Sunday, October 26, 2014

10/26/14 Preservation Hall/ Evaporation Doll

Preservation Hall was founded in 1961 to 'preserve, protect and perpetuate [New Orleans jazz].'  A fitting mission statement for one's retirement account as well.

Last week's 5% rally in the SPX (IMO largely driven by trapped shorts) presented/still presents an excellent opportunity to pare back on risk.

For those who employ a tactical approach to markets, a rough map to study over Sunday brunch might look something like this:

(a) A retrace in the SPX next week to the 1900 range (which would present a short-term buying opp).
(b) A rally into mid-term elections (which would present a short-term selling opp).
(c) A more sustained decline into December, which may even approach Desolation Row (certainly a buying opp).
(d) A rally into January.

Of course, the market (ie, the collective emotions of tens of millions of homo sapiens) will do what it wants regardless of any map.  On the other hand, few participants have shown much success defying human nature.

On a side note:  Brazilian equities rallied on Friday, blocking any low-risk entries ahead of today's election.  The next opportunity might be Monday's open, fading investors' responses to Sunday's outcome.

Monday Postscript: If you've been waiting for an entry into Brazil, this is it. A Dilma Rousseff victory has the Ibovespa selling off -5.8%, giving back its entire summer rally. EWZ (Brazil) -8%, at one point breaching last February's low of 38, PBR (Petrobras) -16% to 10.90.

214 comments:

  1. Both of my banks, DB and ING, passed the stress test.

    DB's results were very solid, so likely the perceived risk goes down and we might get a bounce tomorrow.

    ING has said they now intend to pay the last $1 billion back to the dutch government so they can reinstate their dividend in 2015.

    The full list of banks with ratings is at https://www.ecb.europa.eu/pub/pdf/other/aggregatereportonthecomprehensiveassessment201410.en.pdf?d2f05d43d177c25c57e065ebdbf80fe7

    An interesting investing idea would be to match a bank's ratings with their valuations and if you could find a cheap bank, with a good rating, it would probably be worth looking into for a possible buy. Not sure if I will have time to do this though.

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    1. Too bad I sold BOBE in the low 40's for an entry in BXE... That position is down nearly 50% now.

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  2. Looks like CME futures start pre-open trading (whatever that is) at 4:00 EST and electronic trading at 5:00, so will be interesting to see how they react to this news.

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  3. http://www.bloombergview.com/articles/2014-10-24/putin-says-dont-mess-with-mother-russia

    Just reading this Russian stuff and it probably does blow over, but it also could be a black swan type even that hits the market hard if it escalates.

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  4. EWZ
    Bovespa on watch as Rousseff squeaks by
    Incumbent Dilma Rousseff is re-elected to a second term as Brazil's president, winning about 51% of the votes, according to the official count. It could be bad news for Brazilian stocks, or just maybe her victory was already priced in.The Bovespa had been about 2014's strongest major global market through roughly August as polls showed support evaporating for Rousseff, but the index has slumped more than 15% over the past two months as a victory by her more conservative challenger Aecio Neves looked less and less likely.

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  5. Added much bigger piece of ewz pre market at 37.1 to 37.2. Avg is 38.3. Looking for opening gap reversal to maybe 39 or so

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    1. Nice bottom tick! I averaged down as well, but around 38.20. Missed the lows! Now mostly out (loss).

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  6. Sold twtr pre mkt at 50.6. I would love to play the earnings but I'm not up for it right now

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  7. 2nd - Great day to be short! $WTIC is crashing.

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    1. Crude under 80! The markets always zag when traders zig.

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  8. Negative reaction to Dilma's win is so intense I changed the post title.

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  9. I sold my EWZ pre market at $38.6 and locked in a gain. Was staring at the abyss this morning.

    I sold EDC at a loss at $24.3. Surprisingly up on the day. Still holding PNRA, TUP, and HCLP but will probably look to get out of those. Not sure yet.

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    1. I picked up some LAKE again at $13.25 pre market as well. This is strictly a play on ebola fears running again at some point and reversing the crazy down move it has had. They did a secondary on Friday that crushed the stock but it was up to $19 pre market on Friday. I think it goes there again.

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    2. Bravo! Nothing compares to maneuvering the port from a nosedive into a gain.

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    3. 2nd - that was a tough thing to do.

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    4. No ----. I did that once trading the medical marijuana stocks, and may as well have been piloting a plane spiraling towards the water.

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    5. You have no more than a few seconds to decide if/when you'll double down b/c the the second chance buying opp will be fleeting. Then it's bare knuckles flying until spot an opening to bail.

