The Money Tree

Safely Generating Income in Retirement

Archive for April, 2009

What Others are Trading – April 2009

Posted by mounddweller on April 18, 2009

OK guys and gals.  Let’s hear what y’all are trading!  What’s working for you, what’s not?

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April Portfolio Updates

Posted by mounddweller on April 18, 2009

Not much new to report this month on the open positions in The Money Tree portfolio.  Please recall back in March I wrote a new round of calls on both of them with May expirations.   Both XLI and FRX have rebounded nicely during the current bear market rally and are now trading above my net cost basis but continue to be below my original entry price. 

One piece of news worth noting is that on 4/1/09 XLI paid a dividend of $51.77.  This reduced my cost basis to $19.86.  Thus, if the price remains above my $20 strike and I choose to let it be assigned I will exit the position with a small profit.  Below are updated tables showing my complete trading history of XLI and FRX.

12/22/2008 XLI Bought 300 XLI at $21.99 BY  $(6,605.95)  $     (22.02)
12/22/2008 XLI CALL SECT SPDR INDL SEL$22 EXP 01/17/09 at $0.90 SC  $    267.74  $     (21.13)
1/20/2009 XLI CALL SECT SPDR INDL SEL$22 EXP 01/17/08 CE  $               $     (21.13)
1/21/2009 XLI CALL SECT SPDR INDL SEL$22 EXP 2/21/2009 at $0.70 SC  $    189.83  $     (20.49)
2/23/2009 XLI CALL SECT SPDR INDL SEL$22 EXP 02/21/09 CE  $               $     (20.49)
3/23/2009 XLI CALL SECT SPDR INDL SEL$20 EXP 05/16/09 at $0.50 SC  $    138.79  $     (20.03)
4/1/2009 XLI Dividend Received at $51.77 DV  $      51.77  $     (19.86)
1/15/2009 FRX Bought 200 FRX at $25.60 BY  $(5,132.95)  $     (25.66)
1/15/2009 FRX CALL FOREST LABS INC$25 EXP 02/21/09 at $2.10 SC  $    418.49  $     (23.57)
2/23/2009 FRX CALL FOREST LABS INC$25 EXP 02/21/09 CE  $               $     (23.57)
2/26/2009 FRX PUT FOREST LABS INC$22.50 EXP 03/21/09 at $0.85 SP  $    159.54  $     (22.77)
3/21/2009 FRX PUT FOREST LABS INC$22.50 EXP 03/21/09 PA  $               $     (22.77)
3/23/2009 FRX Assigned 200 FRX at $22.50 BY  $(4,512.95)  $     (22.67)
3/23/2009 FRX CALL FOREST LABS INC$25 EXP 05/16/09 at $0.50 SC  $    188.04  $     (22.20)

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Potential April Trades

Posted by mounddweller on April 18, 2009

Well, another trading month has come and gone.  I have spent a considerable amount of time using Visions today looking for potential new May expiration trades.  Unfortunately, the 6-week bear market rally has significantly altered the risk/rewared ratio.  I found nothing this afternoon that jumped off the page at me and screamed “AWESOME TRADE, BUY ME!”

Rather, I found a lot of quality stocks trading north of their Buy Limit (BL) and 50-day MA.  Thus, I think I’m going to keep my powder dry for a few days and see what transpires as we continue through earnings season. 

However, all that being said, I will still share with you what stocks made it into my final stage of analysis.

  ABB JEC FRX BCR
Current Price  $            15.36  $            46.60  $            22.98  $            80.10
Market Cap.  35.06B   5.74B   6.93B   7.96B 
Fundamentals        
P/B 3.12 2.41 1.69 3.98
Net Profit Margin 8.93% 3.65% 22.01% 16.99%
P/E 11.29 13.2 8.32 19.71
PP/E 14.91 13.02 6.62 13.93
ROA 10.00% 10.71% 13.04% 15.67%
ROE 28.39% 20.19% 22.41% 21.78%
Bare Cash/Share  $              2.36  $              6.06  $              7.26  $              4.45
Debt/Equity N/A N/A N/A N/A
Oper. CF 3.96B 539.01M 1.07B 516.2M
Lev. CF 2.36B 442.77M 324.56M 317.99
Technicals        
CP rel. MA        
20-day EMA Higher Higher Higher Higher
50-day EMA Higher Higher Higher Higher
200-day EMA Lower Lower Lower Lower
Trend of MA        
20-day EMA Up Up Up Up
50-day EMA Up Up Down Down
200-day EMA Down Down Down Down
MA rel. Each Other        
20-day EMA >50 >50 <50 <50
50-day EMA <200 <200 <200 <200
200-day EMA >50 and 200 >50 and 200 >50 and 200 >50 and 200
Vision V Parameters        
BR -0.74 -1.6 1.58 -2.99
TAI -1.61 -3.59 3.2 -6.01
Gold $ 100 100 100 98
BL > CP No No Yes No

As denoted by the green highlights, FRX was the overall winner in my filtering and ranking process.  If I didn’t already have a sizable position in FRX I would be tempted to enter a new trade in it.   For those of you who dieing to put new money to work here is the FRX trade I like best.

Execute a buy/write on FRX and FRXEX (MAY 22.50) at $21.58 or better.

I also looked at several ETFs.   The two I liked the most were the Oil Service Holders (OIH) and the SPDR S&P Metals and Mining (XME).  If we get a pullback over the next week or so I may consider a new position in either one of these.

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Trading Plan

Posted by mounddweller on April 2, 2009

Finally!  It is finished.  Some of you may recall a few weeks ago I mentioned in a posting that I was going to develop and document a trading plan.  This was in response to my realization that while I had an idea in my mind of what constitued a ‘good trade’, I didn’t have any specific rules documented that I followed religiously and thus generally was ‘flying by the seat of my pants’.

While I have been generally pleased with my results over the past few months (since beginning to use Ron Groenke’s Vision V software) I feel better results can be achieved if I have a written plan and use it.

The trading plan now resides on it’s own page.  You can read it by clicking on the “Trading Plan” tab at the top of my blog.  I encourage you to read it and let me know what you think.  You can leave comments at the bottom of the page.  Let me know…is it too specific, too detailed, too general, whatever!

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