Let me tell you bout a man I knew
He roamed the depth and the breadth of China
On a horse that he grew himself
From the bark of a tree on mainland China
I spot just one outright 'Buy' right now.
Looking forward to David's article on AUMN at Seeking Alpha. He and TOF are two young men that really dig into stocks. I would bet they are of the "Millenial Generation" as defined by Neil Howe (1982-2004) or maybe late wave GenXers.
I don't even come close to TOF's sense of timing. He always suggests to us not only stocks with great fundamentals, but also those which he feels are ready to spike up, and which often DO spike up in a short order (REDF is a great example).
However, a broken clock becomes right once in a while, and now I *do* believe that we have *finally* seen the bottom in AUMN. It really took AUMN *much* longer to find its bottom than I expected, but now it is so close to the steady production ramp-up, that only a major crash in gold/silver can derail its growth.
Paul Quinsee, the chief equities investment officer of JPMorgan Asset Management, remarked in a client note last week that risk looks cheap in the stock market. He noted that the discount assigned to less-predictable companies with more-volatile stocks is wider now than it's been 96% of the time since the mid-1980s.
What metrics do you suppose he's using to determine that "risk looks cheap" and which group(s) is he talking about?
"Paul Quinsee, the chief equities investment officer of JPMorgan Asset Management, remarked in a client note last week that risk looks cheap in the stock market. He noted that the discount assigned to less-predictable companies with more-volatile stocks is wider now than it's been 96% of the time since the mid-1980s."
NSPH - From the CPHD CC, this leads back to DHR, one I'd considered last week:
"We also face emerging competition from both established companies such as Beckman Coulter, Danaher and development stage companies that are entering these markets. Several companies are currently making or developing products that may or will compete with our products. Our competitors may succeed in developing, obtaining FDA approval for, or marketing technologies or products that are more effective or commercially attractive than our potential products or that render our technologies and potential products obsolete. As these companies develop their technologies, they may develop proprietary positions that prevent us from successfully commercializing our products."
NIFTY - Seems to have rolled over in it's coiling action, seems like it could lose 200pts rather quickly. Wonder if that's due to it's inverse correlation with the dollar?
Bruce Krasting made an interesting analysis today of what the Fed can do during the August meeting:
http://bit.ly/O49i8l
His conclusion is that a cut in the deposit rate from a 1/4% to a 1/8% is the most likely outcome of the meeting, and while it seems like a small change, it would provide a significant boost for commodities, he argues. That could just be the event that lights the fire under gold and silver, if they don't take off until then.
"On the economic front, as we expected based on leading economic evidence, new orders and order backlogs have dropped abruptly in recent reports. These indices are short-leading indicators of production, which is likely to show a striking decline beginning in the July data.
The key question - in view of extreme credit market strains in Europe, and accelerating economic deterioration in the U.S. – is why the S&P 500 continues to trade within a few percent of its April bull market high. The answer is simple: investors are scared to death of missing the widely anticipated market advance that they expect to follow a widely anticipated third round of quantitative easing. Good economic news may be a relief for investors, but bad economic news in this context is just as much of a relief because it brings forward the anticipated delivery date of the sugar. The follow-up question, however, is that if more QE is widely anticipated, and a market advance is widely anticipated to result, isn’t that the precise definition of an event that is already priced into the market?
If you look at the Federal Reserve’s own research on quantitative easing – large scale asset purchases (LSAPs) – nearly every paper emphasizes the “portfolio balance” effect. Put simply, as the Fed removes longer-term Treasury securities from the menu of portfolio choices available to investors, it forces investors to consider alternative securities, raising their prices and lowering their yields – with a particular impact in driving down the risk premiums of risky securities. Indeed, as we’ve noted, QE has generally been effective in helping stocks to recover the peak-to-trough loss that they have suffered in the prior 6-month period (though the most recent LSAPs in the UK and Europe have been failures in that regard).
Still, once risk premiums are already deeply depressed (we estimate the likely 10-year prospective total nominal return for the S&P 500 to be only 4.8% annually), once stocks are trading near their bull market highs, and once Treasury debt already sports the lowest yield in history, should investors really expect much of a portfolio-balance effect from further attempts at QE? Frankly, I doubt it, but in the eventuality of a third round of QE, we’ll focus on our own measures of market action – not on any blind faith in the Fed."
