Tuesday, November 9, 2010

11/9/10 Runaway Train

The EOY express hasn't made any 'easy' stops. Pullbacks have been shallow and seats quickly taken. Boarding after an overnight gap means higher ticket prices prices. Window seats are gone, but plenty of spaces in most cars. I wouldn't wait for standing room only, as that would be the time to exit. And of course, shorting a runaway train comes with its own perils.

77 comments:

  1. Black gold express (Oil) working well for me. I got out of the Gold and Silver car a few weeks ago. Holding onto my HNU.to position as a short term swing trade that could come into the next station this week and then I will get off. I have stopped thinking about it all. Glad I did not got to 100% cash as the portfolios are in the clouds now.

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  2. Chugga, chugga chu-chu!

    Pretty sure we don't go straight up but you never know, are mom&pop coming back to the market?

    Me thinks they're a little late.

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  3. CADC - China ACM to Report Fiscal 2011 Q1 Financial Results Monday, November 15

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  4. Wow...glad I bought some MGM and BYD calls again yesterday. Looks like MGM's secondary was over alloted, meaning there is a strong demand for their shares. The stock is up another 3% this morning and BYD looks like its going to be bid up as well. I'm hoping these two trades will pay for everything on my bachelor party!

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  5. Runaway Train/ Lightened up at the station
    Submitted by 2nd_ave (4929 comments) on Tue, 11/09/2010 - 08:47 #73802
    My original post went like this:

    The EOY express hasn't made any 'easy' stops. Pullbacks have been shallow and seats quickly taken. Boarding after an overnight gap means higher ticket prices. Window seats are gone, but plenty of spaces in most cars. I wouldn't wait for standing room only, as that would be the time to exit. And of course, shorting a runaway train comes with its own perils.

    After reading Bill's comments, I decided to book a few profits while idling at the premarket stop:

    BAC closed half @ 12.74 (average basis 12.55)
    CSCO closed half @ 23.52 (opened yesterday @ 24.34)

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  6. Bill has some good points 2nd. I might be cashing in regardless because I'll be away from the markets for a few days.

    By the way, if you guys want to get in on a gaming stock that has a nice breakout looking chart, has no debt, and is trading at less than 10 times earnings, take a look at FLL. It's a tiny little casino in the mid-West U.S. and it's conservatively managed. They have $15 Million in cash, no debt, and are only valued at $60 Million. Average volume is only 45k shares so it's a lower liquidity issue. The kicker: Lee Iacocca is a director. I'm partial to Lee because I went to Lehigh University and he's the big alumni there.

    Check out the financials over the past 5 years:
    http://financials.morningstar.com/income-statement/is.html?t=FLL&region=USA&culture=en-US

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  7. 2nd - I hear what people are saying about being overbought and due for a correction, but what if the correction was the 2 and 1/2 weeks that we traded sideways at around 1,170-1,180?

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  8. looks like it's going to be a nice open. anyone check out ngd? It was my stock pick of the year just broke 9.00! wow, even I think that looks frothy! but then, who knows?

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  9. Re: Runaway Train/ Lightened up at the station
    Submitted by Bill Cara (1884 comments) on Tue, 11/09/2010 - 09:14 #73803 (in reply to #73802)
    2nd_ave,

    For now that train is still moving up the mountain. I don't have anything more than a sense that it has been moving too fast and may soon be pulling into a station. The next stop could be a result of anything the powers that be want to communicate in the media, and then we'll have another look.

    I do think that precious metals will move higher after a breather, and I believe that the econ data is starting to get stronger. But for now, there is too little being written about the serious problems that the G-20 is trying to come to grips with. As soon as those people begin to agree on a course of action, I think mo-mo will hit a peak and prices start reverting to the mean.

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  10. Re: Runaway Train/ Lightened up at the station newSubmitted by 2nd_ave (4931 comments) on Tue, 11/09/2010 - 09:38 #73806 (in reply to #73803)
    Bill- Understood, and of course, neither you nor anyone else here is able to advise on portfolio management apart from general principles. However, I've been reading/posting on your blog for over 5 years, and I've seen your instincts make more great calls than I can count.

