Tuesday, September 20, 2011
09/20/11 Shondor Birns
If I buy TZOO on your recommendation at 36, I expect to make money on it. It closed at 28 today. If it keeps going down, I'm going to need some insurance. Stocks don't always go up, I understand that. But if I put money on the line, in good faith, I can't walk away with a loss. Capisci? Look, I'm a reasonable guy. You have until Friday to make good on it.
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ha 2nd! you know, we all bought and sold it several times over the past few weeks. you gotsta trade these momo stocks.
ReplyDelete"We haven't seen anything like this since July 17th (ish). This is actually much worse than that day when I said market collapse w/in 2-4 sessions. Total collapse in all things momo today on a fairly flat day in the markets. I'm not putting money into puts, but be on high alert over the next 6 trading sessions."
Jesse - I think 2nd is right about the rotation into blue chips. Assuming we don't all out collapse, I think thats what's going on. I mean, I'm shocked that companies like DELL are trading so cheap. Check out that one when you get a chance. We're talking like 5 times free cash flow ex-cash if memory serves me correct. Its not that the high fliers won't eventually return, it's that the market is moving on from them. I remember this happening to a lot of high fliers after the initial rally off the bottoms in 2002...they rallied for a year or two then just fizzled out. Look at AMZN...that bad boy ran to $60 then for the next 2.5 years it just dripped lower and lower to the high 20's.
http://twitpic.com/6o10xk
ReplyDeleteConfirmed chart pattern in nflx
Hussman explained on Sunday why we can be certain that Greece is going to default within the next few months (and maybe within the next few days). The "public" assumption is that banks will get only a 50% haircut on the Greek bonds they are holding, but some people say the losses can be as large as 90%. This leads me to a conclusion that the negative aspects of the Greek default are not fully priced in and they will NOT be fully priced in until the default itself, since the governments are doing everything to convince us that they are "working" on avoiding the default. Thus, I think it might be smart to wait until the Greek default before committing decent amounts of money to this market.
ReplyDeleteLarge Cap Tech having a good day after market close. All large cap tech are pretty much very cheap other than the occasional INFA, so don't need much to get buying. ORCL, ADBE good results. MSFT bumped dividend 25% and may be a good buy down here if you take the long view.
ReplyDeleteDavid - "Thus, I think it might be smart to wait until the Greek default before committing decent amounts of money to this market."
ReplyDeleteI mostly agree but will be waiting and watching for the aftermath of the Greek default. There may be more and the whole thing will take time to unravel. The USA cannot help but be affected.
I think there's a good chance we see new mo-mo leaders coming out of the recent correction than we've had for the first part of the year.
ReplyDeleteMaybe energy especially if the economy picks up, financials (possible, but probably not), large caps - sure, tech also makes sense here.
David - It's all really subjective man...who's to say it isn't priced in? I mean in any normal market with the earnings we have, inflation rates we have, and the interest rates we have, we would be trading at 1,600 or higher probably. so a 25pct reduction in prices due to slow growth and European fears....is that enough? I don't think Hussman knows the answer to that.
ReplyDeleteAnd who's to say just how much shit is out there? and just how much cash the banks need to have on their balance sheets. I know the US banks have a ton...maybe its enough maybe it isnt?
There's a thousand guys out on TV all saying different things...no one knows man.
SVM...
ReplyDeletehttp://www.metalaugmentor.com/analysis/charlatan-exposed-silvercorps-shorts.html
SVM...And then there's this...
ReplyDeletehttp://seekingalpha.com/article/294683-silvercorp-s-management-speaks-in-exaggerations-and-half-truths?source=yahoo
If history is any guide, after a total collapse of "trading vehicles", we should see a flat/up day tomorrow and possibly Thursday. If history repeats (as it continually has in my trading career), we could see some sort of a meltdown starting Thursday, Friday, or Monday.
ReplyDeleteIf we trade sideways to slightly higher, perhaps I'll buy a few puts at tomorrow's close. We'll see how it plays out.
Needless to say, I was stopped out of my TZOO last night while dreaming of Pad Thai. It broke all previous support during its bull run over the past couple of years. There is something SERIOUSLY wrong with it. It is now permanently off my potential buy list.
