Wednesday, September 22, 2010

9/23/10 San Francisco



Wells Fargo. Visa. Gap. Charles Schwab. All headquartered in downtown San Francisco. All trading near 52-wk lows.

As the economy recovers, San Francisco (both an international tourist destination and a global financial center) will be among the cities that see it first. It may be a good time to begin accumulating a few positions.

92 comments:

  1. I was just listening to the Howard Stern show on Sirius and he had Maroon 5 in his studio and they did a rendition of Al Green's Let's Stay Together, which was pretty solid. I forgot how great this song is:
    http://www.youtube.com/watch?v=COiIC3A0ROM

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  2. TOF, continuing with the Denninger's post, let's discuss my takeaway from it. To repeat, the stock rally between March 2009 and April 2010 coincided with A LOT of risk-taking attitude and rising bond yields. Right now, the bond yields are falling -- isn't that a big warning signal that the previous risk-taking attitude is over and we shouldn't expect a major stock market rally anymore? Maybe a few weeks/months of a "fool's rally" at most, before the final decline sets in, just like in 2007?

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  3. Considering what 2nd is pointing out, there may be something to it.

    As far as lower T rates goes, isn't that in line with the FED agenda? Equities prices may simply trade in a range for an "extended period"?

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  4. I still say I don't understand why we are at top of channel if "everyone" has given up on the markets.

    I also don't see a lot of upward pointing economic indicators, currently, that would push sales or profits higher in the next 6 months.

    Thus I remain in "just trade for today, and walk away" mode.

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  5. "just trade for today, and walk away"

    There's more than one way to skin a beaver, I say stick to what works for you...

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  6. Just got home. I'm surprised to see the ES/SPY melt up here ahead of the dreaded claims report.

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  7. Again, why the relative strength in ES? I'm sure it will melt away in the morning, but surprising none the less.

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  8. posted on CC
    Thanks newSubmitted by Port2013 (34 comments) on Wed, 09/22/2010 - 23:44 #69881
    Thanks to bsi and 2nd for the highlighting the ADBE trade. I took a small position premarket and sold after hours for a nice gain.

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  9. UNG
    I still have my 500 shares @ $6.75. Storage estimates for tomorrow are +80 with the range at +67 to +103. The adjusted number for last year was +66 so anything over that has us closing the gap on the high of the 5 yr storage range. Last week was +103 but that also included labor day weekend. Sometimes EIA matters and sometimes is doesn't. The +80 sounds about right. Cash has been strong with offers getting lifted, at least for what I'm watching and I still think its storage players filling storage and not hedging. I probably wouldn't be hedging some of my gas either if I didn't have too.

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  10. UNG - more
    I'll be buying more UNG or selling UNG puts if natty trades down to the $3.70 range. I'm looking for a .30-.50 rally in the natty nymex soon. IFF UNG hits $6.85, I'll enter a stop around $6.70 and I'll move it up in $.05 increments if natty continues to rally.

    Good trading tomorrow

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  11. Wow port....I have exactly the same take. Thanks! I was impressed with the strength of XCO and SWN, the most gassy plays there are. GL.

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  12. A little heady for me, but Woodward's new book seems to be unwinding Obama's Afghanistan policy.

    And now insurance Co's are saying that they will not insure ANY children on single policies due to the pre-existing requirement.

    Yikes.

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  13. CB - Stock buybacks and M&A are simultaneously pulling shares out of the market and increasing the value of stocks. I would say that this is one of the many potential upside surprises for the market.

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  14. tof,

    We had a lot of M&A activity in the summer of 87, too, but your point is well taken, even if the reason for the M&A is to get growth to replace the organic growth that isn't there.

    On the positive side, they are paying with cash, not shares, and buying back shares, but on the negative side, we have heavy insider selling of stocks.

    In general, I think yields need to be a lot higher and PE's a lot lower for a bear market bottom to be in. I've read Fosback, and I see no reason things should be different this time. I suspect the lunatic money printing by the Fed is delaying the inevitable. I guess we could hyperinflate stock prices as people desperately try to get out of US dollars. That happened in post WW I Germany and Zim, too.

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  15. I know we've all been waiting for the answer to this question:

    "Yesterday, the S&P closed at 1134.28 after three or four times holding at 1131.58 or higher. The Bulls seemed to have been in control. Near the end of the session with our proprietary models signaling “Bull”, I closed the Emerging Market short. This morning, the words “treacherous” and “interesting” hit home. Futures have pushed the S&P lower by almost 12 points to 1120, the reason being that a survey of European purchasing managers concluded, says Marketwatch, there was “a sharp slowdown in euro-zone growth, rekindling economic worries and prompting traders to sell equities”. What happened here is that the Euro dived and the US Dollar soared, something the Bears have been hoping for."

