Tuesday, August 16, 2011
08/16/11 Hey Joe, It's A Bull Market
I don't understand why traders believe we're going down from here. Is it really as simple as letting the tea leaves (aka charts) call the shots? No way. We're going higher. Much higher. jesse sees the writing on the wall- it'll be closer to +500 than +50. Why? There's no reason for the indexes to sell off. It's still a bull market.
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igor catches the same sentiment in his last post. Why would anyone panic now and sell? If they were inclined to sell, they sold last week.
ReplyDeleteOne stock that I think will be an awesome long term performer is IBKC...it now yields 3% for you fellas that like dividends. I think if you hold it for 10 years you will be getting more than 10% dividends on your current investment.
ReplyDeleteTOF, you are right about European troubles only getting bigger, and so I am fully prepared to believe that next week this rebound rally will run out of steam. But not tomorrow.
ReplyDeleteIgor said it very well in his last post: "Any real negative news you saw after market that is not yet priced in?"
We had a whole new layer of uncertainty added today, and the market behaved VERY bullishly technically, running stops through the 1187 level, then reversing above it, then testing it from above and succeeding.
What's important is not the news, but the market's reaction to the news.
So unless some new negative development comes out of Europe tonight, the traders will keep bidding this market up. Of course, we won't get a 500 point gap up on the Dow, but we WILL most likely slice through 1200 on the way up tomorrow.
As for whether or not we are in a bull market, the answer is simple -- as long as we are getting higher lows on a 2-year chart, the bull market is intact. We had a huge runup into QE2 and it was only natural to see the collapse we had. The low of the recent crash was above last summer's low, so this suggests that we, technically, are still in a bull market.
I don't see a reason as to why SORL should have fallen so much after its earnings yesterday. So for some "illusionary" diversification away from ECU, I am placing a buy limit order for 1000 shares of SORL at $3.40. Their forward P/E is 2.78, and I am OK with holding for a few years a company that has such a low P/E, has a positive cashflow and that keeps growing its earnings y-o-y.
ReplyDeleteDavid- Something like that. Except that no pullback can afford to appear 'obligatory.' It has to be convincing- ie, it needs to 'convince' investors/traders to voluntarily jump off the train.
ReplyDeleteIt's funny: we had big growth scares and market pullbacks in the summers of 2009, 2010, and 2011, and every time we made a higher low. Maybe this time the market has also just made its obligatory summer decline, in preparation for a stellar 2H rally?
ReplyDelete2nd_ave read my mind and responded to my future comment in his 5:02 post. :)
ReplyDeleteNikkei opens down -0.8%. Now THAT's obligatory.
ReplyDeleteEver wonder what it would be like if you could read minds?
ReplyDeletePersonally, I would use it to make enough money to buy an island and then get the hell away from people.
David- May be there is some truth to "Sell in May and go away". Junior traders are running trading desks in August while the big guys are enjoying the Mediterranean coast -)
ReplyDelete"just kick out Italy, Spain, Portugal, Greece from the Euro."
ReplyDeleteOn the bright side of that, I would finally be able to redeem the Italian currency I have here in my jar. I don't suppose it would fetch as much as I paid for it though...
Hey, considering Italy has the third largest store of gold, perhaps my Lire will become gold backed? I knew I was holding onto this stuff for a reason!
Aside: I had never paid one million for anything until my travel to Italy.
"buy an island and then get the hell away from people. "
ReplyDeleteYou could eat the sand which is there.
who knows man!?! i would love to see a return to risk taking as that is where we all make the most of our $$. Shorting stuff is slow and boring and your upside is limited. You can't double your money shorting something like you can buying REDF at $2 or MITK at $5...
ReplyDeleteby the way, i wonder when "they" are gonna rescue us from rescuing things...or bail us out of bailing out everything...
ReplyDeleteCP- haha, haven't heard that one in awhile.
ReplyDeletetof- The big 'surprise' may be they won't need to?
There's just nowhere to hide apparently, aside from maybe government debt. :(
ReplyDeleteThat island full of sandwiches is starting to sound appealing.
David - I know you take today's action as positive but you could also say that that they tried to rally it several times but couldn't. The weak German GDP after our weak GDP and France's weak GDP are problems. Whether or not we rally another 200 pts in the next few days doesn't ignore the problems with slowing/falling GDPs, heavy debt loads and bond markets forcing governments to cut spending. Those are longer term issues that unfortunately will weigh on the markets and make it harder to make money on the long side.
ReplyDeleteAlso, while the US market is only down 13% from highs, there are several big markets already down 20%+, like Brazil, Germany, China, and India. Those are the major drivers of growth in earnings that everyone points to...
ReplyDeleteFinancial transaction tax...
ReplyDeleteGood line...
"For if we’re not careful with how we wean the market off the 70% plus of daily market volume, which is where some estimate high frequency trading is responsible for, zombie banks may be the least of our worries. We could recede into a zombie market, where merchandise trades by appointment."
Is it possible tomorrow we awake to read of a new union called "The United States of Europe"?
ReplyDeletetof- I try to keep it simple. So I keep repeating the same mantra.
ReplyDelete(a) Buy low, sell high. Keep in mind, however, that you won't feel like buying at the lows.
(b) I can't time the market.
(c) If Buffett is holding/adding to GE/WFC, that's good enough for me.
(d) My reasons for holding my other positions, and for being long in general, have not changed.
(e) Headline stories, for the most part, are noise- not mind-altering news.