    (Of your recent takes outside the mining/metals arena, the one I recall best was the fake-out drop in AAPL post earnings. That one was a beauty.)

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  11. AA closed @ 14.11
    Submitted by 2nd_ave (4931 comments) on Tue, 11/09/2010 - 09:37 #73807
    Opened premarket Monday @ 13.85. Even 1.9% is a decent return right now.

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  12. Ok, sold a few of my MGM calls at $2.45 that I bought at $1.65 yesterday. Still holding the others but I have my finger on the sell trigger.

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  13. BAC reentry @ 12.55 newSubmitted by 2nd_ave (4932 comments) on Tue, 11/09/2010 - 09:41 #73809
    Why not?

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  14. Looks like David can buy another Lexus :))) ECUXF

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  15. This market's been pretty enthusiastic lately and the early birds are probably itching to take some gains if they haven't already, wonder if the dip buyers have more stamina than the early birds?

    It's interesting to watch the feeding frenzy...

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  16. REE and GSS look like mirror images...

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  17. off bc blog.

    this is big

    ICE Clear Europe Announces Acceptance of Gold Bullion Collateral; Adds Triparty Collateral Management Service to Enhance Security and Flexibility



    http://tinyurl.com/33mar8c

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  18. ha mark, we must have been typing at the same time.

    I am watching in awe. i have been unloading this am.

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  19. ok, something is definitely going on with BYD. my instinct says buyout...but it has for 6 weeks now.

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  20. VB- We'll see, but this all looks a little crazy to me. I wont mess around with it too much :)

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  21. URRE - I guess emerging markets are going to leap-frog dirty old coal...?

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  22. Gold - I wouldn't mind trading it if I could wrap my head around what moves it, some claim deflation makes it move up but I have my doubts.

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  23. cp - Vad's comment from yday re. Gold...

    Re: was the dollar colapse on QE2 a head fake?
    Submitted by Vadym Graifer (1585 comments) on Mon, 11/08/2010 - 10:49 #73740 (in reply to #73738)
    Sorry, don't have any insight into gold. Being part commodity, part currency, part safe heaven, part hedge, part cult, it's much more complicated than most other trading vehicles, and tends to change its roles often, or re-balance their weight.

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  24. Sold another 4 MGM calls at $2.5 that I bought at $1.65 yesterday. Only holding 4 more. Still have all of my BYD in the money and out of the money calls.

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  25. alright...out of my MGM calls...sold last bit at $2.52. Not bad...made about $1,300 on those. That should pay for my bachelor party. Still holding my BYD calls...may average in on the in the money ones that expire in January and March if the stock drops.

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  26. Good job TOF. Have a great time!!

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  27. Way to go TOF. For some reason I keep putting off the day I start using calls and puts with my trades. Got to make this a New Year's resolution.

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  28. "Market speculation today includes Sterling Bancshares (SBIB) which is higher on unconfirmed takeover chatter. Also unconfirmed is that MGM Resorts (MGM) may acquire Boyd Gaming (BYD) which is trading higher by more than 5%...Juniper Networks (JNPR), up 1.2%, and U.S. Steel (X), up 2%, are each the subject of renewed takeover rumors."

    From Fly on the Wall

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  29. Just to throw my hat in the ring...I don't buy the MGM buyout rumor...MGM is getting rid of its stake in Borgata because the state of NJ is forcing them to do so. Why would they then buy BYD which owns the Borgata? I think it would be Harrah's or LVS that does the buying if it happens.

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  30. Assuming Harrah's or LVS would like to expand into Asia too, why would they buy Borgata?

    What if NJ reverses their position, is that even a possibility?

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  31. GMXR - shark's pick starting to move...

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  32. chicken - i think Harrah's / LVS would buy them to help diversify their holdings. In good times, BYD's properties earn about $1.50 or so a share in profits. Even after a 50% run up in the shares, the stock is way cheap if good times are returning. BYD is still trading far below book value when MGM, LVS, WYNN are trading way above book.

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  33. Gold - I've gotta agree with Vad, and I think this QE2 noise is blown out of proportion to meet someone's immediate agenda.

