(a) AAII Sentiment Survey for the week ending 10/19/16 shows 23.74% bulls: http://www.aaii.com/SentimentSurvey. According to Charlie Bilello of Pension Partners, that reading ranks in the 7th percentile.
(b) Global fund managers' cash levels (according to Bank of America Merrill Lynch) currently average around 5.8%. According to blogger Urban Carmel, this level equals the post-Brexit high, is higher than levels seen during the 2008-09 crash, and is at its highest level since November 2011 (shortly after the 9/11/01 terrorist attacks).
(c) Everyone's worried about the election, and apparently sidelined 'til it's over.
(d) Emerging markets have outperformed since the January lows, and fund managers have increased exposure to the sector. The correct contrarian response in a typical year might be to sell at this point. However, I don't believe it's a typical year.
In my opinion, all of the above paints an extremely bullish picture.
From a contrarian perspective, tonight's Marketwatch headlines couldn't be any better:
ReplyDelete'The U.S. stock market is stuck in the danger zone'
'How the AT&T-Time Warner deal will be bad for the stock market'
'Goldman Sachs just cut its S&P 500 earnings outlook for 2016 and 2017'
'This October still has a chance to look like the month we know and fear'
I sold my X at $20 today but unfortunately rolled that into CHK at $6.40. I think this may be my final foray into this stock as I can't seem to catch it on an upswing despite trying at least 5 or 6 times.
ReplyDeleteMike, NG prices are down today (as well as oil), which is a double hit for CHK. I don't know about NG, but the drop in oil is noise if you look a year or two out. I am also a little upset about BTE not being able to rally, but I know it WILL when oil gets its act together, and that is just a matter of time (hopefully, a short one :)).
DeleteThese inverted head and shoulders patterns have been working fairly well and oil has a big one on the weekly chart. The target presumably is $76. Not sure of the time frame.
DeleteX did manage to hit my buy stop at $20.4 today before rolling into a negative territory. What a crappy intraday behavior... The only bright side is the spike in the copper prices and a corresponding spike in FCX. This makes me think that the intraday drop in X might be just noise...
ReplyDelete2nd - Your post is almost identical to what Jeff Saut said today:
ReplyDeletehttps://cfvod.kaltura.com/pd/p/1727781/sp/172778100/serveFlavor/entryId/0_m20vzexc/v/1281/flavorId/0_xwctaapm/name/a.mp4
You can only listen to this today. He posts a new audio commentary each day.
CHK popped on its analyst day, 8 analysts upgraded the stock and then it dropped 20% in 3 days from top to bottom.
ReplyDeleteI took the hit on it at $6.04 and moved it to FCX at $10.65 instead. FCX seems to have a clearer pathway to get out of this mess but I haven't had much luck in either. Need to go through more pain I guess.
DeleteAKS just crushed their shareholders with that secondary.
ReplyDeleteJudging by the recent past, FCX seems to be close to the top of its range, and I am tempted to sell some shares now, especially since it is trading at my break even level now. I have a feeling, however, that most other traders feel the same way now. No one in their right mind should be expecting FCX to rally now. You know where I am going with this, right? :)
ReplyDelete"nventories tracked by the London Metal Exchange fell for a fifth straight day, and have slid 11 percent from an almost three-year high reached last month. Supplies on the Shanghai Futures Exchange posted the eighth drop in nine days. Prices of the metal used in pipes and wiring also rose after a report showed sales of new U.S. homes held close to an almost nine-year high.
Delete“We’re starting to see a pretty consistent pattern of draws in the LME,” Frank Cholly, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “When you get some fundamentals that are supportive like copper-stock drop-downs, that’s going to make the spike up so much sharper.”
X is trying hard to decide whether it should spike above the late Sept high, or whether it should make a double top there and then crash...
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteBought into miner NSU.
ReplyDeleteEarnings tonight, so risky, but will probably buy more if we get a pullback on earnings.
Really cheap miner, good dividend, good future prospects, no debt, but in a risky (one of the worst) countries - have been there a long time though and work well with the government.
