(a) What is the Plunge Protection Team (PPT)?
http://www.investopedia.com/terms/p/plunge-protection-team.asp
(b) I have no idea whether a similar 'working group' exists in China, but with the Shanghai Composite already in bear market territory, extraordinary measures were taken this week.
http://www.reuters.com/article/2015/07/04/us-china-markets-brokerage-pledge-idUSKCN0PE08E20150704
In my opinion, if it's in the best interests of global central banks, a great deal more than $19.3b will be made available for purchase of shares listed on the Composite.
Sounds like a done deal: http://www.marketwatch.com/story/china-to-set-up-fund-to-curb-stock-selloff-2015-07-04
ReplyDeleteThere is now implicit support for the Shanghai Composite up to 4500. How effective a backstop will it provide?
ReplyDelete(a) There are two sides to every transaction.
(b) Trapped bulls represent a formidable headwind.
(c) We know the market will frustrate the majority.
In my opinion, the greater risk is an acceleration to the downside. Will the typical investor in China find weekend news reassuring? The more likely response to extraordinary measures is generally, 'How bad is it?'
The 'Oxis' have it in Greece (by a landslide). SPX futures down -30 points, DJIA -230 points. Of course, we all know by now that the predictive value of overnight futures is essentially zero. Next up will be the open in Asia.
ReplyDeleteEuro/$USD -0.6%, Germany's DAX futures -3.6%, Crude -4%, long-dated Treasurys +1.9%.
ReplyDeleteInteresting thoughts to ponder.
ReplyDeleteTo this point we have not seen much weakness in U.S. markets BUT we are witnessing the "volume" dry up drastically. This lack of volume also speaks to the size of the exit door. Without volume, how does one sell if they want to? Better yet, without sufficient volume, how does one sell if they HAVE TO or are FORCED TO? In Asia, China's stock market has collapsed over 20% in just three weeks. They are living a real life margin call! What is most humorous to me is China has now instituted rules where stock market margin calls can be met by posting real estate as collateral! Meeting margin with an already margined asset is the recipe for disaster!
This comment has been removed by the author.
DeleteThis comment has been removed by the author.
DeleteOften times I like to write about an event or someone else's article because of the importance to the overall picture. Today I will do something a little different. Below is an e-mail I received last Thursday from a friend. I have the utmost respect for his thought process and his knowledge. The writer is "plugged in" if you will, he has very high and powerful contacts in both China and London while he operates out of North America. The following is chilling to say the least because it comes from someone who "knows", it is not a speculation on his part because he is seeing it real time! I will add my comments afterward.
Delete"I have been pounding the drum for some time about shrinking liquidity and what the impact will be. Well, I can tell you that we are almost there and a real crisis is developing far faster than what I envisioned that is impacting the 75 Trillion Shadow Banking sector which is on the verge of implosion. Focus on Europe as the real crunch will spread like a wildfire from there seizing up all credit markets.
We will ignore China and the BRIC for the time being as to impact and focus on the European Ponzi that the bankers have brought to the table.
The specific area we should keep an eye on is the U.S./bund 10yr yield spread, currently quoted at 155bp. This spread will start taking its lead from the euro, so when that starts to lose favor keep sharp eye out for the next shoe to drop.
Asian shares were very volatile today, Shanghai in particular, trading with a 10% variation (daily low to high) today as PBOC were active again. In Europe we did see small gains intraday in DAX and CAC but neither could hold on and actually closed well into negative territory both down over 1%. UK FTSE never got into the green all day and closed -1.5%. Even seasoned Traders are scared now about intra day swings and being caught in a downdraft at closing. Banks are tightening the leash on trading lines to reduce exposure which is sure to castrate liquidity of bonds.