NFLX looks like a screaming oversold buy here. But I know better.
ReplyDeleteJesse- I posted a similar comment earlier about the inter day reversals and serious break down in bear flags....TZOO the obvious one.
ReplyDeleteI've never been so noncommittal in my life. Including my wedding!
Yeah Mark, I saw your post and started looking at all of the resource plays. Great call. They were all getting sold off. They have seen ZERO bounce in this current bull run.
ReplyDeleteI figure your MITK sale should give your ego a good 3 months of satisfaction before it gets the itch again. By all means, stay noncommittal!
jesse - aside from the reasons ive stated why i like cstr the thing that solidified it for me was my belief that if we do go into a recession and / or there really is a rotation that i think is going on away from momos then i wanted a larger cheap company that would be able to do well in a recession and that still also has a good chance to grow...i think with redbox's price point and the company's dirt cheap valuation this fits the mold
ReplyDeleteI'm off to Pai, Thailand. With any luck, drinking topics will begin for me right around 9am your time:)
ReplyDeleteI scrounged together my remaining $1,700 and put it into the Jan $55 Calls on CSTR...bot them at $2.3. I am standing by my belief that this thing is ridiculously undervalued.
ReplyDeleteANR/PCX/WLT/FCX followed TZOO in breaking through their bear flags.
ReplyDeleteMS...Is that just sell stops getting whacked or are they in some serious chit here?
ReplyDeleteHAL/SLB.
ReplyDeletejesse- History is no guide, at least not in the ST. My opinion would be that the overriding history lesson is that market timing doesn't work.
ReplyDeleteJust saw this:
ReplyDeleteDA Davidson said industry contacts indicate Visa (V) is going to dramatically increase the minimum charge to merchants, like Red Box, to 23c per a debit transaction from 5c. The firm said debits represent 50% of Red Box transactions and the change could have a substantial impact on profitability.
Wasn't the Durbin Amendment done so that merchants wouldn't get charged as much for credit/debit transactions?
TOF- I think the final swipe fee was about 20c plus a tiny fraction of the transaction total. I can't believe they are 'only' charging 5c right now.
ReplyDeleteMark - I call shenanigans on this rumor. I find it hard to believe that Visa would quadruple its fees on dollar stores and merchants that sell things at a dollar. I also find it hard to believe that Congress would allow it after what happened in the Durbin Amendment.
ReplyDeleteSVM - Mark, good find, that guy "silverax" knows what he's talking about... IMO
ReplyDeletehttp://seekingalpha.com/article/294882-fed-primer-could-the-u-s-repeat-weimar-s-inflation-experience-part-1
ReplyDeleteHere is a great article from James Kostohryz, where he explains how hyperinflation arises (when the central banks starts purchasing Treasuries at rates below the expected future inflation rates) and suggests that 2% for 10Y Treasuries is a "line in the sand" for the Fed, below which purchases of Treasuries would lead to a clear perception of debasement of national currency and the desire to dishoard that currency.
Hate fed days. Feels like just wasting time waiting for Bernanke to speak, and then watching the sames (which are too hard to play).
ReplyDeleteTried to go cut the lawn, but started raining. Maybe I should go find that bar Jesse is hanging out in.
"Maybe I should go find that bar Jesse is hanging out in. "
ReplyDeleteLet me know if you do.
BB - Just buy CSTR on the dip man. It's getting hit because of some rumor that Visa will raise fees to $0.23 or 23% of $1 debit transactions. If they do ultimately raise the fees I guarantee it will be a max of $0.23 (for large dollar transactions) or a small % if lower transaction amounts. The stock is down over 10% after the debacle at NFLX, which will DEFINITELY increase CSTR's revenues. I know you're bearish on DVDs but consider this:
ReplyDelete300 Million people in US
Maybe 200 million people watch movies
10 million streaming viewers of movies
So we have 190 million people that don't stream. Large market. Redbox market share:
2008: 12%
2009: 20%
6/30/11: 35%
Folks, so what are your trading ideas for 2:15EST today? Are you watching some key support/resistance levels so as to jump in if they are violated?
