Friday, October 3, 2014

10/3/14 Back in the BRIC House

Hong Kong's Hang Seng printed a beautiful outside day this morning, plummeting -1.6% in the opening moments of the morning session, only to reverse in the afternoon for a +0.57% gain. I noticed other 'near misses' yesterday (EWZ [Brazil], for instance).

Outside reversals do not guarantee a change in direction, but they certainly heighten the odds. Reopening positions in Emerging Markets this morning. Unlike the US indexes, BRICs have effectively experienced significant corrections in the past month (EEM -10%, FXI [China] -11%, RSX [Russia] -12%, and EWZ [Brazil] -22%).

153 comments:

  1. TSN - OMG, have you guys noticed this one lifting? I forgot to look a couple days and Zoom.....

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  2. Doubled my position in DB this morning as it opened weak (German markets are closed).

    I read something yesterday which made a lot of sense:

    1. US Market are higher valued than Europe on many metrics and some spreads are at extremes
    2. Us profit margins are higher and at record highs
    3. US economy is doing better while Europe still in the toilet

    So, while the US can keep doing well (and I think it does), the upside is limited to growth in the economy and people willing to pay higher multiples for stocks. But Europe can have its economy improve, have profit margins grow and just get back to more normal multiples on stocks.

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    1. I completely agree with this. I think the US market could trade sideways for a little while longer but the focus is clearly on Europe and the title of this post. I added to my EDC at $25.85.

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    2. I have a 60% position in GOOGL which I'm thinking is probably not going to outpace the market given its size and valuation (trades at like 19X 2015 earnings). But I can't think of a better business on the longer term than GOOGL. It has the widest moat out of any business in the market.

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    3. So GOOGL is the one exception I think to the idea that its better to be focused on international markets. Although they now get 58% of revenues from international (up from 54% in 2012: https://investor.google.com/financial/tables.html).

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    4. GOOG is a very well company and really rocking now. Valuation is not bad either.

      I almost bought it a couple of years ago at half the current price, so have a hard time paying up now, but it is one of those companies I'd love to get in a market crash to just put away for the next 10 years.

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    5. So you guys don't care for TSN? The theme has been it would lift on the possibility China Bank might try to buy it and lower grain prices to boot. Although, rising $US is a headwind.

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  3. Refiners - So as the $US lifts and BRENT prices are reduced via Saudis the crude spread narrows and US refinery product becomes less attractive. This pushes US crude down.
    Stronger $US also dips into US made goods exports into a weakening global economy.

    Sounds almost like the green agenda at work, slowing global warming via global growth.

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  4. I'm pretty sure the penny flippers are rejoicing over the employment data while the LT thinkers are considering other issues although happy to see a bit of a boost for employment how long does it persist while last week's realities resume control?

    I'd say likely this occurs at the recent downward sloped trend line?

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  5. I get Z emails whenever a home in my area is listed for sale. I'd say I used to see about 6 homes/week. Now maybe 1.

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    Replies
    1. Good sign housing is improving which is good for the economy and job market. And also the stock market, as long as the job market doesn't get too tight or inflation kicks up too much

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    2. Mark - Yeah I think most of the good stuff got sucked up. Especially in your area. Housing is probably becoming more normal. It was extremely hot this time last year.

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    3. I had no idea you could do that. I also learned it's possible to set up a proximity reminder feature so you don't forget to make a stop somewhere while making errands.

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  6. BXE now that reminiscences guy's largest holding and over the last year, his large holdings have done well, so a good sign.

    Plus hedge fund Orange bought another 1.2 million shares yesterday.

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    1. I've been wondering if the rout in emerging markets has more to do with the drop in crude oil than anything else. Some people are suggesting that a rising dollar is bad for emerging markets which I don't get at all. I think this is all noise. Oil seems to be stabilizing in the short term...not really sure where it goes longer term given it is in the latter stages of a massive bull market. But lower oil prices should mean more profits to the 85% or so of the market that isn't energy related. I think EM's are a screaming buy here given the excellent risk-reward setup. I'm adding to EDC as it goes lower. Sold CYBR to add more.

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    2. I don't see any strength in BXE action, just continuing decline. Based on this it's my expectation the gaps up will close and most likely w'll see lower prices and perhaps a trading range once those gaps are closed.

      I'm pretty convinced BXE is a P&D

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    3. "a rising dollar is bad for emerging markets which I don't get at all."

