Wednesday, July 27, 2011
07/28/11 The 200-point prelude
Admit it- you've been waiting for a delayed 'reaction' to the crap going down in Washington. The 'no big deal' headlines were getting old. The market needed to work off some of the anxiety. It may need more work on the downside. It's alright- we're just taking care of business.
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Yep, I was. Just wish I was a little quicker.
ReplyDeleteCLR/ANR/PCX...Yikes.
It feels puny to have only 1% cash. I am not one to go much on margin, since the 1987 crash. Feels like I am hand cuffed with no where to go. Is that what it's like in solitary?
ReplyDeleteI know how you feel, Illini. I wish I had more cash now to start scaling into the miners that were getting killed today...
ReplyDeleteAs for RBY -- I am kind of disappointed with that AEM deal. The investor rep told me a while ago that they would only need to raise cash in order to build the mine, but it seems like the $70M they raised will be used for further exploration, and so they will then need once again to raise cash for building the mine.
ReplyDeleteI am with Kass.
ReplyDeleteStocks are being bid down on political nonsense and causing a really good earnings season to be ignored and have written before why I think insurance is (and I hate to say it) almost a guaranteed winner.
illini- I enjoy solitude. For me, nothing comes close to having all the time in the world to ponder a single note amidst the noise.
ReplyDeleteAll the Armageddon bullshit is back in play, a mere two weeks after being blindsided by a fantastic rally out of left field. Just the same old same old.
ReplyDeleteThey made it real enough to separate J6P trader from his positions.
ReplyDeleteI can imagine a +400 point gap up tomorrow. I said imagine- but it's not out of the question.
ReplyDeleteI can also imagine a -400 point gap down. But I'd rather not.
ReplyDeleteBB > While I am most likely going to use this pullback to buy things, I don't see quite enough good deals out there. Also, I put little faith in what Kass has to say. Whether he likes to admit it or not, he is a day trader and he doesn't have the patience to wait the market to come to his levels. For examples, he's been saying for a while that the range for the year is 1,250 to 1,350 yet he's now saying this is one of the best buying opportunities of the year at 1,305? why wouldn't it be at 1,250?
ReplyDeleteThe ultimate? A failure to raise the debt ceiling + a downgrade of US debt- and the market rallies its socks off.
ReplyDeleteAnd why not? The US is not going down the tubes anytime soon, not in our lifetime. No, I'll wait for let's say SPX 5000 in 2024, when bonds are paying 9-10%. Then I'll cash out.
ReplyDelete"why wouldn't it be at 1,250?"
ReplyDeleteThat might be Kass' target, S&P could open there?
BB - I've been thinking about your insurance angle and can see the logic. Does PRU qualify in your mind?
PGR - Hmm, earnings Aug., 11th
ReplyDeleteWill Congress defer their deliberations until hurricane Don has passed, for the purpose of keeping oil prices "capped"?
ReplyDelete10 year rates peaked at 3.725% earlier this year...
Taxpayers are gettin' quite some good deal on financing decades of unsustainable spending habits of DC, too good to be true? In the past 6-months, the peak 10-year yield was 3.725%. Perhaps a rapid return there would be an alarm bell?
Taking care of business is the Bullhead City theme song! We blast that out of our flat bottomed speed boats all day long while swilling PBR. Hey us bullheadeans have class.
ReplyDeleteTOF - agree with you completely on Kass being a daytrader - when he says this may be the best buying opportunity of the year, he may be thinking for a 2% up move on the debt resolution. I do think it is a good time to be an owner of stocks though based on valuations and fear in the market.
ReplyDeleteChicken, PRU is a good insurance company to own as well - they pretty much all are. If you look at the 10 year valuations on morningstar http://quicktake.morningstar.com/StockNet/Valuation10.aspx?Country=USA&Symbol=pru&t1=1311856358
You'll see it is trading at a substantial discount to the valuations it obtained throughout the 2004 - 2007 period. Earnings are improving, forward P/E is now 7.5, so this should drive a P/B back to the 140% range or up 75% from here. May take a year or 2 to get there, but, all we want it to do is trade back to the valuations it has before in reasonable markets. There is also very little downside here because of the valuation support.
If you are interested in insurance investing, suggest you follow Tom Armistead on seeking alpha http://seekingalpha.com/author/tom-armistead and David Merkel http://alephblog.com/
Also, BMO came out with a report today showing how the Canadian life insurance companies are on average 20% undervalued based on current ROE's. These did not get hit nearly as badly as the US ones as we did not have a banking crisis up here, but even they are set up for some reasonable upside.
