"The central bank may provide advance payments to Kazakh gold producers, becoming their “secure partner” in the coming years, according to the statement. The bank also asked the government to eliminate value-added tax incentives that spurred gold exports."
AAPL is not my munchie. I am still cautious with 50% cash, holding a lot of oils (groan) and a couple divy stocks ( NWN, GTY...groan,weep). Oh, also BTU ( big wail in dirty energy).
Thanks for sharing your research on TEX, Jesse! And also thanks to TOF for his great research on TZOO!
If I had any cash available now, I would be deploying it into TEX or TZOO. Or BTU. Or CMI. The bargains abound now, and NOW is the time to enter buy-and-hold in these oversold stocks. Moral of the story: NEVER enter buy-and-hold in one shot, since the chance of you catching THE low for the next 10 years is 0, and thus it is always good to keep some cash available in cash even better bargains appear.
This is captured mathematically by Kelly's Criterion, http://en.wikipedia.org/wiki/Kelly_criterion, which suggests that if p is the probability you assign to the fact that you won't be able to get a better price for the next year, then you should invest 2p-1 fraction of your portfolio for the next year in that security. So if you are 50-50 for the next year, you should invest 0. If you think that the probability of this being THE low for the year is 0.80, then you should invest 2*0.80-1 = 0.6 of your port now, etc. We don't often assign a probability of 0.8 of the current day being THE low for the year. Hence, on each day we should be invested with a 0.6 fraction of our port into buy-and-hold for 1 year just as infrequently...
It really amazes me the quality of the people we have here. In my daily life, I'm often the smartest guy in the crowd. And that includes architects and engineers.
Having said that, I'm less and less inclined to make comments on any stock. I'm afraid to lead people the wrong way. On the other hand, why the hell are we all here for if we don't share ideas openly with out concern.
Which brings me to SVM. BC is all over this one, and from everything I read, I have to agree with him. However, the recent deal with the Chinese might actually be the issue. I'm not sure ANYONE trust ANYTHING from there. It was really interesting watching HEK get worked over on the China Water and Drink deal. Heckmann said he would NEVER do another deal with the Chinese again and he is a deal maker.
Yep, I was amazed myself at its implications. Notice, however, that it doesn't mean you can't go all-in with a defined stop, like TOF likes to do. That's totally fine, since if the market turns around, you will get stopped out, and will then be able to redeploy your cash at much better prices, thus not really missing out on the great bargains that might arise in the event of a total market crash.
2 more massive buys filed after the close for monster weekly setups:
CAVM and BAS. 700k and 500k respectively. Not your typical 10k purchase.
Come Friday, we may have some "once in a lifetime" weekly setups for stocks like TEX, CAVM, BAS, TZOO, PCX,AKS NFLX, SEA (all shippers)etc....many of which supported by massive insider buying.
The majors still scare me shi%less, but w/ potential weekly charts like these SUPPORTED by massive insider buying (some cases), will make me go all in at 300% margin come Friday close.
Set the stop at their respective weekly lows of this week, and go camping for the next 4 to 6 weeks.
As I've said time and again, it all depends on the close. The weekly close in this case. Will be an interesting couple of days.
Some of the majors scare me big time. EWZ, EWA especially, but some of these individual plays (if they setup by Friday) seem to indicate that we could get a huge rally perhaps to over 1300, ABOVE the 200dma before rolling over.
This is all speculation based on individual setups coinciding with God's gift to traders- substantial insider buying acting as support.
guys - for what it's worth TZOO hasn't yet found a bottom. I say this as a card carrying long that is currently sitting at a small loss, so I'm biased...but it's clear that there could easily be even more downside...possibly to $26 to fill the gap or even lower (who knows!?!?). If the lows from yesterday hold (low 31's - which also happens to be the lowest lows after it gapped up back in the fall of 2010) or if it has a brief false breakdown, then you have a level to trade against. But at this point it's knife catching.
I personally love the long term growth in the company in revenues and earnings, I love their scalable business model, and I love the cheap valuation relative to earnings, sales, and free cash flow. I've been following their daily deals to see how many people are buying them and they're getting quite a bit of business through them...given that they already have 24 million subscribers that they can advertise these to, I think its such a better business model than Groupon because of this (ie., they don't have to spend tons of money getting new people to advertise to) and I think it's worth at least 2 to 3 times it's current value.
But again, I'm biased.
I too have seen quite a few insider buys going through over the past 2 weeks...I remember seeing that in 08 too, though.
I talked to my friend that works for a publicly traded semi company (not gonna divulge which one). They have all of the biggest semis as customers and they have a repeat use biz model where customers use their products when their own demand comes in. Anyway, he said their business has been steady....definitely no drop off like they saw in the summer of 08 before the crash. He things people are just being a bit cautious but that there seems to be plenty of demand still coming through, which is a good sign.
And my own furniture business is doing quite well actually. June was our best month ever, July was about average relative to each month over the past 15 months or so, and August is doing slightly better than average. We haven't seen any drop off really.
I think we see a lot of insider buying because US insiders cannot understand why their stocks are being dumped. A large part of the reason for that was, I believe, the fear of the European financial system falling apart. If it does, then it will pull US into a major recession WITHOUT any prior warning signs in the US. While there is some slowdown happening in the US, I think it totally doesn't justify such a rapid collapse in the stock market. Hence, Europe is the key here.
Does anyone have an update on the European situation? Did they pull another rabbit out of the hat?
TOF -- do you think you can find for us *charts* of the European CDS spreads? That would give us a much better feel for how the situation is evolving over there. Thanks!
David - excellent links! Those work much better in telling how much pain there is (I think the CDS market is heavily manipulated)...I've only been following the CDS spreads on CNBC and the bond yield probably tell a better story (however, bonds are manipulated by the ECB)...pictures are better than numbers...these charts definitely show an easing in the pain.
