A Neil Young classic recorded at the Cow Palace in 1978:
Trying to time the market based on fundamentals and/or technical signals has been next to impossible - which leaves us with sentiment as a rough road map.
Any upside reversal(s) into the black are likely to come out of the blue - as to when/ where it begins, well - your guess is as good as mine! I'm only able to opine that we're probably close in both time and space.
Still long (and wrong).
My take is the following: This is the point where we indemnify and make whole those already at the apex of the pyramid of privilege we refer to loosely as the free market. There will be a bailout that will surely blur the distinctions between the present crisis and the ongoing crisis that is Boeing, for example, and today's action is an anticipatory upmove based on the specter of the bailout, as well as Trumps quite predictable impatience with "doctor's orders" which only encourages rapacious capitalists to trade lives and health for GDP points.
ReplyDeleteAs a long term long opportunity, I still see the market as being quite a few deaths, quite a few overloaded hospital systems and frankly, quite a few Dow points away still, today's action notwithstanding.
As an aside, what a terrible hedge against calamity gold always turns out to be. It will again be vanquished in the Fed's eternal game of three-card Monte (is it here? is it over here? Woops, no actual added liquidity, none that you can get your hands on at least, Mr. Goldbug.)
I will be trimming back significantly on positions here and at the close. Why? The DJIA is +20% off Monday's lows - I think that's reason enough!
ReplyDeleteI've moved to 100% cash. The counter-trend rally may continue higher, but in my opinion that's all we're seeing - it's still a bear market.
ReplyDeleteSpeaking of which, as the pandemic unfolds in the US, how bad might things get?
https://www.sfgate.com/coronavirus/article/san-jose-projections-coronavirus-testing-15159836.php
Markets supposedly bottom well ahead of the news – in this case, I’m not convinced it’s already priced in the effect of the virus on the US. Current fatalities are 17 in Santa Clara County, 5 in San Mateo County, and 2 in San Francisco. If projections for at least 2000 fatalities in Santa Clara County over the next three months are correct, then a-35% correction feels off (and based on the numbers coming out of New York and New Orleans the Bay Area may do relatively well).
Long at the close.
ReplyDeleteI still think we retest the March lows. But my sixth sense tells me we the SPX will make a run to 2900+ before that happens.
In reverse chronological order:
DeleteAll remaining positions off at the close, and back to 100% cash. Probably ~ a one-day +2.2% gain for the portfolio, which is all I expect from a long trade at this point. It's still a bear market, and I still think the trend is down.
On Fri, Apr 17, 2020 at 6:50 AM wrote:
Trimming a few high-beta positions into the open. KBE (banks) off @ 27.8x for a +7% overnight gain.
Why the swing long? Coaches generally take a conservative stance on 4th down and will opt to punt. Once in a while, it can pay off to go for the first down. With everyone looking for a retest of the lows, I felt it was time to try a 4th down conversion play.
Didn't go to Wharton, don't know all the terminology but the truth about the oil market seems to be revealed in the present super contango scenario. The fact that they are willing to pump and sell the stuff for 3 bucks a barrel tells us this commodity trades less like gold or silver and more like like airline seats or hotel rooms, like if the plane takes off the value falls to zero. Also, pump prices here are still two bucks a gallon. These jerks should be paying me to fill up the Ferrari.
ReplyDeleteDoes anyone know the terminology? What are these types of "disappearing" commodities called?
There will someday be stories told by rich old men as grandchildren gather around about the day grandpa bought May oil futures for negative fifty bucks a barrel.
ReplyDeletePPT hard at work on May contract.
In reverse chronological order:
ReplyDelete12:30 PM (3 minutes ago)
I reopened RYSPX at the 0730 am trading window (SPY was 285.94/ SPX 2865 at the time) @ a +1.06% premium to Friday's close. An exception to my usual approach of opening on pullbacks. Why? The pain trade generally does not allow for entries on pullbacks - thus forcing traders to use relative weakness. I have no idea if SPX 2865 will be seen as 'relative weakness' over the next few days, but my expectation is that the SPX will breach 2950 (maybe even 3000 on short-covering).
I also added positions in BABA (Alibaba) + a few flyers on weakness.