I ended up selling VALE and FCX and put some into EDZ today, right after news hit on the Clinton emails. This uncertainty will unfortunately stay with the market until 11/9
ReplyDeleteBack in FCX at $10.88 for a trade
DeleteInstead of selling my shares I added more at $10.90 today. I moved the VALE money into it and now have a pretty large position in FCX for what I think will be a run into year end based on:
Delete(1) Uncertainty surrounding the election will fade away
(2) More asset sales > reduces debt by over $5B
(3) Underlying fundamentals of China and the US (near 3% GDP growth)
(4) Huge belt tightening at FCX (copper cash cost (i.e. cost of doing biz) went down roughly 30% year on year)
(5) More favorable supply demand setup in the copper market due to hesitancy by copper miners.
Traders are still selling FCX near $11. What if it jumps to $11.50 next week? Then previous sellers will turn into chasers...
ReplyDeleteAt the end of the day I thought that FCX might need a little help getting to $11.50, and the best way to appease the market gods, as we know, is to sell some shares. So just before close, I sold a small part of my FCX position at $10.93, which I purchased at $10.66. I didn't do it the past couple of times FCX rose above $11, and THAT'S why it dropped back. Now that I did it, FCX should have a clear sailing next week! :)
ReplyDeleteI think there's at least a decent chance it gets to $19 by January.
DeleteIt is all about the copper price. What is your prediction for that?
DeleteInflation expectations have been growing steadily since their most recent low in late June:
ReplyDeletehttps://fred.stlouisfed.org/graph/?graph_id=87988&category_id=0
which itself was higher than the previous low in February. I think the recent pullback in precious metals is a temporary phenomenon and we have already seen the low of that pullback.
I have just placed a buy stop limit order for more GDXJ at $40.5/$41 (using the funds I got from selling FCX on Friday).
This order was executed at $40.50 today.
DeleteNow FCX's sale of its oil assets does not seem like a such a bad idea, and investors are rewarding FCX for it today. Or maybe the market gods are just trying to spite me for my partial sale of FCX on Friday, which was a "planned sacrifice" on my part. :)
ReplyDeleteBoyz.... still to busy at work to do much more than follow the market a bit. Hopefully that will change in a few weeks.
ReplyDeleteBought SPY here. 210.00
ReplyDeleteGreat intraday move, Mark! But the 6-month SPY chart does look very ominous... Unless, of course, today's drop was another one of those "run the stops" move like it had in late June, and NOW it will rally like crazy, as it did after June's spike down...
DeleteYeah, we'll see. I'm thinking a few days. How are you doing?
DeleteI'm hanging in there... Still can't believe that MTL made a major spike up just after I decided to sell it at a minor loss... Let's hope that FCX will end up being a big win, just like oil/gas has been at the beginning of the year...
DeleteBeen hanging in with my overweight financials and underweight stocks which will be hurt by rising rates and have been profitable every month since June and now am back to breakeven for the year.
ReplyDeleteIn fact, if I look at my performance this year, it is pretty much in line with the regional banks ETF (KRE).
Maybe this is another false rise in rates, but I don't think it is and the financials outperformance the last couple of months is indicating this. They are good stocks to buy in that many of them have a 10% earnings yield (p/e less than 10) and are valued at less than or near book. If the rates rise does stick, I think you see many of these double as earnings increase and the valuations on these does as well.
You are seeing some inflation starting up and that is pushing up the 10 year government bond (TLT), so this is dragging rates up and the fed eventually has to follow. From my perspective, the Fed leaving rates lower will probably hurt the market short term, but is better for stocks that like higher rates as it likely means the long rates will go further upwards before the Fed tries to slow them down.
Not really much to say so I'm being pretty quiet - it's been kind of a rough year, but I'm happy with my positions and willing to ride them out and I think things are turning around.
DeleteI'd strongly recommend looking at some of the financials though - stocks like VOYA for example. fwd p/e of 8, p/b of .40, have a strong buyback program which is on hold now, but likely being reinstated. As cheap as its been since ING spun them out. Have had some messy quarters due to the nature of their business (pension management and insurance), but earnings out tomorrow and if they are good, should be the catalyst for better valuation.
Great article on copper demand longer term.
ReplyDeletehttp://www.smh.com.au/business/bhp-billiton-reckons-copper-to-win-from-shift-to-renewables-electric-vehicles-20161031-gsf23x.html
Interesting article, Mike! Looks like BHP circulated it among its largest investors a week ago, hence the jump in the copper prices. :)
DeleteCould be huh?
DeleteGDXJ hit my sell limit at $43.50 today for the shares I purchased at $39.50, during its 10% down day. I think someone here called me "crazy" for buying GDXJ at that point? :)
ReplyDeleteI rotated the money I got from selling GDXJ into HLX at $8.23. I thought HLX had ran away from me for good, but today I was able to buy it below where I last sold it. I think oil will be higher one year from now, and hence it makes sense buying dips in a rising sector.
