Archive for the ‘ Stock or Option Trades ’ Category

Update on Oracle 9/11/13

Quick Summary: Watch and Wait for a Better Price

Oracle is one of the premier companies of the new economy. Unless you are a tech expert that works with multinational or very large domestic companies, a government agency that has a need for their products or have a degree in computer sciences you probably like me don’t fully understand Oracle or their products. Databases, servers from Sun Microsystem and software for businesses sums up there enterprise.

Oracle makes lots of money and is competitive with only SAP and a few other companies. The never ending thirst for data by corporations and governments seems like it puts Oracle in a sweet spot of some kind.

Technically Oracle’s Point and Figure chart is on a sell signal. Oracle peaked at 36 near the beginning of the year and has sold off after forming a double top on the Renko chart early this year. (see below).

(click to enlarge)Oracle Point and Figure Daily

(click to enlarge)Oracle Renko Daily

The stock has recently changed to a buy signal on the daily Renko chart. The monthly and weekly P&F charts are still both on sell signals. Therefore entering here is not without risk. Ideally all the long term signals, Renko, Kagi, P&F, and Three Line Break charts should reverse to a buy on the daily, weekly and monthly charts to certify that the stock has resumed its uptrend and will take out its old high. Currently Oracle is giving mixed signals. Therefore caution is called for. The stock yields a meager 1.5 percent. That could mean the stock is ultimately going to be cut in half to yield 3 percent or that Wall Street insiders see more growth in the database and cloud related software Oracle sells and that Oracle will be growth stock evaluations for some time to come.

If it is cut to 15.50 the stock would yield 3 percent and you could sell covered calls to increase your yield. Not bad. But if your entry price is 36 you will have to live long and prosper to recover your money should growth stagnate or should Wall Street decide that Oracle does not have much growth left.

So for the time being Oracle should just be watched. It has multiple sell signals and the entire market may be headed for a correction. For years Oracle bounced between 22 (2007) and 14.x (2008-9). It then appeared to break out in 2011 and zoomed up to the mid thirties which has marked the top of the trading range for the period 2011-13.

If and when Oracle approaches 24 to 26 selling the 2015 or 16 puts at 22 to 26 levels would be a reasonable trade with a high probability of success. That appears to be the bottom of the new trading range. Market turmoil should drive Oracle down to the low twenties eventually. Of course if the pattern breaks down and Oracle tumbles to the teens then the trade is going to be one that results in a loss. If Oracle holds to the new bottom then with any good news it should recover and the trade will make a nice profit. Or it is possible that the current bull market pushes Oracle higher now in which case this trade won’t work.

A good options trade would be to sell the $20 2015 put for $4. Currently it is priced at less than $1. Therefore the stock would have to fall 12 points or so or there would need to be a flash crash to get that price. With the war drums sounding, don’t believe it can’t happen.

If you have a little money to invest in Oracle this strategy is very conservative and really the stock may never see $20 again but if it does your put position would give you the stock at 16 where it would be yielding 3 percent. Otherwise you would just keep the cash which is not a bad alternative.

Apple Breaking Bad Now Features the FBiPhone

Apple’s refusal to make a larger phone has reached the point of insanity and is almost quite funny if you are not an investor. The rumors were right and Apple intends to launch different colors of phones not different sizes? This is a sure sign that the upper management of Apple has to go and go quickly. The new iPhone 5c is cheaper than the “old” iPhone and is replacing the old iPhone which will no longer be made. So “c” for cheap? This is the company that produced some of the best ads ever? Instead a new iPhone 5s which is essentially the same as the iPhone 5 will also replace it. The iPhone 5, a despised product won’t be missed, and unlike its predecessors will not be reduced in price and kept for sale. The iPhone 5s has fingerprint technology in it. Really? This is what consumers have been demanding and anticipating? iMac like colors and J. Edgar Hoover in cell?

First everyone with large hands, anyone who is near sighted or has uncorrected astigmatism, or just likes a large phone, has been waiting for Apple to catch up to the S class phone and the Galaxy Note for three years now.

Second a full 75% of folks stick their phones in a case, that means they can buy a case any color they want. No need for a colored phone because you will never see the color of the actual phone. So WTF? Eye candy aimed at teenagers who can’t afford the phones anyway? And if the want Eye Candy on their phone, guess what? There is a company that makes cases called Eye Candy.

Third I have never heard a person say I really need a different color of phone but I know plenty of people who are sick of the small iPhone and want one that is S class device or Note class all in one in that size and configuration.