Credit markets are almost closed, I am being told! I REPEAT again the CREDIT markets are almost closed! Trades are happening by appointment and to even move 1MM EM bonds (at an opening price) is almost impossible. It is not uncommon to hear an indication only to trade and a 2% trade away from from opening, assuming you are able to trade, and desire to trade is no guarantee of a sale. NO ONE is standing up to market prices and to liquidate even a small portfolio can take weeks. It is important that you cannot any longer trade the basis as value is dropping and there no point to partially selling specific bonds unless you can clear a given position! Because once there is a traded price ALL holders of same or similar will have to remark the book. That is unless you are a bank where the Balance Sheet is not a Mark-to-Market approach on a daily basis for the book being held. Think holding government debt at par for the likes of Italy or Spain knowing they can never clear the debt, and knowing that no one will buy at market. So what is the true value of a large portfolio? Do you hang on getting interest while it is still being paid or do you attempt to go to cash? And if you do who is going to step into your shoes ? Especially since the banks are all trying to save cash and want no exposure of any kind. We maybe approaching the point where central banks are losing credibility and their ability to contain the fallout, when governments are so badly in debt they are powerless and rudderless in a sea of chaos.
We are coming very close to complete chaos that will make 2008 look like a walk in the park! We will be fortunate if we make fall without a real financial disaster!
Continuing:
ReplyDeleteFollowing up from yesterday let's ponder the upcoming Crisis that we are facing that specifically involves bonds, which are the bedrock of the financial system and what the fallout maybe.
Every asset class in the world trades based on the pricing of bonds. So the fact that bonds are in a bubble (perhaps the biggest bubble in financial history), means that EVERY asset class is in a bubble. Everything from real estate to stocks to the buying of cars. Ever wonder why car loans in America exceed the value of the cars in question.
Depending on who you speak with globally there are $75-$100 trillion in bonds in existence today.
A little over a third of this is in the US. About half comes from developed nations outside of the US. And finally, emerging markets make up the remaining 14%.
So whatever the real trillion it is, the size of the bond bubble alone should be enough to give pause. Even to the most aggressive or optimistic folks.
However, when you consider that these bonds are pledged as collateral for other securities (usually over-the-counter derivatives) the full impact of the bond bubble explodes higher to something like $500TRILLION. This affects both banks and the shadow banking industry. No wonder the Bank of England is perplexed as to the shrinking liquidity, it is a problem to which they have no solution.
To put this into perspective, the Credit Default Swap (CDS) market that nearly took down the financial system in 2008 was only a tenth of this ($50-$60 trillion).
And this was at a time when there was QE and other means to throw at the problem which are now spent. So what will be used this round?
This is why the shrinking liquidity in bond sales is even to give real pause and wonder what will come to be as confidence in government wanes, and the shrinking liquidity affects all markets at the same time in different degrees but with a universal discount of value and liquidity, egged on by collapsing derivative trades."
So there you have it. This is something I have been saying for quite some time, we are living in the greatest credit bubble of all time...and it is bursting. It is bursting because liquidity is drying up. The point made regarding the inability to offload bonds speaks to just how small the "exit door" really is in the most crowded trade in all of history! I hope you did not miss what was said about "marking to market". The sale of a measly $1 million worth of bonds at any discount affects the pricing of BILLIONS which then acts as a further liquidity restriction on bank balance sheets.
To this point we have not seen much weakness in U.S. markets BUT we are witnessing the "volume" dry up drastically. This lack of volume also speaks to the size of the exit door. Without volume, how does one sell if they want to? Better yet, without sufficient volume, how does one sell if they HAVE TO or are FORCED TO? In Asia, China's stock market has collapsed over 20% in just three weeks. They are living a real life margin call! What is most humorous to me is China has now instituted rules where stock market margin calls can be met by posting real estate as collateral! Meeting margin with an already margined asset is the recipe for disaster!
Please understand this, "policy" and central banks are doing whatever they can to keep investors away from the exit door because they know there isn't one. Central banks all over the world are "buyers" of nearly all things paper, do we really have "markets"? Anywhere? Let me finish with this, it is written in the Bible "and on the third day He rose again". Here on Earth I believe we will soon find out after credit breaks, "and on the third day ...nothing opened". I truly believe this is possible. I do not believe the Earth can spin more than twice after a true break in the credit markets before a COMPLETE SHUTDOWN will occur. Nothing "paper" will be spared!
Are these your words t3?
DeleteNo, and I specifically left it anonymous, so as to not influence peoples bias.
