I think the point of these triangular flag formations is that they exhaust both buyers and sellers, convincing them that they better stay on the sidelines until a clear trend emerges. However, when the trend emerges with a large gap up or a gap down, people don't have the guts to jump in initially and start chasing the trend gradually, thus making it a long-lived one. It is very possible that a breakout to the upside should start with such a violent shakeout.
2nd - Timing these TZA entries is one BIG PITA for sure. Here's something I've been looking at...
Over the weekend I was reading through John Murphy's (StockCharts) Market Updates and he showed an example of a Renko chart. I had never heard of it. It basically amounts to using a 'coarse quantization' of the stock price movement...
I don't think I would short crude. The price of Brent has been hanging in steadily for a few months. I think the odds are WTIC gets pulled up, not the other way around. This will take time, so perhaps a short term short makes sense. I think the easier play is buy the Canadian energy companies that will benefit from higher prices - like a SU or CNQ. Both are still down substantially and growing production.
Was showing my 18 year old daughter the traingle formation in the S&P and how everyone is looking for it to resolve one way or another for a major move.
She says "It'll probably just keep going back and forth in a straight line across the chart". Might be the right answer from someone who has nothing to win or lose in the market.
"Was showing my 18 year old daughter the traingle formation in the S&P and how everyone is looking for it to resolve one way or another for a major move."
Ah, so I am not the only one seeing this! In this case, the first move will likely be a false move. Thus, today's decline could have been that false move!
Check this out, folks -- I think this is important: the $USD index is almost as high now as it was during the early October peak, while S&P is MUCH higher now that its October 4th low. From this point, the upside to $USD is very limited, while the downside is huge. Thus, it is much more likely that the next big move in S&P will be to the upside, on the heels of a falling $USD. Unless, of course, Europe screws up, Euro collapses and $USD zooms. But then, ECB will open up its printing press and the markets will zoom. So in any case, any drop from here will be limited in nature and will be a great buying opportunity. Maybe the bankers actually WANT a drop in equities now, so as to motivate ECB to start printing!
BB - Yes, it'll be interesting to see how this resolves. Murphy noted in last weeks' Market Update that triangle patterns are usually trend continuation patterns (so probably UP)...
http://www.screencast.com/t/aOLghdQEooGY
But then ('jack black' #100207), there's a different view (which I lean towards)...
Kyle, I think "jack black" is looking too far back in his forecast -- the "system" was totally different back then, and hence the "output" of that system (i.e., the price) cannot be compared with the output of the current "system."
Futures are back in the green now... The low they made at EOD today was, once again, exactly on the upward sloping line connecting the previous 3 lows in November.
We haven't seen in a while a scary ending of one day followed by "gap-n-go" the next day. Tomorrow we might finally see a rerun of that movie...
A lot of activity sure takes place overnight these days.
Could have been the comment from a new member of the Royal Bank of Australia:
A European recession won't be enough to seriously endanger growth in Australia and Asia as a whole, a recently-appointed board member of the Reserve Bank of Australia, or RBA, said Thursday.
A likely European downturn won't be "catastrophic for us or the region," John Edwards said in a speech in Melbourne. "A financial crisis caused by a banking crisis in Europe remains a threat but not one I expect to occur."
David, the 'market is the market' it tends to retest levels and repeat patterns. That's why trendlines traced from back in the 80's still have relevance today...
I agree with Vad. Prognosis for Euro is not good. Understand, the European Union can survive. The Euro as currency may not. That means the Eurozone may be depleted (those 17 out of 27 countries who adhere to the Euro as their currency.) They cannot print. Contagion danger very high as US banks are already on flimsy ground. It becomes another financial crisis and another recession or worse.
Here is an excellent discussion from Hussman about the options available to EU:
http://www.hussmanfunds.com/wmc/wmc111114.htm
He ends his weekly commentary with a note that warms my heart:
"As for precious metals, gold prices tend to be inversely correlated with the dollar provided that gold prices are relatively stable in foreign currency terms. At present, we observe continued upward pressure on gold prices in foreign currency terms, so even the prospect of a stronger dollar doesn't necessarily imply weakness in the dollar price of gold. Moreover, gold equities are near record lows relative to the metal, and combined with other factors, we continue to gauge the Market Climate in precious metals shares as very positive."
CP - we discussed it here a week or 2 ago... that double top (1553, 1576) & the lower 1370 high this year has that Landry 'kiss-the-MA-goodbye' look to it. Don't know man...
Even though I'm bullish short term, it wouldn't surprise me to come in to a black monday situation on any given day. When financial systems start freezing up, things just go bad in a hurry.
I was busy today so i'm scrolling thru the Buzz and Banter now. Items of interest
More job cuts at the banks. Actually i have a buddy at one of the banks that said they have an announcment tomorrow and he wouldn't be surprised if he gets let go.
Yesterday I read where GS is decreasing the number of partners which helps lower their expenses in a hurry.
One guy comments that the TED spread reached a 52 week high and he notes that in 2008, this signified that the banking system was stressed., Hey, I think that ties in well with my opening comment.
WTI - two comments on WTI, one says that traders and clearing firms unhappy with CME are closing out trades and boycotting any further trading which I assume means thru the CME. The other rumor is that a large energy fund was being taken out. As far as natty goes, cash is tanking so that would naturally take the futures down with it but who knows.
Two more of my stocks received buyout offers this week - Emerge Energy and Iberian Minerals.
They are both small cap Canadian stocks, but the common factor is they both have great resource bases. It confirms that for a lot of companies it easier to develop new projects by looking in the stock market than looking in the ground. It also says a lot of these stocks are cheap on current fundamentals and are a good place to look for investments.
