Friday, December 2, 2011
12/2/11 Debrief over Negra Modelo
Selling into a +7.4% week? It ain't the latest thing.
(a) Gains between +6% and +12% on AA/GE/POT/TM/WFC since November 23.
(b) Total port +8.8% since November 22/23, and +30% since October 4.
From a common sense POV, how many times do you think the market will allow those kinds of gains without a pushback?
On my second Negra Modelo. Sure, we'll get to 1400 soon enough- I'm just trying to tweak a few extra percentage points along the way.
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I will leave the technical details to Craig.
ReplyDeleteMark- Too funny. I'll bet if we pulled back the curtain on a few CC bloggers, we'd be blown away.
ReplyDelete2nd- No doubt. Great zig/zag bro.
ReplyDeleteI wonder how much Heckmann is paying Cramer?
ReplyDeleteYeah I agree, nice trading.
ReplyDeleteYou do have the risk that something really good happens in Europe this weekend and we gap up 5% and you are stuck, but playing the odds, a pullback is much more likely.
I own about 80 stocks, mostly small caps and am usually looking for at least a double out of them. You have to be more patient in trading these as you never know when these types will move. They do get pulled by the market, but less so than a S&P or ETF stock. For example, I had 3 stocks taken out in the 2 weeks before the market turned up (this is extremely rare), but if I was out of the market, I would have missed these large gains.
I'm very interested to see when you get back in.
It depends when you got in, doesn't it?
ReplyDeleteIf you got in at 108 on the spy or 61 on the Russell then you can hang on and place stops there and not worry too much.
But if you got in later then you have less margin of safety and you may have different parameters.
It also depends on the type of trading you do.
Some buy extremes in sentiment or bottoms (+/-), some are RS traders, some value, some trend, etc. etc.
It's really hard in sideways ranges where the markets are going, especially when they are largely news driven.
If you are flat right now what do you do?
There is no resolution to Europe, we just came off a 10% week, we are at the 200 dma and the bottom of overhead supply (resistance).
The safe bet is to take profits and IF we get through the overhead, wait for a pullback and then go long, OR, wait to see if resistance holds at the 200 and go short to SPY 117 or so.
Nobody knows, except the charts do look iffy as do the sector charts, with a couple of exceptions.
I've known 2nd for a long time now, and I know he will *feel* the sentiment like no one else and if he get's back in it will be at the time of extreme weight on one foot or the other.
BB- What's your normal cash level? And to you ever access 'other' funds?
ReplyDeleteA Farewell from Herman Cain
ReplyDeleteMy Final Thoughts
Dear Friend,
And when I say “friend,” I mean it in the normal way, not “someone I’ve been sleeping with for 13 years.” Unless, of course, I have been sleeping with you for 13 years. In that case, I do mean it that way.
It is with a heavy heart that I have decided to end my inspirational quest for the White House. After much reassessing and reconsidering, I have decided to spend more time being screamed at by my wife. And by “more time,” I mean 24 hours a day, stopping only for bathroom breaks.
But before I go, let me share with you my final thoughts on my campaign. After months of crisscrossing this great land of ours and participating in over three hundred televised debates, I am being disqualified because of an extramarital affair. And that raises the following question: are you fucking kidding me?
I mean, let’s get real. I never heard of Libya. I didn’t know whether that CNN dude’s name was Wolf or Blitz. And my only training for running the #1 nation in the world was running its #8 pizza chain. Yet none of that, I repeat, none of that disqualified me. In fact, I was the front-fucking-runner, as long as I kept my 9-9-9 in my pants. (I have no idea what I meant by that -- I just like saying 9-9-9.)
But here’s the part that really kills me. You’re kicking me to the curb because I was messing around, and instead you’re going with… Newt Gingrich? I repeat: are you fucking kidding me? Oh, I know what you’re saying: you love Newt because he’s an “intellectual.” Well, Newt Gingrich is the intellectual of the Republican field the way Moe was the intellectual of the Stooges.
And that leads me to my final point: you disgust me, America. Right now if I had my way, I’d up and move to another country. I really, truly would. Only I don’t know where any of them are, and my wife won’t let me leave the house.