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  10. Normally I'd be buying into Emerging Markets, but something feels 'off' this morning.

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    1. I agree. I was loading up on TZA near the open based on "feeling". Not the greatest thing to do with the market gapping down but in the context of the recent move its still a long ways down to get to the double bottom

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  11. GS - Says Crude is going to $75
    TREX - Low oil prices make for lower materials expense, huh?

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  12. I may call it a day early today. Was up at 3am staring at a 4% hit to the port. I'm now up 1% on the back of quadrupling down on EWZ and buying TZA. That's enough action for one day. Will probably sell TZA here soon.

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    1. Hopped out of TZA here. Went from -4% to +1.5% in a span of 4 hours which is absurd given I had a substantial amount of cash on hand coming into today. Going for a run. Have a good one fellas.

      Have 10% in LAKE and the rest in cash for the time being. I think odds are starting to favor a substantial move lower fairly soon.

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    2. The market needs buyers to step in soon is my gut feeling. Otherwise the backdrop of the Fed meeting on Wed is going to loom large. I just don't know how much weight European QE has in all of this, at least in the short term. Think about the way the US markets traded while Europe was sluggish from 2012 to now. It didn't give a shit. The reverse is probably true when it comes to QE

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    3. I dunno man, wish I was long HD from $75!

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  13. BXE - No bounce whatsoever. The action suggests this stock remains grossly overpriced.

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  14. Closing RYTPX at the 1030 window for an expected +0.8% gain. It's not b/c I expect markets to bounce from here, more of a 'sell when I can, not when I have to' kind of decision.

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  15. Headlining Marketwatch this morning is the plunge in crude oil prices. In addition, analysts pile on with lowered forecasts. Perfect environment for a short-term play on energy stocks:

    NEW YORK (MarketWatch) -- Energy stocks cratered in early trade Monday and accounted for the top 20 decliners on the S&P 500, weighed down by a bearish note on oil from Goldman Sachs and falling crude prices. Goldman said it expects the shale boom to weigh on oil prices into 2015 and lowered its first-quarter forecast for WTI crude to $75 a barrel from $90. Newfield Exploration NFX, -7.31% was the biggest decliner on the S&P, tumbling 8% in the first 20 minutes of trade. Denbury Resources DNR, -5.84% shed 6.1% of its value, Nabors Industries NBR, -6.30% lost 6% and Halliburton HAL, -5.90% was down 5.6%. The S&P 500 SPX, -0.23% was down 0.6%.

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    1. GS - Always ahead of the curve! :(

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    2. I brought this concern up months ago, I guess nobody believed it might happen? Similar concern as China flooding the market with ships in order to provide employment wouldn't continue driving BDI down and squeeze margins.

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  16. Hopped back into TZA at $16. Short leash as always on that thing

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  17. UHS as well, man that thing did well.compared to the likes of AGO. Makes sense, considering we all know who concocted the healthcare bill.

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    1. Speaking of the healthcare bill, my understanding is it's going to become progressivly more expensive to opt out. Where this year it might cost you $99, next year will be 4x that amount?

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  18. My asset balance hasn't been this low in over 15 years, lol, not doing very well.

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    1. Sorry to hear that man. It's been a tough year for a lot of people. I'm contemplating going to cash completely and just taking a long break. The odds of me riding out a potential very volatile period here should it come are probably pretty low.

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  19. Baltic dry index is like 1285 and BALT is trading @ $3.60, has something gone wrong?

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  20. FLR - Not looking too bad. But whatever is going on to cause prices to crash sporadically in addition to the big hit I've taken the past few months has me too apprehensive.

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  21. JONE only off 10% today, what a bargain.

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  22. Gotta love Twitter, this guy was pumping while dumping BXE, dumped his stuff and tweeted about it but didn't have to bother updating his own web page.

    Week 173: Done for now
    by Lsigurd on October 24, 2014

    Two weeks ago I made the following tweets describing my latest and last investment decision:

    http://reminiscencesofastockblogger.com/2014/10/24/week-173-done-for-now/

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    1. In all fairness to him I don't think he's expecting anyone to follow him in without doing their own research and I think he also has a full time job so probably not as easy to update constantly, especially in the past 2 weeks where the market has been ridiculously volatile.

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    2. Right, no doubt he's preoccupied. More than likely trading is his hobby.

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  23. "Baltic dry index is like 1285 and BALT is trading @ $3.60, has something gone wrong?"

    Wow. That's crazy. I stopped following it because my bias was that coal was the death of this group. If I wasn't so uninterested in stocks right now I'd be buying.

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    Replies
    1. Yeah, looks like huge disconnect on the surface, huh?