Didn't know you owned a furniture store. What is your opinion on the publicly traded furniture companies? I've been considering buying into these as a way to play the rebound on housing. They are definitely down, but there are signs things may be turning like BSET reinstating their dividend.
I noticed that a ton of stuff opened at or near their 9 or 10 day moving averages and started selling off. EEM and EWZ especially. Inverses looking good w/ the up open too. Wanted to be on the safe side and see if the weeklies set up tomorrow.
Jackson Hole tomorrow as well. Don't like the expectations at all.
SVM - Anyway, assuming you're trading the chart, yesterday the trendline was tested ~$8 and seems to have held. I'm still anticipating another attack to push the price to the H&S neckline, around $7.32 or so.
We'll see, gold probably hasn't seen the brunt of it's attack so I'm sticking with this expectation.
Good luck to BAC traders, wonder if the HFT algo can shake Buffett out of his position?
dudes - this is such a great setup for bulls...sell em off even on the buffett news.
banks technically confirmed bottom yesterday...i was expecting a gap up open on them and whattaya know buffett comes in. craziness man. this bank sector was driven down by the big boys to get good prices...i'm sure of it. get them out in the news spreading fear of a 08 retake, drive the stocks down, then buy em up. it's kind of sickening and i understand why people that don't follow the market closely are sick of it. if you know how they work you can make $$ off it.
BB - i own a furniture website...the retail stores are getting killed by us mom and pop shops. i wouldn't buy any of them for a long term buy and hold...people go into the stores, test the products, then buy em online for cheaper. the furniture industry is trending more and more to the online model, but it will never get completely there because people will always want to sit in products first. my site focuses on very funky modern stuff that you don't need to sit in but that you would buy because it's really cool looking. i prefer going that route because people don't have to worry as much about comfort. but anyway, the one furniture company i like is PIR....they're much better run nowadays and they're just starting to get into the online retail side of things. and their balance sheet is very strong. the downside is it has run a lot.
I think Ben's life would become a lot easier if the casino algo trading were stopped. Assuming his goal involves a free market price discovery mechanism.
hedge funds are pissed buffett stepped in...what do they do? hit the overseas market of course! get them retail guys and day traders scared then buy em up. if i had to bet i'd say we go up big tomorrow.
TFO, My thought on the Buffett move (besides DAMN I wish I had a few thousand shares) was that it confirmed that BAC (like GS before) WAS and IS BK without help and big capital infusion. The problem is that WE aren't Warren Buffett, we didn't hold or sell warrants, we don't have 5 billion in ammo and we can't make 6% off the top. So we see the suckers buying in and that nice sell off chart today, which is like a video of the Texas Chainsaw Massacre.
I think the market is seeing it too with the other banks (GS anyone?), which is why there was so much push (blackmail) for QE3,4,5, etc.
"Make no mistake about this: Warren Buffett just saved Bank of America’s bacon.
A few items leap out this announcement:
1) BoA needed both capital and a reputation reboot. Buffett provided a little bit of both.
2) This gives lie to the claim that BofA needed no money
Counter argument — this was about the stock slide, not the capital structure, which remains opaque.
3) The fine print will be revealing of the specifics of the terms, but I am curious as to how this compares to the deal cut with Goldman Sachs (GS) and GE.
4) Buffett met with Obama a few days ago; I wonder what was discussed in THAT meeting.
5) Investors are cautioned that unless you are buying on the same terms as the billionaire, you are making a very different bet than he is.
morning fellas - SOHs after I missed the perfect bounce off the VAL in the ES, 57.75, market just seems to scattered right now. will probably wait post-hole before I enter any trades
Clear - Interesting thoughts, fits my instinctual response.
I'm sure Buffett will do fine, he knows how to make deals.
Interesting though, there's something going on in the background that Buffett's privy to (Thanks to Washington, no doubt) the rest of us aren't.
Sure, PM's aren't money, they're just rocks prized by kings and used as currency until roughly 40 years ago. Fiat is great as long as dishonesty isn't allowed to sneak in the back door.
BAC - A transfer of their bad debt to public coffers would probably provide it, PM's, and perhaps equities in general, some upside.
I suppose China is against the idea of debasing the dollar and euro they've worked so hard to support, their currency advantages would evaporate if that were to occur.
Would logic not dictate that in order to diffuse the public uproar over government spending, the Fed would have to crash the market the day before announcing further stimulus?
I have an itchy trigger finger, but I'm gonna try as hard as possible to sit on my hands today.
Many stocks and indexes have not breached their 10day ema since the first week of July. They have sold off hard each time they've tested it.
Today was another test of the 10 day ema and so far, the results have been the same.
Very negative for the short term, but very bullish for the longer term. I like to see a stock get brutalized by the 10 day on 4 or 5 occasions before finally breaking above it and soaring.
That's a very healthy pullback we are having now, to shake out the weak hands who joined the rally after seeing the double bottom at 1120. By EOD yesterday, the sequence of higher lows and higher highs on 10-minute S&P futures became so obvious that many people had to have piled on. I even got the following market overview in my e-mail from the Zacks service this morning:
"Next Stop: S&P 1,200. The optimism for stocks continued Wednesday with a 1.3% surge in the broad averages. Was it all about the strong durable goods report? I'm going to say "no." This relief rally has been in the cards and there's nothing like a solid test of the lows near S&P 1,120 to scare the bears and the doubters into buying again."
With such views accepted by the public, a pullback was definitely in order. Why do I think this is just a shakeout? Look at C and BAC -- they are up huge. Look at GDXJ for that matter -- it is up huge as well! That wouldn't happen if Big Boyz were intending to extend today's decline below 1120.
The 10-minute futures chart of the last 3 days gives me the feeling that we have seen the bottom of this pullback already, and it was entirely above the previous large pullback at 1145-1150. So we just made a higher low. Last chance to buy, folks, while we are still at the low! Buy now, set a stop at 1145, sell at 1200!