DeleteI'll reveal later.
I think its pretty obvious that liquidity has very poor.
Going to be an interesting start to the week. Greek government is out of touch with how things work - no way Europe gives them a better deal because of Greece's threatening or they lose all credibility and power to deal with other issues. They almost have to give them a worse deal to prove their point.
ReplyDeleteNot sure what it means to the markets. Still think getting clarity on this issue takes risk out of the market and gets things moving up again, but shorter term, who knows? Like 2nd says, overnight futures are down but means nothing as the lows in the market these days often seem to happen in the overnight futures.
But I really think everyone is pre-pared for this. Every government has a plan in place. Every business knows their Greek exposure. Every serious investor and Investment Manager has reviewed their portfolio's thoroughly to see how Greece might affect them.
I really don't see any economic downside from this outside Greece and a few companies. Seems if we get a big pullback, will be a "blood in the streets" type moment.
I am open to different scenarios playing out and watching, but my main thinking is we are higher than now in a month and moving out of consolidation into a bull phase of the market
BB, man I hope your right, but I just do not see how it could be that easy.
ReplyDeleteYou have to say that the vote was true democracy at work, refreshing IMO.
I'm 6% long and prefer zero.
Shanghai opened up almost +8%. From the perspective of a trapped bull, that probably fell somewhere between 'exceeded my wildest dreams' and 'answered prayer.' So it's no surprise the opening rally was sold. After declining to +2%, the Composite has now recovered to +3.8%.
ReplyDeleteI don't have a 'take' on direction going forward, nor do I need one until US markets are open for trade.
DeleteHaving a hard reconciling reports that banks and brokerages are 'prepared' for the fallout from the Oxi vote with comments that no one really knows what the fallout will be.
ReplyDelete'hard time'
DeleteShanghai needs to close decisively higher, or the response to the 'extraordinary measures' taken will be, 'That's it?' Which makes Tuesday a problem.
ReplyDeleteHong Kong traders appear skeptical, with the Hang Seng reversing earlier gains to trade lower (now -1.7%).
ReplyDelete"Rainbows always appear after rains," said an editorial by the People's Daily, the mouthpiece of the ruling Communist Party of China.
ReplyDelete"(China has) the conditions, ability and confidence in maintaining capital market stability," the newspaper said.
http://www.reuters.com/article/2015/07/06/us-china-stocks-media-idUSKCN0PG01420150706?feedType=RSS&feedName=businessNews
Seriously? Now I'm worried. The market rarely accommodates predictions, let alone challenges to its autonomy.
The candy man can.
ReplyDeleteThe Chinese stock market is in serious trouble. Even after this big pullback, it is still up more than double in the last year and it is way overvalued on most fundamentals. The government can try and fix things, but I think even Communists will come to realize this is futile. Too much margin debt and people looking to sell. Markets are bigger than governments.
ReplyDeleteStrange, but the biggest loser in the market this morning is not the Euro or European stocks or US futures, which are now all down less than 1%, but the price of oil which is down almost 5%.
ReplyDeleteMay be due to something completely unrelated - not sure if it means anything
http://seekingalpha.com/news/2612845-ferrari-ipo-may-exceed-11b
ReplyDeleteSo, if the value of Ferrari is $11 billion, of which 10% is owned by the family, it leaves about $10 billion inside FCAU. This $10 billion of value is being surfaced by raising $1 billion of cash into the company and the distribution of $9 billion in shares to the shareholders.
The market cap of FCAU is $18 billion, so this implies that the rest of FCAU is only worth about $8 billion dollars. This would be way undervalued compared to the market.
Even if FCAU just holds its current stock price and we get Ferrari shares, that would a 50% return this year (assuming the IPO goes ahead).
Am I missing something here?
(a) The Shanghai Composite closed +2.41%, not exactly a decisive rally.
ReplyDelete(b) Guangdong's Shenzhen Composite, which also gapped up (+6.5%) at the open, closed in the red, down -2.7%: http://www.bloomberg.com/quote/SZCOMP:IND
(c) The Hang Seng plunged over 800 points (at one point >900 points) to close -3.18%.
