The old format! Tomorrow is due or die time for bulls and bears imo. If we go up, we may have to wait for VIX to hit its lower channel between 12.50 and 13. I think an up day that sticks would buy 2-3 weeks for the bulls. The kicker is emerging markets (EEM). If they break this 14 week base, it could be off to the races for everyone. DXD and DOG have spiked below their channels and look ripe for reversals, but not seeing much else. SPX looks toppy, but IWM and small caps seem to have been basing. Cross currents galore.... Let's see what happens when analysts upgrade AAPL for the upteenth time in the morning...
I was out at Tahoe for the long weekend and when I come back, I see that our blog has been transformed! It seems to me that anyone who looks at our front page will get confused by the small window with a scroll bar for each day, will decide that we don't know how to organize a clear and understandable blog and will leave without exploring it further...
Now for VXX: the buy limit order I placed at $30 did not get hit today, which is good. :) Since VXX seems to be gapping down every day lately and continuing down, I figured that I should be adding any further to my position only on strength. With this new idea, I placed a buy stop limit for 100 shares at $31/$31.03.
Sentimentrader throwing in the towel this morning? After a slew of ultra-bearish studies over the past 6 weeks, this morning's post says
"The price momentum displayed across equity indexes is remarkable. The Nasdaq Composite has shown excellent returns from the past week through the past six months, and when it has done that previously, it has done OK during the next few months." Again, hmmmm.......
This is why AAPL didn't react like it "should have" Investors have figured out Wall Street's game and have been following the amateurs. This is exactly why I had predicting $6.40 in eps and $5.00 in guidance. The blowout quarter was entirely to be expected by anyone with a computer.
Where is everyone??? Posting comments in that little window with a scroll bar that doesn't even have a correct title at the top and no obvious way to post comments? Besides, it requires people to sign in with their real info, which I suspect many people won't like to do.
I see that today is the first up day for VXX since I bought it! My buy stop order at $31 was triggered this morning for 100 shares, and I just placed a sell limit at $32 for these shares.
While I was typing it, the sell limit was hit! So THAT'S how the money pump is supposed to be working! :) I have sell limits from here at 50 cent intervals all the way to $36. :)
Check this out, guys: VXX is up much more now than VIX! This suggests that investors are finally starting to worry about the future, and today's sell-off gives them the creeps about what might happen one month down the road... So maybe we should plan accordingly as well?
Tried to short FCX now but OptionsHouse told me that there are no shares of this security available for shorting. That's the first time I *EVER* see this! So I just bought 2 February $129 puts on it for $14.75.
When I wanted to short FCX a little while ago, I wanted to place a buy to cover stop at $116. I just checked FCX once again and saw that it made a shot for $116, naturally sending for cover many nervous bears like me. So I figured it was actually a good place to add to my put position and added one more Feb $129 put for $14.30.
David - congrats on the FCX play. I wondered if you were still in.
I decided to close out my 100 share short on IBM for a $100 loss at $155.94. Dumb call.
I still have some SPY Puts and TYP, both of which are nicely underwater and won't be above water until/unless the S&P gets under 1,272ish. So I'll just sit and wait, expecting a sharp pullback to 1,240 this week/next.
My RAS just plain old sucks. Very disappointing to see such weakness in an otherwise mildly bearish tape. That's not a sign of a strong stock...not yet. Should the market fall to 1,240-1,250 then there is a solid chance RAS goes down and hits my stops at $2.42. Thinking that this is the wrong move to make on my part because longer term (i.e., weekly charts) the stock is in an uptrend, I have decided to move my stops down to $2.27 for 1/2 of the shares I bought at $2.21.
I also decided to put a buy stop limit order in on my AAPL short at $343.80, which would be above the downward sloping trend drawn from this mornings throwback high around $346ish and the lower high at $344.6ish.