I'll need that luck because I am leaving tonight to hike glaciers in the North Cascades National Park until Monday morning, and so if Ben says something silly tomorrow, I won't be able to do anything about it in real time...
I put together a list of the local deals on TZOO's site over for the following 8 cities (all told they're in 75+ cities) and calculated $7,074,651 in gross sales during that time period:
Los Angeles $777,023 Chicago $608,325 Vegas $1,123,595 NYC $1,330,448 San Fran $787,843 DC $471,352 Atlanta $495,727 San Diego $1,041,606
About 2.5 months ago Benchmark Capital raised estimates to $24 Million in gross revenues. If you include all cities for the past month, I would have to assume they're well above $10 Million and that's just for the past month.
I'm still trying to calculate the rest of the cities but if this is the case then it makes sense that the company is buying back stock here...
"NEW YORK (Reuters) - Major stock averages fell on Thursday as traders were quick to shed positions ahead of a keenly awaited address by Federal Reserve Chairman Ben Bernanke on Friday.
"They're selling ahead of Bernanke and being fairly cautious in their positioning," said Len Blum, managing partner of Westwood Capital LLC in New York."
Be careful putting any rev. or eps projections on the TZOO board TOF. Hedgies aren't fond of putting funds to work when their numbers are known by the masses.
I try to lower expectations on public boards as much as I can while giving any edge I have to a select few.
If history is any guide and the hedgies are fully invested in TZOO at these levels, there will be a non public analyst note released tomorrow, Monday, or Tuesday regarding TZOO sales trends exceeding expectations. The result would be a 1 session gain of 18-20%.
This is if and only if funds have been legging into TZOO at these levels are ready to start playing games again. Otherwise, its dead money.
Jesse - I'm not sure but I'm going to try to piece that together (TZOO estimate EPS). They significantly ramped up overhead (sales people) to get their Deals section going, so while it hurt their EPS last quarter, I'd expect it to help in the coming quarters as those investments pay off...but it seems like their local deals are doing quite well and they're adding a bunch of new ones more frequently from what I can tell. I think they're adding them on a daily basis now...the local deals sector is a very competitive one, but they have been operating in a very competitive market for years now and revenue growth has been tremendous (from $4 Million 10 years ago to estimated $150 Million this year). Their email subscriber list is 24 million and growing pretty fast so with that installed base of people already interested in their service, they don't have to go out and spend gobs of money advertising like Groupon did just to acquire customers. I know the company has been on a huge run over the past couple of years, but the valuation of this company is really cheap man. They had a one time settlement with the state of Delaware for unclaimed shares relating to a merger from 2002 that they had to pay $20 Million for, but if you exclude that the company has done about $30 Million in free cash flow for the past 12 months (in 2010 they did $22 Million). That's really impressive for an internet company growing quickly and only valued at $550 Million.
My guess is that the TZOO "Cramerization" and subsequent dump was the last straw and once and for all got all of the retail money out of TZOO who would be totally left behind in a sudden surge.
Other than management's terrible conference call (imo), the only other thing that concerns me is that you rarely see a stock surge after management declares a stock buyback. I don't know the exact reason for this, but it either has something to do with management wanting to keep the share price down to get cheaper shares, or investor's perceptions of them wanting to keep share price down and moving into other names.
I think my point with TZOO is as the company continues to grow, eventually it will be trading at 40 times earnings or cash flow in a good trading environment and those eps/cash flow numbers will be quite a bit higher over time. So if they do say $60 Million in FCF by 2014 for example, then 40 times that would be $2.4 Billion. Their market cap right now is $540 Million.
If the U.S. government thinks the banking system is once again going under. What do they do? If they make a token investment of say $5 billion in say B of A, what does that signal to the market? That banks are in trouble, thus the market sells off.
So, what to do? Have Warren Buffet have yet ANOTHER "private, secret, non-public, puppet meeting" with Obama a couple of days ago. Give old Warren $5 billion or whatever, have him publicly announce (remember that ALL of his investments are VERY VERY private) his investment in B of A and the markets are soothed because Warren sees "tremendous value" in banks.
So, rather than a trillion dollar bail-out (I'm not suggesting this now), they simply give Warren a few billion which works much better than a trillion dollar bailout. Puppet.
Jesse - While I agree that we have some serious issues, I wouldn't read into it too much. Buffett has made some serious coin over the years taking advantage of panic. Whether it was Solomon Brothers, American Express, Berkshire Hathaway, Goldman, GE, they're all the same....long term investments in well known brands that have been hit hard. Dude is a savvy guy. If the market has bottomed then the sharks are setting the bait right now...just think of the headlines:
Buffett helps out BAC, yet the market still drops 200 points...sky is falling!
As jesse points out above, it's all good. Let's boot the Nervous Nellies off the cable car on the ride down. They don't deserve to enjoy the view from the highs.
Do you guys seriously think the Fed will allow the markets to sell off tomorrow? I would put higher odds on Bernanke getting -----faced this evening and pre-announcing plans to 'jack the ---- out of the indexes.'
Sell off at the last minute what do you make of it. May be lack of trust that Bernanke has bullets left in his gun or may be a risk-off position taken by most traders hoping for a rally before the Ben speech. Can it be that a cleaning lady found a draft copy of the B speech in the dumpster and shared it with some Wall street traders. I guess will know the answer tomorrow. Whatever happens I will be on the plane to Boston (leaves SFO at 7:00 am PST) and like David will have not ability to react.
They're ramping up the internet stocks again...Z and P both had good quarters the last two days....that's a good sign if you're looking for people to take on more risk...let's see if it holds though.
and all I see is a series of higher lows. The market could not have rallied tomorrow if everyone had loaded up ahead of the speech. As it is now, many people SOLD ahead of the speech, and so we are all set to rally, I believe.
Tomorrow is key. We need a gap up tomorrow. At the very least, a flat open that is immediately bought. IMO, anything less and all bullish bets going forward are off.
Speech is at 10:00 AM tomorrow when the markets are open.