Goodbye forever,
Herman
You write that CC?
ReplyDeleteNo, that's Andy Borowitz from the Borowitz Report.
ReplyDeleteBorowitz is a comedian that does political commentary on the absurd, which of course means he has a lot of material available.
http://www.borowitzreport.com/
For example:
ReplyDeleteIn Positive Economic Sign, Walmart Customers Killing Each Other to Buy Shit
Pepper Spraying, Homicide Bullish Indicators, Economists Say
MINNEAPOLIS (The Borowitz Report) – In what economists are hailing as a clear sign of economic recovery, Walmart customers across the USA jammed into stores on Black Friday, sometimes killing each other to buy useless shit.
“We have been looking for evidence that the economy is on the mend,” said Davis Logsdon, chairman of the economics department at the University of Minnesota. “When people resort to homicide to buy a Blu-ray player, that is very, very good news indeed.”
Mr. Logsdon said he was “impressed” by the lengths to which some Walmart customers were going to grab coveted sale items: “They’re using tactics we usually associate with the UC-Davis police.”
With many customers using pepper spray and other weapons to get a shopping advantage, however, Mr. Logsdon advised Americans not to enter a Walmart unarmed.
“If you want to get your hands on a doorbuster, you’d better have a firearm,” he said. “Fortunately, Walmart is offering several great doorbusters on firearms.”
Walmart and other retailers’ decision to commence their Black Friday sales a day early carries with it an added benefit for consumers, he noted: “Now, Americans will be able to declare bankruptcy one day earlier.”
All in all, Dr. Logsdon said that the increased violence and mayhem at retail outlets across the country was “a testament to the greatness of the American consumer.”
“Egyptians risk their lives for new government,” he said. “Americans bravely do the same for new flat screens.”
Greece Offers to Repay Bailout with Giant Horse
ReplyDeleteSteed Wheeled Into Brussels at Night
BRUSSELS (The Borowitz Report) – In what many are hailing as a breakthrough solution to Greece’s crippling debt crisis, Greece today offered to repay a bailout from the European Union nations by giving them a gigantic horse.
Finance ministers from sixteen EU nations awoke in Brussels this morning to find that a huge wooden horse had been wheeled into the city center overnight.
The horse, measuring several stories in height, drew mixed responses from the finance ministers, many of whom said they would have preferred a cash repayment of the EU’s bailout.
But German Chancellor Angela Merkel said she “welcomed the beautiful wooden horse,” adding, “What harm could it possibly do?”
CC- Thanks for the link. Reminds me of The Onion. Too funny!
ReplyDeleteCain will drop out this weekend, and Gingrich won't be on the presidential ballot.
ReplyDeletegold:copper - This chart is looking better to me, or at lest it's not currently heading up, which would not be good...:
ReplyDeletehttp://stockcharts.com/c-sc/sc?s=$GOLD:$COPPER&p=D&yr=0&mn=7&dy=0&i=p99295968853&a=217994610&r=7 736
Mark,
ReplyDeleteI am normally pretty much fully invested with cash around 5%. In 2007, it got higher (about 10%), because it was hard to find good stocks to buy, not because I had any great thought the market would crash. I was also doing a lot of arb trading in 2008 as it was easy to make 30%+ annualized on trades and even with money being tight, pretty much all deals closed. I bought on the way down into the fall of 2008 as the market went down and was pretty much fully invested. As the market went down into March, 2009, I did pull some money out of my line of credit and bought maybe 5% more, but that was just luck ion that a couple of stocks reported really good earnings in March, 2009 and the stocks tanked and I couldn't resist. I try to be very conservative if I borrow money to buy a stock.
BB- Thanks. If I was more certain about my income stream I wouldn't be trading like I am now. I usually like to have about 10 positions on with 10-15% cash.
ReplyDeleteWhen your positions become fully valued in your eyes, do you take them off or simply reduce your exposure?
I usually buy about half of what I want to own at first and then try and get the other half cheaper. If I have a position which gets too large (eg. MGIC when it was up at $9.00), I will sell part to reduce risk. When the stock gets fully valued, I generally sell it all (and never look at it again for at least a few months!)