Just scanned about 80 stocks. Man, there was a lot of volatility out there today.
ReplyDeleteWe keep revisiting this HTF issue. Something about the market seems synthesized if HTF is necessary. Seems like HTF opens trading to the possibility for price manipulation.
ReplyDeleteWasn't this the same argument against short selling bans?
CP- Yeah, we've been down this road before. I agree with the Vad Man. It don't mean sh.t
ReplyDelete"you won't feel like buying at the lows."
ReplyDeleteOr selling at the highs! Buffett isn't to be trusted, he's worried and so just providing lip service while he quietly slips out the back door under cover of HTF?
How can volume be trusted in an environment where volume is modulated by HTF?
Everyone makes observations concerning volume being too light or heavy, does not volume consist mostly of HTF? Seems HTF isn't a net zero phenomenon and can be used in deceitful ways.
HEK refused to break today.
ReplyDeleteVad is convinced there's no price manipulation in the market as well, there are others who wonder why then so many computers need to be as close as possible to the exchange.
ReplyDeleteWhat's that all about if not HFT and why is it so profitable?
CP- I honestly don't get the volume talk. Look back 10 years. Volume is huge right now.
ReplyDeleteCP- HFT, as I understand it, is algo's looking for price anomalies with data feeds a fraction of a second ahead of us. If they can make a buck splitting a penny in half and provide the liquidity I like, got for it.
ReplyDeleteThis just supports the claim that volume is an expense, someone wins and someone else loses, no?
ReplyDeleteSurely HFT doesn't run at a fixed frequency, so if markets rise on light volume, that could be due to less HTF?
So if I was running HTF, I could take a break for an hour and come back to a zombie market and buy at much lower prices?
Someone makes money on HTF, I believe, and it's liable to be a handsome sum.
"I honestly don't get the volume talk. "
ReplyDeleteMe either, HTF controls volume, not the market.
I understand the liquidity argument for HTF, but it seems HTF is a bit more mysterious than just a liquidity provider.
If I had an HTF setup, I'm pretty sure I could handshake two computers together and move prices up and down as I pleased.
CP- Good questions. Sorry, way beyond my pay grade. I think the bottom line is spreads would widen a ton. Hey, let's go back to fractions!
ReplyDeleteSomething like this:
ReplyDeleteComputer one sells 100 shares for a dollar to computer two.
Computer two sells 100 shares to computer one for $1.01.
C1 sells to C2 for $1.02, etc..... until the price reaches $1.50 or some arbitrary value.
You could move a price to whereever you wanted it 100 shares at a time, in a short period of time.
ReplyDeleteAnd volume could be in the trillions, or however fast the lightpipes could carry and execute the trades.
So in short, I'm saying HFT renders volume a useless indicator, you'd need to examine average trade size to see which way the interest exists (sell or buy side).
ReplyDeleteYeah so someone doesn't want to regulate HFT, and that same person doesn't want to engage in a conversation on the subject and discuss some basic fundamentals questions. They just hang onto one side of the coin and ignore the other side completely.
ReplyDeleteMy belief is HFT has nothing to do with investing, and everything to do with turning the market into a casino.
ReplyDeleteLoss of capital.
ReplyDeleteor
Loss of opportunity.
What's in your wallet. I dig a pony.
http://www.youtube.com/watch?v=gY76eJWKUDQ
Great input today from everyone. Very good read with well thought out ideas. keep it up. just catching up.
ReplyDeleteTOF BIDU and other ChiCOM internet companies are getting wacked because of fear of Chinese govt intervention. Why would a democracy like China intervene in a social medium. They have freedom of speech right.
I had just occurred to me, that the natural spot to start "trusting" this rebound rally was at 1200, and so MANY people must have entered yesterday EOD and placed stops at yesterday's lows. They were all shaken out today, THAT'S why tomorrow should be an UP day.
ReplyDelete"George Soros says euro bonds are the only solution, buy gold and silver
ReplyDeleteAug, 16, 2011 04:00 AM - ArabianMoney.net"
"He warned that the longer the Germans take to realize this is their only option, the more expensive it would become."
http://www.poten.com/NewsDetails.aspx?id=11530875
Looks like the rebels are putting the squeeze on Gadahfi.
ReplyDeleteMy two cents. For the short term the S+P 500 technically looks like a screaming short with a textbook bear flag in combo with declining volume. With the big blue arrow pointed down and being below key moving averages I think short term traders need to be net short. Now if it could consolidate between 1180 and 1205 for a few days I could change my mind. If it pops from here I would become even more bearish thinking a very dead cat bounce. using key fibo levels as inflection points.
ReplyDeleteHere's the Soros interview in it's entirety:
ReplyDeletehttp://www.spiegel.de/international/europe/0,1518,780189,00.html
I like the R/R In SCO. Short crude Oil. Stop at 54.45 Support from june with a target up to 70. like Tele says, "might as well play tennis if you pass up set ups like that." FYI I look at the underlying crude prices to set parameters of the trade. Charts on 2x and 3x are distorted and unreliable, IMO.
ReplyDelete"Looks like the rebels are putting the squeeze on Gadahfi."
ReplyDeleteDang maybe i will be too late to short crude.
"declining volume."
ReplyDeleteSounds like code word for HFT headfake.
If Gadaffi is ousted, the brent/WTIC spread will collapse and I think the market could rally. Oil would fall in general on the relief, and gold should as well.
