Re: 11400/1225 might even attract retail buyers
Submitted by DavidV (35 comments) on Tue, 10/12/2010 - 17:38 #71367 (in reply to #71346)
Since quoting Rosenberg is a popular item today, I'll respond to 2nd_ave's idea with yet another quote:
"When the Fed embarked on QE1 in early 2009, the market also caught the tailwind of the bottoming-out in profits and the turnaround that ensued. But keep in mind that profit growth is now receding, the outlook quite uncertain, margins are at a peak and no longer at a trough as was the case in early 2009, and expectations are now for more double-digit growth, not double-digit declines. There is no longer a wall of worry to climb but instead a wall of optimism and complacency, as seen by the vast majority of sentiment surveys."
2nd_ave -- what's happening to your "trading against the crowds" style?
Re: 11400/1225 might even attract retail buyers
Submitted by 2nd_ave (4733 comments) on Tue, 10/12/2010 - 20:22 #71376 (in reply to #71367)
2nd_ave -- what's happening to your "trading against the crowds" style?
For some reason, I feel like I am trading against the crowd. If you can direct me to a single blog that is outright bullish, I'll check it out.
In the meantime, let's dissect your Rosenberg quote:
(a) But keep in mind that profit growth is now receding. Really? According to which sources, and how represenatative/reliable are they?
(b) the outlook quite uncertain. Ditto.
(c) margins are at a peak and no longer at a trough as was the case in early 2009. Ditto.
(d) and expectations are now for more double-digit growth, not double-digit declines. Ditto.
(e) There is no longer a wall of worry to climb but instead a wall of optimism and complacency, as seen by the vast majority of sentiment surveys. Even if I take his word for it, let me offer a few countervailing opinions of my own:
(f) There is still a monumental wall of worry. I see it every day on Main Street.
(g) Expectations are for double-digit growth? I don't think so. The last time I checked, the fear of a 'double-dip' is still alive and well (at least where I live), housing prices are expected to increase at most 3-4% a year, and the employment outlook is stagnant. Can anyone tell me exactly which companies are talking about double-digit growth?
(h) 'Vast majority of sentiment surveys?' How many are there? A half dozen? And which population of investors/traders are they sampling?
(i) Finally, let me turn Rosenberg's comments (a) and (b) around and say that I think we're about to see increases in profit growth + more optimistic outlooks in 2011.
Mark- Your story makes mine seem trivial.
ReplyDeleteFutures ...
ReplyDeleteSubmitted by Dave M (126 comments) on Tue, 10/12/2010 - 18:41 #71373
Not that this means much (yet), but futures for tomorrow have already gone negative so it doesn't look like INTC numbers are going to provide much of a lift. Wait and see I guess.
Re: Futures ... newSubmitted by 2nd_ave (4734 comments) on Tue, 10/12/2010 - 21:02 #71379 (in reply to #71373)
ReplyDeleteFlat futures going into Wednesday? That would be 'a good thing.' The last thing the bulls need is a gap-up excuse to sell into. The best thing that could happen is an excuse for bears to short the open- which would all but guarantee a continuation of the rally.
Mark, if a tree falls in the forest when no one's there, does it make a sound? If the loan servicer doesn't know who owns the loan, how are you to know the owner was paid off?
ReplyDeleteTrading with/against the crowd - It seems to me most of the advantage using this method would be realized at the extremes?
GMO - This is most likely already baked in - Receives confirming certification of Chinese governmental approval:
ReplyDelete"LAKEWOOD, Colo.--(BUSINESS WIRE)-- General Moly (NYSE Amex: GMO) (TSX:GMO.to - News) announced that the Company has been informed by Sichuan Hanlong Group (Hanlong) that it has received a Certificate of Overseas Investment as approval from the Chinese Ministry of Commerce (MOFCOM) to invest in General Moly as a component of an overall structure to fully finance General Moly's 80%-owned share of the Mt. Hope project."
Gold - This one's done quite well for the "deflationista's", now let's see how well it does with a little inflationary pressure...
ReplyDeleteRe: sold my SLW puts newSubmitted by 2nd_ave (4735 comments) on Tue, 10/12/2010 - 21:48 #71381 (in reply to #71362)
ReplyDeleteCould 2nd be right with his bullish intuition after all? Of course he could! One might argue, the "bullish intuition" is really just a call for the trend to continue - a tried and true trading methodology. Solid and respectable.
Sure.
And how would you 'argue' my 8/31/10 call?
Rocket Man
Submitted by 2nd_ave (4734 comments) on Tue, 08/31/2010 - 19:33 #68255
http://tinyurl.com/yg6le49
Take a look at the one day chart of the DJIA. You can visualize the repeated attempts to shake out weak hands- at the open, over and over again during the day, then a last-ditch attempt in the final hour.
