it is moot now. I will look to reacquire ABT upon a decline, but I’m in no hurry since it will now be another three months before another dividend comes along. Also, I’m not at all excited about ABT’s announced plan to split up into two companies. I will only buy back in when a compelling opportunity (read: price drop) presents itself.
My latest article on SA has generated a lot of comments, which is great. I think that’s the most exciting aspect of being an author, hearing what others have to say and responding.
Final Posting Tuesday, 01/10/2012 5:10 PM
Alcoa (AA) posted a loss but gave positive guidance, and the market rallied. It was a slow news day.
I’m still watching First Energy (FE). Recall I sold a $43.00 January put close to the money last week, with the expectation FE would fall further and I would be assigned, buying 100 shares at $43.00. Then, I would sell a call six to nine months out, hopefully at a strike of at least $45.00. Plus, I would also collect the dividend coming up soon. (ex-dividend is February 3rd.) At least that was the plan. FE did drop, closing today at $42.38. So far so good. If it goes up and I don’t get assigned, plan ‘B’ is to go ahead and buy 50 shares before the ex-dividend date, as long as I can get them under $44.00. I’ll add more later upon a decline. If FE goes up beyond $44.00, I will pass. So, I’m in a watch and wait mode on this trade right now.
1st Posting Tuesday, 01/10/2012 8:30 AM
Rating agency Fitch has warned of possible downgrades on several European countries, calling out Italy as especially risky to the Euro. Alcoa posted a loss last night, which is not a good start to earnings season. Markets everywhere are ignoring the negatives so far, however, as Asian stocks finished higher, European stocks are all trading higher, and U.S. futures point to a positive open. The only economic report scheduled for today of any importance is the monthly Wholesale Trade reading at 10:00 AM. This is seldom a market mover.
The buying opportunity I’ve been waiting for will likely not be coming today. Such is the lament of the value investor.
Final Posting Monday, 01/09/2012 5:35 PM
It was a very quiet day in the market today, as there were no TICK readings above +1000 or below -1000. No trades on my part, there just weren’t any opportunities.
I have a new article out on Seeking Alpha, go to the selection from the home page to “SA Articles” for a link.
Time to wrap it up here and get ready for the final college football game of the year, LSU vs Alabama (yawn). It sure would have been interesting to see if either of these teams could handle Oklahoma States' passing attack. (Full Disclosure: Oklahoma State graduate here.) I could wax on about this for several pages, but since this is a financial blog, I’ll end it now.
2nd Posting Monday, 01/09/2012 11:35 AM
Although I didn’t make it on schedule today, I am instituting a new policy of listing any ex-dividend dates and/or any earnings dates, to the extent they are available, on any of the stocks I follow. For this week, activity here is light:
ABT goes ex-dividend 1/11/2012
SNH goes ex-dividend 1/12/2012
Earnings notices will see a significant jump as we move towards the end of the month.
1st Posting Monday, 01/09/2012 9:00 AM
Asian markets were mixed, with Japan and India down, China up. European markets are trading flat or down slightly. U.S. futures are up slightly. Economic releases scheduled for today are the Employment Trends Index from the Conference Board at 10:00 AM, and the Fed’s Consumer Credit reading at 3:00 PM.
Seeking Alpha contributor Philip Mause has produced an interesting read this morning, “Key Differences Between 2008 and Today’s Market”. Another interesting article I found is on Marketwatch entitled “Ten stocks analysts say to sell”. It is worth a read, not so much for the “ten stocks” info, but for the insights to analysts’ “sell” recommendations. As the article points out, “sell” recommendations are still rare, and when one comes out on a stock an investor owns, the investor needs to review the stock thoroughly and determine if the stock indeed should be sold or held.
No upgrades/downgrades so far on any stocks I follow.
Final Posting Friday, 01/06/2012 6:00 PM
Well, the market tricked me again, along with a few others. After positive payroll numbers all week, culminating in today’s monthly employment report, the market turned negative from the start and stayed there all day, although in truth it was only modestly negative, with the NASDAQ actually closing slightly on the plus side.
I am working on a new Seeking Alpha article on BDCs, Business Development Companies. I hope to get it through to publication sometime next week. In conjunction with that, I am working on defining a new set of stocks I will dub “Tier3”, which will be high-yield (and high-risk) stocks I would consider for a portion of a dividend stock portfolio, not to exceed 15% to 20 % of a total portfolio. Stay tuned.
The weekend approaches. It is “Wild Card Weekend”, as all football fans are aware. Four playoff games, two Saturday and two more Sunday. Life is good!
Until next week…..
1st Posting Friday, 01/06/2012 9:00 AM
Asian markets finished mixed, with Shanghai and Sensex up, the rest down. European markets are all in positive territory at the moment. All attention here is focused on the monthly payroll report, coming out at 8:30 AM.
It’s here! The numbers are better than expected. New jobs added came in at 200K vs 150K expected, non-government jobs came in at 212K vs 170K expected. These results indicate that the public sector is still shrinking (in terms of jobs, at least), but not nearly as rapidly as in most of 2011. Of course, this may be a holiday pause, not the end of that trend. Only time will tell. The calculated unemployment rate released was 8.5%, under the 8.7% expected. The rate has gone down substantially over the past year, mainly because many long-term unemployed, discouraged workers gave up actively looking for work, and thus were not counted as in the labor force. The numbers overall are positive, but only time will tell if the improvement continues or represents only a short-term up tick. The U.S. futures went from negative to positive following the release, and now indicate a positive start to the trading day.
