Tuesday, April 12, 2016
4/12/16 It's Not Easy Being Green!
DJIA +182 points. SPX +22 points to 2064. EWZ (Brazil) +3% as a congressional committee votes to recommend Rousseff's impeachment. The iBovespa itself is up +2068 points (+4.12%). RSX (Russia) +3.27%. FXI (China 'H' Shares) +1.84%. EEM (emerging markets) +1.77%.
No commentary needed!
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Actually, I *would* like some commentary! At some point you said that once the market reaches old highs, you'll exit your positions. What are your thoughts on when it would be appropriate to close the long side exposure?
ReplyDeleteI'm not thinking along those lines right now. Just enjoying the ride.
DeleteWell, let me venture a hypothesis then. I think it was BB who recently posted a great article about the extreme cost of 3-month puts relative to 3-month calls on S&P right now, which implies that no one believes in the further advance of S&P, and instead everyone is nicely protected against a drop. With such a mind set, obviously, the market cannot decline (no wave of panicking sellers can appear), and the path of least resistance is up. How far? Well, I remember in Feb 2010 it was clear to everyone that XLF is done going up (it has been flat since prev. August) since a new wave of bankruptcies is around the corner. Even I was trying to short XLF back then. Instead, XLF started climbing and climbed well above the previous post-2009 highs. It did come back to the Feb level in a triangular fashion after that, though. So this time around we may see a similar behavior: S&P will make new all-time highs and will then come back down to the 2010 level, and if the bull ends at that point, it will keep going down. In other words, I'll try to hold off on purchasing S&P puts until new highs are made and puts become less expensive relative to calls.
DeleteDavid - I'd recommend studying the price action of the market in the 1950's and 60's to get a glimpse of how these types of patterns play out. I think looking for a breakout above new highs with a rollover several months later back down to 1800 is a reasonable one to have in mind. No one knows how high it would go if that happens, so best to be open minded in my opinion.
DeleteRE: that article, the only issue I had with it is the chart had zero correlation with being a good contrarian indicator. In fact, it looked like people were actually correctly getting extremely bullish right at the lows in Jan/Feb.
I took off my trade in PBR into the close. Had a good size position on it so taking a 5.8% gain in one day is hard to pass up. I don't trust the continuity of this market at all.
ReplyDeleteEnded up buying back 1/3 of my position after hours at same price I sold just in case it continues higher.
DeleteHolly Crap, not on single 'atta boy' for calling the turn around?
ReplyDeleteAtta boy!
DeleteLooks like good numbers from JP Morgan this morning and Europe up sharply and US futures up.
ReplyDeleteLooks like the rally continues.
Up, Up and Away
ReplyDeleteAnother early composition by Jimmy Webb:
https://www.youtube.com/watch?v=_ii_WugJEJg
Beautiful follow-through in global indexes overnight. Japan’s Nikkei kicks things off with a +2.84% gain to 16381 (ending a one-week grind as low as 15471). Hong Kong’s Hang Seng +3.19% (+654 points) to 21159 (its first close above 21000 since January 5). The Shanghai Composite rose +1.42% to 3067, its highest close since January 11. Germany’s DAX +2.03% and back within walking distance of 10000. Euro Stoxx 50 +2.57%.
DJIA futures +86 points.
tof- The toughest dilemma with short-term trading is deciding how long to hold a position, and when to take gains. It's much easier with a long-term time frame, as moves of +100% or more give us more time to make that decision.
ReplyDeleteI agree. however, when it comes to individual stocks I've always done better focusing on the short term
DeleteFor most people, trading short term is a losing proposition. But if you can do it well, you can outperform most longer term strategies.
DeleteIn the earlier stages of a bull market I have actually held things longer than just a few days at a time. But at the stage we're at right now with valuations elevated, I prefer day / week trades.
DeleteBeen a flat market for a long time now, so longer holds haven't worked that well either
DeleteI also have the advantage (well probably disadvantage since I have to live off of some of it) of having all of my money in a retirement account so taxes aren't an issue.
DeleteThose Euro banks are having a huge day. Should have stuck with my gut on them
DeleteYeah, easy in hindsight, haha. They've had a lot of selling the last year. DB down 50% since August. You know a good bounce is coming at some time, but hard to pick the bottom. The bounce in Feb. was quite strong, but came all the way back down. Hopefully this was a retest.
DeleteTook off RIG, most likely early
ReplyDeleteI bought some FCX this morning at $10.83. I like their exposure to gold. I also sold FCX at $6.6 avg.
ReplyDeleteBought back into PBR. Looks like it's ready for another leg higher
ReplyDeleteThat's always so hard for me to do.
DeleteI haven't seen this many good looking charts since 2012:
ReplyDeleteNAV
NM
CYH
FSTR
GEN
PEIX
THC
ADPT
ENVA
TK
MT
NSM
ASPS
WAC
SF
TOO
DATA
FCX
PBR
Some more:
ReplyDeleteSIEN
GLNG
TMST
GNW
CS
USLV hit my sell limit at $15 for the shares I recently purchased at $12.80. Not sure if I should sell the last bunch of shares at $16 or just hold them for the long term, since the PM charts are spelling a clear long-term turn around, and it is good to keep *some* exposure for the long term in a bull market...