ReplyDeleteIn my stock spreadsheet, I have a target price and date and it calculates out an expected annualized ROI. What I do is look at the low expected ROI stocks and make a call. I also have a subjective Risk Factor, so I don't mind a lower ROI if risk is low, but is ROI is low and Risk is high, I will sell.
I probably have too many stocks, but a lot of them are pretty risky, so I want to keep those positions fairly small. As an example, if I want copper exposure, instead of buying a Freeport Mc-moran (FCX) with 5% of my portfolio, I'll do buy 5 small-caps at 1%. It takes more work, but generally works out better.
Managing 10 positions like you do is simpler in many ways and let's you make bigger bets which can pay off better if you are right and move faster in and out.
I generally hold stocks for 3 years I'd guess and it doesn't bother me if they go down quite a bit as long as I see the value is there in the long run.
Good article in Barron's about why now is a good time to buy. Talking about the value in the megacap stocks.
ReplyDeleteIt's interesting because I am have been wondering about the value in the smallcaps lately. The thing I'm mulling over is if you can get a a largecap at the same valuation as a smaller stock (like MET vs. KCLI), why take the risk on the smallcap unless it has much better growth potential?
http://online.barrons.com/article/SB50001424052748703922804577066323160174632.html?mod=BOL_funds_recent#articleTabs_panel_article%3D1
BB,
ReplyDeleteNice system. How did you come about doing it this way? Your not a pro money manager are you? Do you pay attention to the business cycle in the sectors you pick?
Just finished a presentation for a $2M home in Healdsburg.They seemed pleased, but you never know. Keep your fingers crossed. If I get that one I'll be looking to get back to normal trading.
ReplyDeleteWhere the hell is JB? SAP buys SFSF for 40 bucks/share.
ReplyDeleteRoBear, my system is just based on my various readings like Ben Graham, Tweedy Brown, etc. It's really just a bottom-up value based system, plus I like playing with spreadsheets, so have built some nice graphs and things.
ReplyDeleteI don't pay a lot of attention to business cycles - I think it was Seth Klarmin's book which talks about the big advantage we have as individual investors by looking at stocks bottom up as opposed to take a top down macro approach.
Yeah, and I am not a pro, just a self-investor.
Good luck on the house Mark - sounds like it would be a great win!
FTWR - Down $0.07 (32%)...
ReplyDeleteYRCW - This stock has become a novelty item.
ReplyDeleteJohn Mauldin had an interesting article on Friday:
ReplyDeletehttp://www.investorsinsight.com/blogs/thoughts_from_the_frontline/archive/2011/12/03/time-to-bring-out-the-howitzers.aspx
He first mentioned that the European PMI is now firmly in recession zone, with French and German PMI both under 50 and down for 4 months in a row. Then, he mentioned that Mario Draghi is fully aware of that and is about to engage in inflationary policies. Here is a relevant quote from Draghi:
"So we are now… or shall soon be… faced with a monetary and political union that is manifestly different than that which the original united nations had signed up for AND we have a central bank intent upon fighting deflation as strongly as it has fought inflation. These are the attributes of a regime intent upon weakening, not strengthening, its currency in order to strengthen the economy and to save the union… if at all possible."
This means that we are FINALLY coming to the second phase of any recession/credit crisis: money printing by central banks. The first phase of the crisis, as we saw in US in 2008, involves a sharp collapse in gold/silver as everyone tries to beef up their currency positions so as to pay off debts. The second phase, as we saw in US starting in 2009, is a rally in gold/silver to new highs as the central bank starts printing money.
Recently, we have experience the first phase of a European credit crisis, with gold/silver collapsing. Now, we should see the second phase when gold/silver make new highs.
Out of shear boredom, I clicked on the local Grupon crap....and crap it was. Tzoo had far more deals.
ReplyDeleteJJG - Any good reasons for this ETF to be headed up?
ReplyDeleteDavid - "Recently, we have experience the first phase of a European credit crisis, with gold/silver collapsing. Now, we should see the second phase when gold/silver make new highs."
ReplyDeleteYep, gold has outperformed most everything:
http://www.kitco.com/gold_currency/charts.htm?