The factors leading to higher gold (and all commodities) prices would be government buying their own debt.
Euro Bond makes sense when presented by the media, but if you think about it will it not be just like mortgage CDO's. Do one triple 'A' debtor combined with 16 triple 'b-' equal a triple A bond?
ReplyDeleteCP I think that S+P and oil are more positively correlated then negatively correlated. Meaning they move together more than apart. But If true Retail may be the go to place, but they have all seemed to have popped today already.
ReplyDeleteNKE, UA, DECK, ANF,WMT possible weapons on a quaddafi rally
ReplyDeleteU guys r prob right mkt is going up... I never make $ on shortts don't know why I bother
ReplyDelete"Do one triple 'A' debtor combined with 16 triple 'b-' equal a triple A bond?"
ReplyDeleteNo, I wouldn't think so. But what difference does it make when we're talking about a government buying it's own debt with freshly "printed" currency?
It's a promise to cover present liabilities obtained by pulling forward demand for debt.
It's printing, is what it is. Behind a thin curtain. Watch as the debt mysteriously disappears...
They should just admit they're going to print the debt away like now Greenspan, Buffett, and probably Bernanke have alluded to.
I don't think the collective German Psyche will buy into it. Believe me the Germans' resent the lack of work ethic in the rest of Europe. A popular up roar may make the German govt throw their banks under the sovereign debt steamroller.
ReplyDelete"Believe me the Germans' resent the lack of work ethic in the rest of Europe."
ReplyDeleteAnd I won't bother telling you what the Belgians and Dutch were saying about the Germans last time I was in Europe.
We could be looking at a Euro-zone divorce. Hope for the best, plan for the worst?
SVM - If you think the H&S is going to play out, I've got a target of ~$0.50
ReplyDeletePretty wild, huh?
RoBear:
ReplyDeleteWhat is a "textbook" bearish flag?
"CP I think that S+P and oil are more positively correlated then negatively correlated."
It depends on what caused a particular move. If it was increased risk aversion in the market, then oil will be positively correlated with S&P. If, however, it is some external oil-specific reason that causes it to fall (such as easing tensions in the Middle East), then oil will be negatively correlated with S&P.
Yep, my only point was that gold and oil are in their apex of an elliptical orbit, I'm expecting this huge differential to close.
ReplyDeleteEither long oil or short gold would be the play.
Kinda depends on if the tooth fairy can eliminate $300T or so of debt. It wouldn't be fair for the debtors to get away with highway robbery, but too big to fail seems to possess immense intrinsic value on this planet.
I just can't believe Kaimu would consider selling any of his PM positions...
David.
ReplyDeletehttp://optionstradingbeginner.blogspot.com/2007/12/bearish-flag-pattern-part-1-formation.html
Make sure you read about volume in bear flag part two.
Bear flag pattern. A Pole (fishing line?) On strong volume. A retracement higher on lower volume.(Flag) . A second impulse lower on increasing volume. The pattern works on individual stocks. Don't know the success rate on the index though. I suspect it is probably pretty low due to govt intervention the past two years.
If I were an independant observer, I'd have to say $indu tests 10,500 while gold and oil continue to move in opposing directions. Once that's done, the fur flys.
ReplyDeleteAdd to that, we're looking at a double top here in gold, probably about the same time as 10,500 comes?
ReplyDeleteThen it's Katy bar the door, some kind of trend comes fast and furious?
Copper chart looks to me like it wants to rise from the dead. Oil is near oversold, assuming we're going to survive another month.
slv: top of the head to lowest shoulder is about $4.30 ish. So I get a target of around $7.70 ish, but hell its a mining stock. 50 cent is possible.
ReplyDeleteI meant SVM
ReplyDeleteThanks, RB! Note that the explanation for the bearish flag requires a second set of bad news to come out after the initial consolidation takes place. If such piece of bad news doesn't come out tonight, then we'll keep moving up.
ReplyDeleteYes, The flag can go on for a while as long as the volume diminishes (accumulation slows) the set up is valid. Price pays not volume. In addition it is a 7% bear flag already. A well paying flag. Just keep a mechanical stop for that news. In that article: The psychology of the bear flag seems like it was written today not 2007.
ReplyDeleteA possible play for your trading style is to double your mechanical stop. Meaning you will stop out of your long and go short the same amount at that point. A stop run reversal would be a punch in the face though. Probably extra cautious approach is warranted in this market.
SVM - To be clear, the head I'm referring to is at $16, the left shoulder is now almost completely formed. Assuming I can spot an H&S, then according to the geometry of the formation to my understanding, would yield something in the neighborhood of $0.50
ReplyDeleteSomehow I doubt this one can/will reach that price given the fundamentals, the neckline points to about $7 and the most recent lower trend line intersects ~$8.
We'll see, I can add to the position.
Morning guys
ReplyDeleteI meant right shoulder, of course.
ReplyDeleteHard to see how oil does not go up longer term. You've got all this demand coming on from China (and friends) and supply is just getting more and more difficult. Sure, we could go back to $12 oil if the world could survive just on the stuff pumped from Saudi Arabia at $2 a barrel, but reality is getting at oil is expensive now, whether is it is horizontal drilling and fracing, oil sands or deep underwater fields.
ReplyDeleteIf you think about it, US oil consumption really doesn't go do much in recessions as people still need to drive their cars (cars use about 66% of oil in the US) and with 18 million new cars sold in China a year and a life expectancy of 15 years, that's a lot of oil demand which is not going away.
