Friday, January 28, 2011

1/28/11 WTF, Man

We finally got the pullback. And I bought the dip- see post title. What if I'm wrong? See post title.

Re: market thoughts/ Minor Pullback or Major Sell-off? newSubmitted by 2nd_ave (5186 comments) on Fri, 01/28/2011 - 19:04 #78562 (in reply to #78557)
David- Damned if I know.

I remain bullish. If the sell-off continues, I'll continue to scale into longs. If it moves up from here, I'll add to the positions I opened today (40% of allocation in CSCO, 20% of allocation in BAC).

[edit] Actually, to be honest, if we rally let's say 1% on Monday, I'll probably sell the positions I opened today ;)

I've been following/trading a short list of (mainly) DJIA stocks (AA/BAC/CSCO/GE/INTC/JPM/MSFT/V/WFC/XOM), and opening/closing on weakness/strength during the rally has more or less worked.

There wasn't enough of a pullback to reopen either FSELX/OAKBX in the buy-and-hold, but I probably will if the indexes sell off another 2-3%.

54 comments:

  1. Re: VXX money pump update newSubmitted by 2nd_ave (5187 comments) on Fri, 01/28/2011 - 19:21 #78564 (in reply to #78559)
    David- Let me congratulate you, however, on today's move in VXX. Every vixen has her day.

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  2. Wouldn't it be amazing if we discovered that the ECB were contemplating an interest rate hike?

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  3. 2nd - I would highly recommend taking a look at some coal stocks in your longer term portfolio. Check out this link to Jeffrey Saut's bullishness on Coal:

    http://www.investmentnews.com/article/20100921/FREE/100929994

    Some good ones include BTU, ACI, and ANR. Saut just recommended RNO as well, which should start to pay a really nice dividend soon.

    The issue boils down to a few very positive things for coal:
    (1) it's a cheap energy source
    (2) it's an essential component in electricity and steel, both of which are going to be in high high demand for a long time with the world's middle class continuing to grow
    (3) it's a cheap alternative to oil, which will spike higher and higher over time

    Coal Supercyle
    From their most recent earnings release, BTU: "Peabody chairman and CEO, Gregory Boyce, dubbed the “long-term supercycle for coal,” which he considered to be in the early stages and “strengthening every day.” "

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  4. http://www.dynamicwealthreport.com/Archives/Company-Specific/riding-the-coal-supercycle-for-all-its-worth.htm

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  5. tof- I could take a look at coal, but at this stage in my life, I just can't get into the kind of research the rest of you do. I have maybe 8-12 more years before I hope to switch into bonds for income, and for the most part I'm 'playing it safe.'

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  6. Things are changing for me. In fact, the last two chances I had to hit the tables, I opted to stay home. That says as much as anything about my state of mind these days.

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  7. 2nd - I think for the next 8-12 years you could do exceptionally well investing in coal stocks. Most of them have pulled back some 10% or so which should begin to provide a great entry point. ANR actually has some exposure to nat gas as well as coal so that one could have a really good future if nat gas ever picks up. KOL is the etf and holds ANR, WLT, and BTU amongst others.

    i've been looking for some great long term trends to invest in and this, i'm convinced, is one of them. i think you can begin with starter positions here and add the rest at 10% lower if they get there. i doubt they will with geopolitical issues and an ever expanding consumption of electricity / steel.

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  8. http://www.peabodyenergy.com/pdfs/World%20Energy%20Congress-091410.pdf

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  9. 2nd_ave -- another obviously good investment for the next 10 years is agriculture stocks. I will definitely reload MON if it drops below $70 again.

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  10. Just back from a pleasant trip to Hood River, the Columbia Gorge, and Mt. Hood. Its great to get away from the computer every once in awhile to actually live a little. God knows, the computer has been known to literally suck me in for days during extremes in the market.

    In regards to the discussion regarding many investors missing the boat and not being fully invested over the past 2 years, it seems that the numbers say that the public is "all in" and then some. I would have to dig through Sentimentrader for specific #'s, but I do remember that public bullishness was at or near an all time high, mutual fund assets were basically "all in", margin debt was about 2 standard deviations from the norm, and investor speculation in calls (usually the last stage after individual stocks and triple etf's) was literally off the charts.

    This all suggests to me that not only was everybody IN the market, but they were borrowing heavily from their brokers and investing it recklessly (buying calls at the top).

    Just my .02

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  11. It's saddening to see FAZ gain 2x ABX.

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  12. 10 years? Well, I think CSCO/BAC double in 2 years.

