Monday, June 14, 2010
6/15/10 Mr. Tambourine Man
Take me on a trip upon your magic swirlin’ ship
My senses have been stripped, my hands can’t feel to grip
My toes too numb to step
Wait only for my boot heels to be wanderin’
I’m ready to go anywhere, I’m ready for to fade
Into my own parade, cast your dancing spell my way
I promise to go under it
It's amazing what you learn reading 'Wiki' entries. After watching Crazy Heart I was wondering if Jeff Bridges had any formal training in music (you might recall he also 'played' piano in The Baker Boys). Instead, I learned that "Bridges is also a known cannabis user; in an interview, he admitted to giving up smoking marijuana during the filming of The Big Lebowski, but says he has not 'permanently kicked the habit.'"
Well, I'm a known day trader who plans to hibernate this summer, but I could indulge again at any time.
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Being in cash has its advantages.
ReplyDelete(a) No worries about a short squeeze.
(b) Peace of mind while waiting for Black Monday. No particular reason it needs to be Monday, of course.
Earnings start tomorrow with BBY. Today's action was just about as I expected. Too easy to make it through the 200, and too easy to short it. 1108 tomorrow is my guess. Of course, I have very little ridding on it :). 70% cash.
ReplyDeleteSomething to think about from MOG today...
ReplyDeleteMark,
Hope you are making some bounce-back money in the market. Think
long term and you will be ahead of most of the analysts and traders,
the future value of discounted cash flows is what values the
stock ! People forget that simple fact too many times.
Mark- I would be careful with DCF analysis. Think of all the assumptions that must be made.
ReplyDelete(a) The price of oil over at least the next several years.
(b) The costs of capital equipment, labor, exploration.
(c) The impact of competition.
(d) Global demand for your product(s).
(e) The interest rate(s) with which to discount cash flows over each of those years.
What do most analysts do? They take the lazy route. Use earnings over the past 5-10 years and try to 'project' them over the 5-10 years. Then they may 'assume' interest rates increase at some average percentage over each of years over which they decide to discount cash flows.
You know what? I don't think they can do it with any reasonable degree of accuracy. It's just the nature of forecasting.
I can't even forecast the interest rate (cost of capital) next year, let alone the next 10-15 years.
ReplyDeleteAny analyst in 2002 who tried to value a company using DCF over the next ten years would not in his wildest dreams have imagined the kinds of interest rates we have today. Nor would he have foreseen the kinds of oil prices we've had the past 2 years.
ReplyDelete2nd - I agree. I'd rather focus on the companies that are in what appears to be a long term growth industry and go with a leader in that industry. Perfect examples in my mind are: WATG and MBLX.
ReplyDeleteExperts err predictably and often. Ingesting large amounts of investment information can lead to worse rather than better decisions.
ReplyDeleteI hibernated this morning 'til 8:30 eastern.....
ReplyDeleteFelt really good:)
So what's gonna happen in the markets today? With O's speech tonight? In the market tomorrow?
ARRHGGG...So many questions:)
I am planning to help clean up the gulf with Obama...I'm gonna hold him and drag him by the ankles behind a Boston Whaler and he's gonna suck up all the poil with his already-purple lips!
Papa Smurf!
Gettin' in the mood for some GOOD red wine.
Oil that is...Black gold! Texas titty!
ReplyDeleteSpellbound- That's the problem. They ingest large amounts of information, forget to digest it, and come up with bullshit.
ReplyDeleteshark- I like your idea. It's like the story of the Five Chinese brothers, one of whom swallows an entire ocean to allow a young boy to search for treasure.
ReplyDeleteLandry-
ReplyDeleteRandom Thoughts:
The market started strong but ended weak. This action has it
stalling at the top of its recent range/near its 200-day moving
average.
Considering this, once again, the market only appears to be pulling
back from its recent lows.
The only thing that concerns me is the aforementioned trading
range.
This is not a good thing for the trend follower.
However, the database is providing a plethora of shorts and no
longs. This action suggests that we should continue to focus on the
short side.
Most of the setups are stacking up in Energy and Retail so you
might want to focus on those areas. Other areas that have multiple
setups include Financials, Consumer Non-Durables, and
Manufacturing.
Futures are firm pre-market so make sure you wait for entries.