CAAS? - Chinese auto market is larger than US auto market now, and these guys make parts for GM, they're a real company as best as I can verify and was mentioned by Chinese government representative representative last night on Charlie Rose show...
Unfortunately I didn't catch her name or title though, I was about half asleep...
Well, folks, I don't know what is going on, but a break of 1220 on S&P breaks the upward sloping trendline I saw on the S&P futures charts. Hence, in the spirit of trading what I see (and not what I want to see), I just bought 3 December $40 puts on DB at $5.50 each, so as to have a "consolation prize" in the case we continue to sell off hard.
I just looked at the SLV chart -- holly cow! Who is selling it so hard??? I actually hoped to see such a violent move to the upside in the near future... So I guess I can forget about my AUMN calls...
AUMN is actually holding up pretty well, though -- much better than GDXJ. I guess AUMN was already sold down SO HARD that it is totally disconnected now from gold/silver fundamentals and is being traded by hedge funds so as to extract as much money from human traders as possible...
David - I think your point about how over leverage causes stocks to go down in the short term despite the long term story still being intact is right on. In my mind, there really is no reason for the stock market to drop in the short term given that the long term is what matters. We will continue to grow earnings over time, which is what matters most if you're investing in stocks.
"Re: ..... Submitted by Vadym Graifer (2692 comments) on Thu, 11/17/2011 - 13:22 #100271 (in reply to #100270)
Maybe contrarian in me is too prominent... but when I see headlines with "super-bullish" in them, I want to short the living daylight out of the market. Which by the way we did today, with handsome reward..."
David, I bet if you looked at the RSI(7), you might see something there of at least minor interest (you know, accumulation zone less than 30, distribution zone above 70). ;)
Sold my KCLI today and split the proceeds between MET and AIZ.
MET got hammered today even though they were upgraded by A.M. Best, so I think they were just being sold down by the S&P futures, whereas KCLI was more steady.
I think in the next few months the large caps will generally do better as people try and move into the market quickly.
What I'd like to see now after today's selloff in gold is have it bounce around for a week or 2, then have it bounce back to around $175(GLD) at which time I would be shorting it.
I don't think we can go straight down from here, but I don think we are in line for a significant correction. The latest report from the Gold Counsel show consumption demand for gold falling off and the increase in demand coming from investors. I see this falling off as things improve and people want to move into income producing assets.
Gold industrial demand? A great majority of the gold ever mined still exists above ground.
The only two industrial uses I can think of involves those fancy gold plated connectors on A/V cables found at Radio Shack and as the back side sputtered heat sink on semiconductors.
AUMN/MDW/SCO - Well let's see, considering the US Government has decided to continue their retaliatory war on commodities speculators by allowing any thieving hedge fund, broker, or whomever who cares to steal money from trading accounts, perhaps we should consider holding SCO for a while?
Add to that the fundamentals of a banking system that no doubt will collapse as bank runs begin to cascade, and we might even be able to load up on crude, say, under ~$10 in a few months?
Not that there will actually be any available physical crude available for refining if prices were to fall to those levels mind you, b/c surely producers cannot extract crude from oil sand or shale at $10/bbl... Heck, the average cost to produce gold in South Africa has risen to ~$1600/oz, so if prices fall to that level, gold production there would become uneconomical as well.
Oh yeah, bot 100 CF at 161.22 bot 3 DEC 150 CF calls at 9.30. That's it for long calls.
SPY Jan 121/124 strangle underwater about $360 total today.
team wanted to short gold a couple of weeks ago and I think I did everything BUT call him a goober. That would have been a good trade with just about perfect timing.
"AUMN - As of last night's close, RSI(7) was 34.93 By this metric, it was not yet back into oversold territory."
CP -- I was scaling into AUMN recently not because it was greatly oversold but because it was greatly undervalued on a 3-year time horizon AND because both GDXJ and HAO were making higher lows since October 4, which was bound to pull up AUMN soon. Both GDXJ and HAO ended the day above their October 20 low, so the pattern of higher lows has not been broken yet in these sectors. It WAS broken, however, in S&P, which I find a bit worrisome...
Not that there's necessarily anything wrong with that, this trend is precisely how a fractional reserve system was designed to function. In fact, my argument is that the dollar has not lost enough of it's purchasing power over the past two decades and that it's in a severe bubble.
In order to preserve my buying power, I decided to cancel the buy limit for 200 shares of TBT at $18.50 and instead placed a buy limit for 3 January $124 TLT puts at $6.50.
Didn't day industrial demand, said consumption demand meaning jewelry, etc. is falling off. Was down 10% to 466 tonnes.
Industrial demand (tech) was flat year over year at 120 tonnes.
Investment demand was up 33% to 350 tonnes. This is the part of the market that I see to be particularly vulnerable. If gold prices start dropping, I wonder how solid these holder are. Also, gold bullishness still near record highs meaning anyone who wants to own gold probably already does.
That's why I believe the fall off in jewelry demand is so key. Without that, you don't have natural demand and you're counting on ever increasing people / central banks wanting to store it.
"consumption demand meaning jewelry, etc. is falling off."
Oh, okay... That makes sense I suppose. Consider as well, that paper prices of gold may be affected by a collapse of faith in the financial integrity of the commodities market. I'm hearing warnings of a cascade of margin calls on the MF global customers who are still being taken advantage of, and perhaps a general exodus (boycott?)...
BB - Thanks for mentioning the SeekingAlpha news site a day or 2 ago. Have added it to my incoming news flow.
http://seekingalpha.com/currents/all
6:50 PM Fitch has it wrong, U.S. banks could actually wind up benefitting from Europe's debt crisis, says Rochdale's Dick Bove, He cites two reasons: First, U.S. banks have a relatively low level of exposure to European banks. Second, the problems facing European banks could actually drive business to seek healthier institutions in the U.S. His top picks: PNC Financial (PNC) and Fifth Third Bancorp (FITB). Both get hit when Europe erupts, but neither are heavily exposed to European banks.
