Tuesday, June 2, 2015

6/2/15 The Eagle Dives

The Euro is soaring +2% against the dollar.  Speculators are buying today's drop in the $USD> I'm inclined to think they're wrong.

Opened place bets 'across the board' this morning: PBR (Petrobras), Brazilian miner VALE, RYWVX (Rydex 2x Emerging Markets), RYTNX (Rydex 2x SPX), even EXAS (Exact Sciences).  All on strength (seemingly not my  usual style).  Note, however, that all assets sold off relentlessly over the past two weeks, making them trades on 'the right hand side.'  Rather than buy capitulation, I'm trying to catch the ebb and flow of prices away from the turns.  EXAS?  That's a bet on a squeeze.  Any shorts caught sleeping during the -8% drop to 25 two weeks ago are about to be tested (in my opinion).


Collateral bets on RYPMX (Rydex Precious Metals) + RYMBX (Rydex Commodities) at the close.

76 comments:

  1. BB - Thanks for the link to the Tweedy Brown article on what works.

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    1. Its funny, though, when I pull up Tweedy Browne's historical after tax returns, I find that they have underperformed the market:
      http://www.tweedy.com/funds/vf/performance.php

      Maybe their article about what works is wrong?

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    2. The Value Fund you posted has outperformed over time - 508% to 479%. Their other main fund has done better - 705% to 300% - http://www.tweedy.com/funds/gvf/performance.php

      I think they are running into the issue now fo being too successful and having too much money to manage to be effective. The average market cap of their holdings is $104 billion - http://www.tweedy.com/resources/vf/FactsTBVF043015.pdf

      They are recognized as one of the premier value investment fund companies, but if anyone gets too big, they underperform.

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  2. ENSV - Might be worth a look near here...

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  3. GEVO - Makes green jet fuel, US government wants to reduce aircraft emissions.

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  4. KRE (Regional banks ETF) looks to be breaking out of consolidation range it has been in for the last couple of years and up to new 5 year highs. These guys should be prime beneficiaries of rising rates, so could be the start of a good move if rates continue to firm.

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    1. And interest rate ETF's like TLT, LQD look to be breaking down. JNK down a lot akready.

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  5. My son just said he hates that Seaworld commercial. Love that kid!

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  6. YRCW- Wow, look at the bend in that baby.

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  7. probably not a horrible spot to consider beginning a longer term position in TWTR...if you’re willing to watch it drop $5 first

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    1. restarted a position in TWTR at $37. smaller position that i'm hoping to add to and hold for longer. i figure if they hit their revenue targets for 2016 and assume it trades at a 12 price to sales then the market cap would be $3.3 Billion x 12 = $39.6 Billion vs a market cap of around $25 Billion right now. That would be about 60% upside from here.

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  8. I sold my position in EJ to move $$ into TWTR. I broke even on that one. I don't have the same kind of conviction longer term with that one as I do with TWTR

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  9. EHIC - Tiger Global took a huge stake in these guys. They're trying to become the HTZ / CAR of China.

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  10. I've been watching TWTR as well. Bidding the pivot at 36.39.

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    1. I'm looking to add lower if possible. I don't see any imminent catalysts to move it so gonna be slow with it.

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  11. ENPH just can't hold on any good news.

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  12. Hydrogen - Only viable way I can see for hydrogen production is by using nuclear reaction to produce it. That breaks humans from carbon fuels.

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  13. Thinking about jumping back into AA. Back down to $12.65 now. Should do well with the growing economy and the requirement for lighter aircraft and vehicles to save fuel. Still expensive on a trailing p/e basis, but fwd p/e is 10, so analysts think good things are coming.

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    1. Lighter aircraft are aluminum? I thought they were using more composites like those made by HXL?

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  14. I guess with higher rates this means ending of easy money keeping fresh capital flowing into money losers thus bankruptcies occur and bankers swoop in to scarf on dead meat like buzzards? Sound about right?

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  15. My thinking is these flippers of stocks will eventually get blow out by a sharp move up.

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  16. I doubled up on my positions in SPWR and FSLR. Sold out of more IACI to fund it. I want to be in these stocks for the next few weeks as I think this yieldco IPO (8Point3 Energy) will be a significant catalyst.

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  17. Price action seems random, aside from BXE.

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  18. My self-absorbed persona asks.... So Why isn't $WTIC trading under $30?

