(a)
TLT has put in a respectable +1.5%
performance over the past two days, and I’ll be taking RYGBX (Rydex 1.2x
Government Long Bond) off at the close.
(b)
Opening (what will hopefully be) a
long[er]-term position in FEMKX (Fidelity Emerging Markets) at the close. The
intraday low for EEM was 31.95, which is about 2% from the August 24 close, and
within 0.8% of the August 25 close. Is
that enough of a retest? Good enough for
me!
(c)
Opening a short-term position in RYWVX
(Rydex 2x Emerging Markets).
(d)
GDX (miners) have recovered from an earlier
-2% pullback to trade flat.
(e)
FCX (Freeport McMoran) now 9.80, or about
+2% from basis.
What happens next Tuesday? Will global markets crash, or rally
hard? Gun to head, we rally hard.
I followed you (kind of) into EDC. It's so painful to do this that it must be the right move.
ReplyDeleteKeeping 90% cash. I like the thinking with this here. If EEM blows through $32 without a bounce I would be surprised, given the massive panic spike lower last week. My guess is we get some coordinated global CB action over the weekend with a gap up on Monday.
DeleteThe chart of EEM is very similar to that of RSX back in December. Back then there was an initial bounce, then a weak re-test, then RSX rallied about 40% over the next 4-5 months.
I thought more about this and decided to just hedge out my risk by buying EDZ at $54.85 after hours. I hedged 1 for 1 instead of trying to sell EDC at a loss due to a wide bid/ask spread. I realized I have no interest in having any exposure over the weekend. I'd rather enjoy my weekend than sit with any exposure to the market whatsoever. I'll probably miss a big move but I've had more success having no positions on overnight. Each day has presented a ton of opportunities so being flat with a fresh mind is easier to navigate this mess.
DeleteIBB is a better idea for pairs trade, thanks TOF.
ReplyDeleteCannot help but think two years from now we will look back and say why did we not start scaling into commodity stocks here.
ReplyDeleteWhat you say?
Yep. Looking for a spot.
DeleteZINC is one.
Deletehttp://www.barrons.com/articles/SB50001424053111904255004580029251440218026
old article
Neat book, have not read this in over 20 years.
ReplyDeletehttps://vdthangmeomeo.files.wordpress.com/2015/06/perry-kaufman-trading-systems-and-methods-5th-ed-2013.pdf
This is why the single most important trait of traders who achieve career success is adaptability. Adaptability does require discipline and self-control, but importantly it also requires self-awareness, market awareness, creativity, and flexibility.
ReplyDeletehttp://traderfeed.blogspot.com/2015/09/the-single-most-important-trait-of.html
I agree with that completely
DeleteNice link ... he has a few pdf's out there ... https://vdthangmeomeo.wordpress.com/
ReplyDeleteWanted to respond with a link to Dalton's - Markets in Profile but can't find it (rats!!!!)
Media headlines are doing a great job of scaring investors away from emerging markets and China in particular, probably right at the point where they should be jumping in. Here's a nice contrarian article that takes a more thoughtful look at changing trends in China:
ReplyDeletehttp://www.iris.xyz/global/china-s-economy-undergoing-huge-transformation-no-one-s-talking-about
'You can see that the world’s second-largest economy has begun to shift away from manufacturing and more toward consumption and the service industries. While the country’s purchasing managers’ index (PMI) reading has been in contraction mode since March of this year, the service industries—which include financial services, insurance, entertainment, tourism and more—are ever-expanding. The problem is that the transformation has not been fast enough to offset the massive size of the manufacturing sector.
'Just as a refresher, the PMI is forward-looking and resets every 30 days. It helps investors manage expectations. Consider this: The best-performing country in our Emerging Europe Fund (EUROX) is the Czech Republic—which also happens to have one of the highest PMI readings. Coincidence?
'In China, overseas travel, cinema box office revenue and ecommerce are all seeing “explosive growth,” according to BCA. The country’s once-struggling real estate market is also robust. The government just relaxed rules to permit more foreigners to purchase mainland property.
'But you’d be hard-pressed to come across any of this constructive news because it’s not particularly good for ratings.'
Two Headlines:
ReplyDeleteThe week ahead: More bloodletting in China stocks?
Mobius to Beijing: Quit Fighting the Market and Let Stocks Fall
The minute they let them fall they will Rise, just like the minute you ignore someone they will pay attention to you, The minute you ignore a girl she would like you, etc
DeleteFutures are flirting with the "breakdown" area of 1930 right now. Just sitting aside and casually watching things at this point. Part of me says there's no way in hell things unravel given what I think is a fairly solid economy. But it all comes down to confidence and if people lose that then I guess it could get a lot worse...
ReplyDeleteWaiting for stability to commit more money to the market, though.
http://mebfaber.com/2015/08/24/worried-about-the-stock-market-you-should-be/
ReplyDeleteTrading action in these global markets seems pretty weak to me...not representative of a futures rally of 3/4%. Could just be normal volatility, but early gains followed by weakness is a pattern I've seen occurring for weeks now. Just seems fishy to me.
ReplyDeletehttp://www.ritholtz.com/blog/2015/09/lily-drone-camera/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29
ReplyDeletePretty cool, but i do wonder what happens if you have 50 skiers on the hill at the same time with drones everywhere. Hope they have some safety features in them to avoid crashes and hitting people.
DeleteGood point, could see the mountains banning these things except for say commercial operators like they do for photos.
