Friday, October 31, 2014

10/31/14 Ebola in the Shadows

I posted the following on another blog.  Since it's Halloween, why not here as well:

Following the well-publicized story of Nina Pham, I'm not so easily reassured about the difficulty of contracting Ebola: 

(a) Pham was fully aware that she was treating an infected patient and took precautions, yet still became infected. Have they identified her 'break in protocol?' 

(b) An infected passenger disembarks from a plane and is noted to be symptomatic. This person is detained. The plane she was on has already departed after only a cursory cleaning by the flight attendant, who is unaware that the passenger had discreetly thrown up several times during the flight, leaving traces on the seat handles and cushion. An infant now occupies her seat, and her parents have no reason to think it's unsafe for her to play with her toys, which she habitually chews on b/c she's teething. 

(c) A dog or cat comes into contact with infected bodily fluids, which are then tracked into the owner's home. 

(d) An asymptomatic Ebola victim flies into Mexico. During the 48 hours it takes to cross the border illegally and arrive in NYC, he becomes symptomatic and unwittingly infects forty others who travel with him in a truck equipped only with buckets for waste. None are willing to report their symptoms to authorities or present to a health care facility. 

(e) A mentally unbalanced Ebola victim knowingly attempts to infect others. 

All of the above are unlikely scenarios. However, I would have ranked (a) as being the most unlikely.

Thursday, October 30, 2014

10/30/14 Miners on Desolation Row

Scaling into a few miners that are definitely experiencing stop runs this morning:

(a) Goldcorp (GG) @ 19.7x (-7.7%).
(b) Silver Wheaton (SLW) @ 18.5x (-3.5%).
(c) GDX (Majors) @ 18.8x (-3.8%).

(d) Barrick (AB) @ 12.3x (-4%).

World Series Kick Ass

Sunday, October 26, 2014

10/26/14 Preservation Hall/ Evaporation Doll

Preservation Hall was founded in 1961 to 'preserve, protect and perpetuate [New Orleans jazz].'  A fitting mission statement for one's retirement account as well.

Last week's 5% rally in the SPX (IMO largely driven by trapped shorts) presented/still presents an excellent opportunity to pare back on risk.

For those who employ a tactical approach to markets, a rough map to study over Sunday brunch might look something like this:

(a) A retrace in the SPX next week to the 1900 range (which would present a short-term buying opp).
(b) A rally into mid-term elections (which would present a short-term selling opp).
(c) A more sustained decline into December, which may even approach Desolation Row (certainly a buying opp).
(d) A rally into January.

Of course, the market (ie, the collective emotions of tens of millions of homo sapiens) will do what it wants regardless of any map.  On the other hand, few participants have shown much success defying human nature.

On a side note:  Brazilian equities rallied on Friday, blocking any low-risk entries ahead of today's election.  The next opportunity might be Monday's open, fading investors' responses to Sunday's outcome.

Monday Postscript: If you've been waiting for an entry into Brazil, this is it. A Dilma Rousseff victory has the Ibovespa selling off -5.8%, giving back its entire summer rally. EWZ (Brazil) -8%, at one point breaching last February's low of 38, PBR (Petrobras) -16% to 10.90.

Thursday, October 23, 2014

10/23/14 Running Stops

Like it or not, running stops is legal in the capital markets.  After all, no one forces you to set stops (although highly recommended), and no one forces you to sell (unless you're leveraged, but then the decision to buy on margin [not recommended] is entirely yours).

Today's action in the miners certainly had the feel of stops being run, with prices dropping below recent lows only to rebound strongly into the close.

Brazil?  Here's my take.  I originally intended to buy tomorrow, taking shares away from nervous investors heading into Sunday's elections.  However, there must be a few hundred thousand other traders with the same outlook.  In addition, the midday plunge in EWZ to 39.38 was eerily similar to the stop running pattern in miners.  I'll wager that the Ibovespa gaps up on Friday, frustrating both today's sellers and tomorrow's buyers.  

Tuesday, October 21, 2014

10/21/14 Lying in a Bombay Alley

Two of the BRIC indexes look attractive this morning.  Brazil's Ibovespa off an additional -4% to 52,120.  Opening positions in the extended-hours session> EWZ 41.2x, PBR 12.6x.  RSX (Russia) appears to have found its footing on Monday> opening a position pre-market @ 21.4x.

Even at these levels, both ETFs represent high-risk trades.  For instance, Sunday's runoff election in Brazil is likely to gap its index up or down next Monday.  The ideal entry scenario would be even odds in the polls going into Friday afternoon, as risk-averse investors unload positions ahead of the weekend.

Friday, October 17, 2014

10/17/14 A Life Of Danger

The markets remain treacherous but short-term volatility appears to have blown by, and I plan to open/add to positions in Europe, Emerging Markets (mainly Brazil), Energy (XLE/ RYEIX) and even the SPX (S&P500) on intraday signals. Note also a possible stealth rally in the metals and mining sector. It's occasionally exciting to buy panic and short exuberance, but much safer to play the 'middle' of market swings. I don't anticipate holding positions longer than a week or two. The next 'buy and hold' trade will require more time- December, perhaps.
 
Opening indications are positive: DJIA +175 (+1.1%), SPX +25 (+1.4%), EEM +1.1%, GDX (miners) +0.5%, XLE (Energy) +1.2%.  I opened a very small position in PBR (Petrobras) yesterday, which is bidding +4.4% pre-market.
 
'Treacherous' is an apt adjective to pair with the noun 'markets.'  Never lose sight of the fact that markets are comprised of homo sapiens motivated entirely by fear and greed!  Dylan's 'Desolation Row' tells me when to buy, but Johnny Rivers' 'Secret Agent Man' defines the game: