Sunday, May 9, 2010
5/9/10 Real Good For Free
I slept last night in a good hotel
I went shopping today for jewels
The wind rushed around in the dirty town
And the children let out from the schools
I was standing on a noisy corner
I was waiting for the walking green
Across the street he stood
And he played real good
On his clarinet, for free.
I first heard this song after buying 'Miles of Aisles' in the mid-seventies, and wore it out. Joni- what a writer, what a musician.
Everytime I listen, my mind drifts off into imagining how different life would be had I taken another path.
When I was eighteen, I spent a few weeks washing dishes at a small restaurant in Othello, WA. The ----ing middle of Nowhere, with a capital 'N.' I slept in a ramshackle house with two cooks. The older one, Jimmy, decided to drive down to Reno for a vacation, and I jumped at the chance to go with him. Probably my most memorable road trip. Seeing the Columbia River Gorge for the first time. Small pastoral farms along the highway in Oregon. Sliding towards the shoulder a few times as snow began to fall outside Susanville in California.
So hey- What if I had settled down in Othello for the rest of my life, content with returning home each evening to a basement apartment, where I might still be banging out solos no one will ever hear? What if I had stopped at one of those small farms, asked for a job, and ended up falling in love with the place? Jimmy was fifty and divorced, with a daughter he talked about occasionally- what was he doing frying up steaks for ranchers and farmers during the day, and chain-smoking/reading dime novels at night?
Life is a 'many-splendored thing.' Which is also the title of a great novel that can get you pondering the many paths we take in life:
http://en.wikipedia.org/wiki/A_Many-Splendoured_Thing
What's eternity for? Among other things, I think we might have the chance to explore each of the infinite 'paths' in life, ending up with the kind of understanding of self and universe that cannot possibly be had in one lifetime.
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I agree with t3d's post re investor reactions to 'fundamental deviations.' The reactions are often delayed.
ReplyDeleteWe had the crash. Immediately after, it's as if investors experienced a collective concussion, unable to deal with it.
The market then rallied, easily pushed higher by a few vested interests.
Investors are now waking from their daze, and while they may not be selling, the simple act of not buying may be enough to allow the indexes to settle to some kind of 'fair valuation.'
Good morning everyone, and a joyous day to all the great mothers out there that have to put up with son's like JB....
ReplyDeleteNo one ever needs to qualify there comments on anything we discuss here as far as I'm personally concerned. I look around the bar and see a collection of very intelligent, successful people that take the time to give their best feed back on the issues at hand.
Whether HEK is something we trade or not is up to each of us, but look at the work that was done on it this weekend. Fantastic!!
The only comment I'd like to add is in response to FF. It's my understanding that while everyone is talking about how to treat frac water, no one is really putting any money into it. When I mentioned HEK to MOG, one of my questions was why wouldn't the majors just do it themselves. Cut out the middle man. His response...
"We don't want to. It's not our area of expertise, much like the sub-contractors you use. That's why Co.'s like HAL, BH, SLB exist. At best, we might buy out those type of Co.'s, once they are fully developed, but not likely. At this time, I know of no Co. that is really putting any $'s into it. Everyone is just saying their working on it because they have to."
At least that's what I'm hearing.
The one that got away? I know we all look back @ TCK, SLW etc..but the one that haunts me the most is V. All the way though the crash it kept increasing it's earnings by 10%. I love the business model, and the co. executes perfectly.
ReplyDeleteI bought it the last time @ 44 and took profits up to about 65 I'd guess. On Friday S&P upgraded it to strong buy from by. That's the type of Co. I'd like to focus on trading in the future.
@ 82 bucks it's back to where it was in Dec. I have the capital to make this a very profitable trade even if it ONLY gets back to 90-93 area.
T/A right now..It's sitting just above the 200ema/200sma, RSI looks good. The 20/50 are barley rolling over.
So then in reality, HEK is a PR job?
ReplyDeleteETP is in on half, but what is that really? IE: half of what? MOG's view only makes the NG majors, ETP and HEK even more chancy considering the reaction to the gulf situation. If it's just lip servicem and I don't doubt it, then sooner or later it will be a big problem, esp in light of the low price of the thing they're drilling for. If that happens then David (and I) will be right as rain in a big way.
As far as TA, after last week it will take some time to rely on anything as all the charts are broken after a 1000 down spike, and finding fair value, as 2nd points out, may take some time.
Re: Real Good For Free/ The Secret Life Of Words newSubmitted by 2nd_ave (4406 comments) on Sun, 05/09/2010 - 13:30 #62506 (in reply to #62503)
ReplyDeleteGrym- There are many people we run into each day living by themselves in that basement apartment, with 'secret' inner stories we'll never know.
I recommended a film several months ago, which I'll recommend again:
http://movies.yahoo.com/movie/1809257705/info
The director does a beautiful job of setting up viewers for over an hour, before taking them on an intense emotional ride for the final twenty minutes.
FF- In 2 of your last comments you said:
ReplyDelete"The attraction to HEK is the problems with frac water, which are substantial and everyone is looking to solve, esp the big boys in exploration and drilling in the shales."
"..and everyone and their mother is looking for such an idea" (Treatment)
I was simply pointing out that might not really be the case because of the difficulty and the expertise required. You'll also remember that MOG took a position in HEK which I posted a while ago.
You've also stated that the Rig count is going down. That is not correct. The Rig count has been increasing. This can easily be found on BH web site.
As for HEK being a PR job...I'm not sure how to even respond to that. Perhaps you can re-phrase it.
I thought this was interesting.
ReplyDeleteby Bananamerican
on Sat, 05/08/2010 - 21:40
#338635
for those who haven't seen it, this was Mish's take on "le crashe"
During yesterday's fast-moving midday market, NYSE specialists -- who oversee trading in individual stocks -- used their authority to call a momentary time out. The idea was to bring together buyers and sellers, and get their prices more in line with each other.
It happened in five Dow stocks, including 3M (MMM, Fortune 500) and Procter & Gamble (PG, Fortune 500), according to the NYSE, and in a good number of the listed stocks. The NYSE did not have a tally of exactly how many.
Years ago, when the NYSE dominated trading, such "time-outs" worked well at stabilizing stock prices.
But today, the NYSE accounts for only about 25% of the volume in its listed stocks. Much of the rest comes from computerized markets run by private companies -- and some of those systems did not take a time out yesterday.
So, as the NYSE paused for a minute or two at about 2:40 p.m. ET, the off-exchange computers kept searching to execute trades. They hit the best bids still standing, which in many cases were far below the prior price.
And in some cases, the off-exchange computers found no bids at all. When that happens, market-making computers see a zero bid, then offer a penny higher to capture the trade and collect a commission -- hence the trades of just one cent for several stocks, including Accenture (ACN), Boston Beer (SAM), Exelon (EXC, Fortune 500).
"Computers are looking for the best bids. The real best bids shut themselves down," one trader told CNNMoney.com.
"You had penny prints. The bid was zero. The algorithms were designed to penny the bids," said another trader.
The attempt to stabilize the market by timing out the human bidders made matters worse. The computers reacted by bidding $.01 when there were no other bids.
This was not a planned conspiracy. Rather, it was a natural occurrence after all the sell stops and buy stops executed, the NYSE paused, and the only game in town was computers bidding against computers finding no bids.
The only question is whether or not the computers did indeed in every case route orders to the best bid as required by NBBO National Best Bid and Offer rules.
I am continually amazed at how otherwise sensible people manage to come up with preposterous conspiracies when anything out of the norm happens.
The above has really important implications for individuals as with respect to stops mechanical versus mental.
ReplyDeleteIf you had a mechanical stop you were faced with it gapping right through and getting creamed. If you had a mental stop the swoosh was so fast that you probably could not execute fast enough or were locked out from your trading platform being overwhelmed and forget about trying to get to your broker by phone.
The system is f---ed up. perhaps Capt Vad's approach really is the safest in the brave new world.
Everybody should take the time to watch this.
ReplyDeleteThe comments are very interesting too.
http://www.zerohedge.com/article/dylan-ratigans-explanation-crash
good stuff T3D, thx for posting it. i need to spend more time checking out what's on Mish' mind!
ReplyDeleteT3D- I think that's exactly what happened and no trades should get busted. It actually "worked" the way it's supposed to. Did you see that the spread on the big SP was 10 handles at one point? The locals dropped the bid the steam the tide. Good move.
ReplyDeleteThe real question is how/will it get fixed. I don't hold out much hope of that. Your right. How do we mitigate it?
Saw that video earlier. Question again is will they fix it?
ReplyDeleteAll right, I've gone through the entire bar. Can someone point out Vinod to me??
ReplyDeleteT3d - Agree that Vad's approach might be the way to go. I'm trying to get there as fast as I can. I've worked out of all of these BS positions I've had in MPEL, SD, CNAM, etc. I still like the UCO/SCO swings but not much else in the multi-day, hang-it-out-there & get it chopped off swing trade BS time-frame.
ReplyDeleteHey Kyle! How's the "system" working out? I've had really good success scalping in the past. The only way I'd be able to make a living at (if that was even possible) would be to use very large position sizes. How do you work out the #'s.
ReplyDeleteI'm still in 'learning mode' man. Just trying to pick better entries/exits on SSO & BGZ. (mainly BGZ). Was reviewing Vad's Fri trading log on the 3pm AIG DBI setup. Many of these moves could be accomplished with other trading vehicles (i.e., they're related to overall market movement). Individual stocks may amplify the movement but, the trade could be implemented w/ e.g. SSO or BGZ.
ReplyDeleteKyle- I was messing around with a business plan for trading. If it ever get's finished I'll send it to you if you like. The part I'm having a hard time with is returns/time frames, and if that would necessitate changing trade sizes. It seems to me the one variable you wouldn't want to change is the set-up. Does this make sense?
ReplyDeleteMark - It's the setup Yes, but there is a 'confidence level' related to setup entry that Vad talks about in TTR (Techniques of Tape Reading) connected to 'what the market is currently doing' that is very important. Early entry, late entry depending on strength of the underlying market & 500sh or 1000sh etc.
ReplyDeleteOn economic recovery, which I do feel is occurring somewhat at this point, I think the big question is whether its self sustaining or just there because the printing presses are running at a $1.6 trillion budget deficit + Fed paper buying. I think its the presses, but we won't see that till the stimulus is turned off.
ReplyDeleteAnyway, I think the damage has already been done, and its just a matter of time before the US is just a massive version of today's Greek troubles.
Agreed on both counts Cheapy. We're you able to get anything out of the madness Thur.?
ReplyDeleteMark, no, that's my flaw. I missed the *BIG* profit entirely because I had sold for $3 or $4k profit the night before, and didn't reload on the mini panic at the close. It would have been $200 or $250k profit if I had been able magically to exit near the top. That's why I was re-evaluating my charting/trading method on Friday. Its been a common problem for me. I buy the bottoms pretty well, but sell before I realize its turned up, and am too fearful to reload.
ReplyDeleteI need a magic feather...
and PS, don't get me wrong. I'm up about 20% in the accounts overall so far in 2010, so its not like I've done badly, just have missed big some opportunities I wish I had held onto.
ReplyDeleteES opens +20 but is moving all over the place.
ReplyDeleteCheapy- Your way to hard on yourself, my friend. You've been trading well and have large trades on. Not easy to hold for long these day.
JB- Get on your hands and knees and pray you can get out tomorrow at this price. I told you to hang on no matter what! :)
5pt. range in the ES already...settling in on the low end it seems.
ReplyDeleteES breaking the open range already to the down side.
ReplyDeleteHurry up Bro.
ReplyDeleteDJIA futes +160.
ReplyDeletejb- Hard to imagine a down open right now.
2nd- Turned out to be a nice day, hun? Still, worked in the office all day.
ReplyDelete$USD and gold down.
ReplyDeleteNot trying to outthink the market. Just noting the unexpected.
I worked in the back yard all afternoon.
ReplyDeleteI probably won't be able to sleep tonight.
ReplyDeletepls help me remember that position size is KEY...too much stress.
my fav line from trading places..."SELL, SELL, SELL"
DJIA +175.
ReplyDeleteI would imagine bears are thinking WTF.
And I, for one, am thanking the current trading rule that says 'intraday only, cash out at EOD.'
Clearly, there is No Way to know what happens at the next open.
TK at his sarcastic best:
ReplyDeletehttp://slopeofhope.com/2010/05/an-open-letter-to-the-bulls.html#disqus_thread
Man, we're still getting big swings in the ES.
ReplyDeleteGuys - BP failed to put the box over the leak...the stock is due for another big pullback I suspect. Don't count out this as a HUGE problem for our economy. This oil leak could turn the Gulf into a dead sea and shut down any inbound commerce into those ports.
ReplyDeleteAlso, what are people's opinions on the rout Merkel went through?
http://www.nytimes.com/2010/05/10/world/europe/10germany.html?hp
2nd_ave, it looks like the first part of your ideal scenario is going to work out -- the market will gap up. When that happens, will you have the strength to short this market, as you had originally intended? How do we know that the market won't repeat what it did in February -- 3 months of constant gains to S&P 1300?
ReplyDeleteCongratulations, JB -- you have not only made the correct guess about Monday's open but you also put your money on this bet and looks like you'll win big!
ReplyDeleteDavid- I plan to short any gap-up. For a day trade.
ReplyDeleteIt no longer takes 'strength,' as I don't have an opinion beyond fading any large move. If I'm wrong, I will simply stop out.
TOF- I'd like to here what JB has to say about that also. To me it's just another shot across the bow that people aren't going to take this shit any longer...I hope.
ReplyDeleteES trying to break out to new highs...1130.75.
ReplyDeleteIt's very much a casino right now, and I feel quite at home. Risk management in that environment is second nature to me.
ReplyDeleteSure is 2nd. 5 ES points in 4 minutes. Never seen that before in Globex for this time of day, let alone on a Sunday.
ReplyDeleteJust had a 4 handle on a 2 minute bar for the ES. Everyone be careful tomorrow with entries.
ReplyDelete1135. Wow.
ReplyDeleteI've never really looked into buying gold but I have to say this is probably the best looking long on the board as we approach the 1,150 to 1,170 (50 DMA) area. GLD is probably the play on any pullback. If this bailout doesn't work to help restore confidence then we could really be in store for some hurt. Does anyone have details on the bailout package? Is it debt spread out amongst the other EU nations? If so then wouldn't Portugal, Spain and Italy be on the hook for some?
ReplyDeleteYou know what's funny is that world markets are rallying on what is essentially bad news. $1t 'euro defense fund' is hardly synonymous with economic growth. So it's a relief rally for now. What I'd like to see is another sell-off that takes us down to some kind of 'fair valuation' (don't ask), which allows us to sink money into the indexes with reasonable peace of mind.
ReplyDeleteDavid- Didn't want to leave you hanging regarding MOG. He just sent me an e-mail saying we should talk tomorrow. I'll fill you in right after.
ReplyDeleteLooks like the fireworks are over in the ES for now.
ReplyDeleteA real downer would be if J6P decides he's had it with the stock market following another 'crash' to sub-9k on the DJIA.
ReplyDeleteWe might end up with an entire generation modeled after the post-30s, wanting nothing to do with speculation in the markets.
Mark- You're donating a few hundred in the interest of 'education?'
ReplyDelete2nd- If Vad and I are correct, which I know we will be, my order will fill at the best bid. Hell, I've placed limit orders that have filled well below my bid before. I'll sell right away, of course. Vad has taken the time to keep in touch with me through e-mails. Thought he would get a kick out of it.
ReplyDeleteYou know what's looking attractive right now? TBT.
ReplyDeleteOn that note, guess I'll catch some Zs and see you all in the morning.
ReplyDeleteSleep well, my friend...tomorrow should really be something.
ReplyDeleteInteresting....Why the hell are the US futures far out pacing the markets that are open?
ReplyDeleteDuring the spike on Thursday, one of my standing sell limit orders was hit for 200 shares of TWM at $21.70. Since the Russell 2000 futures are already +3.14%, I don't think I need to wait for a much better price to reload my TWM position, and so I have just placed a buy limit order for 100 shares of TWM at $20.
ReplyDeleteI am surprised to see such a big rally in index futures after the announcement of IMF committing its 30B to the Greek package -- wasn't it obvious since last Monday that Greece will be bailed out? So maybe this overnight rally is just short covering in the face of "any" positive piece of news? If so, then it shouldn't take the market to new highs, and a second leg down should occur, just as we have discussed it here.
ReplyDeleteall markets are rocking, going to dump FAS at the open then flip around a buy my three fav 3x inverse etf's and the watch the market slide back all day
ReplyDeleteI'm not geting how it is that the one thing I'm in, gold, is taking it in the ass when everything else is doing GREAT. Even though we knew about the bailout Friday when gold did GREAT.
ReplyDeleteI am TRULY getting sick of this shit.
Need to win lottery and get on with my retirement, enuff of this market-madness.
Motherjumpers!
another one for the "better lucky than good" column: in addition to my FAS I also ended up still having 1/2 position of TYH (I thought the whole sell order went thru AH on Fri but only 1/2 did), just dumped that sucker this a.m.
ReplyDeleteYou want me to believe that the IMF is giving a trillion bucks to the dead white Europeans, and every asset class in the known universe goes up, except for gold?
ReplyDeleteWhat are ya freaking kidding me?
Obama nominated a Jewish lesbian to the supreme court....but let me ask you this......
ReplyDeleteIs that really freaking necessary? Why nominate a woman who thinks she's a man, when you can just elect a real, actual man?
Also, why do most of Obama's nominees look like mental patiens who look like they get haircuts using bowls as a guide?
shark
ReplyDeletewhat do you think of PLG?
wow sd
ReplyDeletethanks david
My point, folks, is, by selecting someone who can be viewed as an amalgam of "special interests", Obama continues the factionalization that people seize on as an excuse to continue the fractionalization.
ReplyDeleteCan't we just have a really horny straight woman who loves guys and who hates bias crimes?
Can't we have a white guy who doinks his wife but who realizes that every single law limiting homosexual marriage is back-of-the-bus, Jim Crow unconstitutional crap?
Hey vb,
ReplyDeletewhat's PLG?
David, this is just an increase in the money supply again. You know what happens with increased money supply....for awhile.
ReplyDeleteEspecially with the Fed including currency swaps.
shark
ReplyDeletePlatinum Group Metals Limited (USA) (AMEX)
(rec on motley fool)
VB
ReplyDeleteIt's definitely going up...but you knew that right?
The chart looks pretty good but I don't follow it closely and I've never traded it.
VB,
ReplyDeleteI shouldn't say it's definitely going up. Chart-wise, I still really like Yamana, but who knows?
I would be kind of wary about buying in near the open today as the mood is exhuberant.
How's life treating you?
This court pick is the kind of move that makes democrats SEEM like a bunch of out-of-touch, left wing idealogues, more interested in style than substance. Because you know at the bottom of it all this nominee, despite appeearing to be a deviant wacko, will no doubt turn out to be a staunch supporter of unfettered private property rights, as well as letting all the Mexicans in.
ReplyDeleteSo who are we kidding?...what it is, is the APPEARANCE of something meaningfully left-wing and revolutionary which is in fact, ersatz.
Congratulations to jb/vb- two bulls on life-support for most of the weekend, miraculously revived by a dead cat...
ReplyDeleteCupcake here takes exception to your "dead cat" remark....
ReplyDeletePersonally, I'm reminiscing about last Friday's ultrashort trades, where I exited TZA/FAZ @ 7.39/14.66, and spent the remainder of the day regretting the early exits. I even briefly considered reestablishing positions into the close.
ReplyDeleteThank God for trading rules.
Way to go JB. I can't believe the spreads I'm seeing...again. Probably nothing I can do today.
ReplyDeleteHow about cat-with-nine-lives bounce?
ReplyDeleteLet's just go with dead-analyst bounce, ok?
ReplyDeleteI'm thinking I will hold my Yamana, not buy anything else, and go play golf this morning.
Good luck all....
Here's hoping this kookoo market makes more sense to you than it does to me:)
David- NGas making a move this morning.
ReplyDeleteA little "weakness" here in the E&P guys.
ReplyDeleteWell, I loaded up on TZA/FAZ/ERY/VXX.
ReplyDeleteLet's see what happens.
g/l with that 2nd. was thinking of the exact same move but i didn't have the b*lls to pull the trigger.
ReplyDeleteWow. What a move. Nothing like getting stopped out (mentally) at the bottom. I promised myself to take a day off to regroup my thinking. Good luck everyone.
ReplyDeleteOut of all ultrashorts.
ReplyDeleteFido platform must be swamped this morning. Quotes and order executions have been OK, but they're unable to update account balances in real-time.
ReplyDeleteNice timing 2nd!! I was drawing on the chalk board over @ CC :)
ReplyDeleteJB- I think you've done your share of gut shots for one day!!
ReplyDeleteLooking at a bunch of stocks, I can't believe the prices some people paid this morning.
ReplyDeleteUNG off @ 7.22.
ReplyDeleteSGEN is really a steady Eddie today.
ReplyDeleteBy the way, I always read this guys articles...another great one in my mind:
ReplyDeletehttp://www.minyanville.com/businessmarkets/articles/europe-european-leaders-euro-bailout-greece/5/10/2010/id/28200
Good interview with the CEO of XOM on CNBC. Focused mostly on the XTO deal and Ngas.
ReplyDeleteGL guys. At the close....
ReplyDeleteThe last two trading days have really clarified (for me) the concept of being content with decent gains each day, and being concerned only with my own bottom line. Making comparisons on the basis of 'could haves' are such a ----ing waste of time.
ReplyDeleteI made money each day. I was back in cash at the end of each day (ie, free of position-anxiety).
Sure, I 'could have' made twice as much both days by holding another 30 minutes.
I 'could have' also held ultrashorts into Friday's close, betting on a Greece-down Monday. And this morning, my portfolio balances would have slid down like it was on a greased pole.
Addendum: Another foray into ERY/FAZ...
Rosie:
ReplyDelete"So what can we expect going forward?
A relief rally in risk assets — and at the lightning speed that markets operate in
today’s world this short squeeze could be over today. Equities, commodities
(and commodity currencies), credit and lower-tiered sovereign bonds should all
improve markedly. CDS should come in from their lofty levels and Libor pressures will ease.
The U.S. dollar, Yen, gold and high-quality bonds will give up a good part of their
flight-to-safety gains at the expense of the likes of oil and copper and spread product. Bank paper will undoubtedly soar over the very near-term.
Whether this is all sustained will depend on the details of how these facilities will
be operational and who makes the allocations and how they are made. Recall
the initial reaction to the TARP program — shoot first, ask questions later, buy
some time. As the TARP initiation showed, it is one thing to announce a big and
bold rescue package, but it is quite another task to have its credibility built and
actually initiate the plan with no wrinkles. Good luck. Back then, a huge
immediate relief rally of 11% gave way to a 30% slide to the lows — the bottom
was only turned more than four months later once the kinks were worked out
and the specifics of the stress tests were announced. Keep this in mind if
anyone decides to extrapolate today’s short-covering rally into the future.
In a sign of how euphoric this manic market has suddenly become today, as it
digests the bailout news, Greek 10-year bonds enjoyed their strongest session
on record, with yields falling 569 basis points, to 6.73%, and with spreads over
German bunds tightening around 350 basis points. Greek 2-year note yields
plunged 1,327bps (you read that correctly) to 4.9%.
Among other Eurozone periphery nations, yields on Spanish 10-year debt fell
48bps, to 3.96%, and Portuguese 10-year government bond yields slid 61bps, to
5.64%. Spreads on Greek CDS plummeted 444bps, to 561bps (CDS spreads on
all periphery sovereign debt receded sharply too).
While global equities are in the green, the Greece ASI 20 stock market index
climbed 11% — stock markets in Spain are up 12% (led by an 18.5% bounce in
financials). And look Ma, no fat fingers (that only happens on down days).
Beyond today’s knee-jerk reaction, there are issues left on the table. The
emergency measures just announced buys some time but should help take
some of the fear and illiquidity out of the market over the near-term. However,
what were not addressed are the intense structural fiscal problems plaguing
much of the Eurozone.
In the final analysis, if the EU lends money to Greece or to any other problem
country in the zone, debt ratios (including contingent liabilities) in the region will
only rise further. It will be interesting to see how the rating agencies end up
handling this. It cannot be lost on them, or the global investment community,
that while loans, guarantees and central bank provisioning can deal effectively
with liquidity issues, they are ineffective in addressing what’s really at stake
here, which are structural fiscal issues. So the deal over the weekend is only
going to be successful insofar as they are backed up by meaningful reforms (it
must be emphasized that the rescue package critically hinges on the Club Med
countries accepting deep budgetary retrenchment notwithstanding their weak economic structures. Indeed, it will be interesting to see how Spain can manage to meet EMU deficit requirements at a time when the unemployment rate is currently at 20%, just as one example.)
Rosie cont'd:
ReplyDeleteSince the ECB has come out and said that it will buy both government and corporate bonds, then what is clear is that any rally in the Euro should be faded because the lines between fiscal and monetary policy has just become blurred. The cost of the ECB helping drive long-term yields in the periphery lower is jeopardizing the sanctity of the central bank balance sheet. And, just as the Fed has ceased in expanding its balance sheet, the ECB is set to expand its
balance sheet, and this is a Euro-negative. Of all the knee-jerk bounces today, the Euro is the one most vulnerable to reversal.
The threat of default and concerns over the future of the Euro will not dissipate entirely. The region, especially the Club Med
partners, will be in for a long period of extremely weak economic growth
Although the measures will help mitigate the growing dangers of contagion in the Euro area, the IMF/EU loans come with a “strong conditionality” with respect to intense budgetary restraint and structural fiscal reforms. The massive package of loans and guarantees buys time, but the issue of whether the austerity package for Greece will be accepted by the public (almost half do not
approve) is still up in the air. Portugal and Spain are in need of credible packages to cut their deficits. This will exert an enormous fiscal squeeze across wide swaths of the Eurozone and require a weaker Euro as an antidote. Against this backdrop, the threat of default and concerns over the future of the
Euro will not dissipate entirely. The region, especially the Club Med partners, will be in for a long period of extremely weak economic growth. In fact, even with the weaker currency and the underpinning this should give the Eurozone export sector — at the expense of the U.S. — we are seeing EU real GDP estimates for 2010 come down right across the board today.
Guessing we all look back in 2 years and realize how remarkable 2008-10 was in terms of trading.
