ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
Popeyes Louisiana Kitchen, Inc. (PLKI) is one expensive stock, especially for a (fried chicken) restaurant: trailing P/E of 36.2, forward P/E of 28.9, price/sales of 5.5, and price/book of 187.4. PLKI most recently reported 4.7% year-over-year revenue growth and -1.9% earnings growth. (Data from Yahoo Finance). According to briefing.com, year-over-year revenue growth has stagnated in … Read more
In a previous post on the stock market, I noted how commodity-related plays were apparently benefiting from a sagging U.S. dollar index (DXY0). I failed to note that oil was (and is) a glaring exception. Oil futures fell around 9% for the week. This plunge was enough to completely reverse last month’s rally for United … Read more
OPEC, the oil cartel known as the Organization of the Petroleum Exporting Countries, will hold an informal meeting in Algiers, Algeria this coming week (September 28, 2016). On Friday, September 23, 2016 headlines declared that Saudi Arabia and Iran were unable to reach agreement on production caps after two days of preparatory talks in Vienna, … Read more
A week ago, I discussed the setup for the next pairs trade going short Solar City (SCTY) and long Tesla Motors (TSLA). The technicals of SCTY and TSLA suggested a (short-term) bottom in the making. The latest charts suggest a confirmation of those bottoms, especially for Solar City. The follow-through confirmation came 2 days after … Read more
A little over two weeks ago I made the case for implementing a pairs trade on Tesla Motors (TSLA) long versus Solar City (SCTY) short. What unfolded from there rolled out according to my first scenario: SCTY continuing to sell-off and TSLA outperforming. Indeed, TSLA’s outperformance has returned to the all-time high level set earlier … Read more
Solar stocks have had a rough 2016. Solar City (SCTY) seems doomed to join the long line of troubled companies that fell from grace. The stock is down 64% year-to-date and has traded with a downward bias since its all-time high in February, 2014. Source: FreeStockCharts.com Tesla Motors (TSLA) is trying to come to the … Read more
A little over a year ago, I recommended a pairs trade going long United States Gasoline (UGA) versus going short the United States Oil (USO). I never did take up that trade, instead choosing to focus on my (still on-going) hedged trade on USO. Looking back, I wish I had gone ahead and setup the … Read more
(This is an excerpt from a LONG overdue article on commodities I originally published on Seeking Alpha on April 18, 2016. Click here to read the entire piece.) Last week was a great week for a pairs trade in iron ore. I love this trade => Oil, Iron Ore & Gold Correlation: A Mining Pair … Read more
In recent months, I have been in the habit of fading rallies in Market Vectors Russia ETF (RSX) using Direxion Daily Russia Bear 3X Shares (RUSS) for quick, short-term trades. That streak may be on the verge of ending. Source: FreeStockCharts.com As the chart shows, RSX looked like it was ready to resume its downtrend … Read more
I recently read an article that attempted to dive into the nuances of trading the United States Oil ETF (USO) versus the United States Gasoline ETF (UGA). I suddenly realized that through all the nuanced comparisons the forest was being lost for the trees. Since at least 2009, UGA has greatly outperformed USO. In fact, … Read more