Premarket- IRE bid 6.54, DANG bid 7.16...The ego left 3 large on the table. When it comes to gambling, it's often the Id that walks away with a swagger.
unbelievable that IRE. still not sure why i sold that.
Anyone playing TZOO this morning? beat on EPS light on revs. Trading at about 20 x EPS and 16 x cash flow. support over the past 2 weeks has been $28.1 to $28.3. Could be a good trade at that price as I honestly think this sucker turns around and closes up 10%.
This market just wants to keep going and going - I think maybe the hardest thing to do this year may just be not too sell and just keep riding the uptrend. A strong bull makes it hard for people to get on-board.
Another one of my small caps - Vist Financial (sym VIST) getting taken out today. $12.50 in a merger - was $6.90 yesterday. They are a small bank in Pennsylvania with about 20 branches that just stuck to their business. I like these kinds of stocks rather than trying to figure out if BAC or C will be able to turns things around.
LOL! I bought MITI yesterday. not a huge position but enough to pick up $4300 with a 32.5% profit. it's a biotech that is being bought by Amgen. Now I wondering....sell it now or half. Frickin' greed is powerful.
That's what I'm struggling with here as well - I feel greedy, so think I should be selling something, but stuff just keeps going up and news being treated as good. I can see things i'd like to buy, but think I should at least wait for a small pullback, but not getting one.
That's why I think perhaps just riding this bull trend up is the smartest, and hardest, thing to do here.
Honestly, the thing with TZOO that has me thinking turnaround is all of the posts on Yahoo, Twitter, and Stocktwits. Basically it sounds like everyone long is throwing in the towel and not expecting a squeeze because of the rev miss.
Well, I thought for sure I'd jinx the market with my "you can't keep a good market down" comment. Evidently, you can't keep a good market down.
The market accelerated higher breaking out of its short-term consolidation. This action has it pushing further and further into overhead supply. If it keeps doing this, this supply will become support. Today's TA101 was brought to you by Big Dave and the letter P.
Sooner or later the market will have to correct. And, again, the nature of the next correction will be important. If the market comes back in below its prior breakout levels (circa the January lows) then as trend followers, there's no trend to follow. If it has a minor correction then goes back to climbing the wall of worry, then it's all good.
For now, stay picky on setups and wait for entries. If you do get entries, then honor your stops. I'm seeing some speculative "high beta" type setups. I like these since they might be able to trade independent of the overall market.
Yeah, MITI is off yesterday's Landry list. The service people will have missed it if they didn't front run it like I did, because it gaped up big.
I have a friend (not on any lists), who does very well for himself, turn me onto Ferrell Gas, FGP.
I bought a small position (it's not my style of chart at all) but it was $17.40 paying a $2 div. I got in and it's 17.71, as high as 17.87 this am. I'll take a 11.5% return any day. They are down because of numerous acquisitions. Even though it's propane I was thinking of Jesse and UNG.
I took a little off the table with IRE and DANG at the open. A person could get used to making this much $$$$ in a day.
Bought 2 x DECK Feb $85 calls at $2.8 just to play a potential rebound in the stock. It's pretty out of favor so I wouldn't be surprised to see a rebound to $90 or so.
Thanks 2nd. I have to be careful though....about the time I start feeling smart it's time for a correction and 'the humbling'. Kinda like Wayne and Garth....I'm not worthy!
Yeah, it's funny how the human mind works. I have no problem beating myself up for missing a one-day gain on a high-beta gamble. Whereas last year's 10% gain playing the late November drop is easily dismissed. Losses are magnified- gains are downplayed.
TOF, Are you waiting on the CC? They already released earnings which to me look good. Reported .40 a share, were expecting .35, was .23 last year. 70% earnings gain. The street may be looking at the margins, 89.5% vs 92.1%.
Retail - They're never allowed to play this game? I would think the market would want to suck them in but if the market kicks them in the teeth each and every time then retail will learn to stay away (conditioning).
I would think the market would allow for a majority of retail to enter the ring in advance of the fleecing.
PAL - I'd thought this one might go to $2, but it seems the market agrees Sleepy Giant needed to be shut down. So of course the gold bugs lost the twinkle in their eye along with the disappointment over throwing too much money into a hole caused some downside but it seems those who wanted a pure palladium play all along are buying shares.
So now it looks like ~$2.85 or so is the target, and perhaps if things go right then a breakout will occur, or perhaps $2.85 is where daytraders step off the train and $2 does become the new low target?
Added a few more CAT puts at $0.72. Total of 18 puts. This is strictly a trade based on the stock looking EXTREMELY overbought, much like SJT and UNG were EXTREMELY oversold a few days ago. Most likely I will be wrong but we shall see how it trades the next few days.
Going short the Yen, yesterday Japan had its first annual trade deficit since 1980. The countries demographics are deteriorating which will affect its ability to internally fund its deficits. Japan’s debt to GDP make the PIGS look tasty.
