Friday, November 4, 2016

11/4/16 Desolation Row


Nine consecutive lower closes for the SPX.  The longest losing streak since 1980, and with an uncertain election outcome around the corner there's little doubt many traders will spend the weekend on Desolation Row.  For investors with a long-term outlook, it's all good.  Since markets rarely bottom on a Friday, we're likely to see further declines early next week-> even better!  A sustainable move to new highs is impossible without the kind of negative sentiment that forces assets away from weak holders and places them into strong hands.


61 comments:

  1. I agree. Everything I read or watch on TV is cautious. Pretty much no-one talking bullish and especially not strong bullish - setting up for a strong market assuming the election is put to bed (and doesn't drag on with recounts, etc.)

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    1. I agree from a contrarian standpoint. I think we will be in bumpy seas for a little while though given what will almost assuredly be a movement for impeachment if Clinton wins as well as the Italian referendum vote 12/4.

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  2. Looks like a market rally is underway. FBI came to conclusion that their conclusion in July stands. Crazy.

    Funny tweet:
    "If the FBI had 100 people sifting through those 650,000 emails for 12 hours a day, 7 days straight, they would need to read 1.3 emails per minute. Straight, with no breaks."

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    1. Pretty funny SNL on Trump/Clinton this week - https://www.youtube.com/watch?v=gZ15tqN0G1M

      Not unexpected re the emails. If there was something bad in the emails, the FBI would have found it already and the odds that this other PC would have something unique and criminal were very small - Clinton may bend the rules, but she is smart and wealthy and would not do something that is obviously illegal.

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    2. Not sure I agree with that regarding Clinton, BB. She lied to Congress about the confidential nature of her emails (the FBI director disagreed with her statement to Congress) and she did violate those Federal laws regarding using a personal server. I know in jobs that I worked for in the past, it was very clear that you couldn't send info to your home / personal email or take anything home and I'd have to imagine someone in her position they would be really strict about that. I know of a guy that did it for a company I worked for 8 years ago and he got fired for it, so I really highly doubt that she wasn't aware of this seriousness of this. It just gives the impression she had stuff to hide.

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    3. I could see losing your job over something like that, but hard to see how it is criminal and you go to jail for it. Not a smart thing to do and shows either very poor judgement or the expectation she can bend the rules to suit her, but I think a prosecutor would have a tough time making anything stick, without an admission of guilt or at least intent to do something illegal.


      Nice that the election finally over - in the US, you really spend a lot of time and money on these things. In Canada, no campaigning allow until the election period starts and the election runs about 6 weeks and then we vote and forget about it for 4 years.

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    4. Yeah I like that method better for sure. I still haven't decided who to vote for at this point as both candidates pretty much suck.

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    5. The other thing that's unusual about the US method (to us Canadians) is your vote really doesn't matter as California is a hardcore democrat state. Means your largest population state gets kind of ignored in a presidential election.

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    6. Yeah CA is a pointless vote in terms of impact on result.

      I think the more that I think about it, I like our election process because it symbolizes the democracy in our country. It should be a long arduous process instead of just giving it to someone.

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  3. I still can't figure out this FCX. It is barely up with copper tearing higher. I understand their debt load but it seems quite manageable to me given they will pare it down to $12 Billion by EOY. And you have copper at $2.30 now which is a good deal higher than what they projected in their guidance. Perhaps it is just all part of a shakeout.

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    1. FCX could indeed be higher, given the jump in the copper price. It did hit my sell limit at $4.55 this morning for the Jan 2018 calls I purchased about a month ago at $3.55. Decided not to recycle the profits for now and wait to see if BTE drops to $3.3, at which point I'll buy it again.

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    2. I still have FCX shares accounting for about 40% of my portfolio. But it is not my largest holding now -- BTE is about 50% now.

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    3. Screw BTE -- I need some diversification! Recycled the profits into GDXJ at $39.92. Its chart is looking up, at least on the intraday basis. :)

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    4. Placed a sell limit order at $44.66 for a larger lot of GDXJ shares I purchased last week at $40.66.

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    5. Couple ideas - If you look at a longer term chart (http://www.kitcometals.com/charts/copper_historical.html)
      prices look like they are just near the top of the trading range they've been in all year and still down a lot from prior. Also, inventory levels still nearer highs of last 5 years.

      Could be traders are waiting for a better price breakout to confirm things are actually moving up above the $1.30 range.