For what it's worth
ReplyDelete"Claims often fall sharply in the third week of July as workers in certain parts of the manufacturing sector return to their jobs. Auto makers and some other manufacturers usually close plants earlier in the month to retool them to make the latest model of products.
As a result, claims data in July can be more volatile than in other months, making it harder to figure out trends in the U.S. labor market. In 2010, for example, jobless claims fell in the same week of July but then rose for the next three weeks."
Let's just say the more the market sells off without collapsing, the better in terms of building a solid foundation for the next leg of the rally- which IMO will take us past what many TA addicts are referring to as the 'head' portion of a H&S top. Come on, man. Head and Shoulders is a patented shampoo used to control dandruff, the social paranoia du jour of the early seventies.
ReplyDeleteRBY- Shows what I know.
ReplyDeleteCOG- This one is unreal.
ReplyDeleteALU is in it's gap. This one still interest you T3D?
ReplyDeleteAIZ is another insurance company I own and it reported good earnings last night and is up 2% this morning.
ReplyDeleteSolid, niche business, good dividend and management does a good job of building shareholder value.
If you're technically inclined, it also near a double bottom from November when they got slammed unfairly in American Banker Magazine, so you have a good stop loss point. I am a long term holder and would consider buying more on a pullback.
ALU, no Mark, I sold this yesterday off of JNPR bad results. They are shooting stocks today TQNT ALU AKAM JNPR and CSCO for a while now. I see no reason to be involved in this sector now until things improve on the business side along with price. The sector is weak, why fight it.
ReplyDeleteRBY back from the edge thank you AEM. Does anyone notice that the strong are taking out the weak at cheap prices with some of these metals deals?
TA versus Fundamental argument exactly the same as the timing versus buy and hold argument, not worth debating as you will not change each adherents.
ReplyDeleteJust take the best of both and be happy.
RBY back form the
http://www.youtube.com/watch?v=wOrdEcJZyt0
t3d- fwiw, I really believe the recent sell-offs are quite normal. The market has always taken perverse pleasure in leaving traders behind just prior to taking off- why change now? Call it human nature, or call it the nature of the market- it never changes.
ReplyDeleteGLD/SLV picking up speed.
ReplyDeleteAIZ interesting chart, FIDO has an insurance mf FSPCX may give a shot and build a position (thinking about it) MET was a consensus buy by 30 Hedge funds I track as a group those guys are generally right.
ReplyDelete2nd, basically agree.
GL players!
ReplyDeleteOK, one stinky. TRX @ 16.00. Don't be a hater bro!
ReplyDeleteSince I am deeply in debt now and also anticipate a great buying opportunity in ECU in the near future, I decided to close my RBY position with a small loss. I have just reviewed my notes and saw that they will need to raise $200M to build the mine, and so the $70M they raised is not enough. I just sold 1/2 of my position (1000 shares) at $4.09 and placed a sell stop for the other 1000 shares at $3.95, just below the recent intraday low.
ReplyDeleteI am short 20 CAAS August $7.50 puts, and with CAAS below $7.50 now, I might be assigned those shares (something I didn't really plan on -- I just wanted to pocket the hefty $2 premium per share I got when selling these puts a few months ago), and I might want to hold them and sell covered calls against them as soon as I get them. I'll need some cash to buy those shares, and now I'll have it.
ReplyDeleteSo it is not like I don't have faith in RBY's future -- in 2 years they can easily be at $10, but I just need the money NOW.
they're really playing the technicals here with this market.
ReplyDelete1,311 was a big area of resistance and 1,295 was a big area of support...lo and behold what are today's lows and highs on ES?
Forgot to mention -- my cost basis on RBY is around $4.50, so the loss I am taking now is not large at all... I'll easily make up that loss with the premium from the covered calls I'll sell on CAAS if I am assigned the 2000 shares at August OpEx.
ReplyDeleteSVM - I had to go out this morning and so I missed that $10.09 low. SVM found pretty resonable support at $10 level on the way up the first time, would have made a good day trade if nothing else...
ReplyDeleteFunny how they're able to make the metals look weak all the time, yet on a longer time horizon they keep climbing...
BEXP - This one's held up impressively through the turmoil, IMO. Was hoping to find a low entry level but nada. Maybe once the tropical storm season or maybe once Don passes?
ReplyDeleteCP once a deal is made there should be a knee jerk reaction raising the dollar which should hurt metals and oil. That may be your entry at low prices. i'm doing nothing real tired of stocks trading on govt intervention instead of their own metrics.