      If they received loans that must be repaid in $US they're losing their butts. FED policy flooded the market with cheap $US loans?

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    4. CP, BXE is not a pump and dump (if that's what P&D means). It just moved to the full NYSE this week. Do you think the NYSE would let a Canadian energy Pump and Dump onto the big board? http://www.bellatrixexploration.com/news/news-single?id=122664

      It is a real energy company, fast growing and undervalued. Take a look at the following:

      http://www.calgaryherald.com/business/Financier+doubles+Bellatrix+500M/10249825/story.html
      http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/why-bellatrix-exploration-may-still-be-a-bargain-despite-stocks-runup/article18376862/
      http://www.bellatrixexploration.com/docs/default-source/presentations/bxe-corporate-presentation-sept-2-2014.pdf?sfvrsn=6

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    5. P&D - That's my impression. Waiting is the hardest part, I guess. :)

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    6. Orange's valuation of $10B seems like a pie in the sky dream to me.

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    7. CP - I always have to remind myself that it's not some cardinal sin to be wrong on something in the market. Just need to draw a line in the sand and said I'm wrong and move on. I'm wrong more times than right every single year.

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    8. True. And maybe not a P&D but a simple underestimation of the volume of hydrocarbons about to be unleashed from the Permian. I doubt Orange even knows where the Permian is.

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  7. OIBR - Here's one I think might have a pretty good theme behind it once things turn around for Brazil, if ever.

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  8. TSN - So if China wanted to buy this one, why wouldn't prior to the announcement they quietly buy tons of the stock at a discount? Is it possible for this to happen? I'd think they can't b/c large ownership positions are public knowledge?

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    1. AGCO - This is the case with AGCO, insider from India has been accumulating as the price has continued falling. Not sure what to make of it but there must be a plan. Takeover/buyout?

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  9. TVIX - Should we get long this one in anticipation anxiety should resume shortly?

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  10. OIBR - EM's - I guess if you guys are right and assuming all boats are lifted then OIBR could become a rocket? It's not inconceivable someone like softbank might buy this one over a weekend not far away?

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  11. AWAY - This puppy seems to be gaining steam?

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    Replies
    1. I dislike insider selling though, tell me it means nothing?

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  12. TKMR - Based on volume of comments here I guess this one should keep running for a great while.

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    Replies
    1. And today's Friday, no telling what viruses might propagate over the weekend as CDC most likely will be home sipping tea and crumpets.

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  13. MUX - Back under $2

    Noticing SPX ema's have rolled over, signalling and end to the bull market and the rush to $US safety is in full swing. This might be a good last opportunity to put shorts on.

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    Replies
    1. Ryan Detrick makes a pretty good case as to why this bounce sticks, but the next few weeks may be frustrating:

      http://ryandetrick.tumblr.com/

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  14. Look at today's volume, does it smell like selling into strength?

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  15. CP,

    re BXE, TOF is right. Sometimes you have to cut your losses and move on.

    For me, I am happy to hold and think we get to at least $12 or $15 and maybe higher as they do have a boatload of assets.

    But I am very patient and, while I don't like drawdowns, they really don't bother me that much. My initial purchase of BXE was back in 2010 at $3.89 and I never sold a share and just added recently.

    Sure, it would have been nice to sell at $12 and buy back now, but I also could have sold the initial move to $5.00 and never got back in, so it's all how you play.

    If we double in 3 years from here, that is a 25% annualized return. I'm pretty sure that will be well ahead of the market and I'm happy to sit and wait.

    The other factor is maybe you are right about all this oil coming on and prices going down, in which case pretty much all energy companies get crushed. That's why I have a diversified set of stocks, so if that happens, my Canadian airline does well, my consumer discretionary does well (more consumer spending), etc.

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  16. Frankly, I would buy more today if it wasn't a Friday - there are 4 or 5 stocks that I think look good. But we've had a good bounce and are up around 2% since mid-day yesterday, so a weak open Monday would be my expectation (guess).

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    Replies
    1. I went from about 75% cash to 0 in the span of the past 24 hours. Then again, I'm a much more shorter term trader than most of you guys, except 2nd of course!

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    2. That's right. 0->100% and/or 100%->0 within 24 hours seems to be my recent driving pattern.

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  17. Brad,

    I looked at Bankia and maybe I missing something.

    Compared to ING for example, ING is at p/b of .86 vers BKIA or 1.3 and similar for tangible book.

    Forward p/e is under 10 for ING and BKIA is over 13.

    So that generally shows ING cheaper than BKIA and I think it is safer as it has pretty much paid back the government versus BKIA still having high government ownership.

    Perhaps BKIA has better growth prospects and the analyst estimates are wrong or perhaps the numbers I am looking at on Reuters are incorrect. Or maybe you are owning it for other reasons like diversification and to better link your investments to your local economy.

    Let me know what you think.

    Thanks

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  18. Started looking at Tesco and the current price is good, they've done a reaonable job with sales given competition and stayed profitable for a long time, even through the financial crisis. Plus they look pretty cheap now.

    Have you looked into the accounting problems and the possible rights issue? I just started looking at these and am not sure how big they are. Could be a good opportunity if the market is overreacting.

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  19. I built a very large position in EDC this morning. I thought more about the near term upside and figured the opportunity in this for the remainder of the year is better than that of my other stocks. I think the rally heading into this latest drop was for real and this was the necessary shakeout to get as many people as possible off the train. My only concern is the ultimate impact after the Fed exits QE. EMs can get very testy and while I see EEM at $50 within 3-6 months, doesn't mean it can't get to the mid-upper 30's before then if people really panic like they did last summer.

    Ultimately, I think EDC at least doubles over the 2 years...probably triples. I think it is having its 2011 moment right now. Look at the movement in the triple bull ETFs like SPXL / TNA since 2011 lows

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    Replies
    1. So now the hardest part will be holding a triple leveraged ETF through inevitable drawdowns and potentially through a drawdown in the near term should people continue to freak out about the QE exit. The oversold readings and angle of descent is what drew me into this.

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  20. BXE - Yep, the issue for me is there's no reason for hydrocarbons to rally as far as I can see into the future, same phenom really as PMs.
    What I need to do is pick up some DUST as a hedge.
    Taking my loss will reverse my tax liability for the year in a big way and I will just sit in cash if I do that.
    $US - Where the actual party is.

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    Replies
    1. I have a meeting with MOG on Thur. Let's see if he's a little more expansive then.

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  21. Warm Fall forecast, COX gets crushed.

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  22. Asia looked like it might break out last month and that didn't happen. US market rolled over instead, looks like the opposite of what so many were (and still are) anticipating.

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  23. What I don't get with the emerging markets is why the Shanghai chart is so good - up over 10% this year:

    http://www.bloomberg.com/quote/SHCOMP:IND/chart

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    Replies
    1. Not sure, my ears are open? Seems to be a trend of course that could end as all trends eventually reverse but there's no evidence of reversal?

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  24. US health system will 'stop' Ebola: WH officials

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  25. Bull market - Well, I was looking at the wrong chart, thought the ema's rolled over on weekly chart but had the daily chart on my screen. My bad. Looks like 1975 is possible Monday.

    Notice the weekly hammer, we've seen that before at most every next thrust upward.

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  26. BlackRock® ‏@blackrock 8m8 minutes ago

    With the financial crisis behind us, millennials are getting aggressive with their investing.


    Ut ho.

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    Replies
    1. The millennials outnumber the boomers but have few offspring.

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    2. Hey don't blame us blame yourselves:
      "The group that was most comfortable with volatility also reported the biggest increase in confidence. Over a third of respondents in their 40s and early 50s said they were willing to accept more volatility for a higher return, up 10 points to 34%. Those between ages 28 and 39 reported an eight-point increase to 31%."

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    3. Millennials equipped with iphones, are dangerous to themselves and everyone around them. :)

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  27. http://www.youtube.com/watch?v=WAoqrpkwY3c

    You've been warned.

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  28. http://reminiscencesofastockblogger.com/2014/10/04/betting-some-more-on-bxe/#more-5255

    Reminiscences guy details his reasoning for making BXE his now largest position.

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    Replies
    1. Okay, I'm becoming convinced re:BXE, thanks. Wonder if Ebola is likely to sweep through undeveloped, or developed countries and what impact if any, it might have?

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    2. We've been getting some volume too, so that might be a good sign of interest as opposed to short covering (shorts are smart thus often seem to disappear with no appreciable rise)..

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  29. Met a guy on the lake yesterday been experiencing heat trouble and recently had triple bypass surgery. NO HEALTH INSURANCE! Says he cannot obtain health insurance through Obamacare b/c none of the plans he's eligible for will cover this type of medical care.