ReplyDeleteSince October 2015, MTL spiked 3 times to the $2 level and was rejected. Today it rose above that level for the first time since then, making what looks like a cup-n-handle formation since the Jan 2016 spike. So, Mike, you can add MTL to the list of the great looking charts. :)
ReplyDeleteI have a bunch of MTL that I acquired between $1.80 and $1.90, some of which I already sold at $2.00 and my next sell limit is at $2.20.
Looks great. Only problem for me is its too much coal
DeleteA chart is a chart, especially if you are holding it only for a day or two. :)
DeleteAlthough my thought before every trade is: am I ok with owning this for a while if it tanks on me?
DeleteThe German DAX managed to hike above 10k and closed @ 10026. Brazil’s iBovespa tacks on another +1300 points and now comfortably above 53k. FXI (China ‘H’ Shares) up another +3.85%. EWZ (Brazil) up another +2.9%. The DJIA +174 points, slightly below an intraday high of 17910!
ReplyDeleteHow do sidelined investors ‘chase’ an uninterrupted rally like the one we’ve had in 2016? They don’t. Which only increases the likelihood of new highs when underinvested fund managers are forced to chase.
Read stubborn bears like Doug Kass and Keith McCullough. They're digging in their heels. Crazy market.
DeleteAnd people are talking about negative fund flows and sentiment staying negative in the face of this rally.
DeleteAdded to FCX at $10.84.
ReplyDeleteFeels to me like February was the final bottom for this correction, similar to the fall of 2011, and now we are off to the races for the next multi-year, 50%+ rise in the market.
ReplyDeleteI still think the last couple years were the transition to the later part of the bull market cycle and we see things like financials, industrials, commodities (maybe less so than normal).
I know Mike, you are concerned about broad market valuations, and maybe the large consumer staples and utilities (which are very expensive) hold down some markets as their valuations come down, but I think there will be many more winners.
There are certainly plenty of undervalued stocks out there so that's what I'm focusing on. Lots of risky / overvalued ones too and the market in general is pricey. Hopefully rebounds in emerging markets and miners lead to rebounds in their earnings which will improve overall valuations.
DeleteWhen I look through the high forward p/e stocks in the S&P 500, you've got quite a few energy companies in the list, a bunch of fast-growers like AMZN/CRM/SBUX, REIT's, and, a bit lower, safety/yield stocks like KO/CINF/KMI.
DeleteSo, energy earnings should rise, making the energy companies reasonable and every market will have some high valuation/fast grower stocks, so they should be OK. The stocks which I really see as being at risk are stocks like REIT's and high-yielders - I think they get crushed as rates rise and become more competitive for investor dollars and the funding costs for the REIT and Utility stocks also rises.
Lots of open gaps in these mining / energy stocks. I'm planning on selling my positions tomorrow in advance of the OPEC meeting, most likely at the open if they gap up. I'd like to pick these guys back up on gap fills. Even the best stocks over the past decade...most of them fill the gaps. I remember we were talking about RH a year or so ago and I mentioned there was a gap up from $35 that never got filled. Seemed ridiculous at the time but that sucker got filled.
ReplyDeleteThere are exceptions of course but they are rare.
Hopefully they don't tank them overnight...
DeleteHey CP, we are your friends here, life is short.
ReplyDeletehttps://www.youtube.com/watch?v=DVg2EJvvlF8
One more CP, Hawaii will always be a part of me, beautiful song and voice.
Deletehttps://www.youtube.com/watch?v=V1bFr2SWP1I
That guy was good - too bad he died so young
DeleteGlobal oil markets will “move close to balance” in the second half of the year as lower prices take their toll on production outside OPEC, the International Energy Agency said.
ReplyDeletehttp://www.bloomberg.com/news/articles/2016-04-14/iea-sees-oil-oversupply-almost-gone-in-second-half-on-shale-drop
Europe, oil futures and stock futures were all red a couple hours ago, but have all since moved into the green. Market seems to want to continue upwards.
ReplyDelete
ReplyDeleteAAII bulls dropped to 28% from 32%, now 23 straight wks beneath the long-term average of 38%. This with S&P 500 2.4% from the all-time high.
People really don't seem to want to believe in this rally. A lot of these sentiment indicators seem more consistent with coming out of a bear market than a fairly normal correction. I think it means sentiment is still weak (probably due the 2 crashes in 15 years), so there will still be lots of time before the market finally peaks before the next bear.
DeleteGot stopped out of FCX and PBR. Going to wait for some gap fills on those.
ReplyDeleteSince March 23, UNG made a series of higher lows. If UNG goes any lower today, then it will basically touch the trend line formed by those lows. I will buy some UGAZ at that point.
ReplyDeleteUGAZ did not go low enough for me to buy it today, but I raised my existing buy limit order to $23.
DeleteLong UGAZ at $21.8 avg
ReplyDeletelokking at UNG, plus palladium chart looks very interesting.
DeleteInteresting spot on the chart. I's have to be home watching it all day though.
DeleteDid you guys see a bunch of really strange opens?
ReplyDeleteWasn't really watching anything other than the ones I own. which ones?
DeleteJust a lot of quick 3-4% bars at the open. Very thin.
DeleteThat's the market it seems. That's one of many reasons I'm only focusing on short term trades now.
