Placing a buy stop order on GDX at the same price at which I got stopped out today -- $14.40, with a limit at $14.50. Should have re-entered it at the close today, since GLD was down just barely, while GDX was down more than 8%. A clear overreaction...
Very nice snapbacks in most markets this morning, with US indexes up +3.4%. Classic bear market behavior. Personally, I would use the opportunity to trim longs and reduce risk.
Going forward, I would be inclined to short rallies. Shorting is difficult, but risk/reward favors a continuation of the downside. The same traders who tried to call the 'top' will now be trying to time the 'bottom.' SPX futures (aka the 'ES') now at 1936. Shorting on a break below 1920 (the belly of the beast, or the upward trend line) makes sense.
The only 'long' trade that interests me at the moment is miners. GDX up +3% in early extended hours trading.
Rate cuts like what they had in China typically occur during downturns. Not sure what is the typical sign of a bottom in an economy, but if our history is any guide then they could still have a good deal further down to go.
ie I think there's a "purge" period where gold crashes and people liquidate their holdings. But i'm speaking strictly from what I think I see as the sentiment surrounding gold. I have no way of figuring out how to value gold.
Silver is back under $15, thus it seems there's plenty of supply. I'd been thinking we'd see $13 but might even go lower (my thoughts). Who knows, it's impossible to know with my limited knowledge and lack of meaningful info.
Yeah I just think the pain in the miners will cross over to the metals. Think about the sentiment of the public regarding gold and silver over the past decade. We had pawn shops on street corners marketing gold left and right. Remember those gold commercials with Ed McMahon and MC Hammer? I still think there's a lot of people hiding in gold. It hasn't had a true purge move in my opinion.
Not sure. On one hand they had a pretty weak earnings report but on the other they trade at a pretty low multiple to earnings / book value. They're largely dependent on low oil but they're shifting toward more reliance on convenience stores which have been doing well.
I grabbed tiny positions in CRNT at $1.36 and YRCW at $16.5x. 2% and 4% positions. Both of these companies had massive earnings beats and projected solid business going forward. I may add a little to them. Otherwise, I have no interest in holding stuff right now until we get some sort of base building going on that churns people up and then we get a resolution to the upside. The pain trade here is higher without pullbacks, like in October/November.
Went long some stuff on this dip, thinking we could rally into the close. Will keep a lot of cash on hand just in case but I suspect with Jackson Hole this week it will be hard to crash the market further.
Jeff saut is looking for a trading rally but said any rally is suspect given the Dow theory sell signal yesterday. He said there's a chance it is a false signal like we had in May 2010 but that odds favor a short term rally and then you have to be very cautious
I started buying a little bit of RUSS again. Very small amounts that I think I will average over the next 1-3 weeks. My suspicion is we haven't seen the last of that panic.
**FLASH: Federal Reserve Chief, Janet Yellen, is convening with her knitting club about making a quilt.*** In his smoked out corner office at Citadel, Dr. Benjamin Bernanke, whilst puffing a blunt, says "miss me bitchez?"
I think its worth asking: what if we're in 1937? Something we should at least consider, especially if the S&P takes out the lows from October.
The market rallied from 1932 (after great depression) until 1937 like 4x from the lows. Then it tanked 40% in 3 months.
Not sure we can get that kind of drop but down to 1,500 is possible especially if we see earnings drop to 100 to 105 vs 115 last year. that would put it at 15x.
Apologies for being unable to post on the blog today. But I did capture my comments in real time via email. btw, it was the Sep 4 puts I opened/closed.
10:34 am pst: SPX just broke 1920. Opened a small position in September SPY puts with a strike of 194 (SPY currently about 192).
12:36 pm: SPY puts closed for a +25% gain. Opened when SPX was trading @ 1920, closed when SPX hit 1907. (Now it's 1901, and the original option is up +40%, but that's the way it goes!).
Short strategies differ in many ways from long strategies, one of the most important being short leashes. The positions can get away from you quickly if you're careless.
May scale into RYGBX (Rydex Government Long Bond) at the close. Long Treasurys are pulling back -2% today.
DJIA futures were +600 points earlier this morning. As we head into the close, the DJIA is up just +69 points. Again, classic bear market behavior.
12:44 pm pst: DJIA now -19 points, and SPX red at 1889. So yes, I 'could have' held Rydex positions in DJIA + EM overnight and done well closing at the 1030 est window this morning. Not so much right now. I closed both positions at Monday's 1030 window for the simple reason I couldn't predict the timing/strength of a reflexive bounce. However, I do know that major selloffs rarely recover quickly.
