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Why I’m Now Buying Disney

Aug 06, 2015

I said it about Apple before today’s slight move higher…

I said it about Caterpillar before it caught support and is attempting to move up.

Now, I’m saying it about Disney.

The fear is priced in. It’s not going out of business. It hit a near-term snafu. It’ll bounce back just as it has every other time it sold off close to the 200-day moving average. Plus, RSI and MACD are on the floor, telling me a bounce – short-lived or not – is imminent.

I’m not really worried about the ESPN fears either.

One of the biggest reasons I’m excited about DIS growth, despite recent headwinds is Star Wars. The new movie – out later this year – could gross as much as $2.2 billion worldwide.

Buy DIS stock and / or the DIS January 2016 115 call up to $4. Be patient with it.


Why I’m Buying Apple Now

Aug 05, 2015

I’m buying Apple for the same reasons I bought Caterpillar the other day.

There’s a great deal of irrational fear wreaking havoc. Most traders are selling here, without a clue as to why. They’re just selling because every one else is selling.

The rationale is simple. It’s unlikely that such a large group of people can be so wrong. But they oftentimes are wrong. It’s why we try to identify where herd behaviors are popping up so we can exploit it and profit from it.

The herd is so hell-bent on doing what every one else is doing that we forget to think individually.

Here’s the perfect example.

In 2009, Kiplinger’s ran an article by Robert Frick, titled, “Don’t Trust the Crowd.”

Here’s what that article had to say:

What's scary about the herd mentality is how insidiously it gets you to see things differently. In fact, a recent experiment showed that we may actually be hard-wired to believe what the crowd tells us. In the experiment, conducted at Emory University, participants were asked to look at an object (an assemblage of cubes) and then judge how it would look if it were rotated slightly.

But there was a twist: Other participants--who in reality were actors hired for the experiment--were instructed to give wrong answers in an attempt to sway the opinions of their fellow participants.

Sure enough, the real subjects, influenced by the actors, gave incorrect responses, despite what their own eyes told them. Brain scans found that participants didn't just decide to go along with the crowd. Instead, the crowd's opinion actually changed their perception of the problem. Participants "saw" the objects differently. The herd, it seems, alters our perception of reality. 

What allows a Wall Street participant to think outside of the herd is the awareness of just how easily we are influenced, as also highlighted by that article. “Then you can concentrate on the smartest investing strategy: spreading your risk across many types of investments and periodically redistributing your money among them.”

It’s very easy to exploit.

And we’ll review that as we move on.

Back to Apple…

No one is paying attention to the long-term growth story of Apple again. They’re more concerned about the short-term news.

Are there risks with Apple?

Sure… All stocks carry risk.

But this stock is wildly oversold on an overreaction. Earnings were great. It’s swimming in cash. Investors are simply selling because competition is heating up.

Once the negatives pass, Apple will take off again, in my opinion.

It’s also technically over-extended to the downside, as the bad news begins to fade.


How to Trade the Oil “Rebound” Today

Aug 04, 2015

OPEC thinks you’re a sucker…

The group again believes oil has hit bottom again. The same group that called for $200 oil after a fall to $45 a barrel, now believes a bottom is in place… again.

OPEC can say what they want, though.

But there’s still no clear indication a bottom is in place.

Unfortunately the bulls – undoubtedly hoping OPEC is right this time – will lose money just as they have many times before, as record levels of output increase.

Don’t forget this is OPEC. It’s self-serving agenda is more important that honesty.

Second, despite recent rebound action in the price of crude, there’s no bottom in sight. We have to remember that traders have been sucked into oil rebounding hopes before, only to watch their hard earned cash disappear.

We’re hoping for some signs of support at March 2015 lows. If that fails to hold, look out. Short any rallies in oil by buying any of the following:

  • Power Shares DB Crude Oil Double Short ETN (DTO)
  • Power Shares DB Crude Oil Short ETF (SZO)
  • Pro Shares Short Oil & Gas (DDG)
  • Pro Shares Ultra Short DJ-UBS Crude Oil (SCO)


The Bad News Bear Trades

Aug 03, 2015

After a nice end of day pump, the Dow finished down 91.66 points….

While I’d usually recommend buying the fear, I can’t.

Market participants have every right to fear downside here. If the Dow fails to hold 17,400 support, we could slip as low as 17,000 --- January 2015 support.

Will the bulls attempt to run the market up again? Sure…

Will they lose money doing so again? You bet.

Oil prices, geopolitical issues, the Fed losing control of just about everything, China, you name it… And it’s wreaking havoc.

Puerto Rico is about to default on monstrous debt this weekend. An important S&P trend line has been broken. The Greek deal is about to fall apart (I’m shocked). Exxon Mobil is circling the bowl with poor earnings.

Financial markets are crashing.

Until something miraculous happens, we’re headed lower. I’m still a buyer of the DXD and SDS, which we’ve recommended here on July 15.



Staples (SPLS): A big bet on upside

Jul 31, 2015

Some one is bullish on Staples…

Yesterday, overall volume in SPLS was 30 times greater than average. Calls outweighed puts by more than 500:1.

After a rough sell off from $16.50 highs, the stock has become technically oversold on RSI, MACD and MFI, most notably. I don’t believe such lows can be sustained for much longer. I’d like to see a move to at least $16 near-term.

One of the best ways to trade this oversold stock is by buying to open the SPLS January 2016 14 and 15 call… and wait.


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