My bet is we open flat, sell off initially on the news that the Fed will keep rates low for at least 2 years and as long as necessary and no additional measures, then we take off to the upside after this when people come to realize it means things aren't as bad as they thought.
Think we end end the day with stocks up, bonds flat and gold down.
Flipping through a ton of charts tonight and outside of the few weekly setups I've been watching, I do not like what I see at all. I see the distinct possibility of another crash. Shoulda looked at all of my individual charts before I picked up some long positions today.
Shorting SPY after hours 116.16
If we gap down tomorrow, this scenario could be very real:
I can understand how $120 oil would have a negative effect on economic recovery, I can't understand how $1900 gold would, so why object? ie: $1900 gold does less harm than $120 oil...
Same goes with miners, the more successful and less encumbered they are, the more gold is brought to market, keeping prices down.
Keep miners from succeeding just removes supply from the market. Another thought: Perhaps miners are purposefully holding out for higher metals prices? Hmm, those willing to bring product quantity to market could experience huge windfall gain.
Jesse - I think we have a good deal more to rally...it ain't gonna be easy but I think the selling was excessive and there isn't quite yet confirmation of a recession to warrant a whole helluva lot more downside.
Shank up its sleeve, eyes on AAPL shorts.
ReplyDeleteKhazakistan to buy local gold:
ReplyDelete"The central bank may provide advance payments to Kazakh gold producers, becoming their “secure partner” in the coming years, according to the statement. The bank also asked the government to eliminate value-added tax incentives that spurred gold exports."
http://www.bloomberg.com/news/2011-08-23/kazakhstan-gives-central-bank-priority-right-to-buy-gold-1-.html
AAPL is not my munchie. I am still cautious with 50% cash, holding a lot of oils (groan) and a couple divy stocks ( NWN, GTY...groan,weep). Oh, also BTU ( big wail in dirty energy).
ReplyDelete$400/gallon - The cost of fuel for some military installations in Afghanistan. Hum-Vee gets 4mpg, Abrams tank burns 4gal/mi.
ReplyDeleteCREE - Whatever happened to concerns over global warming?
ReplyDeleteVECO - I thought this company was going to provide the tooling for LED production...
Funny Illini! :)
ReplyDeleteThanks for sharing your research on TEX, Jesse! And also thanks to TOF for his great research on TZOO!
ReplyDeleteIf I had any cash available now, I would be deploying it into TEX or TZOO. Or BTU. Or CMI. The bargains abound now, and NOW is the time to enter buy-and-hold in these oversold stocks. Moral of the story: NEVER enter buy-and-hold in one shot, since the chance of you catching THE low for the next 10 years is 0, and thus it is always good to keep some cash available in cash even better bargains appear.
This is captured mathematically by Kelly's Criterion, http://en.wikipedia.org/wiki/Kelly_criterion, which suggests that if p is the probability you assign to the fact that you won't be able to get a better price for the next year, then you should invest 2p-1 fraction of your portfolio for the next year in that security. So if you are 50-50 for the next year, you should invest 0. If you think that the probability of this being THE low for the year is 0.80, then you should invest 2*0.80-1 = 0.6 of your port now, etc. We don't often assign a probability of 0.8 of the current day being THE low for the year. Hence, on each day we should be invested with a 0.6 fraction of our port into buy-and-hold for 1 year just as infrequently...
David- That's an interesting theory. Thanks!
ReplyDeleteIt really amazes me the quality of the people we have here. In my daily life, I'm often the smartest guy in the crowd. And that includes architects and engineers.
ReplyDeleteHaving said that, I'm less and less inclined to make comments on any stock. I'm afraid to lead people the wrong way. On the other hand, why the hell are we all here for if we don't share ideas openly with out concern.
Which brings me to SVM. BC is all over this one, and from everything I read, I have to agree with him. However, the recent deal with the Chinese might actually be the issue. I'm not sure ANYONE trust ANYTHING from there. It was really interesting watching HEK get worked over on the China Water and Drink deal. Heckmann said he would NEVER do another deal with the Chinese again and he is a deal maker.
Just my thoughts.
Interesting stuff on China, Mark. I am not an investor presently. Wonder what it will be like if they try to stiff the many other US companies there.
ReplyDeleteGuys-
ReplyDeleteI have never in my investing career seen so many MASSIVE insider buys coinciding with monster potential weekly setups.
The nightly insider buying reports that I receive are unreal and full of companies I've been following closely for years.
"David- That's an interesting theory. Thanks!"
ReplyDeleteYep, I was amazed myself at its implications. Notice, however, that it doesn't mean you can't go all-in with a defined stop, like TOF likes to do. That's totally fine, since if the market turns around, you will get stopped out, and will then be able to redeploy your cash at much better prices, thus not really missing out on the great bargains that might arise in the event of a total market crash.
Jesse, didn't you say that weekly charts look horrible with bear flags all over?
ReplyDelete2 more massive buys filed after the close for monster weekly setups:
ReplyDeleteCAVM and BAS. 700k and 500k respectively. Not your typical 10k purchase.
Come Friday, we may have some "once in a lifetime" weekly setups for stocks like TEX, CAVM, BAS, TZOO, PCX,AKS NFLX, SEA (all shippers)etc....many of which supported by massive insider buying.
The majors still scare me shi%less, but w/ potential weekly charts like these SUPPORTED by massive insider buying (some cases), will make me go all in at 300% margin come Friday close.
Set the stop at their respective weekly lows of this week, and go camping for the next 4 to 6 weeks.
As I've said time and again, it all depends on the close. The weekly close in this case. Will be an interesting couple of days.
TOF- thanks for the TZOO info.
Heck, I know everyone here is smarter than I.
ReplyDeleteMark, if you want to read a really good book on the Kelly Criterion, get "Fortune's Formula" by William Poundstone.