ReplyDeleteI am thinking that if TLT breaks below today's low at $14.35, then buying puts on it would be the thing to do. Although, of course, the mean bastards ARE known to jerk the prices right after the announcement so as to fake out all those who are watching key levels...
TLT is collapsing already -- does someone know something? Are we not getting any QE3?
ReplyDeleteIf TLT were to collapse, then THIS is how it would happen, so as to prevent ANYONE from jumping on the south bound train...
ReplyDeletewatching
ReplyDeleteshort FCX Feb 25 puts
short THA Oct 28 puts
Wow, the bid/ask spreads have just become HUGE! So much for purchasing puts at the market price...
ReplyDeleteTNA not THA
ReplyDeleteDavid - Collapsing? It's down $1 bro.
ReplyDeleteI think I'll just buy a large amount of TBT on margin if TLT breaks below LOD. So far, however, TLT is holding up well.
ReplyDeleteDoes anyone already know what Bernanke said?
This is going to be another screwed up fiasco...
ReplyDeleteThe bid/ask spreads are still huge, but neither stocks nor bonds are moving -- did Bernanke say anything at all???
ReplyDeleteCHNG - China Natural Gas, Inc.
ReplyDeleteHalted by Nasdaq, accounting problems...
All right! I guess the decision was delayed a little. Beautiful HUGE spikes in TLT. :)
ReplyDeleteSpiking below low of the day, and the next second above high of the day. :)
ReplyDeleteOperation Twist! $400B
ReplyDelete1000 SSO @ 42.04
ReplyDeleteLooks like he IS doing some QE (as TLT has just exploded), but the market does not like the reasons for it, as stocks have just tanked...
ReplyDeleteGlad I was out of TLT puts -- I did have a feeling that Operation Twist was not fully priced in yet....
ReplyDeleteThis huge spike in TLT might be an overreaction -- just bought 200 shares of TBT at $21.04.
ReplyDelete1000 SSO off @ 42.54
ReplyDeleteBought 100 more shares of TBT at $20.75
ReplyDeleteGreat trade you snuck in there, Mark! :)
ReplyDeleteDavid, thanks! Simple S2-S1 trade. It's now below S2 so I'm probably done.
ReplyDeleteSold TZOO at 28.xx
ReplyDeleteUsed proceeds to buy HPQ at 24.xx
Been on the road for 10 hours. Without looking, my guess is Nasdaq is up 38.62 @ 2.52pm... Let's see..
ReplyDeleteSo the Fed has engaged into buying more long-term treasuries at rates that are ALREADY preposterously low. The article I just posted on hyperinflation said that 2% is a "line in the sand" for 10-year Treasuries, and the Fed said that it will keep buying them. The current yield on 10-year Treasuries is 1.87% according to
ReplyDeletehttp://www.bloomberg.com/markets/rates-bonds/government-bonds/us/
So I guess the Fed decided to debase our national currency even more. Got Gold? :)
No, I own no gold and have no plans to own any.
ReplyDeleteThat's too bad, 2nd_ave...
ReplyDeleteUsual 'panic' trading around the FOMC.
ReplyDeleteS&P - Downgraded seven Italian banks today...
ReplyDeleteAnyone selling today will be wondering why tomorrow.
ReplyDeleteTOF- I've been looking into CSTR and am kinda warming up to it. Did you find anything more on the swipe fees?
ReplyDeleteOutside of the media, gold is a mega bubble by any long term technical metric I look at even though "I think" or "I know" that the dollar will be worthless. I have finally learned to never trade what I think.
ReplyDeleteI have finally encountered a few Americans (who would have thought?) in Pai, Thailand. We have been drinking much truth serum.
The truth serum wants me to discuss CSTR (at much length). Instead, I will drift off to sleep and dream about Sangsom:):)
I see the naz down 10 points. It will definitely finish quite positive if the "momo/trading stock" indicator is to play out over the next 2-4 sessions.....
2nd- Do you think we will get another shot at refinancing?