Nikkei wastes no time extending the party. -532 points (-2.87%) in the opening minutes.
ReplyDeleteNow -748 points to 17792.
DeleteAll Ordinaries breaks below 5000.
ReplyDeleteOn the other hand, DJIA futures +231.
ReplyDeleteDow futures are up over 200 points so far this evening.
ReplyDeleteGuess Asia is still playing catchup to the US drubbing.
Now up 300 points. Recovering half of today's loss.
DeleteWild market
Looks like buying into the close today was a great move. Should be nice gap up tomorrow.
ReplyDeletePlacing a buy stop order on GDX at the same price at which I got stopped out today -- $14.40, with a limit at $14.50. Should have re-entered it at the close today, since GLD was down just barely, while GDX was down more than 8%. A clear overreaction...
ReplyDeleteChina cutting some interest rate and dow futures now up 600. Europe now up 4.5%.
ReplyDeleteGoing to be a big up market start
Very nice snapbacks in most markets this morning, with US indexes up +3.4%. Classic bear market behavior. Personally, I would use the opportunity to trim longs and reduce risk.
ReplyDeleteGoing forward, I would be inclined to short rallies. Shorting is difficult, but risk/reward favors a continuation of the downside. The same traders who tried to call the 'top' will now be trying to time the 'bottom.' SPX futures (aka the 'ES') now at 1936. Shorting on a break below 1920 (the belly of the beast, or the upward trend line) makes sense.
The only 'long' trade that interests me at the moment is miners. GDX up +3% in early extended hours trading.
Grabbed some RUSS at $49.2 at the open. will flip it.
ReplyDeleteSold $51.5
DeleteBought back into RUSS at $51.8
DeleteSorta looks like a handle forming, huh? I don't know anything, just talking shift prolly.
DeleteTD not working well today. Quotes are messed up in their streaming quotes and orders don't seem to be getting in.
ReplyDeleteThis is all going to go bye bye....
ReplyDeleteR u holding anything?
DeleteRate cuts like what they had in China typically occur during downturns. Not sure what is the typical sign of a bottom in an economy, but if our history is any guide then they could still have a good deal further down to go.
ReplyDeleteYield curve flattens -> Recession. Today long end is lifting nicely?
DeletePMs - Any thoughts? My guess is trend resumes.
ReplyDeleteI still suspect that huge bull market ends the way oil has. But I don't know enough about how to value it.
Deleteie I think there's a "purge" period where gold crashes and people liquidate their holdings. But i'm speaking strictly from what I think I see as the sentiment surrounding gold. I have no way of figuring out how to value gold.
DeleteSilver is back under $15, thus it seems there's plenty of supply. I'd been thinking we'd see $13 but might even go lower (my thoughts). Who knows, it's impossible to know with my limited knowledge and lack of meaningful info.
DeleteYeah I just think the pain in the miners will cross over to the metals. Think about the sentiment of the public regarding gold and silver over the past decade. We had pawn shops on street corners marketing gold left and right. Remember those gold commercials with Ed McMahon and MC Hammer? I still think there's a lot of people hiding in gold. It hasn't had a true purge move in my opinion.
DeleteI think the miners may be cheap enough to buy, but would stay away from physical.
DeleteBut if we do get a physical crash, it will certainly drag the miners down.
ENPH magic number today is 3.38.
ReplyDeleteYou guys aren't acting on Obama's warning yesterday?
ReplyDeleteSold RUSS at $52.1
ReplyDeleteI bought some PYPL at $33.85
ReplyDeleteOff at $34.02. Too chicken to hold for more than day trades right now.
DeleteTA - I'm finding it difficult not to jump in..... Talk me out of it!
ReplyDeleteI was just looking at this.
DeleteNot sure. On one hand they had a pretty weak earnings report but on the other they trade at a pretty low multiple to earnings / book value. They're largely dependent on low oil but they're shifting toward more reliance on convenience stores which have been doing well.
DeleteSomeone talk me out of buying a little bit of YRCW and sitting on it.
ReplyDeleteI grabbed tiny positions in CRNT at $1.36 and YRCW at $16.5x. 2% and 4% positions. Both of these companies had massive earnings beats and projected solid business going forward. I may add a little to them. Otherwise, I have no interest in holding stuff right now until we get some sort of base building going on that churns people up and then we get a resolution to the upside. The pain trade here is higher without pullbacks, like in October/November.
