Tuesday, June 19, 2012
06/19/12 Sell the news?
Today's run-up is an example of why it's become more difficult to game the Fed. If you weren't already long, there were no opportunities to get long. If you were waiting for 'confirmation' of an upside move, it likely 'arrived' today. Now what? Another gap up tomorrow, forcing sidelined traders to chase. Just in time to be shaken out by sell-the-news profit-taking. A slow grind down into the weekend, coupled with media reports of another cliff-hanger meeting (how about 'we should find out Sunday afternoon whether a viable coalition emerges in Greece'). A violent sell-off Monday to set up yet another Turnaround Tuesday, which then finally sends indexes on their way to new highs.
For the record, cashed out the total portfolio for a one-day gain of +1.46%.
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The other thing to think about this time is we are approaching second quarter end and, as of the end of March, the hedge fund indexes were way behind the market, so this could keep any sort of correction very mild and we could ramp right into month-end.
ReplyDeleteAs of the end of MAY, the hedge fund indexes were behind.
Deletegood pt.
DeleteI guess the early birds were taking gains ahead of tomorrow's FED dog and pony show just in case no candy is offered?
ReplyDeletehahahaha
ReplyDeletehttp://www.youtube.com/watch?v=mHFnFiDZbGk&feature=youtu.be
I agree with 2nd's opening statement. This correction just seems to short lived compared to the one last year and the year before.
ReplyDeleteIn Landry's email this morn he said the "downtrend remains intact". ON the SPY, my 10 20 30 MA's are just about to cross. Tomorrow the 10 SMA will drop off the second lowest candle during this correction which will cause it to pop up quite a bit I think.
And if I interpret Landry's book correctly, for the simplest of trades there isn't anything to do at the moment except honor stops that are in place. IF we use the SPY as an example, I shouldn't be going long until the bowtie happens which will be tomorrow AND until there is a pullback and then a resumption of the uptrend.
I entered my DIS trade using Landry's method and I still have half my DIS shares. That trade is working out pretty well. I do have some questions on where to put the STOP. My guess is Landry would have looked for a stock with a stronger uptrend but this one is fine by me so far.
If the general market keeps trending up, I'm going to watch for an entry on APA which had a pretty tight range today. I'll need a couple of different plans to act on though. I'm interested in APA because it had some big volumes 2 days in a row last week on green candles. That seems bullish to me.
APA Plan 1, opens about where it went out today, Buy trigger at 86.51, 200 shares with a stop around 84.51 which would be a risk of $400.
APA Plan 2, gap up and stays up on bigger volume, buy trigger around 87.95, 200 shares with a stop around 85.95. I would probably prefer to move to an intraday chart on this plan if I get the chance to do it.
I see Landry's downtrend on APA drawing a trendline along the tops on 3/16/2012, 5/1/2012 and 6/15/2012. Maybe plan 2 above would be a better plan to hope for.
DeleteAPA definitely looks like a bear flag to me.
Deletealso clear head & shoulders pattern on weekly chart. i'm not a huge fan of the head & shoulders pattern but it has worked a bit over the past 12 months on the overall market.
Deletei agree not clean, I should add that volume will be important. The other thing that bugs me is why is energy lagging so much while everything else is taking off? It seems to be a money printing rally and energy should be right in the mix I would think.
Deleteport > there are several things that are diverging here that still keep me cautious:
Delete(1) oil...wtf?
(2) copper...definitely lagging
(3) consumer discretionary stocks lagging
(4) bonds not really moving down
having said that, i'm trying to ignore the market divergences and what not and focus on indiv securities.
Deletescratch my energy comment, they seem to be doing as well as everything else, APA is actually up about $7.00, not as much as I thought it would be though.
Deleteagreed, my original thoughts were that we should chop around 2-4 more weeks before our presidential rally starts.
here's a natty chart before I go. This is a seasonal chart of the August Natty contract for the last 6 years. So it show's how the Aug contract traded from Jan-Jul of it's respective year. The shorter black line on the bottom is the Aug12 contract which is still active. The futures symbol for August is Q. Match the color to the text box on the left. I admit I'm not bullish natty at all for the rest of the year but this chart tells me that there is a good chance that low for the August contract is pretty much set. Now watch us get a big injection number this week.
