Sunday, February 6, 2011
2/6/11 Saint Valentine's Day Massacre- DJIA/SPX 12500/1350
The Saint Valentine's Day Massacre is the name given to the decimation of several poorly-positioned hedge funds over six trading days in February, 2011.
Bulls disguised as bears were spotted during the week of February 7 selling cheap puts in the back rooms above Broad and Wall, floating tinder for a short-covering rally that drove the DJIA/SPX to 12500/1350 by market close on February 14.
Bernanke strides in stage right to sound of congas, maracas, and piano:
Please allow me to introduce myself
I'm a man of wealth and taste..
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Sooooo funny! I'm actually laughing.
ReplyDeleteJNJ - Looks like a decent price here.
ReplyDeleteCREE - Have all the rats finished deserting? Almost looks that way.
ReplyDeleteGrab a bowl of chili and a cold one, let's watch the game...
ReplyDeleteTOF- Take a look at a 180d chart of MPG. Damn similar to RAS. Let's hope RAS follows!
ReplyDeleteis kick off at 3:30?
ReplyDeleteboo barry made me hot dogs and mac and cheese for the game....yahoo, but look out stomach!
Go Pack
Yeah, 3:30. Rooting for Rodgers, of course.
ReplyDeleteI am mildly tuned in. Recalling that Mendenhall was a junior Fighting Illini before he split for the pro's two years ago. More power to him I guess. Same thing happening this year with Mikel Leshoure who may be greater.
ReplyDeleteseems like a low energy game, switching between that and golf....plus running stock screens in between.
ReplyDeleteI read a headline that GB was the only NFL team not owned by some big time, big $ individual. From my youth I certainly remember Bart Starr and his coach Vince Lombardi although in those days I was rooting for George Halas and da Bears.
ReplyDeleteDidn't some of you guys have any interest in KRY???..Looks like it's nightie night time.
ReplyDeleteChina stocks - That would be great if someone wound up in crossbars motel. Not sure what crowbar hotel is though, maybe the same old place, or the old same place...
ReplyDeleteMore like we'll have to sit in the waiting room or wait in the sitting room.
Close game.
ReplyDeleteSeoul back above 2100.
ReplyDelete2nd- I get kinda confused with your comments back and forth at CC. Are you flat right now?
ReplyDeleteThe trading account is completely in CSCO. The buy-and-hold is completely in OAKBX.
ReplyDelete2nd- Thanks.
ReplyDeleteI wasn't paying attention closely when the national anthem was song, but thought she booted it. I guess she did.
Funny opening post. I picture Ben dressed up as the 70s metro sexual Mick Jagger.Eyeliner and lipstick with the tight aerobic pants with Reebok high tops.
ReplyDeleteRB- You didn't do that? So it was only Mic and me?
ReplyDeleteCatch you cats tomorrow.
Interesting observation from Hussman tonight:
ReplyDelete"The pickup in the ISM Purchasing Managers Index tends to correlate with higher yield pressures, but interestingly, the correlation between the PMI and subsequent stock market returns is negative, with present readings historically correlated with flat or negative returns over the following 3-12 months."
I wonder why he writes that the negative correlation between PMI index and subsequent stock market returns is something "interesting" as in "unexpected." Higher bond yields always provide a headwind for the economy. In our present situation, that would especially be the case. At the beginning of today's commentary Hussman wrote:
"If the Fed indeed completes QE2 and pushes the monetary base to $2.4 trillion, we'd better see the 3-month Treasury yield at roughly 0.05%. Even a yield of 0.25% would be incompatible with that level of monetary base, and would place upward pressure on inflation. Worse, any exogenous pressure (loan demand, reduction of default concerns, etc) pressuring short-term yields to even 1% without a corresponding contraction in the monetary base would generate near term upward pressure on the GDP deflator of about 20%, and a longer-run inflationary pressure of close to 90% - that is, a near doubling in the level of U.S. prices. Frankly, I doubt that we'll observe that, but that's another way of saying that the Fed is likely to be forced into a very hard reversal of its present course unless economic conditions stay weak enough, and credit fears remain strong enough, to hold short-term interest rates at roughly zero."
So maybe Paulson knows that the Fed will not do the required reversal and hence we WILL get that double digit inflationary pressure in a couple of years when all the housing foreclosures work their way through the system and the credit fears subside.
Landry-
ReplyDeleteRandom Thoughts:
The Ps and the Quack made closed at multi-year highs. So, as trend
following moron, I'm not going to argue with that. Obviously, the
big blue arrow continues to point higher.
Ideally, I'd like to see some acceleration and for the Russell to
join in.