Fourth a large phone should be cheaper. In theory the cost of designing all that stuff to fit into a small space costs more than putting it into a big space.

So the reason Apple has not made a large phone? The rule of thumb. When Samsung launched the S class phones Apple was expected to follow shortly with a comparable product. This was a no brainer. The S class put Samsung on the map. It buried Blackberry, Windows, and Nokia. Apple responded by announcing the rule of thumb in an advertisement. The refusal to make a larger phone was based solely on the idea that the thumb must reach across the phone. Thus an advertisement which in years past had given reasons to buy a product now gave reasons why not to buy a competitors product. What is wrong with that picture? Because the phone had to be of a size so that a certain sized person could use it one handed (while driving with the other?) a larger phone was unusable and unwanted because this particular guy could not roam the entire screen with his thumb. Had to be the worst advertisement in Apple’s history. That was ridiculous enough but Tim Cook then doubled down on the rule of thumb in a conference call during an earnings report. He said Apple would not be making a larger phone to compete with not just the S class and by now nearly every other phone maker out there but Blackberry. There would be no product to compete with the Note either because of the rule of thumb! Hard to believe. Someone should have showed Tim Cook pictures of people’s hands. Believe it or not hands come in different sizes.

So now we can different color phones. This mimics the “Colors Everywhere” iMac that Jobs so successfully launched with the Rolling Stone song. But a colorful computer was distinct from the beige desert of bland boxes of Dell, Intel and Microsoft products that polluted the interiors of offices everywhere. Plus the color of the iMacs stood out anywhere and everywhere they were used. No one put a case on an iMac. And they were very large. Lots of purple, tangerine, and grape. For reasons stated above the color of the phone is inconsequential. There is a huge demand for a larger phone. The S class and Galaxy Note are taking sales away from Apple every quarter. Since Apple’s great visionary passed away EPS has now declined every quarter year over year. Had Apple simply made a larger phone that customers want, an all in one like the note which would also count towards iPhone sales, year over year EPS would have likely continued to increase. The only reason Apple is not making a larger phone is that Tim Cook is in charge of Apple. His decision to keep the iPhone at an odd size is his and his alone. At some point he will pay the price as Apple shareholders have now.

Oracle

Oracle-Investing With A Measure of Security

Quick Summary:  Watch and Wait for a better price!

Oracle is one of the premier companies of the new economy.  Unless you are a tech expert that works with multinational or very large domestic companies, a government agency that has a need for their products or have a degree in computer sciences you probably like me don’t fully understand Oracle or their products.  They seem to make lots of money and are competitive with only SAP and a few other companies.  The never ending thirst for data by corporations and governments seems like it puts Oracle in a sweet spot of some kind.  Technically Oracle’s Point and Figure chart is on a sell signal.  Oracle peaked at 36 near the beginning of the year and has sold off after forming a double top on the Renko chart early this year.  (see below).

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Oracle Renko - Version 3

Still the stock yields a meager 1.5 percent.  That could mean the stock is ultimately going to be cut in half to yield 3 percent or that Wall Street insiders see more growth in the database and cloud related software Oracle sells.  If it is cut to 15.50 the stock would yield 3 percent and you could sell covered calls to increase your yield.  Not bad.  But if your entry price is 36 you will have to live long and prosper to recover your money.So for the time being Oracle should just be watched.  It has multiple sell signals and the entire market may be headed for a correction.  For years Oracle bounced between 22 (2007) and 14.x (2008-9).  It then appeared to break out in 2011 and zoomed up to the mid thirties which has marked the top of the trading range for the period 2011-13.  If and when Oracle approaches 24 to 26 selling the 2015 or 16 puts at 22 to 26 would be a reasonable trade.  That appears to be the bottom of the new trading range.  Market turmoil should drive Oracle down to the low twenties.  Of course if the pattern breaks down and Oracle tumbles to the teens then the trade is going to be one that results in a loss.  If Oracle holds to the new bottom then with any good news it should recover and the trade will make a nice profit.  A speculative trade would be to sell the 20 2015 put for $4.  Currently it is priced at less than $1.  Therefore the stock would have to fall 12 points or so or there would need to be a flash crash to get that price.  With the war drums sounding, don’t believe it can’t happen.  If you have a little money to invest in Oracle this strategy is very conservative and really the stock may never see 20 again but if it does your put position would give you the stock at 16 where it would be yielding 3 percent.  Otherwise you would just keep the cash which is not a bad alternative.