From a sentiment perspective, the most likely scenarios are:
(a) After shaking off the majority of retail investors (many of whom borrowed heavily to fund stock purchases), China indexes will rip higher, allowing the PBOC (People's Bank of China) the illusion of a successful intervention (I don't expect any rallies to last long).
(b) The China market will briefly reward dip-buyers, only to resume its slide (newly-trapped bulls will accelerate the decline).
I think CP nailed it. Everyone's on the phone to the Candy Man this morning. Let's see what he can do.
ReplyDeleteIt's tough to bet on the Candy Man right now. But it's never wise to bet against him. Tough call.
DeleteBXE - There's just no way I could ever add to this one, it's being priced for BK, it's coming I can feel it.
ReplyDeleteStill the one that moves my portfolio the most, despite it's only worth 1/4 what I paid for it.
DeleteENPH- Magic number today is 7.20!
ReplyDeleteZ - Back to previous lows, which will likely hold IMO so a good entry if you believe in it..
ReplyDeleteWhos was it Tele?
ReplyDeleteBill Holter
DeleteENPH - There's the entry. Just add if it does go lower and hang on tight.
ReplyDeleteI didn't get it yet. Only a couple hundred shares traded at that price.
DeleteI might pull my bid quickly. It might be holding it up....or I'll take a shower.
DeletePay the couple pennies and get it, if you believe in it.
DeleteI guess that's the issue. Right now I don't really believe in anything.
DeleteOK. I'm going to cover all the bases. I pulled my bid, am going to shower AND shave. Be right back.
DeleteThere's something out there in demand, just not sure what it's likely to be. Planes/trains/automobiles?
Deletebiotech is solid here
DeletePBMD not withstanding missed getting back in to BIIB, considering
NAV - Nicely green in a sea of red, not sure why this one was beat up so badly....
ReplyDeleteRUSL - Down another 8%, wonder what Putin's up to....
ReplyDeleteThe opening negativity opened up a few buying opportunites: GREK (Greece) @ 10.1x, RSX (Russia) @ 17.5x, and RYWVX (Rydex 2x Emerging Markets) at the 1030 est trading window.
ReplyDeleteYou are a brave trader!
DeleteChina - So if you anticipate China is overbought, what would the expectation for US markets when China does correct? Why pump stocks here as opposed to waiting for the fallout.....
ReplyDeleteWhy not shot something instead, what about that.
Market got green there for a few minutes. Going to be interesting to see what happens when the European markets close.
ReplyDeleteI added to my BIS position at around $28, a bit too early. I'm using a move above $376 for IBB as a stop out point.
ReplyDeleteNice to see WMT picking it up a little. If it starts outperforming it could be a sign the market is going through a rough patch as it significantly outperformed after similar oversold readings heading into the 2000 and 2007 market tops. Not a big enough sample size but something to keep an eye one.
I almost bought FCAU at $13.9 this morning. I'm very tempted at these prices. I was hoping to get $13.75 so not sure why I passed up on the chance given how close it was.
ReplyDeleteYANG - I guess we missed it.
ReplyDeleteAdded 25% to my position in AGO. S&P says have lots of money and can handle Puerto Rico issues - should help bring some fear out of the stock and get moving up again.
ReplyDeletehttp://finance.yahoo.com/news/p-affirms-assured-guaranty-aa-143400539.html
PBMD, dumped, if I'm going to get beat in bio its going to be in the better names not sub $5 specs, just not my game.
ReplyDeleteI ended up selling my BIS at $28.1 to $28.3 and taking a loss on it. My conviction on this trade isn't very high right here but I will be trying it again when I can get some more clarity on a setup.
ReplyDeleteBought some FCAU today at $14.08 to $14.15. Not a huge position but want to add to it if it drops lower.
ReplyDeleteWhat did you think of the 11B valuation?