Toyota and Honda are just having some bad luck in addition to the world financial problems. I was looking for a new Honda Pilot Touring 4x4. My Honda guy told me it would be sometime next year before they get more Pilots - especially 4x4's.
I've been looking at the Ford Explorers. The Pilot seems more roomy on the inside but the Explorer is just about a luxury vehicle, at least for me.
Thailand Floods Plague Honda, Toyota http://www.autoobserver.com/2011/11/thailand-floods-plague-honda-toyota.html
Of course, it could also be the case that since EVERYONE placed stops at the visible 11/01 S&P low at 1209, today's brief break below that low finally did shake out all weak hands and now the path is all clear for the market to surge up.
I'll take a nice rally. The daily chart of the SPY isn't looking so good though. So I'm at a minimum hoping for a new 3 month high in the SPY while the MACD trends lower. Just the opposite of what has happened over the last 3 months.
'Eurodollar rates make a 16-month high while T-Bond rates drive sharply lower. Silver is on its way to the teens and stocks are heading to the 2009 lows.
And that is all I have to say about the markets, because, quite frankly, I have never seen a more fickle group of people than those who flock to internet chat rooms. The short-term orientation of most traders today is pathetic."
thx CP, i went to his site, pulled up the FACTOR TRADING PLAN. He has a section called "Trading Lesson Learned by Factor during the years". GOOD STUFF. You guys have probably been posting these things but I just have not been paying attn.
FWIW, ($30/mo to me?), the algo has switched to bear yesterday, especially the SPX. Confirmed today. Had been balls out bull resume for a while, which I did not believe. Don't ask me why I don't consistently stick with it. I remain lightly loaded and in cash mostly. Do not see opportunities and waiting for lower prices.
As Port points out, they and Toyota are having a tough time, but I think this is fully reflected in the stock. The stock is back at the 2006 lows (excluding the 08-09 crash) and should have solid support around $28.
The other thing I really like about Honda is they've got a solid motorcycle business with 50% worldwide marketshare and 10% operating margins on this. They growing in Asia and, unlike US car companies, they always generate a profit. Dividend is 2.7% and solid balance sheet. Thin it should get back to $40 within a year.
picked up some more NOIZ at $7.9...here is a research report I came across on the company:
"Reasons for Optimism - NOIZ Multi year refocused efforts finally paying off.
NOIZ has went away from being a prime contractor to government customers and has opted to become a subcontractor to such businesses by developing strong relationships with other larger prime government contractors such as Boeing, General Dynamics and Lockheed Martin. For a small company like NOIZ bidding for contracts vs. larger competitors is not an optimal situation to be in. Now they can gain access to a larger pool of contracts and don't have to worry as much with obstacles from dealing directly with the government.
Focus on higher margin, less cyclical product categories as opposed to commodity type products.
Historically, the company focused its efforts on manufacturing components for its customers. Customers could then use these components (as well as those from other sources), to build entire subsystems. However, a developing trend for customers to purchase entire subsystems prompted NOIZ to create a division that builds such systems (mainly in the higher margin pockets of its market).
After years of EPS growth inconsistency and stagnation it appears that NOIZ could be entering a period of a new EPS growth cycle. In recent history, EPS had never eclipsed $0.12. The company just reported EPS of $0.24 for its fiscal 2012 second quarter. If this new level of EPS can be maintained we believe that shares could significantly surpass our valuation scenarios presented later in this report. Furthermore, the current revenue stream has mainly emanated from its stable (but not the most exciting growth profile) component business. However, once the new subsystems business gains traction, new higher minimum revenues thresholds could be in the cards.
NOIZ may have reached a revenue/margin inflection point driven by operational efficiencies. The company achieved 2nd quarter revenues of $11.63 million, representing sequential revenue growth from the 2012 1st quarter of 16%. However, pre-tax margins nearly doubled to ~16%. Some of this operating leverage has resulted from the company devoting less resources to new product testing/development in its subsystems business which are now ready for deployment. Resources can now be deployed to higher margin venues. Once the subsystems revenues kick in we feel it is possible that margins could see further improvements. NOIZ currently is qualified to manufacture 4 subsystems (three government; one commercial), which it is actively marketing.
Favorable industry trends:
The acceleration of the adoption of the digital domain: "A key driver of demand for our products is the pervasive transformation of information from the analog domain to the digital domain. Because digital technologies require greater degrees of precision and rely more on miniature circuits than analog technologies, testing is critical for the rapid commercialization of reliable products necessitated by broadband and wireless communication technologies." (NOIZ provides testing services)
As mentioned earlier, the large defense prime contractors have shifted their business strategies to focus on platforms and systems integration and consequently have subcontracted the development of many systems and subsystems (new services that NOIZ provides).
The Stock's small float of just 3.2 million could lead to a sudden and sharp increase in its share price if momentum players stumble upon it.
GeoTeam overall subjective/confidence comfort level: Pertains to the ability of a company to achieve solid and consistent EPS growth over the next several quarters (from 1 to 10): 5 (We would like to see a few more quarters of elevated financial performance)
Potential Valuation Scenarios if the company can achieve its EPS growth goals
Short-Term Potential value based on fully taxed adjusted trailing EPS
P/E 25 * $0.48 = $12.00
Short-term Potential value based on Fiscal 2012 fully taxed adjusted Implied EPS Guidance
P/E 15 * 0.76 = $11.40
Caveats:
NOIZ has had a history of inconsistent quarterly EPS growth performance (new business focus is aimed at addressing this issue)
We would like to see a few more quarters of elevated financial performance before concluding that the fiscal 2012 2nd quarter was a true breakout period. (need to see the subsystems side of the business gain traction)
Cancellation/delay of backlog
Customer concentration
The company still has exposure to government business which opens it up to the risk of budget cuts as the U.S. Congress addresses the debt crisis. However, the company does focus on areas that may be less apt to this risk. Furthermore, the company's ability to help its customers reduce implementation costs and deliver product quickly could give it an edge over its competitors.