TOF, the "lucky" play with FCX would have been not closing at $118 last week the 5 puts I had on it. Or at least opening the 3 puts today at the daily high of $116.50 instead of the daily low at $115.50... My timing with FCX totally sucks. I suppose that's so because FCX, being such a popular stock, is heavily traded by computers, who have excelled at confusing the crowd while I haven't learned yet how to separate my desires from those one might get by looking at the chart...
Got your email David. I hear you. I'm not sure about having to use your real name. I didn't. I like the pop out screen and rolling comments, but I'll leave it up to everyone.
What a fakeout in FCX mid-day today! First it drops to the bottom of its morning support level, then as soon as I start buying puts on it, FCX shoots up and rises ABOVE its morning resistance level (where I would have definitely closed my short stock shares if I hadn't bought puts instead), and then FCX drops below its morning support level!
I just checked VIX and saw that it has also reversed its mid-day decline and broke out to a new high, up 9% right now! This could be a one-day washout of all that excessive bullishness, or it could be the start of something big...
When I woke up this morning, FCX was at $115.50. When I looked at its chart, I did get a feeling that FCX will drop below $115 today, and that's why I just went ahead and bought puts on it, but those damn computers did a great job shaking out all those who shorted FCX together with me at that point.
S+P finally getting pushed down from outside of its upper monthly bollinger band. I expect the reaction to be violent and lasting at least 3 months.
At a multi-year major market top you want to see unbelievable headlines, a bullish mania, and all-time high margins and a brilliant outlook.
Intel blows #'s out of the park saying 2011 will be basically as good as it gets. AAPL record gross margins, earnings, unreal outlook yada, yada. Cult memb.... I mean "investors" in AAPL don't think it could possibly go down...ever. The market is ALL about margins and the distant future (1+ years out). At peak margins, I expect AAPL to trade at a 10 PE w/ all of its fans calling it the cheapest stock in the universe.....
IBM knocks cover off the ball w/ stellar outlook, bullish investor sentiment is at all-time high. People believe that pomo will take the market up FOREVER. I could go on and on and on.
This is EXACTLY the sentiment that you want to see at a major market top. William O'neil has a couple of chapters about this exact scenario in his book "How to Make Money in Stocks".
Having said all that, could we head up to new highs and roll around for a bit in a bull/bear battle? Absolutely!
In regards to the chat format, I believe that its a great way for a small group of investors to "shoot the sh%t". I've been a part of 3 or 4 good ones in the past.
If the goal is to have a format where investors can develop and post more in-depth analysis, the old format is far superior. If the goal is to grow "readership", a chat room basically tells people to stay the hell out due to a number of reasons including many/most people's desire to browse anonymously. If somebody just want to stop by to see what people have been posting, the chat room feature is not pleasant whatsoever.
I think the answer is to perhaps have both. The old format for more in-depth analysis and a chat room (perhaps a separate site altogether to minimize the confusion to the eye?) where investors can discuss in real-time earnings and economic releases, passing thoughts, beer drinking, and of course TOF's wedding pictures:)
hey Jesse - i don't see signs yet of this being a major market top...just a nice and much deserved pause. i think we bottom out at 1,230-1,240 and trade sideways for a few months before going higher. in the sideways trading, i think we could see a couple of 5% move opportunities between 1,240 and 1,300. i would be selling 1,300 and buying 1,240 until next earnings season.
by the way, AAPL is actually now trading at about 11 times earnings. they have almost $70 in cash and earnings are around $24/share. $24 x 11 = $264 + $70 = $334.
BTW- The LOOOOOOOONG forgotten Hindenburg Omen is still valid. I found this interesting:
"The timing of a decline following a HO can begin the day after or as long as 4 months after the signal. In the current situation, the confirming signal may occur at a lower level. In fact, market crashes NEVER start from a top. They generally occur at least 20% lower than the top. In 1987, for example, the Dow Jones Industrial Average peaked at 2,700 and change. The crash began with the index a full 20% lower than its peak. The same can be said for the market crash that occurred during the Great Depression."