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  19. Going through some posts by Tim Melvin. I see he's back to posting after a long hiatus.

    http://www.timmelvin.com/little-bank-big-deal/

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  20. MLM - Getting some insider buying....

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  21. (a) RYTNX (Rydex 2x SPX) was closed at the 1030 est window for a +1% gain.
    (b) PBR (Petrobras) and VALE well off intraday highs of 9.12/ 6.93. Would normally have closed both on the morning spikes, but I'm content with positions sizes and hoping for double-digit gains given a longer time frame.
    (c) EXAS up +1% to 27.39. A squeeze will begin in earnest once/(if!) price approaches 30.
    (d) Treasury holders in pain. TLT -1.68%. Even TIPS now at a 52-week low. A timely reminder that even inflation-protected bonds are subject to duration risk (with the average inflation-protected Treasury fund exhibiting a duration of 8 years).

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  22. LNG - Looks like Seth is dumping.....

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  23. Anybody seen any stocks they'd say have collapsed?

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    1. I've seen a shit load that have fallen sharply. Anyone have any concerns about the late day selloffs of late?

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    2. Coal is gone, say goodby. The battle will be over nuclear I think, or an emphasis on natty taking the place of coal and consider, nuclear takes a long time to construct unless maybe we've got small factory-built reactors on the way?

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  24. (a) EXAS (Exact Sciences) off pre-market @ 28.14 for a +6% gain over 2 days (the early morning spike sparked by a press release re a partnership with MD Anderson). My 2017 target price for this stock? Likely >100, with multiple dips and rises along the way.

    (b) The $USD resumes its decline. Here's the thing. Prices of commodities and gold, which normally display a negative correlation to the buck, have decided instead to display positive correlation. Market frustration at its best, and not good for any of my remaining positions. I will likely be exiting plays on Emerging Markets, miners, and commodities later today- all for losses. It's pointless to argue with the market (no doubt a hotly debated topic among Hussman's remaining staff). Sure, the negative correlation may in fact kick in later today or tomorrow (certainly characteristic of a market which loves to thwart investors), but I don't like to trade on hope.

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  25. TLT - Exactly what I was anticipating.

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  26. EYES- Man, if this one can break free of the gravitational pull here it's off to 20.

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    1. Wish I hadn't sold 2/3 at a loss.....

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  27. TWTR- We'll, everyones talking about it that's for sure.

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    1. Looks like a bull flag to me, but the diagonal is really long. Maybe it took someone a long time for accumulation? Anyway, the negative slope diagonal is a sign of a bear trap forming.

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  28. The entire heat map is lit red like The Fugushima.

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  29. PCP- Had a really good day yesterday, that encouraged me.

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  30. I think I fucked up the ipo date for the FSLR / spwr yieldco. I don't think it's coming til later in year so might bail on them for time being. That was part of my reason for buying them here so if it changes then I need to adjust.

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    1. Of the two, though, SPWR is clearly stronger than FSLR. Probably because SPWR has more exposure to residential than FSLR. But FSLR trades around book value with a huge chunk of their value in net cash, so its definitely cheaper.

      Both are a play on the longer term shift toward solar that will happen...and these yieldcos are giving them a good way to offload their solar projects (and raise cash) while receiving a steady stream of income kicked back to them from the yieldcos.

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    2. Yes, my broker prefers SPWR over FSLR. FSLR is deposited film on "glass" and SPWR is silicon substrate I think. Takes a lot of energy to grow silicon ingots.

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  31. EVA - Getting much cheaper than IPO, why isn't alt-energy going gangbusters if it's the future?
    BWEN is up, the windbag.

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  32. PSEC - Looks to have a decent bid here....

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  33. Replies
    1. I think you see a lot of IBB becoming the next MCP

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  34. Sold FSLR at $49.8 and SPWR at $30.8. Going to try these again later when I have more clarity on the IPO date for 8Point3.

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  35. "Hadoop is becoming the cornerstone" - Hadoop was created by Doug Cutting and Mike Cafarella in 2005. Cutting, who was working at Yahoo! at the time, named it after his son's toy elephant It was originally developed to support distribution for the Nutch search engine project.

    So I guess YHOO owns rights?