The sector action continues to look great. Many, like the market
itself, are hitting new multi-year highs. Some, such as the Semis
and Selected Telecom are doing it with vigor.
Futures are firm pre-market.
Best of luck with your trading today!
Cara 100 Update
ReplyDeleteSubmitted by Bull Hunter (1712 comments) on Mon, 02/07/2011 - 09:28 #79219
CSCO - Cisco upgraded to Positive from Neutral at Avian with a $25 price target citing positive Q2 channel checks and expectations that customer spending will increase in 2011
CSCO- Yeah, little bit of a shake out at the open. Nice man!
ReplyDeleteRAS baby! Wish I didn't sell 1/4 of my position on Friday. That's the beauty of this bull market. Sellers have remorse just one day later.
ReplyDeleteHeavy volume in RAS right now...
ReplyDeleteI decided to buy a few AKAM Fe 19 $46 calls. I think the stock runs up to earnings on Wed.
Bought some BAC Mar $12 calls at $2.54.
ReplyDeleteBought a few Mar $67.5 Puts on RIMM at $5.19 avg.
ReplyDeletePretty wild open for RAS.
ReplyDeleteCADC - Sold @4.71 most of the shares bought last session @ 4.40, kept the free shares.
ReplyDeleteCCME - Seems longs dissected the muddy waters report to bunk while a boots on the ground investigation has confirmed the install base.
Take a look at AAPL.
ReplyDeleteRAS - Easily broke out through the first barrier, waiting to see if it holds up... So far, so good.
ReplyDeleteCADC- Way to jump into the fire on that one CP!
ReplyDeleteLEXVF- Still trying to GTFO.
ReplyDeletePoor Natty...
ReplyDeleteTOF- You were joking about dreaming about RAS. I have dreams every night about Natty. Kid you not.
I'm surprised KRY isn't 0 right now.
ReplyDeleteMark - I hope you're not having bullish dreams about UNG because then you might just be delusional.
ReplyDeleteLook at the daily chart for RAS...what a perfect breakout, then come back and retest the breakout levels. That's what got me scared I missed the boat when I sold a couple of weeks ago.
ReplyDeleteTake a look at AAPL. No, that wasn't a re-post.
ReplyDeleteFollowed your guys comments and sold BBY at a small profit after the open. Here's to it going to $40.
ReplyDeleteCADC - Sold the free shares @ $4.80 to take those gains and allow the core position to ride.
ReplyDeleteTOF- Not UNG, our inability to take advantage of a natural resource we have. Hell, China is coming in and buying up natty acreage. That is not like Japan buying Pebble Beach years ago :).
ReplyDeleteWFC looking very strong.
ReplyDeleteSPX 1320- let's see if they sell off here, or break higher...
ReplyDeleteCOST has been in a strong uptrend and is not far from it's all-time high of $75.23. No position.
ReplyDeleteYRCW - Failed to impress, guess this dog will be keeping it's fleas & ticks.
ReplyDeleteRe: Cara 100 Update/ CSCO v Sysco (SYY) newSubmitted by 2nd_ave (5239 comments) on Mon, 02/07/2011 - 10:44 #79225 (in reply to #79219)
ReplyDeleteI've been around long enough to remember Cramer's 2001 post touting Sysco in place of Cisco- 'I'm recommending Sysco- no, the other Cisco!'
Yeah, well it's time to reverse that call. SYY down -6% today on higher food costs.
APKT- Talk about follow through after earnings.
ReplyDeleteGood luck guys!
ReplyDeleteShould be sunny/60s, Mark.
ReplyDeleteCADC - Stink bid @ $4.50 on the premise the morning's gap will close.
ReplyDeleteConversation on the Rally Bus-
ReplyDelete'Driver! 's yo name?'
'Sho'ty pant.'
I bet all the bearish indicators must be off the charts this morning.
ReplyDeleteRAS - Lookin' really good now.
ReplyDeleteCP > Yeah, RASy looks great. Remind me again why I sold ANY shares...
ReplyDeleteAm I crazy to like AKAM into earnings on Wed afternoon?
Added 3 more AKAM Feb $46 calls at $3.2. Avg is $3.28.
ReplyDeleteTOF - I don't know man, on a longer time horizon it's been a mistake to sell most anything if you managed to buy a halfway decent opportunity.
ReplyDeleteTime and time again, over and over. Why should we start thinking that's about to change?
Tight channel forming on RAS, about $0.80 wide here.
AKAM - Looks like an earnings report launch setup.