Team- In terms of AAPL, I was thinking 10x the run-rate of current eps- $20-$25. You'll think I'm crazy, but I totally, 100% disregard cash. That would be an interesting discussion and analysis at some point when I have more time.
In my experience, when companies (especially tech) have a huge cash hoard, their performance going forward is dismal. I can recall a specific instance when OVTI was $35 in '06 w/ $9 in cash and an eps run rate of $2.00. Investors kept giving it a target of 20x current PE of $40 plus cash = $49.
In 8 months, it traded at $10. In 3 years, under $5.
In my experience (it would be great to do a study at some point) when these companies have a HUGE cash hoard, their ongoing multiples shrink a great deal. Don't ask me why because I'm not entirely sure.
Lastly, I read a GREAT article in the spring regarding how AAPL's stock is screwed going forward due to their huge cash position. I would LOVE to find that article again. I'll look at some point.
Just sold my QQQQ puts. GOOG will probably knock the cover off the ball ah. Sentimentrader said that S+P tends to have a snapback rally 3 days after yesterday's decline prior to a continuation of the decline. On the sidelines now.... Maybe I should re-enter UNG for its run into the 20's...
2nd - the steelers ain't making it past this week my friend.
ReplyDeleteThe old format! Tomorrow is due or die time for bulls and bears imo. If we go up, we may have to wait for VIX to hit its lower channel between 12.50 and 13. I think an up day that sticks would buy 2-3 weeks for the bulls. The kicker is emerging markets (EEM). If they break this 14 week base, it could be off to the races for everyone. DXD and DOG have spiked below their channels and look ripe for reversals, but not seeing much else. SPX looks toppy, but IWM and small caps seem to have been basing. Cross currents galore.... Let's see what happens when analysts upgrade AAPL for the upteenth time in the morning...
ReplyDeleteI was out at Tahoe for the long weekend and when I come back, I see that our blog has been transformed! It seems to me that anyone who looks at our front page will get confused by the small window with a scroll bar for each day, will decide that we don't know how to organize a clear and understandable blog and will leave without exploring it further...
ReplyDeleteNow for VXX: the buy limit order I placed at $30 did not get hit today, which is good. :) Since VXX seems to be gapping down every day lately and continuing down, I figured that I should be adding any further to my position only on strength. With this new idea, I placed a buy stop limit for 100 shares at $31/$31.03.
ReplyDeleteSentimentrader throwing in the towel this morning? After a slew of ultra-bearish studies over the past 6 weeks, this morning's post says
ReplyDelete"The price momentum displayed across equity indexes is remarkable. The Nasdaq Composite has shown excellent returns from the past week through the past six months, and when it has done that previously, it has done OK during the next few months." Again, hmmmm.......
This is why AAPL didn't react like it "should have" Investors have figured out Wall Street's game and have been following the amateurs. This is exactly why I had predicting $6.40 in eps and $5.00 in guidance. The blowout quarter was entirely to be expected by anyone with a computer.
ReplyDeletehttp://tech.fortune.cnn.com/2011/01/19/apples-blow-out-quarter-the-bloggers-called-it-the-street-blew-it-2/
Where is everyone??? Posting comments in that little window with a scroll bar that doesn't even have a correct title at the top and no obvious way to post comments? Besides, it requires people to sign in with their real info, which I suspect many people won't like to do.
ReplyDelete2nd_ave -- let's change the format back!
I see that today is the first up day for VXX since I bought it! My buy stop order at $31 was triggered this morning for 100 shares, and I just placed a sell limit at $32 for these shares.
ReplyDeleteWhile I was typing it, the sell limit was hit! So THAT'S how the money pump is supposed to be working! :) I have sell limits from here at 50 cent intervals all the way to $36. :)
Check this out, guys: VXX is up much more now than VIX! This suggests that investors are finally starting to worry about the future, and today's sell-off gives them the creeps about what might happen one month down the road... So maybe we should plan accordingly as well?