"The key question - in view of extreme credit market strains in Europe, and accelerating economic deterioration in the U.S. – is why the S&P 500 continues to trade within a few percent of its April bull market high. The answer is simple: investors are scared to death of missing the widely anticipated market advance that they expect to follow a widely anticipated third round of quantitative easing. Good economic news may be a relief for investors, but bad economic news in this context is just as much of a relief because it brings forward the anticipated delivery date of the sugar. The follow-up question, however, is that if more QE is widely anticipated, and a market advance is widely anticipated to result, isn’t that the precise definition of an event that is already priced into the market?"
I love reading or listening to anyone that knows with certainty why the market is acting the way it's acting. That alone is reason enough for me to not follow them closely. I mean how the hell does he know for sure that the reason the S&P is within a few percent of April highs is because people are anticipating QE? Hasn't he been in the business long enough to understand the naivete of this comment?
In late 1982 when the market skyrocketed higher in the face of significant negative headwinds in the economy, I'm quite sure that people said it was just another headfake. In fact, in the summer of that year it is well known that everyone agreed the US was essentially doomed by rising unemployment and high inflation. There were several well known publications that covered this. However, the market continued to rise without much more than a 8 to 10% pullback for 5 years, tripling over time.
I'd argue the reason the market is not pulling back is because earnings support it. Throw in the fact that the market has traded sideways for 13 years and it's pretty clear the market is not even close to overvalued.
Can it trade lower? Absolutely. But my belief is that the market is susceptible to very sharp rises at any point in time. Let's say we slow down and get a drop in earnings to $90/share. Let's say the market drops to 1,150. Do you think that earnings will rise sharply after taking a dip? History suggests it would. Take a look at this chart again and pay attention to the years when earnings dropped. Within 3 years earnings skyrocketed higher:
I think this period is very similar to the 1970s. From 1969 to 1981 the market traded slightly higher; however earnings went up well over 100%. This set the stage for a major bull market. Since 1999/2000 we have traded sideways for 13 years. Earnings in 1999 were about $51 or $52 a share. They are now around $100. This is only setting the stage for another bull market.
TOF, here is what Hussman has to say about earnings:
"Profit margins are nearly 70% above their historical norms at present, but these margins reflect very high deficit spending and very weak savings rates – something that can be related to corporate profit margins through accounting identities. Unless one anticipates continued deficits indefinitely, either revenues will revert closer to the level of labor compensation, or less likely, labor compensation will increase toward the level of revenues, but in any event the gap will tend to narrow."
Well, maybe the stock market is looking out at most a year or two at this point, and over this time horizon the market DOES see continued deficit spending by the US government and hence (by the virtue of accounting/economic identities) corporate profit margins that refuse to go down...
what hussman fails to mentioon is there have been times where profit margins have fallen and yet the market has risen. instead of assuming they are positively correlated he should post a chart of corporate profit margins and correspponding performance of equities from the 50s thru the 80s. he would see that margins fell yet the s&p rose substantially.
that would be much more objective and actually do service to his readers. remember this is a guy who 10 plus years. it is human nature to find reasons to support your outlook on things. if youre bearish you are more to likely to find negative articles and facts that support your bearish outlook and vice versa.