DeleteSold UGAZ at $22.2
ReplyDeleteOne stock I would consider holding for the longer term right now is BIIB. The valuation is too compelling for a company that does tremendous margins (45% operating margins), ROE (>30%), ROC (>180%) etc. There's some risk with MS drugs being a lot of their revenues but at 13x CY EPS estimates I think a lot of risks are being priced in. I know this is a new CrossingWallStreet pick for 2016, which I was surprised to see. It's actually down a good deal from when the year started which makes it more interesting to me. It reminds me a lot of PCLN and GOOGL back in the beginning of last year.
ReplyDeleteGlad I didn't buy UGAZ yesterday. :) My buy limit order was triggered this morning at $22.18. Placed a sell limit at $25.18.
ReplyDeleteWhat are your guys thoughts on SDRL? I’m contemplating putting a small amount at risk that I’m willing to lose 100%. Seems like a firecracker type stock. If they get an extension from their lenders (which I would assume they will given they are still operating at a profit) then I could see it double easily.
ReplyDeleteLet me see this weekend. Could be really tough.
DeleteIn my opinion, SDRL is a play on the price of oil. If oil continues to bounce and off-shore drilling picks up, will be a big winner. If oil goes back down, SDRL could be in big trouble due to their high debt load.
DeleteTd had an energy report recently showing how the larger E&P's and integrated oil companies had recovered fairly well, but the intermediates and especially the juniors had not because people were worried how these companies could survive in a low-price oil environment, especially the ones with stretched balance sheets.
I see SDRL the same way - stretched balance sheet, so lots of torque if oil goes. The other way to play the off-shore drillers would be to go with a larger company with less debt, like DO - they would be safer, but haven't come down nearly as much, so less upside of course.
VRX- OK, I got sucked in. 32.20
ReplyDeleteOh boy! $30b in debt and mostly intangibles on that balance sheet. I stayed away but prob wrong move knowing this market
DeleteYou know none of that matters right now.
DeleteGuys, what do you think about the charts in the first part of this article:
ReplyDeletehttp://ggc-mauldin-images.s3.amazonaws.com/uploads/pdf/160416_TFTF.pdf
Don't they clearly show that the growth rate of the economy has been slowing down since 2011 and the stock market can start pricing in a recession at any time?
It is said that the end of the bull market is a process -- haven't we been having this topping process since last summer? If April 11th lows are violated on S&P, I will start loading up on S&P puts...
ReplyDeleteNote that IWM has been much weaker than SPY over the past year. So the underlying breadth is not good...
ReplyDeleteUnderlying breadth has improved drastically recently, but I agree something ain't smelling right.
DeleteWith all due respect, the above comments (along with like-minded articles/stories in the media) tell me this rally will continue.
ReplyDeleteI wouldn't be surprised to see a big move up in oil this week, given I think a lot of people are positioned incorrectly into the meeting.
DeleteLaszlo Birinyi would always come on CNBC and say, XYZ companies wouldn't be doing this well if we were heading into a bear market / recession, usually pointing to companies like NVR and a few others. I always thought this was a great concept.
ReplyDeleteTake a look at the chart of XIN, a stock I always use as a litmus for Chinese housing. If the Chinese economy and real estate market were heading into a major bear market then would the price of this stock be doing this well?
IWM had a monster run from 2012 - 2014, around a double, and got VERY expensive on most metrics and not has spent the last couple years consolidating and your could even say having it's own bear market which may have ended in February.
ReplyDeleteThe S&P did better because of its high weighting in dividend and dividend grower stocks which have done better than average due to people seeking yields.
This is changing recently with IWM outperforming since the February bottom.
Also,if you look at the T2127 (Russell 1000 a/d line), it is now at all time highs.
To me, it looks like we have spent the last almost 2 years consolidating after a strong bull run. Sure, it could be a top as David suggested, but my read is it is consolidation after along bull run and it is now getting ready to launch the nest leg much higher.
David, re the Mauldin Charts, the way I see them is the first part from 2010 is the normal strong bounce back after a recession. The second part is the recovery period where we recovery a lot of the excess demand which was deferred due to the recession. The 3rd part, where we are now, is the typical mid-cycle correction where the economy switches from recovery to growth. The next phase we should see is a re-acceleration of growth, but this based on better fundamentals like improving employment and housing, business investment, etc. This growth phase should last a few years and that will likely be followed by a bear market and recession, but could be a couple years to over a decade like we saw in the 1990's.
ReplyDeleteI also don't put a lot of weight into what mauldin says. He sells fear and has been doing so (wrongly) since 2009
Delete"The point is not to imply that an investor won’t be able to pick off an attractive deep value stock from time to time. It is our opinion, however, that generally the purchase quantities will likely be insufficient for most institutional investors, the stock might be an illiquid value trap and/or the stock may lie in the precarious resource sector vulnerable to volatile commodity prices. This situation is the reality of today’s value marketplace. The fact is that pickings are very slim and value investors such as ourselves have had to face a more complicated world of “new value” whereby past parameters of low price/earnings multiples, discount to book value, replacement cost and/or out-of-favour contrarian investments are no longer enough to achieve investment success.
ReplyDeleteA few examples of these new value ABC Funds’ holdings include Apple Inc., Boston Scientific Corporation, Microsoft, Johnson & Johnson, Visa, Amgen Inc., Kraft Heinz Co. and PepsiCo Inc. We believe that these common stocks offer not only good long term value and liquidity but also investment stability, dividends and growth in an extremely volatile financial environment."