PHYS - Sprott Physical Gold is the only purchase I have made lately and that was a month ago. It also is the only stock I hold with a profit. Three others are losers. PHYS is nowadays selling at a decent premium to NAV of 2-3%, much lower than last year.
I think the point of these triangular flag formations is that they exhaust both buyers and sellers, convincing them that they better stay on the sidelines until a clear trend emerges. However, when the trend emerges with a large gap up or a gap down, people don't have the guts to jump in initially and start chasing the trend gradually, thus making it a long-lived one. It is very possible that a breakout to the upside should start with such a violent shakeout.
ReplyDeleteWTIC - I see now, the pipeline reversal unlocks the captured market and the spread with BRENT narrowed as a result.
ReplyDeleteMU and RBUS ruling today...
Ah, come on 2nd. You lost a few shekels on your BAC trade. Isn't this going a little too far...
ReplyDeletehttps://twitter.com/?photo_id=1#!/abc7newsBayArea/status/136950942384930816/photo/1
Pack up and go home bro.
2nd - Timing these TZA entries is one BIG PITA for sure. Here's something I've been looking at...
ReplyDeleteOver the weekend I was reading through John Murphy's (StockCharts) Market Updates and he showed an example of a Renko chart. I had never heard of it. It basically amounts to using a 'coarse quantization' of the stock price movement...
http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:renko
When applied to say a (6d-10m) chart it does a very good job of showing the turn points. Of course, there are still some whip-saws, but 'Not Bad'...
http://www.screencast.com/t/XvYdGRoapp
WTIC - Time to short crude?
ReplyDeletehttp://www.capturetrends.com/comodities/1467-crude-oil-reaches-a-bear-point.html
Short crude? The volume in SCO/UCO seems to say yes.
ReplyDeleteHere you go David.
ReplyDeleteBudget Won’t Constrain U.S. Pacific Plans: Obama
http://www.bloomberg.com/news/2011-11-16/obama-says-budget-constraints-won-t-lessen-u-s-military-plans-in-pacific.html
If we aren't going to our banker for the funds (China, the object of our concern) then there are few options but to print more.
I don't think I would short crude. The price of Brent has been hanging in steadily for a few months. I think the odds are WTIC gets pulled up, not the other way around. This will take time, so perhaps a short term short makes sense. I think the easier play is buy the Canadian energy companies that will benefit from higher prices - like a SU or CNQ. Both are still down substantially and growing production.
ReplyDeleteRe the Supercommittee, if I was on that, I'd say:
ReplyDeleteOK, Dem's make whatever tax increases and cuts you want worth $1 trillion. Same for the Republican's.
Then just pass them all and let the public know whose are whose and they can decide next election who did a better job.
It's easy to say anything when you know it doesn't have a chance of being passed. I say hold them to what they say and let them do it.
Was showing my 18 year old daughter the traingle formation in the S&P and how everyone is looking for it to resolve one way or another for a major move.
ReplyDeleteShe says "It'll probably just keep going back and forth in a straight line across the chart". Might be the right answer from someone who has nothing to win or lose in the market.
We had a dead cat bounce in S&P futures an hour ago, and now the futures are making a new low...
ReplyDeleteSCO -- here's a (1y-d) Renko... there's a reversal in there somewhere, but as Vad always says, 'one needs to play the RHS of the reversal NOT the LHS'
ReplyDeletehttp://www.screencast.com/t/COBsHAQvD
Gasoline headed up, Get long UGA?
ReplyDelete"pass them all and let the public know whose are whose and they can decide next election who did a better job."
ReplyDeleteGreat idea, and yes, the wedge will probably morph into another longer formation! ;)
"Was showing my 18 year old daughter the traingle formation in the S&P and how everyone is looking for it to resolve one way or another for a major move."
ReplyDeleteAh, so I am not the only one seeing this! In this case, the first move will likely be a false move. Thus, today's decline could have been that false move!
Check this out, folks -- I think this is important: the $USD index is almost as high now as it was during the early October peak, while S&P is MUCH higher now that its October 4th low. From this point, the upside to $USD is very limited, while the downside is huge. Thus, it is much more likely that the next big move in S&P will be to the upside, on the heels of a falling $USD. Unless, of course, Europe screws up, Euro collapses and $USD zooms. But then, ECB will open up its printing press and the markets will zoom. So in any case, any drop from here will be limited in nature and will be a great buying opportunity. Maybe the bankers actually WANT a drop in equities now, so as to motivate ECB to start printing!
ReplyDeleteFWIW, Vad offered an opinion on the EURO going forward...
ReplyDeletehttp://tradinglog.realitytrader.com/2011/11/will-they-fail-to-bail.html
David,
ReplyDeleteit seems to me lately that our good days are ones when the futures tank overnight, then we come back during the day.
Should have know it would be trouble when I woke up at 5:00 AM and the futures were up.
CP, WTIC going up shouldn't have much effect on Gasoline futures as these are priced off Brent Oil.
ReplyDeleteThat's why the refiners have been making so much money lately and also why they got hit so hard today.
BB - Yes, it'll be interesting to see how this resolves. Murphy noted in last weeks' Market Update that triangle patterns are usually trend continuation patterns (so probably UP)...