also here is an article talking aboutt the relation between margins and external factors: http://m.seekingalpha.com/article/428181-debunking-s-p-500-profit-margin-anxiety
Based on recent client conversations most seem bewildered by the fact that the S&P 500 is up for the year, let alone generating returns in excess of 8%. From our perspective and as we discussed in last week’s report, US Strategy Weekly, “Scaling the Wall of Worry,” investor skepticism appears to stem from the increasing concerns with regard to China, the US “fiscal cliff,” Europe, US politics, and corporate earnings. Yet despite all the consternation these issues have caused lately, stock momentum has been seemingly undeterred and this has made some investors even more nervous (us not included). To be clear, we are not minimizing the potential risks that stocks and the economy still face. However, we have learned through experience that it is best “not to fight the market.” In fact, as Chart 1 illustrates, almost every major US recession since WWII has been preceded by a prolonged period of negative stock market momentum. But as you can see from the chart, stocks have remained in an uptrend for the past three years. This signals to us that imminent recession fears are likely overstated. In addition, we believe most global and domestic investors are already positioned for bad news. Furthermore, the market environment over the past four years which has been characterized by elevated correlations and volatility, rising risk premiums, consistent equity fund redemptions and heightened macro sensitivity has driven most equity investors to manage their portfolios in such a way as to “not be wrong,” in our view. As such, we believe many investors have abandoned what we believe is a core foundation of investing. Namely, fundamentals are what ultimately define investing environments, not fear, chaos, or emotion. We continue to believe US fundamentals remain attractive and sound, providing a template of stability and consistency for which other regions around the world will likely model over the next several years. And we believe that it is just a matter of time before more investors begin to refocus on underlying fundamental trends (as opposed to chasing macro headlines).
Kinda strange, but the market is still selling hard and just about all the stuff I follow has risen since the open. Also kinda interesting is F again. I would have thought it'd get creamed on MCD.
Keep an eye on stocks that are holding up strong. If they hold up ok here then when the market selloff ends they will rip higher. We've seen it time and time again.
Pay attention to stocks that are green or that are near the highs of the day when the market is near the lows of the day. If this selloff is a trend that continues for several days and then we have a final drop lower in the market which brings those strong stocks down, then those are the ones to target for long trades.
China, who I would say is the ultimate long term investor, putting $1.5 billion into TLM, and CNOOC buying Canadian energy company Nexen at a 61% premium.
Canadian energy companies are starting to say "well, Obama, if we can ship our oil to the U.S., China will be happy to take some".
Think it shows the undervaluation of energy companies if you are patient.
"New analysis from Strategas Research Partners shows irrefutable evidence that companies are getting a real bang for their buck on the money they spend trying to influence lawmakers"
Quite right, I've always thought politicians sold themselves out too cheaply. $2M for an earmark worth hundreds of millions is a screaming bargain.
NSPH: "Net proceeds from the sale of the shares after underwriting discounts and commissions and other offering expenses are expected to be approximately $23.4 million. If the underwriters exercise their over-allotment option in full, net proceeds from the offering will be approximately $26.9 million. The offering is subject to customary closing conditions and is expected to close on Tuesday, July 24, 2012."
WHR, which I have been thinking about as a way to play the US housing rebound, also in the green.
If people thought things were completely falling apart, like the AP Article called "Global economy in worst shape since 2009" by some AP Econ write tries to sell us, stocks like this would be down.
Pretty soon we're gonna get to the point where everyone is out of the market waiting for a crash, the market will be elevated much higher than they want it, and then they will have to give in and admit that a crash ain't coming. That's when we rip much higher as the big institutions pour in. Calpers and the pension funds, the bearish hedge funds, all of them will be flooding the market with buy orders all at once.
It amazes me that we have seen a market at significantly higher levels than in 2009, 2010, and 2011 and yet the bearish sentiment readings are at all time highs. A few months ago Laz said he expects it to be a 4 phase bull market where the 1st and 4th phases are the best returning phases. He said he thinks we're in the 3rd phase where people will finally give up on their bearishness and accept that we're not returning to prior lows. I totally agree.
I think it must be people are still shell-shocked the terrible losses they took in 2008 / 2009 - I don't know what else it could be.
You look at the longer term charts and we are solidly in a bull market since March, 2009, and if I draw a channel, we are right in the middle of the uptrend, yet many sentiment indicators would have you think we are at a multi-year low, not up 8% for the year.
I think this poor sentiment bodes well for a very long, multi-year bull market as it will take many years of good stock performance to turn this attitude around and bid stocks up to overvalued. In the meantime, I think we can do really well by just finding the good stocks and take advantage of the unwillingness of people to buy.