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  24. MXC - This company has 3 employees and is based in Midland, Tx. That's right there in the Permian.

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  25. Prepared for a “code brown” event?

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  26. Going long-short end of day:

    (a) Long via RYWVX (Rydex 2x Emerging Markets), which is overweight Latin America.
    (b) Short via RYVNX (Rydex 2x Inverse Nasdaq 100).

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  27. Bidding $38 TWTR. Not a chance in hell but why not try?

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    1. I like it, good idea with low risk. How about BABA?

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    2. BABA seems cheap to me. But how much bigger can we expect it to get longer term?

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  28. DG - Wow, this one closed the gap up and I wasn't watching it b/c sure didn't expect that.

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  29. New Jeep Wrangler might be made using aluminum unibody construction. Currently Fiat Chrysler is negotiating relocation of the current plant located in Toledo, it's not capable of converting to aluminum and a new factory must be constructed?

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  30. APPL - WMT disconnects? iPAY must compete with bitcoins or what?

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  31. I ended up starting a 10% position in TWTR today after the close at $43.3-43.4. I honestly have no idea where it trades to but I really like this business and think it has the potential to go up 5X over the next few years if they can figure out a way to monetize the news search function on their site. I view it as a real time news source that will replace all news sources, including GOOGL. The money will be made in developing an ad words type function on their search results page just like what GOOGL has. I think GOOGL would be wise to buy them out. They will do about $1.4 Billion in revenues this year,

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  32. I picked up some F today right before the close at $13.82. I know this is a stretch but one thought I've had is if oil stays down and goes lower then a pickup truck actually becomes more attractive to a prospective buyer. That's the big money maker for F. Plus, I like their cars.

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  33. Man there are a lot of companies that you can choose from that have higher dividend yields than the 10 year treasury. In normal circumstances that would mean stocks are cheap. Who knows for sure nowadays?

    GM
    F
    MRK
    LLY
    PFE
    PG
    JNJ
    AFL
    KO
    MAT
    KEY
    CPB
    JPM

    so many more...

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  34. AHP - This sucker is really on the move.

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    Replies
    1. They announced they will sell a hotel in Philadelphia and buy back shares.

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  35. Europe bouncing this morning. Makes sense as you probably had some short term traders playing the ECB bank ruling and they closed out yesterday, but now the reality that the bank situation in Europe actually is pretty good is being priced into the market and I wouldn't be surprised if this ran for quite a while with a good leg higher.

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    1. I really like ford as a play on Europe and low oil. I added a bunch today

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    2. DB - This one's on the move. Looking good.

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  36. TWTR - Picked some up @ $42.23, not a whole lot.

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    1. I picked up some too around $42.

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    2. I don't see what search function your talking about. I see the one to search TWTR?

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    3. Mark, you have to search for it! :)

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    4. Oh wait, please don't try that until I've sold my position just in case using twitter search to search twitter causes it to crash.

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  37. One thing for sure, when I'm feeling skeptical it's time to but. Thing is, so many ema's on charts have rolled over. The aspect that makes me think we're most likely to make new highs is Europe is in the Doldrums and central banks are going to nip that in the bud.

    Not sure where we go from there, seems like down is the only remaining direction as central banks cannot continue pumping forever?

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  38. I just remembered, Debby Downer takes the podium tomorrow so today's action might be a bull trap?

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  39. Closing the long-short strategy at the 1030 window.

    (a) RYVNX (Rydex 2x Inverse QQQ) short: With QQQ currently +0.82%, likely to take a -1.64% hit on the position.
    (b) RYWVX (Rydex 2x Emerging Markets) long: Should more than eclipse losses on the short side. EEM currently +1.4%-> will see at least a +2.8% gain. In addition, with Latin American outperforming this morning- (EWZ [Brazil] +3.66%, PBR [Petrobras] +3.57%), hoping to see up to +4%.

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  40. TWTR - Oh man, I'm not prepared for it to lift yet.... Wanted to add at lower prices and watch it sink from there dragging me with it into the abyss..

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  41. JONE - I'd of bought yesterday's close if my reflexes weren't so bruised. The surgery from silver losses may have scarred me for life.

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  42. Anybody know who's making the turbos on the new cars?

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  43. "I don't see what search function your talking about. I see the one to search TWTR?"