ReplyDeleteCP - I agree man...RAS is looking awesome. But I've learned in the past to begin lightening up when my portfolio rockets higher and people are very bullish. Having said that, there's no reason why RAS can't get to $5 this year.
ReplyDeleteAdded more BAC $12 March calls at $2.74 just now. This bank is going back up to it's old highs.
ReplyDeleteKey levels of resistance are peenys away. Qs above 58 and AAPl closing above 350 could cause a market pop
ReplyDeleteFinancials are clearly buys in my opinion. More so than any other group. The market is now up almost 100% from the lows. Financials have severely lagged everything else...they are underowned. Yet clearly the economy is improving, outside of robust jobs growth. However, the jobs market is still improving. I think after watching everything run, portfolio managers will look to the one place that hasn't run yet has significant leverage to a growing economy and that place is financials. If you can imagine a better economy with job growth and say 7% unemployment, then BAC, JPM, C are all very undervalued.
ReplyDelete2nd - Great call yesterday on the market. I am holding a large CSCO position and wanted to find out if you think that the run-up in the stock is due to the expectation of good earnings on Feb 9 or just a general realization that the stock is undervalued for current market conditions.
ReplyDelete"lightening up when people are bullish"
ReplyDeleteYep, lately I've been flipping the dips as opposed to selling from core positions near a perceived top.
I'm comfortable with this "strategy" as long as the trend remains up or flat and I don't acquire more balls than I can effectively juggle.
Igor- Re CSCO: There's a very good chance that CSCO not only beats expectations on Wednesday, but also (a) gives great guidance for the remainder of 2011 and/or (b) announces a dividend. Either could rocket the stock price higher.
ReplyDeleteEven if CSCO tanks on Wednesday, the drop should be minimal. I see absolutely no reason NOT to like this company looking ahead to 2012.
Naturally, I reserve the right to sell CSCO at any time, as trading is the name of the game.
ReplyDeleteCSCO - I shouldn't put my two cents in since I regretfully don't have a position, but a well-planned strategic acquisition could put them on cloud-9, no?
ReplyDeleteI kinda liken it to INTC in the sense of insider acquisitions and dividend hikes, although the latter has yet to materialize in CSCO's case.
CCME - What a show! Complete with free ringside seats!
ReplyDeleteGood lord. When TVIX started trading in Dec. it was $107. A little over 2 months later it's now $36.
ReplyDeleteCP: congratulations on your great trade with CADC! You owe me one -- if I hadn't bought my shares at $4.56 on Thursday, you wouldn't have gotten your CADC shares at $4.40 on Friday. :)
ReplyDeleteTOF -- congratulations on your RAS position! You know fully well that if you hadn't sold 1/4 on Friday, then it wouldn't have gone up today, right? :) Someone has to make a sacrifice for the rest of us. :)
ReplyDeleteI decided to place a sell stop limit order at $2.92/$2.90 for the 1000 shares of RAS I bought last week at $2.92, so as not to let a profit turn into a loss.
Similarly with CADC -- I am placing a sell stop limit order at $4.56/$4.52 for the 1000 shares I purchased last week at $4.56.
ReplyDeleteWeekly Max Frustration Almanac newSubmitted by 2nd_ave (5240 comments) on Mon, 02/07/2011 - 14:16 #79247
ReplyDelete(a) Monday. Not on board yet? Probably not buying today.
(b) Tuesday. Gap up to 12250. Enough to prompt a few sellers to clear the table. Flatlines the remainder of the day, leaving Wednesday's open in question.
(c) Wednesday. Minor dip at the open, giving Tuesday's sellers the chance to feel smug. Last hour buying sets new highs, taking the DJIA above 12300.
(d) Thursday. Serious gap up. Bears throw in the towel. J6P throws hands up and calls broker. Smart money cashes out short of 12500 and leaves for the weekend.
(e) Friday. Another minor dip at the open encourages sidelined buyers. Rotation into large caps keeps the DJIA near YTD highs.
(f) Next Monday. Weekend conference calls + early morning pacing leads to hedge funds covering all shorts. This allows the indexes to pull back, prior to making new highs in early spring
I just found an article about my two Chinese auto parts stocks, WATG and SORL: "THE 5 COMPANIES IN THE AUTO PARTS & EQUIPMENT INDUSTRY WITH THE LOWEST PROJECTED EARNINGS GROWTH (JCI, GNTX, WATG, SMP, SORL)"
ReplyDeleteDoesn't sound good, right? Let's read the details:
"Johnson Controls (NYSE:JCI) has the lowest projected earnings growth of 18.43%; Gentex (NASDAQ:GNTX) is next with projected earnings growth of 19.08%; and Wonder Auto Technology (NASDAQ:WATG) has the next lowest with projected earnings growth of 23.17%.
