True on so many levels.
Monday, September 21, 2015
9/21/19 'Irrationality reigns supreme'
"There is no training -- classroom or otherwise -- that can prepare for trading the last third of a move, whether it's the end of a bull market or the end of a bear market. There's typically no logic to it; irrationality reigns supreme, and no class can teach what to do during that brief, volatile reign. The only way to learn how to trade during that last, exquisite third of a move is to do it, or, more precisely, live it." -- Paul Tudor Jones
True on so many levels.
True on so many levels.
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I grabbed some twtr today. I still think this thing trades a lot higher eventually. Long at 27.36
ReplyDeleteMark- Any suggestions for resurfacing a garage floor?
ReplyDeleteThis VW diesel thing looks to be turning into a big problem and stock is down again. Some reports say the car would only turn on environmental filtering when it was being tested and off for regular driving and emissions would be over 40 times the legal limit. A friend of mine just bought a VW Golf and was loving it due to great fuel economy and good performance while being environmentally friendly - I wonder what happens to her car now.
ReplyDeleteFCAU down about 6% this morning as all the European auto makers have diesel engines and I would think people are selling first instead of waiting to see if this spreads. Trying to figure out how much diesel FCAU sells - they do have some Jeep and Dodge trucks in the US, but Europe is the big diesel market.
The upside of this is it may actually help Marchionne with his push for industry consolidation.
Sold twtr at $27.
ReplyDeleteI really think this uvxy has the potential to go to $200. I've seen this pattern play out before and it usually ends up going significantly higher. I was looking around last night and saw several people mocking uvxy as a guaranteed short and it made me think sentiment matches up with this going higher
Given how volatile this thing is I bought a 2% position in it at 50.5. Could lose 1/2 in a day, I know
DeleteThinking VRX would be a good short here. With Hillary and the NY Times making drug price rises front page news and trying to stop it, I think the VRX business model is in trouble. IBB may have topped out as well.
ReplyDeleteI completely agree. That thing seems destined to fail
DeleteMr. Panic is back in town. Europe indexes -3%. US index futures -2% (DJIA -284 points, SPX -35 points).
ReplyDeleteBlogger poll at rare levels of negativity:
Deletehttp://tickersense.typepad.com/
This is a strange market man. I still see lots of people looking to buy dips yet I see readings like this blogger poll. Then again, the blogger polls have been right for a long time as has the CNN Fear and Greed readings.
DeleteAlso, I've seen extremely bearish positioning in commodities like Nat Gas and oil that have been right for a long time. Maybe the masses are getting smarter?
Maybe too many people trading off sentiment polls, so they are losing their predictiveness? Anything that gets too well followed in investing stops working. (Until people stop believing in it and then it does again)
DeleteI'll admit I was tempted to buy the dip in FCAU at $13.3. That's a key area for that stock. Still hard for me to commit much to this market given it's trending down and under all key moving averages.
ReplyDeleteFrom Bloomberg re sentiment - http://www.bloomberg.com/news/articles/2015-09-21/who-s-left-to-sell-u-s-stocks-mood-darkens-most-since-volcker
ReplyDeleteI do have a couple of buys in for stocks I'd like, but I'm bidding low as I hope to catch some panicky selling.
That's the way I would approach longs right now. I still think it's best to just wait for stability and a new uptrend...however you personally define that. For me it's a move back up above the 200DMA.
DeleteBeen really busy, and got killed yesterday....of course.
ReplyDelete2nd- This is the ONLY product I'd use. Not supper easy to use. http://www.westcoat.com/
Need to know something about what the problem is, I think.
Deletehttp://www.reuters.com/article/2015/09/22/us-fiatchrysler-us-defeatdevices-idUSKCN0RM1MK20150922
ReplyDeleteSo, the VW trouble could actually bode well for FCAU market share
GMO - Down 34% this morning. ZINC down another big chunk too, Haven't looked at everything else (who can?) but can only imagine.
ReplyDeleteWow. Still watching the gold miners but I can't figure out where to buy. Was thinking double bottom???
DeleteGimme silver at $12.22 and I might consider something. Who knows, maybe lower if the coming derivatives explosion is spectacular?