    Mark - There's now a search function at the top of twitter that allows you to search for any keyword that people tweet about. It's a game changer. For example, type in ebola and you will see thousands of tweets every few minutes about it from people and news outlets. It's going to be a cash cow if they can monetize it properly

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    1. https://twitter.com/search?src=typd&q=ebola

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  44. CP,

    the central banks stop buying because the broad economy is improving.

    http://www.woodworkingnetwork.com/wood-market-trends/woodworking-industry-news/custom-woodworking-news/Architecture-Billings-Index-Shows-Robust-Conditions-Ahead-280456802.html#sthash.9x1hp9K3.lOuEKWxc.dpbs

    The builder growth is a good sign for both the economy and the jobs market.

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    1. Get long whittlers.

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    2. CNC whittlers equipment! Down with plastic ducks and thumbs up to the real McDecoy!

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    3. Woodworkers are more trustworthy than wall street analysts!

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  45. Looks like Blackberry is ready to roll:

    http://www.theglobeandmail.com/report-on-business/kim-kardashian-proclaims-love-for-blackberry-ill-never-get-rid-of-it/article21348232/

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    1. I can see the attraction for Blackberry, don't they also make the Arduino? Arduino isn't a money maker I think but the perfect platform for techies who want to get their hands dirty. There's another 3D device out there for imbedded internet-enabled appliances, not sure who's chips are being implemented.

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    2. I heard this cool new phone called the iphone 6 has been selling well...

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    3. Only if you want you want your naked selfies stolen. Oh wait, maybe that's why Kim says she uses the iphone for pictures...

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  46. Birinyi back on the bull side:

    http://www.bloomberg.com/news/2014-10-27/birinyi-sees-s-p-500-at-record-with-bull-case-intact.html

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    1. Good to see he didn't get full shaken out. Wild market this year but it now looks like it was just a big consolidation period after a really strong 2013.

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  47. Dang, shoulda gone all in tweeter...

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    1. Still time to get on the gravy train

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    2. Yep, was counting on getting my wanger cut off though....

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  48. Wouldn't you know it, the baltic dry index is up almost 100% since summer lows. We all got shaken out and are convinced coal is to blame. That means shippers have as good of a shot as any to take the northbound train now and never look back.

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    Replies
    1. Still can buy a lot lower now than they were back then.

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  49. I really feel like the bottom is in for F and GM. Great washout then a slightly higher high. Valuations are excellent especially when you consider one of their major markets is in a recession. You have the catalyst of ECB easing to assist in someway with the Euro economy. I waited a long time to start buying these and hopefully down 25% is it.

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    1. Plus, can't argue with 3.5% dividends.

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    2. I'm down 6% on my FCAU purchase and 7% on GM, a bit less with dividends and still like them both.

      I didn't buy F because it was more expensive, but I see it has come down now. It's probably the best run business of the 3.

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    3. Where was that logic when some oiler dividends were recently 6% ? :)

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  50. TWTR - BACML following up the earnings release now whistling a different tune.... - 10/28 - "Twitter: User/revenue upside thesis not playing out; Neutral"

    As opposed to 10/24 - "Twitter: 3Q: Expect a beat driven by higher ad loads and pricing"

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  51. OIBR - She's taking off laddie! (ACE: How long, has this be going on?)

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  52. One hour and a half session to go before the fat lady clears her throat......

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  53. Well, I went ahead and added to my BXE position. It seems oil is forming a bottom, and the energy stocks are so cheap, I don't think there is much more downside. It came down to 2 choices - SPE.TO or BXE and I added to BXE because it is a better balanced company with oil and nat gas and most of my other energy stocks are more oil weighted.

    BXE is still executing well (as is SPE.TO), but if the Saudi's are trying to crush oil prices, this will have been a mistake. But on the other hand, if energy can just stabilize at current prices (and we are moving into a better seasonality), then I think most of these energy stocks bounce substantially.

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  54. The fiercest rallies are seen during bear markets, which may be what we're seeing today. I suspect another scenario at play, however: traders have underestimated the strength of the current Bull for several years, and it's unlikely to end easily.

    (a) RYVNX closed the 1030 window down -1.91%.
    (b) RYWVX closed the 1030 window up +3.46%.

    So I came out ahead, but not as much as I might have had I held the Emerging Market long 'til day's end (EEM now +2.24%, EWZ +5.36%).

    (c) Miners putting in a strong showing: GDX +1.59%, GDXJ +3.1%.
    (d) Bonds weak. TLT -0.51%.
    (e) The Fed concludes its monthly meeting tomorrow.

    I've had a good run with the recent volatility. Awaiting the next pitch.

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  55. CP,

    It's always good to spread the risk and have several winning possibilities and not just pick one. The major trends I am spreading my investments around these days are:

    I still see the major themes playing out as:

    1. normalization of financial markets (banks, insurers)
    2.improving consumer (buy hotels, cars)
    3. improving Europe economy and financials (Euro-stocks)
    4. Emerging middle class in Asia (energy)

    Plus, I have a few stock specific holdings (UNP, GIL) that I like the long term growth profile.

