Wednesday, August 11, 2010

8/12/10 Closing in on 4.375%

More than one way to make money, one of the most time-honored being paying less for a given product or service.

Mark- According to my broker, a print of 4.375% for a non-conforming loan with zero points crossed the tape today. It would still involve a fee, but that's the lowest he's ever seen for a 30-year fixed. By tomorrow, 4.375% with no points and no fees may be on the table.

Personally, I think today's action was in fact a bull trap (as per my response to Dr. Cosa's post about a bear trap). It will continue to be a bull trap (with minor spikes as lures) all the way down to sub-1000 SPX. JMO.

97 comments:

  1. 2nd - I suspect we will see mid 3's for the 30 year at some point this decade.

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  2. Mid-3s? Well, I hope so. My broker actually commented today 'To be honest, I didn't really believe you when you said we'd get down this low.'

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  3. David- I was referring to the HEK con. call. It's only about 20 minutes and no BS at all. Very interesting to me. Covers all of the issues related to frac water treatment.

    What you wouldn't probably recognize was the amount of analysts covering the call. I've heard maybe 10 calls. There used to be 3 or 3 analysts asking questions. There was about 10 the other day. Even the big boys, MS/CS/JPM etc.

    It's a risky play in this political environment, no doubt, but I still like it.

    One thing of note worth watching. 68M warrants sit out there with a exercise price of 7-11 in Nov. 2011. As we get closer without a large price movement, that is very bullish for the common.

    GL, my friend.

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  4. Yep, today's action was unusually certain.

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  5. So far, Shanghai is unusually certain as well.

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  6. TOF- Mid 3's? How would you see that playing out. Short version is fine. I'm just curious, not questioning.

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  7. Daaad?....Daaad???

    http://www.youtube.com/watch?v=mDm6iKH38C0

    Sorry, that just really cracks me up.

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  8. CREE - Kinda disappointed shareholders today, didn't it? If simple conservation of energy is too expensive then what does that say for alternative energy technologies?

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  9. So....The "higher low" in GMO failed today.

    PAL looks like a dying dog.

    RBY has been a champ but can that last in the face of global armageddon? Hopefully. I think RBY will ultimately go a lot higher. Still got RBY, watching everything else.

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  10. CREE- I've traded/followed this one since 24.00ish. I wont jump in here, comments were tough. Especially LED screens, which is a broad growth area.

    LED lighting was still firm.

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  11. I guess I should say an "anticipated" broad growth area....But dam, I have 4 very high end TV's and the LED kicks ass.

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  12. yikes. mob of 30,000 shows up in atlanta for section 8 applications.
    http://www.wsbtv.com/video/24599062/index.html

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  13. Alt energies, at least until today were trending higher. SOLR and ENER were.

    Causality is more difficult in a company with multiple products.

    LED's are hot, but I think conservation is more complex. It depends on the upfront costs and payback period.
    Remember when compact fluorescents came out and were expensive and required utility offset/coupons. Now they are cheap and available at Costco and the savings are obvious so they are widely used.

    Solar and wind are competitive with line power, but the costs are all upfront, so it's a lot like compact fluorescents used to be. LED's are following the same basic adoption as CF.
    If more people knew about the 30% Fed subsidy for solar and wind, those with some capital would probably adopt them (along with CF/LED lighting) and would kiss the grid supply goodbye, at least those with good sites for wind/solar.
    I'm thinking of this along the lines of tonights thread....paying less for a given product or service. The idea of paying up front for generating capacity and then free power (after payback) is attractive to me in view of projected energy costs.
    FF

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  14. Mark - I was talking to my friend that does loans for Bank of America...he said they have something like 600k homes that are REO and that it would take years before they clear it. He thinks rates will continue to stay at these levels or lower and I agree.

    A couple of weeks ago, in challenging my thinking that housing stocks were a good trade, David forced me to calc the potential time needed to clear the excess inventory. At best it looks like 2 to 3 years. All of this excess supply means demand will stay low, which means rates could STILL go lower. It's not a science but that's what I'm thinking.

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  15. that is, they have something like 600,000 homes in the REO category.

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  16. putting in a bid for ADES at $6.60 for tomorrow. if it gets filled i'm ok with it as a longer hold.

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  17. "A couple of weeks ago, in challenging my thinking that housing stocks were a good trade, David forced me to calc the potential time needed to clear the excess inventory. At best it looks like 2 to 3 years."

    2 to 3 years for the current level of inventory. However, this inventory will keep increasing as the economy goes further south and prices go further down. So first, the inventory of potential homes for sale has to stop increasing, which will happen only in 2012, when the current wave of foreclosures of the houses bought up to the 2006 price peak subsides. THEN, this inventory will need to be gradually sold to new buyers, which might take another few years. After that, I'll seriously consider investing into real estate myself. In fact, I'll re-evaluate the situation in 2012. But until then, it's not even worth thinking about investing into real estate or homebuilder stocks, IMO.

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  18. Russell 2000 futures are already green. Those who sold in a panic during the 1.5% market drop after hours are biting their nails now (in their sleep).