ReplyDeletehttp://www.screencast.com/t/mmD37y9uh
port > the more i think of natty the more i think it will definitely not have a big rally...my best guess is it is range bound between 2 and 3 for a long long while.
DeleteTOF, my energy intel Houston based, says the same thing.
DeleteDid you notice the big APA find:
— 1:51 PM ET 06/15/2012
* Company finds 48 tcf gas field in northern British Columbia
* Test well in field most prolific ever
* No rush to develop while prices low
* One of several high-potential regions for company
* Shares rise 1.3 pct
CALGARY, Alberta, June 15 (Reuters) - Apache Corp (APA
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) has made what it believes may be one of the world's largest shale-gas discoveries in a remote corner of northeastern British Columbia, a massive field containing as much as 48 trillion cubic feet of recoverable natural gas.
The company has drilled three wells into its holdings in the Liard Basin in British Columbia, just south of where the province's northern border meets the borders of the Yukon and Northwest Territories. Those wells tapped into a massive shale-gas reservoir that alone could supply U.S. needs for almost two years
I'm trying to think through my plan on APA from above. Mostly it's this, APA is a momo stock when it moves so if I have a chance to enter a trade with a $2.00 stop I think its worth a chance. But, what I should do is wait for a better setup because in order for the plan above to work, I would need to be more consistent in watching the price action which I can't do. Maybe it doesn't work this time but it might later this week or next week when I'm not watching. For me, that means I should wait for a confirmed uptrend in the indexes AND the stock before I enter. No trade.
ReplyDeleteThis is part of what I'm saying when I think the economy is weak (not to mention the global econ).
ReplyDelete"In their second estimate of the first quarter 2012 GDP, the Bureau of Economic Analysis (BEA) lowered the annualized rate of U.S. domestic economic growth to 1.88% (down about a third of a percent from the 2.20% previously reported), and now more than a percent below the growth rate for the fourth quarter of 2011. This revision to the prior month's report does not reflect actual monthly changes in the economy, but rather another month's improvement in the BEA's understanding of what was happening during the prior quarter.
The real net changes in the report came from slightly weaker consumer growth and a further deterioration of government spending -- which between them made up the entire change in the headline number. Other than those changes this revision is notable for completely offsetting shifts in the growth contributions provided by commercial fixed investments (which strengthened slightly) and commercial inventories (which had offsetting weakness), and exports (strengthening modestly) and imports (deteriorating comparably). The BEA's bottom-line "real final sales" improved very slightly to an annualized growth rate of 1.67% (from 1.61% in last month's report) -- which, like the headline number, continues to be anemic for an economy that is supposed to be nearly three years into a recovery.
The BEA continued to use "deflaters" that at first glance seem to understate the inflationary experiences of the public. To correct the "nominal" data into "real" numbers the BEA assumed that the annualized inflation rate during 1Q-2012 was 1.65%. As a reminder, lower "deflaters" cause the reported "real" growth rates to increase -- and once again very low seasonally adjusted BEA inflation "deflaters" have contributed a significant positive bias to the headline number. In fact, if the raw "nominal" numbers were instead "deflated" by using the seasonally corrected CPI-U calculated by the Bureau of Labor Statistics (BLS) for the same time period the economy would have been reported to have been contracting at a -0.13% annualized rate.
And real per capita disposable income was still reported to be shrinking during the quarter -- even using the BEA's optimistic "deflaters." We find it unrealistic to expect any kind of continued recovery (let alone a "robust" recovery) throughout 2012 with household disposable income dropping."
"Summary
For those who read the BEA's GDP pronouncements for evidence of where the economy is headed (e.g., into another recession), we offer the following observations:
-- The numbers in this report are anemic by nearly any context of an economy three years into a "recovery."
-- As lackluster as they may be, the numbers are likely boosted artificially by understated inflation.
-- Any touted growth in consumer spending has come in spite of shrinking per capita disposable income. As such, the reported consumer spending growth is neither organic nor long-term sustainable -- and likely fueled by governmental student loans, or household cash flows improved by re-financing and mortgage defaults (whether strategic or involuntary).