ReplyDeleteI'm thinking the market is setting itself up for a selloff...However, today's econ reports were definitely positive and that's a good sign for the time being. I'm assuming GDP will be bad tomorrow. If we get a sub 1% print I would have to imagine that triggers a selloff. However, if we get more econ reports next week like todays then I think the downside is indeed limited.
ReplyDeleteTOF,
ReplyDeleteyou might be right and the market may initially sell off on resolution to the debt issue (as everyone is expecting a bounce on this), but I think that would be a good opportunity to buy.
The other factor which limits downside is the really good earnings reports.
It looks like the rebound rally in DB is over, and so I just placed a buy limit order for 2 DB September $7.50 puts midway between bid and ask, at $4.70.
ReplyDeleteI think the best thing is to do nothing until a resolution and the short term reaction. Much like a fed announcement.
ReplyDeleteRB - "once a deal is made there should be a knee jerk reaction raising the dollar which should hurt metals and oil."
ReplyDeleteYes, that's precisely what I'm anticipating as well. I'm expecting the $9.22 gap up in SVM to fill, as a result.
It's just that I had a feeling the 50SMA would hold as long as news or government hadn't changed something.
You're not the only one wishing government would s**t or get off the pot, I've kinda moved on and bought my very own toilet though, those public toilets are crawling with who knows what?
Maybe we should be shorting aluminum?
ReplyDeletehttp://finance.yahoo.com/news/Goldmans-new-money-machine-rb-4144406218.html;_ylt=AhImPcU0_ZjVhQEh.IEN_8.7YWsA;_ylu=X3oDMTE1bGw0cnBkBHBvcwM0BHNlYwN0b3BTdG9yaWVzBHNsawNnb2xkbWFuc25ld20-?x=0&sec=topStories&pos=1&asset=&ccode=
Yeah it is hard to get very excited about the market here.
ReplyDeletehttp://www.youtube.com/watch?v=LrwsUur6SfE&feature=related
Boy CTCT just keeps getting laid into. I still haven't found a good enough reason to buy the stock yet because I think it's still overvalued given how much competition the company has, but it's long term revenue growth is really impressive and the company is getting into some very interesting opportunities in CRM type stuff.
ReplyDeleteHaving said that, the stock is right at an upward trendline from Fall 2008 so perhaps a buy with a stop $1 below it would be a low risk trade. Earnings are due out very shortly so there is risk. It seems like the market just likes to beat to hell those stocks that are showing a series of lower lows so I wouldn't be shocked to see CTCT go lower.
IMAX is getting the business today. 3d is dead. Stick with 2 dimensions
ReplyDeleteEh, T3d is not dead.
ReplyDeletehttp://www.youtube.com/watch?v=aWPjtI3w5kk&feature=related
maybe 15% less of him?
ReplyDeleteFunny thing, back in the early eighties, Phyllis and I where skiing in Aspen and who but Cindy comes by skiing. She was not very good like us, but it was a moment to remember.
ReplyDeleteLast one.
http://www.youtube.com/watch?v=jQ_3zo5YDLA&feature=related
Today has been really boring. I closed my SPY puts just after the open for a solid 65% gain.
ReplyDeleteEarlier I also bought some puts expiring tomorrow just for the hell of it...again, position size is tiny at $3k total. Bought the SPY $134 Puts at $2.83 The rest is just in cash and waiting for better (lower) prices.
My thinking is the hardest thing to do here is to go short. No one wants to be screwed over on a spike up. So momentum may be to the downside.
Also, 1,305-6 is acting as pretty strong intraday resistance.
ReplyDeleteCSCO fans must be happy today.
ReplyDeleteTA assessment: Price has been contained by 89 dma since Feb 11, it has bumped up against this line 5 of last 6 days. 89 dma is at 16.42 Csco needs to take this out to prove real st strength here. CSCO has been in a confirmed top and down trend since 5/14/10.
Maybe a fundie among us can tell me why I should be long based on an argument of what will turn CSCO around and not just that it is a value play and price has come to me..
I'm reading my trading indicators as follows:
ReplyDelete*IYT is confirming weakness
*IWM is confirming weakness
*CAT is confirming weakness
*Copper is strong, but wasn't there some issue with a mine disruption or something?
*DD struggling to stay positive after good earnings
*XHB complete reversal after strong housing report
*XLF is actually acting strong which could be a good thing when we bottom as long as it doesn't collapse.
Flat, flat, flat. Yuck.
ReplyDeleteLiked the Lauper video.
CSCO- Did you see the GS upgrade?
ReplyDeleteHeard about and is reason for today's strength, let's see it take out the 89.
ReplyDeleteTailsman hitting the skids here, some.