Long YCS
Nat Gas today is probably where gold was 20 years ago, it could be very wise to buy some and just forget about it for 10 or 20 years.
Eh...sold my TZOO shares at breakeven. Should've read more into the report but they actually had a $600k favorable tax adjustment which boosted EPS by $0.04. So really they met EPS and missed on revs...this probably will break the $28 support now that I think about it more....or rip higher now that i'm out!
Japan - There have also been proposals for Japan to use the strong Yen for buying commodities.
I guess if the Yen begins a downward trend, then commodities may become a safe haven?
There are more humans on the planet than ever, latest census figures indicate, and based primarily on the protests I see going on in the streets, I've decided they're all clamoring for a better lifestyle. Add to that, massive debtloads backed by a nothing more than hope and prayer, it's safe to say I expect bankers need to see the global economy ramp up. Otherwise, their losses will become overwhelming.
I don't see how any of today's factors, once corrected for these stacking errors, could be commodities negative.
All out of my Longs now. Just holding CAT puts..added another 20 of them. So 53 total. I'm definitely done with those. This market is due for a pullback.
I'm glad I turned on CNBC to see what the talking heads were saying and saw the headline: "Time for Retail Investors to Get In?"
I'm also glad I waited to sell until the "Golden Cross", which bulls point to as a key technical setup for further gains. Pretty much every time I see that it is a contrarian indicator. Today's turnaround just FEELS like an intermediate top is in.
I didn't realize that the DOW is within earshot of it's bull market high. That will make for good headlines tomorrow. As such I decided to buy some SPY $131 Calls expiring tomorrow. Keeping it small. Bought 20 @ $1.50.
I've been looking at arb opp's today over at http://www.mergerinvesting.com/pendingmergers - there are quite a few +10%, +20% or higher annualized returns out there. I keep an eye on these and when people get optimistic on the market, these returns shrink. When they are pessimistic, they get higher like they are now. Doesn't make a whole lot of sense as these deals close independently of what happens in the market, but it does happen.
Between CAT, NFLX, and MMM it probably makes sense that the market can't sell off much. Dow is still positive. I'm going to wait (pray) for a small pullback to buy some of the ones we have all been following on weakness.
Bespoke reporting Bearish Sentiment Drops Below 20% - that would indicate a pullback is near:
THURSDAY, JANUARY 26, 2012 AT 10:58AM The weekly sentiment survey from the American Association of Individual Investors (AAII) showed that bullish sentiment rose to 48.4% from 47.2%. On the other end of the spectrum, bearish sentiment dropped to 18.9% from 23.6%. While this week's drop in bearish sentiment looks like a large shift, we would note that it doesn't even erase the 6.4 percentage point rise we saw in the prior week. That being said, there have only been four other weeks since the start of 2006 where bearish sentiment was lower than it is now. Two of them were this month, and the other two were in December 2010 and January 2011.
GMO - That thing always lags, been wondering when it would catch up. It should be pushing $3.90 about now (vs spy/dow), but considering all things equal it's not looking abnormal.
Not sure if there's anything new going on there, doesn't appear to be, but I'll check.
Well crap, Kitco has always been wrong: "Kitco News reports this morning that yesterdays' announcement may extend the secular bull market for gold by several more years."
Anyway, checked on GMO but found no news.
GMO - so I see on the chart it coiled into the end of the wedge then broke up, but isn't that reaction usually typical of a false breakout?
This isn't that big a deal. So far we gave back three days of S&P and we are back in the range. If we pullback below 129.50 then there is some serious S going on.
Geez, we've been going up steadily for awhile, it's time for a walk or a breather. I wouldn't be putting on new positions here but I'll keep what I have and honor my stops.
I don't know, all the solars are ripping. It looks like rotation to me, or as Stephen Stewart calls them, JOBS (junk off the bottom). That's what Landry thinks.
alright took another $300 hit from my SPY calls....I think I ended up losing about $1k today. oh well. really not allowed to complain after this big run in 2012.
boy i tell ya what this market looks an awful lot like that 1990 selloff that i was using as a guide a little while ago. assuming that is the case we should be back up to the May highs very soon.
1991 Corrections I think it's good to look at that period just because the trading is so similar. As you can see after the big move to recover to old gains the market essentially traded sideways to very slightly up with 6 mini corrections...really actually only 5 since the first one was tiny. Each low marked a very slightly higher low until the last one, which propelled another move higher in the markets.
Just something to keep in mind.