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    Replies
    1. And I guess the 5th trend I am slowly starting to move into is the metals markets coming back with my purchases of CAM.TO (a large holding for me) and LUN.TO (smaller)

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  56. "I didn't buy F because it was more expensive, but I see it has come down now. It's probably the best run business of the 3."

    BB - This is why I chose F over GM. Of course, GM was up more than F. I should have reminded myself of the phenomena we saw around each significant bottom over the past 5 years which is that the poorest run companies tend to rise the most. GM was up 3.6% today while F was up 2.4%. Oh well.

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    1. If I was looking now, I'd take a hard look at F. I'd prefer to own them as I'd buy one of their cars over GM or FCAU.

      But probably not worth flipping at this time.

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    2. FCAU has a pretty sweet 1/2 ton diesel, and TM also has one that uses a Cummins engine. These are the first 1/2 ton diesels to be marketed in the US in quite some time and considering the expense of 3/4 and 1 ton pickups these are more palatable and can still get the job done towing.

      I know some guys who wouldn't own a gas hog diesel pickup if they weren't using it to tow, many pickups are bought primarily for this purpose, where the diesel shines in terms of fuel economy, and still carry those relatively light loads.

      I expect Ford will introduce an aluminum 1/2 ton Diesel pickup as a next move, if not already?

      WPRT is involved with Cummins, correct?

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  57. Nice reaction to the numbers out of X after hours today.

    My steel company CAM.TO reports tomorrow, so hoping for a similar reaction as pretty much every steel company has gotten a good reaction like this the last month.

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    1. Damn man what a stock. I was really tempted to buy some around the mid $30's, then was thankful I didn't and am now kicking myself for not. Look at those moves:
      $28 to $46
      $46 to $30
      $30 to $40

      All within 3 months.

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  58. 2nd - congrats on the good run. I think most traders have been expecting first a big pullback, then a small pullback...and now they're just hoping for something. This will cause the chase. I still am amazed at the skepticism. The key issue, though, is the economic reports have continued to be fairly strong and earnings have been pretty solid again. If that source that BB quoted is right about EPS then the market is baring trading above 15.5 times earnings for 2014.

    Just as I figured, after having one of my best runs ever into 2 weeks ago, I've managed to underperform significantly since the "bottom". I think I'm about flat since then. Good thing we don't have investors to report to, just our wives!

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  59. I got a lot more invested today. Bought F, AFL, TWTR, and still own some LAKE which is underperforming but I'm banking on another run. I think my avg is around $13.1. Tempted to buy some PNRA after hours but I'll probably just wait. I passed on HCLP today and am kicking myself for it.

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  60. I ended up selling my TWTR between $42.5 and $43 after hours only because of the FB earnings. FB announced they are expecting a huge ramp up in expenses of about 60% which will hurt earnings. I'm thinking I may get a chance at a lower entry for TWTR because of this. Could be a bad call but I figured I will get a better entry point.

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    1. I'm out @ $42.84, booked a relatively small gain as opposed to a loss. Is FB increasing cap-ex in order to buy TWTR?

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  61. Well into the fourth quarter, let's review the usual portfolios:

    (a) ATACX. Now -5% YTD. Fumbled a perfectly thrown pass earlier this month (when TLT gapped up +5%), which opposing Bulls have run back for 7 percentage points.
    (b) HSGFX (Hussman). Unable to score even a first down. Today's close marks a new all-time low for the fund (9.31), which is also -5% YTD (most followers now substitute WTF).

    To be fair, it's been a very difficult market to navigate. Yet all is fair in war and trading, and to justify fees and commissions all fund managers need to perform!

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    1. My own wtf decision took place going into yesterday's close. My first draft of the trading plan was:

      (a) RYWVX (Rydex 2x Emerging Markets) 12.5% (of the port). The fund closed up +5.19%.
      (b) RYEIX (Rydex Energy) 6.25%. Closed up +2.95%.
      (c) RYPMX (Rydex Precious Metals) 6.25%. Closed up +1.62%.
      (d) RYEUX (Rydex Europe) 6.25%. Closed up +1.6%.
      (e) RYVNX (Rydex 2x Inverse QQQ) 8.75%. Closed down -3.04%.

      In the final minutes, I revised it to 12.5% each, RYWVX and RYVNX.

      https://www.youtube.com/watch?v=k3kWd8iWqAg

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    2. As long as I'm in the confessional. I also considered reopening RYVNX at the close today, but decided it would be suicidal given the strong close + FB earnings release. Needless to say, FB plunges -10%/QQQ off -0.6% after hours.