HFT - check out the good work over at nanex...
ReplyDeletehttp://www.nanex.net/FlashCrash/FlashCrashAnalysis.html
Much of this has more to do w/ JAMMING than trading. The topic may just as well have been "Loss of Lock in Synchronous Communication Systems under Burst Jamming Conditions"...
Looks like you fellas are right...I'll most likely be closing my SDS with a small loss today.
ReplyDeleteSurprised the market doesn't view the news out of Europe as negative at this point...
I guess Target's sales going up are trumping Europe indecisiveness this morning...
ReplyDeletesluggish open in the ES, locals going short to start, given that the action has been wild for the past couple of weeks a pause makes sense.
ReplyDeleteWill be closing my SDS on an hourly close in ES above 1,205.
ReplyDelete1200 support for a while? I still think yesterday was about the trans. tax.
ReplyDeletecommercials have stepped in and have been buying, but unless we get the 6E moving above 45 I don't trust this rally, the commercials could just be covering shorts.....I'm going to be very careful today, which probably means we scream higher and I miss the whole move
ReplyDeleteSurprise, folks! :) Meaning the fact that I am up at this early hour.
ReplyDeleteI decided to check at at the open because my SPY call options position was quite large for my taste ($5K), and I wanted to sell it quickly in case the market starts tanking -- I intended to *trade* these short-dated calls as opposed to keep them until their Sept expiration.
Since the market moved today as I had expected, I am now setting sell stop orders for my calls: at $4.59 for the 10 initial contracts I purchased yesterday at $4.09, and at $4.75 for 3 "extra" contracts I added at $4.25 yesterday.
And going back to sleep -- see you at 11am. :)
Good to see the follow though on HD.
ReplyDeleteI could never wake up and go back to sleep like David.
ReplyDeletefinally getting the 6E confirm, at the same time the ES is pausing, I'mm all messed up today
ReplyDeletejpm and merril have been selling at the 04 level
ReplyDeleteOf course the market took out stops at 1,202, which is why I set mine at 1,205...doesn't mean I won't be getting stopped out...
ReplyDeletetof - I'm normally highly confused but today just seems crazy to me, how is this market going higher with zero support from the euro?
ReplyDeleteedit: my stop is an hourly close above 1,205...we had a close at 1,204.5. i suspect today is a trending day though so my stop will get hit.
ReplyDeleteedit2: i kid you not i saw a news flash on my ThinkorSwim platform that Doug Kass tweeted that he might be going short. Not only does this not bode well for my short position, but is that really a news item?
jb - Euro is up so if that correlation holds then it's providing support...
ReplyDeletetof - it is up, and that accounts for the action to around 1198-1200 but what I don't get is the 5 points to 1205, while the euro keeps failing at 45
ReplyDeleteOff the BGU @ 59.08 for a couple points for the good guys.
ReplyDeletef-it, my obsession with the 6E has cost me enough, the ES has been structured long all morning and I have nothing to show for it.
ReplyDeletedays like this make me miss being able to turn off the computer and go to the day job
jb > i wouldn't read too much into it...there were a LOT of stops placed at 1,202-1,203 i'm sure...
ReplyDeleteMixed energy report.
ReplyDeleteBidding 2K MITK @ 8.50. That would get my 5K trading shares back I sold @ 9.40.
TOF- That inventory report might have saved you :)
ReplyDeleteMark > What inventory report?
ReplyDeleteKass tweet not news--opinion!
ReplyDeleteAll of us are inundated with these short bursts of noise.
Risk on today, not really surprised.
http://www.charlierose.com/view/interview/11845
ReplyDeleteCheck out the part around 12 or 13 minutes when they talk about printing money and our currency...it's kind of sickening...
Miners rolling over.
ReplyDeleteTOF- Crude inventory. Crude bearish/gas bullish.
My large UXG position is really starting to piss me off.
ReplyDeleteKass Tweet, now its being flashed on CNBC.
ReplyDeleteGL players!
ReplyDeleteJeez high fliers looking weak:
ReplyDeleteTZOO, OPEN, NFLX, CMG, LULU, AMZN, GOOG, MITK
Maybe it's nothing more than a rotation?
http://peterlbrandt.com/u-s-stock-market-close-to-declaring-itself/
ReplyDeleteYour guy Peter Brandt declares this point in time a pivotal one for markets. Either we blow up out of this rising wedge or get a fake breakout with a rollover. So higher or lower he says...Well, duh!
tof - yeah, I sure wish I could get paid for such keen insight.
ReplyDeleteGold is within days of a major top.
ReplyDeleteBased on 14/21 rsi, and channel.
By the way, /NQ broke out above the rising wedge and then below it...wacky action today...glad I didn't get stopped out.
ReplyDeletetof - glad you're still alive and kicking, action today has smelled like a bull trap. I'll look to go short if we get down to 94
ReplyDeleteToday looks like a carbon copy of Monday...especially if the drop is over here
ReplyDeletemore evidence for the intermediate/long term bull case:
ReplyDeletehttp://seekingalpha.com/article/287665-global-build-out-presents-emerging-market-infrastructure-opportunities
Stopped out of TBT. I get what I deserve for trying to grab the marshmallows under the sleeping bear.
ReplyDeleteIs it beyond comprehension to think that the Dow could have a weekly range of 250-300 points setting up a reversal pattern for next week?