David-
ReplyDeleteSome of the majors scare me big time. EWZ, EWA especially, but some of these individual plays (if they setup by Friday) seem to indicate that we could get a huge rally perhaps to over 1300, ABOVE the 200dma before rolling over.
This is all speculation based on individual setups coinciding with God's gift to traders- substantial insider buying acting as support.
guys - for what it's worth TZOO hasn't yet found a bottom. I say this as a card carrying long that is currently sitting at a small loss, so I'm biased...but it's clear that there could easily be even more downside...possibly to $26 to fill the gap or even lower (who knows!?!?). If the lows from yesterday hold (low 31's - which also happens to be the lowest lows after it gapped up back in the fall of 2010) or if it has a brief false breakdown, then you have a level to trade against. But at this point it's knife catching.
ReplyDeleteI personally love the long term growth in the company in revenues and earnings, I love their scalable business model, and I love the cheap valuation relative to earnings, sales, and free cash flow. I've been following their daily deals to see how many people are buying them and they're getting quite a bit of business through them...given that they already have 24 million subscribers that they can advertise these to, I think its such a better business model than Groupon because of this (ie., they don't have to spend tons of money getting new people to advertise to) and I think it's worth at least 2 to 3 times it's current value.
But again, I'm biased.
I too have seen quite a few insider buys going through over the past 2 weeks...I remember seeing that in 08 too, though.
I talked to my friend that works for a publicly traded semi company (not gonna divulge which one). They have all of the biggest semis as customers and they have a repeat use biz model where customers use their products when their own demand comes in. Anyway, he said their business has been steady....definitely no drop off like they saw in the summer of 08 before the crash. He things people are just being a bit cautious but that there seems to be plenty of demand still coming through, which is a good sign.
And my own furniture business is doing quite well actually. June was our best month ever, July was about average relative to each month over the past 15 months or so, and August is doing slightly better than average. We haven't seen any drop off really.
I think we see a lot of insider buying because US insiders cannot understand why their stocks are being dumped. A large part of the reason for that was, I believe, the fear of the European financial system falling apart. If it does, then it will pull US into a major recession WITHOUT any prior warning signs in the US. While there is some slowdown happening in the US, I think it totally doesn't justify such a rapid collapse in the stock market. Hence, Europe is the key here.
ReplyDeleteDoes anyone have an update on the European situation? Did they pull another rabbit out of the hat?
David - The CDS spreads have barely budged. Not a great sign given the surge in the equities market.
ReplyDeletehttp://www.cnbc.com/id/38451750
http://www.colbertnation.com/the-colbert-report-collections/394172/report-of-the-rings/
ReplyDeletefunny stuff
On the other hand, the bond spreads relative to the German bonds have improved a lot:
ReplyDeletehttp://www.bloomberg.com/apps/quote?ticker=.SPAGER10:IND
http://www.bloomberg.com/apps/quote?ticker=.ITAGER10:IND
http://www.bloomberg.com/apps/quote?ticker=.PTGERSP:IND
Well, if Europe is not falling apart, then there is no reason for S&P to be below 1250 now.
LET'S RALLY!
TOF -- do you think you can find for us *charts* of the European CDS spreads? That would give us a much better feel for how the situation is evolving over there. Thanks!
ReplyDeleteDavid - excellent links! Those work much better in telling how much pain there is (I think the CDS market is heavily manipulated)...I've only been following the CDS spreads on CNBC and the bond yield probably tell a better story (however, bonds are manipulated by the ECB)...pictures are better than numbers...these charts definitely show an easing in the pain.
ReplyDeleteTOF,
ReplyDeleteDidn't know you owned a furniture store. What is your opinion on the publicly traded furniture companies? I've been considering buying into these as a way to play the rebound on housing. They are definitely down, but there are signs things may be turning like BSET reinstating their dividend.
Man, the 'easiest' trade on the board, short BAC, just got a lot tougher. This short squeeze could last a week.
ReplyDeleteBuffett - smart guy.
ReplyDeleteQuick calc is he just made $1 billion on his warrants.
T3D- Thanks bro, I'll take a look!
ReplyDeleteSVM - "However, the recent deal with the Chinese might actually be the issue."
ReplyDeleteYes, I've wondered the same (Chinese relationship) from day one. I'm not sure what deal was swung though, haven't heard about it.
Why Bill hasn't seemed to attempt assessing the risks concerning Chinese operations I can't understand.
We know what's already happened to Chinese equities, and probably anticipate more of the same...
More importantly though Mark, I don't understand what makes you think anyone here knows more than you.
BAC - Okay, I see Berkshire has invested $5B, that might change confidence levels. Maybe now he'll reestablish a stake in GS?
ReplyDeleteThe other thing that makes it great to be Warren Buffet. We can get a reasonable guess because warrants already exist.
ReplyDeleteYesterday, the BAC 2019, $13.30 warrants were trading at $3.40.
Buffet got BAC 2021 $7.14 warrants, so these would have to be worth probably $5.00 each.
So, since Buffet got 700 million of these, he essentially got $3.5 billion for loaning $5 billion at 6%.
If you assume he sold the warrants and pocketed the cash and held the bonds for 10 years, its an roi of about 27%.
Like I said before, smart guy.
Zodiac- first kill at the open, now luring next victim.
ReplyDeleteCP- Cause half the time I have know idea what you guys are talking about!! :)
ReplyDeleteDon't like the up open. Sold my stuff and will wait for Friday close for potential weekly setups.
ReplyDeleteXLI/XLE don't seem to care about BAC.
ReplyDeleteSPY need to hold it's pivot right here. 117.42.
ReplyDeleteI noticed that a ton of stuff opened at or near their 9 or 10 day moving averages and started selling off. EEM and EWZ especially. Inverses looking good w/ the up open too. Wanted to be on the safe side and see if the weeklies set up tomorrow.
ReplyDeleteJackson Hole tomorrow as well. Don't like the expectations at all.
Relax, jesse. Everyone's expecting Ben not to exceed expectations.