ReplyDeleteCould it be that today's jump in TLT is just the final short-covering rally that marks the top of its rally? After all, TLT kept going down during all of QE2, so Fed purchases on a small scale (only $400B) are not sufficient to support the bond market if the market participants feel that bonds are overvalued.
ReplyDeletePlacing a buy limit order for 100 more shares of TBT at $20.50. This will be my TLT put option without expiration. :)
ReplyDelete2nd! HPQ. 24.42. Temporary short covering rally on the road to perdition.
ReplyDeleteMark - Nope, nothing more. I think DA Davidson has it completely wrong though. Typically how the credit / debit fees work is they cap a max that you have to pay (on larger transactions) and they do a % if the fee is lower than the capped amount. That is, it's typically you pay the lesser of 1% or $.25, for example.
ReplyDeleteThat is how the fees work on my business.
DA Davidson is implying that for transactions of $1 you would have to pay a 23% transaction fee. That's ludicrous.
Regarding the market, I think the odds of us going down further are pretty solid just by looking at:
CAT
IYT
DE
GS
BRK/B
Copper
XLE
XLI
But no way in hell am I getting short. I'd rather be in a recession proof biz like CSTR.
ReplyDeleteShort HPQ 24.54. Off to bed.
ReplyDeleteAll considered, GMO has acted VERY well today.
ReplyDeleteSold short CMG 338.17
ReplyDeleteTOF- Isn't your swipe fee agreement with a bank that pays V a %? And I'm pretty sure they are talking about the debit transactions.
ReplyDeleteMITK- Not good considering they had a presentation today at a financial conf....But I might put in a stinky.
ReplyDeleteCMG falling. If it closes higher, its put central for me.
ReplyDeleteThe buy limit order for 100 shares of TBT at $20.50 was just hit. So now I have 400 shares of TBT with the average cost basis of around $20.80. I'll stop here for today. One lesson that I keep forgetting and then relearning the hard way is not to enter into any medium-term position too fast. Let's see what the market does tomorrow.
ReplyDeleteSold short AAPL 416
ReplyDeleteThe remaining high flying mega caps are going to get absolutely crushed. The entire world is hiding in them...propping up the indexes. Not for long.
ReplyDeleteCMG. AAPL.
More details about the Twist from CNNMoney:
ReplyDelete"The Fed said it would invest the majority of its $400 billion in Treasuries with maturities between 6 and 10 years with 32% going to 6-8 year Treasuries and 32% into 8-10 year maturities.
Another 29% of the portfolio will be allocated to buying 20-30 Treasuries and just 4% will go towards buying 10-20 year Treasuries. The Fed will use the remaining 3% to buy Treasury Inflation-Protected Securities or TIPS."
So only 33% ($133B) of the total $400B will go toward purchasing long-term treasuries tracked by TLT. I doubt this will move the multi-trillion dollar market. Thus, it is very conceivable that TLT will just collapse under its own weight from the lofty highs it has reached.
I am glad I bought DB puts yesterday as a hedge against the market collapse. I didn't think, however, that the collapse will happen because of the Fed's own actions -- I was actually hedging against a European...
ReplyDeleteMark - Yeah they're referring to the debit fee...again, there's no way in hell Visa would levy a 23% fee on a $1 transaction. Every 7-eleven in America would ban the use of Visa debit cards.
ReplyDeleteDo you tech gurus know anything about this:
http://www.reuters.com/article/2011/09/08/idUS163768337720110908
Is the new content not available on Netflix streaming? Or is this the case as a result of Starz being dropped? Either way, people are gonna have to get access to the new titles somehow...
$1 Redbox rental (with no monthly commitments or commitments to a monthly cable service) vs $9 per month Netflix vs $5 per rental on demand?
Which do you think will win out?
Looks like I was wrong.
ReplyDeleteNaz -52. Covered all shorts.
ReplyDelete2nd - No Way Man - That can't happen - Because I just sold my TZA - U just keep talking that positive shit - It'll come back....
ReplyDeleteNice trading Jesse for a guy who went to bed half an hour ago!
ReplyDeleteThat day sucked, but what does it really mean? Traders didn't like what Bernanke had to say. Still trying to figure out what it means for the longer term.
