Sunday, November 6, 2011
11/06/11 I sat on the roof and kicked off the moss
Has it been 40 years since I carried the Elton John LP around with me to play for anyone who would listen? I think the album was released around the 1971 holiday season.
The 9-year-old has been playing a simple version of this song for several months. He plans to ask his piano teacher if he can play the full version for his recital piece next spring. Circle game, indeed.
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We drove to Santa Cruz for whale watching, and ended up with sea lions instead. Those dudes know how to relax- either sunning themselves on the wooden pilings beneath the wharf, or floating in groups on their backs.
ReplyDeleteLatest from Hussman:
ReplyDelete"Here in the U.S., our broadest models (both ensembles and probit models) continue to imply a probability of oncoming recession near 100%.
In our view, investors should presently hold risky assets only in the amount they would be willing to hold through the duration of significant downturn, without abandoning them in the interim. For buy-and-hold investors, that amount may be exactly the same as they are holding at present, but the choice should be a conscious and deliberate one.
It's easy to dismiss the probability of a recession because "you can't see it in the data." To some extent, that's true, provided that you restrict the data to coincident and lagging indicators - our recession concerns are driven by leading indicators that are tightly related to subsequent economic outcomes, and are broad enough not to be influenced by any one or two components. (In contrast, the Conference Board index of leading economic indicators actually places most of its weight on M2 and the yield curve, resulting in curious "improvements" in the LEI that stem from safe-haven demand for U.S. bank CDs and U.S. Treasuries)."
Apparently, the investors have read his letter thoroughly tonight, as the S&P futures plunged to -1% after his letter was released (or after something else that happened tonight, but for the fun of it, I'll assume that Hussman was the trigger :)).
More from Hussman:
ReplyDelete"A final note. The overvaluation, misguided policy, and misallocation of capital that has produced more than a decade of dismal returns for the S&P 500 has also forced us to take a regularly hedged investment stance in response (though we know that the ensemble methods presently in use would have done things differently in several periods, particularly 2009 and early 2010). While our investment approach is by construction risk-managed, it is not by construction hard-defensive or fully-hedged. These are positions that have been thrust on us by conditions that have, predictably, led to a decade of stock market returns far below the historical norm. Though the present menu of prospective investment returns remains unappealing, those conditions can change quickly, particularly in a crisis-prone environment. This is important to mention here, because I strongly expect that we will begin seeing opportunities - probably not immediately but also not in the distant future - to significantly and perhaps sustainably reduce the extent of our hedging.
We emphatically don't need to wait for the world to solve its problems before being willing to accept risk. What we do need is for those risks to be more appropriately priced in view of those problems. We're not there by any means, but a significant change in the market's return/risk profile could come quickly. To quote MIT economist Rudiger Dornbusch (who was a professor to the new head of the ECB, Mario Draghi), "The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought."
So just like 2nd_ave, Hussman is waiting for a hard drop in the stock market to assume that many risks have been priced in to a large extent and that it is safe to shift his fund to a net long position.
If we have a big down day tomorrow (at least a gap down opening), then I might get a chance to reload at $19.50 the 300 shares of TBT I sold at $20.50 on Friday, and I also won't feel like a fool closing my December TLT puts with a small $300 gain on Friday when TBT was around to $20.40.
ReplyDeleteIf TBT hits my buy limit at $19.50 and then drops to $18.50, then I'll reload those TLT puts and will feel like a smart trader! :) So let's have a big gap down tomorrow!
From the "watch what they do" category, another data point showing stocks to be of good value:
ReplyDeleteBerkshire Hathaway (BRK.A) invested more money in Q3 than any quarter in 15 years, according to a SEC filing. Though the firm hasn't yet filed a statement of stocks owned, industry insiders say it broadened its holdings outside of the traditional consumer product and banking names led by star portfolio manager Todd Combs.
David,
ReplyDeleteI really wonder if we are going to get that big drop Hussman is looking for.n I think too many people are waiting for it, so we only get shallow pullbacks as the market moves steadily upwards.
China and Japan - Improved economic data.
ReplyDeleteDoug Kass - getting pretty bullish on twitter.
ReplyDeleteIn my experience, he's often early (sometimes so early, I would say wrong), but generally, he's pretty good and has had a good run lately.
Be great to see what his actually fund results are. I wonder (and doubt) if they're as good as he implies.
YYYYeeeeeeee HHHHaaaaa, all or none limit orders are back at my broker!
ReplyDeleteStop Limit orders are back too, oh I'm in heaven!