DeleteGreat interview with peter Brandt
ReplyDeletehttp://chatwithtraders.com/ep-036-peter-brandt/
Really nice,
DeleteRisk Management
Process
In Gold we Trust
ReplyDeleteThis has some interesting charts with a bias towards gold. Worth a look IMO.
http://www.zerohedge.com/news/2015-09-07/gold-we-trust-2015-edition
I managed to squeeze a little money out of my EDZ / EDC hedge. Missed a lot more than just holding the EDC but got scared at the last minute.
ReplyDeleteOdds they fade this open?
Grabbed some TZA at 11.76 i case they fade the open.
DeleteI remember when the TZA gap ups would always fill during the up trend, so thinking it fills now that we may be in a downtrend.
Delete"so thinking gaps DOWN fills..."
DeleteSold half of TZA earlier at $11.86 and the rest here at $11.75
DeleteENPH magic number today is 4.80.
ReplyDeleteNSPH news. I hadn't heard of this test so I'm surprised by the action.
(a) Both Shanghai and Hong Kong reverse early declines to post +3% gains, despite disappointing trade data out of China. A notable change in character to 'rallying on bad news.'
ReplyDelete(b) EWZ (Brazil) +3% despite a drop in crude.
(c) US indexes recoup all of Friday's losses and then some.
Bear markets are characterized by spectacular rallies, and this one is no exception. The SPX may have room to run to 2040, where patient bears lie ready to short again.
Grabbed some GILD and AAPL at $103.08 and $111.5. Thinking that people aren't expecting a continuation of this move so willing to put some money on the long side for the short term.
ReplyDeleteAAPL has a product announcement tomorrow. could be a good trade into the close if you think people will buy ahead of the announcement, which is what i'm thinking. AAPL has historically moved 5% in the 30 days prior to a iPhone announcement. The past 30 days it has gone down 6.6%. I'm thinking there is some room to catch up here into the close today.
DeleteDoh, looks like i was wrong. Sold at $110.7
DeleteLong YRCW $15.89
ReplyDeleteAlibaba (BABA) made comments about softness, stock is tanking.
ReplyDeleteBack in TZA $11.64 for another day trade
ReplyDeleteSold at $11.6. Not making any headway today.
DeleteSold GILD
ReplyDelete(a) FCX (Freeport McMoran)-> Cleared entire position @ 10.56 (+10%).
ReplyDelete(b) RYWVX (Rydex 2x Emerging Markets) closed the 1030 window up +5.25%. Currently still holding, but likely to close end of day. It's a trading position, and we're still in a bear market. In a bull market, I would use a trailing stop. In any case, I have enough at risk via a longer-term position in FEMKX (Fidelity EM).
nice trades, took alot of courage
Delete(a) EEM now +3%. Will close RYWVX end of day, and look to reopen on a pullback.
ReplyDelete(b) TLT now at 120.83, or <0.5% from my target of 120.3x. Will (re)open a partial position in RYGBX (Rydex 1.2x Government Long Bond) at the close. The thinking is TLT may drop early Wednesday morning only to reverse hard in the afternoon, setting a 'swing low' entry I would otherwise need to chase.
Great trades 2nd. You had more guts than I did to hold EEM / EDC unhedged.
DeleteI bought two small positions as trades on housing today:
ReplyDeleteTREX at 38.62
CCS at 22.46
I'm also holding small positions in YRCW, GILD (bought back into this), AMGN, ARIS, CRNT, TA.
Still holding 50% cash.
Its tough to buy into today's strength but I think most people are thinking the same thing and unwilling to do it. So I'd like to have some exposure on here just in case. If not then I'll take hits and move on.
Bought small amount of FCG, been watching this thing since 2008.
ReplyDeleteI've made a few trades on UGAZ but i cant fully buy into the thinking that it will rise significantly just because of all of the new technologies people are using to extract nat gas
DeleteCopper putting in an interesting move off the bottom and the copper stocks like FCX, FM.TO, LUN.TO having big moves. Probably just short covering so far, but the metal is up over 10% in the last couple weeks. My favourite is LUN.TO, and I've been watching for a couple years now waiting for the right time to buy. Still just watching for now, but thinking hard it might be time to go.
ReplyDeleteI was very close to buying this after hours (FCX). Going to regret not buying it and holding it. I was trading it down under $10 last week.
DeleteI did manage to get up to 75% long with after hours purchases in ERX, GPRO and GILD and seeing the futures up is nice. Hopefully it sticks. But I'm thinking the biggest rewards will come in the metals and emerging markets sectors.
They are the beaten down ones that no-one likes.
DeleteWent back through a few really small cap base metal producers last night that I used to follow. Hard part with them is they don't have the volume of scale a FCX does, so need high prices for profits, but have great leverage to the upside if metals prices can get moving.
Leon Cooperman positive on the market:
ReplyDeletehttp://www.cnbc.com/2015/09/08/risk-parity-trading-is-causing-volatility-and-scaring-the-public-leon-cooperman.html
"There have been eight interest rate cycles since the mid-1950s, and the market went up for 30 months on average after each rate hike, he said. In addition, the market was up 9½ percent one year after liftoff on average across those eight cycles."
Did a lot of cycling in Montreal this weekend. Great city for getting around on your bike - rated as the best in North America by some. They've taken roads and carved out one of the lanes into 2-lane bike paths with curbs to keep the cars out. You can get around a lot of the city on bike with very few car interactions and the cars there are bike-aware, plus no right turns on red lights. We rented bikes for some long rides along the water, etc., but they also have these Bixi bikes which you pay $12 for a 3-day weekend and can pickup and drop off all around the city - bixi is supposed to be like a bike/taxi.