ReplyDeleteYeah, seems like everyone is just standing aside until tomorrow...or they are afraid of the Zodiac :)
ReplyDeleteSVM - Anyway, assuming you're trading the chart, yesterday the trendline was tested ~$8 and seems to have held. I'm still anticipating another attack to push the price to the H&S neckline, around $7.32 or so.
ReplyDeleteWe'll see, gold probably hasn't seen the brunt of it's attack so I'm sticking with this expectation.
Good luck to BAC traders, wonder if the HFT algo can shake Buffett out of his position?
Mark - "half the time I have know idea what you guys are talking about!!"
ReplyDeleteI do try to express my thoughts in the best/simplest way, not make them sound like voodoo.
Some posts are mysterious to me as well, I must be automatically tuning them out.
Anyway, my observation is that HFT must be making the charts b/c the formations seem to be playing out.
I'd like to see them execute the H&S pattern on SVM, that'd be quite a trick taking it to $0.50... It's one trick I don't think they can accomplish.
dudes - this is such a great setup for bulls...sell em off even on the buffett news.
ReplyDeletebanks technically confirmed bottom yesterday...i was expecting a gap up open on them and whattaya know buffett comes in. craziness man. this bank sector was driven down by the big boys to get good prices...i'm sure of it. get them out in the news spreading fear of a 08 retake, drive the stocks down, then buy em up. it's kind of sickening and i understand why people that don't follow the market closely are sick of it. if you know how they work you can make $$ off it.
BB - i own a furniture website...the retail stores are getting killed by us mom and pop shops. i wouldn't buy any of them for a long term buy and hold...people go into the stores, test the products, then buy em online for cheaper. the furniture industry is trending more and more to the online model, but it will never get completely there because people will always want to sit in products first. my site focuses on very funky modern stuff that you don't need to sit in but that you would buy because it's really cool looking. i prefer going that route because people don't have to worry as much about comfort. but anyway, the one furniture company i like is PIR....they're much better run nowadays and they're just starting to get into the online retail side of things. and their balance sheet is very strong. the downside is it has run a lot.
I think Ben's life would become a lot easier if the casino algo trading were stopped. Assuming his goal involves a free market price discovery mechanism.
ReplyDeletehedge funds are pissed buffett stepped in...what do they do? hit the overseas market of course! get them retail guys and day traders scared then buy em up. if i had to bet i'd say we go up big tomorrow.
ReplyDeleteComing up on S2. 116.59
ReplyDeleteTFO,
ReplyDeleteMy thought on the Buffett move (besides DAMN I wish I had a few thousand shares) was that it confirmed that BAC (like GS before) WAS and IS BK without help and big capital infusion.
The problem is that WE aren't Warren Buffett, we didn't hold or sell warrants, we don't have 5 billion in ammo and we can't make 6% off the top. So we see the suckers buying in and that nice sell off chart today, which is like a video of the Texas Chainsaw Massacre.
I think the market is seeing it too with the other banks (GS anyone?), which is why there was so much push (blackmail) for QE3,4,5, etc.
SVM- Like the chart (price/support) and the fundies.
ReplyDeleteFrom Barry Rithotlz:
ReplyDelete"Make no mistake about this: Warren Buffett just saved Bank of America’s bacon.
A few items leap out this announcement:
1) BoA needed both capital and a reputation reboot. Buffett provided a little bit of both.
2) This gives lie to the claim that BofA needed no money
Counter argument — this was about the stock slide, not the capital structure, which remains opaque.
3) The fine print will be revealing of the specifics of the terms, but I am curious as to how this compares to the deal cut with Goldman Sachs (GS) and GE.
4) Buffett met with Obama a few days ago; I wonder what was discussed in THAT meeting.
5) Investors are cautioned that unless you are buying on the same terms as the billionaire, you are making a very different bet than he is.
More to follow later today."
morning fellas - SOHs after I missed the perfect bounce off the VAL in the ES, 57.75, market just seems to scattered right now. will probably wait post-hole before I enter any trades
ReplyDeleteLater players. GL!
ReplyDeleteClear - Interesting thoughts, fits my instinctual response.
ReplyDeleteI'm sure Buffett will do fine, he knows how to make deals.
Interesting though, there's something going on in the background that Buffett's privy to (Thanks to Washington, no doubt) the rest of us aren't.
Sure, PM's aren't money, they're just rocks prized by kings and used as currency until roughly 40 years ago. Fiat is great as long as dishonesty isn't allowed to sneak in the back door.
Selling BAC short three minutes after the open would would have been a great day trade from $8.80 to $7.80. Not that I had the spine to do it.
ReplyDeleteBAC - A transfer of their bad debt to public coffers would probably provide it, PM's, and perhaps equities in general, some upside.
ReplyDeleteI suppose China is against the idea of debasing the dollar and euro they've worked so hard to support, their currency advantages would evaporate if that were to occur.
Would logic not dictate that in order to diffuse the public uproar over government spending, the Fed would have to crash the market the day before announcing further stimulus?
ReplyDeleteI have an itchy trigger finger, but I'm gonna try as hard as possible to sit on my hands today.
Many stocks and indexes have not breached their 10day ema since the first week of July. They have sold off hard each time they've tested it.
ReplyDeleteToday was another test of the 10 day ema and so far, the results have been the same.
Very negative for the short term, but very bullish for the longer term. I like to see a stock get brutalized by the 10 day on 4 or 5 occasions before finally breaking above it and soaring.
Maybe next week.
Watch SMH EEM IYT SLX SEA and others going forward to see how they respond to their 10 day ema's.
ReplyDeleteFor the past 7 weeks, you could short with both hands every time they briefly touched.
If and when they cross up, buy with both fists.