ReplyDeleteBought some EVTC - the Puerto Rico credit card processor and IT company. Earnings tonight, but down a lot this quarter and very cheap. Puerto Rico has issues and travel down due to Zika, but tourists and most locals still want to pay by credit card, so I think they have a tailwind. Good dividend too.
ReplyDeleteI picked up some EDZ to hedge. Almost did it yesterday morning when it was at $22.6 but I chickened out. Bought at $24.27.
ReplyDeletePlaced a sell limit order on HLX at 8.80.
ReplyDeleteTook off the hedge on EDZ at $24.21
ReplyDeleteOops
DeleteSold HLX at 8.48 (shares that I purchased yesterday at 8.23) and rotated the proceeds into FCX at 10.79. The oil price keeps going down, while the copper price keeps rallying, so it makes more sense to be in copper than in oil...
ReplyDeleteBesides, my most recent sale of FCX has been at 10.93, so buying it back cheaper is nice. :)
DeletePlaced a sell limit order at $45.50 for the shares of GDXJ I picked up on Monday at $40.50. The chart looks great -- the pullback seems to be over and the next push above $45 should happen soon.
ReplyDeleteAnyone else think that we see a pretty good rally on the results of the election? Seems like a lot of fear and nervousness being generated by the huge amount of coverage and probably over the top commentary on what will happen when the votes are in. So once we get a decision, the unknowns go away and the market can evaluate and move on.
ReplyDeleteEven if Trump beats the odds and wins, it seems like a lot of that is being priced into the market, so we son't see a dramatic drop that we would have seen a few weeks ago when Clinton was broadly expected to win and a Trump victory would have been a big surprise.
Just noticed CCJ at 12 year lows if you think Uranium comes back. I'm not so sure as it is out of fashion now with the Japan Tsunami, Germany getting rid of nukes and even France looking to cut back, but China still appears to be building a lot of reactors
ReplyDeleteFCX seems to be having some trouble getting to $11.50 despite the surging copper price, so I figured I'd help it a little -- just sold at $11.18 1/5 of what I purchased at $10.6. The same trick worked last Friday, so let's see what happens next week. :)
ReplyDeleteFCX seems to be having some trouble getting to $11.50 despite the surging copper price, so I figured I'd help it a little -- just sold at $11.18 1/5 of what I purchased at $10.6. The same trick worked last Friday, so let's see what happens next week. :)
ReplyDeleteRotated that money into BTE at $3.74, since oil is getting cheap again and the oil stocks are basically flat today, so traders don't believe that these low prices will last...
DeletePlaced a sell limit at $4.34 on this purchase of BTE.
DeleteI'm out of FCX. Sold it yesterday at $10.9 and made a small trade in it today. I bought back into EDZ and held it overnight and sold it. Back in it at $24.90. I'm just playing small ball. The contrarian in my says election will be a non-issue but I don't feel the need to take on a lot of risk right now.
ReplyDeleteDavid - I think there will be a "test" or two in copper before it truly breaks out into the $2.40 range. I also think we will see oil in the 30's again, briefly. Just a gut take on things right now but open to change.
ReplyDeleteMike, since you sold all your FCX and I sold a part of it, then it will definitely break out above $11.50 next week. :)
DeleteAs for oil -- I don't know what is going on in the short term. Over the next couple of years, however, oil must move higher, and buying dips in a market that is headed higher over the next year or two is generally a profitable exercise. :)
Ha yeah probably. I'm waiting for a shakeout in FCX to re-enter
DeleteSaudi's threatening to increase production by a couple million barrels unless Iran cuts back production. You have non-rational player in this market which can push prices to irrational levels in the short term. I tend to agree we see higher prices over the long term, but there's still a lot fo supply which can come on pretty easily, so may be longer than expected.
DeleteBoy WNC took a header. Truck sales in the dumps?
ReplyDeleteAnd I thought trucking was doing pretty well.
DeletePicked up YANG today into the close at $16.23.
ReplyDeleteStocks down for 9 days, matches 1980 - also an election year.
ReplyDeleteThe 2 previous 8 day losses were also election years, so seems we get these long steady downtrends in election years implying it is more about the cycle and not necessarily the market.
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