Tuesday, July 28, 2015

7/29/15 Preflight

My favorite Elton John song:


It's gotten way too negative in emerging markets, especially Brazil (where stock prices have descended past the gates of Hades).  RYWVX (Rydex 2x Emerging markets) actually closed this morning's 1030 window off yet another -1.49% to 49.54, despite a slight rise in EEM at the time.  Shanghai?  I'm willing to buy at the second -30% off sale this month. 

Packing my bags for another trip on RYWVX at today's close.  Adding a little RYPMX (Rydex Precious Metals) into the fuel mix.

Adding positions in CAF (China 'A' Shares) + EWZ (Brazil) + PBR (Petrobras) + ABX (Barrick Gold) near the close.

Thursday, July 23, 2015

7/23/15 The smell of napalm

Rarely have I witnessed the kind of wholesale shellacking in commodities that began Sunday evening (a $2.4b sale of gold some analysts view as a blatant attempt to manipulate prices, as the bullion was dumped in a single sale during a session when most major markets were closed) and has continued all week.

(a)          FCX (Freeport McMoran) announced an earnings ‘beat’ this morning, only to see its shares taken down another -10% to 13.56.  Company insiders have been prescient in the past, marking ‘bottoms’ with eerie precision (at least since I started following the company in 2005).  It’s a little different this time: http://finance.yahoo.com/q/it?s=FCX+Insider+Transactions.  At least two officers recently shelled out between $5-10m on shares priced in the high teens to low twenties, and are now looking at -40% haircuts.  Very unusual!
(b)          Commodity-rich Brazil (EWZ) is off another -4% today.
(c)           Both OIH (oil services) and XLE (energy) opened strong, +2.8%/+2% respectively.  Now +1.8%/-0.1%.  Crude itself is off -1%, with Nymex oil futures near a 4-month low under $49.
(d)          Miners also started off strong (GDX +1.6% at the open), only to meet a wave of supply which has many majors printing new 52-wk lows and GDX off -3.8%.
(e)          EEM (emerging markets) off -1.03% to 37.58.
(f)           US indexes faring a little better, with most off just -0.7%.
(g)          Utilities off -1.7%.  The only green would be long-dated Treasurys, now +1.26%.


I see the possibility of 'bottom candles' in the energy sector (OIH in particular), but no signs of a turnaround elsewhere.  

Sunday, July 19, 2015

7/19/15 She just changes her mind



'Oh, and she never gives out and she never gives in,
She just changes her mind.
And she'll promise you more than the garden of Eden
then she'll carelessly cut you and laugh while you're bleeding,
But she brings out the best and the worst you can be.'

https://www.youtube.com/watch?v=D4nQB3V10i8

I was shopping at the local Safeway this morning when the Muzak floated an old Billy Joel song, one I haven't heard in decades.  As I descended the stairs to the parking garage my mind transposed memories of college life in the Seventies with an image of Gordon Gekko- the perfect song to have floated over the closing credits to 1987's 'Wall Street.'

Friday, July 10, 2015

7/10/15 The Eagle Dives On Friday

(a) DJIA futures +200 points.
(b) TLT (long-dated Treasurys) off -1.3% on top of yesterday's -1.97% drop.
(c) $USD -1.05%, FXE (Euro) +1.55%.
(d) Gold/miners flat.
(e) EEM (emerging markets) bidding @ 38.44-> +2.5% above Thursday's close, and +0.9% above the point at which I exited RYWVX @ the 1030 window.  So the bounce has legs.
(f) FXI (China 'H' Shares) up another +5% after Shanghai rallies another +5% overnight.

My take? 

(a) If you want to reduce exposure by selling into strength, this morning appears to be a good time. 

(b) Buying opps setting up in miners and bonds.

Tuesday, July 7, 2015

7/7/15 Big Trouble in Little China

It started out with a little trouble in Big China.  $3-4t later, it's time to switch the adjectives.

(a) Trading halted for 20% of China listed stocks: http://www.marketwatch.com/story/over-20-of-listed-china-stocks-now-in-trading-halt-2015-07-07-181035534.  When all else fails, freeze prices!
(b) Hang Seng opens down -3.8%: http://www.hsi.com.hk/HSI-Net/
(c) Shanghai opens down -8.12%: http://finance.sina.com.cn/realstock/company/sh000001/nc.shtml

I think they need to halt the entire market.

Saturday, July 4, 2015

7/1/15 The Plunge Protection Team

(a) What is the Plunge Protection Team (PPT)?

http://www.investopedia.com/terms/p/plunge-protection-team.asp

(b) I have no idea whether a similar 'working group' exists in China, but with the Shanghai Composite already in bear market territory, extraordinary measures were taken this week.

http://www.reuters.com/article/2015/07/04/us-china-markets-brokerage-pledge-idUSKCN0PE08E20150704

In my opinion, if it's in the best interests of global central banks, a great deal more than $19.3b will be made available for purchase of shares listed on the Composite.

Sunday, June 28, 2015

6/28/15 Just Another Grexit

There's nothing esoteric about trading.  Trading is a job, in some cases a business, like any other.  Sports analogies work well, not only because of the competitive environment but because players drive to jobs, and teams are run as businesses.  The daily grind is the same.  The bread and butter of trading is consistent execution of the same (offensive or defensive) plays over and over again.  The blocked shot.  The fat pitch.  The line drive.  Three yards and a cloud of dust.

A Grexit looms on Monday.  That makes it another manic Monday, one of the 52 that occur each year.  Look over your playbook.

Monday may be a non-event.  If it's an event, we don't know how markets will react.  It's unnecessary to know what will happen if we prepare for the most likely scenarios.  In general, Treasurys/Utilities +/- downside bets such as VXX or inverse funds work well should markets break lower.  Cash is generally considered defensive, but it's really in the Special Teams category-> preserving capital as markets decline, transitioning to heavy artillery as traders retreat/capitulate.