TOF- Do you still have STT?
ReplyDeleteRed or green, shark?
ReplyDeleteMark - No I cut my losses on STT after finding out that they are the #1 holder of BP stock.
ReplyDeleteTOF- Thanks...
ReplyDeleteWelcome spellbound!
Obama tonight...A broad speech tonight about our last chance to create a new energy plan? Political push going into Nov....Sounds about right.
SPX 200 EMA is 1098, 200 SMA is 1107.
ReplyDeletePretty funny...They're not running any of the testimony today until the ceo's start to talk. Now THAT will piss off a lot of politicians :)
ReplyDelete2nd, I'm not feeling the close yet, so this would be a "pure" guess. Let's see how the oil hearing goes:)
ReplyDeleteMy instinct is to wait until after Obama's speech and see what happens tomorrow.
AONE...simply an early play on tonight's speech??
ReplyDeleteDamn..I remember only a few months ago trading SNDK @ 28 and thinking it looked toppy...like my pointy head :)
ReplyDeleteI still stand by my view that the market is going down to 950 relatively soon. This oil spill is a far, far, far, far worse disaster than anyone thinks. The first hurricane that rips through the Gulf will cause so many problems that we can't even think of. This is far bigger than BP, which I think is inevitably going to go bankrupt. This spill should start hitting the gulf stream going up the east coast soon enough, which is just awful. I feel so bad for those people on the east coast.
ReplyDeleteOn a bright note, this may ultimately put more business in the hands of places like my hometown (San Diego) as vacationers avoid Florida and the east coast in favor of other beaches.
Man...I really F'ed up the FTWR trade...
ReplyDeleteThe relief well(s) will successfully shut the well down, damage from huge quantities of BP oil remains to be seen (too many unknowns), it's not looking good.
ReplyDeleteGot to run...Why an I not surprised I wouldn't hear from the ceo's before I had to leave. God what a bunch of....ah, you get it...
ReplyDeletePalladium on the move.
ReplyDeleteFolks haven't you figured it out yet...the well is essentially unstoppable. The leak will continue under basically every contingency.
Even extra wells will do nothing to stop the rate of flow from this hole...they will just lessen the overall time of leakage.
Say hello to our future.....
CORPORATE OIL HELL DISASTER WORLD DEAD EARTH BABY!!!!
good thing I have no kids:)
FTWR - You have to go with the flow... That last downtrend line projected back to the peak, which amazed me how the price just followed the line right on down then finally broke to the upside.
ReplyDeleteSharkie - Have you seen my tin-foil hat, I think I left it over at your place a couple weeks ago...???
ReplyDeleteI saw something walking by.....
ReplyDeleteIt had 8 legs....2 claws...antenna's....
And the fucking thing was baked stuffed. Imagine that:)
Nah....shark's don't smoke weed:)
Check out spot palladium prices up 15 smackers
ReplyDeletePAL seems to be responding, gold helping there as well...
ReplyDeleteOil up, a sign of anticipated economic activity. Copper pierced $3 briefly, may be headed higher?
ReplyDeleteGetting ready to close my long BGZ at a loss. However, I will not do so until after the market closes above 1,110 for a few days. That is the closing low on the initial drop back in May.
ReplyDeleteFTWR - Multiple bottoms.
ReplyDeleteSending FAZ back to the punch bowl.
ReplyDeleteChicken,
ReplyDeleteWhat state do you live in?
PAL is gettin' ready to have a big day.
This morning if you bought copper with greenbacks you could get about 20% more than in April.
ReplyDeleteState of confusion most of the time, otherwise the one just south of DC.
ReplyDeleteRDC - Flying, guess we need oil after all...
ReplyDeleteBoys....
ReplyDeleteI did have a feeling yesterday that the market closed lower in order to go higher today. :) I am totally fine with this scenario, as long as the market stays at the current levels or above until the end of the week, so that the June puts I sold on PXP and UCO would expire. Maybe that's what the Big Boyz are actually trying to do -- lift the market up this week so that all the "hopeful" put buyers would get screwed over.
ReplyDeleteSo I'll try to sit on my hands and restrain myself from adding to my shorts today (even though all 3 of my trading accounts are up for the day so far, so it would make total sense to add to my shorts so as to preserve today's profits).