DeleteI agree with it. I have been thinking it will be at 30 to 40x earnings. That's a standard multiple for brands that are this exclusive. Earnings were around $350 Million last year so that puts it at $10.5 to $14 Billion. Leaves $6 to $10 Billion for the rest. The rest did $700 M income last year. They're raising dealer prices by 1%. Margins were 0.85% last year so a 1% jump could increase net income by 100% for rest of company, meaning it could be trading at 4 to 7x net income ex-Ferrari. GM/F trade at around 8x so it's not THAT cheap, but I think all of their multiples have room to rise to 10x. I've been thinking $20 as a target for a while now. Gonna leave some room to add lower no matter what.
DeleteEither way dude I'm leaving open the possibility for a significant pullback in biotechs pulling down a lot of stuff. There's so much optimism built into that sector that it is no doubt going to have negative spillover effects. I've been super cautious for a few months now and don't really plan on changing it.
DeleteBack into BIS at $28.2. I think I just need to do a gradual approach with this sector
ReplyDeleteIf IBB is like the Nasdaq in 2000, the hard part will be the final ramp up which shakes out all shorts before crashing.
DeleteThe Nasdaq had its first big plunge in March, 2000, then had a pretty good bounce for a few months before the big downtrend started - I am keeping that in my mind as the way this could play out too.
Yep. I've been studying all of the "crash" charts for several months now to get a sense for how this could play out.
DeleteSPWR - Judging by price action, looks like the subsidies might be on hold for a bit longer?
ReplyDeletePretty nice haircut for oil there, this must indicate a booming economy and demand for everything strong and building, lol....
ReplyDeleteha I love your cynicism!
Deletewere there any reports out today on oil / rigs?
Quite right, good point, none of the experts expected it.
DeleteI'm getting tempted to buy a couple China stocks but I suspect we get a complete washout soon. I like BITA on a crash
ReplyDeleteI'm thinking $30 for BITA on some crash type event.
DeleteCBI/JONE - A couple more obvious steamers....
ReplyDeleteKB - By the way, it seems perhaps I was correct about this one being a decent proxy for China.
ReplyDeleteRussia - Some 200+ banks are being shuttered, is this really true? I guess if I had a realtime news feed I'd be buying hand over fist, lol.
ReplyDeleteAdditional positions near/at the close:
ReplyDelete(a) PBR (Petrobras) @ 8.07.
(b) RYVIX (Rydex Energy Services).
(c) RYEUX (Rydex 1.25x Europe).
(d) EWH (Hong Kong).
(e) Bumping up the position in RYWVX (Rydex 2x Emerging Markets).
I didn't realize how weak many commodities and emerging markets are. I'm assuming its all tied to China.
ReplyDeleteCOPPER: there was a lot of support around $3 that gave way at the end of last year. Looks like all it did was bounce back to prior support and is rolling over again.
EEM: looks like a similar chart to copper. If it breaks through support around $36 or so then it looks like it could drop to $30.
GLD: looks like it's weakening and about to give way to lower prices
Wonder how to best play this. I'm definitely going to avoid companies like X, AA, FCX etc.
Kind of goes together with what we were talking about with the baltic dry index and coal consumption. i saw the BDI was up a good deal lately, but its really not even close to allowing the major players to make money.
DeleteI've also seen a couple reports recently about very weak iron ore pricing out of Australia.
DeleteI think the China build-out is slowing and they are responsible for half the world's copper (and other base metal) consumption, so if this is weakening, it will definitely be a big factor in overall supply/demand fundamentals.
I've still got a small position in IVN.TO as a flier and bet on the CEO, but in general, metals can go through years of tough times and it may be that situation again.
Who can take a rainbow, wrap it in a sigh.....
ReplyDeletehttp://3417.vd.aclst.com/dl.php/xD5iCHl_iiE/Primus%20%26amp%3B%20The%20Chocolate%20Factory%20-%20Candy%20Man%20-.mp3?video_id=xD5iCHl_iiE&t=eEQ1aUNIbF9paUUtMzUxNzE1MjY2Ni0xNDM2MjMzODAyLTMyNjc3OQ%3D%3D&exp=10-07-2015&s=173d2d248e1d4e7501c2c9979a9f832c
All trades opened yesterday can be labeled 'ill-fated.' My bad. Attempting to play a bounce before prices resume their slide can be tricky. Of course, I had well-defined loss parameters, so the damage will be quite manageable. The failed rally attempts in Asia and Europe are worrisome. I would take the time to consider how comfortable you are with exposure.