ReplyDeleteContemplating leju given how cheap it is (10x eps, 1/2 mkt cap in cash). Definitely risky given its in China but they do have zillow as a partner which adds credibility. I think some of these China Internet plays could be good here if you're willing to take risk as I do think the worries about China are overblown. My main concern is currency devaluations and the impact they have on adrs
ReplyDeleteI sold all of my positions at the open except ta YRCW aris and crnt. Wish I had more crnt
ReplyDeleteFunny, ENPH magic number today is 4.80 again. That was sorta my original sell price so we will see.
ReplyDeleteFCG took profits at 6.78. And yes TOF, the amount of gas deposits here is exceptional which makes me think supply would damp down price rise, so just trading. UGAZ for me is a mind warp.
ReplyDeleteCopper, yes FCX wish I'd held, but pullbacks will/should happen. BB know anything about TGB in year neck of the woods, trades .50's .
TGB also has a copper project 52 miles above me in Florence drove right by going to an from PHX airport, will take a lot next time.
DeleteBTH - These guys should offer flame throwers, not just candles.
ReplyDeletescaling back into GILD
ReplyDeletehttp://247wallst.com/healthcare-business/2015/09/09/why-gilead-faces-unenthusiastic-ratings-into-massive-debt-offering/2/
DeleteAnyone have insights into senior unsecured notes? like dislike why
many weasel clauses
DeleteAdditional risks were listed as follows (headers) directly from the SEC filing:
The notes are obligations exclusively of the Company and not of its subsidiaries, and payment to holders of the notes will be structurally subordinated to the claims of our subsidiaries’ creditors.
The notes will be effectively junior to secured indebtedness that we may issue in the future. The notes are unsecured.
Redemption may adversely affect your return on the notes.
We may not be able to repurchase all of the notes upon a Change of Control Triggering Event.
An increase in interest rates could result in a decrease in the relative value of the notes.
There are limited covenants in the indenture governing the notes and the terms of the notes do not prohibit us from taking other action that could negatively impact holders of the notes.
Our financial performance and other factors could adversely impact our ability to make payments on the notes.
There are no public markets for the notes.
Our credit ratings may not reflect all risks of your investment in the notes.
Increased leverage may harm our financial condition and results of operations.
I'm thinking this is a fake out shakedown and we rally into the close today.
DeleteBiodiesel that doesn't smell like french fries:
ReplyDeleteCity Sewage! :)
STORS is a hydrothermal process, capable of taking dewatered raw, post-digested or activated sludge as an alternative to anaerobic digestion for primary and secondary treatment.
The sludge is converted at elevated temperature and pressure into a useful burnable fuel, either as an oil with 90% of the heating value of diesel"
T3 - Thanks for passing the note on GILD. I decided to pass on scaling back into it. I really don't like that from a sentiment standpoint right now.
ReplyDeleteT3,
ReplyDeletere TGB, it is one of the small cap copper producers I follow. It has a pretty good active mine in Gibraltar, but they've had operational troubles over the years. they also have a big potential project up here called Prosperity which they have been trying to get environmental approval for. None of the value of Prosperity is in the price and it is hard to know what happens.
They are one of the small producers that I think needs good copper prices, but if we get them, it will be very cheap.
Long gpro 35.4
ReplyDeleteI'm thinking since nobody seems capable of profits from digging, drilling or extracting shit from the ground then maybe those guys pumping shit into the ground have a chance.
ReplyDeleteAGM - Now there's some shit.....
ReplyDeleteGRC - Pretty sure these guys make the giant shit pumps. No debt!?!!!
ReplyDeleteSold GPRO for a few penny gain.
ReplyDeleteon to next.
DeleteGILD and bio's have caught some bid last few days, I like BIIB more since the down move may have removed some of the downside risk. Still one cannot rule out going back to 270.
I suspect we will be going lower in general market in the next few months, perhaps we rally hold into FED mtging and sell off regardless of decision.
BB thanks TGB
I am being extremely cautious. I suspect we will get better prices down the road in general. If this was 2 years ago I would be extremely agressive buying stocks like YRCW / TA right here as I love their setups / valuation, but not in this market.
DeleteAMGN / GILD are the cheapest biotechs by far and the ones I'm focusing on. Both have significant amounts of debt on their books but they're both generating tons of free cash flow.
I think the dollar could continue going higher over time and that should be a problem for the market. The market has gone higher under this scenario before (late 90's) so its not impossible for it to happen again, but that period was a bubble and the market ignored pretty much everything as people chased it higher. When I was looking at a move up in the dollar last year, I was thinking it would potentially go to 120. If that happens that could be a problem.
Sold CRNT at $1.51. I'm thinking we get a very choppy move up to the downward sloping 50DMA. I may look to go short at that point if we get there.
ReplyDeleteOdds we test the lows from two weeks ago heading into the Fed meeting?
ReplyDeleteThis UVXY is easily the most volatile thing I have ever seen
ReplyDeleteBXE - Nothing but a thorn.
ReplyDeleteLong TLT $121.20
ReplyDeleteReuters U.S. News @ReutersUS 3m3 minutes ago
ReplyDeleteBankrupt ex-teen heartthrob David Cassidy to auction Florida home http://reut.rs/1NirCt4
Raising cash for his beachfront home in Italy?
DeleteI flipped RUSS for a nice profit today and sold TLT. Was tempted to keep both through the close but given the volatility, I have zero desire to hold on to anything longer term.
ReplyDeleteIf oil gives up its gains I think this market could tumble to the low 1800s
Yep, all the bull traps have that distinct smell of wet ass.
ReplyDeleteI added a little TA here at $11.6 to $11.65. I think this is a major beneficiary of low oil
ReplyDeleteTITN - Lesson is buy ahead of earnings IF it's beat up in advance, I guess.