Peter Brandt, aka Factor Research, it did not take long for him to want to cash in on his 15 minutes of fame. Notice his seminar banner ad where he will teach you his methods for $5000. Yeah right.
ReplyDeleteSomewhat surprised that we are waking here.
NASD trin 1.76
Somewhat surprised that we are weakening here. jeez
ReplyDeleteIts no secret, I'm a chartist and from a technical perspective (stating the obvious)all major sectors are broken. XLY XLP XLE XLF XLV XLI XLB XLK except XLU which broke and whipsawed back on desperate people probably looking for yield.
ReplyDeleteSPX cash has broken its trendline on the weekly from the 09 lows. As for me the market is speaking and I'm listening.
market needs to close at lows for this reversal to hold...otherwise it's yet another trap.
ReplyDeletemy take, though, is that the market is doing its best to convince people that the selloff is over...but the crap going on in the world is too bearish to support higher markets in my mind.
ReplyDeletehaving said that, i will probably end up getting stopped out.
steve roach is on cnbc , good
ReplyDeletewatching for a bounce around 1187 for another BGU entry
ReplyDeleteT3d - Who is Steve Roach? I mean, I know he works for MS but is he good?
ReplyDeleteTOF, he runs China for MS and has always been very astute over the years and right and wrong like all of us. I just think it worthwhile knowing what he's thinking.
ReplyDeleteI like macro views of things, some here do not, but it helps me formulate what I should be doing. You clearly like macro and use it in your decisions by what you write here.
Okay, so apparently the little charade's going to continue...
ReplyDeleteI can also understand why people think stocks are cheap. There are many stocks trading at 08 lows.
ReplyDeleteTOT TEVA
The market has traded over the years with a multiple between 7.5-29 times earnings about 10.5 now. Fundamentalist will argue that we are near the low end and justify buying, maybe they are right.
watching the paint dry
ReplyDeleteTelestar3d,
ReplyDeleteI own TEVA. Think it is really cheap down here. Think their generics will continue to do well and even grow with the focus on controlling healthcare costs in the US. Decent yield, grow dividend, has made some key acquisitions to keep growth going, having strong Israeli government support (and low taxes). Plus, they've got growing markets to move into in the emerging markets and positive demographics in the western world.
Won't be a quick double or anything like that, but I think a good long term buy.
T3d > My suspicion is we see multiples of sub 10 by the time we bottom out. I have a feeling we grind lower over the next few years...
ReplyDelete"a lot of oil demand which is not going away."
ReplyDeleteLooks like Gadaffi's demise is priced in, I don't think it's reasonable to think the world is ready for an Amish lifestyle, although I suppose I could survive one if that were the case. Fire up the helo's.
Gasoline has dropped considerably here, haven't seen $3.20 in a while. I'll be filling three barrels this week if I get the opportunity...
Lots of really weak stocks out there related to retail:
ReplyDeleteTIF COH AMZN SKS DECK PIR BBBY M
According to today's Yahoo Finance Breakout segment, the breakdown of once predictable market correlations is a major concern. Noted technical analyst Louise Yamada pointed out that the correlation between the U.S. Dollar and commodities such as gold and oil has broken down.
ReplyDelete"What's amazing is everybody talks about the correlation between dollar direction and commodities, but the dollar has done absolutely nothing, flat for months, yet gold went up and oil went down, so there was no correlation," says Yamada. This means "the dollar is starting to lose that correlation perhaps because the perception of the dollar as the reserve currency is starting to drift away."
The weak dollar along with falling oil prices may also indicate an economy that is coming to a halt. She also pointed out that interest rates had made higher lows in 2010 and 2011 (a good sign), but have now breached the lows. This is also indicative of a lethargic economy and deflationary pressures. "What's more disconcerting to me now is...evidence at the long end, where interest rates were starting to pick up, is now dissolving and that I think is problematic in the sense that it's telling us that there is more fear and concern out there."
While Yamada believes that oil could remain in a trading range between $67 and $90 , due to economic concerns, she remains very bullish on the price of gold. "Gold is in a structural bull market. It has maintained its 2009 uptrend on every pull back that has taken place and now you've had a rather accelerated advance to $1800 ," says Yamada. She added that bullish traders should keep adding to positions.
On the stock front, Yamada maintains that this is not a market where you want to be heavily long, and the sidelines might be the best place for now. "It suggests there's confusion, there's not a definitive trend, and if there's not a trend you shouldn't be playing."
T3d > Not sure if I personally rely on macro views but I think it makes sense to try to piece together a picture for why stocks might move one way or another...and that includes longer term macro trends.
ReplyDeleteFor example, I think housing will eventually be a really good investment because we have continued population growth and have had 3+ years of underdevelopment which will eventually create an imbalance, but it's hard to piece together the timing (and given the recent pain felt by homebuyers, the rental industry should do awesome for a while)...so i think it makes sense to think about catalysts that might work in your favor. What is it that is going to get housing going? Is it just going to take a lot of time?
MMYT is another thing I'm bullish on...however, the macro picture isn't great: inflation is a big problem in India and the global economy and India stock market looks bad. However, there are clear catalysts that make this interesting: internet usage in India is only 8% of total population and the India government is pumping money into expanding internet usage. But the Indian government has a history of poor central planning so it comes down to timing...what will be the catalyst to get the stock going?
No one ever said investing is easy...that's probably why the day traders do what they do.