That's a very healthy pullback we are having now, to shake out the weak hands who joined the rally after seeing the double bottom at 1120. By EOD yesterday, the sequence of higher lows and higher highs on 10-minute S&P futures became so obvious that many people had to have piled on. I even got the following market overview in my e-mail from the Zacks service this morning:
ReplyDelete"Next Stop: S&P 1,200. The optimism for stocks continued Wednesday with a 1.3% surge in the broad averages. Was it all about the strong durable goods report? I'm going to say "no." This relief rally has been in the cards and there's nothing like a solid test of the lows near S&P 1,120 to scare the bears and the doubters into buying again."
With such views accepted by the public, a pullback was definitely in order. Why do I think this is just a shakeout? Look at C and BAC -- they are up huge. Look at GDXJ for that matter -- it is up huge as well! That wouldn't happen if Big Boyz were intending to extend today's decline below 1120.
Last chance to short TLT, folks! Set a stop at 109 and ride it down to 104, or set a stop at 112 and ride it down to 96.
ReplyDeleteJust bought 5 September $109 puts at $3.95.
ReplyDeleteTreasury auction done. Fed no longer needs money from stock market.
ReplyDeleteThe 10-minute futures chart of the last 3 days gives me the feeling that we have seen the bottom of this pullback already, and it was entirely above the previous large pullback at 1145-1150. So we just made a higher low. Last chance to buy, folks, while we are still at the low! Buy now, set a stop at 1145, sell at 1200!
ReplyDeleteI have $10K invested now in TLT puts -- the largest long options position I have ever taken. Wish me luck, boys. :)
ReplyDeleteI'll need that luck because I am leaving tonight to hike glaciers in the North Cascades National Park until Monday morning, and so if Ben says something silly tomorrow, I won't be able to do anything about it in real time...
ReplyDeleteGood luck David. I'll be hiking the glaciers with you next week in Glacier National Park.
ReplyDeleteLegging into TEX again. 1st chunk 14.26.
For those looking for ideas:
ReplyDeleteaks zeus pcx fdx bas cavm mgm byd jva nbr soxl bcs mdr gmxr uri winn tex epl nflx aci dxpe bee mtl zeus fdx mgm byd tex epl tzoo
many w/ nice insider buys.
I put together a list of the local deals on TZOO's site over for the following 8 cities (all told they're in 75+ cities) and calculated $7,074,651 in gross sales during that time period:
ReplyDeleteLos Angeles $777,023
Chicago $608,325
Vegas $1,123,595
NYC $1,330,448
San Fran $787,843
DC $471,352
Atlanta $495,727
San Diego $1,041,606
About 2.5 months ago Benchmark Capital raised estimates to $24 Million in gross revenues. If you include all cities for the past month, I would have to assume they're well above $10 Million and that's just for the past month.
I'm still trying to calculate the rest of the cities but if this is the case then it makes sense that the company is buying back stock here...
Just to clarify...Benchmark's estimates were for $24 Million gross revenues for all of 2011.
ReplyDeleteTOF- What kind of eps are you modeling for the q?
ReplyDeleteGiven the weekly chart set-up, I wouldn't be surprised to see TZOO move 30% next week and 50-60% w/in 2-3 weeks. Lots of interesting charts out there.
ReplyDeleteTLT looks set on breaking its intraday support at $107, which will probably lead to a nice inverted H&S pattern in S&P and possibly a green close.
ReplyDeleteWent to the ZOO at 3:40 pm.
ReplyDeleteHeadline Yahoo news:
ReplyDelete****
"NEW YORK (Reuters) - Major stock averages fell on Thursday as traders were quick to shed positions ahead of a keenly awaited address by Federal Reserve Chairman Ben Bernanke on Friday.
"They're selling ahead of Bernanke and being fairly cautious in their positioning," said Len Blum, managing partner of Westwood Capital LLC in New York."
****
So we are all set to rally for tomorrow. :)
Be careful putting any rev. or eps projections on the TZOO board TOF. Hedgies aren't fond of putting funds to work when their numbers are known by the masses.
ReplyDeleteI try to lower expectations on public boards as much as I can while giving any edge I have to a select few.
This is exactly the king of action we need if this market is indeed forming a bottom.
ReplyDeleteSPX down 1% and VIX was up over 12%, VXX and TVIX trying to break out to new highs but failing. Lots of fear for such a small pullback. We need this.
If history is any guide and the hedgies are fully invested in TZOO at these levels, there will be a non public analyst note released tomorrow, Monday, or Tuesday regarding TZOO sales trends exceeding expectations. The result would be a 1 session gain of 18-20%.
ReplyDeleteThis is if and only if funds have been legging into TZOO at these levels are ready to start playing games again. Otherwise, its dead money.
Jesse - I'm not sure but I'm going to try to piece that together (TZOO estimate EPS). They significantly ramped up overhead (sales people) to get their Deals section going, so while it hurt their EPS last quarter, I'd expect it to help in the coming quarters as those investments pay off...but it seems like their local deals are doing quite well and they're adding a bunch of new ones more frequently from what I can tell. I think they're adding them on a daily basis now...the local deals sector is a very competitive one, but they have been operating in a very competitive market for years now and revenue growth has been tremendous (from $4 Million 10 years ago to estimated $150 Million this year). Their email subscriber list is 24 million and growing pretty fast so with that installed base of people already interested in their service, they don't have to go out and spend gobs of money advertising like Groupon did just to acquire customers. I know the company has been on a huge run over the past couple of years, but the valuation of this company is really cheap man. They had a one time settlement with the state of Delaware for unclaimed shares relating to a merger from 2002 that they had to pay $20 Million for, but if you exclude that the company has done about $30 Million in free cash flow for the past 12 months (in 2010 they did $22 Million). That's really impressive for an internet company growing quickly and only valued at $550 Million.
ReplyDeleteMy guess is that the TZOO "Cramerization" and subsequent dump was the last straw and once and for all got all of the retail money out of TZOO who would be totally left behind in a sudden surge.