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  30. (a) Sunday's election results in Brazil sets up a run-off between incumbent Dilma Rousseff and challenger Aecio Neves. Hope for change is driving Bovespa futures this morning, with indications the index may gap up >+5% (PBR [Petrobras], for instance is bidding +11% pre-market). A good example of how markets rarely allow easy boarding!

    (b) Hong Kong's Hang Seng up another +1.1% last night. Russia's MICEX +1.7%. Germany's DAX 30 opens +1.6% despite weak economic data.

    (c) Sentiment in Emerging markets + Europe? The September slide down a 'slope of hope' may have ended (at least temporarily), allowing prices to resume climbing the proverbial 'wall of worry.'

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  31. (a) EWZ (Brazil) trading +8.7% pre-market. I'm closing my position @ 47.14 for a 2-day gain of +10.8%.
    (b) PBR (Petrobras) trading +15.3% pre-market. Closing my position @ 16.11 for a 2-day gain of +16.7%.
    (c) EEM (Emerging Markets) bidding +1.8% pre-market. FXI (China) +1.4%. RSX (Russia) +2%.

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    Replies
    1. Naturally, EWZ is now bidding +10.7%, and PBR +18%.

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    2. Well done 2nd. Those are nice wins!

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    3. Wow, amazing! Is it luck, or reward for paying attention to detail?

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    4. Nice gain anyway, so congrats. I haven't been following Brazilian elections, distracted by other subjects so wasn't sure if I'd been missing out on LT bullish news. Trying to keep track of VALE but keep forgetting to check it everyday.

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  32. The $USD is selling off in earnest this morning, down -0.4%. It may be yet another fake out on its way higher, but I doubt it. Preparing to take positions in miners: GDX (majors), GDXJ (minors), SLW (Silver Wheaton).

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  33. Opened GDXJ @ 31.53 and SLW @ 19.24

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  34. Opening a position in WPRT on hopes NGas engines will take off at some point. I also think they've exhausted sellers on this one.

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  35. Opened BXE in my last account.

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  36. Replies
    1. Sapphire doesn't grow on trees, it grows on a seed.

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  37. Closing RYWVX (Rydex 2x Emerging Markets) @ the 1030 est trading window. Likely to close +3.5% for a 2-day gain of +6%.

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  38. So Eurobank stress tests are scheduled for completion Mid October and the results may be skewed to seem worse than perhaps reality dictates in order to try convincing Germany they must approve/join the QE party?

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  39. Nice trades 2nd. I'm holding edc despite the pullback. Thinking it rallies to new highs before end of year

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  40. UNG - At lower trend line again, could be good entry?

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  41. RYWVX closed the 1030 est window +5.21% @ 79.29 (+3.93)!

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  42. BAS - Notice the insider selling that took place, this kept me out. Wonder what the issue is.

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  43. My contact in the Austin Police Department says MRSA infection is a much larger fear than Ebola.

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  44. CVEO - Looks like bear flag formation at the sweat lodge.

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  45. BXE - Nice surprise, two consecutive green days!

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    Replies
    1. Moving into the home stretch and whoops, some profit taking. Gotta take them pennies off the table ya know... Well, maybe we close $5.89 or better...

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  46. (a) Holding SLW, currently bidding 19.59 (+1.8% from this morning's entry). The $USD index now -0.9%.
    (b) Plan to close RYEUX (Rydex 1.25x Europe) at day's end (position opened last Thursday, and unexpectedly closed down -0.68% on Friday despite a strong rebound in European indexes).
    (c) NGas futes off -3.35%. Opening a small position in UGAZ (3x) @ 13.64 (-9.5% from last night's close).

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  47. The $USD will close at the lows of the day. Dollar longs (rather than shorts) may be in for a rough time overnight. Reopening a position in RYPMX (Rydex Precious Metals) at the close.

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  48. Gtat - buy the dip!

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  49. EDC - A parallel channel seems to be the possibility here.

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  50. It's still a month away, but please remind me in a month:

    http://www.marketwatch.com/story/stocks-typically-pop-after-mid-term-elections-2014-10-06?mod=MW_story_top_stories

    An average gain of +15% between November and April in the third year of a Presidential cycle that occurs with a frequency of 94%? Sign me up, bro!

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  51. NFLX recommendation: 'Peaky Blinders.' It's almost impossible to find a badly-written/directed British series.