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  16. gb58 newSubmitted by 2nd_ave (4612 comments) on Thu, 09/23/2010 - 09:05 #69907
    Right on target. Nicely done. Wish I'd had your foresight and reactivated those same SPY puts.

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  17. Landry-

    Random Thoughts:

    Looks like the breakout becoming the fake out from low volatility/overbought is playing out-Futures are getting crushed pre-market.

    Aren't you glad we didn't start kissing each other on the breakout?

    I'll walk you through this (the breakout/fakeout/low volatility not the kissing) later today in the chart show.

    Call in sick. This alone will be more than worth the price of admission.

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  18. Breakout Fake Out newSubmitted by 2nd_ave (4613 comments) on Thu, 09/23/2010 - 09:08 #69908
    Landry calls the recent action a 'low volatility breakout fake out.' That makes a good sound bite.

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  19. tof- surprised to hear you are a stern fan.

    I used to listen to him here in nyc during the
    W-ENNNNNN-BC days but eventually I got out of high school:)

    Totally different subject: Behold the myth of the rugged independent rich American, who if you consider the thought experiment that he was born in a different town to different parents and had different experiences would, most likely and in the vast majority of cases, not be rich.

    OF course I am not referring to serial entrepreneurs or rock stars and athletes, but to everyone who ever got hooked up with a job interview by the alumni mafia...

    These guys gotta realize, it is circumstance and choosing between various appealing options that bring our subject to his current tax bracket....

    These guys must realize that America needs to work, not just for them, but for the poor hispanic kid born in the barrio.....That kid has a right to equlity of opportunity too, at least according to the pablum offered by the defenders of unequal outcomes:)

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  20. SSO off @ 38.31 in the trading acct. +2.2%

    Will hold in the IRA.

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  21. They had Jack Welch on cnbc this morning. He mentioned that many of the CEOs he talks to are most concerned about losing lawyers, financial & benefits people (these are the head hunter main targets). i.e., Compliance people who are needed due to the deluge of regulations headed the company's way...not engineers or scientists

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  22. 'San Francisco' on sale- putting V/WFC/SCHW/GPS on the watchlist...

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  23. These circumstances seem, just a guess, SEEM to me like a top and market reversal.

    That's been my gut anyway. Smart thing I did....no tcarrying any stock into thursday

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  24. San Francisco Watchlist newSubmitted by 2nd_ave (4614 comments) on Thu, 09/23/2010 - 09:39 #69914
    V/WFC/SCHW/GPS on sale this morning.

    No idea how long this sell-off lasts, but putting all four companies on the watchlist for entries/reentries.

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  25. REE in play long new hi's

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  26. WFC @ 25.23 newSubmitted by 2nd_ave (4615 comments) on Thu, 09/23/2010 - 09:56 #69917
    Not waiting to reenter. This one's down 6% from where I sold it Tuesday? This bank has great management (according to my wife, who worked for them at one time), and has experienced amazing volatility recently.

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  27. Natty running ahead of inventory report...

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  28. CAN you see

    how pro traders got the housing number ten seconds before the shlubs who watch tout tv ?

    it aint freaking fair!

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  29. WFC...Nice timing!! Right @ S2 and 10 seconds ahead of a positive housing report.

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  30. Come on!! Give a a good natty report and the world is right as rain :)

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  31. Re: WFC @ 25.23 newSubmitted by 2nd_ave (4617 comments) on Thu, 09/23/2010 - 10:03 #69919 (in reply to #69917)
    Adding WFC Oct 26 calls @ 0.57...

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  32. Shark- Yep. As SPY started to take off, I thought the same thing.

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  33. Take a look at the intra-day of SWN. That opening shake out was a 1k ball buster for me.

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  34. Looks like INTC has turned into a proxy for the Q's. That fine with me for now.

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  35. Well, we know you have titanium balls, so we're not buying it...

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  36. Thanks for pointing it out 2nd. With the amount of EMA exposure they have, I'm very comfortable holding it LT.

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  37. Well, let's see if natty blows up in my face.

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  38. fuck...look at REDF go. I always sell too early.

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  39. 78 BCF. Works for me on a longer term trade with SWN/XCO/ and a smaller part of PXP.

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  40. TOF- I've got a few more four letter words than you do. RAS held 1.40 again this morning.

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  41. Re: Breakout Fake Out>Followed by Breakdown Shakedown newSubmitted by 2nd_ave (4618 comments) on Thu, 09/23/2010 - 10:38 #69922 (in reply to #69908)

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  42. What IS REDF? What kinds of assets are therein?

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  43. i am quite sure i will regret this but i bought ree


    the less i trade the less i lose
    :)

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  44. TOF/Kyle- Do you guys understand the volatility in ODP? For a retailer that large it seems strange.

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  45. If any of you have an interest in PXP, 25.50 seems to be where the buyers are.