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  13. Jesse - Margin debt is at its highest level since 2008 but it's not really that close to the 2007 levels. I don't think we're anywhere close to being at a spot where everyone is bullish. You can see it in all of the skepticism surrounding the markets in blogs. Just about every blog I read states is skeptical of the markets and the economy. I think there is a decent chance we are in a new bull market and this is just a hiccup. It should level out in a couple of days then trade sideways for a month or two and then go higher.

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  14. Where are you guys finding reliable margin data? I'd like to see it through NYSE/NASDAQ etc.

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  15. jesse- IMO, the Columbia River Gorge is hands down the most memorable drive I can recall. March or April 1973. One day trip from Othello, WA to Reno NV. Partly due to being 'on the road' at 18 and the heightened emotional responses to just about everything during that period of my life.

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  16. While on the road today, I was thinking about all of the individual investors who have been buying calls and calls and more calls...and then some more (according to markets stats) over the past couple of months. As long as the strategy worked, they would just re-enter similar positions on a rolling basis after expiration.

    Group think takes over and investors assume that the government (POMO) will take the market higher indefinitely. They get complacent, step away for 1 day to spend some of their fortune on a manicure, return home and their calls are literally wiped out in a single session.

    One of the things I've noticed over the past 4-6 weeks and forget to comment on was how many times I saw the search term "day trading" pop up on Yahoo's top 10 search terms. Hmmm....

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  17. Well, today's was one of the largest red candles on the yearly chart... Not in a mood for buying at all after that one.

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  18. ""day trading" pop up on Yahoo's top 10 search terms."

    Didn't know that, maybe I should start using YHOO search...

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  19. We did have an unusual outside week today.

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  20. Lost 1.11% today. Thank you BEXP!

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  21. Actually, thanks to TRE also...and cash... :)

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  22. And my parents, the academy, and all my fans.

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  23. The day I give an acceptance speech (apart from the fact I'm unlikely to run into that problem), I'm going to make like Brando and send some young lady with a chip on her shoulder to plead for (working) latrines in every household on the planet by 2020.

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  24. This market has a long way to go down before it becomes really attractive to me, a person who would like to enter at a value price historically. Meantime in the month I have made 6 profitable round trip trades with a duration of a few days in most cases. Mean time I also went long 3 stocks which I am holding underwater. The losers are more $ than the winners.

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  25. I was just checking in, not much as changed. From my small world perspective, I see many very bright people hanging out here but,, they have "extremely" different perspectives of reality

    = unstable times

    hope all is well at home. make it work!

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  26. illini- I think investors will one day refer to 2010 prices of CSCO and BAC as having been at 'value' levels. It all depends on where you think prices are headed.

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  27. vb- Reality (not unlike beauty) is very much in the eye of the beholder.

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  28. 2nd,

    Always Liked your perspective

    stay in touch

    vb

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  29. Well, let's see... Today my account only shriveled by 2.2%, too bad I wasn't fast enough to capture gains on ABX before it sank an entire $1.

    Why can't I locate something anything worthy of long term investment?

    I stink at trading gold but it seems like such a great play considering there aren't any reasonable alternatives, should stay a mile away from it.

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  30. Well, at least ABX beat MUB and TLT. The way things are going, maybe I should just load up on PM's and turn the computer off for 10 years.

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  31. Did anyone note Obama's disdain over people having their life savings in a 401K at the mercy of Wall Street whims? That comment seemed awfully one sided considering WS and the global economy only reacts to capitalize on decisions emanating from Washington. Unfortunately the results are only poor as a direct result of the DC decision making process.

    In retrospect, for me that comment was the real nail in the coffin this week.

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  32. 2nd.... I fail to appreciate your attraction to banks... BAC, WFC. Sure, TB to F but zombies never the less. Goodnight, will catch up tomorrow.

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  33. got the tech bug, another solid beat by INFA (why oh why did I sell while my friends who I turned on to the stock held on), going to spend another tule fog filled weekend trolling for beaten down techs

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  34. "Report: Alpha Natural near deal for Massey Energy"

    Should ANR lose some air, this might provide an entry op?

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  35. Hmm, what's the play here, batteries or flywheels?

    "CHEYENNE, Wyo. (AP) -- Petroleum giant Chevron Corp. said Friday it plans to get out of the coal industry by the end of the year.

    The decision came after the company determined that new coal technologies were developing too slowly to make staying in the industry a good strategy"

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  36. CP- You know MOG was a Chevron guy for a while, and as I've said here before, he thinks this summer there will be a big shift away from coal fired electrical generation to gas fired.