> The above guy is a long term Canada Value Investor and used to have a great rack record, but now his 10 year record is negative and he is giving up. You saw this in 1998 - 2000 where value guys closed shop, etc. and now with the gap between growth and value near its highest, I think you see history repeating itself, just before value starts working again, like it did in 2000.
It's pretty impressive how well some of those large cap stocks have held up despite being very expensive. Look at a stock like COST. That thing is sporting a really high 30x P/E on mid single digits growth. But their growth, like so many of those listed above an others, has been remarkably steady. So people just extrapolate the growth out into the future I guess.
DeleteStarbucks is one I've been wanting to buy on a dip for my kids accounts but it's just so expensive. However, there's really nothing that is going to stop that company in my opinion...unless people find that their coffee has major harmful effects on your health. 40% ROE and 90%+ ROC. Net margins have doubled over the past 15 years and Operating Income has grown 15x over that time period. I thought they were saturated 10 years ago..every store I visit has lines.
Almost bought COST back in 2009 in the high $40's, but some analyst convinced me the price was too high and I should wait. Still waiting, but really hard for me to buy at current prices.
DeleteDavid- If I had to put a 'number' on how much higher the rally in global stocks will run, it would be +30% from current levels. The number may ultimately be somewhat lower, or it may be much higher. 30% just 'feels right' at this point.
ReplyDeleteIs your view based purely on sentiment? If not, what else gives you this feeling?
DeleteApart from sentiment, the valuations of global indexes are low. Especially among emerging markets. A +50% gain in EEM/VWO, powered by 100+% gains in ASHR/EWZ/RSX, would not surprise me.
DeleteThe Chinese market is actually pretty expensive but there are multiple markets in China (like the US with the Nasdaq / NYSE / RUT). Shanghai is quite expensive. Not sure about Shenzhen.
DeleteAlternatively, markets like Russia are cheap, but you're still running a lot of political risk that people tend to just brush off despite it being significant. A year or so ago I went back and calculated the historical total market cap to GDP of Brazil, China, and India and found that only China was within its historical range (this was prior to it rising 50%+). Brazil was actually quite expensive compared to historical norms and India was elevated but had the tailwind of 8%+ GDP growth to support it.
Hong Kong Fund managers are as scared now as they were in 2002 and 2011/2012 (2009 was worse) - firt chart:
Deletehttps://shortsideoflong.com/2016/04/fund-managers-positioning/
Thank you for your feedback, guys!
ReplyDeleteOil futures down 6% on back of no agreement at OPEC meeting.
ReplyDeletenot surprised at the inital reaction - we'll know how the big players were positioned by how it trades Monday.
DeleteFolks, can you please post links to one or two of your favorite analysts who are bullish on the stock market now? I'd love to read some bullish views to counter Mauldin's and Hussman's negativity... Thanks!
ReplyDeleteI haven't been checking the COT data for gold/silver for a while, but I did check it just now and holly cow! It is WAY too bullish!
ReplyDeletehttp://www.barchart.com/chart.php?sym=GCM16&style=technical&template=&p=DN&d=X&sd=&ed=&size=M&log=0&t=BAR&v=0&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=150&indicators=COTLC%2813369344%2C26112%2C153%29%3BCOTDLC%2813369344%2C26112%2C153%2C16750848%29&chartindicator_3_code=COTLC&chartindicator_3_param_0=13369344&chartindicator_3_param_1=26112&chartindicator_3_param_2=153&chartindicator_4_code=COTDLC&chartindicator_4_param_0=13369344&chartindicator_4_param_1=26112&chartindicator_4_param_2=153&chartindicator_4_param_3=16750848&addindicator=&submitted=1&fpage=&txtDate=#jump
If gold doesn't crash this week, I would be surprised. I'll close my USLV position as soon as I wake up tomorrow, and hopefully it won't be too late...
I had an open order to sell USLV at $16, but when I just canceled it, it said "pending cancel," which means I cannot change it now for a market sell order. So, in order to hedge my USLV gains, I just placed a market buy order for 3X gold bear, DGLD, for the same dollar amount.
DeleteCanceled the dgld order, placed a sell stop on uslv at 14.50, going back to sleep... :)
DeleteDavid,
ReplyDeleteJeff Saut from Raymond James is the one strategist I make sure I read every week and bullish:
http://www.raymondjames.com/inv_strat.htm
David, I tend to pay attention to longer term, value oriented guys and a lot of the smart investors are buying. Warren Buffet was on CNBC a couple months ago saying they are buying stocks every month. Of the Fast Money lunch crew, that Jim Liebenthal is bullish. Tony Penza was on CNBC last month and I posted:
DeleteTop value investor Pzena on CNBC at lunch today - you have to be a PRO to see, but talked about growth vs. value and how spread is so wide, so good time for value coming and, if you catch it, will be good for outperformance. Said this cycle, value is in financials, energy, industrials. Liked financials a lot as they are making 9 or 10 on their equity, you buy at 70% of book value, so your return is even higher and if rates do go up, they will do even better.
Thanks, BB! I'll make sure I read Saut as well!
