“Our business is driven more by policy, environmental regulations which are mandating steel manufacturers to install these systems – THEY DON’T HAVE A CHOICE AND THE FINES FOR NOT COMPLYING ARE INCREASING

While this sounds nice several ratings agencies have labeled RINO a SELL.  Before stepping in we need to look at what is going on.  We can start by looking at past history to see if there is a pattern we can use for guidance.  By bringing up the 1 yr chart we can look for support and resistance points.  Over the past month we can see support at the $12 and $11 levels (the lower yellow lines). Previously in August it bounced off $11 support.  Looking back to September 8 we can see that support at $12 held and there was a price bounce.  In late September there was a large price move and the stock moved up at a rapid pace.  Looking at today’s pattern we can see similar behavior and a bull triangle forming.

Bull Put Spread

Buy Aug 10 10.00 Put @.32
Sell Aug 10 11.00 Put @ .50
Credit (Mid): 0.18
Amount at Risk: 0.83
Potential Return: 0.18
Potential % Return: 21%
Break Even: 10.83

Or if you are feeling more aggressive you can go for a combo.  The disadvantage is if the stock drops below $11 by August expiration you agree to buy it for $11 by selling the Put option, no matter how low it goes.  But after looking at the charts it seems unlikely that the stock will break down through support at $12 and at $11.

Combo Risk Reversal
Buy Aug 10 14.00 Call @1.05
Sell Aug 10 11.00 Put @ .45
Debit : 0.65
Amount at Risk: 0.65
Delta: 0.55
Potential % Return: Theoretically Unlimited.  85% (for $1 move up in underlying)

Or for something plain and boring you could buy the stock today for about $14 and ride it up to the next resistance point of $15.

RINO’s services are going to be in strong demand in China.  Until we see where the economy is going, this is something to trade in and out of, or limit your exposure through the use of options.

We’re seeing some positive technical signs:

• Higher highs and higher lows have been happening for four days.
• Person’s Proprietary System (PPS) is showing a buy
• PPS shows a positive cross over after the buy signal
• MACD Histogram progresses back to and above zero
• Stochastics have crossed over into positive and have not gone negative
• Stock did not break down below pivot point of $6.93

Our short term strategy was to do a covered call.  In simple terms you buy some stock and then sell a contract to sell the stock to someone else at a later date.  We managed to get in at $6.94 per share and sold a March 7.5 CALL for $.40.  We get paid $.40 per share for agreeing to sell the stock to someone else if it reaches $7.50 by March 19.  If the stock keeps going up we miss out because we will have to sell it at $7.50.

There’s a 63% chance that it will not get to $7.50 so we can put on another covered call next month if things go our way.

If it stays under $7.50 we get to keep the $.40 which reduces our risk to $6.54 per share.  We won’t lose any money unless the stock drops below $6.54.  There appears to be some resistance around $7.12, but if that breaks it should be a relatively smooth ride up to $7.50.  We have a Sell Stop in place at 6.74 which still nets us $.20 per share if the trade moves against us.

Without the covered call this trade might not be worth the risk.  Using covered calls can be a good strategy to reduce your risk if you know that you want out of a stock by a certain date or price.

“If you think about it in a domestic violence way, people are so attached to their pets now,” said state Rep. Sharon Cooper (R-Marietta), who sponsored HB 429. “One way to really hurt the person you’re trying to control is to go after the pet.”

In issuing a protective order, courts can order a person to refrain from domestic violence, authorize a dangerous person to be evicted from a home or force them to provide housing elsewhere for a partner, and set up child and spousal support payments. Cooper’s bill would allow pets to be included.

This language has been added to the OCGA 19-13-4

(12) Order the respondent to refrain from harming any family pet and further direct the care, custody, or control of any family pet. As used in this paragraph, the term ‘family pet’ means an animal kept for companionship and enjoyment or a household animal which is owned or possessed by either party, or a minor child residing in the household of either party, and shall not include livestock, laboratory animals, working animals, or sport animals which are kept for economic purposes.”

The bill allows judges to order an alleged abuser to not harm family pets.  A judge can also assign care and custody of the pet as well.  If Georgia passes HB 429 it will become the twelfth state to have a law that protects pets.  Rep. Cooper deserves a lot of credit for sponsoring this bill.  It’s something that Georgia has been missing and desperately needs.