ReplyDeletehttp://www.screencast.com/t/aOLghdQEooGY
But then ('jack black' #100207), there's a different view (which I lean towards)...
http://caracommunity.com/sites/default/files/dow-daily-16th-nov-2011.jpg
Kyle, I think "jack black" is looking too far back in his forecast -- the "system" was totally different back then, and hence the "output" of that system (i.e., the price) cannot be compared with the output of the current "system."
ReplyDeleteFutures are back in the green now... The low they made at EOD today was, once again, exactly on the upward sloping line connecting the previous 3 lows in November.
ReplyDeleteWe haven't seen in a while a scary ending of one day followed by "gap-n-go" the next day. Tomorrow we might finally see a rerun of that movie...
A lot of activity sure takes place overnight these days.
ReplyDeleteCould have been the comment from a new member of the Royal Bank of Australia:
A European recession won't be enough to seriously endanger growth in Australia and Asia as a whole, a recently-appointed board member of the Reserve Bank of Australia, or RBA, said Thursday.
A likely European downturn won't be "catastrophic for us or the region," John Edwards said in a speech in Melbourne. "A financial crisis caused by a banking crisis in Europe remains a threat but not one I expect to occur."
David, the 'market is the market' it tends to retest levels and repeat patterns. That's why trendlines traced from back in the 80's still have relevance today...
ReplyDeletehttp://www.screencast.com/t/AbxSXNLdNpc
I agree with Vad. Prognosis for Euro is not good. Understand, the European Union can survive. The Euro as currency may not. That means the Eurozone may be depleted (those 17 out of 27 countries who adhere to the Euro as their currency.) They cannot print. Contagion danger very high as US banks are already on flimsy ground. It becomes another financial crisis and another recession or worse.
ReplyDeletehttp://en.wikipedia.org/wiki/Euro
Here is an excellent discussion from Hussman about the options available to EU:
ReplyDeletehttp://www.hussmanfunds.com/wmc/wmc111114.htm
He ends his weekly commentary with a note that warms my heart:
"As for precious metals, gold prices tend to be inversely correlated with the dollar provided that gold prices are relatively stable in foreign currency terms. At present, we observe continued upward pressure on gold prices in foreign currency terms, so even the prospect of a stronger dollar doesn't necessarily imply weakness in the dollar price of gold. Moreover, gold equities are near record lows relative to the metal, and combined with other factors, we continue to gauge the Market Climate in precious metals shares as very positive."
Folks, have you seen the chart of French-German bond yield spread?
ReplyDeletehttp://www.bloomberg.com/apps/quote?ticker=.FRAGER10:IND
This is not a pretty chart...
SPX(1986-2011) - a little pitchfork projection from the '87 crash forward...not to bad of a projection actually...
ReplyDeletehttp://www.screencast.com/t/BUKIDgrgNwA
Mark- True, for sure. I won't allow any future losses result in posting a Carpenters video.
ReplyDeleteKyle - That chart seems to suggest it wouldn't necessarily be a bad time to be short right now...
ReplyDeleteCP - we discussed it here a week or 2 ago... that double top (1553, 1576) & the lower 1370 high this year has that Landry 'kiss-the-MA-goodbye' look to it. Don't know man...
ReplyDeleteVery funny!!!
ReplyDeletehttp://www.ritholtz.com/blog/2011/11/colbert-protesters-removed-by-caesarean/?utm_source=dlvr.it&utm_medium=twitter
Even though I'm bullish short term, it wouldn't surprise me to come in to a black monday situation on any given day. When financial systems start freezing up, things just go bad in a hurry.
ReplyDeleteI was busy today so i'm scrolling thru the Buzz and Banter now. Items of interest
More job cuts at the banks. Actually i have a buddy at one of the banks that said they have an announcment tomorrow and he wouldn't be surprised if he gets let go.
Yesterday I read where GS is decreasing the number of partners which helps lower their expenses in a hurry.
One guy comments that the TED spread reached a 52 week high and he notes that in 2008, this signified that the banking system was stressed., Hey, I think that ties in well with my opening comment.
WTI - two comments on WTI, one says that traders and clearing firms unhappy with CME are closing out trades and boycotting any further trading which I assume means thru the CME. The other rumor is that a large energy fund was being taken out. As far as natty goes, cash is tanking so that would naturally take the futures down with it but who knows.
MFG - Hmm, $600M/50,000 is $12,000.... MF Global had 50,000 customers with an average of just $12k of cash in their accounts?
ReplyDeleteNow maybe I'm beginning to understand why all these constant 100 share trades after all....
CIM - Gap up off the second bottom needs to fill, current;y, this one has an almost 20% dividend...
ReplyDeleteTwo more of my stocks received buyout offers this week - Emerge Energy and Iberian Minerals.
ReplyDeleteThey are both small cap Canadian stocks, but the common factor is they both have great resource bases. It confirms that for a lot of companies it easier to develop new projects by looking in the stock market than looking in the ground. It also says a lot of these stocks are cheap on current fundamentals and are a good place to look for investments.
Europe got you down? Get over it bro. We're going higher. Americans don't give a hoot about Europe.
ReplyDeleteSVM - Added at $8.20 on the gap close, didn't look like anybody wanted to offload their shares at $8.10...
ReplyDeleteEurope - What's an American?
ReplyDeleteBTW & FYI, Bro's don't cuddle...
CAAS? - Chinese auto market is larger than US auto market now, and these guys make parts for GM, they're a real company as best as I can verify and was mentioned by Chinese government representative representative last night on Charlie Rose show...
ReplyDeleteUnfortunately I didn't catch her name or title though, I was about half asleep...
CAAS - Note that RSI(7) at yesterday's close was $19.24...