ReplyDeleteOther than management's terrible conference call (imo), the only other thing that concerns me is that you rarely see a stock surge after management declares a stock buyback. I don't know the exact reason for this, but it either has something to do with management wanting to keep the share price down to get cheaper shares, or investor's perceptions of them wanting to keep share price down and moving into other names.
David-
ReplyDeleteWhat are your thoughts on the fairly obvious head and shoulders pattern on the indices over the past 3 sessions? If for real, it'll get ugly.
I think my point with TZOO is as the company continues to grow, eventually it will be trading at 40 times earnings or cash flow in a good trading environment and those eps/cash flow numbers will be quite a bit higher over time. So if they do say $60 Million in FCF by 2014 for example, then 40 times that would be $2.4 Billion. Their market cap right now is $540 Million.
ReplyDeleteHey guys...
ReplyDeleteGL David- That's a pretty big options bet!
SPX close 1157.39
If the U.S. government thinks the banking system is once again going under. What do they do? If they make a token investment of say $5 billion in say B of A, what does that signal to the market? That banks are in trouble, thus the market sells off.
ReplyDeleteSo, what to do? Have Warren Buffet have yet ANOTHER "private, secret, non-public, puppet meeting" with Obama a couple of days ago. Give old Warren $5 billion or whatever, have him publicly announce (remember that ALL of his investments are VERY VERY private) his investment in B of A and the markets are soothed because Warren sees "tremendous value" in banks.
So, rather than a trillion dollar bail-out (I'm not suggesting this now), they simply give Warren a few billion which works much better than a trillion dollar bailout. Puppet.
Hmmmm.......
Jesse - While I agree that we have some serious issues, I wouldn't read into it too much. Buffett has made some serious coin over the years taking advantage of panic. Whether it was Solomon Brothers, American Express, Berkshire Hathaway, Goldman, GE, they're all the same....long term investments in well known brands that have been hit hard. Dude is a savvy guy. If the market has bottomed then the sharks are setting the bait right now...just think of the headlines:
ReplyDeleteBuffett helps out BAC, yet the market still drops 200 points...sky is falling!
As jesse points out above, it's all good. Let's boot the Nervous Nellies off the cable car on the ride down. They don't deserve to enjoy the view from the highs.
ReplyDeleteDavid- Good luck!
ReplyDeleteDo you guys seriously think the Fed will allow the markets to sell off tomorrow? I would put higher odds on Bernanke getting -----faced this evening and pre-announcing plans to 'jack the ---- out of the indexes.'
ReplyDeletehaha thats funny stuff 2nd.
ReplyDeletei'm rooting for a sh*t faced rip higher as well. maybe BTU will confirm year end targets and TZOO will get bought out. it's all good.
Sell off at the last minute what do you make of it. May be lack of trust that Bernanke has bullets left in his gun or may be a risk-off position taken by most traders hoping for a rally before the Ben speech. Can it be that a cleaning lady found a draft copy of the B speech in the dumpster and shared it with some Wall street traders. I guess will know the answer tomorrow. Whatever happens I will be on the plane to Boston (leaves SFO at 7:00 am PST) and like David will have not ability to react.
ReplyDeleteThey're ramping up the internet stocks again...Z and P both had good quarters the last two days....that's a good sign if you're looking for people to take on more risk...let's see if it holds though.
ReplyDeleteJesse, I am looking at the 10-minute chart of S&P futures since 8/22 at
ReplyDeletehttp://www.forexpros.com/indices/us-spx-500-futures-advanced-chart
and all I see is a series of higher lows. The market could not have rallied tomorrow if everyone had loaded up ahead of the speech. As it is now, many people SOLD ahead of the speech, and so we are all set to rally, I believe.
JB's PIPer got a little snappy EOD.
ReplyDeleteTomorrow is key. We need a gap up tomorrow. At the very least, a flat open that is immediately bought. IMO, anything less and all bullish bets going forward are off.
ReplyDeleteJesse, I think it would be OK to see a small down open tomorrow, followed by a huge rally after Bernanke's speech. :)
ReplyDeleteSpeech is at 10:00 AM tomorrow when the markets are open.
ReplyDeleteMy bet is we open flat, sell off initially on the news that the Fed will keep rates low for at least 2 years and as long as necessary and no additional measures, then we take off to the upside after this when people come to realize it means things aren't as bad as they thought.
Think we end end the day with stocks up, bonds flat and gold down.
If Oil 2008 is any guide then Gold probably has another 30% to go higher...
ReplyDeleteFlipping through a ton of charts tonight and outside of the few weekly setups I've been watching, I do not like what I see at all. I see the distinct possibility of another crash. Shoulda looked at all of my individual charts before I picked up some long positions today.
ReplyDeleteShorting SPY after hours 116.16
If we gap down tomorrow, this scenario could be very real:
http://stockcharts.com/c-sc/sc?s=$SPX&p=15&yr=0&mn=0&dy=7&i=p98019842662&a=229826273&r=922
I can understand how $120 oil would have a negative effect on economic recovery, I can't understand how $1900 gold would, so why object? ie: $1900 gold does less harm than $120 oil...
ReplyDeleteSame goes with miners, the more successful and less encumbered they are, the more gold is brought to market, keeping prices down.
Keep miners from succeeding just removes supply from the market. Another thought: Perhaps miners are purposefully holding out for higher metals prices? Hmm, those willing to bring product quantity to market could experience huge windfall gain.
Jesse - I think we have a good deal more to rally...it ain't gonna be easy but I think the selling was excessive and there isn't quite yet confirmation of a recession to warrant a whole helluva lot more downside.
ReplyDelete"I do not like what I see at all."
ReplyDeleteYep, they don't ring a bell at the bottom. ;)
Here's the Value Adjusted gold Price chart, relative to copper and oil:
http://1.bp.blogspot.com/-QxRxP4Wo5AQ/TlZb9swKa5I/AAAAAAAAD6M/pwbEuUfby-g/s1600/VAGP%2B%252808-25-2011%2529%2B660W.jpg