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  4. I made a very poor entry into X -- at the top of the previous peak ($20.40) rather than during the most recent pullback, but its chart is looking great and a push above the Sept-Oct double top seems very likely. Placed a sell limit at $23.40 for my shares.

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  5. Financials a big winner today with KRE up almost 3% and XLF up 2.5%. Of the sectors I follow, only transports were better. GDP growth looking good again this quarter and some inflationary pressures pushing up rates which will help financials as happened today.

    Financials have a much clearer tailwind with rates rising and a little new investment in the industry with more capital going into M&A than new capacity.

    Commodities are still risky in my opinion as we had that big overinvestment last decade and it is still not clear that this has been completely worked off. We've had some reductions in capital spending, but I think you really have to pick your spots.

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  6. Fantastic day for the markets. 10:1 upside volume. Analysts are framing it all as a 'relief rally' from an oversold condition following a string of nine losses. That may be the case. It may also be the case that following a remarkable 36 weeks of mutual fund outflows by investors (which left sellers feeling smug heading into the elections), the market decides to simply head straight up from here. We really won't know until the market does its thing.

    Investors who sold last Friday now face a conundrum. If they remain on the sidelines, will the market simply head higher without looking back? If they buy back now, will it then sell off again on unexpected election results?

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  7. So THAT's what was needed for FCX to rally -- I needed to start selling some shares! :) Last Friday I sold some at $11.24, and this week it is above $12! It actually hit my sell limit at $12 for about 1/4 of my position. My next limit orders are at $12.50 and $13.

    BTE is also moving up, but very slowly. Maybe I should sell some shares to get it moving faster? :)

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    1. Just let me know when you sell so i can buy!

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  8. I picked up a little SPWR. They have earnings tmrw morning so if it tanks and Hillary wins I will be looking to add as she had stated numerous times she intends to increase the national installation 5-fold from current levels.

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  9. If you account for the roll in the futures contract, Nat Gas is down 33% in the past 4 weeks. That's intense.

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  10. you guys see HTZ? It plunged to $17.20 this morning and recovered to $27.70 at the close

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    1. Seemed too far down this morning, but didn't have time to look.

      TRIP down 14% on earnings miss after hours tonight.

      Seems like misses are being hit hard

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  11. UNG vs Sentiment Chart...almost identical:
    http://charts.stocktwits.com/production/original_66568192.?1478640383

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  12. Nice work on FCX - not sure what was the difference today, but finally got moving.

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    1. Copper was up huge. I flipped it today. just sticking with mostly cash for next month or two.

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  13. IF this slate vote turnout track is accurate, looking good for Clinton

    http://www.slate.com/votecastr_election_day_turnout_tracker.html

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  14. http://seekingalpha.com/news/3222542-carl-icahn-doubles-stake-hertz-global

    Icahn bought the dip in HTZ

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  15. Consider having some flush bids on a few things you like, never know.

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  16. Brent we're coming for ya:
    https://www.rt.com/viral/365924-canada-immigration-website-crash/

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    1. Haha - yeah, looking pretty solidly like Trump has it - going to be interesting to see what he does vs. what he said. Stock futures crashed and Gold up. Probably a buying opportunity, but the hard part is always catching the bottom in these situations.

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  17. DJIA futures were down close to -5% (-870 points) earlier. Now -298 points, which is less than the +450-point rally earlier this week! It wouldn't surprise me to see a green close later today.

    What's not to like about a Republican administration? Lower taxes. Fewer regulations. We'll keep more of our paychecks, companies will retain more of their profits-> both will support a stronger economy and extend the bull market.

    Check out the following (see Scenario 5 below, although I think we ended up with Scenario 8):

    http://www.marketwatch.com/story/in-8-post-election-scenarios-this-one-with-president-trump-is-best-for-stocks-2016-11-07

    I would agree that the ultimate scenario for a strong stock market = a trio of deal brokers-> Trump + Ryan + Schumer. Markets may initially swoon with a Trump win, but will ultimately rally far higher than it would have under Clinton.

    No reason to fear a Trump administration. Embrace it.

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    1. I felt that way going into the polling since what everyone fears most tends not to happen. He seemed to strike a pretty conciliatory tone in his speech. We'll see how he manages things though as time rolls on.

      I fear an assassination attempt more than anything.

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    2. Not saying that will happen but he had two scares on the campaign path and all it takes is one stupid statement, which is what he's good at, to piss off some nut

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    3. The other thing I'm interested in watching is what happens with the Fed. And with trade agreements.