CORRECTION AMT Length of Correction 2.66% >>>> 3/5/91 to 3/22/91 5.64% >>>> 4/17/91 to 5/15/91 4.88% >>>> 5/31/91 to 6/25/91 3.84% >>>> 8/6/91 to 8/19/91 5.05% >>>> 8/28/91 to 10/9/91 5.54% >>>> 11/14/91 to 11/29/91
During that time here are the returns of some of the stocks that were also around back then...this in a period where the market went sideways:
INTC - up 50% from 1/1/91 to 6/1/91, then it came all the way back down to it's 1/1/91 price. Value was about 1/20th of current price GE - basically mimicked the market > up about 20% until mid year then gave back all of its gains. Value was about 1/3 of current price MRK - this was the hot big cap stock back then, it basically rose the entire year, up 100%. Value was about 2/3 of current price MSFT - this was about 1/30 of the current price. Rallied 50% to 6/1/91 highs then pulled back some, then rallied another 50%. CAT - about 1/20 of current value, didn't do anything all year. C - value about the same as today, up 50% in 1991. PG - Flat all year, value about 1/6 of today. DELL - about 1/60 of today, up about 75% until late in year when it ended up about 25%.
I think there are a lot of people at around these levels that are looking to get out near the old highs like I did today, happy to take money out and get to the sidelines in case we get a selloff. That should prevent the market from rallying a ton higher right away until we clear the 1,370 level, but quite honestly the market is cheap based on earnings. However it's not the cheapest it's been.
In the past 52 years there have only been 12 years with higher earnings yields than the current market. Those were the years from 1973 to 1984. Heading into 1973 the earnings yield slowly rose for several years until it skyrocketed higher in 1974 to 13%, the highest ever in the past 52 years. The S&P's earnings yield has risen since the end of the 90s to 7.7% for 2011. The question is whether or not we have a spike in earnings yields like 1974 or not....
tof- That's exactly what Craig means when he refers to 'a ton of overhead resistance/supply.' All we need is a little uneasiness at these levels, and they'll be rushing for the exits. However, Landry also mentions the possibility of cutting through resistance on heavy volume- which would indicate institutional commitment to positions, and create a floor for prices.
In addition, note that buying into the market in 1992, 1993, 1994, 1995, 1996, or 1997 would still have allowed a trend follower to capture the bulk of the bull market gains.
Folks, you should be trying to catch the next dip in the market only if you are bored. Otherwise, stick with the fact that we are in a "risk ON" environment that will keep pushing the prices up, go fully long and sit tight.
2nd - given how the market sliced through the 1,250-1,260 level, which was an area of a lot of overhead resistance, my best guess is we most likely only pause here. i think the odds that we test the old highs of 1,370 soon are quite high given that the market based on earnings is not even close to expensive compared to the past 52 years. did you know that S&P earnings have risen 5 fold since 1992 while the market has only risen 3 fold?
also, there have been 6 "business cycles" (defined as a period of rising earnings without a fall in earnings for more than 1 year) since 1961. The average gain in those cycles is 110%. If you exclude the 1990's and 2000's two cycles that had 190% and 125% gains, you still have an average of 87%.
This cycle began with earnings of $60.8 in 2009. Assuming a 87% gain gets you to $113 Earnings. The market is trading at a 8.6% earnings yield on those earnings. There were only 9 years with yields greater than that over the past 52.
Assuming a 110% gain gets you to $128 Earnings. The market is trading at 9.7% earnings yield on those earnings. There were only 8 years with yields greater than that over the past 52.
So it pays to be on the bullish side I think and to use pullbacks as buying opportunities. I suspect the big move higher on heavy volume will occur when the Lakshman Achutans and John Hussmans and Mauldin's of the world concede that there won't be a recession.
I think caution is always warranted. We are pushing into that overhead and doing pretty good so far, but we are overbought. Even the best of athletes needs to rest on big hills. It's the nature of any rest or correction that will tell us what will happen.
We will likely be fine if previous resistance serves as support and we re-establish the upward move. If we retrace into that support then it is best to acknowledge market weakness and act appropriately.
I'm seeing stories of low VIX and low bearish/high bullish sentiment, but it's worth noting that some of the beaten down sectors and stocks can move counter to the indices. Clear as mud, right?
Many of you are way too bullish, IMO. The recent Fed Econ report is more a worry thingy than an endorsement of the economy. Europe is the next looming catastrophe but it will be a slow train wreck. SPX up in the meantime? Maybe but not sustainable.
I tend to agree with Illini. Fundamentals are fine, but emotions, ie: human sentiment rules the markets. People don't see fundamentals in their minds as readily as they see prices slow or slip. Prices slow or slip when those who bought into that overhead supply built it and seek to regain their capital. That's why it takes so much fuel to plow through overhead, you need a lot more buyers to go the same distance the markets climbed earlier without that level of offsetting selling.
No one will be happier if we get through it and resistance becomes support, but we aren't there yet and we've come a long way to get where we are. The S&P have about a third more to go, the nasdaq is surprisingly close and the russell has the most work to get through the supply. All it will take is one to not quite get there and it will pull the others with it. This is unusual in that many of the speculative transitional patterns we are trading are small caps in the russell. Why is it the hill gets steeper near the top?