DeleteEarnings estimates appear to be increasing as we get into the quarter instead of the traditional fall-off. There may be an error, but assuming correct, it means analyst stock ratings will be going up:
ReplyDeletehttp://fundamentalis.com/?p=5883
David - I only tend to focus on people with good track records. Learning investing from Mauldin and Hussman is like trying to learn about Christianity from an atheist.
ReplyDeleteSo which people have a good track record and publish something at least once a week?
DeletePicked up more BIIB. I intend to hold this and MTCH longer than just my normal day trades as I think there's real value in these two
ReplyDeleteSaw some big initial drops in energy stocks, but have recovered a lot of their initial falls - some, like CNQ, now in the green.
ReplyDeleteOil sure seems like it's heading to $50
ReplyDeleteThat was indeed an amazing reversal. Weak hands have been shaken out, and the rebound looks set to continue, but with fewer traders on board...
DeleteThat's why I don't like waking up early! If I had kept my market buy order on DGLD, I would have made money now! :) I just placed a new buy stop limit order on DGLD, at $59/61. Even though the COT sentiment is very bullish for gold (large spec futures positions are consistent with price tops), gold can still go up for a little while. But once it starts coming down, it will have a long way down, until large spec positions drop at least below 100K contracts.
ReplyDeleteI'll try to be a little more aggressive with DGLD and not wait until the major recent tops are surpassed (at $59). Instead, I placed a buy stop order at $57.50/$58, just above the most recent top. Still keeping a buy stop at $59/61.
DeleteSince SLV in this overbullish climate can easily gap down 3% (like it did on April 1), I just sold my remaining USLV shares at $14.84 (purchased them at $12.81). Now I'll try make money on the way down using DGLD. :))
ReplyDeleteNicely done, David.
DeleteThe 1-month intraday chart of EROS shows a clear double bottom made at $10.40. I just bought some more EROS at $11.30 (replacing the shares I sold at $13), and placed a sell stop limit for all my shares at $10.40.
ReplyDeleteBrazilian Congress votes to impeach.
ReplyDeletehttp://www.bbc.com/news/world-latin-america-36069477
Next up will be the Senate vote. The iBovespa has vacillated between +/-, but sits at 6-month highs. EEM (emerging markets) +0.64%, FXI (China ‘H’ Shares) +0.9%. The intraday high for the DJIA is currently 18010. Crude oil has reversed an overnight -6% plunge and now off just -1.3%.
Global markets just feel like they ‘want’ to rally.
Sold VRX for 4%.
ReplyDeleteI bought the drop in NFLX at $96.13. Wish I bought more...
ReplyDeleteSold at 98
DeleteBack in 97.75
DeleteJust paying my broker
DeleteLet's see if MTL hits my sell limit at $2.20 tomorrow. It feels like a coiled spring, with both SLX and RSX pulling it up, and with MTL itself recently clearing the resistance at $2... Let's see how high it will spike now...
ReplyDeleteI ended up passing on this due to the balance sheet. Hope you kill it!
DeleteSold NFLX at $100.1
ReplyDeleteThe Baltic Dry Index was at this level last year this time and NM was at $4. Wouldn't be surprised to see a significant rally in NM from here.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteJeff Saut quite bullish this week and buying into my theory that we've been working off the bullish oversold for a couple years and starting the next leg of the bull market higher now. Also had good things to say about the financials which you all know I still (a bit painfully) like:
ReplyDelete"I can make a cogent argument that the SPX has been trapped in a trading range since April 2014 between 1800 and 2130 (see chart 2). That’s over two years, which is about as long as a consolidation period lasts within a secular bull market. And yes Virginia, I still believe we are in a secular bull market that has years left to run!"
http://www.raymondjames.com/inv_strat.htm
Yes, I liked his writing. He uses both charts of what's happening now and sentiment, which is very important. Hussman only uses the charts, and so he is most bearish at bottoms and neutral (or bullish) at tops.
DeleteI don't disagree with his outlook. IMO, the Fed needs the bull to run for another several years to avoid a Boomer retirement disaster. They'll pull the US equivalent of a Mario and do 'whatever it takes' to keep the bull alive.
DeleteDJIA 20,000 only +11% away. I think we see it this year.
DeleteScrew baseball, the market is our national pastime. It must be protected at all costs.
DeleteSo why exactly did I sell my USLV yesterday??? Well, at least I didn't enter DGLD on the same day. :) But I did enter it just now, at 53.35. Gold has reached the top of its trading range, so a pullback is likely at this point, given that all speculators on COMEX are already long gold futures.
ReplyDeleteI don't know about the whole all speculators are long comment but I do agree that if the markets are going to go to new all time highs you want to be short gold. I've been waiting on this trade to develop.
DeleteBeen having one of my better days in a while. I sold MTCH and BIIB this morning and rolled it into PBR and SDRL at $6.83 and $4.01. SDRL is one of the most leveraged companies I could find to oil that is still able (IMO) to get out of its hole if oil goes to $50. I think they could extend with their lenders because they're profitable and cash flow positive.
ReplyDeletePBR is going to get a big boost from higher oil + Rouseff getting ousted.
I'm hoping to get back into MTCH if it dips again...that thing is whipped around so much I think there's a chance it comes back in again.