State residents need to visit http://www.legis.state.ga.us/legis/FindLegislator.htm to look up their legislator and have them support the bill.  The Senate needs to be the focus of action since the legislation expired last year with no apparent interest in passing it.

YGE Day Chart

Yingli Green Energy is showing a positive crossover on the Stochastic,  the MACD is improving day after day,  and the PPS is also having a positive crossover.

OPTT Day Chart

Ocean Power Technologies is showing a positive crossover on the Stochastic,  the MACD is improving day after day,  and the PPS is leaning towards a positive crossover.

FSLR Day Chart

First Solar is is showing a positive crossover on the Stochastic. The MACD is improving day after day.  The PPS is also having a positive crossover and is signaling a buy indicator.

AONE Day Chart

Battery Maker A123 Systems is showing a positive crossover on the Stochastic.  The MACD is improving day after day after a flat decline.  The PPS is almost having a positive crossover and the buy indicator has triggered.

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Business and recreational travelers do not want to be stuck on a 300mph train when a Boeing 717 can go 600mph.  Most tickets on Airtran and Delta start at $49 each way.  To make the train reasonably priced, it would have to be in the $5-15 range each way.  Matthews also forgets that terrorists can blow up trains just as easily as planes.  This would mean putting the TSA in every train station, which would be expensive and inconvenient for the traveler. 

A much better investment than high speed rail would be to invest in slow rail for cargo.  Freight train is more efficient than moving goods by 18 wheeler to distribution hubs where the 18 wheelers can then pick up the cargo and deliver it to the final destination.  Trains are 2-4x more fuel efficient than trucks per ton-mile and emit 1/3 the NOx of trucks per ton-mile.  Cramer’s picks of US Steel and Caterpillar are right on target with slow trains, high speed trains, or roads for trucks, but we need something sustainable after the construction is over.

Another reason high speed commuter rail is not the solution is the use of technology to eliminate the need to commute.  GenX and GenY are more comfortable with running a virtual office.  Whether these groups are business owners or executives at established businesses, they will influence the workforce to become more decentralized.  Instead of meeting in person in a conference room, you can use GoToMeeting, WebEx, or the open source tool DimDim.  The last time we ordered a nifty IT appliance a Sales Engineer didn’t come out to set it up.  We placed the device in the server room with an IP address.  Then the Sales Engineer took control of  our PCs through WebEx Remote Support and did all of the configuration from California.  They could have sent a real person, but why do that when it’s more efficient and green to do work over the internet?  Skype and SIP based calling allow workers, vendors, and customers to communicate across the world for the same price as it would cost to call across town. In the near future there will be no reason to go to the office which is good for workers, good for the environment, and bad for high speed commuter rail.

Unfortunately it was the Democrats that indirectly torpedoed the extension.  According to Charles Grassley (R-Iowa), the Democrats tried to bring back the estate tax along with the tax credit for biodiesel producers.  They also decided to put it into a defense bill for some strange reason.  Something as divisive as the death tax was sure to not win support from the Republicans.  By taking this approach the Democrats have shown that they are not committed to green energy reform.  Since this would be a tax break for small business any Republican would be behind the bill if that were the only topic.  Democrats can show their commitment to renewable energy by creating a bill that brings back a minimum of $1/Gallon tax credit for biodiesel manufacturers.  This bill should carry out no other actions than the tax cut. 

Republicans want to see lower taxes and less dependence on foreign oil.  Democrats want to protect the environment and bring manufacturing jobs back to the US.  Passing the tax cut will benefit Democrats and Republicans.  It’s time to drop the red state/blue state partisan bickering and get to a green state.  Write your Democrat Congressman and Senators and tell them to support renewable energy in a way that brings the Republicans to the cause.

The Ohio Supreme Court ruled this month, by a 4-to-3 vote, that the search violated the Fourth Amendment’s protection against unreasonable search and seizure. Rather than seeing a cellphone as a simple closed container, the majority noted that modern cellphones — especially ones that permit Internet access — are “capable of storing a wealth of digitized information.”

This is information, the court said, for which people reasonably have a high expectation of privacy, and under established Fourth Amendment principles, police officers must get a search warrant before they can look through call logs or examine other data. The court wisely decided that it made no sense to try to distinguish among various kinds of cellphones based on what specific functions they have. All cellphones, the court said, fall under the search warrant requirement.