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  36. TROW (hadoop?) - .... They funded ($200m), along with INTC ($900mm), Cloudera, the company Doug Cutting went to work for c: 2009

    T. Rowe Price Group Inc $79.97 $90.00 Buy Hold Buy
    Invesco Ltd $39.83 $47.00 Buy Buy Buy
    Franklin Resources Inc $51.12 $58.00 Neutral Buy Buy
    Affiliated Managers Group Inc $226.07 $255.00 Buy Hold Buy
    Carlyle Group LP $29.18 $33.00 Buy Hold Hold
    Och-Ziff Capital Management Group LLC $12.79 $15.00 Buy Buy

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  37. Rates seem to be rising (TLT, LQD) after this mornings probable dead cat bounce. So, likely the selloff in bonds continues. I think rising rates are a good things, but I am worried about the short term dislocation that may go with this.

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    1. Makes sense. Lack of cheap money thus money losers tripping over their debt load.

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  38. AMT - Seems to be breaking out of downtrend.

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  39. BB - I think if we see rates rise with a pullback then yes that would be concerning. If they don't then this could just be more of the same.

    I pared back almost all of my longs this morning and am just holding some BIS, a small amount of CRNT, and a little IACI because it just seems like trading has been unhealthy. I've been wanting to take on less risk as the summer progresses, thinking we would see a fairly large pullback in the fall, but am open to a smaller pullback happening sooner. And if it does, I think it would diffuse the potential for a larger one later.

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  40. BXE - Looking forward to getting at least a 20 cent haircut today.

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  41. Notice now PMs are moving, same thing happened during the financial crash. Oil too.. Disinflation isn't pushing silver to $250 as conjectured, now is it? Of course if you have friends looking to sell their miner positions you'd gladly accept a consultant fee to talk their book for them.

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  42. RUSL - Is oil moving Russia or is Russia moving oil?

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  43. ORBC - Damn, missed all that upside while watching turds sink.

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  44. Anybody have some idea of what comes following a miraculous recovery?

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  45. NLY - $9.85 target? Talk about small CAPS volatility.....

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  46. NBG - So the excitement was fake?

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  47. ENPH - Smoke 'em if ya got 'em..... better entry here.

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  48. Sold BIS at $30.1 to $30.2. There's no confirmation yet of significant downside (I'm looking for a crossover down of the 20day EMA vs 50day EMA) so probably makes sense to take the profit.

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    1. not sure if these will come through but check out what i'm referring to with the crossovers:
      Before the 2011 crash: http://stockcharts.com/h-sc/ui?s=%24SPX&p=D&st=2011-01-03&en=2011-12-01&id=p38620328925

      Before the 1987 crash: http://stockcharts.com/articles/chartwatchers/2012/10/lessons-from-the-1987-crash.html

      I'm using the 1987 analogy just because it has some pretty similar characteristics with the runup in biotechs. There's no guarantee it happens of course so I'm thinking that this crossover could be a good trigger for trying out the trade when it happens, assuming there's a big push up / blow off move higher before the crossover down.

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  49. Bought back some IACI at $76.4 and bought GOOGL at 550.9

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  50. That was so much fun, I'm no longer inside myself.

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  51. What's in your pantry?
    "Nestle India collapses over -9% yesterday as their pre-packaged noodles are found to contain high amounts of lead. The noodles account for 25% of the company’s sales."

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  52. Good article on Margin Debt:
    http://www.seeitmarket.com/why-record-margin-debt-isnt-flashing-a-market-crash-signal-14429/

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  53. (a) RYWVX (Rydex 2x Emerging Markets) was closed @ the 1030 est window for a -2% loss.
    (b) PBR (Petrobras) and VALE closed near the open for slight gains (from basis).
    (c) RYPMX (Rydex Precious Metals) will be closed end of day for what will amount to a -3% loss from basis.
    (d) RYMBX (Rydex Commodities) for a -2% loss from basis.

    With few exceptions, the market rewards taking losses quickly. Traders who veer from that approach usually retire early (or resurface later as new authors!). I have yet to come across an investing book that focuses purely on the art of handling losses, even if (in my opinion) almost 100% of successful trading resides in the ability to quickly exit positions that move against you (a daily occurrence for most traders). Probably for the same reason no one buys books on defensive driving tactics.

    The DJIA is currently off -183 points. Friday will include Non-farm Payrolls at 0830 est, always a market mover.

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  54. LAKE - This one moved up on volume.

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