We do have some support under us, so as I wrote before if we do get some correction, it will be the nature of that possible correction and the depth that gives us hope or not. Off a half a point today is 'not the end of the world" as Big Dave says....it's "one day at a time".
Illini, we are not bullish on the broad market. We are bullish on stocks that were beaten down SO much that it's not even real, and that are starting to turn up now. They HUGELY underperformed S&P during the past year, and now it's time for them to HUGELY outperform S&P.
"Europe is the next looming catastrophe but it will be a slow train wreck."
That might be a very good thing for the markets, as a "slow train wreck" will give enough time for the policy makers to react and keep pouring more money into the system (by buying crappy assets from banks). Don't forget -- stocks are MUCH more sensitive to central bank/government stimulus than to GDP growth.
As for S&P being overbought -- I am not so sure. The futures are trading right now almost at exactly the same level at which they were trading a week ago, on 1/19. So I would say S&P has been working off its previously overbought condition by moving sideways for a week now, and it is pretty ready to really zoom up.
I will go on record as being bullish on the general market for 2012. Sure we could have a pullback here and it would be healthy to get some of the optimism out of the market, but I find it hard to envisage a scenario where we do not end up with a good gain for the year.
Europe has issues, but they are well known, being worked on, and I don't see the Germans being so dogmatic as to allow a broad European recession (which would hurt their country and chances of getting re-elected due to their dependence on intra-European trade).
Companies are very profitable, valuations are good, money is cheap, business is growing, the economy is improving, jobs are increasing, the Fed and now the ECB are supportive - all good things.
Over longer periods (like a year), fundamentals almost always win out.
unbelievable that IRE. still not sure why i sold that.
ReplyDeleteAnyone playing TZOO this morning? beat on EPS light on revs. Trading at about 20 x EPS and 16 x cash flow. support over the past 2 weeks has been $28.1 to $28.3. Could be a good trade at that price as I honestly think this sucker turns around and closes up 10%.
tof- Are you long TZOO, or thinking about going long?
ReplyDeleteThis market just wants to keep going and going - I think maybe the hardest thing to do this year may just be not too sell and just keep riding the uptrend. A strong bull makes it hard for people to get on-board.
ReplyDelete2nd - I'm thinking about it. I think it's a good trade...Buy at $28.3, stop at $27.8. I think if the CC is good at 11am then it could run.
ReplyDeleteAnother one of my small caps - Vist Financial (sym VIST) getting taken out today. $12.50 in a merger - was $6.90 yesterday. They are a small bank in Pennsylvania with about 20 branches that just stuck to their business. I like these kinds of stocks rather than trying to figure out if BAC or C will be able to turns things around.
ReplyDeleteAlright....gonna do it. Limit 2k at $28.3. Stop $27.7. Target is $34. Risk/reward is 10/1.
ReplyDeleteLOL! I bought MITI yesterday. not a huge position but enough to pick up $4300 with a 32.5% profit.
ReplyDeleteit's a biotech that is being bought by Amgen. Now I wondering....sell it now or half.
Frickin' greed is powerful.
Shares filled at $28.3 on TZOO...stop is $27.5 actually because of the volatility of the stock.
ReplyDeleteCC, congrats on the buy - nice timing!
ReplyDeleteThat's what I'm struggling with here as well - I feel greedy, so think I should be selling something, but stuff just keeps going up and news being treated as good. I can see things i'd like to buy, but think I should at least wait for a small pullback, but not getting one.
That's why I think perhaps just riding this bull trend up is the smartest, and hardest, thing to do here.
So far so good with TZOO...if this CC goes well I think it goes to $33 today
ReplyDeleteHonestly, the thing with TZOO that has me thinking turnaround is all of the posts on Yahoo, Twitter, and Stocktwits. Basically it sounds like everyone long is throwing in the towel and not expecting a squeeze because of the rev miss.
ReplyDeleteBut EPS and Cash Flows were strong.
ReplyDeleteBTW - that PATK is another momo stock...check it out when you have a chance. If it gets to $4.4 it could be a good buy.
Landry has it nailed:
ReplyDeleteGot Random Thoughts:
Well, I thought for sure I'd jinx the market with my "you can't keep a good market down" comment. Evidently, you can't keep a good market down.
The market accelerated higher breaking out of its short-term consolidation. This action has it pushing further and further into overhead supply. If it keeps doing this, this supply will become support. Today's TA101 was brought to you by Big Dave and the letter P.
Sooner or later the market will have to correct. And, again, the nature of the next correction will be important. If the market comes back in below its prior breakout levels (circa the January
lows) then as trend followers, there's no trend to follow. If it has a minor correction then goes back to climbing the wall of worry, then it's all good.
For now, stay picky on setups and wait for entries. If you do get entries, then honor your stops. I'm seeing some speculative "high beta" type setups. I like these since they might be able to trade independent of the overall market.
Craig- Good to see you're having a pretty decent streak with a few set-ups while waiting for a trend to emerge.
ReplyDeleteNice dip to scare people in TZOO, but there are buyers here.