DeleteI sold BIIB primarily because I've read multiple reports about their MS drugs getting patent challenges and that's 50% of their revenues which I think could put a cap on the stock. The market might end up seeing through it because it makes me wonder how much risk there is with the stock.
I tried trading back into NFLX again today and lost some money. I knew it was a bad call. I bought it at $98.8 this morning and ended up selling it at $97.3.
ReplyDeleteWow what a day for nat gas.
ReplyDelete"I don't know about the whole all speculators are long comment..."
ReplyDeleteIt is easy to check -- just look at the chart I keep posting:
http://www.barchart.com/chart.php?sym=GCM16&style=technical&template=&p=DN&d=X&sd=&ed=&size=M&log=0&t=BAR&v=0&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=150&indicators=COTLC%2813369344%2C26112%2C153%29%3BCOTDLC%2813369344%2C26112%2C153%2C16750848%29&chartindicator_3_code=COTLC&chartindicator_3_param_0=13369344&chartindicator_3_param_1=26112&chartindicator_3_param_2=153&chartindicator_4_code=COTDLC&chartindicator_4_param_0=13369344&chartindicator_4_param_1=26112&chartindicator_4_param_2=153&chartindicator_4_param_3=16750848&addindicator=&submitted=1&fpage=&txtDate=#jump
The large spec positions, in green, are the ones to look at.
I agree but there's no such thing as all being on one side. and that tends to last longer than we think. I've been using JO (ie /KC for coffee futures) from 2014 as a guideline. Gold has been tracking how that traded fairly closely.
DeleteUNG indeed is having a hell of a day. It just broke out to the highest level since its February trend reversal. The sell limit order I had for UGAZ at $25 was filled this morning at $25.89 (for the shares I purchased last week at $22.18), which completed my third round trip on UGAZ in its recent trading range (6.50-7 on UNG). Somehow I feel that it is now breaking out of this range to the upside, so I'll need to reposition my "money pump." :)
ReplyDeleteMy next sell limit on UGAZ is at $31, for the shares I purchased at $26 (adjusting for the split) on the way down in February.
DeletePlaced a sell stop at $53/52 under DGLD that I purchased today. If last week's top on GLD is surpassed, then technical traders might drive GLD much higher...
ReplyDeleteIncidentally, MOS and POT are having a hell of a day as well. I am wondering whether I should take profits on the MOS calls I purchased when MOS was trading at $25.25 last week, or whether I should wait for MOS to make a higher high on the 3-month chart (after all, it looks like it made a higher low last week)...
ReplyDeleteJust in time for the following article, posted today: "Barclays Getting Bearish On Ag: Downgrades Potash, Mosaic, Lowers Targets On Agrium, CF"
DeleteRead more: http://www.benzinga.com/analyst-ratings/analyst-color/16/04/7857485/barclays-getting-bearish-on-ag-downgrades-potash-mosaic-#ixzz46IVoq0Uw
Those folks may be right. Today we might be just seeing a strong short covering on the back of a large drop in $USD. So I just sold at $6.50 the MOS calls that I purchased at $4.80 last week. If the ag sector keeps going up, then the POT calls I purchased a while ago will keep lifting me up. When I was purchasing the MOS calls, I actually just wanted to take advantage of the pullback we were having in this sector, so it was actually intended more as a trading position rather than a long-term hold, so I should be true to my original intention.
DeleteAny idea why Nat Gas is doing so well today? I can't really see anything.
ReplyDeleteA hot summer is anticipated? We just had two days of 32C in the Bay Area...
DeleteMy guess is too many traders got caught on the wrong side of the boat. It was trading in a range so they saw the false breakdown as a break out of the range and pressed shorts. Now they're covering and momentum guys are chasing it higher at same time..
DeleteFolks, don't miss the next spike up in EROS. Look at its 3-month chart -- it is ready to spike! I already added to my original position yesterday!
ReplyDeleteThe whole fraud thing (and losing my ass on it last year) has me possibly forever on the sidelines.
DeleteI was able to negotiate $5/trade fees with Ameritrade. Given how much I trade it makes a substantial difference for me. Good to see a little bitching still works...
ReplyDeleteDown from $8?
DeleteThe MTL traders are really "slow." I bet MTL rallies tomorrow when both SLX and RSX will be slightly down...
ReplyDeleteMichael LipkaApril 19, 2016 at 10:27 AM
ReplyDeleteScrew baseball, the market is our national pastime. It must be protected at all costs.
It really is. I think the Fed recognizes the Boomer fascination with the market, and that a great deal of consumer consumption relies on a continuation of the bull. They'll never be caught saying as much in public, but caught off guard/among themselves over a bottle of wine in the wee hours? It wouldn't surprise me.
A buddy of mine said recently he used to really watch football, but now he likes the markets way better as you can make money in the markets unlike football.
DeleteAdded some pbr and sold sdrl at 6.86 and 4.3
ReplyDeleteI don't know timing / strength of oil bounce. If it gets to $50 and political situation in Brazil stabilizes then pbr should at least double. The biggest Chinese oil company is PTR which is down 10-15% past 7 years. In that time frame PBR is down 80%
DeleteYesterday I bought shares of NMM as a flyer in case dry bulkers rebound for real. It paid 1.44 dividend past 4 years
ReplyDeleteWTF? Both RSX and SLX are up again, but MTL is still bumping against the $2.15 level? I wonder what happens when the big seller at $2.15 runs out of the shares to sell...
