Friday, July 14, 2017

7/14/17 You Can't Always Get What You Want




https://www.youtube.com/watch?v=fZOlL6pPq4E

In the words of the people's philosopher Mick Jagger-> 'but if you try, sometimes you might find you get what you need!'

We're at a tough juncture in the markets.  

VT/ VTWSX (total world stock market) will close up around +2% since my reentry at Tuesday's close-> that is a remarkable 3-day gain.  EEM (emerging markets) is up +5.5% this week alone!   Normally, I would consider both developments to be unsustainable.  But these are not normal times!

My thoughts:

(a) There is no doubt that shorts are driving much of this week's rally.  I don't think shorts are done covering.

(b) President's Trump unexpected election night win, together with the enormous chaos (both in Washington and in the media) created by his Administration since taking office has probably constructed the 'Mother of All Walls of Worry.'

(c) Chaos itself is the mother of all real change.  I believe we will begin to see real changes in the American economy (infrastructure, manufacturing, and tax reform) over the next few years.  No one really 'wants' Donald Trump for President.  But I think he'll deliver what America needs.

(d) Markets will often climb longer and higher than anyone believes possible.  Emerging markets rallied +5.5% this week to a six-year high?  Who's to say the rest of the world won't catch up?

(e) 2017 is not 1987, nor is it 1999.  The media loves to make comparisons!  Today's markets are a long way from either the euphoria or the kinds of valuations seen in 1987 or 1999.

As second-quarter earnings get underway, it's not unrealistic to set our sights on DJIA 22,000 and SPX 2500.

77 comments:

  1. AKS did not continue it's descent today, so maybe the post-Trump pullback is over. Just bought some shares at 6.51.

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  2. Oil is down more than 1% but XES/XLE are up! A change of sentiment seems to be taking place!

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  3. And CBMX is making its way toward $6 -- get it while it is still under $6! :)

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  4. Also, check out the 1-year chart of NMM -- doesn't it give the feeling that the upside from the current level is much larger than the downside? Considering that BDI is trending up, a breakout can happen any day...

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  5. Replies
    1. Nice! Don't forget to reload when it drops under $5.25! :) Holding my fingers crossed for a small pop in CBMX tomorrow, to have my sell limit at $5.90 executed. :)

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    2. Hopefully we both will. It's just a little to much to soon with the market at these levels.

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  6. Bought more AAPL. This time in m tax free account with CBMX $'s. feel's like a fairly safe way to get a little more beta than just buying QQQ.

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  7. CBMX did hit my sell limit at $5.90 this morning for the bunch of shares I added at $5.15. My next sell limit is at $6.40 for the shares I added at $5.40.

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  8. Used CBMX proceeds add to my AKS position at $6.37. Now I have fully replaced the exposure I had via call options, which I closed after it's pop last week, but now I replaced it with shares, to be safer...

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  9. Nice rally across the board, but why is EMES lagging XES??? It usually has a much larger beta!

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    1. I have a sell limit on EMES at $10.00, and if someone told me that XES would rally 5% today, I would be almost sure that EMES would hit $10, but it barely rose above $9...

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  10. NMM is also dragging its feet despite the steadily rising BDI. However, its 6-month chart looks like it is ready for a spike up.

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  11. *Now* EMES is moving, but in the wrong direction. WTF???

    You Can't Always Get What You Want

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  12. Did you guys read Saut's latest commentary from Monday. All I can say is wow:

    "Hi, Jeffrey,

    I calculate a three week moving average of the Bullish sentiment. Currently, it is abnormally low and [that’s] very bullish. Although long retired, many fund managers in Europe, Asia, and North America still call me and seek my view of the market. I can report to you that worldwide, investors are skeptical and fearful. Most are sitting on a mountain of cash. As you know, that is very bullish. My view remains that this great bull market is only in the early stages of the second leg. The first leg was from October 10, 2008 and ended in May, 2015 which was driven by an easy/accommodative monetary policy. The second leg started in February, 2016 which is always the longest and strongest as it is driven by improving economic conditions (due to the monetary stimulation of the past eight years) and accelerating earnings momentum which is what investors are seeing. As you know, since early last year, I’ve been of the view that investors are witnessing the biggest bull market on record and the end is nowhere near in sight. Also, I felt that when this bull market ends, it will be the wildest and wooliest speculative “blow-off” in history. There has never been so much liquidity created as in this cycle. Also, in my 55 years in this business, from a chart standpoint, I have never seen so many humongous bottoms in so many different industries as in this cycle. Many are 15 years and longer. In the 50s, it was mostly in anything electric/electronic and in the 90s, it was mostly high tech. In this cycle, except for the resource sectors, big bottoms are found everywhere. One of technical prerequisites for a long, sustained bull market is that many stocks must trace and break out of long bases. Putting my money where my mouth is, I own a few of the small and micro caps in the Biotech/Health Care area.

    Enjoy!