-- After the first full quarter of the last recession, the BEA correctly published that quarter's economic direction only after 16 months had passed -- and they eventually admitted the full magnitude of the contraction only after some 40 months had elapsed.
Our bottom line for the economy has always been the health of households. This report shows per capita disposable income is shrinking and that any improvements in consumer spending are likely unsustainable. We continue to suspect that the softening seen in this report is the harbinger of a collapsing "recovery" that will continue to unfold during 2012. "
http://www.consumerindexes.com/
Despite all of the rupees woes the sensex broke above the 200 DMA yesterday and is adding to gains. MMYT, REDF, INFY, CTSH, TTM should outperform.
ReplyDeleteI see JRCC had a nice run yesterday. I am glad that I re-entered it at $2.10, after stopping myself out at $1.95. At this point, my cost basis for the 2000 shares is $2.45. So in order not to let a profit turn into a loss, I just placed a sell stop limit for these shares at $2.50/$2.45.
ReplyDeleteThe junior PM miners are one of the least trusted and wanted sectors in the market. They start going down first in any downturn, but they also start turning up first, since the traders panic out of that sector first and the selling exhausts itself first. This sector has definitely bottomed in mid-May. GDXJ has been making higher lows/higher highs since then. The best companies in that sector, AUMN and MUX, have both surged recently to recapture their December lows (GDXJ is not there yet, but will get there soon). Based on this action, I would say that the broad market is ready for another leg up, and the fact that $USD is still overbought on the long-term chart but has broken its uptrend on the short-term chart provides a great setup for the next leg up.
ReplyDeleteIt could be the reason oil prices are staying down because the technology for getting oil out of the ground is improving so much. Evan Texas is supposedly raising its output after all these years of sucking oil out of the ground by 425,000 barrels/day this year. This is close to the incremental demand out of China of 505,000 barrels/day. Perhaps we are seeing a big swing in the supply side dynamics of the demand/supply curve.
ReplyDeleteWorth a read for sure:
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/for-oil-executives-the-fracking-revolution-raises-spectre-of-a-gas-flashback/article4347921/
BB- That's what MOG has said...ie, peak oil.He calls it plateau oil just for that reason.
DeleteDoes he give any predictions for the price of oil for the next year?
DeleteJust saw Raymond James cutting 2013 oil price to $65. They are pretty good on energy, so I wouldn't necessarily just dismiss this:
Deletehttp://blogs.barrons.com/stockstowatchtoday/2012/06/18/raymond-james-downgrades-24-oil-gas-names-crude-going-to-65/
BB- $80-$110 is his yearly range. I saw the James 2013 price and it surprised me.
DeleteRe the BEA Report - unfortunately, I think this is the best you can expect for now. The U.S. is still working off the excesses from the last decade. This is the same thing Canada went through when we got into our mess. You need to restructure the economy (and it is happening) and produce more, consume less and sell to the parts of the world that have been under consuming the last decade (emerging markets). The good thing is the U.S. is probably the best country in the world for this creative destruction process and is coming through this much faster than Europe or Japan in the 1990's.
ReplyDeleteI think oil is low because we are coming off of dollar strength and there is low demand due to previous prices and lower incomes. I note that in the last TWO WEEKS gasoline went from $4.29 at my local station to $3.56. Some of that is due to our local refinery coming back on-line, some from our governor announcing she is investigating high gas prices and some from weak demand due to insane prices.
ReplyDeleteGot Random Thoughts?
ReplyDelete"The market continues to plow ahead. This action has it very overbought in a downtrend and bumping up against overhead resistance. This is a recipe for disaster. So, should we short with two fists? (www.shortswithtwofists.com) Yes, but with a major caveat: don't fight the tape. Channeling Mr. Keynes: The market can stay irrational a lot longer than you can stay solvent. So, honor your stops just in case the market continues to defy gravity. And, wait for entries on new positions. That, in and of itself, can often keep you out of new trouble.
Futures are flat pre-market."
Oil - Yes, I think it's true we're seeing increased production. Lower oil prices might also correlate to some degree with the warmer winter we just experienced?
ReplyDeleteAnyway, lower oil does represent an economic tailwind.
Day 2 for X.
ReplyDeleteMITK - Still on a roll....