ReplyDeleteYeah, MITI is off yesterday's Landry list.
ReplyDeleteThe service people will have missed it if they didn't front run it like I did, because it gaped up big.
I have a friend (not on any lists), who does very well for himself, turn me onto Ferrell Gas, FGP.
I bought a small position (it's not my style of chart at all) but it was $17.40 paying a $2 div.
I got in and it's 17.71, as high as 17.87 this am. I'll take a 11.5% return any day. They are down because of numerous acquisitions. Even though it's propane I was thinking of Jesse and UNG.
I took a little off the table with IRE and DANG at the open. A person could get used to making this much $$$$ in a day.
SDOW - Lowered my bid to $23, hoping it doesn't fill...
ReplyDeleteBought 2 x DECK Feb $85 calls at $2.8 just to play a potential rebound in the stock. It's pretty out of favor so I wouldn't be surprised to see a rebound to $90 or so.
ReplyDeleteAnyone playing MGIC today? VERY close to a breakout in that.
ReplyDeleteJeez Mark look at COOL. Nice 30% move.
ReplyDeleteThanks 2nd. I have to be careful though....about the time I start feeling smart it's time for a correction and 'the humbling'. Kinda like Wayne and Garth....I'm not worthy!
ReplyDeleteThe market feels a bit toppy to me. The "golden cross" is about to form which usually spells danger!
ReplyDeleteSold another 15% of my SKUL at $13.13.
ReplyDeleteYeah, it's funny how the human mind works. I have no problem beating myself up for missing a one-day gain on a high-beta gamble. Whereas last year's 10% gain playing the late November drop is easily dismissed. Losses are magnified- gains are downplayed.
ReplyDeleteNO! Not the freaking golden cross.
ReplyDelete2nd....check your yahoo.
ReplyDeleteThanks, bro.
ReplyDeleteSold another 10% of SKUL...Added another 1k TZOO at $28.2.
ReplyDeleteNow about 60% in cash. not liking the action today.
I sold those damn DECK calls at $2.2 and took the $120 loss. Oh yeah THATS why I don't buy options.
ReplyDeleteHa uncanny I just turned on CNBC and the headline: Time for Retail Investors to Get In. We're most definitely going to dip here.
ReplyDeleteTOF, Are you waiting on the CC? They already released earnings which to me look good. Reported .40 a share, were expecting .35, was .23 last year. 70% earnings gain.
ReplyDeleteThe street may be looking at the margins, 89.5% vs 92.1%.
Wow...that move in CAT is parabolic. RSI(7) is 95...who else is left to buy?
ReplyDeleteAs such I decided to buy a few puts. Bought 5 x $110 Puts expiring next Friday at $1.05.
SVM - Volume is up, maybe that's a positive indicator?
ReplyDeleteAlright added 5 more CAT puts at $0.82.
ReplyDeleteRetail - They're never allowed to play this game? I would think the market would want to suck them in but if the market kicks them in the teeth each and every time then retail will learn to stay away (conditioning).
ReplyDeleteI would think the market would allow for a majority of retail to enter the ring in advance of the fleecing.
PAL - I'd thought this one might go to $2, but it seems the market agrees Sleepy Giant needed to be shut down. So of course the gold bugs lost the twinkle in their eye along with the disappointment over throwing too much money into a hole caused some downside but it seems those who wanted a pure palladium play all along are buying shares.
ReplyDeleteSo now it looks like ~$2.85 or so is the target, and perhaps if things go right then a breakout will occur, or perhaps $2.85 is where daytraders step off the train and $2 does become the new low target?
I'll look to buy if I see $2...
PAL - What do you guys think of the volume, I think it's a good sign of upside potential...
ReplyDeleteDudes this TZOO is going higher man. They said they believe the European sales were hit by the issues in Europe, yet they were still up 48% Y on Y.
ReplyDeleteAdded a few more CAT puts at $0.72. Total of 18 puts. This is strictly a trade based on the stock looking EXTREMELY overbought, much like SJT and UNG were EXTREMELY oversold a few days ago. Most likely I will be wrong but we shall see how it trades the next few days.
ReplyDeleteGoing short the Yen, yesterday Japan had its first annual trade deficit since 1980. The countries demographics are deteriorating which will affect its ability to internally fund its deficits. Japan’s debt to GDP make the PIGS look tasty.
ReplyDeleteLong YCS
Nat Gas today is probably where gold was 20 years ago, it could be very wise to buy some and just forget about it for 10 or 20 years.
FSG - A breakout it seems, but how long can that possibly last?
ReplyDeleteEh...sold my TZOO shares at breakeven. Should've read more into the report but they actually had a $600k favorable tax adjustment which boosted EPS by $0.04. So really they met EPS and missed on revs...this probably will break the $28 support now that I think about it more....or rip higher now that i'm out!
ReplyDeleteJapan - There have also been proposals for Japan to use the strong Yen for buying commodities.