ReplyDeleteSVM - RSI(7) should be crossing under 30 on today's weakness (estimate based on yesterday's value of ~34).
NDQ not looking healthy.
ReplyDeleteSPX has broken 1220. Another medical emergency.
ReplyDeleteWell, folks, I don't know what is going on, but a break of 1220 on S&P breaks the upward sloping trendline I saw on the S&P futures charts. Hence, in the spirit of trading what I see (and not what I want to see), I just bought 3 December $40 puts on DB at $5.50 each, so as to have a "consolation prize" in the case we continue to sell off hard.
ReplyDeleteThat's interesting: both Italian and French bond yields are down today, so what's all this worry about?
ReplyDeleteDavid - I think those bond yields are from yesterday...what site r u using?
ReplyDeleteI just looked at the SLV chart -- holly cow! Who is selling it so hard??? I actually hoped to see such a violent move to the upside in the near future... So I guess I can forget about my AUMN calls...
ReplyDeletehttp://www.bloomberg.com/apps/quote?ticker=GBTPGR10:IND
ReplyDeletehttp://www.bloomberg.com/apps/quote?ticker=.FRAGER10:IND
AUMN is actually holding up pretty well, though -- much better than GDXJ. I guess AUMN was already sold down SO HARD that it is totally disconnected now from gold/silver fundamentals and is being traded by hedge funds so as to extract as much money from human traders as possible...
ReplyDeleteDavid - I think your point about how over leverage causes stocks to go down in the short term despite the long term story still being intact is right on. In my mind, there really is no reason for the stock market to drop in the short term given that the long term is what matters. We will continue to grow earnings over time, which is what matters most if you're investing in stocks.
ReplyDeleteI just love realtime posts, don't you?
ReplyDelete"Re: .....
Submitted by Vadym Graifer (2692 comments) on Thu, 11/17/2011 - 13:22 #100271 (in reply to #100270)
Maybe contrarian in me is too prominent... but when I see headlines with "super-bullish" in them, I want to short the living daylight out of the market. Which by the way we did today, with handsome reward..."
David - "I just looked at the SLV chart -- holly cow! Who is selling it so hard???"
ReplyDeleteWhat value do you have for the oversold/overbought indicator (RSI(7) and where in the cycle is the price?
CP -- I don't use any oversold/overbought indicators. I determine these conditions approximately, by just looking at the charts.
ReplyDeleteDavid, I bet if you looked at the RSI(7), you might see something there of at least minor interest (you know, accumulation zone less than 30, distribution zone above 70). ;)
ReplyDeleteSPX - Monthly Pivot Point =
ReplyDelete= 1206.91 (went to double-check the value & hit the post button instead...)
ReplyDeleteAUMN - As of last night's close, RSI(7) was 34.93 By this metric, it was not yet back into oversold territory.
ReplyDeleteAll along the watchtower:
http://www.youtube.com/watch?v=l6Z7LR8Z9_o
Sold my KCLI today and split the proceeds between MET and AIZ.
ReplyDeleteMET got hammered today even though they were upgraded by A.M. Best, so I think they were just being sold down by the S&P futures, whereas KCLI was more steady.
I think in the next few months the large caps will generally do better as people try and move into the market quickly.
So 1193 is next?
ReplyDeleteHad a meeting with potential new clients. Huge house, guest house, pool house, pool, etc.
He's a Quant Hedge Fund partner.
What I'd like to see now after today's selloff in gold is have it bounce around for a week or 2, then have it bounce back to around $175(GLD) at which time I would be shorting it.
ReplyDeleteI don't think we can go straight down from here, but I don think we are in line for a significant correction. The latest report from the Gold Counsel show consumption demand for gold falling off and the increase in demand coming from investors. I see this falling off as things improve and people want to move into income producing assets.
"He's a Quant Hedge Fund partner."
ReplyDeleteDon't forget to offer a special discount, the size of which is dependent on if he also manages capital on behalf of congressional members.
Gold industrial demand? A great majority of the gold ever mined still exists above ground.
ReplyDeleteThe only two industrial uses I can think of involves those fancy gold plated connectors on A/V cables found at Radio Shack and as the back side sputtered heat sink on semiconductors.
AUMN- Impressive.
ReplyDeleteMDW- Very impressive.
SVM - I see Max Pain for this one was/is $8.00
ReplyDeletethis is going to be the ultimatte jynx but every one of my holdings was up today: xwes, noiz, nls.
ReplyDeletemark - feel free to grab some insider insights from ur potential client.
guys - this europe crap will blow over soon. just be ready for a furious rally when it passes because our econ is gaining steam.
AUMN/MDW/SCO - Well let's see, considering the US Government has decided to continue their retaliatory war on commodities speculators by allowing any thieving hedge fund, broker, or whomever who cares to steal money from trading accounts, perhaps we should consider holding SCO for a while?
ReplyDeleteAdd to that the fundamentals of a banking system that no doubt will collapse as bank runs begin to cascade, and we might even be able to load up on crude, say, under ~$10 in a few months?
Not that there will actually be any available physical crude available for refining if prices were to fall to those levels mind you, b/c surely producers cannot extract crude from oil sand or shale at $10/bbl... Heck, the average cost to produce gold in South Africa has risen to ~$1600/oz, so if prices fall to that level, gold production there would become uneconomical as well.
Ugghh
ReplyDeleteLet's see what foolish moves I made today,
Oh yeah, bot 100 CF at 161.22
bot 3 DEC 150 CF calls at 9.30. That's it for long calls.
SPY Jan 121/124 strangle underwater about $360 total today.
team wanted to short gold a couple of weeks ago and I think I did everything BUT call him a goober. That would have been a good trade with just about perfect timing.
feel free to use me as a valuable contrarian indicator
ReplyDeleteI'll try to post when I'm selling my longs so you guys can load up.