DeleteWhat I don't understand is, how unemployment can improve if companies are experiencing difficulty growing why do they hire?
Added to ENPH @ 4.30.
ReplyDeleteZINC - Shareholders being handed their horse-heads.
ReplyDeleteWatch and wait, Zinc at its lowest level since 2010.
Deletehttp://www.bloomberg.com/news/articles/2015-09-22/nickel-drops-after-chinese-imports-dive-on-slow-stainless-demand
FCX someone sure came in and bought.
Only question now is, when does the major event occur?
ReplyDelete21 Sep per Cashin.
ReplyDelete– Despite the indicated strong futures bounce (part crude related), today begins a historically weak
14 day period.
Mohnish Pabrai with regards to ZINC. He said that your margin of safety in commodity stocks is by being the low cast producer. This bogus concept can be put to bed, its supply/demand balance period.
ReplyDeleteA falling dollar also creates a wind in your sails. Great opportunities are ahead, but patience is the key and the ability to recognize the moment.
low cost producer
DeleteSold UVXY at $51.5
ReplyDeletePope flying in on AirItalia chartered plane to speak on global climate change.
ReplyDeleteMMYT - Something's gone wrong, apparently.
ReplyDeleteMarket down 300 doesn't help
DeleteJust an excuse. PSEC pays a divy and is green.
DeleteGrabbed some TWTR at $27 for a daytrade unless it can trend up from here. Will close out on a move below $26.5.
ReplyDelete+5000%
ReplyDeletehttps://www.youtube.com/watch?v=H0P4r9fcy1o
Whoever sold the rights was a poor money manager.
DeleteMaybe it's tough, being the son of a politician? "Former state Senator Houck's son kills man, then takes own life, authorities say"
ReplyDeleteBought LWP.TO.
ReplyDeleteAnother of these arb plays similar to KCLI. Company has sold it's major assets and is being closed down.
Stock is at $2.23 and payout is to be between $2.50 and $2.75. I've done several of these over the years and they never have missed on the low end of the payout and it can even be higher than the high end. Risk really is timing in getting everything closed up. Return is between 12% and 24%. Annualized ROI between 10% and 50% using various projections.
Seems like a pretty safe way to make some money without too much risk in a tough market.
Healthcare insurance companies should be able to set their own prices, given it's Federal law requires health insurance.
ReplyDeleteCVRR - Also green, pays a dividend as well.
ReplyDeleteDitto for KCAP
DeleteNEM (Newmont Mining) is at a 13-year low. There's panic, and then there's the kind of panic that indicates brokers selling positions to cover margin calls. I'm opening a position @ 15.50.
ReplyDeleteSPH - If you lived in a place where there's snow on the ground during winter would you want solar panels on the roof to run an electric blanket or would you want a propane fired heater? Does the solar panel stock pay a dividend, is the company profitable (sans politically correct government subsidies)?
ReplyDeleteSPH appears to be profitable, and pays a dividend as well.
DB - Haven't seen this so low in some time, meanwhile I thought everyone had agreed growth was taking hold? That was one reason I bought into oil, with the understanding unemployment was falling and the country, along with Europe, were strengthening economically.
ReplyDeleteDB probably getting dragged down by German market selling due to VW or maybe they are a big lender to VW, but I think that less likely. They are moving forward with their turnaround plan and the stock is cheap - I think the big question is how well they can execute the turn-around and what value they can get for assets.
DeleteRe oil, demand is increasing, but the supply fundamentals changed when the Saudi's decided to chase market share.
Always so many cross-currents in investing.
Saudi's just repeated the same thing they've done at least twice in the past, Texans remember well.
DeleteLAKE - Looks toppy so I sold it.
ReplyDeleteFunny VW commercial looks very bad now - https://www.youtube.com/watch?v=c9ciAi8e-e0
ReplyDeleteScaling back into Emerging Markets cautiously at the close. At this point, all positions are short-term, and the assumption will be that most stocks are in established downtrends.