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  52. Chevron swung a deal with Kuwait on some of their Duvernay assets, a JV deal. BXE has interest there as well, I think.

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  53. AGCO -6%, ouch! Can anybody match that?

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    Replies
    1. I don't know. I'm still not to interested in buying anything yet.

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    2. Maybe somewhere under $0.50 if we get a strong selloff on fear?

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  54. IMF is concerned with global growth.

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  55. Traders are very concerned...perhaps for good reason...but wouldn't be surprised to see at least a rally to yesterday's open.

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    Replies
    1. Me neither, but I'm counting on the eurobank stress test to present an opportunity?

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    2. Not always but when you see reversals like yesterday that are sharply downward without any rebound, it tends to at least go back and fill in to that high. The reason is probably because it seems to be more panicky selling instead of heavy institutional selling. So after those sellers have exhausted themselves, buyers come back in. Even if it ultimately heads lower. I remember this clearly in the days after the flash crash. It ultimately went lower but it stay up for a few days first and headfaked a lot of people.

      We'll see though. Definitely a dicey market right now.

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    3. I added EDC in my in laws account at $27.05 this morning.

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    4. Good point, that might happen. I'll be out tomorrow so can't make trades.

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  56. FLY - If Last Friday's gap up closes?

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  57. So it looks like the world is basically using Iraq for target practice.

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  58. OGZPY - Looks pretty cheap, cheapest energy play out there on one of the worlds largest energy companies?

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  59. Container Store - Counting on holiday sales to save the day. So this holiday give the gift of a 50 gallon plastic basket, okay?

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  60. Here's a map of hot spots in the Duvernay, looks like Chevron is in a good area.

    http://oilandgas-investments.com/2013/investing/duvernay-stocks-companies/

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  61. YUM - I'm downgrading this one unless it closes better than $71.72 today.

    PDS - This driller should do well (pun intended!) assuming the fracqking industry keeps on crushing underground rock, right? These guys own the underground excavators?

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  62. Earnings start trickling out this week, so will be key to see how the market reacts to these. The first reports are often weak for some reason, so next week is probably a better time to judge. But I really could see people thinking, "hey these earnings are pretty good - I better buy something"

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  63. Richard Pzena on CNBC Fast Money Lunch - definitely worth a watch: http://video.cnbc.com/gallery/?video=3000317846

    Like energy, particularly European (as good as US energy, but cheaper and oil is oil) and the big banks which have a lot of tailwinds coming and are cheap. Worst case is you make 8% a year, best case is get better valuations and stocks go up.

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    Replies
    1. "In this market, you don't get cheap stocks without issues or concerns"

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    2. Sounds like OIBR fits the description. Wanna know what you think though, maybe yes? I'm just not sure where the fun (WTF) is, lately market pukes gains quickly.

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  64. 10yr - Wow, 2.36% TBT smacked yet again. Just heard last night again the prediction rates are destined to move up.

    OIBR - Will it be this easy to predict a fierce rally from here if today's close is better than 0.66?

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  65. SODA - All time lows here. Give the holiday gift of a plastic basket full of soda-pop!

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  66. TLM- I think Icahn was in at $12ish.

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  67. I guess you would call it capitulation. Sold EDC at $26.8 avg. Gained 3.8% but was up 8.5% at one point. Greedy bastard!

    All in cash now.

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  68. What's the toughest trade right now? Gotta be going short no?

    I'll keep cash.

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    Replies
    1. Either way is tough at the moment, think it's going down. The volume spike at 2019 spoke to me.

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  69. (a) The $USD is in fact somewhat lower today, but it's not helping the miners! GDX currently off -2.8%. I stopped out of SLW @ yesterday's entry price (19.24), now trading @ 19.05.
    (b) I will close RYPMX end of day for an estimated -2.8% loss.
    (c) On the positive side, I closed UGAZ @ 14.17 for a +3.9% gain.

    The hit on miners is mitigated by the broad selloffs throughout global markets today. DJIA currently -200 points. EEM (Emerging Markets) off -0.7%. The Euro Stoxx 50 was massacred for a -1.8% loss (which I side-stepped by closing RYEUX yesterday, for a +1% gain no less!).

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  70. If I had the guts, I would short Emerging Markets at the close via RYWYX.

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    Replies
    1. I considered EEV actually, after selling EDC

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  71. Something inspirational.....