"AUMN - As of last night's close, RSI(7) was 34.93 By this metric, it was not yet back into oversold territory."
ReplyDeleteCP -- I was scaling into AUMN recently not because it was greatly oversold but because it was greatly undervalued on a 3-year time horizon AND because both GDXJ and HAO were making higher lows since October 4, which was bound to pull up AUMN soon. Both GDXJ and HAO ended the day above their October 20 low, so the pattern of higher lows has not been broken yet in these sectors. It WAS broken, however, in S&P, which I find a bit worrisome...
David - On a long enough time scale, it's difficult to say anything's gone down except for the purchasing power of the dollar...
ReplyDeleteNot that there's necessarily anything wrong with that, this trend is precisely how a fractional reserve system was designed to function. In fact, my argument is that the dollar has not lost enough of it's purchasing power over the past two decades and that it's in a severe bubble.
ReplyDeleteIn order to preserve my buying power, I decided to cancel the buy limit for 200 shares of TBT at $18.50 and instead placed a buy limit for 3 January $124 TLT puts at $6.50.
ReplyDeleteThanks port!
ReplyDeleteCP,
ReplyDeleteDidn't day industrial demand, said consumption demand meaning jewelry, etc. is falling off. Was down 10% to 466 tonnes.
Industrial demand (tech) was flat year over year at 120 tonnes.
Investment demand was up 33% to 350 tonnes. This is the part of the market that I see to be particularly vulnerable. If gold prices start dropping, I wonder how solid these holder are. Also, gold bullishness still near record highs meaning anyone who wants to own gold probably already does.
That's why I believe the fall off in jewelry demand is so key. Without that, you don't have natural demand and you're counting on ever increasing people / central banks wanting to store it.
Also placed a buy limit for 10 April $5 AUMN calls at $2.00 each.
ReplyDeleteHmm... Wonder if this is the sell off that closes that gap up over the 50SMA?
ReplyDelete"consumption demand meaning jewelry, etc. is falling off."
ReplyDeleteOh, okay... That makes sense I suppose. Consider as well, that paper prices of gold may be affected by a collapse of faith in the financial integrity of the commodities market. I'm hearing warnings of a cascade of margin calls on the MF global customers who are still being taken advantage of, and perhaps a general exodus (boycott?)...
Yeah, the MF windup could be causing a lot of the big swings we are seeing in all the commodities the last couple of weeks.
ReplyDeleteNow NY Times is saying MF didn't just misplace the money, but actually stole from customers.
Could get ugly. And there better be someone going to jail if true or it could be the fuse for Occupy Wall street to really explode.
$silver - Boy this sure is an ugly chart, reminds me of the CSCO chart over the last 12 months.
ReplyDeleteBB - Thanks for mentioning the SeekingAlpha news site a day or 2 ago. Have added it to my incoming news flow.
ReplyDeletehttp://seekingalpha.com/currents/all
6:50 PM Fitch has it wrong, U.S. banks could actually wind up benefitting from Europe's debt crisis, says Rochdale's Dick Bove, He cites two reasons: First, U.S. banks have a relatively low level of exposure to European banks. Second, the problems facing European banks could actually drive business to seek healthier institutions in the U.S. His top picks: PNC Financial (PNC) and Fifth Third Bancorp (FITB). Both get hit when Europe erupts, but neither are heavily exposed to European banks.
BB, Kyle, Bove's comments make sense to me. Good point.
ReplyDeleteToyota and Honda are just having some bad luck in addition to the world financial problems. I was looking for a new Honda Pilot Touring 4x4. My Honda guy told me it would be sometime next year before they get more Pilots - especially 4x4's.
ReplyDeleteI've been looking at the Ford Explorers. The Pilot seems more roomy on the inside but the Explorer is just about a luxury vehicle, at least for me.
Thailand Floods Plague Honda, Toyota
http://www.autoobserver.com/2011/11/thailand-floods-plague-honda-toyota.html
Of course, it could also be the case that since EVERYONE placed stops at the visible 11/01 S&P low at 1209, today's brief break below that low finally did shake out all weak hands and now the path is all clear for the market to surge up.
ReplyDeleteI'll take a nice rally. The daily chart of the SPY isn't looking so good though. So I'm at a minimum hoping for a new 3 month high in the SPY while the MACD trends lower. Just the opposite of what has happened over the last 3 months.
ReplyDeleteThe $USD index right now is below the highest level it reached on Tuesday. If $USD is not gonna move up, then S&P is not gonna move down much...
ReplyDeleteBarndt today...
ReplyDelete'Eurodollar rates make a 16-month high while T-Bond rates drive sharply lower. Silver is on its way to the teens and stocks are heading to the 2009 lows.
And that is all I have to say about the markets, because, quite frankly, I have never seen a more fickle group of people than those who flock to internet chat rooms. The short-term orientation of most traders today is pathetic."
Barndt must be talking about me.
ReplyDeleteBarndt who? Sorry, I've lost track.
ReplyDeleteSLV - This chart now has an RSI(7) of less than 30, it's getting there... Too late to short when this indicator is in oversold territory, IMO.
ReplyDeleteAnd yes, it fell out of the wedge formation and silver now has a target of $18. ;)
This Brandt:
ReplyDeletehttp://peterlbrandt.com/
SPY - I've got an RSI(7) of 38.61, not quite in the accumulation zone but getting close.
ReplyDeletethx CP, i went to his site, pulled up the FACTOR TRADING PLAN. He has a section called "Trading Lesson Learned by Factor during the years". GOOD STUFF. You guys have probably been posting these things but I just have not been paying attn.