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  46. Mark - I don't think the volatility is that strange for ODP...the stock is down 50% from it's highs so just as there's volatility at tops there is volatility at bottoms.

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  47. Re: WFC @ 25.23/ Closed 25.51
    Submitted by 2nd_ave (4620 comments) on Thu, 09/23/2010 - 11:06 #69925 (in reply to #69917)
    ...

    edit reply Bookmark this Ignore thread
    Re: WFC @ 25.23/ Oct 26 Calls Closed @ 0.62 newSubmitted by 2nd_ave (4620 comments) on Thu, 09/23/2010 - 11:07 #69926 (in reply to #69919)
    Reasonable return for a 1-hr time frame...

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  48. Mark - might be related to the overall uncertainty week-to-week wrt whether small businesses are starting to recover or not. Optimism to Pessimism reversals...

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  49. Bought more EBAY October $23 calls at $1.62 despite them being up 50% from when I first bought them. Did I mention I think this company is undervalued?

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  50. SIFY is up along with redf.

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  51. added AEE to the long portfolio and took a bit of profit on BTIM, but still holding 1.5x position

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  52. gb58- Reactivating SPY puts newSubmitted by 2nd_ave (4621 comments) on Thu, 09/23/2010 - 11:40 #69929
    SPY Oct 112 Puts @ 1.59...

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  53. Re: gb58- Reactivating SPY puts/ Closed @ 1.65 newSubmitted by 2nd_ave (4622 comments) on Thu, 09/23/2010 - 12:14 #69934 (in reply to #69929)
    gb- Not into the short side today, for some reason...

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  54. ree: hasn't broken my heart yet

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  55. I see V rose above $71, which seems like a resistance to me on the 5-day chart. So I just bought a couple of November $75 calls on V at $1.72 each.

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  56. Re: WFC Oct 26 Calls Closed @ 0.62/Reopened @ 0.55 newSubmitted by 2nd_ave (4624 comments) on Thu, 09/23/2010 - 12:57 #69940 (in reply to #69926

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  57. Re: WFC @ 25.23/ Closed 25.51/Reopened @ 25.36
    Submitted by 2nd_ave (4624 comments) on Thu, 09/23/2010 - 12:45 #69937 (in reply to #69925)

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  58. Also this morning IWM did trigger my sell short stop order at $4.98 for 300 shares. I am inclined to just hold that short, as a hedge on my long portfolio. At around $66, IWM is still overbought, and so I would rather cover this short when IWM gets oversold.

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  59. REE still long.

    this job's taking years off my life:)

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  60. shark - you shouldn't have said anything -- it heard you.... :-)

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  61. I think i am a walking heart attack but it does beat rotting away in a cube:)

    this ones going to 7 today and 12 by the end of sept. (REE)

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  62. went jogging yesterday first time in 6 mos.....
    that was a freaking wake-up call!

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  63. Bought an opening stake in ADES at $5.00. This is a clean coal play. They have a license deal with Arch Coal and a lot of other things in the works.

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  64. So far, played UCO, TZA and TBT. All trades profitable, and net of $830, but big winnings left on the table at UCO.

    Oh well, at least I'm up...

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  65. add TZA and TBT to big wins missed list

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  66. Re: WFC Oct 26 Calls Closed @ 0.62/Reopened @ 0.55/Closed @ 0.50
    Submitted by 2nd_ave (4626 comments) on Thu, 09/23/2010 - 15:01 #69958 (in reply to #69940)
    ...

    edit reply Bookmark this Ignore thread
    Re: WFC @ 25.23/ Closed 25.51/Reopened @ 25.36/Closed @ 25.23 newSubmitted by 2nd_ave (4626 comments) on Thu, 09/23/2010 - 15:02 #69959 (in reply to #69937)
    Paying the price for double-dipping...

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  67. A little while ago I saw that WATG was "on sale" today and I added 250 more shares at $8.60 to my long-term position (betting on the inevitable growth of Asian consumer).

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  68. Just bought 1 November $65 put for $3.19 and placed a sell limit order for it at $6.40.

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  69. Now that IWM broke below its morning low, I just bought one more November $65 put on it at $3.30 and then decided to "stagger" my sales of the two puts I picked up today, placing one sell limit at $5 and another at $7.

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  70. Bought a little WATG at $8.46.

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  71. "look at REDF go. I always sell too early."

    TOF -- you sell too early??? You held out in REDF much longer than any of us did! I exited REDF between $2.80 and $3.30 -- I should be the one who is bitching. :)

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  72. haha...good point David. I just had a really big position in it and am disappointed...oh well. by the way, I was looking more into WATG today...I didn't realize they bought that air bags supplier a little while ago. what a great purchase. They're expecting it to add about $0.50/share in earnings and they will pay for it through cash on hand and bank loans (i.e., no dilution). the more I look at this company the more I'm convinced it will become like a Borg Warner. at some point people will start paying up for this stock. It is trading at 10 times current earnings and only 6.5 times next year's earnings. at some point it will trade at 20 times earnings. it may take 10 years but it will happen.