    Leon"

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    1. Very nice. I penned the following last night in preparation for another new post, but I would rather append it to 'Leon's' comments:

      Let's return to the music video that kicked off the current series of market comments:

      https://www.youtube.com/watch?v=gp5JCrSXkJY

      What's going down? It's not exactly clear, but the 2017 global market rally appears poised to leave 1995 in the dust, and print its own place in history. I would say there's a good chance the second half of 2017 outperforms the first half.

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  13. WTF? USO is up more than 1.5%, but EMES is down 11%??? Maybe the algos are just trying to shake out weak hands? XES has not even broken below Aug 7. So sector-wide, there is no reason to panic, and EMES is strongly correlated with XES on a 1-year chart. So I just bought more EMES at $7.06 and placed a sell limit at $8.06.

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    1. US Silica is also down 11% -- I wonder what's up with frac sands today? Did the frac companies come up with a new technology that does not use sand?

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    2. The EPS forecasts on nasdaq.com for both companies look great until 2020 -- a steady increase. For 2019, the consensus EPS forecast for EMES is $3.85. If that happens, how many times higher will the stock price be than the current levels? Raised my sell limit on EMES to $8.40, the level where I purchased my previous bunch of shares.

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  14. Wow, investors are bailing out of EMES en masse...

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    1. The 3-month chart suggests that the current wave down is almost over. Bought more EMES at $6.70 and placed a sell limit at $7.70.

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  15. Weird shit is not just happening to EMES and SLCA today. "Halliburton's Q2 earnings soared to 23 cents per share from 4 cents a year ago, beating Wall Street estimates by 5 cents. Revenue climbed 29% to $4.96 billion, also above above analyst expectations." The stock was up 3% premarket and is down more than 5% now. WTF?

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  16. 3 times the average volume was traded in SLCA/EMES today. Hopefully all sellers have done their job today, and the buyers will take their turn tomorrow. :)

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  17. EMES is underperforming XES again now. I think investors are worrying about the upcoming frac sand supply glut, as several new mines we're recently announced. They may be right -- sand is not a scarce commodity...

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  18. NMM finally broke out of its base and hit my sell limit at $1.67 for the shares I purchased at $1.52.

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  19. Decided to sell at $6.77 the AKS shares I added at $6.37. Also placed a sell limit at $7 for the shares purchased at $6.51.

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  20. EMES- Took a quick look at the trading only for the past month or so. I don't think this is done going down David.

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    1. The 6-month trend is definitely still down. At this point I am just hoping for a bounce to $7.40...

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  21. Lowered my sell limit on NMM and sold at $1.73 the shares I purchased at $1.55. BDI is down today, which might signal the end of the recent BDI uptrend...

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  22. Rotated the money into AKS at $6.36 and placed a sell limit at $6.76. I think people are just rotating money from it into X today, but nothing wrong was found with AKS or with the sector today to justify a 6 pct drop in AKS...

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  23. The upward momentum in EMES today is waning. Just sold at $7.02 the shares I picked up at $6.70 two days ago.

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    1. Placed a sell limit at $7.40 for the shares I purchased at $7.05.

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  24. An sell limit order I had in another account for NMM was just triggered at $1.73 for the shares I picked up at $1.57. As you remember, I've been buying a lot of NMM in the $1.50 - $1.60 range, which is a strong support for NMM... Placed a buy limit order at $1.60 so as to partially replace the shares sold today.

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    1. On the upside, my next sell limit is at $1.85 for the shares I purchased at $1.62.

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  25. Steel today:

    http://www.marketwatch.com/story/us-steel-surges-7-as-better-than-expected-earnings-offset-trump-comments-2017-07-26

    Glad I sold some AKS yesterday. :)

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  26. This morning, I saw that BDI was down for the second day in a row, increasing the chances that the recent uptrend is over and a downtrend has begun. I also saw that NMM was up. So I lowered my sell limit from $1.85 to $1.78 and sold the shares I purchased at $1.62.

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  27. WTF has just happened to the market??? I wish I had a buy limit open for CBMX at $5.25, so as to reload the shares I sold at $5.90. I have just placed such an order, in case the market takes another dive and pulls CBMX down with it.

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  28. Replies
    1. Nice, Mark! You picked the lowest price of the day!

      For me, the buy limit at $5.25 was triggered and I just placed a sell limit at $5.75. The fact that the tech stocks decided to give up the ghost today should have no bearing on CBMX future...

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  29. Bought more AKS at $5.40 and placed a sell limit at $6

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  30. I should have posted the following yesterday:

    [A +2.67% rally in the total world stock market (maximum diversification when investing [only] in stocks) in twelve trading days is highly unusual. Today's sharp reversal in the Nasdaq reminds me how quickly gains are often given back. Moving to cash to await a reentry.]

    It appears that waiting another day would have made little difference. I did pick up a small position in X @ 23.6x this morning. Should have waited longer.

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    1. Closed X @ 23.45 for a minor loss. Opened a small position in QID @ 16.04.

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  31. NMM keeps moving up. I have two more lots of shares I can sell, and I just placed sell limit orders for them at $1.90 and $2.10.

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  32. CBMX got bought out after the close for equivalent of $8.00 to $8.60 per share. I almost bought back today. Sucks.