ReplyDeleteDang PBMD plus 45%
ReplyDeleteNo short float, might be a reason for that?
DeleteIt's the elevator down this morning. Bonds + utilities +$USD the only assets working. Gold as a safe haven? Spot gold -1%, miners -3%. Euro -1%. Selling intensity tells me we should see a V-type bounce and close green. If we don't, it's clearly risk off.
ReplyDeleteENPH- Today's magic number is 7.04. Bidding there.
ReplyDeleteI'd be really surprised.
DeleteGBX - Oops, bought some GBX on a stink bid.... $44.82, rule of 80/20
ReplyDeleteVNM - Oh, so POTUS has been working a trade deal? Just heard of it and lookie see......
ReplyDeleteNBL- Cuts right through S2. Amazing.
ReplyDeleteIran - Still working on Iranian trade deal..... Met an intelligence officer, he said no way Jose, not ever.
ReplyDeleteA guy I've seen but never spoken with before.
DeletePSEC - I should double up on this one, but also considering CLMT for the div... Been waiting for CLMT to get whacked and so far no good.
ReplyDeleteCreosote - Dang, can't recall the ticker of the company that produces creosote....
ReplyDeleteLOG?
DeleteRailroad Ties, LOG is a toymaker?
DeleteAMD - There ya go.
ReplyDeleteThe engineering talent was lost to BRCM, I heard.
DeleteBXE - Hardly worth anything, moving forward.
ReplyDeleteCBI - It would suck to lose that much money on a stock that doesn't even pay a dividend, to speak of.
ReplyDeleteFCAU - Not far from where I originally bought. Remember AA/BALT, the other stocks that rose on a prayer and a whim only to crash again? Oilers too.
ReplyDeleteYeah nuts huh? So many things are giving up all of their gains. Just in looking at past charts, reminds me a lot of the "breakout" in stocks in 1980/81, only to be followed by a complete reversal of those gains in 1981/82.
DeleteI really hope we see a biotech crash.
Maybe you actually hope it goes much higher before the crash happens. I think these guys have made a lot of progress, still don't know of anyone cured by gene therapy but designer babies are lower heath insurance risk by 50% and that's huge.
DeleteYeah I'm just playing a setup similar to the 1987 crash for biotechs. XBI and IBB are up huge this year, on top of massive gains the past 4 years...and with huge valuations.
DeleteBITA - Wow.
ReplyDeleteChinese stock sporting 30 PE and 6x sales...... In downtrend.
DeleteSBNY - Ouch, wonder if new positions are worth holding or maybe the top is finally in for a while?
ReplyDeleteCYBR - Another fallen angle. It's no wonder so many stocks have been trending down, I categorize some of those as low risk now, hopefully. Take ENPH for instance, if their products are going into the field hot cakes style they should do great. I guess Markster has a handle on this but not know about competition, or maybe even a buyout is possible..
ReplyDeleteadded 1/3 position to CBI. Previous purchase was $38.79, but I don't think it gets that low again. Think the overall market pullback is getting closer to the end and CBI is being pulled down again by the drop in oil prices, even though oil is a very minor part of their business. Back to an 8 p/e, which is very cheap both in the market and about half their traditional valuation. PLus they are a well run company with only 1 loss (a minor 1) in the last 10 years.
ReplyDeleteAlso, S&P has it as a 5-star stock and Buffet is still a 10% holder (unless he sold and forgot to call me) and they other smart money guys in it as well.
DeleteFunny I was looking at this one last night. Clearly that potential Iran deal is putting extra pressure on oil. I still have a really hard time valuing oil and so I just choose to mostly stay clear of that entire sector.
DeleteGood luck
I thought about buying double the position I did, but kept back half in case we do get a further pullback.
DeleteI do think though the company is really misjudged as an energy company, but pretty much all of their business is energy infrastructure related, like nuclear, LNG, energy processing, so they are only minorly affected by oil drilling, etc. Their CEO has confirmed earnings forecasts of over $5.00 a share for 2015.