ReplyDeleteBought more FSLR at $15.2
ReplyDeleteBought ANR at $8.89.
Bought STS at $3.65
Bought GRVY at $1.9 avg
The best play off low oil: LCC
Please don't mention MITK again while I'm around.
NOK is a buy right here.
ReplyDeleteAnd GLL is a buy.
I decided to heed 2nd_ave's advice and took some profit on my MUX calls, after the nice rally MUX had off its mid-May lows: sold at $1.05 30 contracts of January $2.50 calls, for which my cost basis was $0.80.
ReplyDeleteHard to argue with 31% gains.
DeleteI went to bed really late last night after looking at charts and the single best set up I found was STS. I only managed to get about 11k shs today because its so damn illiquid. I believe this can run to $10 if the next earnings report is as good as I think it could be.
ReplyDeleteGRVY was the second best setup I found.
The others that looked good were:
BTU
ANR
FSLR (still)
LCC
NOK
COH
TIF
REDF
GLL
I think the hard trade right now is being long.
WTIC - Wow, if this keeps up going for new 52wk lows?
ReplyDeleteWhat a gift, just at the right time...
Raymond James $65 oil 2013 target? Better not get long!
ReplyDeleteI'll have to start getting the old 1 Ton gas hog road worthy...
Hey, maybe Obama can even deliver $2.50 gasoline without any help from Gingrich?
ReplyDeleteMET - Big boost yesterday from their FED requirements extension.
ReplyDeleteTZOO is another really good looking chart for a ST trade
ReplyDeletemaybe the Fed is printing money to short oil
ReplyDeleteExactly, why not? Same for other commodities and PM's as well. Print money and short the pee out of 'em. The problem I perceive though, is prices are all over the place (my untrained observation) and thus making it impossible to reliably forecast costs in most any business model.
DeleteMaybe I still don't have enough experience watching prices to comprehend this phenomenon well.
Added another 1,200 shs of REDF at $3.76. 9k total.
ReplyDeleteAdded another few grand shs at $3.8
DeleteAll right, just sold 1000 shares of JRCC at $2.90, for which my cost basis is around $7 (entered in January and did not stop myself out -- let this be a lesson to everyone!). Still keeping 2000 shares I recently bought, for which my cost basis is $2.45 (have a stop order at $2.50 for these shares).
ReplyDeleteSold ANR at $8.98.
ReplyDeleteHDSN - Zoom, zoom, zoom......
ReplyDeleteMan they're really shaking the FSLR tree. Gotta get them weak longs out.
ReplyDeleteHoldin' up pretty well, IMO...
DeleteHoly sh*t. MITK's RSI(7) is now 94. That has to be the quickest move from 10 to over 90 ever. Just unbelievable.
ReplyDelete$WTIC - Wow, nearly free oil in just a few days if this keeps up...
ReplyDeleteKeeping and eye on FXE/UUP.
ReplyDeleteWhat I'm finding interesting is the one broker-dealer I won, Cowen (COWN), bottomed before the market a couple of weeks ago and has been outperforming since for the first time in a very long time.
ReplyDeleteCompanies like Cowen trade as leveraged plays on the market, so this, along with with gold going down, is saying people think the markets will get better and money printing will not be excessive.
BB, I would say ZIRP is already absolutely excessive.
DeleteThe FED ultimately has two choices print or dafeult, what one do you think they will do?
No doubt they will print as long as necessary. The price of Gold probably already has this built by now, so the question becomes will they print more than the market expects?
DeleteHave not read it yet, but know some here like.
ReplyDeleteStrategist Jeff Saut's Latest Market Commentary
http://www.marketfolly.com/2012/06/strategist-jeff-sauts-latest-market.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MarketFolly+%28Market+Folly%29
Must be bad news? I guess the market isn't expecting much of anything from Bernanke.
ReplyDeleteI'm really trying to overcome the urge to sell every pop b/c I feel like I'd be opening myself up for manipulation and conditioning.
Don't let the noise around a fed decision affect your trading. There's often a lot of turbulence as the market tries to decide if it is actually good or bad.
Deletewatch bros oil will close flat. market up 100
ReplyDeleteif it doesn't happen then it don't blame me please.
