Monday, October 2, 2017

10/2/17 I'm A Believer



Trading gets tricky for me here.  

The DJIA is up +137 points (+0.62%).  SPX +0.33%.  NDQ +0.23%.  VTI (total US market) +0.45%.  All at/ near all-time highs.

I'm inclined to avoid the US market.

What about emerging markets EEM currently +0.2% to 44.90.  More or less in line with the SPX.  However, EEM is trading -2.3% below its 52-wk high.
What about the the total world market?  VT currently +0.19% to 70.86, or about -0.3% below its 52-wk high.

What about bonds?  TLT (the long bond) currently +0.03% and hovering around a one-month low.

I think US indexes are nearing resistance points which will (hopefully) lead to some consolidation over the next few days.  My bet for the next few days: momentum will carry stock prices higher than most of us believe 'reasonable.'

(a) Emerging markets may play 'catch up.'  I foresee no more than a +1% upside.  VEIEX at the close.
(b) The long bond should see a dead cat bounce.  A smaller position in RYGBX at the close.
(c) RIG (Transocean).  I closed my last position on Friday @ 10.80.  Currently off -5% and reopening here @ 10.23.

Few people believe in this bull market, although I'm now seeing a few comments that point out the brutal bear market in emerging economies and commodities in the Winter of 2016 (let's call it the 2016 Bear).  I honestly think the 2016 Bear 'resets' the clock and allows us to consider the current Bull less than two years old.  One thing I'm pretty certain of-> the global markets are in no danger of an imminent crash.

15 comments:

  1. Tom Petty, Handle With Care

    https://www.youtube.com/watch?v=L8s9dmuAKvU&list=RDL8s9dmuAKvU&t=137

    RIP

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  2. Let ACIA go, will re-buy.

    Still long SLB RRC SYF

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  3. My target for the emerging markets trade upon entry (yesterday) was about +1% (the maximum upside I was able to foresee). Instead, a +2.25% overnight rally in the Hang Seng + an additional +2.7% rally in Brazil's iBovespa now has the index EEM ahead by +1.52%.

    (a) Will close VEIEX (Vanguard Emerging Markets) end of day.
    (b) EWZ (Brazil) was opened premarket this morning @ 41.8x. Closing now @ 43.0x for a +3% intraday gain.
    (c) RIG (Transocean) closed @ 10.27 for a trivial gain.
    (d) RYGBX (Rydex Government Long Bond) will be closed end of day for a very small gain (TLT currently +0.16%, a tepid dead cat bounce which presages another leg down).

    I'm prepared to reopen positions in any of the global sectors on weakness later this week.

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  4. My buy stop limit order on GDX was finally triggered today at $23.25. The reason for this entry -- the 3-month chart seems to have bottomed out here.

    I made 3 other entries recently with the same reason: EMES, SPWR, and ORCL. SPWR is still in the same spot, ORCL is moving up slowly, but EMES is ripping today. I am debating whether I should take a nice profit on this trading position or just place a sell stop order at my entry price (8.20) and then let it ride to the $10 price target that 2nd_ave set for it a while ago. :) Leaning toward the latter option for now. :)

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    Replies
    1. After the June low, USO has made a higher low and a higher high. If this trend continues, then crappy energy-related stocks like EMES should move up as well...

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  5. Still almost fully loaded. Did let go of CBMX again today I jumped back into at 7.20. I'll keep trying this trade in a tax deferred acct as long as it let's me.

    On a side note, I'm meeting with 2 investors from India next week who want to make some serious RE developments. I'll keep you posted.

    mb

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  6. Should have taken profits on EMES yesterday...

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  7. CBMX hit my sell limit at $8 today. Thank you, Mike, for a great stock pick!

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  8. Apologies again for the late posting:

    Early morning:

    INTC (Intel), which has been chopping around the thirties for the past year, has broken out on a weekly chart. It quietly opened at a new 52-wk high (39.70) this morning, and quickly sold off. Opening a position @ 39.30.

    The long bond trade isn't working out. TLT currently down about -0.4%, and I plan to close RYGBX end of day.

    My take on the markets? Not many investors believe strongly in the global rally, which is keeping a bid underneath prices. Sometimes, rather than focusing on what can go wrong, it makes more sense to think about what may go right (I borrowed this sentence from James De Porre)!

    Unless things change dramatically in the final hour, my plan now is to reopen VTWSX (Vanguard Total World Market) at the close (I have no opinion on which sector(s) will outperform going forward, so spreading chips across the board!).

    Smaller trades:

    (a) ASHR (China 'A' Shares). Opening a position at the 52-wk high, 30.05.
    (b) HIMX (Himax). Reopened at 10.72.
    (c) Brazilian steel producer VALE @ 10.44 (as a proxy for both Brazil and commodities).
    When the market defies all expectations, what's the right move?

    In my opinion, it's preparing to equally frustrate both bears and (under-invested) bulls. It's 1995 all over again, when the DJIA soared +36% against all expectations. It may continue to defy expectations of a pullback until it's sucked in all the cash on the sidelines and squeezed the last short. Sure, there's no lack of 'things' that could go wrong. Then again, it could all go right, and leave skeptics in the dust. The only side to play right now is the long side.

    Trying to figure out which sector(s) will outperform at this stage would probably won't be helpful. With the exception of a few stock picks, I'm going with the default play-> the total stock market (the equivalent of a pass line bet in craps). Reopening VTWSX (Vanguard Total World Market) at the close. VT (the ETF equivalent) is currently trading +0.27%.

    Near the close:

    When the market defies all expectations, what's the right move?

    In my opinion, it's preparing to equally frustrate both bears and (under-invested) bulls. It's 1995 all over again, when the DJIA soared +36% against all expectations. It may continue to defy expectations of a pullback until it's sucked in all the cash on the sidelines and squeezed the last short. Sure, there's no lack of 'things' that could go wrong. Then again, it could all go right, and leave skeptics in the dust. The only side to play right now is the long side.

    Trying to figure out which sector(s) will outperform at this stage would probably won't be helpful. With the exception of a few stock picks, I'm going with the default play-> the total stock market (the equivalent of a pass line bet in craps). Reopening VTWSX(Vanguard Total World Market) at the close. VT (the ETF equivalent) is currently trading +0.27%.

    As we approach the close, the DJIA is up +102 points (+0.45%). SPX +0.54%. NDQ +0.76%. EEM (emerging markets) +0.74%. EWZ (Brazil) -0.4% (although I suspect the index reverses tomorrow). VGK (Europe) -0.21% (ditto).

    I added a position in EWZ (Brazil).

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    Replies
    1. fyi-> I inadvertently left out three paragraphs in the afternoon post which have now been added.

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    2. A messy US jobs report (a loss of -33k, the first decline since 2010->largely due to Hurricanes Irma and Harvey) leads to an early pullback in global markets. Whether the opening weakness will be bought (the pause that refreshes) or sold (the news may finally end the remarkable momentum that has driven markets all year) is key. I have no opinion on the outcome. But I do have a plan either way-> I will hold on strength, or cut losses on further strength. My recent gains provide a significant 'buffer' against losses, but I'm stingy about giving back any profits.

      For now, I've taken profits on INTC (Intel) @ 39.82 + HIMX (Himax) @ 10.87 for about +1.3% one-day gains.

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    3. Reloaded INTC (Intel) @ 39.52. HIMX (Himax), on the other hand, is waving at me as it zooms up to 11.44! It happens.

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    4. Tough call (standard modus operandi for the market) near the close. Off the lows of the day, but neither are we seeing a strong close.

      Holding all positions through the weekend. I think upside risk outweighs downside risk at this point.

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