I wanna see if the gap up closes, it might.
DeleteThe past two weeks are reminiscent of 1987. History often rhymes-> high valuations, large swings in prices (China, in this case), a few warning shots across the bow.
ReplyDeleteShould the situation become 'uncomfortable,' my advice is to become comfortable with selling. The human mind is not designed to handle losses well (for whatever reason). Investors often prefer to ride a position down (in hopes it will eventually recover, of course) over taking a minor loss upfront even when downside risk is clear.
Sure, a small loss will hurt. I probably take one every week! But far less than let’s say a -25% to -50% drawdown.
Don't forget about WMT, seems to have leveled off.
DeleteSMART!
DeleteWM seems to have completed it's correction as well. There could be some upside coming?
DeleteNATI - Back to support.
ReplyDeleteMAC - Teachers Union's buy looking decent, not crashing. Gotta think they're smart(er)t money.
JONE - Now green lol, about frikin' time.
ReplyDeletePACB - This is support.... I just don't trust the gang isn't sucking money out paying themselves handsomely.
ReplyDeleteBABA - This one seems well poised to me, for dovetailing with the new China.
ReplyDeleteI have to conserve some cash just in case silver does reach $13.....
ReplyDeleteSWC - Seems to be a good price here, assuming they still have metal in their mine.
ReplyDeleteEYES - Well, maybe I get a chance to reload that 2/3 I offed at the last low......
ReplyDelete"Chinese government lost control of the market" CNBC This was said with a sort of tone of acceptance of central banks being market makers.
ReplyDeleteWell timed margin calls.
ReplyDeleteMarkets have popped to the green. Let's see if they can hold now. Yesterday, they didn't last long in the positive before turning back down.
ReplyDeleteI think the end-game fro Greece is getting pretty obvious now, so perhaps that is enough to give markets some certainty and can get back to looking at the more important things like the good US jobs data today.
"The past two weeks are reminiscent of 1987. History often rhymes-> high valuations, large swings in prices (China, in this case), a few warning shots across the bow.
ReplyDeleteShould the situation become 'uncomfortable,' my advice is to become comfortable with selling. The human mind is not designed to handle losses well (for whatever reason). Investors often prefer to ride a position down (in hopes it will eventually recover, of course) over taking a minor loss upfront even when downside risk is clear.
Sure, a small loss will hurt. I probably take one every week! But far less than let’s say a -25% to -50% drawdown."
Excellent advice 2nd. I have no idea where the market goes but there's definitely a recipe for a significant pullback in many stocks that have outperformed and are very overvalued (ie biotechs). The question is: from what levels? We have seen tons of things get oversold only to get more oversold (eg AA, X, FCX, EEM, RSX, YNDX, WMT, XOM, SNDK, MU, FSLR, SPWR etc). The markets that do this are the deadly ones...the ones where oversold readings don't matter. You guys know these. We get massive oversold readings causing people to rush in, a rally ensues, people set stops and hold overnight, then the market barrels lower. I'm seeing lots of signs of this in various sectors but the market is holding up well for now.
Either way, I'm going to remain cautious and trade opportunistically until I see valuations that look enticing.
We have our ‘V’ (the DJIA is now +200 off the intraday low) and I’m closing all positions possible at this time. The Rydex funds will have to wait for end of day.
ReplyDeleteAll long positions?
DeleteNaturally.
DeleteHere is a biotech article that echos TOF's sentiment.
ReplyDeletehttp://seekingalpha.com/article/3308585-are-biotechs-in-a-bubble
This calculation yields a TTM p/e of 97.84
DeleteEchoes, background music
Deletehttps://www.youtube.com/watch?v=xmADpBu_ZCA
T3 - This is actually my article from my blog that I keep for myself/family. I don't know why they have my name listed as Jonathan Verenger or whatever it is. I tried to get them to change it but they didn't. I don't really write for SA much anymore but I will say I like using it as another sentiment indicator...i.e., paying attention to the comments and the general tone.