ReplyDeleteI guess if the Yen begins a downward trend, then commodities may become a safe haven?
There are more humans on the planet than ever, latest census figures indicate, and based primarily on the protests I see going on in the streets, I've decided they're all clamoring for a better lifestyle. Add to that, massive debtloads backed by a nothing more than hope and prayer, it's safe to say I expect bankers need to see the global economy ramp up. Otherwise, their losses will become overwhelming.
I don't see how any of today's factors, once corrected for these stacking errors, could be commodities negative.
Alright I'm now 80% cash and added a bit to the CAT puts...now have 33 of them. I'm done there. Just gonna wait for a dip in prices to buy again.
ReplyDeleteAll out of my Longs now. Just holding CAT puts..added another 20 of them. So 53 total. I'm definitely done with those. This market is due for a pullback.
ReplyDeleteI'm glad I turned on CNBC to see what the talking heads were saying and saw the headline:
ReplyDelete"Time for Retail Investors to Get In?"
I'm also glad I waited to sell until the "Golden Cross", which bulls point to as a key technical setup for further gains. Pretty much every time I see that it is a contrarian indicator. Today's turnaround just FEELS like an intermediate top is in.
Since CP is the resident expert on GMO, what's up?
ReplyDeleteAlright sold those CAT Puts for a $400 gain.
ReplyDeleteNow I'm in 2nds boat...nice stick save in the markets today...looks like I was a little early in my top call maybe?
ReplyDeleteI didn't realize that the DOW is within earshot of it's bull market high. That will make for good headlines tomorrow. As such I decided to buy some SPY $131 Calls expiring tomorrow. Keeping it small. Bought 20 @ $1.50.
ReplyDeleteMan, that's some squeezy squeeze in NFLX/JCP.
ReplyDeleteGMO- I couldn't find anything.
ha! ok i'm done. sold those SPY Calls at $1.3 and took the loss. putting myself in the penalty box
ReplyDeleteI've been looking at arb opp's today over at http://www.mergerinvesting.com/pendingmergers - there are quite a few +10%, +20% or higher annualized returns out there. I keep an eye on these and when people get optimistic on the market, these returns shrink. When they are pessimistic, they get higher like they are now. Doesn't make a whole lot of sense as these deals close independently of what happens in the market, but it does happen.
ReplyDeleteBack in the SPY calls but the $130 calls expiring tomorrow...got 20 of them at around $2.02. i'm bored.
ReplyDeleteBetween CAT, NFLX, and MMM it probably makes sense that the market can't sell off much. Dow is still positive. I'm going to wait (pray) for a small pullback to buy some of the ones we have all been following on weakness.
ReplyDeleteBespoke reporting Bearish Sentiment Drops Below 20% - that would indicate a pullback is near:
ReplyDeleteTHURSDAY, JANUARY 26, 2012 AT 10:58AM
The weekly sentiment survey from the American Association of Individual Investors (AAII) showed that bullish sentiment rose to 48.4% from 47.2%. On the other end of the spectrum, bearish sentiment dropped to 18.9% from 23.6%. While this week's drop in bearish sentiment looks like a large shift, we would note that it doesn't even erase the 6.4 percentage point rise we saw in the prior week. That being said, there have only been four other weeks since the start of 2006 where bearish sentiment was lower than it is now. Two of them were this month, and the other two were in December 2010 and January 2011.
GMO - That thing always lags, been wondering when it would catch up. It should be pushing $3.90 about now (vs spy/dow), but considering all things equal it's not looking abnormal.
ReplyDeleteNot sure if there's anything new going on there, doesn't appear to be, but I'll check.
The TED spread took another large drop today. The risk is still coming out of the banking system...
ReplyDeleteWell crap, Kitco has always been wrong: "Kitco News reports this morning that yesterdays' announcement may extend the secular bull market for gold by several more years."
ReplyDeleteAnyway, checked on GMO but found no news.
GMO - so I see on the chart it coiled into the end of the wedge then broke up, but isn't that reaction usually typical of a false breakout?
PEIX did the same thing...?
Agree with tof. Anyone speculating in high-beta stocks today is late to the game.
ReplyDeleteThat said, DANG is simply back to where I sold it yesterday, and IRE is still 2% higher than where I sold it.
ReplyDeleteRally in 3,2,1.....?!?!?
ReplyDeletecp- I think this rally will take some time to die off. The dip-buying will continue until it stops.
ReplyDeleteThis isn't that big a deal. So far we gave back three days of S&P and we are back in the range.
ReplyDeleteIf we pullback below 129.50 then there is some serious S going on.
Geez, we've been going up steadily for awhile, it's time for a walk or a breather. I wouldn't be putting on new positions here but I'll keep what I have and honor my stops.
2nd, have you looked at ENER?
Craig- I don't have that kind of time during the day, but I'll definitely take a look tonight.