ReplyDeleteRates - I just don't see rates going up appreciably, there are too many people and companies sucking off that nipple.
ReplyDeleteI think it will take years beofre we approach anything resembling normal rates in a expanding economy.
DeleteFinally added to GPRO. Basis now 44.30.
ReplyDeleteGPRO trades like BXE
DeleteBXEwwwwww
DeleteGlobal markets rallied hard early this morning, with the DJIA +200 points pre-market. EEM (Emerging Markets) up +2% at early morning highs. Heading into the close, the DJIA is trading -226 points, and EEM slightly in the red. Bonds plunged at the open, but are now in positive territory and at intraday highs. Trading around miners-> closed partial positions early in the morning, and added back near intraday lows.
ReplyDelete(a) TLT (long bond) +0.6%. Taking RYGBX (Rydex 1.2x Government Long Bond) off at the close.
(b) Reopening a partial position in RYWVX (Rydex 2x EM) at the close.
(c) Adding a small position in RYPMX (Rydex Precious Metals) at the close on today's -2.8% decline in miners.
It's a bear market, and playing cautiously with small positions remains prudent.
Asia should sell off tonight, TUR/EWS already got a head start on that. Knew I shoulda shorted the pop this morning, ahead of the FED dog and pony show of course we get a bull trap.
ReplyDelete1 week to the Fed meeting.
ReplyDeleteI think all the longer term traders pretty much have their positions in place and, unless something really unexpected happens, the market just gyrates around like it has the last couple weeks with the short term guys and computers trying to make a few bucks.
I'm probably being too optimistic, but I still think the fed decision either way is bullish for the market. Either the economy is getting better, so rates are going up and stocks follow, or the fed holds rates and we get at least a short term bump as people jump on board the lower for longer rate thing.
I'm hoping they feel the economy is strong enough to raise rates and we can start looking forward more.
This TNH seems awfully cheap. How do they have 50%+ net profit margins? ANyone follow this thing?
ReplyDeleteI bought RUSS heading into the close today at $43.67. Bought some TZA and SPXS after hours at $11.89 and $21.05 as well. I have a slightly net short position but all of my shorts are 3x so I have more than that. Still holding lots of cash, though. Not willing to commit much to the long side yet.
ReplyDeleteEWZ down 7% after hours. Brazil downgraded to Junk by S&P
ReplyDelete
ReplyDeleteBoeing (NYSE:BA) says it plans to raise monthly production of its 767 widebody jet to 2.5 in late 2017 to accommodate a previously announced order for 50 planes by FedEx; Boeing currently makes 1.5 per month and is due to reach two per month in Q1 2016.
Boeing’s Everett, Wash., assembly line is gearing up to begin regular production of a heavily modified version of the 767 to serve as a refueling tanker for the U.S. Air Force, which plans to buy as many as 179 aircraft.
Boeing's backlog of 767 orders reaches into the mid-2020s, says Brad Zaback, VP and general manager of the 767 program.
Can you imagine running a business like this?
Enviable spot to be in huh?
DeleteIt's amazing really. 10y backlog with their margins. Wow.
DeleteAnd it's not really an expensive stock at 14 times next year's earnings.
DeleteSeriously, how many people honestly think we could see the S&P go down to 1,000 again? I mean, outside of the permabears...The fact that I ask this probably means we're near a short term low. But look at the range bound nature of the market from 1900 to the early 1920s.
ReplyDeletehttp://stockcharts.com/freecharts/historical/images/djia1900s.png
In fact, excluding the big late 1920's bubble, the market went nowhere for 30+ years. Imagine if we saw the same here...wild swings between DJIA 7,000 and 18,000 for another 10-15 years. Hussman would be anointed investor extraordinaire.
Check this cool chart out:
ReplyDeletehttp://40.media.tumblr.com/7d5b113d6a9f3c10007b9b4686908e15/tumblr_nk5ad6t18A1tk131bo1_1280.jpg
XPL buying CNW. I was actually looking at CNW yesterday. Looks like it's giving a bid to YRCW. Doubt it lasts but we'll see.
ReplyDeleteWow I didn’t realize the German Dax was up almost 50% from the October lows to the highs earlier this year. If that’s not a blowoff top I’m not sure what is. Best thing is for that index to consolidate sideways.
ReplyDeleteTook off my hedges in SPXS / TZA at $21.05 and $11.92. Seems bearish to me though so I kept RUSS on, which is down a decent amount.
ReplyDeleteEnded up putting TZA / SPXS back on at $11.94 and $21.14 just in case I was wrong about selling.
DeleteYRCW off pre market
ReplyDelete(a) Brazilian debt cut to junk status. EWZ off -6% earlier, but recovering quickly. The downgrade was probably already priced in.
ReplyDelete(b) EEM (Emerging Markets) slightly in the green. Another sign that few sellers remain.
(c) GDX (miners)? Currently +1.7%, but I've seen these early morning spikes get faded many times. http://www.kitco.com/charts/livegold.html
(d) TLT (long bond) -0.5%.
David Tepper on CNBC this morning:
ReplyDeletehttp://www.cnbc.com/2015/09/10/david-tepper-good-time-to-take-money-off-the-table.html
He's cautious, thinks volatility is here to stay, and says being flat is good. Worth a listen too. Watch in order from oldest to newest to have it make most sense (CNBC goes wrong way)
I saw that he was gonna come on yesterday. I reviewed all of his portfolio moves yesterday and saw that he reduced his portfolio size significantly so I was thinking odds were that he would be bearish. Reaction isn't that bad considering how bullish it was when he was bullish on CNBC. I agree with his comments in general that the market multiple is probably too high right now (and estimates are probably too high) given the risks out there with emerging markets / dollar etc.