7:19 AM (5 hours ago)
If the SPY holds 284.54 for the first hour, I plan to reopen a position in RYSPX.
Flipping back to bull mode, as it appears the pain trade continues to be higher.
Scaling into EWZ (Brazil), which took a -8% hit on Friday, Reopening a small position in GILD (Gilead).
Taking partial profits on EWZ (Brazil) @ 23.8x (opened yesterday @ 22.7x) for a +5% gain.
DeleteOn Mon, Apr 27, 2020 at 4:31 PM wrote:
I can come up with countless reasons why the indexes should be going down - but that's simply not what the market is doing. In fact, the tape is all-out bullish! I can't explain it, but that's not my job. My job is to make money, and fighting the tape won't help. Until the market decides otherwise, being positioned long is the right play.
May opt to close partial/full RYSPX @ the 730 am window.
DeleteI did in fact close RYSPX at the 0730 window - although I was unhappy with the closing price-> up $0.01. That doesn't seem right.
DeleteClosing all remaining positions here. Back to neutral.
12:21 PM (0 minutes ago)
DeleteAdding positions in XLF (banks), GILD (Gilead). Will add positions in RYSPX (SPX) and VEMAX (emerging markets) at the close. Why?
The SPX came close enough to 2888 (2892 intraday) and held. I think the next move will be back above 2950, perhaps to 3000. I don't think this bull leg is over.
On Thu, Apr 30, 2020 at 10:02 AM wrote:
Scaling into a few positions->EWZ (Brazil), VT (global market), BABA (Alibaba).
On Thu, Apr 30, 2020 at 6:49 AM wrote:
Where would I buy for a ST move? Probably in the SPX 2850-2887 range. For a intermediate-term entry, I would wait for SPX 2750. For a longer-term entry->2650.
On Thu, Apr 30, 2020 at 5:16 AM wrote:
After three straight days of broad market strength? It's a better sell than a buy at this point. Just my opinion.
On Wed, Apr 29, 2020 at 3:48 PM wrote:
Why fight the market?
The market couldn’t care less about my logic, the Fed’s logic, or that of any analyst/ economist/ fund manager. When we decide to time the market, that’s what we sign up for. It’s one reason why timing is so difficult.
There are clues in the price movements. It’s been a strong tape – if anything, it’s now even stronger. Are there reasons? There are as many reasons as there are traders. I don’t claim to know what they are, but I always try to come up with a perspective that helps me to predict direction and strength. After years of trading, I think we all develop an intuition that’s specific to our own trading styles/methods.
The ‘perspective’ that works best for me right now (which may not be accurate or even helpful to anyone else) is that most of the short-covering is over – it’s now under-invested funds that are doing the buying. Just an opinion.
https://www.marketwatch.com/story/gilead-plans-to-spend-50-million-to-test-and-manufacture-covid-19-drug-candidate-remdesivir-2020-04-30?mod
Delete'Company executives also said they are looking into developing inhaled or subcutaneous forms of remdesivir for COVID-19 patients. The drug, which is currently delivered to patients using intravenous infusion, will not be tested as an oral treatment.’
If GILD succeeds in delivering remdesivir via a metered dose inhaler or a simple injection that can be administered in a few minutes at a doctor's office - and of course assuming the drug proves to be safe and effective - well that would significantly hasten the recovery of the global economy.
What does the market see (or foresee) that none of us are able to envision? There must be hundreds of innovations/solutions yet to be invented/discovered. The first take on the speed and breadth of the economic recovery (that it will be long and arduous) may be way off base. Homo sapiens have always risen to the challenge - the small businesses that drive the economy have no other choice if they are to survive. Who knows - the restaurants/gyms of the future may evolve into far more efficient and profitable operations - the means and the ends are inconceivable to us now, yet the market undoubtedly recognizes these businesses will find a way to make it happen.
Each individual small-business owner will do whatever it takes to survive. In that sense, it's difficult to bet against a quicker-than-expected recovery.
That may pave the way for another 'V' move.
May 1 follow-up. I was wrong. A few positions closed near Friday's open, the remainder closed end of day.
DeleteI'm back to 100% cash.
JMO, but it still feels like a strong tape, and a -4% pullback feels like reasonable consolidation. SPX futures held above 2775 overnight - sometimes that's all it takes. Is SPX 3000 still on the table? Odds are noticeably lower, but far greater than zero - 25% maybe.