ReplyDeleteOK, I see what you mean. Too late.
ReplyDeleteI have to admit, the guy's good.
ReplyDeleteENER has to be a short-covering play.
ReplyDeletewow who'd a thunk it...SKUL runs late day.
ReplyDeleteI'm not sure it's too late. As a percentage it looks scary, but the 52 wk high is 4.80.
ReplyDeletet's up 29% today and i'm up 17.25%, so I'm holding for now. It's bound to surge and give some back on the way. "The waiting is the hardest part".
I don't know, all the solars are ripping. It looks like rotation to me, or as Stephen Stewart calls them, JOBS (junk off the bottom). That's what Landry thinks.
ReplyDeletealright took another $300 hit from my SPY calls....I think I ended up losing about $1k today. oh well. really not allowed to complain after this big run in 2012.
ReplyDeleteall in cash and will try to be patient here.
CC - there is def a sector rotation going on. Check out the shippers too...FRO, EGLE, DSX all look good. I like ANW.
ReplyDeleteFor solars look at that chart for WFR...TONS of insiders buying back in August at higher prices. In fact I counted about $1.9 Million in insider buys.
Mark - You feel better now about INVN?
ReplyDeleteboy i tell ya what this market looks an awful lot like that 1990 selloff that i was using as a guide a little while ago. assuming that is the case we should be back up to the May highs very soon.
ReplyDeleteTOF- NO!! :)
ReplyDeleteMan, a 5pt. sell of doesn't seem that much to me?
"The dip-buying will continue until it stops."
ReplyDeleteSo too, will the beatings! ;)
1991 Corrections
ReplyDeleteI think it's good to look at that period just because the trading is so similar. As you can see after the big move to recover to old gains the market essentially traded sideways to very slightly up with 6 mini corrections...really actually only 5 since the first one was tiny. Each low marked a very slightly higher low until the last one, which propelled another move higher in the markets.
Just something to keep in mind.
CORRECTION AMT Length of Correction
2.66% >>>> 3/5/91 to 3/22/91
5.64% >>>> 4/17/91 to 5/15/91
4.88% >>>> 5/31/91 to 6/25/91
3.84% >>>> 8/6/91 to 8/19/91
5.05% >>>> 8/28/91 to 10/9/91
5.54% >>>> 11/14/91 to 11/29/91
During that time here are the returns of some of the stocks that were also around back then...this in a period where the market went sideways:
ReplyDeleteINTC - up 50% from 1/1/91 to 6/1/91, then it came all the way back down to it's 1/1/91 price. Value was about 1/20th of current price
GE - basically mimicked the market > up about 20% until mid year then gave back all of its gains. Value was about 1/3 of current price
MRK - this was the hot big cap stock back then, it basically rose the entire year, up 100%. Value was about 2/3 of current price
MSFT - this was about 1/30 of the current price. Rallied 50% to 6/1/91 highs then pulled back some, then rallied another 50%.
CAT - about 1/20 of current value, didn't do anything all year.
C - value about the same as today, up 50% in 1991.
PG - Flat all year, value about 1/6 of today.
DELL - about 1/60 of today, up about 75% until late in year when it ended up about 25%.
those values are based only on price obviously there was probably share dilution in all of them (especially with C)
ReplyDeleteRe 1991- I would consider all 6 corrections to be tradeable from the standpoint of sentiment.
ReplyDeleteI think there are a lot of people at around these levels that are looking to get out near the old highs like I did today, happy to take money out and get to the sidelines in case we get a selloff. That should prevent the market from rallying a ton higher right away until we clear the 1,370 level, but quite honestly the market is cheap based on earnings. However it's not the cheapest it's been.
ReplyDeleteIn the past 52 years there have only been 12 years with higher earnings yields than the current market. Those were the years from 1973 to 1984. Heading into 1973 the earnings yield slowly rose for several years until it skyrocketed higher in 1974 to 13%, the highest ever in the past 52 years. The S&P's earnings yield has risen since the end of the 90s to 7.7% for 2011. The question is whether or not we have a spike in earnings yields like 1974 or not....
check this out:
ReplyDeletehttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/spearn.htm
CAT - Guidance sounds pretty upbeat to me.
ReplyDeletePretty interesting TOF.
ReplyDeletetof- That's exactly what Craig means when he refers to 'a ton of overhead resistance/supply.' All we need is a little uneasiness at these levels, and they'll be rushing for the exits. However, Landry also mentions the possibility of cutting through resistance on heavy volume- which would indicate institutional commitment to positions, and create a floor for prices.
ReplyDeleteIn addition, note that buying into the market in 1992, 1993, 1994, 1995, 1996, or 1997 would still have allowed a trend follower to capture the bulk of the bull market gains.
In fact, if 2012 through 2020 resembles 1992 to 2000, we'll all be able to RETIRE in 7-8 years.