DeleteDoesn't mean you can't make money, just that it will probably be a lot harder. I think the safe way to think of it is to consider what average multiples were over the past few years and apply a 30% discount.
DeleteI think you're right about it being harder, but that is a good thing - otherwise we'd probably be getting into a blowoff phase.
DeleteYou also have to take anything someone says on TV with a grain of salt. Tepper was bullish on 2015 back in December. Of course he has the right to change his mind and not tell us, but all these guys are just point in time statements and reflect their current thinking and what they have done (if they are honest) and not what they will do.
Sold SPXS at $21.26
ReplyDelete7 days, 3 hours and 29 minutes till Fed decision (I'm just getting ahead of the CNBC countdown clock)
ReplyDeleteAAII Sentiment still showing a lot of bearishness - would be good fuel for the market if we get some good news.
ReplyDeletehttps://www.bespokepremium.com/think-big-blog/another-all-or-nothing-day/
Also interesting article further down about "All or Nothing Days". Says to me the traders are driving the market through ETF's and futures and less individual stock being traded.
http://seekingalpha.com/news/2771436-dryships-to-sell-17-vessels-at-795m-loss-shares-minus-36-percent
ReplyDeleteMakes you wonder about the book value of all the ships on the dry bulk shippers. It is one of my concerns, that their BV is overstated, so the p/bv discount is not real you see may not be real
Yeah I agree. That plus exposure to coal
DeleteI bought some AMGN today at $152.3. Still holding TA. Wish I didn't sell YRCW earlier.
ReplyDelete(a) Added to my position in RYWVX (Rydex 2x EM) @ the 1030 window, which allowed me to reduce my basis a bit. The fund closed off -1.37% @ 40.20, probably due to weakness in Brazil. The Ibovespa index was off -2.2% early in the session, but later climbed into positive territory. EEM (emerging markets) now showing more strength, up +1.12%.
ReplyDelete(b) Miners gave up early gains (not unexpected), and now flat.
(c) TLT (long bond) now -0.74%, struggling against strength in US equities (DJIA +60 points).
(d) Crude rebounding +3.37%. Investors in the energy sector, having been burned by reversals in oil prices overnight, have barely pushed the sector into positive territory. XLE up just +0.46%. Considering a small position in RYEIX (Rydex Energy) at the close.
My gut feeling is gap down tomorrow that reverses. I intend to sell my stocks at the close today
ReplyDeleteLong small piece of UVXY at $63.18 after hours
ReplyDeleteTook this off at $62.5. Just gonna keep cash for the open tomorrow. I have no edge on the direction. My guess is lower which probably means higher.
DeleteEnded up buying it back. I have an inkling we open up down tomorrow but am not willing to put much into it. Long at $62.7
DeleteWe open 'up down' tomorrow?
DeleteEquity futures up .25% at 8:30, but a lot can change by morning.
Deletehaha. meant to say we have a down open but it reverses hard. i don't think i'll be right though.
Deletei haven't seen a single person suggest we will just grind up to new highs. Means we probably should keep that possibility open.
http://www.marketfolly.com/2015/09/david-tepper-not-as-bullish-as-i-could.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MarketFolly+%28Market+Folly%29
ReplyDeleteSo many pundits have offered advice on what the Fed OUGHT to do–and rendered Chair Yellen speechless–for we have heard from every Governor and regional Fed President but not from Yellen. Today the airwaves were filled with Professor Larry Summers and his stance on the need for the FED to wait until there is a genuine threat of rising inflation expectations. CNBC had fund manager David Tepper on for an hour and in the pursuit of access journalism actually allowed the head of Appaloosa Finance to be heard. Mr. Tepper was not overly bullish the global equity markets and voiced concerns about the rise of wages in the U.S. as being a negative for American equities. This is a point I have discussed with Rick Santelli many times over the last two years so it was refreshing to hear Tepper raise the point to a greater level.
DeleteIn fact, I wrote a blog more than two years ago about Janet Yellen not being a friend of Wall Street and equities because she would prefer rising wages to higher corporate profits–the ultimate stand for Janet in her role as a moral philosopher. (I do not disagree with the moral stance I just don’t want a FED Chair taking that as an open position). But David Tepper raised a more significant issue, which had to do with the ECB‘s QE PROGRAM. Tepper wanted to know how the Germans will react when the ECB runs out of German sovereign debt to buy and has to fulfill its QE program with greater amounts of Portuguese, Spanish, Italian and other sub-par bonds. (I would have included the French also but Squawk Box was running out of time.) The issue of a back-door bailout of the European periphery is going to be a serious issue for Europe and it was interesting to see Tepper raise it. That’s a true global macro trader.
per Ira Harris
ReplyDeleteSome FCAU news - Sergio keeps trucking along.
Positive review for the Alpha Romeo 4d, plus the announcement of the Mazerati SUV for Q1 next year, which should be a big plus for profits if the success companies like Lexus have is an indicator:
http://www.latimes.com/business/autos/la-fi-hy-alfa-romeo-4c-20150911-story.html
http://www.reuters.com/article/2015/09/11/idUSL5N11H25X20150911
I had the hardest time holding that one with the constant merger talk.
DeleteI agree with Mark, but Sergio is a guy I'd put my money behind. Guy is smart and very hard working.
DeleteLooks like another range bound day. I'm really not finding much to do these days. Probably will just go golfing this aft and forget about the markets.
ReplyDeleteWas looking at the SPY options for next Friday, thinking that maybe worth a buy before the Fed decision. Still kind of expensive with at the money calls (and puts) going for a little over 1.5%, so would need a pretty strong move to make some money, but prices may come down as we get closer to expiry.