ReplyDeleteA lot of charts are pretty screwed up from the Aug 24 sell-off. Take a look at:
ReplyDeletehttps://finance.yahoo.com/echarts?s=IYH+Interactive#{"showArea":false,"useLogScale":true,"showLine":false,"showOhlc":true,"lineType":"bar","range":"5y","allowChartStacking":true}
How do you decide what the real bottom is? A lot of the big drop was just due to ETF illiquidity, not real price.
I ended up buying into FCAU and AMGN at $13.3 and $145.1 today. Two hardest hit areas and I suspect both aren't in the crosshairs, though I don't know for sure.
ReplyDeleteAlso bought some NUGT into the close at $2.75
ReplyDeleteKMI bought some at close 30.11. Also like CVX here
ReplyDeleteNEM watched all day, just could not pull trigger, prefer a little more chart structure like KMI, but get why you took the shot 2nd.
Bio's like it for trade my goto here is BIIB but still waiting
LAKE nice sell CP
ETF's I really do not trust anymore look at RSP chart wtf
A ton of great movies and shows on Prime. This Friday AMZN will be discounting to $67 (down from the usual $100):
ReplyDeletehttp://www.engadget.com/2015/09/22/amazon-prime-discount-emmys-transparent/
Bought a little eem after hours
ReplyDeleteI am 90% cash and am annoyed I have anything on
ReplyDeleteLook at the similarities:
ReplyDeleteEEM Now: http://stockcharts.com/h-sc/ui?s=EEM&p=D&yr=2&mn=0&dy=0&id=p99564917550
1938 Chart: http://www.graphicstart.com/images/Comapring_1938_DOW_to_2008.GIF
I chickened out today and early in the morning moved down my buy limit order for more SVXY from $49 to $45. I noticed last night that volatility futures were actually not high at all, below $21. I can easily imagine two month futures rising to $30 on another leg down, then coming back to $20, and oscillating in this range. So it is too early for me to buy the next bunch of SVXY -- $45 would be a better entry, if it gets there...
ReplyDeleteIf VIX futures go a little above 30, then VXX goes up by 50% from here, and UVXY goes up by 100%, from current 50 to 100. This is something that *might* occur with some reasonable (although very small) probability. The probability of UVXY going to 200 is pretty much zero in my estimates...
ReplyDeleteSPX futures traded as low as 1910 overnight on weak manufacturing data out of China, only to reverse 30 points higher this morning. Bad news is good news once more.
ReplyDeleteWe probably see a continuation of the bounce in today's regular session. However, the longer term outlook is negative. The indexes likely stair-step down. The most effective strategy would be to short the bounces. I've never had much 'fun' shorting, and prefer instead gaming the 'one steps up' ahead of each 'two steps down.'
I sold all of my positions pre market. Like 2nd said, one step up then wait for the two steps down. I grabbed ugaz at 7.3
ReplyDeleteTOF- You asked why I added to ENPH at 4.30. I suppose it's pretty simple. Most PT's. are in the 10 area which I think is probably about right. If they wanted to they could easily lighten up on the R and D and maintain margins and be quite profitable. I think that might be close with their battery system on the market now, even though I think they made a mistake in not working with TSLA. They say their system is better which it probably is. I also still think it's probably 'dead money' until JPM changes their note. Problem is I don't know when that would be. A hold with a 10pt on a 4.20 stock is pretty hard to justify.
ReplyDelete...and it's still not a huge position for me. Probably 15%ish.
DeleteGotcha. 15% of total portfolio?
DeleteLong hmy 0.65
ReplyDeleteLong nugt again at 2.8
ReplyDeletePotential bottoming scenario from the TD QUant guys:
ReplyDeleteFrom a technical perspective, we believe that we can look to the market corrections
of 1998 and 2011 as a potential guide as to how the current correction may bottom
and recover. All three corrections have had the identical pattern of beginning with
a steep sell-off in August. This was followed by a September bounce and then by a
retest of the low. We believe that the recent downturn is the beginning of a retest.
In both the previous corrections, the market set its low in early-October and then
began a year-end recovery. Most importantly, the previous market recoveries were
confirmed by rising bond yields off an improving U.S
. consumer
economy. In
both years, we saw a sharp upturn in auto sales, housing starts, and retail sales
through the fall. As we have mentioned in numerous publications, we believe that
the U.S. consumer economy remains in a strong uptrend as we enter the very
strong seasonal fall period. If history were to again replay itself, we believe that we
could see the market retest its August 25 low (1,867 for the S&P 500) by early-
October and then initiate a year-end r
ecovery on better-than-expected U.S.
economic data, confirmed then by a rise in the U.S. bond yields.