ReplyDeleteAdded a little more YRCW at $16.05
DeleteWent long some stuff on this dip, thinking we could rally into the close. Will keep a lot of cash on hand just in case but I suspect with Jackson Hole this week it will be hard to crash the market further.
ReplyDeleteTook all of it off just now
DeleteFLY - Isn't that a lot of debt? Correct me if wrong but seems like quite a bit?
ReplyDeleteJeff saut is looking for a trading rally but said any rally is suspect given the Dow theory sell signal yesterday. He said there's a chance it is a false signal like we had in May 2010 but that odds favor a short term rally and then you have to be very cautious
ReplyDeleteYeah, makes sense. Gonna watch resistance levels.
DeleteENPH - I dunno man, sun no longer shines on this one. So strange, we have hedge funds shorting SCTY and other HF's getting long CNX......
ReplyDeleteI started buying a little bit of RUSS again. Very small amounts that I think I will average over the next 1-3 weeks. My suspicion is we haven't seen the last of that panic.
ReplyDeleteURI - How good have Oppenheimer's calls been, I'm not impressed.... Jul-27-15Reiterated Oppenheimer Outperform $105 → $85
ReplyDeleteBXE - Keeps moving the opposite direction of $10, must be something wrong......
ReplyDeleteThat's like an $8.65 difference. Talk about a dud, this one takes the cake.
DeleteThere you have it.
ReplyDeleteYep, was expecting TBT would be low $30 by now though....
DeletePlatinum - Well under $1,000 as if vehicles will be switching to something else.
ReplyDeleteHilarious:
ReplyDelete**FLASH: Federal Reserve Chief, Janet Yellen, is convening with her knitting club about making a quilt.***
In his smoked out corner office at Citadel, Dr. Benjamin Bernanke, whilst puffing a blunt, says "miss me bitchez?"
Didn't expect RUSS to rip so fast. Sold some into the close.
ReplyDeleteWe could really use a rate hike right now. That should calm things down.
ReplyDeleteEmerging Markets priced in USD:
ReplyDeletehttps://pbs.twimg.com/media/CNR4thmUAAAc_OO.png
Gotta give credit to Peter Brandt on the Yuan devaluation. He nailed it in advance I think it was last month. He just sent out a tweet today:
ReplyDelete"$USDCNH $USDCNY Intraday charts indicates there is a Yuan-derful chance of another devaluation soon "
https://pbs.twimg.com/media/CNRnFVwUkAAVC4o.jpg:large
I think its worth asking: what if we're in 1937? Something we should at least consider, especially if the S&P takes out the lows from October.
ReplyDeleteThe market rallied from 1932 (after great depression) until 1937 like 4x from the lows. Then it tanked 40% in 3 months.
Not sure we can get that kind of drop but down to 1,500 is possible especially if we see earnings drop to 100 to 105 vs 115 last year. that would put it at 15x.
Apologies for being unable to post on the blog today. But I did capture my comments in real time via email. btw, it was the Sep 4 puts I opened/closed.
ReplyDelete10:34 am pst: SPX just broke 1920. Opened a small position in September SPY puts with a strike of 194 (SPY currently about 192).
12:36 pm: SPY puts closed for a +25% gain. Opened when SPX was trading @ 1920, closed when SPX hit 1907. (Now it's 1901, and the original option is up +40%, but that's the way it goes!).
Short strategies differ in many ways from long strategies, one of the most important being short leashes. The positions can get away from you quickly if you're careless.
May scale into RYGBX (Rydex Government Long Bond) at the close. Long Treasurys are pulling back -2% today.
DJIA futures were +600 points earlier this morning. As we head into the close, the DJIA is up just +69 points. Again, classic bear market behavior.
12:44 pm pst: DJIA now -19 points, and SPX red at 1889. So yes, I 'could have' held Rydex positions in DJIA + EM overnight and done well closing at the 1030 est window this morning. Not so much right now. I closed both positions at Monday's 1030 window for the simple reason I couldn't predict the timing/strength of a reflexive bounce. However, I do know that major selloffs rarely recover quickly.
It may take a few weeks, but I think investors will get around to realizing the market is headed down, and won't be recovering anytime soon.
ReplyDeleteFreaking miners. It's no wonder they're the most hated asset class right now.
ReplyDeleteThey want to make sure there's absolutely no one, not a soul, on the train when they finally take off for good.
Deletenew post
ReplyDelete