One stock (of those I follow) that I missed commenting on that received a downgrade yesterday was United Parcel Service (UPS), downgraded to “neutral” by HSBC Securities. No reason that I can see for this, other than valuation, or possibly a concern over an economic slowdown affecting the firm. Today Intel (INTC) was downgraded to “neutral” by Sterne Agee, probably for the same reasons.
Now that the payroll report has been received and digested, time to buckle up and get ready for the final action of the week.
Final Posting Thursday, 01/05/2012 5:45 PM
After dropping on Europe concerns, the market recovered on improving payroll data from ADP and Initial Claims to close slightly up or down from neutral.
I could find no news on MCY. The stock is pricey at almost $45, with a PE near 28. Also, the dividend payout ratio is 149%. If I still owned it, I would sell and take profits, or at least sell a covered call. Other than taking advantage of the recent run up, I can’t see any reason for the Stifel Nicolaus “sell” downgrade today. The stock stays on my Tier2 list.
No trades today for me.
1st Posting Thursday, 01/05/2012 9:00 AM
Asian and European markets down, U.S. futures indicating a modestly lower open. ADP, the payroll processing company, reports private-sector employment expanded by 325K, a significant increase over the prior month’s reading. The Challenger job cuts report for December came in at 41785, the lowest since June of this year. The weekly Initial Claims for unemployment came in at 372K, slightly under consensus, and a big improvement over the 400+ levels seen frequently earlier this year. All of these readings will likely lift the futures at least back into neutral territory before the open, and bode well for the monthly employment report coming tomorrow. ISM services and weekly oil inventories are all that remains for today’s scheduled economic releases.
Mercury General (MCY) was downgraded to “sell” by Stifel Nicolaus. It is on my Tier2 list. I don’t own it now, having sold at $40.00, thinking it would come back down, which it so far has not. I will investigate this further. When a brokerage says “sell”, they usually really mean it, these recommendations are rare. The stock closed yesterday at $44.83, and yields 5.44%.
Time for that 2nd cup.
Final Posting Wednesday, 01/04/2012 5:00 PM
A mostly flat day followed yesterday’s rally, with only the Dow 30 average finishing in plus territory, of the major averages. Oil closed at an 8 month high, per the headline on MarketWatch, at $103.22. All three U.S. automakers posted December sales gains.
Pretty much a ho-hum day. Tomorrow and Friday may pick up the pace, with weekly unemployment figures (Thursday) and the monthly numbers (Friday).
1st Posting Wednesday, 01/04/2012 9:00 AM
Asian markets ended mostly down, except Japan, which finished up slightly. Europe is trading mostly flat to down slightly. U.S. futures are down slightly, indicating a flat to lower start at the open. Economic releases scheduled are minimal, Challenger Job Cuts and Factory Orders. The “Big Kahuna” of economic releases, the monthly Employment Report, will be out on Friday January 6, the first Friday of the month, as always. Trading will likely slow down until then, as traders / investors become reluctant to commit until after that release.
An article by Bill DeShurko on MarketWatch (The Trading Deck) entitled “These high yielders look good for 2012” pretty much echoes my sentiments for 2012. Seeking Alpha contributor Roger Nusbaum has a new article out, “The 5% Yield Solution” that is interesting, although the author considers the portfolio as presented “hypothetical”, and does not recommend many if not most of the stocks discussed..
Lockheed (LMT) was downgraded to Underperform by RBC, based on potential cuts to the F-35 program and the general uncertainty surrounding future defense spending.
The open approaches.
Final Posting Tuesday, 01/03/2012 5:30 PM
Stocks rallied on the first trading day of 2012. The ISM reading came in better than expected, and Construction Spending followed suit.
I made a move uncharacteristic for me, selling a put on a stock on an up day. The stock was utility First Energy (FE). I had sold an October 2011 call on FE with a strike of $45.00, and I allowed the shares to be assigned on expiration Friday, October 24, thus I sold 100 shares at $45.00. I was expecting to buy the shares back upon a decline, and even though they have declined some since then, the decline has not been enough to meet my desired buy price. The next ex-dividend date is February 3, 2012. Considering the lack of attractive buy opportunities, I settled upon a put acquisition strategy for FE. I sold the January 2012 put with a strike of $43.00 today for $.71. I want to acquire the shares upon expiration Friday, January 20, which will allow me to receive the dividend. If the stock moves back up and I am not assigned, I will keep the premium, and I may go ahead and buy the shares anyway before the ex-dividend date, if they can be bought near $43.00 before February 3rd. Once I have the shares, I will sell a longer-dated call against them to further realize income. So the process is under way, nothing to do now but wait for January expiration, then determine my next step on FE.
1st Posting Tuesday, 01/03/2012 9:15 AM
Asian markets up, Europe trading mostly higher, U.S. futures indicate stocks to open higher. The Institute for Supply Management (ISM) manufacturing survey, to be released at 10:00 AM, has the potential to move the market. The Iowa caucuses will occur tonight, ensuring the news will include a healthy (?) dose of politics today and on through the week.
Minimal upgrades/downgrades so far today, nothing of interest to me.
A broad selection of “2012 Predictions / Outlook” articles are posted on Seeking Alpha and other major financial websites. I haven’t had time to read them yet, but if any that I review make an impression on me, I’ll note them in my end-of-day update.
Time to get a 2nd cup of coffee and get ready for action, or more likely, observation.