DeleteThings do seem to be ramping up now. Perhaps the market has decided that things are good enough than no more QE was needed.
Deletewho knows. did you get a chance to look at AMNF any more? i really like that one. check out this other one: IFON. they have about their entire market cap in cash and revs are growing and they just turned the corner to profitability.
DeleteOr Seekingalpha is reporting:
DeleteMaybe trumping disappointment over the Fed announcement is a leak out of Europe that European Council head Herman Van Rompuy has prepared a blueprint of reform that will include jointly issued short-term bills, reports Bloomberg.
perhaps. all i know is the market doesn't want to let people in. we may have begun another one of those crazy low volatility cruises up for the next several months that we have seen multiple times over the past 3 years.
DeleteWhat do you mean TOF, the market gave us 10 minutes to get long. This thing is slow.
DeleteHa Ha
Mood
ReplyDeleteM-O-O-D: That is the important word right here. And, what a difference a few weeks makes for last week the markets seemed to
switch from the “glass being half-empty to half-full” leaving Mr. Market in a more forgiving mood. Importantly, market mood
frequently sets the near-term trend. If the mood is positive, all things are possible; if it is negative, little is. To wit, consider the
following excerpt on mood from the New York Times:
‘Emotions are contagious,’ wrote the Swiss psychoanalyst Carl Jung. His observation is now being borne out and given
precision by scientific studies of the subtle interplay of moods as they are passed from person to person. . . . It is perhaps no
surprise that people’s moods affect how they see their futures. But psychologists point out that people are largely unaware
that a good or bad mood is creating an optimistic or pessimistic outlook. . . . Research shows that moods influence people’s
judgments by making either positive or negative memories more readily available. Thus a rational weighing of the evidence
is swayed in one direction or the other by the bias that moods introduce in what can be brought to minds.
That is very true - I know I've made some poor decisions on days when I've felt very crappy.
DeleteAfter having watched these markets for several years now, my mood could definitely use improvement.
DeleteTOF,
ReplyDeletere AMNF, I've put it on my watchlist and would probably buy on a pullback. Seems like they have a good little niche, priced well, are shareholder friendly and could be a takeout target. Given the stock has traded between $0.78 and $0.84, perhaps a better approach would be to buy a partial position now, then average down if we get a pullback, but participate if it moves. Next quarterly earnings shouldn't be out for about a month, so we have some time to maybe get better prices.
Re IFON, I would personally stay away. Generally, it is a great time to buy a stock when it flips to making profits as it generally attracts a lot of attention and especially since the stock is cheap. The problem I have is there competitive advantage only seems to be price and that is not sustainable for a small player. I could see one of the big Chinese makers of cheap cell phones move into their markets and crush them with lower prices due to manufacturing at higher volumes. Maybe I'm missing something here, and the stock did trade above $10 for all of 2006, so you could get a big move if you get some hot money in here. But for me, I would pass.
Do not know if this is the start of something.
ReplyDeleteMCP 1.82 22.47 + 22.48 8.81%
REE 0.54 5.11 + 5.14 11.91%
AVL 0.11 1.66 + 1.67 7.10%
12:15 PM EDT, 06/20/2012 (MidnightTrader) -- China today published a white paper detailing stricter environmental standards and protective exploitation policies for the rare earth industry, according to a report in Global Times.
The white paper, released by China'sInformation Office of the State Council, also said that it will continue to supply the global market in line with WTO rules, the report stated.
Chinese officials are also defending the stricter rules, saying these comply with WTO rules and are a necessary move to protect against further environmental damage, the report stated further.
Was still questioning why on pink sheets for AMNF, so called IR:
ReplyDelete1. Why on Pink Sheets?
> SOX costs would have been $400K year 1, plus $200K every year after - not worth it
> CEO is a stock guy and wanted a $0.25 stock as easier to move up, so did a 10 for 1 when went to pinks
> OTC listing fees are $5K per year instead of $100K+ on Nasdaq
2. Insider ownership?
> CEO - 9%, family - 15%
3. Financial Reporting?
> Continue to report as if on Nasdaq so can easily analyze. Do a certified Annual Audit.
SWC - How do you like the swing on this ding-a-ling?