    I'm sticking with Ben's thesis unless of course the world decides to fund the US military machine by some other mechanism, then we might be singing a slightly different tune.

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  34. Added a few more BYD Dec $10 Calls at $1.00. The strength in this stock today tells me that something is going on with this company...maybe I'm wrong and too much hot air is in it, but the market is weak and this thing hasn't pulled back one bit for a while now.

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  35. CI -- congratulations on your NG trades! First you buy HND.TO, then at the bottom you switch to HNU.TO -- amazing instincts! I wish I had done that...

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  36. Mark -- that second Lexus just paused briefly in front of my house but then drove away to a better neighborhood (probably to TOF :)).

    Enjoy your bachelor's party, TOF!

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  37. Maybe today's decline in the market means that it is getting worried about rising commodity prices that will squeeze corporate profit margins? I just bought one more January $122 put on SPY for $3.89 -- pretty cheap, I would say...

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  38. SLW BABY!!!!! Right now I'm + $1,450.

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  39. Wow! Sweet trade Mark!

    Note to self: Sell when volume explodes and I'm dreaming of earlier retirement...or at least nice top shelf liquor at my bachelor party. BYD coming back down to earth.

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  40. CRAP!!!...Oh well, it felt like I was reaching into the mouth of a lion to grab those $'s this morning. Looks like I left about $600 behind, but I have to leave now for a meeting. GL guys.

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  41. Gutsy trade, Mark! So THAT'S where my second Lexus was driving! :)

    Bill said many times that crazy up moves don't end with gap downs but rather with nasty mid day reversals, like the one silver is having now.

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  42. David, I just followed your method of watching for NG UNG to move above/below the most recent high/low for a break in the trend and have a tight stop if I am wrong. I just kept my eyes on the higher lows which were never taken out. You use buy stops, which is the best way to play this. I just watched and pressed the button to buy with market orders because of the liquid markets for these instruments.

    Who would have guessed the strong trends in gold, silver, coal, copper and anything that is crap would lead to such strong momentum. Not me. I am nervous with this market. I like some nice order and gradual price movement each day. They say the market goes down faster than it can go up. I am holding my cash to see what is next for Wall Street. I really can't take this anymore.

    I turned gray when you said ECU would break $1.00 by the end of the year and looked what happened in a matter of days. It is beyond imagination what has been happening the last two weeks.

    On the flip side, I sold GIX.to, PNP.to and ECU.to to play with NG. In hindsight I wish I had just kept these positions.

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  43. WATG reported its 3Q results today. It showed better net income and revenue than analysts have been expecting and raised its guidance for the year. As a result, its shares are ... down 14% now! I just placed a sell limit order for 10 December $10 puts at the asking price of $1.00. Let's see if someone will buy them away from me in a panic.

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  44. Why is ECU.TO still up despite silver going into red already? That's what I call an inefficient market...

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  45. In order to partially hedge my ECU.TO position, I have just shorted 200 shares of SLW at $34.19, with the intent on covering if SLW breaks out to a new high.

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  46. I decided to lower my sell limit order for 500 shares of UNG from $6.10 to $6.07 so as to sell them right away, which I did. Booking whatever profits I can in something that I don't want to hold for a long term.

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  47. GMO/PAL Ouch^2! - Massive damage to both so far, especially if you bought into the exuberance over the last couple of days, LOL.

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  48. GMO - Me thinks I shoulda sold a bit more yesterday...

    2nd, where were ya, mi amigo??? ;)

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  49. managed to pull off 1/3 of my calls in BYD around $10.55, including 1/3 of my out of the money calls at 5 times what I bought them at. I might just let the rest ride as I have no cost basis in them now.

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  50. Yeah, not that it doesn't hurt when they go down but having "free" shares is sort of like sitting back watching the waves at the beach. Reminds me of a Corona beer commercial inclusive of the little twist. ;)

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  51. Exiting OAKBX @ the close on strength in COV newSubmitted by 2nd_ave (4933 comments) on Tue, 11/09/2010 - 15:44 #73846
    COV is one on OAKBX's top holdings (an Irish healthcare company)- in fact, OAKBX is the fund with the largest position in COV, 2.63% of shares outstanding. Up >5% today. Plus, I'm looking for an excuse to close the position.