ReplyDeleteA rotation into small-caps and international stocks appears to be underway - the better play here might be VT (global index). Not sure what happened to VTWSX (the Vanguard mutual fund equivalent), but it can be replicated using a combination of VTSAX (total US) and VTIAX (total ex-US).
Sorry for the late post.
ReplyDelete(a) I exited all long positions last Friday.
(b) I opened a short on QQQ this morning via SQQQ.
(c) I closed the short five minutes prior to today's close.
It's a good thing y'all know me well. Otherwise who'd believe it!
Back to leaning long.
ReplyDeleteRYPSX (S&P500) + EWZ (Brazil) + XLF (financials).
Not my best trade. Got in early. Watched all positions move against me that day + the morning of the following day - but rather than exit my positions I decided to add to them instead. Held through another rough patch the following morning, and then the market reversed hard to the upside. Closed all positions today for modest gains. Back in cash.
DeleteGoing long banks, industrials, and the SPX end of day.
ReplyDelete(a) There appears to be a strong undercurrent of buyers, perhaps enough to make a run at SPX 3000 (SPY ~300) before this run is over.
Delete(b) Today's decline was enough to justify an entry - yet the pullback held where prices needed to hold. Buyers are still in control.
(c) I also agree with Tony Dwyer - markets are in the process of rebalancing/rotating from growth stocks to value (banks and industrials).
I've trimmed a few positions-> XLI (industrials), XLE (energy), BAC (BofA) + UAL (United)/ JETS (airlines), closed one position in JPM (JP Morgan), and will continue hold BA (Boeing) and WFC (Wells Fargo).
DeleteWill probably take all/most of my position in RYSPX (SPX) off at the close. I think another broad market pullback may be necessary to launch an assault on SPX 3000.
Went long again last Friday morning. In reverse chronological order:
ReplyDeleteSPX futures +60 points overnight and poised to break out from a bull pennant. Lots of disbelief in what may ultimately prove to be the start of a new bull market.
On Fri, May 22, 2020 at 7:50 AM wrote:
Added positions in BABA (Alibaba)/ JPM (JP Morgan)/ XLE (energy)/ XLI (industrials)/ RYSPX (SPX).
A strong (and perhaps rising) undercurrent of buying continues, at least IMO.
On Fri, May 22, 2020 at 5:34 AM wrote:
Starter positions in EWH (Hong Kong) ~19.8x + FXI (China 'H' Shares) ~27.7x. Overnight selloffs were an overreaction, IMO.
US indexes holding up surprisingly well. I was hoping to see SPY ~292 - may get there later today.
Closing JPM (JP Morgan)/ XLE (energy)/ XLI (industrials) for ~+5% gains.
DeleteWill be closing RYSPX (SPX) end of day. Since the position was opened at the 0730 window on Friday, total gain for the one-day trade likely to be >+2%.
DeleteThe first breach of SPX is unlikely to hold - good chance we see 2850 (SPY 285) for a durable low (assuming it's now a bull market). Shorter term, I might open another swing long ~ SPY 295.
A blow-your-hair-back rally? Sounds insane, but I'm going with that thesis for today. Opened positions in SPY/ EEM/ XLE/ XLI/ XLF + flyers in QCOM and UAL. Waiting for a pullback is absolutely the 'right' thing to do - ie, avoid chasing. Occasionally I opt for an exception to the rule.
ReplyDeleteThe negative narratives re unemployment + a second wave + widespread unrest/riots has created one of the steepest walls of worry that I can recall. Every negative scenario is met by the market with the same response-> 'Bring it on!'
I think there's a ton of money flowing into this market. Where's it coming from? Probably under-invested longs and stubborn bears.
What's the market saying? I don't know. Might scientists, against all odds, come up with a safe and effective vaccine this summer? Might pharmaceutical companies manage to produce a billion doses by September?
I see upside breakouts left and right. Taking my chances this morning and jumping onto the ladder of a departing train.
As always, keep in mind the very real possibility that I may be wrong!
Closed all positions. Now it feels like irrational exuberance - a +10 million 'beat' on jobs is still a bad picture.
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ReplyDelete