If V can hold here, it should go to 80.
ReplyDeleteAnother if....If HEK can somehow close at 5.13, it will be above the 20 and 200 sma.
ReplyDeleteSPY trying to break R2. (111.76)
ReplyDeleteNice little shove just now.
ReplyDeleteThe rain in Spain falls mainly in China?
ReplyDeleteES broke 1108 on the 3rd try. Will shorts be forced to cover?
ReplyDeleteGS/JPM/C/WFC...order imbalance on the buy side into the close.
ReplyDeletehey mark - i'm technically short (am about 70% short the market and 30% long individual equities) through BGZ but I didn't "cover". I'm still waiting for a few days above the 1,110 level before I can call this a new trend. I still contend that this oil spill is absolutely disastrous.
ReplyDeleteTOF - If not for BP's blunder, how would you feel about the market? Maybe it a moot question but I'm curious...
ReplyDeleteChicken - ex-BP, technically it looks good but I think the market is due for a pullback. I think people that are buying here for any longer period than a few days are going to be regretting it, unfortunately, in a few months. The more evidence we see like today's housing report that the government is still supporting the economy (that is, without their help things pretty much crash), the more likely it is to me that the market will reduce earnings estimates and place lower multiples on earnings. The jobs report last month was abysmal, with the majority of the jobs coming from government. The GDP data in Q1 was subpar, certainly not enough to support a jobs recovery. I just think we have seen the highs for a long long while. Probably a few years at least.
ReplyDeleteEarnings look solid right now based on the growth off of last year, but I don't see a reason for them to grow significantly. My long term thinking started to turn back in early May and I think my long term view is now pretty bearish, unfortunately. I might play the long side for trades, but nothing more, because I know that the governments of the world will continue to try to prop things up. But slowly, one by one, the debt markets will tell governments that they can't continue to prop things up. I hate being bearish, but that's the way I see it.
TOF, then perhaps we should be looking to go short but if the bondies flight from public debt(now progressing in Europe?) accelerates, where are they likely to go, cash?
ReplyDeleteTo add to that, what if government actually did stop or reduce stimulation and cut spending? Wouldn't we expect to see falling prices again? The recession was kick-started when debt markets siezed, prices fell and bondies ran to shelter in government debt.
ReplyDeleteSomething's got to give...
I didn't find O's speech just now particularly inspiring, maybe I've missed out on something along the way.
ReplyDeleteTOF- Thanks for the update, man. Honestly, If I had BGZ right now I wouldn't close it yet either. We'll see. We are at an interesting area here and things could break either way. I still suspect we'll get to 1150-1170 one way or another. I'm still hearing good things from my clients in their industries.
ReplyDeleteLong term, I'm afraid we will have high unemployment for years. What really creates a deep recession is fear, and everyone hunkering down, just like I did for over a year. However, that was my choice. Financially, I'm very comfortable, but chose not to do/buy anything.
Increases in tax's are on the way, no doubt. I guess I agree with the "new normal", just that it wont be SPX 890.
Chicken - I think it's pretty clear that without the government, there would be falling prices everywhere: stocks, housing, commodities, etc. There is a limit to the amount of support they can provide to the markets, but knowing the limit is probably the key to knowing the upside limit on the markets.
ReplyDeleteThere are definitely a lot of companies that look reasonably valued, like HPQ, BBY, IBM, CSCO, JNJ, and many others. Those are probably the best places to stay for the time being. Big cap stocks are definitely providing good values.
I don't really know where the markets bottom will be. I doubt we will see a crash (unless the bond markets say no mas to more US govt debt), but I think we could see a slow grind lower for a few years as people adjust to a no growth economy. I think we're becoming more and more like the 90's Japan.
Chicky- You didn't miss anything. There was nothing there.
ReplyDeleteMark - I agree about the hearing good things. My own furniture business is doing pretty well too. But this stuff turns so quickly as I'm sure you're aware.
ReplyDeleteTOF- What's your site? My wife is always looking. Since we got the floors done here recently, much to my surprise, none of our old furniture came back in!
ReplyDeletenew post
ReplyDeleteTOF - That was my question, what if bondies say "no-mas" to government debt? Where does the money go, cash?
ReplyDelete