    I picked up some GDX. The weekly chart looks like it's bottoming out but tough spot here with the dollar so weak. Would think the dollar bounces here. I still can't quite figure out why gold hasn't begun to move higher with bitcoin doing so well, gold demand being strong, and supply haven't been reduced a lot over the past several years.

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    1. Thank you, Mike, for bringing CBMX to our attention a few months ago! Everything worked out exactly as you had predicted. I wish you had kept your large position in this stock, so as to reap the gains...

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    2. Nice move David! I can't complain. Made about 60% on that trade

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  33. The sell limit I had at $6.40 for my trading position in CBMX (the one I reloaded at $5.25) was triggered this morning at $7.20. Now I am down to my original core position...

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  34. Oh, man. I was planning to buy 1-2k shares around 5 solely based on tof's record. Then I forgot about it.

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  35. SPWR at 9.17. Way to interesting of a level to pass up.

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    1. Thank you for the alert, Mark! I read about SPWR a little and it seems like the share drop is due to reduced forward guidance due to a small project delay. All key profitability indicators are rising, however. I just bought 5 Jan 2019 $7 calls on SPWR at $3.60 each. Will put them aside and see what happens. :)

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    2. Sold a little SEDG and added to SPWR @ 8.85

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  36. QID closed for a minor loss. Reopened X @ 22.8x. Opened a short-term position in BABA near the close @ 151.5x.

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  37. Let's see how quickly I can lose money on VXX. :) Just bought some at $11.23.

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  38. The high tech leaders (GOOG, FB, AMZN) are all off their highs. If the market is losing its leaders, then some trouble might be brewing...

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  39. The front month VIX futures are at 11.90 and next month futures are at 12.72. That's a 7% expected loss for me over the next month IF there will be no VIX spikes in between. Let's see how it plays out...

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  40. TEVA...wow, haven't looked at this one in years. I wonder what happened.

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  41. X closed @ 23.1x (too early). BABA closed @ 153.3x (too early, but better than where it is now). SNAP opened @ 13.5x.

    Considering another entry into global/ emerging markets.

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    1. Basically, I don't think this market wants to go down.

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    2. On the other hand, I don't feel compelled to buy anything. Looking back many years (all the way to
      2000), I recall the second week of August as being a particularly bad time to be long.

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  42. EMES is regaining its lost ground. I just sold at $7 the shares I added at $7 during its "crash" on July 24. There are real concerns about oversupply of frac sand with all new announcements about new mines coming online in 2018, and I would like to wait for this sector to bottom out for a few months before jumping back in.

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  43. CBMX keeps moving higher. I was surprised it did not jump to $8 upon the announcement of its sale between $8 and $8.65. Its drop below $7 the next day presented an easy arbitrage opportunity. In fact, I did not post that, but a part of my core position was sold that day at $7.20 on a sell limit that I forgot about. I promptly reloaded that part at $7.10, thinking that the price is still too far from $8, where CBMX should be trading following such an announcement. Should have reloaded the trading shares as well...

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    1. Nice move, David. Personally, I would sell your entire lot of CBMX right here. (Although my short-term trading instincts have been less than reliable recently.)

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    2. 2nd -- you don't believe the sale will go through?

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    3. There's always an element of uncertainty. Isn't 7.90 'close enough?' The other question is whether it's an all cash offer, or a stock swap. The latter adds even more uncertainty.

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    4. 7.90 is indeed "close enough." But CBMX reached $7.90 only at the close, when I was not looking. I just placed a sell limit order at $8.00 for my core position.

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  44. NMM has flattened out just below $1.90. I don't want it to turn down before hitting my sell limit at $1.90. So I just lowered my sell limit and sold at $1.87 the shares I purchased at $1.65. Now I am down to my core position, which I will sell at $2.10 and will then reload under $2. :)

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  45. SPWR seems to have bottomed out yesterday. Just bought some at $9.25 and placed a sell stop limit at the recent lows of $8.8/$8.75.

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  46. David- I sold 1/3 CBMX at 7.85 the other day.

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    1. Now you can reload and make some extra bucks when it gets to $8. :)

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  47. Thanks for the SPWR tip, Mark! It is doing well!

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  48. NMM keeps moving up. Its double bottom at around $1.5 between January and July was so obvious... I wish my money was not tied up in EMES at that point -- could have loaded up even more NMM at those prices...

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  49. Mark -- what is going on with oil services? They keep going down and down. Now almost at the level of Jan 2016 even though oil is much higher now. What about the thesis that the only real stopper of higher oil prices are US shale drillers, and so if they keep a cap on the oil price, then it would mean that they have figured out how to do A LOT of drilling at $50 oil, and hence they will require a lot of services. So even if the oil price stays flat, services will still be in demand in US. But this logic is not working out now -- do you have an idea why?

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  50. AKS is making a double bottom relative to May 2017. Just bought more AKS at $5.46.

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    1. The whole SLX ETF is much higher than it was in May, so the sector is moving up. AKS should follow.

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    2. Placed a sell limit order for this bunch at $5.85.

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  51. Have to wait one more day for funds to settle to re-buy CBMX.

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