ReplyDeleteEarnings continuing to look good. Gives a trailing P/E of 13.3 and earnings continue to increase. From Bespoke:
ReplyDeleteWhile economists and the media are busy debating over whether or not the US economy is in or on the verge of a double dip recession, US companies are busy posting record earnings. According to S&P, with 88.1% of US companies having reported, Q3 operating earnings are on pace to total $25.42 for the S&P 500. On a four quarter trailing basis, earnings for the S&P 500 are set to total $94.77, which would eclipse the old record of $91.47 set in Q2 2007.
FRPT - LOL, I didn't think this thing was ever going up...
ReplyDeleteTRID - Dead cat bounce, I guess...
ReplyDeleteHey Guys- Long, long weekend. Busy this morning so will check in latter.
ReplyDeletePretty big bid just got hit in MITK.
ReplyDeleteI know no one wants to hear this, but I think we go down. Way down.
ReplyDeleteSPY - Friday's low was $124.01, last week's low was $121.52
ReplyDeleteI'm not interested in shorting today for some reason, but I will be looking to add on a nice dip.
Besides, we all know how easily we zoom through the 200SMA on the way down, in sharp contrast to breaking this level on the way up.
ReplyDeleteOk, 2nd, I'm taking your lead. I'll wait until we get back above the 200 DMA before adding more risk. Currently sitting with about 1/3 cash. Holding NLS, XWES, and a long SPY position from SPY $122.5.
ReplyDeleteEurope - What bad timing (winter) for having a weaker currency.
ReplyDeleteItaly Greece, all of EU - We've got a dollar waiting on a dime here, sheesh, when's the eurozone finally going to bend over and print to cover their governmental debt obligations?
Even if we go lower, I think we get at least one more push up to the 200 DMA
ReplyDeleteQuotes - Man, I don't know what's going on, but I've been witnessing what appears to be a huge number of discrepancies on price quotes for about a week now...
ReplyDeleteBAC - When's this POS gonna retest $7?
ReplyDeleteDon't look now but STVI has been basing for about 2 months now. I wouldn't be surprised to see it rise to $2 again, a return of almost 200%. Problem is:
ReplyDelete(1) it's waaay too illiquid to establish a large position
(2) it has a pretty big spread
XWES:
So I tested the waters on that and sold a few thousand shares just to see how it would absorb selling at the Bid when Level II only shows 100 shares on the Bid. It gobbled them right up. I take that as a sign of strength.
Long 1k shs FXP at $28.09
ReplyDeleteI like short FXI as well...FXI crashed and burned, had a huge rally right back to prior highs in late August and couldn't rally above...it's weaker than the other ETFs including SPY. If we do fall here like 2nd, Hussman and Hulbert say, then FXI should underperform and FXP should outperform.
ReplyDeleteWhy so negative 2nd?
ReplyDeleteOn the positive side, when looking at the charts if we hold 121.5 SPY then we're still in an uptrend.
ReplyDeleteChesapeake oyster kill due to excessive influx of fresh water from storm runoff, causes starvation.
ReplyDeleteAdded FXP at $28
ReplyDeleteKnock another buck off CHK and I'll take a shot unless all hell break lose.
ReplyDeleteI think we could probably narrow this blog down to 2 or 3 community rules...mine would be:
ReplyDelete(1) Use of foul language is absolutely not not tolerated.
(2) Drinking while posting is strictly allowed.
(3) No bragging is allowed, unless of course you were smart enough to nail the top or bottom of a trade like 2nd did a week and a half ago. If so then rules (1) and (2) are required while supporting your brilliance.
weird...my previous post got deleted, but it was in reference to a list of 20 rules/guidelines I saw on CC after the first time i checked in on that blog in weeks.
ReplyDeleteI see that TBT did take a hit this morning and has entered a "value" territory from my point of view. So I decided not to wait until it hits my buy limit at $19.50 and just bought 200 shares at $19.65, replacing those that I sold on Friday at $20.50 (and cancelled my buy limit at $19.50).
ReplyDelete"(1) Use of foul language is absolutely not not tolerated."
ReplyDeleteMaybe we could add a footnote to that one: "unless the market circumstances justify it" :)
If today finishes green then I would have to say that the pullback is over and the market will most likely continue grinding higher. Let's look at all of the noise going on in Europe. Italy is an absolute mess...yet we're not crashing. That tells me there is a good chance the market is loving the worldwide money printing once again.
ReplyDeletetof - I saw that list over there too. 'Penny stocks'...I thought that was all kaimu did...
ReplyDeletedavid - take note of the double negative bro
ReplyDeleteperhaps it would be better if i just said:
ReplyDelete"Use of foul language is absolutely not fuckin tolerated, man."