So I've finally found (in a Karate Kid kind of way) 'vindication' for those daily workouts in the inverse leveraged funds- immunity to being shaken down by run-of-the-mill non-superhuman adversaries -)
Get ready for Wednesday morning. Zero hour, 9 am. And the SPX's going to be high as a kite by then.
I see that BC is no longer setting course for the morning breeze, that should dramatically help readers over @ CC... or at least keep them out of harm's way.
ReplyDeleteTo be honest, I don't think we get a flat open. I think we see a WTF gap up that opens high and closes higher. Led by JPM-inspired financials.
ReplyDeleteRe: Futures ... newSubmitted by 2nd_ave (4736 comments) on Tue, 10/12/2010 - 22:07 #71382 (in reply to #71379)
ReplyDeleteTo be honest, I don't think we get a flat open. I think we see a major gap up, led by JPM-inspired financials.
Gun to head- open high, close higher.
2nd/CP- Yeah, the whole HELOC thing is really incredible. "Your line is now closed! Your only option is to pay it off. No, we will not waive our pre-payment penalty! Your stuck with us BABY!"....Well, FUCK YOU!
ReplyDeleteBut more importantly....The HARD thing to do was go long when we all did yesterday.
Man, we need one final spike to shut the bears down.
ReplyDeleteFor once, could they just please shut up...
2nd - You eloquently put what's been going on in my head for the better part of the past 15 months. The amount of skepticism about the economy / markets is unbelievable and can easily fuel a rally that goes another 100 points higher. I got really bullish a little over a month ago thinking that we might be able to rally 200 points...we're halfway there and I still think this. Perhaps when David Rosenberg capitulates and Karl Denninger shuts down his site and Tim Knight renames his site Slope to Heaven then we can begin getting bearish.
ReplyDeleteBy the way, I think a gap lower on MGM should be bought furiously tomorrow if it happens.
2nd- Did you catch what Lincecum said at the end of that clip I posted? Too funny!
ReplyDeleteAlright, that's it! My official call surpasses 11,258 dow.
ReplyDeleteTOF - Just look at that 70 year chart and tell me what you think?
Just a small sampling of the bearishness about the economy and this is just in the past week:
ReplyDeletehttp://money.cnn.com/2010/10/11/pf/investing/stocks_earnings.fortune/index.htm
Read the comments on this blogpost:
http://www.ritholtz.com/blog/2010/10/market-refuses-to-stay-down/#comments
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aG3_OCkhtFU8
http://www.bizjournals.com/pittsburgh/stories/2010/10/04/daily23.html
http://www.vancouversun.com/sports/Pessimistic+CIBC+warns+Great+Disappointment+dismal+economic+recovery/3566704/story.html
Mark - dude I read your post about the refinance...that blows man. I'm so far from owning a home...i've never had any desire to because I'd rather spend my money owning businesses and stocks...even though i'm clearly wasting money each money.
ReplyDeleteTOF- Yeah. The sad part is any reasonable business decision is removed from the equation. No problem for me. I'll still close the loan just a little later.
ReplyDeleteMark, did you have to pay the prepayment fee? Sounds about as bad as dealing with an insurance company.
ReplyDeleteI was looking at refinancing my loan with JPM Chase. They said I would have to pay $1,000.00 fee plus about $900 for title insurance plus an appraisal fee(I'm guessing about $400 or so for that). I don't understand the title insurance part. I need to get off my butt and call someone else but I'm still not sure what I want to do, have the 4 of us stay in the old 2000 sq ft house, buy a bigger house (2500-2700 sq ft) and prob pay about $150k more, or pay about $90k to add on to this house? Hmmm. I keep coming back to just staying in this house (smaller house and smaller bills) and spending that xtra money traveling to Europe to visit the extended in-law family.
port- No, I wont pay the pre-payment fee. It clears Dec. 5th. You should be able to get a NO cost loan @ 4.35%. Anytime you refinance the new lender will want clear title. So title insurance is needed. My loan was, and probably will be, through WFC.
ReplyDeleteCan't help on the issue of buying a bigger house. I'm done here, and will pay the loan off ASAP. I'm guessing I'm a little older than you, (46) and just want to be done with it. My kids are young and need to be prepared to fund them for many years to come.
David
ReplyDeleteJust to make sure we're on the same page, by "cash prices" I mean what the physical natural gas traders traded from 7 AM to 11:30 AM this morning for tomorrow's gas day. And most of that trading takes place between 7:30 AM to 9:00 AM usually. I think other commodities, like gold, you would probably refer to this as the spot market price but I only know natty.