Brandt finally found the $USD chart... If you're over there, tell him my double top target is 59.97
ReplyDelete"U.S. Dollar in Huge Technical Trouble
* Posted by PeterLBrandt
* on August 17th, 2011
http://peterlbrandt.com/u-s-dollar-in-huge-technical-trouble/
I guess China has been keeping a bottom under the euro, maybe dollar too. Wonder when they buckle?
ReplyDeleteBGU at 56
ReplyDelete"inflation is a big problem in India"
ReplyDeleteAny theories on root causes? You may have posted this before, but I don't recall...
SDS out 24..18is
ReplyDeleteWow, that was unexpected! S&P was up at $1207 when I went to sleep this morning, and I was SURE that the 1200 level is broken for good now. As we all know, the best trading setups occur after some important level is convincingly broken but then the stocks reverse. I am sure that MANY shorts closed their positions this morning (I am glad, TOF, you weren't one of them!) and many new people went long. Thus, I interpret the current action as very BEARISH. Thus, I just bought 8 contracts of September SPY $121 puts at $5.15.
ReplyDeleteOverall, the situation is playing out exactly as I had expected: both Pill and I cashed out today with decent gains, while TOF and T3d just held through this little bounce and will now be making money on the longer time horizon. And now I am with them. :)
Naturally, I'll close my puts if SPY rises above 1200 again.
TOF,
ReplyDeleteI think investing is way easier than day trading.
Day trading is a winner take all game, but investing allows everyone to win with longterm GDP and profit growth and time helps make some bad decisions not so bad.
I think they say 95% of traders lose money (and I suspect it may be higher now with the machines running things), but most investors do make money.
Incidentally, my buy limit order for 1000 shares of SORL at $3.40 has just been triggered...
ReplyDeleteSDS, sold out 24.18 ish my thinking is this:
ReplyDeleteI still think the trend is down and will look to re-establish. This trade hedged out half of my long positions so both my longs and short worked out, lucky. we are also coming up on contra hour where the market tends to reverse what its been doing to this point.
BB TEVA yeah good LT
BTW, TOF did not mean to imply you only use macro, your approach is very balanced and I know your into micro and balance sheet analysis.
I will actually close my puts if S&P turns green today, since the current decline seems to have stopped, once again, at the key 1187 level.
ReplyDeleteTC - I think this one is presenting a compelling buy.
ReplyDelete"we are also coming up on contra hour where the market tends to reverse what its been doing to this point."
ReplyDeleteGreat observations, T3d! I saw this behavior MANY times but wasn't sure if I could start *counting* on it happening. The right thing to do, I suppose, is to wait and see if a small reversal takes place now (such as S&P going green), and if it happens, THEN to assume that the reversal will have legs.
My guess is we just saw the low for the rest of the week. This will most likely be a "frustration week" for everyone. Nobody wins this week.
ReplyDeleteBut oh, if we close w/in the weekly bands set in place thus far, we could see a nasty week next week. Weekly inverses still setting up.
I may not do anything for the rest of the week so I can come back with a fresh perspective Friday afternoon.
I don't know guys. The P indicator is not confirming the move down.
ReplyDelete56 on the BGU appears to be a good pick up. I agree with Jesse. I may push the BGU into tomorrow. Looks like everyone made $ from yesterdays trades long and short....that doesnt happen often.
ReplyDeleteAdded two more Sep $121 SPY puts, this time at $4.83. That brief spike into the green by S&P followed by a reversal back into the red is not quite bullish.
ReplyDeleteLooks like S&P just made a lower high relative to its previous top at 12:45 EST...
ReplyDeleteAnd one more SPY September $121 put at $4.95. Now I have completely used up my buying power in both Etrade and OptionsHouse. Becoming a spectator now...
ReplyDeleteI am looking at the real-time S&P futures chart at
ReplyDeletehttp://www.forexpros.com/indices/us-spx-500-futures-advanced-chart
It is a 24-hr continuously-updated chart -- very nice...
Well that was a blast...just sold my SDS for what amounted to a whopping $1000 gain...This week will most definitely be a frustrating one so I'd rather not bother.
ReplyDeleteAlso, it's quite clear that waiting for longs is the way to roll. I have about 10 different stocks on my list that I could have just waited on and made more than the 0.3% gain I got on my shorts.
To wit the crash will most likely commence. If it does a likely stopping point is 1,150. That was the H&S downside target.
ReplyDeleteCP- Did you do ant work on TC other than a quick look at Finviz? This one is always on my list, mostly because of GMO. I can't figure out why it is so cheap.
ReplyDeleteI hate paying to watch re-runs.
ReplyDeleteAh, so that spike in S&P futures chart was TOF covering his short (and hedgies propagating this to the futures). :) I suppose many other shorts would be happy to get out here with a small gain. Thus, the market could easily collapse here without much short-covering support left...
ReplyDeletehttp://blogs.wsj.com/marketbeat/2011/08/10/bank-stocks-a-1930s-redux/
ReplyDeletePut/Call Ratio is really high today. 148% at the last reading. This will be the 14th day over 100% in a row if it holds.
ReplyDelete==> To me, that's a sign of fear and that we are closer to a bottom than a top.
According to the quant guys over at BMO, Copper is the chart to watch. Break up from here and we add another 6%. Break down and we retest the lows.
ReplyDelete=> Copper is up 1% today, so I wouldn't call that a break up, but its trending in the right direction.