My only concerns are
Delete(1) Everyone is looking for a bottom
(2) China could be a black hole
Meanwhile, here's some pole dancer and stripper bar music.
Deletehttp://a.tumblr.com/tumblr_lv00teGxHD1qdv5i3o1.mp3
http://mp3light.net/assets/songs/72000-72999/72207-unskinny-bop-poison--1411585805.mp3
Sold UGAZ at $7.44
ReplyDeleteAdded to NUGT at $2.76
ReplyDeleteThink I'll just hang onto my cash today. I SHOULD be short SPX.
ReplyDeleteBack in UGAZ at $7.27
ReplyDeleteSold UGAZ for flat. Bought back into TA at $11.90.
ReplyDeleteAt this point I have little confidence in anything working. Then again, we're due for a reflex rally.
Haha. The Price Target for HMY at $8.50 has been met per Point and Figure. Probably would have been good to stop yourself out there, in hindsight.
ReplyDeleteITY is in a clear downtrend channel.
DeleteMike,
ReplyDeleteI agree that everyone is looking for a bottom, but on the other hand, pretty much no-one is saying to buy either. Almost all sentiment indicators are negative, so I think we see market chasing once we start to move.
I really don't see how we get a full-blown bear market - we do not have rising rates, a recession, excesses in the economy,surging inflation or energy prices, things that typically come before a bear.
China and moving away from 0% interest rates are a concern, but I don't think they are big enough to derail things. Plus markets often bottom in Sept/Oct, and you know a bunch of hedge fund guys and watching things for any sort of a move to try and make their year, so the timing is good for a bottom.
We'll see, a lot of this market prediction stuff is just interesting to think about scenarios and not really tradeable for most people.
I would just say that this is a dicey time of the year and that this bull market is long in duration, but we all view markets differently.
ReplyDeleteAs for the fantasy of KMI wish I would have bought NEM instead. Div play yeah.
Is hope a strategy?
Don't know if this is true or how to check, but according to Financial Post Canada:
ReplyDeleteBloomberg also notes that short positions in U.S. stocks are at the highest level since the market bottom in March 2009, when sentiment was near an all-time low.
No one wants to forego the gains they accumulated over the past 6 years, and so people are trying to get defensive AHEAD of the market crash. :)
DeleteThat's a reasonable interpretation.
DeleteWan't sure if you were being funny, but hope you are wrong about the crash - that's probably the only thing that could cause you to lose money on your VIX puts.
DeleteThis market is about as 'choppy' as it gets! Once again, it's a bear market and I'm willing to risk capital only for very short periods and in small amounts. The bounce I expected has not materialized, and the path of least resistance is DOWN. I will be out of all positions by the close, and back to 100% cash.
ReplyDeleteIt is choppy, but I think it is too early to call it a bear market. I would either say the market has been topping for the last year or basing for the last year for it's next move upwards, depending on your bias, but really all of the significant downward action we've seen in the last year happened that 1 week in August. And a lot of the market charts (the way I draw them), show the market pretty much on long term support lines for this bull market, so a good place to resume the upwards trend.
DeleteFiat & GM make up ~ 50% of the Portfolio. He doesn’t invest more than 10% into one position but doesn’t mind when a position grows.
ReplyDeleteThe value of the Ferrari spinoff will exceed the initial purchase price of the entire position. In his opinion Fiat will not drop that much after Ferrari is spinout of Fiat. He thinks that Fiat should be at least valued 2x or even more.
http://www.marketfolly.com/2015/09/what-were-reading-92315.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MarketFolly+%28Market+Folly%29
A 4-banger from here for FIAT would certainly be nice, and I see how the numbers can work, but 42% of your stock in FCAU is risky - look what just happened to VW.
DeleteAs an aside, I started reading Poor Charlie's Almanack about a week ago since I wanted to get inside of Munger's head.