I sold my uvxy pre market and bought back into ta and amgn today
ReplyDeleteInteresting writeup on a company that does software for regional banks. Valuation is out of line for me, but a good story if you believe it and don't mind buying at high multiples:
ReplyDeletehttp://www.btigresearch.com/create-pdf/?url_pdf=wp-content/uploads/2015/09/QTWO-Initiation.pdf&name_pdf=QTWO-Initiation&id=64564
Can't view it. Which company is this?
DeleteQTWO.
DeleteFor AMGN - The reason I like it up here is valuation is reasonable (trades at about 14.2x FCF and FCF has grown over 10% annually since the last peak) and it has a good technical setup. It consolidated for a week or so then gapped up on 9/8 to a new range with the low around $150.5. I figure if it closes below this then I'll bail, otherwise I think it can run up to its 200DMA at least.
ReplyDeleteNot looking for a huge move but I figure downside of $1 vs upside of $7 is a good setup.
DeleteI've been thinking more about what Tepper said yesterday and I think he's spot on as far as valuations (ie he doesn't think the market should continue to pay 18-19x earnings given what's going on with foreign currencies and slowing worldwide growth). It seems like there's enough risk out there now that we should get the opportunity to get things at lower prices. I've been toying with the idea of slowly building out a longer term buy and hold portfolio of stocks should we get more downside. There are still plenty of larger companies that are fairly cheap. Companies like JPM, COF, DFS, AXP, BID are a few that have stuck out to me. Problem is, if we get another 10-15% downside or so then a lot of smaller companies will look just as cheap and they will probably have more upside.
ReplyDeleteWhen I look at companies like AXP, during the past 2 recessions / market downturns, earnings dropped 50% and the company traded at 20x EPS at the lows in 2001/2 and a lot lower in 2008/9. If I assume earnings drop 40% during the next downturn and it trades at 20x EPS, then you're looking at a stock based on current earnings that would trade at $68, which is only about 8-9% downside from here. I think going through this calculation is a good way of knowing what your potential downside is.
Interesting that a few gold miners have been popping up on technical screens I've been doing for stocks down significantly (30%+) over the past year but up in past month.
ReplyDeleteNCR - This probably confirms NCR is a turd, right?
ReplyDelete"Blackstone considers bidding for NCR -source September 11, 2015 10:59 AM ET Reuters"
I ended up selling AMGN for a small loss. I'm going to hold TA as I think theres a chance we see lower prices in oil which should inevitably be a good thing for them.
ReplyDeleteI bought a little RUSS as well, using a move above today's highs as a point to sell.
A move by RSX above its highs, that is. If RSX moves over $15.88 I'll bail on RUSS
DeleteEh, was hoping for a move lower by RSX but doesn't look like I'll get one into the close. Closed out RUSS.
DeleteThe Chicago Board Options Exchange (CBOE) tracks a $SKEW index (a real time snapshot of out-of-the-money options bets), which can be used to measure the probability of 'tail risk' in financial markets. SKEW ranges from 100 to 150. It hit 142 last Friday (Sep 4). Although bets on outlier events rarely pay off (odds are about the same as hitting '12' on a single roll of the dice), spikes in $SKEW have 'scored' relatively well in the past two years (last October, for instance): http://www.barchart.com/chart.php?sym=$SKEW&t=LINE&size=M&v=0&g=1&p=D&d=X&qb=1&style=technical
ReplyDeleteI'm as clueless as the next guy when it comes to predicting the future, but I'm big on risk management. The markets have turned around nicely from an early selloff. The DJIA is currently +65 points, EEM (emerging markets) +0.4%, GDX (miners) +0.84%. I don't have any reason to hold risk heading into next week's FOMC decision re hiking rates.
Moving to 100% cash at today's close.
I think the dollar is a key index to watch as this drives commodities and profit margins. The majority of traders I listen to / read are bullish on the dollar so there's the potential for a fairly significant unwind to occur in the very short term which would be bullish for the market / commodities. /DX (US Dollar Index) pulled back pretty hard the past 2 days and is sitting right at its 200 DMA, heading into the Fed meeting next week. Most likely this is in anticipation of the Fed meeting with traders probably selling off an overweight long position on the dollar.
ReplyDeleteI've been thinking this would consolidate for about 7 months before breaking higher. Next week could be a very volatile week for the dollar. My guess is a little more selling occurs on Monday and then the dollar puts in a bottom just below its 200 DMA. I think Monday will probably be a good day for the market.
http://stockcharts.com/h-sc/ui?s=%24USD&p=D&yr=2&mn=0&dy=0&id=p82333123207
I did buy back into AMGN today after realizing it was a mistake to sell. Holding that and TA as a play on lower gas prices.
ReplyDeleteI will say that it's surprising to me how strong some leading stocks are. And when I look at China, its interesting that its only down 1% YTD and still up over 35% in the past year. In fact, there's a lot of similarities with it and how the US market did in 1986-1988. The market was actually up in 1987 despite a massive crash.
It would be the ultimate head fake if this market grinds back up to 2100 again. Lots of bears out there.
Realistically, though, there's a ton of overhead supply with resistance levels at 1980 and 2040. The market is unable to get back above the first resistance level at 1980. I would think we get back up to 1980 again next week, then turn down. After that I would think we get a move to 2,040 that also gets rejected and we move lower below last month's low during Q4 or Q1.
DeleteSo I would be looking to fade a move to 1990 or so
That would complete a pretty classic topping pattern.
DeleteThere are very few people who are bullish on the market (Ackman was bullish on CNBC today). A lot of people waiting on a pullback or looking to buy lower. Could provide a floor to any sell-offs.