    The best scenario for me would be to see a market gap up tomorrow that would trigger my TNA sell limit at some awesome price (relative to $35.97 at which I picked it up after hours), and then see the market go red by the end of the day, so that my long-term position in TWM keeps growing.

    Off to bed now, see you all at 10 PST tomorrow. :)

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  19. Bubbles typically take about 5 to 7 years to unwind.

    Read that was normal the other day.

    That would put 2012 to 2014 as a general target range for the housing bubble bust to bottom. It seems completely obvious now that there will be no recovery, and that unemployment is certainly not going to improve in the next year or two, so therefore it would seem to me that the banks and lenders will start giving up pretty in the next year or two, and just take what they can get for properties before prices decline further as we go into the 2nd leg of the depression that nobody admits we are in.

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  20. TZA- could have opened a position as recently as 20 minutes ago, and be up big right now.

    Jobless claims up. Market down.

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  21. Landry-

    Random Thoughts:

    The market obviously got whacked on Wednesday.

    Futures are getting hit hard pre-market so it looks like we'll see some follow through--at least on the open.

    This is why I've been preaching to wait and not anticipate when a market is range bound.

    I'm going to beat this dead horse later today in the chart show.

    Best of luck with your trading (or sitting on your hands) today!

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  22. I could have gone all-in on TZA at Tuesday's close, and be done for the year...

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  23. I hear that - if I had only held my shorts from mondays close, not tried to get tricky and just sat on my hands I probably wouldn't have been up all night with chest pains.

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  24. perhaps a 'salt on open wound' moment but I'm adding to my csco position@21.22

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  25. I have to say- Landry's advice is quite good. A sane voice in a sea of madness. Wait.

    As much as I hate losing out on profits in the ultrashorts, the memory of sitting in 2x-leveraged longs (having opened early in October 2008) while the market relentlessly sold off for weeks, is an experience I am happily avoiding right now.

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  26. Market seems unusually certain again today.

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  27. "the memory of sitting in 2x-leveraged longs (having opened early in October 2008) while the market relentlessly sold off for weeks, is an experience I am happily avoiding right now. "

    Strangely enough, the strategy of switching from 2x to 3x long at the price convergence has been working out pretty well since then.

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  28. Hold the phone, I'm seeing a few green shoots here...

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  29. PAL - Earnings AMC so wouldn't anticipate too many sellers today?

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  30. CSCO did what it had to do, hold 21.

    Banks/energy catching a bid.

    I have slightly less stinky bids on FTWR/HEK/AONE. These should hit if the SPX drops about 20 today.

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  31. gartner just cut their IT growth rate for 2010 by 25%+, down to just under 3% growth - that must weigh on the nasdaq today.

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  32. CADC - Hopefully they'll take this one back to a low three handle so I can load the truck.

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  33. And SD....

    OK, if we drop hard today, I should get fairly long.

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  34. mark - xco for a short or a buy above something like 14.75?

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  35. CP - you got a second home in wenzhou?....you love those Chinese mid caps

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  36. JB- Bidding XCO @ 13.93. Long.

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  37. Dang dip buyers are screwing up my plan again...

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  38. jb - I only like the illiquid ones, that's where the largest potential gains are.

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  39. thx mark, just trying out some new indicators, gl!

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  40. if it breaks 3 then I'd hop on w/you CP.

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  41. PXP looking strong....This one never got below my sale price.

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  42. CP - did you pick up any CVS yesterday? it's rolling this a.m.

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  43. CVS - Didn't pick any up but it's definitely worth a go under $29, or even very low $29.

    CADC - I'll try and get it down to under $3 so we can both load up but earnings are coming next week I think, so it might be hard to accomplish. This one will fly at some point, IMO.

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  44. VQ - This one popped up on my radar yesterday as well, but I haven't done any DD on it.

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  45. Mark- We just locked on 4.375% at NO COST...

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  46. re: VQ, thinking it's a takeover target?

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  47. VQ - As 2nd might say, WTFDIK? PEG is awfully high, doesn't seem to be anything special about it on the surface, don't know anything about their assets, etc., just liked the chart.

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  48. 2nd - Congrats on your lock. I see one of my homes in San Jose just re-sold for nearly double what I got for it a decade ago...

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  49. interesting, I thought the chart didn't look good at all, so I wondered if there was a takeover angle

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  50. Just goes to show how much variance there is between two individual's chart interpretation I suppose.

    I'm content just to watch VQ and maybe learn something.

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  51. for sure, and i'm super new at trying to develop my own chart interpretation methodology.....based on my recent efforts VQ must be a screaming buy!

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  52. I feel like an A-hole having done this but I sold RBY just now at 4

    It's inevitably a mistake, if I'm doing it, but there goes. Still in PAL don't know why:)

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  53. Long REDF at $2.02. Long IMMR at $5.15

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  54. VQ - Let's see if it closes over $15.74, for grins and giggles.

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  55. Shark - You're in PAL due to your pain addiction, same reason as me.