The judges were wise in their decision.  Modern smartphones contain a great deal of information that you don’t want falling into unauthorized hands.  Today many people sync their entire online address book to their phones.  Also consider that social networking applications app could expose your associations beyond the address book on your phone. And while not sound information security practice, many small businesses use free email services and employees do work on personal equipment.  As an employee, you could be exposing your employer’s business to unauthorized viewing.  Small business employers should also be concerned.  You normally don’t want just anyone reading your company information without a proper NDA.  If you are planning to IPO anytime soon, this would not be a good thing.

You can protect yourself by setting the password on your phone.  I won’t go into specific details since there are many different phones.  A 4-digit PIN is all you can get out of most older phones.  If you have the option to set a password that consists of other characters you might consider enabling that feature. Password protecting your phone will also help prevent anyone from going through its contents or making calls using your account.  If you’re going to put a password on your phone for privacy reasons, then consider the cost of someone using your phone to make international long distance calls. 

Many people put off reading the user manual, but now might be the time to take a look.

We can make some money by selling the January 10 650 CALL.  This is an options contract that we sell to someone else.  These options contracts are going for $2.66/share.  So we could make $266 per contract sold.  We would get to keep this amount as long as the ^RUT stays below 650.  If it goes above 650 our losses could seriously add up.  To protect against this possibility we also purchase the January 660 CALL contract from someone for $1.26.  This brings our initial net profit down to $1.40/share or $140 per call spread.  This limits the maximum amount you could lose on making this trade.  The advantage is that the January 660 CALL is gaining in value along with the January 650 Call if ^RUT goes up. To get out of this trade if it does go bad you would do the opposite of how you entered.  That is you would sell the January 660 CALL you bought and take part of the proceeds to buy the January 650 CALL you sold.

Max Profit occurs when ^RUT below the price of the CALL you sold.  I this case as long as ^RUT is below 650 you get to keep 100% of the 1.40/share from making this trade.

Break Even occurs when the price of ^RUT is equal to the price of the call you sold (650) + the premium you received (1.40).  In this case you would break even if ^RUT made it to 651.40 and only lose money after it went higher.

Max loss would occur if ^RUT were higher than the CALL you bought (660).

If we were to go and buy 3 contracts (300 shares) using this setup we would see this calculation in our trading software.

Max Profit: $420.00

Max Loss: $2580.00

You collect the $420 immediately if you click send.  You only start to lose money if ^RUT makes it above 651.40.

Is this trade worth the risk?  We can calculate that to make our own decision before hitting send.

On Dec 21 we used the Analyze Risk tab in Think Desktop to see what the odds were of ^RUT being under 651.40 by the date the options contracts expire in January.  Based on this chart the odds were 100% likely that ^RUT not go above our break even point.

RUT 100% Chance of Success

We didn’t get filled so we tried again on Dec 22 and raised our price.  ^RUT went up 5 points in one day which was a big move and we performed another risk analysis.  Now there is 72% chance of ^RUT being under 651.40 by January 15.  The odds are greater than 50/50 and much better than winning the lottery.  We also set an email alert when ^RUT gets to 645.  This gives us an opportunity to bail out of this trade before expiration.

RUT 72% Chance of Success

Bear Call Spreads are useful for speculating on a security not rising above a given price.  In this case we didn’t have to have any money up front to invest and made a profit of $420.  With a more than 70% chance of success this was worth the risk since ^RUT is going to have a hard time breaking above 625.  We’ve set email alerts in case things continue to slide in the wrong direction over the next 23 days.  Never trade and forget because you could end up with an unpleasant surprise.

the CEO stated in an SEC filing, “If we do not successfully execute our liquidity plan, we face the risk of not being able to continue as a going concern.”

LDK Solar has dropped from over $9 to under $7 in the past two days.  This is a perfect example of why managing your sell stops is important.  Looking back at the chart some well placed trailing stops would have exited the position on Nov 24.  There was also a strong jump up on Dec 4 where setting a stop at $8.50 would have saved some profits.  The slow stochastic is showing an uptick in the %K line, but this may continue to sell down. 

Rentech is a clean energy company that has been around for a very long time . They’re testing some interesting technology and seem to have a fairly repeatable process.  We’re still undecided about getting back in.  The debt-to-equity ratio is a little high but this still might be a good short term play with a tight sell stop.  There is support near 1.44 and 1.38 which might prove to be a good entry point in the future.  It’s also still above its 21 day SMA which is a good sign for now.

RTK