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  62. I picked up FB after hours at $72.96. While the expected ramp in expenses is a bad thing, I feel as though it is fairly priced in at -$8. I believe at the least I will get a chance to sell at $80 again. That's the plan. Keep position size pretty small and hit for singles here as we close out the year.

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    1. I sold my FB after hours right before the close. It probably gaps up tomorrow. Oh well. I'm struggling with a strategy here to use my remaining cash so rather than force a trade I'll just keep it in cash. May look to buy some FCAU if it drops on earnings tomorrow.

      Delete
  63. FCAU has the most potential of the car manufacturers.

    It is quite cheap, relative to their size and prospects. This guy has quite a detailed writeup on it - http://seekingalpha.com/article/2502995-fiat-preparing-to-strike

    There's a lot of good that could happen, but one of the key points:

    Ferrari, with Maserati’s value detailed below, would mean the luxury brands at Fiat have a stand-alone value of €11.88 per share, which is 70% higher than today’s share price.

    Lots of risks like their large Brazil presence and things like Consumer Reports rating them 4 of the worst 5 cars this week doesn't help, but lots of upside if they can execute.

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    Replies
    1. Actually, Tata has been in South America for a good while now, folks from there are quite familiar with Tata.

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  64. Sounds like the republicans are going to win the senate - if they do, I think we could see some favourable changes to the business climate. I think banks and energy companies are most set to benefit as they reduce regulations and restrictions.

    Make sense to you guys down there?

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    1. Given our politicians inability to get much done I doubt the impact will be much. Then again it might be good for a change in sentiment thing. Perhaps that's why coal is starting to rally since Obama & the EPA is dead set against its usage.

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    2. Yep, I'm sure coal will rally if republicans look like the winners. Otherwise, not convinced Grover Norquist republicans have any better reputation for looking out for middle class interests.

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  65. FCAU looking to be up big this morning on announcement of a spinoff off of Ferrari.

    If I was a CNBC person or hedge fund manager, I'd be talking for months about how I talked about the value of Ferrari yesterday and how it was spun off today!

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  66. TD out with their monthly new oil and gas wells report and BXE had the best gas well of all producers and 4 of the top 20, tied with nat gas giant ECA. SHows that BXE is continuing to execute well and should meet their year-end grwoth targets.

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    1. Good, maybe this morning's gains will stick. Not sure if it's wise for me to add but I should probably average down if say a 50% gain from here is in store I could break even.

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    2. Wish I'd added yesterday..... :)

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    3. Sounds like you have enough BXE. I'd look to add something non-correlated in case oil does reverse back down.

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    4. BXE also top performing stock in the TSX composite so far today with no news - not sure if it means anything, but interesting.

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    5. Quite right, those are the obvious circumstances.

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    6. My intention is to trade my way out of the mess though, wouldn't be the first time. Consider BXE (and others) is no longer pumped to unrealistic/unsustainable levels, so risk is much lower now.

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    7. For instance, Monday's gap down created an obligation that was fulfilled today.

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    8. Along those lines, today's gap up created an obligation as well.

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  67. HTZ - Loner cars for airbag recalls? Sounds unlikely to me.

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    Replies
    1. i thought it was your usual witty play on words!

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  68. I've had unbelievable bad luck this morning, trading wise.

    I was in the middle of putting in a substantial order for FCAU at $9.4 when my son woke up. By the time I came back 5 minutes later it was up $1. So I did what any fool would do. I bought more F and GM at $14.08 and $31.2. Naturally both are down a good chunk. I've been the cooler here for 2 weeks running now. Luckily I haven't given back a ton percentage wise (~5%) but still enough to shake my confidence.

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    1. Probably uncertainty over what Debbie might have to say at 1pm (my guess) and/or someone published a well timed negative article.

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  69. Can anybody read this (quick scan for some sort of conclusion?), it's so small on my screen I can't read it and it only downloads partially....

    My suspicion is gold is rolling over from a great run.....

    http://peterlbrandt.com/chart-history-gold-market-updated-edition/

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    Replies
    1. Here's the summary:


      Factor LLC
      ● Colorado Springs, CO 80903
      www.PeterLBrandt.com
      45
      As a chartist, here is what I know.

      Gold always rings a bell before making a major move.

      Absent a clearly defined chart pattern it is doubtful that Gold will develop a sustained trend.

      The longest-term charts (such as the one on the front cover) remains up.

      All shorter-term charts are in a bear market. A rectangle top was the last dominant pattern completed on the monthly and weekly Gold charts. The burden of proof in now on the bulls.