ReplyDeleteHey, Suttmeier 'agrees' with my take on DJIA 8500 as 'fair value.'
ReplyDeletehttp://finance.yahoo.com/tech-ticker/dow-8500-before-11500-sell-the-surge-suttmeier-says-482228.html?tickers=%5EDJI,%5EGSPC,XLF,UUP,GLD,UDN,SPY&sec=topStories&pos=4&asset=&ccode=
Side note to anyone who keeps track of my 8-year-old's account.
ReplyDeleteIt may have been a mistake, but I closed out his C and WATG this morning near their highs, betting I can buy them back lower. So he's 100% cash right now also...
CP- Hope you're taking advantage of the strength in GMO this morning. Better yet, taking advantage of morning strength to unload the shares you probably added on last week's weakness...
ReplyDeleteClosing second set of TZA/FAZ here.
ReplyDeleteTwiggs;
ReplyDelete"Dow Jones Industrial Average
Despite some dodgy trades doing their best to spook the market, the Dow failed to break primary support at 9900. Expect a rally to test short-term resistance at 10700, followed by another, weaker, test of 9900. The index, however, remains in a primary up-trend."
In the quarter ended March 31, Goldman made money on every single trading day.
ReplyDeleteI wonder what my problem is.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a5BwJAfaalEw&pos=6
OK, here is what I woke up to: the account with my ultrashorts/S&P puts down 7%, the other two accounts jointly up the same absolute amount (thanks to UNG and HNU.TO).
ReplyDeleteThe buy limit order order I placed for TWM was executed at $19.49 -- so far it looks like the low of the day, just as I had expected.
Mark: give my thanks to MOG, as it looks like he listened to my complaints about NGas and propped up that market, at least for today. :) My sell limit order at $7.25 was hit for 250 shares of UNG I purchased at $6.85 last week, and then I manually sold 500 shares of HNUZF at $5.55 that I picked up at $5.15 two weeks ago (I had a sell limit order at $5.65 for these shares, but decided to take my profits early, as UNG looks to be in a rangebound market and so I should lock in at least *some* profits on every rally).
By the time I brushed my teeth and wrote all this, the account with my ultrashorts/S&P puts went from -7% to -5.8% -- I like the trend here! :)
OK, I am off to having breakfast -- will catch up on the rest of the comments later...
One might be tempted to buy some more S&P puts here, but I suspect ^VIX will have a large drop again tomorrow even if S&P simply stays flat between now and tomorrow. So I'll wait until tomorrow.
ReplyDeleteMark, can you please post a link to the CNBC interview with XOM CEO? Thanks...
ReplyDeletevb -- I hope you unloaded your long positions at the open today! Congratulations for going long on Friday!
ReplyDeleteT3D...you aren't in the room....me either.
ReplyDeletedavid, I am so mad, I couldn't get to the computer till now and sd went up and then dived back down (like GS). hmm. I did get out of WATG and considering my next move
ReplyDeleteany consensus here which way next?
ps
plg is up over 11% and I never bought it - guess someone else did!
Smart trend report
ReplyDeleteThis had the effect of driving the IBDI and Trend Ratio down to levels so oversold that they cannot be sustained there any longer and a rebound by the intermediate-term uptrend is expected to commence today (MONDAY) and continue for the next few weeks lifting stocks along with the long-term uptrend, which was slowed, but not reversed, with the pandemonium in the stock market last week.
In short, the investing environment is expected to resume its favorable to long stocks posture today with bargains galore available from last week's sharp selloff.
Brinker May report says pretty much the same.
vb: I think you will do better going with your intuition about the next move from here rather than with consensus. The consensus seem to be that we go down from here, and hence I wouldn't be surprised to see the market break out to new highs over the next few weeks. We had the exact same mood in January, when everyone was sure that the correction has finally arrived. When everyone is sure of one thing, the opposite happens, and with a vengeance.
ReplyDeleteIf the market breaks out to new highs, I think it will then roll over pretty soon after that (i.e., S&P probably won't go past 1250). But what do I know? I expected the new highs after the January correction to be close to the previous highs, and instead the market went MUCH higher.
Note, vb: I added to my ultrashort position this morning and I am not planning to close any of my shorts into further strength. If anything, I'll pick up some more S&P puts when ^VIX drops into low 20's.
David, how's the AMB doing?
ReplyDeleteCraig -- the next official update to AMB will come out on May 20. In the past, an "official" increase to AMB has always preceeded the end of the correction, but you are right in pointing out that the $1T bailout in Europe is just like an increase in AMB...