ReplyDeleteFWIW, ($30/mo to me?), the algo has switched to bear yesterday, especially the SPX. Confirmed today. Had been balls out bull resume for a while, which I did not believe. Don't ask me why I don't consistently stick with it. I remain lightly loaded and in cash mostly. Do not see opportunities and waiting for lower prices.
ReplyDeleteStaying "lightly loaded" can keep you spry for years! ;)
ReplyDeleteport - yep, we've been keeping an eye on Brandt.
I actually think that S&P drops briefly below $1200 and then stages a major rally to a new post-August high, just like it did in July 2009.
ReplyDeletei gotta say i admire the stubborness of permabears...any time we get a drop of 2% we're going back to 2009 lows.
ReplyDeleteMasimo Corp Started At Underperform By BofA-Merrill Lynch
ReplyDeleteBought some more Honda (HMC) this morning.
ReplyDeleteAs Port points out, they and Toyota are having a tough time, but I think this is fully reflected in the stock. The stock is back at the 2006 lows (excluding the 08-09 crash) and should have solid support around $28.
The other thing I really like about Honda is they've got a solid motorcycle business with 50% worldwide marketshare and 10% operating margins on this. They growing in Asia and, unlike US car companies, they always generate a profit. Dividend is 2.7% and solid balance sheet. Thin it should get back to $40 within a year.
HMC- Interesting idea. Thanks.
ReplyDeletepicked up some more NOIZ at $7.9...here is a research report I came across on the company:
ReplyDelete"Reasons for Optimism - NOIZ
Multi year refocused efforts finally paying off.
NOIZ has went away from being a prime contractor to government customers and has opted to become a subcontractor to such businesses by developing strong relationships with other larger prime government contractors such as Boeing, General Dynamics and Lockheed Martin. For a small company like NOIZ bidding for contracts vs. larger competitors is not an optimal situation to be in. Now they can gain access to a larger pool of contracts and don't have to worry as much with obstacles from dealing directly with the government.
Focus on higher margin, less cyclical product categories as opposed to commodity type products.
Historically, the company focused its efforts on manufacturing components for its customers. Customers could then use these components (as well as those from other sources), to build entire subsystems. However, a developing trend for customers to purchase entire subsystems prompted NOIZ to create a division that builds such systems (mainly in the higher margin pockets of its market).
After years of EPS growth inconsistency and stagnation it appears that NOIZ could be entering a period of a new EPS growth cycle. In recent history, EPS had never eclipsed $0.12. The company just reported EPS of $0.24 for its fiscal 2012 second quarter. If this new level of EPS can be maintained we believe that shares could significantly surpass our valuation scenarios presented later in this report. Furthermore, the current revenue stream has mainly emanated from its stable (but not the most exciting growth profile) component business. However, once the new subsystems business gains traction, new higher minimum revenues thresholds could be in the cards.
NOIZ may have reached a revenue/margin inflection point driven by operational efficiencies. The company achieved 2nd quarter revenues of $11.63 million, representing sequential revenue growth from the 2012 1st quarter of 16%. However, pre-tax margins nearly doubled to ~16%. Some of this operating leverage has resulted from the company devoting less resources to new product testing/development in its subsystems business which are now ready for deployment. Resources can now be deployed to higher margin venues. Once the subsystems revenues kick in we feel it is possible that margins could see further improvements. NOIZ currently is qualified to manufacture 4 subsystems (three government; one commercial), which it is actively marketing.
Favorable industry trends:
The acceleration of the adoption of the digital domain: "A key driver of demand for our products is the pervasive transformation of information from the analog domain to the digital domain. Because digital technologies require greater degrees of precision and rely more on miniature circuits than analog technologies, testing is critical for the rapid commercialization of reliable products necessitated by broadband and wireless communication technologies." (NOIZ provides testing services)
As mentioned earlier, the large defense prime contractors have shifted their business strategies to focus on platforms and systems integration and consequently have subcontracted the development of many systems and subsystems (new services that NOIZ provides).
ReplyDeleteThe Stock's small float of just 3.2 million could lead to a sudden and sharp increase in its share price if momentum players stumble upon it.
GeoTeam overall subjective/confidence comfort level: Pertains to the ability of a company to achieve solid and consistent EPS growth over the next several quarters (from 1 to 10): 5 (We would like to see a few more quarters of elevated financial performance)
Potential Valuation Scenarios if the company can achieve its EPS growth goals
Short-Term Potential value based on fully taxed adjusted trailing EPS
P/E 25 * $0.48 = $12.00
Short-term Potential value based on Fiscal 2012 fully taxed adjusted Implied EPS Guidance
P/E 15 * 0.76 = $11.40
Caveats:
NOIZ has had a history of inconsistent quarterly EPS growth performance (new business focus is aimed at addressing this issue)
We would like to see a few more quarters of elevated financial performance before concluding that the fiscal 2012 2nd quarter was a true breakout period. (need to see the subsystems side of the business gain traction)
Cancellation/delay of backlog
Customer concentration
The company still has exposure to government business which opens it up to the risk of budget cuts as the U.S. Congress addresses the debt crisis. However, the company does focus on areas that may be less apt to this risk. Furthermore, the company's ability to help its customers reduce implementation costs and deliver product quickly could give it an edge over its competitors.
NOIZ - I like companies like that and they're profitable(a rarity these days), to boot!
ReplyDeleteHard for me to get excited over a chart that's already run to the moon knowing the second I buy it tanks...
PHYS - Sprott Physical Gold is the only purchase I have made lately and that was a month ago. It also is the only stock I hold with a profit. Three others are losers. PHYS is nowadays selling at a decent premium to NAV of 2-3%, much lower than last year.
ReplyDeletehttp://www.sprottphysicalgoldtrust.com/NetAssetValue.aspx