Standard Motor Products (NYSE:SMP) follows with projected earnings growth of 29.22% and SORL Auto Parts (NASDAQ:SORL) rounds out the group with projected earnings growth of 34.00%."
What a shame! Only 34% projected earnings growth for SORL! And SORL is down 30% in 3 months. What are those traders smoking??? I already sold 10 March $7.50 puts on SORL last week and just now picked up 500 shares at $7.05. Will keep scaling into SORL as it goes down -- I will be buying VALUE, just like Buffett...
David - Yes, I do owe you at least a thumbs-up on that one. It's nice knowing you were in and therefore a new chance to load up was just around the corner. Thx! ;)
ReplyDeleteBased on a closer look at the chart & in consideration of your new limit order, I just moved my buy order to $4.45 to provide you some additional breathing space. ;)
2nd - So it's up up and away huh? Well, the market based solely on current earnings isn't exactly expensive. My take on the broad market is weak at best...I like BAC/RAS/JPM/C and I like short RIMM. That's about the only take I have. I like AKAM into earnings but I'm about the worst short term trader out there.
ReplyDeleteAutoparts - David, I agree the future looks bright, but where's the assessment for MGA?
ReplyDeleteAs evidence of how bad of a short term trader I am...I bought ITM call options on 3 stocks today right at the open. Two of my positions are down 20% and 9% respectively. Honestly, what are the odds that you buy calls on a day as bullish as today, watch the market go up nicely after you buy them, only to watch your calls go down this much? That's talent, no? Remind me again why I bother with short term trading.
ReplyDeleteShort term trading - No shit!
ReplyDeleteABX - I'm sticking with my call for $1570 gold by July 4th but don't have the nuts to back it up!
My new least favorite stock is now BTU. It was previously REDF, then GOOG.
ReplyDeleteAKAM is looking tired...same with BTU...of course I bought calls in them today. However, in looking at how a lot of stocks that are looking tired trade as of late, this is probably the time to be buying more (at least stock, not options). Look at GOOG and PVH last week as the latest examples...
ReplyDeleteTOF- My list is quite long!!!
ReplyDeleteDavid- OK, let me know when SORL hits 6.50 and I'll join you on the pain train :)
The daily for RAS is just plain fugly. I see the MM's finger prints all over this one.
ReplyDeleteTook profits in BEXP/APA. I don't like this market right now.
ReplyDeleteSold RAS in the trading account @ 3.05.
ReplyDeleteMark - I think the daily on RAS looks excellent actually. It broke through resistance at 2.40ish, went to $3, then came back and retested resistance and bounced higher than old highs.
ReplyDeletemarket is weakening into close yet the market breadth is strong.
ReplyDeleteRAS - What's so unusual about it, all I see is yet another stock that doesn't confirm a break out when it looks like it has, nor does it break down when it should?
ReplyDeleteStandard affair, leaving a litany of pain, agony, remorse and anguish in it's wake. None the less, somehow it continues moving higher, eluding both longs and shorts accustomed to playing by the "rules"?
Sold RAS in the IRA @ 3.04.
ReplyDeleteTOF- I'm guessing your OK in RAS here. The 70K shares I sold didn't budge the ask.
Mark > I sold 15k on Friday and the bid didn't budge as well. I think it's going higher and wish I held all of my shares.
ReplyDeleteLooks like I got out of BEXP just in time :)
ReplyDeletePCAR off @ 51.00
ReplyDeleteTaking a position in ALGT, the company has good fundamentals and have been out of favor lately. Has support around $40, purchased at 40.30 today. Smart money going in....
ReplyDeleteThanks Igor. Interesting!!
ReplyDeleteImbalances favor the financials. Looks like I made a mistake in RAS.
ReplyDeleteBlackrock has 3M shares of MPG.
ReplyDeleteCHGI has built a nice little shelf after gapping up to $2 from $1.
ReplyDelete$62.90 appears to be near term support for BTU. I still think this company trades in the triple digits by the end of the year.
ReplyDeleteMark - check out GKK. I have a feeling RAS is gonna make a move like that...as in up $1 in 2 days.
ReplyDeleteMid day, I placed a buy to cover order at $0.4 for 2 March $33 GDXJ puts I sold at $2.00, and I just noticed that the order was executed. I figured that I have already extracted most of the potential dollar profit from these puts, and I would rather stay ready to sell them again if GDXJ makes a lower high on the daily chart and heads down soon...
ReplyDeleteRAS - I sure wouldn't have sold today if I had a basis around $3.50 or less.