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    4. Check this out. I agree with much of what she says.

      http://www.marketwatch.com/story/why-america-has-chosen-donald-trump-2016-11-09

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    5. Yep I agree with all of that. I had a tough time voting for him though because of the things he said about people and how he verbally abuses people. But as far as the talking points go with health insurance and taxes, who doesn't like that?

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    6. I've been following the Clintons since the Seventies. Hillary is just as abusive toward others, although she hides it well.

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    7. Going to be an interesting time. His speech was good and makes you think he will do the right things, but what he has said previously does not. All politicians say 1 thing and do another, but I think there is far more uncertainty around Trump than there would have been around Clinton.

      I also hate to see a egotistic bully like Trump actually win, but in many ways it was more about people not wanting to to vote for Clinton as she is seen as worse

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  18. Remember Futia's comments re the Brexit lows? The ES bounced off 2029. That's 2.5% above 1981 Brexit low, but still represents a steep -5% overnight plunge. It may be close enough.

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  19. Financials and Healthcare up almost 3% this morning. Utilities and Staples down. 10 Year treasury rate up to almost 2% and TLT down over 2%.

    Not sure why Trump winning is pushing rates up - maybe it is the US becoming a less safe place to invest, maybe people are worried about inflation with Trump's infrastructure spending plans, but watching to see if it is a blip or turning into a long term trend.

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  20. Watching the election last night with the kids was interesting. Hopefully the bubble they live in got a little bigger.

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  21. Thinking of buying X. I think it gets another gap up tomorrow.

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  22. Trying a little X...starter at $24.5. Hate buying up but I'm betting this volume carries over for a day two rally

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    1. X, AKS, CLF kinda forecast ed a Trump win.

      At least is was a vote against corruption, time will tell who pulls his strings. I hope he can be real game changer for our country.

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  23. Quite an unexpected election result and a mind-blowing market reaction. This shows that the whole market was stuck in a hypnotic state: "Hilary is good, Trump is bad", and it is now waking up from that hypnosis. I find it very interesting that such states can persist for quite some time.

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  24. I had a sell limit for X at $23.40 (for the shares I purchased at $20.40), which was triggered this morning at $24.09. Also, I had two sell limits for FCX: at $12.50 and $13, and both were triggered at $13. So I am not complaining about the election results. :)

    In the article posted by 2nd_ave it was said: "Trump has proposed lowering individual taxes from a top rate of 44% to 33%, lowering corporate taxes from 35% to 15%, and eliminating estate taxes." If he actually does this, it will be great for us in the short term. How will it solve the US budget deficit problem, though?

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  25. Picked up some RRC vs CHK.

    Sold ETP on open look to buy back

    Sold X and AKS on Monday did not expect Trump to win and wanted that risk off, ouch.

    So just have RRC, CEF, PCRX, with bonds being crushed looks tempting.

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  26. took off RRC picked up 1%, CHK would have been better

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  27. Think the traditional Republicans will have issues with many of Trump's plans (like the tax cuts) and how he will pay for them. The deficit already is very large. I still think the end game for the US government is inflation to reduce the value of the debts built up, so maybe Trump gets that going. But that will be the end of this bull market.

    Personally, having one of my best days on the markets probably of the year. Never would have thought that Trump winning would do that, but a good surprise.

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  28. Surprised to see Gold actually ended up negative today - was up a lot last night and would have thought it would have held with the Trump uncertainty and potential inflation.

    Sentimentrader also said long bond price drop and rate increase the biggest on record. Seems like deflation is now considered dead.

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  29. I think X and FCX are great holds until inauguration day. Best in my market in my opinion.

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    1. But what if the expected gain in X and FCX until the inauguration day has already been priced into their prices today?

      Just in case, I placed a sell limit at $14 for the rest of my FCX position.

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    2. Its always possible David. For FCX, I don't think that's the case

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  30. Copper price gaps up this evening by 8c: http://www.kitcometals.com/charts/copper.html

    The horizontal flag pattern that formed over the past year (which I pointed out a few times) is indeed living up to its fame -- a breakout from this pattern is breathtaking.

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  31. Copper is up more than 10c now. I am canceling my sell order on FCX. If it was able to turn profitable in the most recent quarter with copper in $2.10-$2.20 range, it will surprise everyone at the current copper prices.

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    1. I think that's a smart move, David. Bull markets always take us by surprise. I woke with a take on what the market + reactions to it are telling us, and will hopefully post before the open.

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