Inverse head and shoulders setting up for the day David...not that it means much but just noticed it...also, they briefly broke recent lows for /NQ and it snapped right back. That was enough for me to just get to the sidelines...
ReplyDeleteTOF,
ReplyDeleteDon't you find "this is like 1930's" stories to be a sign that people have gotten too negative?
Mark, to the best of my knowledge, TC IS compellingly cheap. Insider buybacks under $8. I bet there's a 50% upside there in not too many months. Even if it produces 20%, and risk seems high one could take that and do nicely.
ReplyDeleteSeems this year is a near repeat of last, in this sector...
I've built a 70% of port position in SVM and didn't want to leave it in GMO where the upside is probably limited in the short term. A little dry powder to put into SVM should one last downside hurrah occur.
Hmmm. Thanks CP. Buy that beer yet? :)
ReplyDelete1200 has the largest open interest, correct?
ReplyDelete"Inverse head and shoulders setting up for the day David...not that it means much but just noticed it..."
ReplyDeleteI see that, TOF. But it is pretty flat, and so I think if S&P does get into a green now, it can easily have a last minute sell-off and close in the red once again. So I'll probably keep my puts until tomorrow. Unfortunately, this means I'll probably have to wake up early so as to close my puts if S&P rises above 1200.
Copper and oil both need to catch up to gold, IMO. I could see gold run to form a double top, while oil and copper keep moving up slowly.
ReplyDeleteI think today will end up being a trendless day, with traders waiting for more news from Europe. However, the fact that S&P did not stay above 1200 in the absence of bad news TODAY is pretty bearish, and warrants, IMO, waiting for tomorrow with puts on hand.
ReplyDeleteThanks for pointing out TC - I used to follow it, but haven't in a while and can't believe how cheap it has gotten. Will have to do some more investigation.
ReplyDeleteDo you know where you can get price quotes on Moly?
Little bit of money coming into energy here.
ReplyDelete"Buy that beer yet? :) "
ReplyDeleteHa, no, I did make the 66 mile trip this morning and hastily loaded up on chicken(60lbs@ $1.20/lb) while running another errand.
I'll do the real shopping tomorrow, probably. It's a lot of driving, but at least it keeps me from looking at this %^&*# screen.
I don't know, folks... I am looking at the one-month intraday S&P chart on Google, and this rebound is obviously out of steam, having stayed flat for 3 days. This is not bullish. It should have had relentless gap ups if the crash we had was totally unwarranted. If S&P breaks out above 1210 tomorrow and STAYS there until EOD, then I could believe that the 3 flat days were needed to simply gather more steam for yet another thrust higher. But I think the chance of a breakdown tomorrow are higher than those of a breakout.
ReplyDeleteStrange trading day for V. I wonder what happened this am?
ReplyDeleteBB Canada, I am using this site for metal price quotes:
ReplyDeletehttp://www.infomine.com/investment/metalprices/
BGU off @56.90
ReplyDeleteWhy's that CALPERS guy on TV all the time now?
ReplyDelete"I think the chance of a breakdown tomorrow are higher than those of a breakout."
ReplyDeleteI believe there's some big overlevered bank out there still liquidating into the market. Not a justification for throwing caution to the wind.
CP- I agree about the bank/hedge fund idea.
ReplyDeleteThanks David.
ReplyDeleteFYI, from BMO - they have TC as a hold due to a large expected increase in supply. Note that this analysis was done when TC was at $10 in early June, so under $8, may get an upgrade - target is $11.
====================================
Thompson Creek is currently one of the world’s largest producers of molybdenum, with
current production of ~30Mlb/year. Over the next few years, production is expected to
stay at similar levels, with the decline in production from the Thompson Creek mine (due
to lower grades) offset by expanded production from Endako.
BMO Research covers ~40% of global molybdenum supply, with 15% from pure play
producers. BMO Research’s molybdenum universe is forecast to double current mine
production to >400Mlb by 2016.
Current demand projections suggest global growth of ~4% per annum. This implies
demand growing at ~20Mlb/year, with total demand of ~600Mlb by 2015/16.
Over the next few years BMO Research expects substantial production growth from
Ivanhoe Australia – first production in 2012 from Merlin, ramping up to
~18Mlb/year.
Freeport – first production from Climax in 2012, ramping up to 30Mlb/year by
2013.
Southern Copper – expansions at its Peruvian and Mexican operations are
expected to add 8Mlb to current production (45Mlb) by 2013. A further 3Mlb are
expected by 2015.
Avanti – first production from Kitsault in 2014, ramping up to ~25Mlb/year.
Rio Tinto – expansion at Bingham Canyon to 58Mlb/year from 2014.
Quadra FNX – the development of Sierra Gorda is forecast to add ~54Mlb/year
from 2015.
Significant Chinese production growth is also expected in line with domestic demand.
BMO Research remains cautious on the molybdenum outlook, particularly given the
amount of new supply seen within BMO Research’s production universe. BMO Research’s
forecast molybdenum prices are US$17/lb in 2011, US$16/lb in 2012, with a long-term
price assumption of US$14/lb from 2014.