Took a $200 lump on my FXP
ReplyDeleteAll right TOF -- now I had my breakfast and I am fully awake now. :)
ReplyDeleteI think today's trading is beginning to confirm that we're back to bears dropping the ball and dip buyers coming in, reminiscent of a year ago.
ReplyDeleteThe futures, incidentally, look like they have just made a higher low relative to the overnight low...
ReplyDeleteSVM - Earnings tomorrow after close:
ReplyDeleteNov 1st - ("Silvercorp") plans to release its unaudited second quarter results for the period ended September 30, 2011, on Tuesday, November 8, 2011, after the close of the market.
http://finance.yahoo.com/news/Silvercorp-Announce-Second-iw-2504576113.html?x=0
CSTR's chart looks very solid right here. Basically all it did was rip higher through the 200 DMA, come back and re-test the 200 DMA and highs from mid September and then begin moving higher.
ReplyDeleteI decided to buy my XWES shares back at $3.7 that I sold this morning at $3.7. You're welcome, Mr. broker.
Board rule - Use of double negatives isn't permitted!
ReplyDeleteNLS is reporting after the close today. I'm very interested in seeing how results fared in a climate where people are freaking out about consumer spending being weak. If they report positive earnings with continued revenue growth of the Treadclimber, then it should continue to support a move up back to YTD highs.
ReplyDeleteJust placed a sell limit at $20.65 for the 200 shares of TBT I picked up a little while ago at $19.65.
ReplyDeleteTOF, thanks for reminding about NLS. I have just lowered my sell limit order for 20 NLS January $2.50 puts to $0.9 (the previous ask was $1.00, and I wanted to make sure that I am the asking price).
ReplyDeleteHAO is up more than 1% now. If the small caps Chinese ETF is positive even on a down day for S&P, then the Chinese market has definitely turned the corner. Since October 4, HAO is making higher lows and higher highs. Currently, it is ready to break out to a new high, just like GDXJ.
ReplyDeleteI think today and Friday confirm that the market is in dip buying mode...it's time to ride it higher.
ReplyDeleteA alternative perspective of the Western World from an Asian source:
ReplyDeletehttp://en.m4.cn/
WHR looks like a buy to me. It's one of those companies whose products can't be outsourced or beaten by digital technology. Sure, it has competitors, but it's a solid brand. The balance sheet has a bit too much debt for my liking, but they have good free cash flow. Dividend is about 4% and has risen 50% in the past 10 years.
ReplyDelete"I'm very interested in seeing how results fared in a climate where people are freaking out about consumer spending being weak."
ReplyDeleteI wouldn't be one bit surprised to learn we have nothing to fear except crony capitalism on behalf of bankers intent on sharing the misfortunes brought upon themselves.
http://www.investopedia.com/terms/c/cronycapitalism.asp#axzz1d365w79e
Cool link, CP! I haven't read the opposite propaganda for a long time now. :) It's interesting that they use many more adjectives than in the US propaganda:
ReplyDelete"On October 4, much more carefully-worked out than the previous vote on Libya in March 17, though in nature same as viciously deceptive, limitlessly greedy, unimaginably hypocritical and racist as before, the UN Security Council Resolution on Syria which had been also cunningly but forcibly pushed upon by US-led NATO powers was, however, thwarted down this time."
I guess this means that the China/Russia coalition feel that they are weaker than US, and so the only thing the can do right now is to fight it with "words."
More from the same site:
ReplyDelete"This is a set of 7 articles, dealing with the history of Israel and the Jews, the “holocaust”, the Khazars and the origin of the Jews, Jewish involvement in brokering a US entry into World War I in exchange for Palestine. It includes discussion of “anti-Semitism” and the Jewish lobby.
The first article is a brief introduction to set the stage for the remaining content. The second is a lengthier description and introduction of history, including the Jews’ involvment in many atrocities such as the black slave trade, the opium concession in China, and Stalin’s Jews – the slaughter of millions by Stalin’s Jewish lieutenants in Russia. "
Man, that's just too much... I feel ashamed now for the Eastern Block. USA does overstep the boundaries of moral behavior in handling international matters, but at least they hide it well and try to make sure that its citizens keep good moral values...
AUMN is green now -- yay! I was worried about it for a little while earlier today...
ReplyDeleteWho's behind OWS - Is Dick Cheney, the “shadow emperor” of the war industry?