ReplyDeleteEROS has officially made a higher low since its early April bottom. So I just moved the stop under my whole EROS position to $11.10/$11, just below the most recent low.
ReplyDeleteEvery half-decent oil company is up today. In fact, BTE and HLX have already surpassed my original ill-timed entries in November. But WTI, another one of my holding, is still being stalled. Just like MTL. The WTI chart, in fact, looks similar to EROS chart, but a little behind in time. I wonder if it gets resolved the same way...
ReplyDeleteCheck that out, folks: I still did not get stopped out of my DGLD position (my stop is at $53). :) If it doesn't happen today, then tomorrow should be a down day for gold!
ReplyDeleteStarted selling my position in GIB (CGI Group). It's up almost 70% from when I bought in in 2014 when they unfairly got a bad rap about Obamacare websites. But now it is getting pretty fully valued and the only way to justify holding it is if I were to expect high growth, which I don't. People talk that they will do an acquisition soon which will drive growth, but I can't hold just for that hope.
ReplyDeleteNice one.
DeleteFollowing through on my expectation of WTI chart resolving itself the same way as EROS chart, I just bought more WTI at $2.19 and placed a sell stop under my whole position at the recent low of $1.95. The downside for this trade is very small, but the upside, I think, is much bigger...
ReplyDelete----in' A on EROS, David!
DeleteIt's the chart, it's not me. It was begging to go up...
DeleteThe Market From Another Planet
ReplyDeleteThis market is doing a better-than-usual job of outsmarting most smart (and smart-ass) traders. Following overnight and early morning weakness (taking crude oil futures down -2% and EEM [emerging markets] down -1%), all is now well. The DJIA has reversed to print a +109-point gain, oil is now +4%, and EEM is unchanged. ASHR (China ‘A’ Shares) is off -2.37%, but FXI (China ‘H’ Shares) off just -064%, and RSX (Russia) is nicely green @ +3.04%.
Can anyone trade this market? I know I can’t.
How about the simple strategy of finding a chart with at least one recent higher low and a higher high, buying it on a pullback not far from the previous low, placing a stop at the recent low and then selling when a new high is made?
DeleteAdded to Alabama regional bank USBI today. Seems banks may be starting to take off for real this time (but we've had a lot of false starts) and this one hasn't moved yet. The capitalization ratios are excellent and p/b is 0.65. Insiders own almost 8 percent and have been buying. They also had a 50% larger business prior to the finanicial crisis, so hopefully it can rebuild and the they are expanding also.
ReplyDeleteFlipped PBR, SDRL, FCX, and NMM for a 1.4% gain today. Still holding some PBR. Bought UAL after hours at $56.99 on dip from earnings as an offset to oil. I'm thinking that I need more exposure to oil, though it did hit overbought readings on the hourly chart which has been a decent barometer for the past month or so.
ReplyDeleteMan I still am a bit shell shocked at the run this market has had without a pullback. And at quite elevated valuations no less. One commentator I follow that absolutely nailed this entire move is James Paulsen at wells capital. He was bullish, almost ragingly until the end of 2014 or beginning of 2015. Then he got cautious / bearish. Then he turned bull in February 2016. He's expecting a 1800 to 2200 range and 5-7% gains for rest of bull run with significant choppiness along the way
ReplyDeleteI couldn't imagine what bears or people stuck in cash must be feeling
DeleteTo me, the market feels like we are in the initial phases of a new bull market or may be should say bull run as the bull market didn't really end. We had the excess selling early this year, people are overly bearish, expectations are low, people aren't believing the bounce in oil, etc. Now we are in the early recovery off the bottom phase with a fast bounce and people underinvested and struggling to catch up. This won't be as great as 2009 obviously as we did not have a big bear before, but I think the market goes through the similar bull phases.
DeleteRyan Detrick, CMT @RyanDetrick 59m59 minutes ago
ReplyDeleteThis just released Gallup poll shows only 52% of American own stocks, a 19 year low.
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I guess that could be read a couple of ways tough.
The guy at http://www.philosophicaleconomics.com/2013/12/the-single-greatest-predictor-of-future-stock-market-returns/ and updated at http://alephblog.com/2016/04/09/estimating-future-stock-returns/
Deleteshow the best predictor of future stock returns is if you look at the proportion of US wealth held by private investors in stocks using the Fed’s Z.1 report. The higher the proportion, the lower future returns will be.
It is projecting a fwd 10 year annual return of 6.1%
CHP: Petaluma man drove drunk to CHP office to report crash http://bit.ly/1YI29gn
ReplyDeleteYour town looks nice:
Deletehttp://www.petaluma360.com/sponsored?prx_t=wBUCALhQGA1ccMA
It is. It's grown up a lot since we moved here 16 years ago. You should bring the family to the area for a vacation.
DeleteDamn I am having a rough day. Got smoked on UAL and for some idiotic reason bought FCX at breakeven on the day. Going to go to cash and take a break. Gave back 1/4 of my gains this year on a seemingly listless day. Sucks.
ReplyDeleteSeems like things are looking more like an interest rate hike could happen. That will help the US$ and pressure commodities. We'll see if it really happens. Financials are generally do well today, probably because of this.