Gold is the only metal that I follow which did not have a major correction this year and is now $200 above platinum. This is a rare situation and is being driven by fear in the market (the gold is money trade).
ReplyDeleteI am believer in the reversion to the mean in the long run, so unless something has fundamentally changed, this will correct over time. Either Gold has to come down or the other metals have to rise.
The platinum to gold ratio peaked at 2.3 in 2001 and that turned out to be a very good time to buy gold. Now that the ratio has fallen under 0.9.
My plan is to look for a bounce in gold, which combined with an improving European situation over the next month, will give a good shorting opportunity. I'm not calling for the end of the long term gold bull market here, just a trade for gold to play catchup and make some extra $.
Herman Cain- It would have worked out better if he'd at least admitted to the Ginger White affair. The moment I heard him say he was only guilty of not having told his wife about his 'friend' (not to mention having given her money to pay the rent), I knew it was over. That's the moment he stepped over the line and revealed his disdain for American voters- 'I think they're all idiots, and if they buy this, then I'll know for sure.'
ReplyDelete"I am believer in the reversion to the mean in the long run, so unless something has fundamentally changed, this will correct over time. Either Gold has to come down or the other metals have to rise."
ReplyDeleteBB Canada, this would be true if changes in the metal prices were driven only by people's emotions. This is not the case, however, because industrial metals are driven by the demand/supply situation (which changes every year at some rate), while the price of gold is driven by the expanding fiat money supply, which expands FASTER than the demand/supply situation for industrial metals. Therefore, as long as the economy of US & Europe stays at a crawling pace, gold will keep growing faster than industrial metals.
The Money Pump?
ReplyDeletehttp://www.financialsense.com/contributors/john-rubino/2011/12/02/fooled-again
China May Channel Reserves to Invest in US: Minister
ReplyDeletehttp://www.cnbc.com/id/45524415
So I just skimeed thru the WIR and if I had one takeaway it would be this; those in power are not going to let there be a 2008 repeat. I'm pretty sure 2008 (which includes the low print of Mar09) shocked a lot of people including Bill and a lot of other old timers.
ReplyDeleteFrom a technical perspective, just looking at the spy
ReplyDeleteWeekly, i see nothing useful. A nice bullish signal would have us trending up from two weeks ago from something that would have looked like a cup with a handle. It looks like the handle was hot when we grabbed it and we had to let go the week of thanksgiving. This last week had a lower hi than the previous six weeks, except for Thanksgiving so that's bearish.
Daily - i see resistance overhead. What would a patient trader do? Wait for a break then a retest of the 200 day around 126.69? Or if we go down, wait for a rise off 122/123 level?
weekly spy
http://www.screencast.com/t/lNTyJxeeI
daily spy
http://www.screencast.com/t/miLiQ2kP8
Oh yeah, I'm still thinking we have a Christmas rally and who the hell knows what next year will be like. But, I can see a little head fake with us dropping first before going up.
ReplyDeleteI'm inclined to buy another SPY strangle for my "sleeping at night" position. I also wouldn't hesitate to load up with SSO WITH STOPS IN PLACE if it looks like we're moving up. I'm going to look at some potential entry points for that as well.
So waht happens now? I'm going to guess we run back down to retest the bottom of the wedge around ~1180
ReplyDeleteJust b/c I'm pessimistic anything in Europe gets resolved by the summit on Dec. 9th...
Germany the Grinch?
Just finished scanning through the WIR, followed by a faster scan through Friday's blog comments. Almost every time we hear those kinds of 'had it' comments, the days and weeks following tend towards above-average volatility. fwiw.
ReplyDelete2nd- What do you mean?
ReplyDeleteWell, maybe the eurozone can get something going, it's either dissolve or go for a more centralized control, either way Germany really can't avoid taking it in the shorts but I think it's tit for tat considering Germany did quite well building their economy by selling goods to the rest of europe while it's unfair to Germany in the sense that southern europe are the debt "deadbeats". Maybe a little dose of imposed fiscal responsibility would be healthy for the world.
ReplyDeletehttp://www.telegraph.co.uk/finance/financialcrisis/8933914/Merkel-and-Sarkozy-to-unveil-eurozone-rescue-package.html