    "The situation in Europe is becoming dire as economic stagnation leads to increased unemployment, a rise in NON-PERFORMING LOANS and a fear of disinflation as creditors are forced to sell the assets of overly leveraged borrowers. This is the type of liquidation scenario that forced the hand of the Bernanke Fed and also led to the passing of TARP. The fear of a Japanese-type deflation cycle will be devastating for a high unemployment European economy and becomes more problematic because the EU has no central FISCAL AUTHORITY."

    www.yragharris.com

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    Replies
    1. If Europe passed a TARP bill or actually implemented QE, I think it would be liftoff for the markets.

      Delete
  72. Long a small amount of CMRX at $33.23. Can't really find anything with a good setup and the more I read about this ebola scare I'd have to imagine there's some more to come out about this over the coming weeks...even if its not a real threat.

    I think the market just needs to get to the latter part of October. the ECB will be floading the market with their money soon enough.

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  73. U.S. billionaire Wilbur Ross eyeing Canadian, U.S. energy sectors
    Tuesday, October 07, 2014
    John Tilak
    Print this article
    TORONTO — U.S. billionaire investor Wilbur Ross is looking at investing in the Canadian and U.S. energy sectors, betting a long-term recovery in oil prices will boost the fortunes of small and mid-cap companies whose shares have been battered since June.

    Ross, who made his name by snapping up out-of-favour assets ranging from banks to textile firms, told Reuters he is in the early stages of assessing companies in the oil, natural gas and rail transportation sectors.

    “We’re looking for things that are idiosyncratically distressed, where we believe the long-term fundamentals are in place,” Ross said in a telephone interview on Tuesday.

    “If you (have) a theory that the longer-term outlook for oil is okay, then the very severe price decline of some of the equities might very well be a buying opportunity.”

    Signs of weak demand and amply supply have pushed crude oil prices lower, with the Brent crude benchmark down 15 per cent this year. Last week, Brent November crude hit a June 2012 low.

    Canadian energy stocks are down about 18 per cent since hitting a peak in June, while the U.S. energy sector has shed about 12 per cent over the same period.

    “If the stocks keep going down, it (investment) will probably be quicker,” Ross said. “Many of the oil stocks are off 20 or 30 per cent. So we’re certainly inclined to think that they are closer to the bottom than to the top.”

    The 76-year-old chairman and chief strategist of WL Ross & Co., a unit of asset manager Invesco Ltd, did not give any names of potential investment targets.

    Money managers, as well as the proxy firms that help shareholder activists and targeted companies navigate these battles, said in September that they expect activity to pick up in the Canadian energy sector.

    Any investment by Ross would be his first in the Canadian energy space.

    “Canada has very good oil reserves and the stocks have certainly been under a lot of pressure. So that’s why we’re giving a good serious look at them,” Ross said.

    He would be following in the path of U.S. investor Warren Buffett who last year acquired a stake in Suncor Energy Inc., Canada’s biggest energy company. Activist investor Carl Icahn bought a piece of Talisman Energy Inc. in 2013.

    Ross said he is also evaluating rail transportation projects that have sprung up around the Canadian oil patch.

    “It doesn’t feel like the Keystone pipeline will get done any time soon, and that’s going to put pressure on rail.”

    TransCanada Corp.’s $5.4-billion (Canadian) Keystone XL pipeline has been bitterly opposed by environmentalists and has awaited approval from the Obama administration for six years.

    Calgary-based TransCanada is emerging as a possible target with several U.S. activist hedge funds reviewing the nearly $40-billion pipeline operator as a break-up candidate, people close to the matter told Reuters last month.

    On Tuesday, Ross said that, while he is looking across the sector, he is gravitating toward small- and mid-cap companies because they have been the hardest hit.

    “We’re generally making investments that are in the nine figures,” he said when asked about the size of any potential deals.

    In August, Canexus Corp., the developer of Canada’s first dedicated oil train terminal, said it was in talks with interested parties about potentially selling its 70,000 barrel-per-day loading facility in Alberta.

    It is unclear whether Ross is in talks with Canexus. RBC Capital Markets analyst Nelson Ng, after a meeting with Canexus management in late September, said in a note to clients that the asset is drawing strong interest from a wide range of parties.

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  74. CP,

    re OIBR, it might be worth a shot, but I really haven't done any work to see if Brazil is turning things around or how OIBR are as a company.