"Don't you find "this is like 1930's" stories to be a sign that people have gotten too negative? "
ReplyDeleteBB > Yes and no...I think Birinyi & Associates is just pointing out that Financials should be avoided. I think they are doing a lot of their projections based off the fact that this is the 1930's (hence their call for S&P at like 2,100 by 2013 or 2014). I don't think that view is warranted and I think we're more like the early 1940s. The only caveat is that debt:GDP is at the equivalent of 1929...i.e., before a great period of deleveraging. That's why I think we see a long ass period of big market swings and false breakouts and breakdowns. Housing isn't ready to turn around and that's a big part of when we will turn around. But when it does it could spark a huge period of inflation which will require significant tightening etc...so I think we won't get into a true bull market until at least the middle of this decade...perhaps when multiples have hit 9 or 8 times earnings...
TC's website quotes moly too.
ReplyDeleteYesterday's prices:
Western Molybdenum Oxide (Infomine) is $15.42; European Molybdenum Oxide (Bloomberg) is $14.80; LME cash seller is $14.97, LME moly 3-month seller's contract is $14.97
'I hate paying to watch re-runs.'
ReplyDeleteCP weighs in with the quote of the day. IMO, that's all it was today. I didn't even bother checking in 'til now.
Another day, another shakedown. It's all good. Let's dump more losers off the train ;)
"so I think we won't get into a true bull market until at least the middle of this decade...perhaps when multiples have hit 9 or 8 times earnings..."
ReplyDeleteThat's what I've been trying to tell 2nd_ave for a while now! I think he can make SIGNIFICANTLY more money over the next few years by trading than by doing a buy-and-hold.
As for today, my feeling is that most of the shorts were stopped out today on a break above 1200, but most of the bulls who entered on that break are still here, with stops at 1180. Thus I think tomorrow will be a down day because of the few NEW buyers available while many new sellers are out there.
ReplyDeleteMade mine twice 2nd. Now if I just would've shorted off the top on the way down it would have been a perfect day.
ReplyDelete"Another day, another shakedown. It's all good. Let's dump more losers off the train ;) "
ReplyDeleteOh snap. 2nd is dropping bombs on you David.
Still holding everything in the B&H port in case you were curious.
ReplyDeleteHow about a 'compromise' strategy, David? Every time the SPX hits a blistering high, I'll sell. My working definition of the next blistering high? I'll recognize it when it comes.
ReplyDeleteMoly - About the only new supply of consequence would be coming from FCX's Climax mine in Colorado, that was just reopened.
ReplyDeleteI think $20 moly is possible, don't see much downside.
YEah, I wish 2nd would trade again. It appears that we trade very similar so it was fun to piggyback on his trades from time to time. One more set of eyes is great when trading real time blogs.
ReplyDeleteNice little scalps PZ! For some reason I'm kinda 'stuck' here. Not really sure why.
ReplyDeletePz- I haven't stopped my running commentary on market direction. With no skin in the game, my takes may appear to lack conviction, but I don't arrive at them any differently than I would o/w.
ReplyDeleteThere's a rally in the wings. It may be today, or it may be in two weeks. But it will be enough to rip out the hearts of shorts. We can play the Stones when that happens.
ReplyDeleteFair enough 2nd, just not quite the same. Trying to gauge what tomorrow holds. Might sit on the hands for the close.
ReplyDeleteIt still wouldn't come close to a blistering high.
ReplyDeleteEven though I knew this to be true before, I think the past 8 days have convinced me enough. It's easier to buy panic than sell euphoria. There is no easily identifiable end to euphoria. There is an end to panic (bailouts / printing $$).
ReplyDeleteSo even if we go through a long drawn out bear market, the odds are good that we will have numerous buying opportunities.
Knowing how stubborn I am I will ignore this in the future more than once.
Knowing you, you'll ignore it before/at the close.
ReplyDelete2nd > I have actually adopted a new style to my trading for what it's worth...I am trying my best to take at least a day off of trading after I close my latest trade so that I can think things through more clearly before entering my next trade.
ReplyDeleteI gotta say the action over the past few days sure looks a lot like futures buying...a lot of the leading stocks I follow in multiple sectors are red yet the S&P is flat. I bet there's some support going on there.
ReplyDeleteThat sounds a lot like my 'wait three beats before entering any leveraged ETF' strategy from 2008. It works well if you have the discipline to stick to it.
ReplyDeleteTaking bets for tomorrows open....
ReplyDeleteSDS on at 23.89, going to play tennis
ReplyDeleteSitting the overnight out in the trading port. I don't think anything was decided today. Tomorrow is a 50/50 proposition in my view.
ReplyDeleteGMO - Keep in mind Mt Hope will be open pit and the deposit is high content, probably the cheapest cost of production of all moly producers.
ReplyDeleteTOF,
ReplyDeleteI would agree the large cap banks should be avoided. There is too much unknown to make a good assessment of how they are really doing and what their ultimate liabilities will be.
I think there are still lots of opps going down market though.
I have 3 banks, 2 insurance and 1 investment manager and all are good value without the risks.
One is SNBC, a Wilbur Ross reorg company. It's up 15% today, but still below where he did most of his buying.
I saw a following quote on BC this morning:
ReplyDelete"ZH reports this month could be the largest equity mutual fund outflow month in history. Currently we are at $34b. We just need $13b more to get this record."
With all this money getting out of equities we have to have real bargains.
David,
ReplyDeletelike the charts on that infomine site! Hard to find longterm commodity charts and the 15 year charts are great to have as they show prices before the bull market in commodities started.
starter position in IIH, wish it had some vol but I like the chart and the sell off in tech, imo, is over done.
ReplyDeleteIgor, another good contrarian sign that people are too negative and it will be hard to go down from here.
ReplyDelete