DeleteYou guys may want to take a closer look at the $SKEW chart. Unless you're a buy-and-hold guy like BB, is there any point in holding risk assets before the Fed tips its hand next week? The spike to 146 on September 19, 2014 marked a ST top in the SPX. More importantly, it provided an early signal that allowed traders to scale out several days ahead of the October sell-off.
ReplyDeleteI have 80% cash so I am in your camp
Delete94% cash here
Deletehttp://www.mcoscillator.com/learning_center/weekly_chart/vix_above_all_of_its_futures_contracts/
LAKE taking off without the gang?
ReplyDeleteLots of sentiment indicators indicating fear:
ReplyDeletehttp://money.cnn.com/data/fear-and-greed/
http://www.barrons.com/public/page/9_0210-investorsentimentreadings.html (Citi index at bottom in panic mode)
But insiders are buying:
https://www.insidertracking.com/
http://www.ritholtz.com/blog/2015/09/princes-debut-performance-of-purple-rain/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29
ReplyDeleteanother version
Deletehttps://www.youtube.com/watch?v=oDs2Bkq6UU4&index=3&list=RDPpprG99PuvI
one more
Deletehttps://www.youtube.com/watch?v=OY4XqksDQzY&index=27&list=RDPpprG99PuvI
Value investing link.
ReplyDeletehttp://www.dataroma.com/m/managers.php
Nice web site for looking at these guys.
DeleteAmazing to me how large some guys make certain holdings. 2 guys hold FCAU - one is a 42% holding and one is 20%. Bruce Berkowitz has 30% each in AIG and BAC - hard to justify paying 2 + 20 for that.
ReplyDeleteA self-proclaimed "kid in a candy store" in 2011, Lowes (NYSE:L) CIO Joe Rosenberg isn't as excited now as he was then, but he remains a long-term bull and sees a few particular pockets of value.
Source: Barron's
On oil, either OPEC and non-OPEC countries reach an agreement to cut production and the price spikes upward, or there isn't an agreement and the price collapses - wiping out a lot of production. Either way, the price moves higher, says Rosenberg, and energy stocks (XLE, OIH) have likely bottomed.
Rosenberg doesn't think the dividend gets cut at Chevron (NYSE:CVX), noting board members like John Stumpf were buyers of the stock at much higher levels. "The probability of them then agreeing to a dividend cut seems somewhat remote." A similar case can be made for Shell (RDS.A, RDS.B) or ExxonMobile (NYSE:XOM).
Catalysts for Johnson & Johnson (NYSE:JNJ) include a breakup into three companies, and better capital allocation - notably, getting far more aggressive with share repurchases. "JNJ could raise $50B in the bond market in a heartbeat and use that money to buy back stock." Don't rule out an activist investor if management doesn't get with it.
Ford (NYSE:F) and General Motors (NYSE:GM) are "incredibly cheap," says Rosenberg. The strong sales pace is sustainable because the average age of cars on the road in the U.S. is about 11 years - they need to be replaced. "The stocks are discounting a very bearish scenario."
Seems very logical re oil, just the timing and the path to get there are hard to know.
DeleteI don't know guys. Granted I have never really invested in the energy sector so I'm not the most knowledgeable in this space. However, I have a hard time getting past the entire energy sector having just gone through a massive bubble. Look at the long term chart of XLE for example. It's still up 133% from the 2000 highs. By comparison, the S&P 500 is up 26%.
DeleteThink about the cycle we went through: I remember reading a multitude of articles about how the Chinese were going to drive demand for oil exponentially higher. This demand caused massive production increases, tons of which was backed by debt assuming very high oil prices. Now we get a triple whammy of China slowdown (potentially significant), a crash in oil prices, and a huge expansion in the use of alternative fuels. The result is we have a huge amount of what I think is unsustainable / unserviceable debt.
I think this bubble was no different than the tech bubble. It was just masked by what looked like sustainable earnings driven by a debt bubble and unsustainably high oil prices.
I am steering clear of all energy related stocks. None are in new uptrends yet. If they get back above their 200DMA and successfully re-test their 200DMA like the S&P did in July 2009, then I'll change my mind.
Regarding JNJ - That valuation isn't exactly cheap any longer. Sounds to me like he's hoping for an activist type move to make money on it. Otherwise, the business hasn't grown FCF in 6 years and trades at a pretty high multiple on trailing earnings at 17x. They have also increased their dividend payout ratio from 37% to 50% over the past 8 years and their payout ratio is now on the high side. Typically low payout ratio companies tend to outperform.
DeleteF & GM do look cheap on the surface (ie this years EPS estimate) but those businesses kind of suck. The cyclicality of their businesses only warrant very low multiples and who the hell knows where we are in the cycle? I'd consider these stocks though, but you have to be flexible on them because if we enter a long down cycle these stocks will get destroyed.
DeleteRe: Value Investing Link - thanks a lot for this link. I came across a checklist that Mohnish Pobrai wrote about to construct a good portfolio; see link here: http://www.valuewalk.com/2015/05/how-mohnish-pabrai-and-charlie-munger-use-a-checklist/
ReplyDelete"Checklist shows possible failure points
I used to believe in a 10x10 portfolio until Q308.
The drubbing of Q408 exposed clear weaknesses in
some portfolio holdings. Size was key issue
Moved to a 2, 5 or 10 model
2% Bets Are Part Of A Basket Or Cases Like Wells Fargo
5% bets are typical
10% bets are made when 7 moons line up
Graham’s entire framework emerged after the 1929-1933 Great Depression and collapse in equity prices
Since mistakes are inevitable and businesses always fail on some checklist items, best to go back to Graham 101 and diversify
No need to hold 100 names, but unwise to hold 4
20-30 names seems just right"
But it looks like he has completely ignored his own research as he now has 7 holdings and the top 4 make up 90% of his holdings.