DeleteI agree BB, I think that bet big idea comes from Munger, who says that when the opportunity is right. I suppose from his perspective the Ferrari spin is that catalyst.
DeleteMunger only owns four stocks three of which are banks.
Some people are saying Ferrari is around $8 per share. That means the rest of FCAU is $6 and they should be able to earn over $2 per share as they continue to improve their margins to Ford levels, so a p/e of 3 on the remaining business. PLus you've got one of the best CEO's in the business looking to do a deal to drive value.
DeleteMy cost is $10.61, so I'm in good shape. I think most guys here sold above $15, so looking smarter than me so far, but I do think we see $20 in less than a year based on the above logic.
Alright, here's a worst case scenario printed on Marketwatch today:
ReplyDelete'What we can expect is that without renewed buying pressure to continue the trend upward — unlikely given the risk numbers and new downward trend — that the market has quite a large potential drop that it can sustain in coming months or quarters. The bottom of the range is around 1200 on the S&P 500 — over a 30% drop from here. Due to all of the intervention of central banks and governments recently and likely coming, I don't expect the S&P 500 will fall any further than about 1200 and might not quite make it all the way there at all, as there is a lot of money on the sidelines. Investors need to be aware of that risk, though.'
http://www.marketwatch.com/story/the-bear-market-has-begun-2015-09-23?dist=countdown
Not saying I agree or disagree. I've been following this guy for a couple of years, and like everyone else he nails a move now and then.
Ended up selling all of my positions during the day and lost about 0.2% I bought back into SDS after hours at $22.79. I don't think we're near the bottom yet. I suspect the selling continues and we end up down 20% or so. The carnage in some of these sectors is just too much for the overall market to bear in my opinion. Something is going to come of Brazil and the oil sector. Just a guess.
ReplyDeleteI sold at 22.84. Lol
DeleteDoh looks like my whole order didn't get filled. So I have 69% of order still on
DeleteHere's what I think.
ReplyDelete(a) Smart money cashed out in 2013, and did so at the risk (ultimately the reality) of not looking so 'smart' for two years.
(b) The devaluation of the renminbi in August 2015 seems to have been 'a big deal.' I've read many 'explanations' (guesses) for the ensuing selloff in global stocks, but all that really matters is that they sold off hard.
(c) Virtually every long position I've opened since the August 'crash' has been met (in short order) with strong selling.
(d) Many (if not most) foreign indexes are already in bear market territory.
(e) Three $SKEW readings >140 since September 4.
This is probably not the best time to be holding risk assets.
The worst possible market will be the one that gold has been in for 3 years after breaking down. I wouldn't be surprised to see that. I would assume most people will waste all of their capital in that type of market
DeleteSo the mood is dark out there and there are many obvious headwinds for the market. The real question is: to what extent have those headwinds been priced in? After the problems in China have been revealed, the market dropped sharply for a few days in mid-August and then... And then it recovered 1/3 of that drop! Despite all the horrible forecasts and fears that have been around AFTER that drop. The price went up. Maybe that price gain concentrated in a few stocks and did not reflect the majority of the stocks? Nope, the A/D lines for the major indices did not underperform the indices since the moment prior to the drop -- the A/D line for Russell 2000 has also regained 1/3 of the lost ground (in the weeks prior to the drop, as I have posted a couple of times, the A/D line was clearly underperforming the index itself). So both the price action and the market breadth action since the drop are pointing to a slow recovery rather than to continuing trouble, and the likelihood of that recovery increases further if we add into the picture the unusually high negativity that is around. When the price action deviates from the sentiment, the price is right.
ReplyDeleteYou may be right. Keep in mind the Shanghai exchange is off -40%. Nothing positive about that. The US is only off -10%.
DeleteWe both traded the 2008 selloff. I thought it would end at 11k, then 10k, then 9k, etc.
The best thing is to wait for the market to recover above the 200dma and for the 200dma to slope upward. Sure you will miss the bottom but that could be a lot lower if things continue to gradually deteriorate. And if not then you buy higher but the key is most setups will start working again.
DeleteKeep in mind the market gained 90% from the 2011 lows to the 2015 highs, an almost unprecedented run in the middle (not beginning) of a bull market, all while China and the emerging markets were weakening. Teller hinted at say a 14-15 multiple and earnings maybe not hitting estimates. In that scenario you're talking maybe 1,500 to 1700.