ReplyDeleteSince none of my orders aimed at increasing my short exposure (VXX, FCX, TWM) got triggered today, I figured I will replace them for tomorrow.
ReplyDeleteI just tried to place the sell short stop order on FCX at OptionsHouse but was told that there were no shares available for shorting. Last time this happened, FCX got sold pretty hard over the next couple of days. Let's see what happens this time... Just in case, I placed such an order in my Scottrade account for 400 shares at $55/$54.90.
Also, the spread between next month and the front month VIX futures got compressed very tightly today, and coupling this with a very low VIX, I think venturing back into VXX is warranted once again. As I discovered while playing VXX, that it has a tendency of gapping down (because of a strong contango) even if the market opens slightly down. So the best way to play VXX, it currently seems to me, is to keep placing buy stop orders above the closing price. Hence, I am placing a buy stop limit order at $29/$29.20 for 500 shares and at $29.50/$29.70 for 1000 shares.
Finally, I am placing a buy stop limit for 1000 shares of TWM at $12/$12.05.
I meant $2.50, of course.
ReplyDeleteDavid - Thanks, you're the best pal ever! ;) (kidding, of course!)
ReplyDeleteGreetings from Kuala Lumpur. Great call 2nd! 1320 by the SuperBowl! I don't have much time, but I don't see any immediate setups. OMG- Just checked out UNG! Holy moly.
ReplyDeleteI was stopped out of SDS at the open for a .5-.7% loss as I took on a little margin, so all cash now and probably won't be buying anything for a few days as I'll be on the road.
GKK- I checked it out and it's kind of funny. Insiders were busy selling the heck out of it in Dec/Jan at low prices. They must be kicking themselves.
ReplyDelete"David - Thanks, you're the best pal ever! ;)"
ReplyDeleteSpeaking about PAL -- I remember shark buying PAL big time when it was around $4. PAL is trading at $7.25 now... I hope shark didn't read any blogs since the time he left us and was just looking at the charts, which probably means that he is still in PAL!
PMI -
ReplyDeleteFebruary 4th, 2011 "Equities research analysts at Goldman Sachs (NYSE: GS) raised their earnings per share estimates on shares of PMI Group Inc (NYSE: PMI) in a research note to investors on Thursday. The analysts currently have a “buy” rating and a $72.00 price target on the stock."
http://www.americanbankingnews.com/2011/02/04/pmi-group-inc-pmi-earnings-estimates-increased-by-goldman-sachs-gs-analysts/
This is yet another reason why the big banks like BAC and to a lesser extent JPM are great buys:
ReplyDeletehttp://blogs.barrons.com/stockstowatchtoday/2011/02/07/big-banks-could-profit-as-government-steps-back-from-mortgage-biz/
People are waiting for the shoe to drop with Wikileaks for BAC...this is just keeping the stock down temporarily and will make the rally even more violent.
BAC shares have gone up 2.5 times what they were back in 2006. However, assets and equity has risen by about 2.4 times. Who's to say this stock won't see the 30's-40's next year?
ReplyDeleteHa, I thought at first they were anticipating a reverse split until I saw this:
ReplyDelete"Philip Morris (NYSE: PM) PMI estimates were raised through 2012, Goldman Sachs said. Buy rating and new $72 price target.
TOF - Yes, that's kinda along the same lines of why I'm trying to keep tabs on PMI.
ReplyDeleteGOLD - Randgold reports a great quarter, not so much of a reaction.
ReplyDeleteclarification: BAC shs outstanding have gone up by 2.5 times while assets/equity has risen by 2.4 times. So it's basically a wash. If earnings return to 2004 levels then what's to say shares won't as well? $40 in 2012? I think it's definitely possible.
ReplyDeleteToo funny, shouldn't these bozos understand the importance of home equity ownership by now?
ReplyDelete"The government may also demand buyers put 20% down for qualified residential mortgages."
Copper reached another high today but came back down to Earth, base metals and grains were weak along with FCX, steelers gained a bit though. Gold still lagging the pack.
ReplyDeleteCADC - Oh crap, I thought I had more time:
ReplyDelete"China ACM to Report Fiscal 2011 Q2 Financial Results Friday, February 11"
Port sent me a CS energy report. I'm pleased to see both BEXP and APA looked good in all the matrix strips they presented. Hope to get back in soon on some further weakness. I suspect APA might not let me.
ReplyDeleteCP- Get the hell out!!! :)
ReplyDeleteMaybe I should just stop trading. The last 3 times I switched back to my trading screen my "Day's change" has gotten bigger! :)
ReplyDelete