ReplyDeleteFolks, you should be trying to catch the next dip in the market only if you are bored. Otherwise, stick with the fact that we are in a "risk ON" environment that will keep pushing the prices up, go fully long and sit tight.
ReplyDelete2nd - given how the market sliced through the 1,250-1,260 level, which was an area of a lot of overhead resistance, my best guess is we most likely only pause here. i think the odds that we test the old highs of 1,370 soon are quite high given that the market based on earnings is not even close to expensive compared to the past 52 years. did you know that S&P earnings have risen 5 fold since 1992 while the market has only risen 3 fold?
ReplyDeletealso, there have been 6 "business cycles" (defined as a period of rising earnings without a fall in earnings for more than 1 year) since 1961. The average gain in those cycles is 110%. If you exclude the 1990's and 2000's two cycles that had 190% and 125% gains, you still have an average of 87%.
This cycle began with earnings of $60.8 in 2009. Assuming a 87% gain gets you to $113 Earnings. The market is trading at a 8.6% earnings yield on those earnings. There were only 9 years with yields greater than that over the past 52.
Assuming a 110% gain gets you to $128 Earnings. The market is trading at 9.7% earnings yield on those earnings. There were only 8 years with yields greater than that over the past 52.
So it pays to be on the bullish side I think and to use pullbacks as buying opportunities. I suspect the big move higher on heavy volume will occur when the Lakshman Achutans and John Hussmans and Mauldin's of the world concede that there won't be a recession.
David- A blind date with TNA can't be far off.
ReplyDeleteBVSN. Man, what a ripper.
ReplyDeleteI think caution is always warranted. We are pushing into that overhead and doing pretty good so far, but we are overbought. Even the best of athletes needs to rest on big hills. It's the nature of any rest or correction that will tell us what will happen.
ReplyDeleteWe will likely be fine if previous resistance serves as support and we re-establish the upward move.
If we retrace into that support then it is best to acknowledge market weakness and act appropriately.
I'm seeing stories of low VIX and low bearish/high bullish sentiment, but it's worth noting that some of the beaten down sectors and stocks can move counter to the indices. Clear as mud, right?
Watching the debate and Kendra asks if it is a game show.
ReplyDeleteMany of you are way too bullish, IMO. The recent Fed Econ report is more a worry thingy than an endorsement of the economy. Europe is the next looming catastrophe but it will be a slow train wreck. SPX up in the meantime? Maybe but not sustainable.
ReplyDeleteI tend to agree with Illini. Fundamentals are fine, but emotions, ie: human sentiment rules the markets. People don't see fundamentals in their minds as readily as they see prices slow or slip. Prices slow or slip when those who bought into that overhead supply built it and seek to regain their capital. That's why it takes so much fuel to plow through overhead, you need a lot more buyers to go the same distance the markets climbed earlier without that level of offsetting selling.
ReplyDeleteNo one will be happier if we get through it and resistance becomes support, but we aren't there yet and we've come a long way to get where we are. The S&P have about a third more to go, the nasdaq is surprisingly close and the russell has the most work to get through the supply. All it will take is one to not quite get there and it will pull the others with it. This is unusual in that many of the speculative transitional patterns we are trading are small caps in the russell.
Why is it the hill gets steeper near the top?
We do have some support under us, so as I wrote before if we do get some correction, it will be the nature of that possible correction and the depth that gives us hope or not.
Off a half a point today is 'not the end of the world" as Big Dave says....it's "one day at a time".
"Many of you are way too bullish, IMO."
ReplyDeleteIllini, we are not bullish on the broad market. We are bullish on stocks that were beaten down SO much that it's not even real, and that are starting to turn up now. They HUGELY underperformed S&P during the past year, and now it's time for them to HUGELY outperform S&P.
"Europe is the next looming catastrophe but it will be a slow train wreck."
ReplyDeleteThat might be a very good thing for the markets, as a "slow train wreck" will give enough time for the policy makers to react and keep pouring more money into the system (by buying crappy assets from banks). Don't forget -- stocks are MUCH more sensitive to central bank/government stimulus than to GDP growth.
As for S&P being overbought -- I am not so sure. The futures are trading right now almost at exactly the same level at which they were trading a week ago, on 1/19. So I would say S&P has been working off its previously overbought condition by moving sideways for a week now, and it is pretty ready to really zoom up.
ReplyDeleteI will go on record as being bullish on the general market for 2012. Sure we could have a pullback here and it would be healthy to get some of the optimism out of the market, but I find it hard to envisage a scenario where we do not end up with a good gain for the year.
ReplyDeleteEurope has issues, but they are well known, being worked on, and I don't see the Germans being so dogmatic as to allow a broad European recession (which would hurt their country and chances of getting re-elected due to their dependence on intra-European trade).
Companies are very profitable, valuations are good, money is cheap, business is growing, the economy is improving, jobs are increasing, the Fed and now the ECB are supportive - all good things.
Over longer periods (like a year), fundamentals almost always win out.
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ReplyDelete