ReplyDeleteTried to short FCX now but OptionsHouse told me that there are no shares of this security available for shorting. That's the first time I *EVER* see this! So I just bought 2 February $129 puts on it for $14.75.
ReplyDeleteWhen I wanted to short FCX a little while ago, I wanted to place a buy to cover stop at $116. I just checked FCX once again and saw that it made a shot for $116, naturally sending for cover many nervous bears like me. So I figured it was actually a good place to add to my put position and added one more Feb $129 put for $14.30.
ReplyDeleteDavid - congrats on the FCX play. I wondered if you were still in.
ReplyDeleteI decided to close out my 100 share short on IBM for a $100 loss at $155.94. Dumb call.
I still have some SPY Puts and TYP, both of which are nicely underwater and won't be above water until/unless the S&P gets under 1,272ish. So I'll just sit and wait, expecting a sharp pullback to 1,240 this week/next.
My RAS just plain old sucks. Very disappointing to see such weakness in an otherwise mildly bearish tape. That's not a sign of a strong stock...not yet. Should the market fall to 1,240-1,250 then there is a solid chance RAS goes down and hits my stops at $2.42. Thinking that this is the wrong move to make on my part because longer term (i.e., weekly charts) the stock is in an uptrend, I have decided to move my stops down to $2.27 for 1/2 of the shares I bought at $2.21.
I also decided to put a buy stop limit order in on my AAPL short at $343.80, which would be above the downward sloping trend drawn from this mornings throwback high around $346ish and the lower high at $344.6ish.
TOF, the "lucky" play with FCX would have been not closing at $118 last week the 5 puts I had on it. Or at least opening the 3 puts today at the daily high of $116.50 instead of the daily low at $115.50... My timing with FCX totally sucks. I suppose that's so because FCX, being such a popular stock, is heavily traded by computers, who have excelled at confusing the crowd while I haven't learned yet how to separate my desires from those one might get by looking at the chart...
ReplyDeleteUNG is hitting the daily highs, which is pushing the broad market lower... :)
ReplyDeleteGot your email David. I hear you. I'm not sure about having to use your real name. I didn't. I like the pop out screen and rolling comments, but I'll leave it up to everyone.
ReplyDeleteWhat a fakeout in FCX mid-day today! First it drops to the bottom of its morning support level, then as soon as I start buying puts on it, FCX shoots up and rises ABOVE its morning resistance level (where I would have definitely closed my short stock shares if I hadn't bought puts instead), and then FCX drops below its morning support level!
ReplyDeleteThe VXX money pump keeps working so far -- it just hit my sell limit order at $32.50 for the 100 shares I purchased at $31.50.
ReplyDeleteI just checked VIX and saw that it has also reversed its mid-day decline and broke out to a new high, up 9% right now! This could be a one-day washout of all that excessive bullishness, or it could be the start of something big...
ReplyDeleteNaturally, as soon as FCX dropped to a new low for the day and early bears got on the south bound train, the damn computers immediately jerked it up!
ReplyDeleteWhen I woke up this morning, FCX was at $115.50. When I looked at its chart, I did get a feeling that FCX will drop below $115 today, and that's why I just went ahead and bought puts on it, but those damn computers did a great job shaking out all those who shorted FCX together with me at that point.
ReplyDeletegoogle finance shows a list of my 10 recent quotes, and they are all red except for two market-inverse ETFs: VXX and UNG. :))
ReplyDeleteJust for fun, I just bought 100 shares of VXX at $32.12 and placed a sell limit order at $33.
ReplyDeleteS+P finally getting pushed down from outside of its upper monthly bollinger band. I expect the reaction to be violent and lasting at least 3 months.
ReplyDeleteAt a multi-year major market top you want to see unbelievable headlines, a bullish mania, and all-time high margins and a brilliant outlook.