ReplyDeletehttp://en.m4.cn/2011/11/07/hidden-agenda-behind-occupy-dump-obama-install-romney/
S&P is green now -- why is TBT lagging behind??? But then, if it weren't lagging today, I would not have been able to reload it at $19.65 this morning... Hopefully, tomorrow TBT outperforms S&P...
ReplyDeleteTLT/TBT - Could it be capital is flowing away from Europe and to anyplace other? Or maybe the FED is busily buying "debt" to fund the next phase of the "war on terror"?
ReplyDeleteLots of rumblings lately concerning Iran's nuclear ambitions... Concern over a possible attack in the pipeline?
CP -- with all those concerns on the table, why is S&P surging then? Maybe it is surging precisely because of the low interest rates?
ReplyDeleteGold/silver are surging, GDXJ is also surging, but AUMN is flat. Can we say that it has successfully consolidated its recent gains and is ready for another leg up?
ReplyDeleteAUMN - From a technical perspective, I'd have to say today's action wouldn't make me feel compelled to sell.
ReplyDelete"with all those concerns on the table, why is S&P surging then?"
Low(negative) rates might be part of the motivation, I know it is for me, or simply climbing a "wall of worry" perhaps?
Copper - Hmm, didn't exactly confirm the festive move, almost as if today was in part a flight to safety day? Okay, I'll give it the benefit of the doubt by labeling it a "mixed" day.
ReplyDeleteHopefully the black ADX line in this chart doesn't begin turning back up:
http://stockcharts.com/c-sc/sc?s=$Copper&p=D&yr=0&mn=7&dy=0&i=p99295968853&a=217994610&r=7736
Very interesting call with the new management team at NLS. On paper it looks like they missed sales (granted only 1 analyst had estimates) but two factors impacted sales:
ReplyDelete*They had a significantly amount of a product that they put on sale in 3Q 10 that they no longer sold in 3Q11 so it wasn't really apples to apples
*New launches that they expected to happen earlier in the quarter didn't happen until later in the Q and will most likely impact Q4.
EPS from continuing ops was $0.01 which was better than the lone analyst estimate of $(0.01).
They are seeing product margins improving for the first time in a while and are going to be launching a slew of new products focused on segments they have been testing for months now, including the Corebody Reformer, which was released about a week or so ago and which they said is seeing good response.
They are also focusing on royalty income which was around $1 Million this quarter and was up about 25% and carries margins of 100%. The new CEO came in about 5 months ago or so and he said when he arrived he was very happy with the product development but also the significant opportunity to capitalize on their intellectual property.
I think this company has the potential to really get momentum behind it. The company has $11 Million in cash and about $75 Million in Tax Loss Carryforwards (which works to about $30 Million after tax) and it is only valued at $60 Million. In Q4 they could do over $0.10 EPS from continuing operations (vs $0.06 last year) in what is their best quarter. Between new product launches, royalty income, improving Treadclimber sales, cash on hand, and huge tax loss carryforwards, I think this company could be a really good turnaround investment.
The market will be the arbiter though.
S&P futures broke out AH above the highest level reached by spikes up since 11/3. Tomorrow should be a nice green day...
ReplyDeleteSee, when I see gold and copper moving in opposite directions, it raises an eyebrow...
ReplyDeleteAlthough FCX did move up, and that's an encouraging indicator, we want this chart (gold:copper) to keep moving back towards 400, else we're at risk of remaining in recessionary territory:
http://stockcharts.com/c-sc/sc?s=$GOLD:$COPPER&p=D&yr=0&mn=7&dy=0&i=p99295968853&a=217994610&r=7 736
These other two should also continue moving in a downward trajectory, in confirmation of progress away from recessionary territory:
http://stockcharts.com/c-sc/sc?s=$GOLD:$SILVER&p=D&yr=0&mn=7&dy=0&i=p99295968853&a=217994610&r=7 736
http://stockcharts.com/c-sc/sc?s=$GOLD:$WTIC&p=D&yr=0&mn=7&dy=0&i=p99295968853&a=217994610&r=7 736
FSLR - Yep, still sliding downhill. Just as well, although if they could get their thin film solar cell to outperform the silicon cell, that would be discouraging news for silver and their shares would fly against the heavier (technical dinosaur) and more expensive silicon modules.
ReplyDeleteNote that a lot of silicon ingot growing capacity has been added, indicating that thin-film isn't fulfilling the promise to replace silicon and thus silver demand for solar remains on the table...
I wonder what the log-jam issue is for the thin film cells, I'd love to know since depositing thin films is my bag... My guess is the films required are actually quite thick and deposition rate is too slow.