Q3 earnings will be out soon and should be good still. I think what really scared the market today was the RIO Tinto CEO saying sales are slowing and coal exports were down, so people are taking this to mean China is slowing. That would be an issue as even companies like Apple are saying they expect more sales into China than the US. That is the story that played out in 2008 and people are afraid of the same again.
Mark- Ted said no change in rates today.
ReplyDeleteI AM positive it all turns around soon.
ReplyDeleteI have spent the majority of my time the past 14 months on the ground in China. It is slowing and will continue slowing big time. The media does not know it and the government (gov. media) will not admit it.
ReplyDeleteWe will only see it in the prices of commodities until China finally admits it. If I've learned anything in my time in China, they will do anything and everything to save face. Unfortunately, they will not admit to a slowdown until it is 200% evident to the rest of the world.
I remember reading an analyst report from RBC at the beginning of the year saying that 10% Chinese growth is priced into the market for the next 3-5 years. Their analysis predicted a Chinese market collapse if growth comes in at 5%. Ummmm....
Don't even get me started on my friends trying to dump their Chinese real estate.
If you take a step back and look at things from a longer term, we are still in the bottoming process from August. I do believe Q3 earnings will drive the market higher or lower depending on how things work out.
ReplyDeleteThe copper stocks I follow are getting back to last summer's levels which was a good time to buy. The price of the metal was 20% lower back then, so we are now in the same situation as all other commodities where the stocks are undervalued relative to the price of the commodity and should be good to buy.
Not sure what to do here. If Jesse's observations are in fact a trend for overall China, perhaps the commodity run of the last 10 years is over.
Jesse, what about Chinese small caps like CADC, SORL and ONP, which have forward P/E ratios of 2 or 3? Do you think that P/E ratio is pricing in something?
ReplyDeleteBruce Krasting has a couple of new interesting articles on his blog: about the upcoming mega-ReFi announcement from Obama and about the breakdown in the copper price potentially leading to a major banking crisis in China (since copper was used as a collateral for many loans).
ReplyDeletehttp://brucekrasting.blogspot.com/
"the breakdown in the copper price potentially leading to a major banking crisis in China (since copper was used as a collateral for many loans)."
ReplyDeleteI'm sorry but puhhhh lease. Sounds like a flimsy argument from a short. While Copper looks bad no doubt, let's put it into perspective here. On the monthly chart it hasn't even tested to the downside the $3.60ish resistance that it broke through last fall.
Capitol Hill chows down on muffins, $16/each.
ReplyDeleteJesse - Sing away bud, we're all ears!
ReplyDeletehttp://www.homemediamagazine.com/kiosk/analyst-kiosks-not-likely-affected-pending-debit-card-fee-cap-25029
ReplyDeleteLooks like on 9/12 DA Davidson saw no impact or perhaps a $0.01 increase per transaction on debit cards...however, they changed their tune today (well, actually yesterday since CSTR crashed yesterday on "no" news).
Also, see this from today:
http://www.forbes.com/feeds/ap/2011/09/21/business-financials-us-analyst-note-credit-cards_8693328.html
I still find it hard to believe that (a) the projected $0.23 fee would go into effect since its greater than the Durbin cap of $0.21 and (b) every retailer from Starbucks, 7-eleven, Family Dollar store, Redbox, etc that specialize in smaller transactions would revolt against this.
For Redbox, if this goes through I don't know why they wouldn't just accept MasterCard debit cards and force people to use their debit cards as a credit card (I know you can do that at grocery stores and 7-elevens).
We shall see, but ultimately I think the drop is an over reaction to this news. Redbox will find a way around it.
Looking around fro some positives to hang on here. Think we still have earnings, valuations and sentiment on the side of the bull and now, seasonality:
ReplyDeleteSeasonal patterns point to a stock market recovery in the making, says Oppenheimer's Brian Belski. Looking at the data, he notes that every fourth quarter since 1970 has been positive for stocks when preceded by double-digit negative returns in the months prior, which is exactly what we're seeing now.
"Looking around fro some positives to hang on here. "
ReplyDeleteBB - Just think how good 2020 will be!