That is how I manage my portfolio as well. I hold a few more stocks, about 30 to 35, but also use a 2, 5, 10 approach.
DeleteI know it doesn't make any sense, but I think if the Fed raises rates we will see the market drop another 2000 Dow points.
ReplyDeleteI think we got our first round of tightening when the Fed stopped QE. This is round 2 and I just don't see how the global market could deal with this sentiment change without dropping more.
From a practical standpoint a minor increase shouldn't matter at all. Its so minute that it's meaningless. But emerging markets are so messed up right now with China, Brazil and Russia in major slowdowns / nasty recessions.
DeleteMy hope if we get no rate increase, the market jumps, and I can put out a few shorts.
I could see that happening, but I think it goes up on a rate rise for 2 reasons:
Delete1. People realize that the reason for the rate increase is because of an improving economy and greater economic activity will drive drive future profits
2. There are very few people positioned for a rising market, and seems pretty much everyone is cautious on the Fed decision. I think there will be few people left to sell on the decision, but a lot will need to buy if the market reacts positively.
I think your second scenario where we jump on no rate rise and this is shortable is probably a good idea.
I'm going to ask MOG about the apparent lack of M and A so far. It surprises me.
ReplyDeleteGood question, wonder if subsea methane harvesting is just around the corner?
DeletePretty funny to think a token rate increase is causing all this consternation, must be something else really causing the concern.
ReplyDeleteEVA - Will this be yet another case of government mandated success?
ReplyDeleteTOF,
ReplyDeletethe theory with oil, which I think makes sense, is that the difference with oil is it is a declining commodity. With a commodity like this is people start with the cheapest sources first. So a hundred years ago, you could just drill a hole in the ground and oil would come out. Now all the easy oil has been exploited, and new oil is expensive to get. There are still some fields like in Saudi where they can pump oil for $2 per barrel, but these are giant field that were developed long ago (1970's). Oil declines by default about 6% a year without capital investment to replace and demand increases by about 1% per year. Replacement oil is generally expensive (fracing, oil sands, deep offshore) and most of these need oil above where it is now, so we should see the supply/demand balance get back in track fairly quickly.
I know we had a long bear in oil for the 1980's and 1990's before China became a big consumer, and maybe that happens again, but if even if we do, if you look at the long term chart of a stock like XOM, it did great during this time, so energy companies can make money with cheap oil.
SLW @ 11.24.
ReplyDeleteI sold my amgn at the open for break even. Tried selling ta but couldn't get my order in quick enough. Still holding it. Bought ugaz at 8.55 and russ at 39.9
ReplyDeleteFED rates?
ReplyDeletehttp://www.calculatedriskblog.com/2015/09/fomc-preview-and-review-of-projections.html
Just watching, like KMI, BXMT for yield plays, some say SE is a better play than KMI. KMI seems close to being washed out to me.
ReplyDeleteIf gold equities would go with NEM, the institutional favorite.
BXE - Where's the customary $0.20 drop?!?!?
ReplyDeleteThanks for the feedback on oil Brent.
ReplyDeleteOdds we sell off into the fed meeting are high I think. Then we should get a major spike. If not I'll be in cash and will miss the crash. If we do I'll be looking to short at 1990 unless we get there in one day and close at the highs then I'm thinking 2030.
ReplyDeleteI bet there are heros showing up just ahead of fed meeting, remains to be seen if they get clobbered but there's a decent chance they win?
DeleteCXO - Always seems to recover, just not fully.
ReplyDeleteOver 120,000 waiting for an organ transplant, 2/3 of which are awaiting a kidney.
ReplyDeleteSold RUSS at $40.
ReplyDeleteI probably should be holding this but I haven't had much luck with this thing and wanted to grab some gains since I had to average down to get em.
DeleteNatty just broke out. I'm holding UGAZ hoping this break out is for real and not a head fake.
ReplyDeleteCG
ReplyDeleteSold my TA at $12. I hate selling it here but I want no risk other than a short on RUSS and/or long UGAZ
ReplyDeleteSold UGAZ at $8.92.
ReplyDeleteBack to all cash. Will just continue to look to make day trades and keep 70%+ cash.
ReplyDeleteZINC - Another leg down, wheeeee-hoooo........ Miners don't benefit from low oil or low rates which should create demand, management instead, too busy screwing shareholders.
ReplyDeleteI saw Mohnish Pabrai (guy that owns a huge chunk of FCAU) owns a lot of this
Deleteyeah -49% on ZINC at 15% of 475 mil is approx 35 mil. and flat on FCAU
Deletetime to double down?
DeleteStill think ZINC will be a good one when things stabilize, ah timing.
DeleteI Have No Original Ideas. I Am A 100% Cloner: Mohnish Pabrai
Deletehttp://rakesh-jhunjhunwala.in/i-have-no-original-ideas-i-am-a-100-cloner-mohnish-pabrai/
Bought back into RUSS at $39.6. Looking to just flip it.
ReplyDeleteI really hope that they raise rates this week, so we don't have to hear the endless talk about when will they raise rates.
ReplyDeletesold BIIB, look to buy back in low 300's
ReplyDelete22% Arlington office vacancy rate.
ReplyDeleteArlington National Cemetery,
The Pentagon,
Marine Corps War Memorial,
United States Air Force Memorial,
Pentagon Memorial
Anyone know why GOOGL is 653 and GOOG is 624?
ReplyDeleteGOOGL are voting, GOOG are the non-voting.
Delete