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  52. Nice long red candlestick today no doubt, looks like depression is back on the table and even gold can't do a damn thing about it... My U$D's are soaring nicely though.

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  53. Wow what a spurt at the end. I actually bought most of my options back in BYD (at lower prices so I have some cash to spare), but I went with in the money options, before the close...BYD is the only stock on my list up a decent amount so I'll probably be buying at the top! Position sizes are manageable so I don't really care that much.

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  54. hehe, Chicken. 2 days in a row and we're back in a depression. i bet that's what we'll start reading in the media if we go down about 3%. 5% and we might as well all pack it in. Gotta love the mercurial nature of the market and the public in general.

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  55. TGB - did quite well today, someone thinks it's oversold...???

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  56. Yep, just when you begin to think the bears might've given up the market throws them a few bones to gnaw on, resuscitating the fervor of their alternative reality.

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  57. Re: Sell Gold? newSubmitted by 2nd_ave (4934 comments) on Tue, 11/09/2010 - 16:22 #73862 (in reply to #73850)
    But don't ever say trading is easy!

    For some reason, I have to remind myself of that every few days...

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  58. So far, my hedge for ECU.TO in the form of SLW short is working well -- ECU is up 2.65% for the day while SLW is down 7.87% for the day, down $2 from the level I shorted it at.

    I think there is only a small chance that today's nasty reversal in silver does not morph into a nasty multi-day correction. However, if today's pullback gets bought, then silver is going way higher. So, in order not to let a profit (in SLW short) turn into a loss, I am placing a buy stop limit order at $34.5/$35.

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  59. "But don't ever say trading is easy!

    For some reason, I have to remind myself of that every few days... "

    --------------
    hmmm. This is negative reinforcement. Never good.

    If I was Vad, I would want a dollar for every time I heard/saw this.

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  60. natty comments

    Storage comes out tomorrow at 11:00 AM CT due to the holiday. I'm seeing estimates of +23 (injection).

    Here's a Soc Gen comment you might find interesting
    "2011 index reweighting
    The S&P GSCI and DJ UBSCI indices will be reweighted between 7 Jan. and 13 Jan. 2011, according to the weightings published by S&P and DowJones last week. There will be no change of composition in terms of underlyings, only weightings are to be adjusted.
    Commodity prices can vary greatly. Therefore, for now, it is perhaps a bit premature to assess the potential impact of these reweightings. Nevertheless, it is always interesting to consider the possibilities as the impact could be very significant for certain commodities.
    We estimate that the current total amount invested in OTC commodity index swaps is around $160bn, with 85% being linked to the S&P GSCI and DJ UBSCI, in equal proportion. There are also $6.2bn and $2.7bn of ETPs linked to the DJ UBSCI and the S&P GSCI respectively. Thus, we estimate investments linked to the S&P GSCI at $70.8b and those linked to the DJ UBSCI at $74.3bn.
    All told, at today's prices, the 2011 reweighting should result in strong buying of Nymex Natural gas, and heavy selling of ICE Coffee and ICE Cotton."

    hmmmm

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  61. Thanks port# for the NG update. Your comments have been very helpful the last two months.

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  62. I can't help but think: how many were (stupid enough) to buy the weakness today like me? I wouldn't be surprised to see a gap higher tomorrow. I mean, today was supposed to be this nasty correction day. We were down a whopping 0.85% today in the S&P 500. 60 whole points on the Dow.

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  63. TOF, the correction in SLW today was pretty extreme, much larger than what was warranted by today's drop in silver. Such extreme moves usually have follow ups... The weakness in miners usually foretells the weakness in the metal itself.

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  64. David - I can't believe how awesome yours and Mark's trade was. Vad would shun your trade, though, and probably righfully so. There were probably a ton of other people calling tops in SLW in the mid 20's only to be crushed. My gut instinct tells me it goes up yet another leg, at which point it could be the mother of all shorts.

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