DeleteSo I did get stopped out of DGLD this morning. But since I entered it at $53.30 and placed a stop at $53, my loss was minimal. I guess I'll have to wait until a clear new high is made in DGLD before entering (have a buy stop order on it at $57.50).
ReplyDeleteMTL and WTI are still marking time. I guess the longer they stay flat, the more energy the next move up will have. EROS is showing a nice example of that...
ReplyDeleteThere's a saying - the bigger the base, the bigger the bounce (or something like that)
DeleteHopefully... But seriously, looking at the 1-month chart of MTL that just flatlined at $2.15, I can't shake off the feeling that it will have a huge spike up on the day when the $2.15 seller will run out of shares to sell. So I just bought more MTL at $2.15 and moved up my sell limit from $2.20 to $2.30.
DeleteSpeaking about the base -- take a look at the 5-year chart of MTL. That will show you one hell of a base!
DeleteUNG is also working off its overbought condition by moving sideways...
ReplyDeleteTLT (20 year government bonds) sure looks like it has topped out. Lower high than February, and basically a triple top if you include the one from 2012. Plus, rates look to be going up (and really can't go much lower).
ReplyDeleteInvestment grade bonds and junk bonds (LQD and JNK) look to have topped out in the last couple years.
Worth watching as interest rates and the US$ are key to the market.
Anyone buying the dip in Google?
ReplyDeleteKinda. I added to QQQ att he open.
DeleteMeb Faber, who is a hard core reversions to the mean guy, calling for big returns in commodities and emerging markets over the next 2 years because they have been so stretched to the downside (fifth and sixth times across 378 opportunities). Looking for 40% - 96% upside.
ReplyDeletehttp://mebfaber.com/2016/04/21/50-returns-coming-commodities-emerging-markets/
I am tending to agree with him. The next drop in commodities that pushes the RSI into the 30 area is a major buying opportunity IMO
DeleteI agree too, AAII use to have an annual mutual fund book that would show 5 year returns, most times funds that have bad 2 and 3 year returns roared back over the next few years observation-ally, Faber just quantified. Yes!! 2nd seems very well positioned.
DeleteVNM looks interesting as its run only 16%.
Picked up MTCH at $11.42, SDRL at $4.10 and FCX at $11.73 today.
ReplyDeletePicked up some CS at $14.54. Going to try to hold this for a while and add on weakness.
ReplyDeleteMassive volume going through on FCX
ReplyDeleteSo NOW gold is going down, after I got shaken out of DGLD... I don't even want to start bitching about AEZS, which shook me out at the bottom of its pullback to $3.25 and then took off right away...
ReplyDeleteI can relate, I had both NEM and SLW mid January and was shaken out both +70%.
DeleteMTL is still stuck at $2.15, so no fun there... The bright spot is UGAZ, which hit my sell limit at $31 today for the shares that I purchased at $26. My next sell limit is at $36 for the shares I purchased at $31.
ReplyDeleteThe energy stocks had a monster run recently, and one of my positions, HLX, is already above the Fall 2015 levels. I decided to take some profits on the energy sector and sold my HLX position at $8.35 (my cost basis was $7.30 after an unsuccessful trade I made on it).
ReplyDeleteBTE is already 12% higher than I bought it, but it still did not break out as convincingly above the Fall 2015 levels as HLX did, so I'll hold onto it a little longer.
Rotated the money I got from selling HLX into WTI. It is building a base above the early April low, and the next natural move, it seems to me, is up.
DeleteHere is what analysts are thinking about WTI now:
Delete"Among the 8 analysts Thomson/First Call tracks, the 12-month average price target for WTI is $2.63 but some analysts are projecting the price to go as high as $4. If the optimistic analysts are correct, that represents a 84 percent upside potential from the recent closing price of $2.17. Some sell-side analysts, particularly the bearish ones, have called for $2 price targets on shares of W&T Offshore Inc."
Notice that $2 is exactly the early April low, and WTI did not rise too far from that level yet. So if we trust the analysts now (in reality we know that they are way behind the action and their estimates will keep rising as the energy sector improves) the risk/reward ratio for buying WTI at $2.18 seem to be very good...
Everyone in the world is bad mouthing AAPL/QQQ. I must be in the right spot.
ReplyDeleteEven the crappiest one of my energy stocks, BCEI, which Mike said should go bankrupt, is breaking out today to a 3-month high. Is WTI really that much worse off? Mike -- what can you say about its financials?
ReplyDeleteAn interesting note about the market I just read in the news:
ReplyDelete"Wall Street has rock-bottom expectations as companies post their first-quarter results over the next few weeks, with S&P 500 companies on average seen reporting a 7.1-percent fall in profit, according to Thomson Reuters I/B/E/S.
Crude rose about 1.5 percent on signs of strong U.S. gasoline consumption, declining production around the world and oilfield outages.
Oil prices have moved in lockstep with U.S. stocks for several months and some investors expected more gains next week.
So far, 77 percent of first-quarter earnings have exceeded expectations, which is superior to the 63-percent beat rate in a typical quarter.
"If earnings results come in above the very low bar of expectations that are out there, and you combine that with a continued rising price of oil, that should equate to an upward trend in the market next week," said Thomas Wilson, Managing Director of Wealth Advisory at Brinker Capital."
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