So we've already talked about there being more gas demand for electric generation this past summer. What surprised me and a few others I'm sure was how strong cash prices were relative to the Oct Nymex price in September. Now we're pretty sure that was due to some electric generation plus all of the storage players were trying to get as much gas in storage as possible. I was buying gas for my storage every day in Sep and just about everyday I could see that there were more bids than offers. I can also tell if the last price that traded was someone selling (hitting the bid) or buying (lifting the offer) and most of the time it was someone buying. I also talk to my physical traders since they are the ones talking to the physcial traders at the other companies and they have a good idea if people are buying for power loads or storage or both. Keep in mind that most physical gas trading is nowhere near as active as something like AAPL.
I'm also buying gas each day this month for my storage and I see that its different than it was last month. Many times during the morning there are more offers than bids and I can see the bid getting hit just as often as the offer gets lifted. The spreads are better this month too meaning there is a bigger difference between the forward months, for me thats Nov10 and Jan11, then there was last month. Since the forward prices are down that means cash is even weaker than before. IN the month of Sep, the Jan11 contract ranged from $4.21 to $4.68, so far this month the range has been $4.18 to $4.39. The early storage estimates for this week are +91 which is pretty big but that's probably priced in right now. At the end of the injection season the storage facilites are not as flexible. Once storage fills up, and no one really knows what that number is, there's no place for the gas to go unless peeps are burning it for heating.
So now you need to ask shark when he's turning on the heater. If he's turning on his heater then everyone else in the NE is too. Do we have anyone here from the Chicago area?
"What do you mean by rolling storage withdrawls forward? Do you mean not selling gas now but waiting until next summer/winter? In that case, wouldn't there be less gas available for this winter, which should push the cash prices UP??? "
ReplyDeleteMost of us that arb storage have a lot of flexibility on when to put it in and when to take it out. Sometime over the last 6 months, I was buying gas to inject and selling the Oct10 swaps. As part of my strategy, I let those swaps mature so that I would physically withdraw the gas in Oct. Now, I'm buying that gas back in the cash market each day and I've been selling Nov10 and Jan11 forwards. Thats called rolling storage.
Now I have these positions on to withdraw gas for Nov10 through Mar11. These are really financal positions but I have the physical gas in storage to back it up. I see that the spreads from this winter have widened to next winter so sometime in the next week or two I'll probably start buying back some of my withdrawals for any of these months and sell the Nov11-Mar12 strip.
ANd yes, this could AND should support cash prices some for the winter. Last year these spreads were much wider by labor day. It looks like its happening again this year, just a little later.
Hope this helps. One of our admin groups have asked me to do a presentation on hedging which is actally my primary job function. It will be more work to do the presentation than the actual job itself but if I do it I'll let you know and I can send you or anyone else the slide presentation if you want it.
Night all.
Thank you, port2013, for such detailed explanations of the NG storage business! Do you think that the storage people like you and other professional arb players have a noticeable impact on the NG price, or is the price driven primarily by the industrial consumption?
ReplyDelete2nd_ave, I've watched some CNBC videos and also videos from the TechTicker, and all of them said basically the same thing: you gotta be long the stock market now, since the market now has a "Bernanke put" (if the economy starts going bad, Bernanke will step in with QE2 and save us all). I think the trading blogs you are reading are the *contrarian* blogs. These are the small guys who are trying to fight the trend and who do not have any impact on the market. America's "mom and pop's money" is in the hands of the fund managers, and THEY are the ones who can create real volumes. These fund managers HAVE to buy in now, since only a silly person wouldn't go long in the face of a "Bernanke put." Hussman described the current market climate very well in his latest commentary titled "No Margin of Safety, No Room for Error" (I hope you read it -- it is very informative). Here is what he said:
ReplyDelete"As of last week, the Market Climate in stocks was characterized by strenuous overvaluation, overbought, overbullish conditions, and unfavorable economic pressures. This is a combination that has historically been associated with poor returns, on average. While the S&P 500 has essentially gone nowhere since early January, the present overvalued, overbought and overbullish conditions, coupled with still negative economic pressures, suggests the potential for a familiar pattern of market behavior that I refer to as "unpleasant skew." The short-term tendency in such conditions tends toward small advances to repeated marginal new highs, often followed abruptly by a steep "air pocket" that wipes out weeks or months of progress in the span of a few days. During the interim, however, it's typical for 2-3 day pullbacks to to be followed by spike advances that do little but recover the lost ground, but that make the advance appear relentless."
I think that's exactly what we are having now. The "unpleasant skew" phenomenon implies that at any point in time, the probability of the market finishing a little higher one week later is greater than 0.5, which is why those who are very long now are very likely to keep making a little money for some number of days/weeks. However, when the market finally reverses, the drop will be so steep that it will go significantly below the present level, and hence only nimble traders who can get out on time can make money on the long side now.
new post
ReplyDelete