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January 03, 2016
Charles Moskowitz Discussion
We closed out the year with a gain of $6,646 and are carrying only one position of 6 CCOI 1/35 calls. This uses $510 of our current funds which we roll back to $10,000 at the first of the year.
The last 4 days of the year were mixed and were actually looking pretty good for the Santa Claus rally. Monday was quiet and we finished down, but at the high of the day. Tuesday was up right out of the gate and was a great day. The problems didn’t start in earnest until Thursday (Wed was an inside day) when we started seeing the pictures and reports about the Dubai fire. It wasn’t the fact, but the possibility that it was going to turn out to be a terrorist action. As it turned out, that seems to not be the fact, but the issue remained and after a 170 point up reversal during the day in the DJIA, we fell back to close at the lows. This means that unless we see two big up days for the first and second days of the new year, Santa has already come and gone...
Another issue that hasn’t really been discussed much on the Sunday morning shows is the Saudi executions including the killing of a major Shi’ite cleric. While the Supreme leader is looking for “divine intervention I expect something a little more contemporary to occur. This may put a new bid under the oil and maybe the gold.
This year has thrown an awful lot at the markets and frankly, closing slightly lower on the year doesn’t bother me at all. The relative pessimism is good for the market. The only area that has been a major problem is the transports. We closed 2014 @ $9139 and this past year @ $7508, a decline of almost 18%. While this has been damaging, it has not yet developed into the Dow Theory sell signal for the overall market. The price of coal and oil (2 of the biggest cargo for the rails) has been so weak as to put most of the energy sector the biggest declines of the year. However, I think that if oil was to simply stabilize the attitude would change. If, as I also believe, that the problem with oil is one of supply, not demand, then the trucking, airline and railroads and chemicals will reap the advantage of cheaper fuel.
Another area that has had some problems after an extended period of monumental rise is Pharma. The ETF for this group (XPH) had a low of $11.97 in early 2009 closed the year @ $51.20. While the weekly chart looks like an unending rally from the lower left to the upper right this is deceiving because the weekly is smoothed by seeing it in the 6 year context including the 2:1 split in September of 2015. In fact, there have been several retracements and corrections of 10-20%. Just this past year we started with a high of $67.25 and even throwing out the “mini flash crash” low of $38 on 8/24, we had a real low of just over $43. When you look at the long term chart on a daily or weekly basis this 36% decline looks like a normal pullback. Right now we are oversold with stochastics at the low end of the range. While the downside should be limited by support in the $49-50 area a move back to $60 wouldn’t surprise me at all…..CAM
All trades were based on your participation in the texting service to receive updates. Previous closed out trades not listed here may be seen in previous market letters.
New trades $ 10,000 account...In Texting we have a limited amount of words. In the interest of brevity: OPTIONS ONLY: 1 January , 2 February. The Quantity and Strike Price for each trade is specific. Trading is hypothetical. We may trade weekly options and they are noted: SPY 1/25 147 for SPY Jan 25th 147 Calls or Puts.For questions please call 702 650 3000. Closed out positions are found in previous letters dating back four years: Dec 28th;21st;14th; 7th; Nov30th; 23rd; 16th; 9th; 2nd; Oct 26th;19th;12th; 5th;Sept th;21st;14th;7th;Aug 31st; 24th; 17th;10th etc
( 1 ) Buy 6 CNC Jan $ 65 Puts $ 1.10 Or Better
( 2 ) Buy 4 SPY Jan $ 206 Puts @ $ 2.65
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