ReplyDeleteI just picked up 500 shares of UCO at $11.70 and placed a sell limit order for these shares at $12.70.
ReplyDeleteAlso, picked up 250 more shares of SD at $6.27.
ReplyDeleteDavid- I'll find the interview on line and post it tonight.
ReplyDeleteMan...some of the moves today are amazing.
ReplyDeleteI am glad that I sold "manually" some HNUZF today slightly below the limit price I set for it -- the limit price was never hit today. I just placed a buy limit order at $5 to replace the 500 shares I sold today at $5.55 (which I acquired at $5.15, which were a replacement for the shares I sold at $6.35, which were themselves purchased at $5.50).
ReplyDeleteFor me, the most interesting thing to note from today's action, was closing basically at the highs. I'll probably be wrong, but I suspect we'll get better entry prices soon.
ReplyDeleteEven though the account with my ultrashorts/S&P puts ended the day down 7.5%, my long-only account (which is 30% larger in size) compensated for 3/4 of that loss, and I suspect that when my ETrade Global Trading account gets marked to market tonight, it will easily compensate for the remaining 1/4 of that loss due to the strong moves in HNU.TO, ECU.TO and the rise in CAD:USD. So I am ending the day flat, sort of speak. But I now have some extra cash that was freed up on Thursday when the market spike down caused my ultrashorts to hit some far away sell limit orders, and having extra "ammo" is always good in uncertain markets.
ReplyDeleteInteresting action today. I didn't really watch at all but the action fits in with my playbook that I mentioned on Friday or Saturday that there will be a bounce up to the 50 DMA which will act as resistance. If we are to trade according to this playbook then shorting the markets at this price level is a low risk play, with a stop set at the other side of the 50 DMA.
ReplyDeleteI did my share today, teamonfuego, and bought some TWM at the open. :) Did you short anything today?
ReplyDeleteAs the weather is crappy here, I've spent a little more time looking at charts, err office work, than usually. I saw a few set up's to the long side that should have been played, but since they were already up 5-8% at the time, I sat.
ReplyDeleteGood job getting some money out of the market today 2nd.
David - I promised myself not to do anything today so I can clear my head. I may take another day or two to fully reassess.
ReplyDeleteI traded horribly last week at the end of the week, particularly with WATG (bought at $9.6 and sold at the lows around $8.2) and whenever I take an oversized loss like I take a day or two to step back and reassess my thinking and not let my emotions get in the way of things.
teamonfuego, if your thesis is right, then you'll get a chance to reload WATG under $8. So don't be upset at yourself -- the future may still prove you right.
ReplyDeleteDidn't you move 1/3 of your long-only account into S&P at the close on Friday? I remember you writing about every spike in ^VIX being a buying opportunity, which turned out to be correct yet again. I wish I had listened to you on Friday...
I remember that John Hussman wrote once that a very strong up day (4-5%) after a long streak of declines often sets the stage for a real market crash, since buying is difficult after such a day and all those who wanted to sell then start selling. I just placed a buy stop limit order for 100 shares of TWM at $19.30/19.50, in case the market starts losing ground tomorrow.
ReplyDeleteI am placing a sell limit order at $20.50 for the 100 shares of TWM I picked up today at $19.49. As Thursday's experience showed, standing sell limit orders sometimes do wonders. :)
ReplyDeleteDavid - I actually moved my long only account back into cash on the close on Friday because while I felt there would be a bounce (not this much of course!) I felt that I may have underestimated the issues in Europe. In hindsight, I let my emotions get the best of me. I take a few days off for just this reason...to let me rethink how I'm investing and avoid the mistakes I made. It has helped me beat the market returns over the past couple of years and helped me avoid trying to make up any losses, which is often what we do when we take losses. I was due for some anyway!
ReplyDeleteUP 404 points in one day?
ReplyDeletewhy? I can see an up day but 404 points?
something seems Surreal about this to me.
my guess is to expect the same size swings down for no reason, in this ball game
It's all about testing $SPX levels--- Thurs morning had an opening around 1165 w/ morning tests of 1150 & back up to 1160 before things went off-a-cliff. Today's movement was a resumption of testing that range 1150-1160 after the moon-shot up to 1163.85
ReplyDeleteI bought some PAL this afternoon.
ReplyDeleteStill got Yamana.
ReplyDeleteIts just another trillion in confetti money, that then gets leveraged, bidding everything up higher, vb. Someday those debts will be repaid or not, and it all disappears, I think, but the way the game is being played, they just blow another bubble and kick the can again when that day comes, and in the meantime, higher and higher we go.
ReplyDelete