    The Euro-telco's are possibly interesting as it appears the Euro governments have realized if they put too much competition in the telco space, capital spending gets delayed and the consumers fall behind, so I think you'll see margins improving over there, plus, if they do turn their economy around, which I suspect is more likely than Brazil as I believe Brazil is still quite Ag/commodity based, and the China demand is suspect.

    But having said all that, there's a lot of assumptions in all that, so really I should just say, "not sure, but I'm not buying"

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  75. From David Rosenberg, reasons the correction has a ways to run:

    Rosenberg on stocks: Only one-third of the way through this 'corrective phase'
    Tuesday, October 07, 2014
    Darcy Keith
    Print this article
    Tuesday was another painful day for investors - and David Rosenberg doesn’t exactly have soothing words.

    The chief economist with Gluskin Sheff believes U.S. equities are only between one-quarter and one-third of the way through what he thinks is a “normal corrective phase,” based on a range of indicators he has analyzed “with a fine toothed comb.”

    “The fact that U.S. equities can make little headway despite what would ordinarily be considered favourable corporate news like the record Alibaba IPO, the move by Hewlett-Packard to split into two companies, and reports of stepped-up bond trading volumes for the banks is a classic signpost that the main overhang in the market is principally one of excessive valuation that needs (and is in the process thereof) to compress - a market already more than fully priced for whatever good news there is out there,” Mr. Rosenberg wrote this morning in his Breakfast with Dave newsletter. “That is the message from a 16x forward price-to-earnings multiple, which is at least 10 per cent above the norm.”

    But Mr. Rosenberg stresses a key point at a time when investors’ nerves are getting tested: Don’t be tempted to move entirely into cash. That level of hubris, he said, would imply you have complete confidence in timing the market. And as any investor who has been in the game for a while knows, that’s nearly impossible.

    “What it means is reining in the beta of the portfolio, dialling back on risk for now, and raising some cash to buy back the quality names you already own at better price points,” he said.

    “This corrective phase may not be over yet, but continuing to look for the forest past the trees is necessary because corrections are not the same as fundamental bear markets, and I do not see the conditions for one of those, at least not yet.”

    Mr. Rosenberg said he looks at seven indicators to gauge whether markets are poised to make a sustainable upward march again. Only one - the relative strength index of the small-cap sector - is flashing a green signal. “We will need more evidence than that to become convinced that a buying opportunity is at hand.”

    “So far, the S&P 500, even with all the ups and downs since the mid-September peak, has corrected by 2 per cent, even though it may feel worse than that given all the volatility. The VIX (volatility index) has only jumped 20 per cent, or less than half what one would like to see at an interim market trough. Both the trailing and forward P/E multiples have corrected by 30-40 basis points - again, a fraction of what we typically see when it comes time to start dipping more toes into the equity pool. Even the high-yield corporate bond market, which has corrected in relative terms more than other asset classes, has seen spreads widen 20 basis points since last month’s peak in the S&P 500 - one-quarter of the widening that we tend to see before the dust settles. The 10-year T-note yield is down 20 basis points and again this is half of what is typical.”

    And there are cracks appearing as we head into the third-quarter earnings season. Analysts have been lowering their earnings forecasts for the quarter due to such factors as weakening economies overseas, sliding energy prices, and the hit to currency-translated earnings from the surging U.S. dollar, he noted.

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  76. "If Europe passed a TARP bill or actually implemented QE, I think it would be liftoff for the markets."

    I'm specifically looking at Europe and Emerging markets because of this factor. Do you know of any leveraged ETFs for Europe? EWG / EWF / IEV are all non leveraged.

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  77. I could be wrong but I'm still seeing a lot of dip buyers in energy.

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  78. SPX 1933 - "1933 was the worst year of the depression with unemployment peaking at 25.2% with ( 1 in 4 people unemployed ) in 1933 . Adolf Hitler became the chancellor of Germany and opened the first concentration camp at Dachau. 10's of thousands travelled the road and rail in America looking for work , and the US banking system which was under great strain was propped up by the US government ( US banking act of 1933 )to try and stop the panic of people withdrawing their money from the banks. the continuing drought in the Midwest made even more of the land into dust bowls "

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  79. INO - Dropped like a hot potato, but this company has had excellent success in treating Ebola in small animals. Not sure what CRMX has achieved?

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  80. Russell 2000 closed 2 points below the danger zone (Tom Cruz flies there).

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