There's an interesting chart on cell efficiencies at
ReplyDeletehttp://en.wikipedia.org/wiki/Thin_film_solar_cell
It's official. I'm never running for president.
ReplyDeletemark, that's funny
ReplyDeletePut in a new stop good for 60 days on my SDS and it hasn't hit yet, almost but not yet. Any positive move in the morn should take me out but there's always hope for a down 300 point day.
I happily bot 7 lots of a Jan12 121/124 strike SPY strangle for $10.97, I think when it was dow -20. I'm thinking if we do get a drop, I'll get a big pop on volatility, if not, it won't take much for the calls to kick in.
You guys probably don't want to hear about these option trades do you? Just let me know and I'll stop posting them. I don't do any fundy work on this stuff, I just read what a few experts say, listen to you guys and a couple of buddies and thats it.
We were talking today about how smart CHK looks now selling those long term dated natty calls to Barclays. One of my fundy guys said he thought it was through Cal18. That's gutsy but you do what you have to do when you have no cash.
ReplyDeleteI like seeing them Port.
ReplyDeleteI'm looking for an entry in CHK.
Hmm, here's a good point on CC. And this is why I like reading what you guys have to say cuz I'm reallly weak at the fundy stuff. I have a hard time reading anything for more than 60 seconds, even worse if there are no pics.
ReplyDeleteSubmitted by Grateful (21 comments) on Mon, 11/07/2011 - 11:33 #99369 (in reply to #99365)
Guys,
I think you are missing Bill's point. I don't believe he's getting into the who's a good analyst argument...I take his point to be, let's stop just referencing articles that support a certain viewpoint. We should be digging deeper and finding data to facilitate our discussions in this blog.
CHK - a gap down on the open would be nice, if not then 2 or 3 more down days? natty is CHEAP CHEAP CHEAP right now. It can get cheaper too. Based on my reading buddies at work, we're looking for an entry on DVN. The guy that turned me on to BEXP in the teens, and of course I sold in the low 20's, doesn't talk to producers anymore. DANG.
ReplyDeleteMark - Certainly you're not one of those "upskirters" with a mirror attached to your shoe?
ReplyDeleteport2013, it would be great if you could post your options trade in real time and describe your expectations for each trade. Then we could think about your expectations and decide if we want to play on them (using the same trading vehicle as you or using some other trading vehicle).
ReplyDeleteIf I were gonna short GLD, this is the first level I would do it. It's up against resistance which is the 172-177 level from Sep 15-21st. I'd probably buy the DEC 170 strike puts for $3.95 and use a stop of 180 ish, which would make the puts worth $2.50 or so.
ReplyDeleteBUT, I wouldn't short GLD. GLD and OIL are the two commodities that can shoot up for both good and bad reasons. The chart looks bullish to me with a nice steady uptrend on the weekly chart that just got a little toppy 6 or 7 weeks ago. I think its a buy in the 155-160 range with a stop in the upper 140's. Of course I'd be more comfortable doing that with options. It helps me sleep at night knowing my max potential loss.
David - I've posted a time or two from work in the past but we keep layering on more compliance monitoring at work and everything I do is recorded and documented so I'm a little nervous about logging in. My wife, who has never worked in a trading environment, likes to call me on my recorded line and discuss stuff that I would never want anyone to hear. Sometimes I just hang up on her. Now, if someone leaves me a voice message, I get an email recording of the message on my blackberry which I can play and listen to anywhere I can pick up a phone signal. It's cool but scary sometimes.
ReplyDeleteCP- My closet is quite full :)) !!!
ReplyDeleteWMB - This one's been flying...
ReplyDeleteWMB - we can thank Kinder buying EP for this rally.
ReplyDeletePlan for tomorrow, if we keep going up, I'll get stopped out of my SDS early and I'll just stick to my bull bias SPY strangle strategy. I like playing SDS and SSO intraday because for some reason I don't have a problems putting in hard stops and leaving them.
I may play some intraday CF from the long side, meaning I would buy a dip and sell it higher but I WOULD NOT, sell it short in hopes of buying it back lower. I do have problems with stops on this stock though, know thyself, so I'd probably play it with short dated options to cap my potential losses.
later
WMB- Besides it's my initials mixed up, I think this is a Kaas fav.
ReplyDeleteOh I get it now, he was raising a little Cain?
ReplyDeleteport2013 -- it must be very annoying to be monitored so closely...
ReplyDeleteCYD - Keep an eye on this one, they reported earnings today.
ReplyDeleteGodzilla's eating Japan tonight, and I thought they were going to continue their Yen interventions??? Last one was $64B?
ReplyDelete