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  73. TOF, so how many percentage points did the REDF trade add to your whole portfolio?

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  74. I have just placed a sell short limit order for 10 WATG November $7.50 puts at $0.5, so as to pocket $500 in 2 months or buy more WATG at $7.

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  75. Re: WFC @ 25.23/ Closed 25.51/Reopened @ 25.36/Closed @ 25.23
    Submitted by davefairtex (2255 comments) on Thu, 09/23/2010 - 15:20 #69962 (in reply to #69959)
    So 2nd, I remember someone (perhaps Bill?) suggesting that when we post our trades, we also give the rationale for WHY we are taking a particular action. I always liked reading why people do things, maybe they saw something I didn't.

    reply Contact the author Bookmark this








    Re: WFC @ 25.23/ Closed 25.51/Reopened @ 25.36/Closed @ 25.23 newSubmitted by 2nd_ave (4627 comments) on Thu, 09/23/2010 - 19:10 #69977 (in reply to #69962)
    Dave- Sure.

    (a) I opened WFC+Oct 26 calls initially due to feeling the stocks I mentioned last night/this morning (WFC/V/SCHW/GPS) were on sale. I opened after the major indexes were well off their lows (which gave me the sense that I had the wind at my back).
    (b) I sold into strength (for decent gains), with the thought that I might be able to repurchase the same positions on weakness.
    (c) Shortly after my sales, I sensed things were topping out, and purchased a few SPY Oct 112 puts. I lacked conviction in any further sell-offs during the day, and closed them out for a minor gain.
    (d) The market in fact began to sell off again, and I responded with a long bias by repurchasing WFC+Oct 26 calls. Unfortunately, the indexes never really recovered from the second spike down, and I pulled the trades at the point where I would not have to post a loss for the day.

    My apologies for not posting supporting rationale. I'm often unable to come up with an honest reason beyond intuition, and to comment that I 'sense' the indexes will recover or sell off sounds somewhat hollow. (Then of course there's the day job, which may not allow time to reflect on reasons. Given a choice between posting retroactively or in real time, I prefer real time- posting trades after the fact seems even more hollow.)

    (e) I am now back to 100% cash. With no take at all on Friday.

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  76. David - I'm not sure what the gain % was but it was probably at least 50%. I put 70% of my money into REDF. Ballsy, I know, but I didn't see the downside risk given when I bought in ($1.90 to $2.00) it was trading at $58 Million market cap with $40 Million in cash. So a top 10 most popular website in India was worth only $18 Million at the time. That's a no brainer to me. I just wish I sold my stake in piece meal. I'm never good with that.

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  77. Amazing, TOF!!! A 50% growth in your portfolio in two week??? You can take a break from trading for the next couple of years and still be ahead of the game! In fact, I think you SHOULD take a break until the middle of the next recession (say in 2012), so as to preserve your gains GUARANTEED and then enter the market again at the bargain prices GUARANTEED (rather than highly suspicious overvalued prices now).

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  78. David - once in a while it makes sense to take those risks. i'm inherently a risk taker, though, when it comes to the markets. but in my mind the markets are no riskier than putting your money into a business.

    i have 3 reasons for why now i should be taking the most risks i can in my life, as long as they're calculated ones:

    first, i'm still really young, relatively speaking. second, i don't have a family to support yet. third, i don't make investment banker money so i need to take risks to get ahead of the game.

    the last two times in my life i made a decent amount of money in the markets, i took a year off from work both times and worked on my internet startups. both times my businesses grew but not enough to support me and i ended up spending a good deal of the money i saved up. so now i'm waiting until i have more money in the bank before buying an existing business (or two). i like business a lot and want to get out of the tax accounting world as soon as possible. this crap is so boring it kills me.

    regardless, i think there are still plenty of small caps that are very undervalued. if you time it right there's no reason why you can't make 25-50% in a month or two, assuming the markets are trending up and you have found a "low risk" small cap (i.e., either one that is trading below book value or near cash/no debt or one that is in the midst of a turnaround and is so far from it's highs that it is bound to bounce back some). i've done this a few times in the past 12-15 months. i've taken some lumps along the way but the big gains more than make up for it.

    when we were coming out of the crash and the recession, i suspected there would be values out there in the small caps for a while because people would be so fearful of the next shoe to drop that they would ignore value in the markets and it has pretty much turned out that way. i took my limited experience from the 2001-2003 recession and just thought it would be even more severe than that. people can't forget the feeling of losing so much money so quickly and they're afraid to put money at risk. that provides unbelievable opportunities if you're willing to take calculated risks.

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