Thank you for those who appreciated my insomniacal (Oh my, a Danaism, but I like it.) drivel that I spewed on Saturday night. Many of you liked my solution to the Federal Deficit issue. Perhaps President Obama should have an insomnia attack or two.
The week kicks off with my lovely wife having one of the nastiest summer cold, congestion, respiratory, sinus, sneezing, coughing, wheezing illnesses that I have ever seen her contract.
Much unlike her, she went to CVS and bought gobs (a medical term meaning a lot) of OTC medicines. That is very unlike her and an indication that she was really ill. There were no urgent care facilties open on Easter.
I had suggested she look for a euthanasia kit, but that did not get the laugh I was hoping for. It's time to "put you down" did not meet with a jocular reply either. Hey, just sayin'.
She is off this morning to get her "fix" of some anti-biotic which should do the trick.
This morning also sees the departure of our friends Butch and Deb, after a delightful visit. Sometimes Butch and I can get on each others' nerves, but this visit went smoothly. Perhaps it was the three acres and three separate buildings? I don't know.
I even avoided not having to listen to Butch tell me about the trials and tribulations of buying their new car. I have been subjected to the details of this purchase for about two years.
Now you all know that I despise the act of purchasing cars. My goal from the minute I get in a dealership is to get out of the dealership. I do all the homework ahead of time, come in and say give me a good deal and get me out the door in one hour or less.
So for me to listen to anyone (including one of my best friends) anguish about the details of their purchase, is physically painful. I got smart during their visit. Every time Butch threatened to get the Buick (Who want to buy a car that sounds like you are puking anyway buickkk, buickkkk, buickkk) brochures out, I went running from the room and the building.
They have since left, teasing me by saying they were going by the Buick dealership in Tustin, California. I am very confident, the next time they visit, he will still be threatening to buy a new vehicle.
Devin has been resting comfortably most of the day. Well maybe not comfortably, but she is resting which in and of itself is a rare sight. I came back from my doctor's visit (I actually have lost weight and the bp was down. Good news.) and Devin was watching Forest Gump.
It was the closing scene of the movie where Forest has just sent his son on the school bus and the feather is on the ground. As Gustavo, our gardener came around the back of the house and was blowing the leaves and clippings, as he came to the back window, the feather shot into the air. (After reading that, you really had to be there.)
Let's Make Some Money
As Butch and Deb came to breakfast on Saturday, I was reading my Barron's magazine. While not trying to be rude, I was trying to make some money this week in the market. I was due as I had given back recent gains with a miscalculation of market volatility. (VXX)
Two ideas came about as I did eventually read the publication.
In Vito Racanelli's opener, he spent a couple of paragraph's discussing a publication to be issued today (Monday) by the Center for Medicare and Medicaid Services. The report will provide insight into reimbursement rates for 2014.
The consensus is the Medicare Advantage rates will be decreased in 2014 (Obviously impacting HUM negatively). The stock was down about 10% YTD in anticipation of the bad news. The Barron's article and quite a bit of homework on Finviz had me thinking this might be an over correction.
There was also a small chance that the news might be good or not as bad as suspected. (Witnessed by some casino managers and pit bosses buying in over the last few trading sessions.)
My choices were easy. HUM long tying up a lot of cash at $69 a share, $6,900 a round lot. I could by a call slightly out of the money, but they all looked a bit pricey. (Again, casino bosses will use options to make a play.) Or, sell some PUTs.
We chose to sell some Aug $67.50 PUTs at $4.67 a contract. We received $467.00 for each contract. Those contracts closed at $2.95 giving us an unrealized gain of 36%. The trick will be taking them off the street tomorrow without giving most of that gain back. If we clear 30% we will be happy.
On a less happier note. I remembered reading a while back in one of the many investment books I have consumed, that the DOW Trans Index is a leading indicator for the broader market. (DOW Industrials or S&P 500)
If you subscribe to this derivative of DOW Theory, I suggest you do a ten year chart of the DOW Trans, with an overly of the S&P 500. Based upon those patterns, we could be in for a 7-20% correction in the next 3-8 weeks.
It A New Day, Week, Quarter.
Looking to the east, the market were a bit squishy today because of lackluster news out of China, and Mr. market needed to take a breather after his three month sprint to the end of the first quarter. Even a better than expected forecast on construction spending was the not the energy drink or snack bar Mr. Market needed to continue the rally.
Good news out of Cisco and Telsa motors could not keep the S&P 500 above its recent resistance line of 1,565. Not to worry, we needed a cooling off period.
Of all the news I heard today, I really like what I am seeing and hearing from EBAY. Ahh, Ebay, my first almost natural triple. During 2004-2005, we got a lot of folk in to the stock at the spit adjusted price of 20ish. Many of hung in there to the mid fifties where we suggested they take their profit. A few greedy folk we know rode the stock all the way back to 20s and lower in the fall of 2008.
The time period after the glory days of 2005 saw many companies who had been using EBAY engines to sell goods develop their own secure and efficient transactional websites. It also saw the collapse of the economy, a true double whammy for the traditional auction side of EBAY.
When Meg Whitman bought Paypal, many of us thought it was scope kreep for the company. It turned out to be a brilliant move as Paypal kept Ebay from ruin. Now Paypal is the engine behind this recent rekindled love affair with the market. (Two price upgrades today.)
Recent upgrades to technology and infrastructure has allowed Ebay to take on Amazon and MercadoLibre in all channel retailing and global cash management. We would suggest you do some good homework and consider Ebay as part of your bag of tricks for the next few years.
After we pay our taxes and see how many nickels we have left, we will be going long on Ebay.