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  37. FRO - Nice 7% pop out of the weeds there, evidence of concern over Egypt I presume.

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  38. "big shift away from coal fired electrical generation to gas fired."

    Sounds as good as any idea I have at the moment, sorry for my ignorance but which ones should I look at again?

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  39. 1/28/2011 S&P MarketScope, Views and News
    03:31 pm ET ... RACKSPACE HOSTING, INC (RAX 34.14)
    UP 1.93, BENCHMARK UPGRADES RACKSPACE
    HOSTING (RAX) TO BUY FROM HOLD... Analyst Clayton
    Moran tells salesforce he upgrades RAX as its managed
    hosting and cloud product set appears increasingly strategic
    to large, deep-pocketed telecom and IT companies. Notes
    that today's news of VERIZON'S $1.4B tender offer for
    TERREMARK increases valuation parameters for data center
    stocks, especially ones with vibrant cloud strategies such as
    RAX, SVVS. Believes that RAX is an attractive takeover
    candidate; warrants a premium to fellow hosting peers due to
    superior growth and strategic positioning. Raises $29 price
    target to $40

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  40. CP- I've got to go to work early today. I'll put a list together when I get back.

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  41. Ok, thanks. Taking a quick lookie, seems there's been quite a run already.

    Now I'm thinking about a huge pullback entry op, RAS might be one, or I could go with an add to CADC, which seems yet undiscovered or a bit of China passing is going on.

    I suspect the China passing is a mistake just as a new internal economic focus begins to gain momentum. I really like infrastructure plays b/c they're good for an economy and if done properly always seem to result in a huge boost to standard of living along with everything else.

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  42. Verizon is making a big push into the cloud: looking to provide apps from co's such as ORCL and SAP. AMZN is another that's quickly moving to deploy clouds (private/public)

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  43. Now I'm only up about 60% from where I started 3 years ago, even though I extracted my seed capital out of GMO. Need to isolate and time my next great play that hopefully is presenting itself soon. CADC already in progress but no devastating pullback opportunities have materialized.

    Gas companies - Maybe these charts are indicative of rising gas prices going forward and natty the commodity is the way to go at this moment in time?

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  44. UNG - This thing seems like such a decay dog, unworthy of a long time horizon.

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  45. jb- Word is CSCO benefits from the push into cloud computing- Would you agree?

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  46. Japan Downgrade - Wasn't Japan just rated a buy from one of the large trading firms?

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  47. http://blogs.marketwatch.com/cody/2011/01/28/what-if-things-go-right-in-this-country-for-the-next-year-or-two/?mod=yahoo_hs

    Cody Willard's take:

    ' There’s an old saying on Wall Street that you “can’t fight the Fed,” but it’s dead wrong. For the last 15 years, you always want to buy when the Fed is getting done lowering rates and sticking around til the Fed starts to lower rates.

    In about 1994, the Fed stopped lowering rates and never went that low again for many years, as the overall trend in rates was higher. Meanwhile, the stock market went into a huge bubble by the year 2000. By 2001, the Fed started dropping rates and the markets literally crashed over the next couple years. By 2003, the Fed was done lowering rates and we once again went into an environment of rising interest rates — and the stock market doubled over the next three years.

    By 2010, we’re done lowering rates and easing. We’ll likely see the overall trend in interest rates rise over the next few years. And I do think the most likely scenario is, indeed, for a booming or even a bubble in the stock market again.'

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  48. YCS - This one seems to be basing, surely Yen can't be more desirable following the downgrade, and Japan needs a weaker currency anyway? Maybe Japanese citizens finally capitulate on their Japan T's and move to gold?

    So why isn't gold absolutely flying?

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  49. Speaking of the cloud-

    http://www.marketwatch.com/story/amazon-and-emc-have-their-heads-in-the-clouds-2011-01-28?siteid=yhoof

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  50. He doesn't actually spell it out in B&W, he just points out well established mechanisms with no time horizon (a familiar ploy) may I assume Willard is currently bullish on stocks?

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  51. CSCO - Yea, I'd like to know the same thing, I think JB has already told us 50% of new business is in the vapor-saturated atmosphere.

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  52. Willard - Okay, so I read the article and now I know he does believe in rising prices.

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  53. Cody has been bullish since last July.

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  54. Well I have to agree with him in the sense that when interest rates are low it's cheap to borrow money with which to speculate. Prices tend to move upwards in such an environment and the inverse is true as well (obviously).

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