      The next bull market (on a monthly scale) in Gold (if and when) will be ushered in with a clearly recognizable pattern. No such pattern exists. Thus, my quess is that Gold will go to new lows for this bear phase with a breach of 1,000 very possible.

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    2. If i had to guess just strictly based on sentiment, gold rallies here and throws everyone off.

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    3. I've seen enough bearish sentiment...I'm long NUGT at $18.28. Small position but this Peter Brandt guy seems to be to be on a major cold streak and I'll take the other side.

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    4. Thanks for checking it out, I wasn't trying to get you into taking a position though! :)

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    5. haha. true. i've just seen so many damn "technicians" talking about how gold is going to break down big time and i see a lot of smaller traders pressing their bets on the bear side. they may be right but my guess is it rips in their face first.

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    6. I'll extend that into a guess oil should have a similar reaction, hopefully not an allergic one.

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  70. ORB - Blowing up in spectacular fashion, launch abruptly cancelled perhaps?

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  71. Been watching Fast Money half time show and they had a segment on gold. Every trader is bearish on it. Might be worth sticking with NUGT for a little longer even though its up 1.5% already. Shit its the only thing working for me right now.

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    Replies
    1. Screw it just took profits in NUGT at $18.5.

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    2. Bidding $18.81 now, naturally!

      I did buy more F at $13.87 so that's up $0.01. What' s up now!?

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  72. CG - Oh boy ouch, looks like the insiders bought, too.

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  73. DB - Line in the sand appears to be $31.44 I think it can.

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  74. More children are hurt/killed on October 31st, than any other day of the year.

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  75. MTW - Looks destined to close the gap down, huh?

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  76. I think oil's fundamentals, although more tricky than usual, are much better than gold's.

    Gold's big problem is you have loads of people who bought it over the last 5 years and are all underwater and looking to dump it. I think any increase in price gets hit by sellers for a long time.

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  77. ORB - Next flight not cancelled, delayed slightly. Stink bid @ $7.50....

    10 min till Debbie yodels the all-clear.

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  78. ISIS should probably recruit Manuel Noriega, he has a video game in his honor and contacts internal to DEA handy for weapons acquisitions. Those guys do what they please, just like the secret service.

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  79. Staying course, ending QE but keeping rates low indefinitely. And gold goes FRUMP...... So how are rates kept low, not understanding if FED doesn't buy (QE) how do they continue to cheat savers, er I mean rescue gamblers?

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    1. By this CP:

      The Fed said it will continue reinvesting proceeds from a balance sheet that swelled to a record $4.48 trillion in the course of three rounds of so-called quantitative easing that started in November 2008 during the longest and deepest reces sion since the 1930s.

      The latest round was announced in September 2012, with monthly purchases of $85 billion in Treasuries and mortgage-backed securities. The Fed began a step-like reduction of pur chases in January 2014, cutting them by $10 billion per meeting.
      Minneapolis Fed President Naray

      Even after purchases end, the Fed’s record balance sheet will provide support to the economy by limiting the supply of government securities and suppressing long-term interest rates. The FOMC has said it expects to stop reinvestments of maturing securities only after it raises the benchmark interest rate.

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    2. Ah yes, by reinvesting proceeds! Thanks T3d! So perhaps we can judge the success of their proceeds by watching rates. Considering the ramifications, this seems not good for FNMA longs.

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    3. It's a low rate world, with or without QE. Look at Japan and Germany, with with lower rates than the US and no QE in Europe or Japan (until recently).

      Reality is there are more savers than borrowers as people deleverage and the demand for safe places to invest (govt bonds) is very high.

      UNless something dramatically changes, rates aren't going up anytime soon regardless of what the Fed does.

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    4. Yeah, I think we're primarily speaking of rates at the ST end being anchored. So this is practically a guaranteed sloped curve, not inverted, seems like.

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  80. This is why I'm holding on to a piece of LAKE:
    http://usa.chinadaily.com.cn/us/2014-10/29/content_18824911.htm

    My guess is there will be a second run in this stock back up to the $30 area within 2 months.