ReplyDeleteFunny, Liesman always seems to get the first question for The Benak, can't help but think it is scripted.
ReplyDeleteObviously my MUX Jan. 2.50 calls where bought today. +45%.
ReplyDeleteNow 101% cash :)
101% cash is probably the smartest move. Landry could definitely be right that the trend remains down.
DeleteTime to short now?
ReplyDeletejust don't short FSLR...i don't want to have to go head to head against you big fella!
DeleteI have a bid on SDS at 15.50 just in case.
DeleteHey CP, what da ya think of Shark'y PAL for a trade?
I don't understand why PAL moves opposite the underlying, thus I think it's gonna run outta steam unless the underlying turns up. I'm still eying a $2 target if metals roll over, which I doubt happens bur doesn't mean they won't.
DeleteI'm still in SWC and considering selling if we don't get some price support.
UCO - What a stinker this thing is today, reminds me of silver last summer. Unbelievable!
ReplyDeleteIf we continue to grind slowly higher in our economy then this is a great thing for us...some needed relief at the gas pump! Maybe this is what QE3 is?
DeleteLower oil could really stoke the economic stove, assuming it's a result of higher production and not demand destruction.
DeleteThe lower the better, I'll just wait to buy.
I tell ya what we could really use it for my furniture biz. Lower shipping rates will help our profits out for sure.
Delete$USD - This thing went on a tear about the time Bernanke was flapping his jaws, hopefully the initial reaction was a head-fake...
ReplyDeleteHomes report tomorrow, will home builder profit taking be the course of action?
ReplyDeleteHDSN - The price of R-22 freon has doubled in the last year and there's still huge opposing forces to replacing older residential HVAC systems as opposed to repairing them.
ReplyDeleteThis should be good long term for HVAC equipment manufacturers.
Is that a bull flag forming?
Deletewow read this post and the comments...quite harsh:
ReplyDeletehttp://www.objectivetrader.com/2012/06/clown-trading-diary.html#trackback
I'm writing this more to hash out my thoughts on something...anyway i probably made a mistake buying some stocks today (now about 75% long) but i really liked the setups on the following:
ReplyDelete1.) STS - Got some right at the open at $3.65 when I saw a 10k block on the ask; fundamentals I'm already familiar with and I've been wanting to get back in but the chart hadn't set itself up yet; speaking of which I see an uptrending Stochastics with a crossover thingy (check 1), a bullish MACD crossover (check 2), a diverging RSI (check 3), and low volume on the pullback (not a necessity but nice to see). Long about 11k total shs
2.) REDF - We all know the story behind it. It's a total **** bag company and stock. I added to my 7800 shs I bought yesterday at $3.9. I bought another 6k shs at $3.7 to $3.8 I think. This one has a slightly bullish MACD crossover, a slightly diverging RSI, but no bullish Stochastics crossover yet. For me it's more a function of the RSI readings on the weekly that triggered a buy. It just recently registered lower RSI readings on the weekly than back in August 2010 when it was below $2 and it in the range of one of the lower weekly RSI readings I've ever seen which is usually good for a bounce. Additionally, it has registered a bit of a diverging RSI(7) reading on the weekly chart for the past few weeks. And lastly I think it's a positive sign that the Sensex appears to be breaking above it's 200 DMA, although that's not a done deal yet.
3.) I bought a little more FSLR at $15.20 (ouch). Now have about 11k shs I think. This was also has had diverging RSI readings (getting close to overbought though), a continued bullish Stochastics (albeit now getting to the overbought territory), and a bullish MACD trend.
4.) GRVY - bought some at $1.82 to $1.90. This has almost the same setup as STS. Everything looks bullish as far as a buy setup goes. Also it was right at the 200 DMA so I thought it was a good low risk entry.
Obviously I have some reservations about buying with the market up so much in the past 2 weeks but I'm trying to just focus on individual stocks for now and will keep an eye on the market. I see the potential for a pullback here because the stochastics look to be topping out but in a trend they can stay in the overbought range for a long time (e.g., December through March 2012).
what the eff man. jrcc up 70% since last week. if i sell another stock that goes up 50% plus a week after i sell im gonna lose it
ReplyDeletenew post
ReplyDelete