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  56. by the way, i think IMMR, REDF, SOKF, ADES have some of the best potential in the market right now. i'm always a sucker for the small caps...

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  57. WATG in the green...sure looks like that one has found a bottom.

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  58. Added more REDF at $1.99.

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  59. WATG - Yep, TTM's performance has been stellar.

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  60. CADC - This chart has some similarities with FTWR's chart from a few months back just before the "rally from nowhere".

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  61. Sure is good to see gold moving in the same direction as other metals for a change.

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  62. Added some IMMR at $5.1

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  63. So my TNA sell limit order did get hit today at $36.97, for a quick $100 profit while I sleep. I remember 2nd_ave used to buy something during a panic and hold it for more than a few minutes. :)

    Also, I have just discovered that I had a forgotten sell limit order for 100 shares of TWM at $21.84, which was triggered at the open today at $22.34. So I have just reloaded those 100 shares at $21.86, essentially making another $50.

    So, 2nd_ave, indeed after a series of day trades when I was getting stopped out on ultrashorts and have accumulated a $400 loss, in 3 quick trades I have recouped all those losses: SDS between post-Fed spike and yesterday, TNA between yesterday and today, and TWM between today's open and now.

    The last trade was just an accident, and the first two trades where based fully on psychology, so I wouldn't say that my technical day trading became any better...

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  64. It's nice to see UNG not collapsing today after the "lottery." And why should it? Storage is still noticeably below last year's level. If this situation keeps up, then $4 on the futures might indeed be the bottom for this cycle...

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  65. 2nd- Working on it as fast as I can. Some things I still need to do to be ready.

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  66. TOF- Thanks for the ideas. I'll check then out.

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  67. Come on baby!!! Crash already!!

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  68. Interesting to see the VIX and TLT flat.

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  69. WATG -- indeed it seems like it doesn't want to go down.

    A while ago, on the way down, I opened a small starter position (250 shares) at $9.01. Then, during the May panic when WATG options were amazingly expensive, I sold 5 $7.50 puts at $0.50 and 10 $5 puts at $0.25 for a total of $500, and after all those puts happily expired, I have effectively lowered the cost basis for my original 250 shares to $7.01.

    I have just placed a buy stop limit order for another 250 shares at $8/8.01. The beauty of small positions is that I can keep adding in such small chunks for a while now, until the WATG finds its bottom during this cycle (the bottom might have been at $7 in July). If WATG drops below $7, then I'll sell 5 $7.50 puts on it for around $1, and will get more WATG shares at $6.50.

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  70. UCO is getting destroyed this week. I am glad that as a part of my strategy of making my portfolio "shorter" during the recent market rally I decided to get rid of some long positions and sold all my UCO at $10.90. It is bidding at $9.40 now, but I don't feel like reloading it since the economy is obviously going South and oil cannot thrive in this environment. Gold -- maybe, but not oil.

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  71. One more stinky on BHI. FTWR is getting dangerously close;)

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  72. Interesting you mention UCO David as I've been looking to get back into DIG. Will check again tomorrow and see what she looks like.

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  73. It's funny. When I went to bed last night and turned on the radio, the topic was a potential market crash. They NEVER talk about the market on this show.

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  74. JB- I like UCO/SCO better than DIG. Seems to trade closer to WTIC.

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  75. The 4.375% Solution
    Submitted by 2nd_ave (4470 comments) on Thu, 08/12/2010 - 14:51 #67160
    loannetter (and anyone else with an interest in mortgage rates)-

    We locked on a no-cost 4.375% 30-yr fixed this morning at exactly 827 am pst.



    Mark- You may end up with an even better rate next week- no one knows the extent of this sell-off.

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  76. TOF- RAS is having some wild swings today.

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  77. 2nd- Yep. Either way, there are a few things I need to do on the house, and this will motivate me :)

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  78. don't know what it is but i've never made a dime when i've traded uco/sco, only winner has been dig - don't know why, probably just luck.

    if we get a wave down into the close I'll put the 3 3x longs back on...glutton for punishment.

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  79. I bought EXK today also.

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  80. mark/2nd - is the thought that having a mortgage at these historically low rates frees up more cash for investments? we paid off our home loan years ago, just wondering if i should tap into some of this almost free money while i still have a job.

    thoughts?

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  81. I figured the selloff would've resumed in earnest by now...

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  82. CADC- I know it's thinly traded, but that was crazy.

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  83. Bernanke - Something tells me he wanted to scare Wall Street for a few days so the Treasury could sell more paper to finance the housing crisis.

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  84. AMZN is up 26 bucks after it's earnings.

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  85. I wouldn't chase this little pop. Not close enough to the close to stick.

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  86. CADC - Word of increased Chinese military investment might be holding it back?

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  87. Half expecting PAL to move up into the close... Okay, slightly more than half.

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  88. Order inbalances a mixed bag going into the close.

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  89. wow, everything looks right in the middle, neither short nor long into the close...probably a godsend

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  90. PAL - Sharkie - I hope you had the good sense to take any gains, the earnings stink this quarter.

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