DeleteFunny TOF, as soon as I started reading it, stopped to look at the author to see if it was you.
DeleteVery nice!
I like this comment best.
Delete"Just buy GILD, it's the cheapest and literally makes more money than all the other components of IBB combined."
by Illuminati Investments
Chuckled at the guy with the 20 year hold. He's probably the guy who bought QQQ in 1999 without worrying about valuation for a 20 year hold. The price you pay always matters.
DeleteShorter term it sure feels like a bottom is near:
ReplyDeletehttp://money.cnn.com/data/fear-and-greed/ - Reading is now 12
Lots of waterfall charts setting up.
I'm watching the Russell 2000 to see if it diverges and goes green before the others. Right now I'm not seeing that which means most likely people are still in sell mode.
Agree, gut says we open higher on tomorrows open.
DeleteWYNN casino stocks COST, solid
WMT CBI RSX interesting, plus AGO
solar's decimated with the whole oil and gas complex and the tsunami of coal, but solar should be the future. SUNE seems to have best RS in solar's.
FWIW
The other thing I'm thinking is with the way Gold is acting, that we may be at the start of the final washout sell-off of gold. If Greece, etc. can drive people into gold, not sure what will. I think it eventually bottoms for good in the $700 - $800 range. I would definitely be looking to buy some gold stocks if it did.
ReplyDeleteEvery time I want to buy a gold stock I kick myself. Been wanting to buy RBY for weeks, came to my senses and took it off the screen.
DeleteI do like trading FNV from time to time, maybe even here.
If you believe in magic, ah triple bottoms, look at FXC.
ReplyDeleteRIG, short covering or a turn?
DeleteNo-one likes those stocks - maybe they are good to buy.
DeleteBetting on a ‘V’ allowed me to dodge a few bullets:
ReplyDelete(a) OIH (oil services) now +1.5%, and hope to see the same for RYVIX.
(b) EEM (emerging markets) now -1.8%, but well off earlier lows. Taking a hit on RYWVX.
(c) VGK (Europe) now -0.3%, also well off earlier lows. If my luck holds, RYEUX will close flat.
I’m guessing these will be my last trades for some time. ‘No trade’ is also a trade, and an extended period of not trading appears likely. Of course, I don’t want to disappoint my ‘subscribers,’ and I’ll make sure the daily commentary is worth the price of admission!
Bidding on OXY and CBI
ReplyDeleteGreen Day?
ReplyDeletehttp://mp3light.net/assets/songs/27000-27999/27108-greenday--1411572410.mp3
ReplyDeleteCanadian oil producers look to squeeze costs even further
Low crude oil prices present an opportunity to drive down oil sands costs even further, adding to the 25% savings YTD, some of Canada's largest producers said today at a TD Bank conference in Calgary.
Cenovus Energy (NYSE:CVE) executive VP of oil sands Harbir Chhina believes his company can cut costs by another 30%, adding that “the key thing that’s going to happen now, with this downturn, is really the cost structure in the oil sands is going to come down."
It is a sentiment echoed by Canadian Oil Sands (OTCQX:COSWF) CEO Ryan Kubik, who expects 2015 operating costs of C$39.48/bbl vs. C$45.69 at the start of the year.
Encana (NYSE:ECA) VP of strategy Corey Code said the oil price slide has provided the opportunity to cut costs not just in oil sands but across its shale oil holdings in Alberta and Texas.
In addition to reducing operating costs, MEG Energy's (OTCPK:MEGEF) John Rogers said the company would grow its production solely by expanding existing oil sands plants for the foreseeable future.
Oil services and drilling companies are getting squeezed and their stocks getting hit hard. The producers savings is another company's revenue hit.
DeleteGold bear markets for the last 40 years. It's the second longest of the 7, but only 5th of 7 in terms of drop.
ReplyDeleteSo if it sticks to history, it should be getting near the end timewise, but may have further work on the downside:
http://shortsideoflong.com/2015/07/golds-bear-market-2/
new post
ReplyDeleteBIS - Amazing how TOF and Jonathan Verenger both calculated the same PE! :)
ReplyDelete