Evidence that a short-term bottom was put in this morning at SPX 2856:
(a) Put/Call ratio 137% (even higher @ 154% earlier in the day).
(b) ETF Put/Call ratio 201%.
(c) VIX reverses hard to close at the intraday low.
(d) AAII Bulls decline to 21.37. Bears rise to 39.44.
If you don't like numbers, here's what it comes down to:
The market rallied on bad news (ISM) to pull off a Staubach come-from-behind win.
Cashing out at today's close.
ReplyDeleteIt's not exactly a bearish call, although I think we may see more attractive entry points approaching the US-China trade talks on Thursday. I'm more interested in protecting recent gains. I plan to reopen positions over the next two days - probably underweight emerging markets and overweight US.
For a sentiment reset, we need at least a retest of last week’s lows (ideally the SPX undercuts the lows and recovers). Even better would be a washout low following yet another failed negotiation on Thursday/Friday.
DeleteI have been watching in amazement how the sector I chose as my next big bet -- XOP is dropping to ALL TIME LOWS despite oil hanging well above its December 2018 lows. This is a weird replay of GDX dropping to ALL TIME LOWS a few years ago… This time I was more prepared for such shit, however -- I held off until the most absurd valuations before buying individual companies in this sector (I tried CRC), which I luckily sold with profit on the day of the Saudi drone attack. Even though I did venture into margin while scaling into XOP, I didn't even get a margin call :) when the whole sector dropped to new lows prior the Saudi attack. At this point, after profitably selling CRC, I have a decent amount of margin buying power, and so I should survive! :) The following article points to some hope for this sector:
ReplyDeletehttps://www.investopedia.com/5-reasons-energy-stocks-could-surge-4772280?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral&yptr=yahoo
2nd_ave -- don't you find this sector enticing now? :)
Another reason why I survived XOP hitting all-time lows is DIVERSIFICATION! I have about 1/2 of my port in XOP and the other half is in NMM and NMCI. Both of those stocks have bottomed out already, and I expect them to zoom up in about one month, when they issue their earnings reports that would cover the recent quarter when shipping rates shot to multi-year highs. I am amazed that investors have not ALREADY lifted the stocks to multi-year highs. But that's fine -- good fundamentals will eventually prevail. I loaded up on NMM prior to its 15:1 reverse split, when it still trading under $1 and paying out 8% to 10% dividends. My cost basis for NMCI is around $2.20, but given that container shipping rates hit all-time highs during the 3rd quarter, I expect NMCI to jump above $3 after its earnings announcement...
ReplyDeleteI began scaling back into positions today, and will probably be 100% invested by tomorrow. It seems the media is working overtime to frame the US-China deal as a failure. I think they're wrong.
ReplyDeleteA resolution in US-China relations (which I would define as the removal of tariffs + a return to normal trading – so not necessarily the kind of deal the financial media seems to insist on) is enough – that's all it will take to buoy the confidence of global corporations.
I've been scaling out of positions today, and will close all remaining positions end of day.
DeleteIt feels pretty exuberant out there, and we're likely to chop around these levels for a while.
In reverse chronological order;
ReplyDeleteAdding EWZ (Brazil) @ a -4% discount to last week's exit. Also reopening positions in ASHR/FXI (China).
On Mon, Nov 11, 2019 at 3:28 PM wrote:
VEMAX (Vanguard Emerging Markets) closed -0.87% below Friday's print, relative to a -0.56% close for VWO (the ETF equivalent). Today's close is also -1.7% below Thursday's close.
On Mon, Nov 11, 2019 at 12:26 PM wrote:
Taking a swing at emerging markets here via EEM and at the close via VEMAX.
All positions off.
DeleteIf this was a craps game I'd be asking the dealer to take it off the 4-5-6-8-9-10. I've given the trade three days to work, and instead will be taking about a -1% hit. That's a reasonable loss, and I'm unwilling to risk a larger hit.
I'll wait for the next pitch.
Exactly the wrong move. It happens!
DeleteMy trading style requires a pullback, and we finally have one in global markets today. I've had to reopen a few positions above last Thursday's closing prices, but in many cases (ASHR [China 'A' Shares], EWZ [Brazil], BABA [Alibaba]) I've been able to reopen significantly below. At the close, I plan to reopen a 50/50 split of VTSAX (all US) + VTIAX (all ex-US).
ReplyDeleteDoes the pullback have further to go? No doubt - but no one knows when it will take place. From what I've read, there are a ton of underinvested fund managers right now who have been waiting for an opportunity like today. Any pullbacks will quickly find a floor.
On a personal note- my Mom passed away last Saturday after two months of hospice care. She was under palliative sedation and resting comfortably during her final moments. My wife, the little guy and I had visited just hours earlier, and my Dad + younger brother were at her side when she passed. Her body was cremated today, and the ashes will be interred inside the prayer garden of a local church.
There's really no way to accurately predict market turns, but today's action feels pretty extended to me. I'll be closing all positions end of day.
DeleteIn reverse chronological order:
ReplyDeleteOn Mon, Dec 2, 2019 at 11:01 AM wrote:
Going long at the close.
Lots of reasons. From an intermediate-term perspective, global indexes closed November with a positive monthly 'MACD cross-over,'which is apparently a pretty reliable signal. On a short-term basis - VIX +20% and over its 50-day moving average for the first time since early October.
Will use a mix of VTSAX (all-US), VTIAX (ex-US) and VEMAX (emerging markets).
On Mon, Dec 2, 2019 at 7:22 AM wrote:
The SPX has pulled back an additional -0.7% (about 22 points), where it may find temporary support.
Reopening positions in BABA (Alibaba) and HUYA on -2% to -3% declines.
Global indexes reversing nicely off the intraday lows. So why am I selling?
Delete(a) To be clear: there's no guarantee that I'm doing the right thing! I may be making the wrong move.(b) In my opinion, there are way too many market participants who believe that we'll rally into year-end. What if they're wrong?(c) Based on current bids, I expect roughly a -0.5% hit to the portfolio. That's a minor dent and I'm OK with that.(d) I want to protect my YTD gains.
So pretty simple.
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