Sorry meant david tepper not teller
DeleteI guess the other thing is that even if the market continues down and say we do go down 20%, I feel good about the stocks that I own and there aren't a whole lot I'd sell unless I thought the economy was getting a lot worse.
ReplyDeleteIn 2001 and 2002, the S&P was down 12% and 22%, but my portfolio was up 7% and 18%, and I think the same thing may apply here. I do feel many value type stocks like financials and other specific situations are quite undervalued, which will provide protection in a down market and upside when the market recovers.
I approach trading on an an individual stock basis and I tend to look at things from my personal holdings, which may be why I see things as pretty good while the rest of you are more concerned about the broader market.
Things do looks cheap in some areas but the earnings trends aren't great. My "value" list includes Jpm, wmt, knl, cof, axp, mog/a, ibm, msft, hog, utx, qcom, all of which are very cheap
DeleteFCAU - I know this stock gained today but all the charts I'm looking at show a loss? WTF?
ReplyDelete2nd_ave, in 2008 there was an obvious problem *inside* USA, and no one new its magnitude (or we can say that its magnitude was increasing with time, as more banks were failing and the mutual distrust between them was increasing). The price action was VERY NEGATIVE -- it was going down every day (late September - mid October). This time around, however, there is no obvious problem *inside* USA and the price action is suggesting that all the known issues have been discounted in the price. Of course, if new problems appear, the market can make another step down.
ReplyDeleteThe current situation greatly reminds me of 2011, and it even matches up well in terms of dates: a steep sell-off in late August, then lots of volatility for a month (including a partial recovery and then a retest of the bottom), and then a steady climb up out of the hole. I think the same thing will happen this time around, unless totally new problems (not currently discussed in the media) will appear.
ReplyDeleteI really think it's useful to slide through old charts to see what can potentially happen. I think there's a decent chance will end up seeing a significant rout....A cascade lower. Take a look at these periods as a point of reference:
ReplyDelete1962: -30% slide
1966: -23% slide
1969/70: -36% slide
I think its a little crazy to think this is over. Not with yields rising rapidly in Brazil, huge uncertainty in China, oil in the gutter, etc. I think this will result in a 20%+ correction here, especially when you couple it with a 90% three year run and with an extremely hot IPO market leading up to this period.
Here's the chart to use...just scroll around different periods to get a sense for what can happen:
http://finance.yahoo.com/echarts?s=^GSPC+Interactive#{%22showArea%22:false,%22customRangeStart%22:18342000,%22customRangeEnd%22:94723200,%22showSma%22:true,%22smaColors%22:%22#cc0000,#009999%22,%22smaPeriods%22:%2250,200%22,%22smaWidths%22:%221,1%22,%22smaGhosting%22:%220,0%22,%22showRsi%22:true,%22lineType%22:%22line%22,%22range%22:%22custom%22,%22allowChartStacking%22:true}
My guess: we get a close down to 1913, maybe 1910, then we rally to the 50DMA....hit 2010 again. And then we roll over hard, maybe another 12 to 15% from 2010.
DeleteI would take the first part of your guess even further -- I think we will have a decent rally in the near future, possibly back to old highs, since the recent price action suggests that the Invisible Hand has stopped pushing the price down for now. And then we'll keep oscillating in this range until the time comes for "price insensitive buyers" to turn into "price insensitive sellers," at which point there will be no bottom (read the first part of the latest quarterly newsletter from GMO's Jeremy Grantham for the terminology).
Delete1867 Retest at least, maybe way more I guess?
ReplyDeletenew post
ReplyDeleteFCAU - Wow man, this doesn't seem justified except for Machioni keeps repeating himself there's too much capacity.
ReplyDeleteWOR - Up on bad news is bullish. no?
ReplyDeleteFSLR - If solar sales are growing then why are the stocks in downtrend, is this b/c the investment tax credit is expiring?
ReplyDeleteBXMT - Seems like a logical place to turn down. Just sayin' while noting it had no trouble lifting off from retest of support.
ReplyDelete