Intel blows #'s out of the park saying 2011 will be basically as good as it gets. AAPL record gross margins, earnings, unreal outlook yada, yada. Cult memb.... I mean "investors" in AAPL don't think it could possibly go down...ever. The market is ALL about margins and the distant future (1+ years out). At peak margins, I expect AAPL to trade at a 10 PE w/ all of its fans calling it the cheapest stock in the universe.....
IBM knocks cover off the ball w/ stellar outlook, bullish investor sentiment is at all-time high. People believe that pomo will take the market up FOREVER. I could go on and on and on.
This is EXACTLY the sentiment that you want to see at a major market top. William O'neil has a couple of chapters about this exact scenario in his book "How to Make Money in Stocks".
Having said all that, could we head up to new highs and roll around for a bit in a bull/bear battle? Absolutely!
In regards to the chat format, I believe that its a great way for a small group of investors to "shoot the sh%t". I've been a part of 3 or 4 good ones in the past.
ReplyDeleteIf the goal is to have a format where investors can develop and post more in-depth analysis, the old format is far superior. If the goal is to grow "readership", a chat room basically tells people to stay the hell out due to a number of reasons including many/most people's desire to browse anonymously. If somebody just want to stop by to see what people have been posting, the chat room feature is not pleasant whatsoever.
I think the answer is to perhaps have both. The old format for more in-depth analysis and a chat room (perhaps a separate site altogether to minimize the confusion to the eye?) where investors can discuss in real-time earnings and economic releases, passing thoughts, beer drinking, and of course TOF's wedding pictures:)
JMHO
hey Jesse - i don't see signs yet of this being a major market top...just a nice and much deserved pause. i think we bottom out at 1,230-1,240 and trade sideways for a few months before going higher. in the sideways trading, i think we could see a couple of 5% move opportunities between 1,240 and 1,300. i would be selling 1,300 and buying 1,240 until next earnings season.
ReplyDeleteby the way, AAPL is actually now trading at about 11 times earnings. they have almost $70 in cash and earnings are around $24/share. $24 x 11 = $264 + $70 = $334.
ReplyDeleteBTW- The LOOOOOOOONG forgotten Hindenburg Omen is still valid. I found this interesting:
ReplyDelete"The timing of a decline following a HO can begin the day after or as long as 4 months after the signal. In the current situation, the confirming signal may occur at a lower level. In fact, market crashes NEVER start from a top. They generally occur at least 20% lower than the top. In 1987, for example, the Dow Jones Industrial Average peaked at 2,700 and change. The crash began with the index a full 20% lower than its peak. The same can be said for the market crash that occurred during the Great Depression."
Team- In terms of AAPL, I was thinking 10x the run-rate of current eps- $20-$25. You'll think I'm crazy, but I totally, 100% disregard cash. That would be an interesting discussion and analysis at some point when I have more time.
ReplyDeleteIn my experience, when companies (especially tech) have a huge cash hoard, their performance going forward is dismal. I can recall a specific instance when OVTI was $35 in '06 w/ $9 in cash and an eps run rate of $2.00. Investors kept giving it a target of 20x current PE of $40 plus cash = $49.
In 8 months, it traded at $10. In 3 years, under $5.
In my experience (it would be great to do a study at some point) when these companies have a HUGE cash hoard, their ongoing multiples shrink a great deal. Don't ask me why because I'm not entirely sure.
Lastly, I read a GREAT article in the spring regarding how AAPL's stock is screwed going forward due to their huge cash position. I would LOVE to find that article again. I'll look at some point.
Found it!!
ReplyDeleteBasically, w/ AAPL's huge cash pile, its shares decline if they issue a dividend(s) or if they acquire.
http://blogs.wsj.com/source/2010/04/07/eating-into-apples-cash-pile/
Just sold my QQQQ puts. GOOG will probably knock the cover off the ball ah. Sentimentrader said that S+P tends to have a snapback rally 3 days after yesterday's decline prior to a continuation of the decline. On the sidelines now.... Maybe I should re-enter UNG for its run into the 20's...
ReplyDelete