    For GM & F I looked again at the analyst estimates for 3 years out. I think they're on the mark, whether its 2017 or 208 I don't know. Here are the EPS estimates for 3 years out:

    F: $2.40
    GM: $5.70

    Now let's assume they do a 40% payout. That equates to $0.96 annual dividend for F and a $2.28 annual dividend for GM. The yield on today's prices comes to 7% for F and 7.5% for GM. Assuming a straight line trend to get those dividends:

    2015: 4.5%
    2016: 5.8%
    2017: 7.0%

    Now assuming people pay 10X EPS on those you get prices of $24 for F and $57 for GM. That's a return of 20% to 22% annually for the next 3 years. If I assume it takes 4 years then the return is 17%. Toss in dividends and you're talking about roughly 25% annually for the next 4 years. For blue chips I find it hard to get similar returns. I've personally been waiting to transition into blue chips with solid yields and I think this is time. The drops in FB, NFLX, AMZN, YELP, TWTR recently suggests to me that its time to avoid the high growth sector and move to value / blue chips. I don't know the exact timing on this turn but F & GM, for example, are down 25% in the past 2-3 months so now is certainly a better time than a few months ago.

    Also, keep in mind that if these stocks hit those EPS targets on time and people pay a 12 multiple then you're talking total annual returns of 35 to 40% for the next 3 years. That's no joke.

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    Replies
    1. basically whether it takes 3 years or 4 years to get to those earnings estimates returns should be 25% to 40% annually for the next 3 to 4 years on these 2 stocks, barring a collapse in the economy or electric cars taking over the world (which I think we’re way way way far from given the cost of those cars (i.e. Tesla))

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  81. Long F 13.85

    Long MDW .8650 good spec to 1.0

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  82. Oil bouncing back now, as gold seems to be taking a second leg down.

    Improving economy is good for oil. Gold needs inflation which is dead.

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    Replies
    1. I suspect NA energy production is providing the FED a considerable distance between the goal posts for guiding their ICBM.

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    2. Maybe GS's $75 call put's a floor in as the market was pricing in a worse base case, thus the E&P boyz over shooting to the downside.

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    3. In support of this observation I sight Buffetts clairvoyant railroad investment.

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  83. I could tak myself into a F position.

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    Replies
    1. It's holding up pretty well, and abiding by the 80/20 rule

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  84. Perhaps Saudi Arabia is creating jobs (I know, sounds a little passe, huh?) by constructing oil refineries?

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  85. Replies
    1. Exactly as anticipated via the gap down obligation.

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    2. AZ for now, man, we are at the base of the Catalina Mountains with elevation above Tucson and its nice and quiet just what I want. Had internet problems the installers did not punch down wires to Ethernet and telephone jacks, hard to get good help I guess.

      Is construction still booming in your neck of the woods.

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    3. Sounds nice a peaceful. Yeah, very busy here and not just me. I honestly find it pretty amazing.

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  86. AHP- Why is selling income property to buy back stock bullish?

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    Replies
    1. Perhaps the market agrees income property is a sell?

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    2. BTW, thanks for asking thought provoking critical questions.

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    3. I get the stock is 'cheap' argument, but it seems kinda silly to mio.

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    4. They think they can sell the Philadelphia property for more than it's being valued for inside the company by investors and then buy back stock on the cheap. I think it is the lowest quality of their properties.

      The guys running this company are smart and have done stock holder friendly things like buying back share and debt during the financial crisis, then splitting the company up to drive up its valuation (hasn't worked well yet, but probably will and a good idea). I would bet that this does add value for shareholders.

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    5. Agree, your point is it went up (past tense).

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  87. Reuters U.S. News ‏@ReutersUS 38m38 minutes ago

    Man who vanished from Denver NFL game said he 'had his fill of football' http://reut.rs/1DxbKep

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  88. I dunno man, Debbie seems too preoccupied with wages for me to believe her concern is genuine, I suspect this is lip service.

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  89. My steel company CAM.TO getting smoked on earnings down 13%. Were expected to be $0.30, but came in at $0.25. Revenues and backlog were really good, but margins under pressure. Really disappointing considering how well other steel companies are doing - I guess other people had the same idea. Conference call at 4:30 that I will listen to to decide what to do next.

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    Replies
    1. Seems like auto manufacturers are moving to aluminum? I could see if infrastructure projects were to pick up steel demand would benefit?
      MTW/TEX/FLR/CAT, etc.?
      There are suggestions being floated stimulating US economy might entail infrastructure investment?

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  90. NCR - The gap down was closed yesterday and today was a red day. Just heard this: "Dibold voting machines are antiquated", to wit defenders respond "Operator error"

    Unrelated: Homeland security is scrambling to attention, raising concerns.

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  91. TWTR - Starting to look like a bull flag formation, to me.

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  92. HPQ - Getting into 3D printing? Sometimes this can lead to technology acquisitions, can't it?

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  93. It's been warm here this week, in the 70's about 4~5 days now.... "Very strong cold front" rapidly coming our way; we're accustomed to paying dearly for nice weather this time of year.

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  94. Wow huge news out of LAKE after hours!

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