My friend bought into this after I bought it at $2.00. When it was at $4.20ish he asked me what I thought he should do. I said to sell 1/2 then and to sell the rest if it fell below $3.7. We had a poker game on Thurs night and I asked him about it. He said he sold the 1st half at $4.2 but held on to the last half and didn't sell and was asking me what to do with the other half. I told him to sell it immediately Friday morning. I'm hoping he did. Still a great trade. A lesson in not worrying so much about your trade.
Not sure if I'm going to be able to add more NSPH at $2.52 which was my target.
The coals were suprisingly strong today. JRCC and BTU look interesting. JRCC looks like Nat Gas from mid June. Failed rallied that killed all hopes before the real rally.
BTU - Reports Bmo tomorrow. I continue to hold 1/2 of a position taken last year at a great % loss, . Sold the other half at a reasonable loss.
NSPH - See my reply to your earlier post. I couldn't get any at $2.58 today. I like this story stock.
CLF - I made an intra-day score today (shot up in last hour). Third time traded this month for profit. Bumps along $44 support. Great fundamentals too, although I have enough of the coal biz thru BTU exposure. (Cliffs mostly iron ore}.
I have reduced trading this year and am trying to be an investor, as I was years ago. Hard not to take a fast profit though in this market.
Looks like Mark Slezak picked up another 1 Million shares of NSPH at $2.40 on the private placement: http://phx.corporate-ir.net/phoenix.zhtml?c=214748&p=irol-SECText&TEXT=aHR0cDovL2lyLmludC53ZXN0bGF3YnVzaW5lc3MuY29tL2RvY3VtZW50L3YxLzAwMDEyMDkxOTEtMTItMDM4ODA0L3htbA%3d%3d
This dude has been buying a sh*tload of stock over the past two months.
"Weekly U.S. coal carloads have increased for the first time, year-over-year, since mid-January. Coal car loads climbed to 122,507 compared to 119,547 from the same timeframe last year with western U.S. railroads being up 22% from their April low as PRB coal makes a comeback as Nat Gas prices continue to rise. "
TOF, BB: I think the reason people are so bearish now is because they see things in Europe getting worse, and they are rightfully afraid that a breakup of the Eurozone will cause the banking system to freeze and the Lehman-type experience to occur. There is a lot of truth to that argument, and the fact that the US economy is not doing badly so far has no relevance in this type of an event...
Europe is in the middle of our own 2008/9. Lots of those markets affected are down 50% plus. pay attention to what happened after 08/09 in the US markets. that's what's coming in europe. greece exits the euro flies and our markets are at new highs. germany and the IMF have that $$ to use toward spain/italy. mark it down on ye calendar.
Looking forward to David's article on AUMN at Seeking Alpha. He and TOF are two young men that really dig into stocks. I would bet they are of the "Millenial Generation" as defined by Neil Howe (1982-2004) or maybe late wave GenXers.
ReplyDeleteI don't even come close to TOF's sense of timing. He always suggests to us not only stocks with great fundamentals, but also those which he feels are ready to spike up, and which often DO spike up in a short order (REDF is a great example).
DeleteHowever, a broken clock becomes right once in a while, and now I *do* believe that we have *finally* seen the bottom in AUMN. It really took AUMN *much* longer to find its bottom than I expected, but now it is so close to the steady production ramp-up, that only a major crash in gold/silver can derail its growth.
"Congrats on your first article. SA is something I use a lot. I signed on as a follower although don't know exactly what that entails."
ReplyDeleteThanks, Illini! I would think that as a follower you'll get an e-mail notification whenever I post a new article...
Well written article David. Keep up the good work!
DeleteAUMN - OBV is currently lower than it was in October of 2009, while share price is at about the same level.
DeleteYou did a great job penning your article. I remain unconvinced though, concerning a PM trend reversal.
It is interesting to note that Soros loaded up GLD at what appears the yearly low, I wonder if he's still euro bullish?
From Santoli's market review at Barron's:
ReplyDeletePaul Quinsee, the chief equities investment officer of JPMorgan Asset Management, remarked in a client note last week that risk looks cheap in the stock market. He noted that the discount assigned to less-predictable companies with more-volatile stocks is wider now than it's been 96% of the time since the mid-1980s.
http://online.barrons.com/article/SB50001424053111904346504577531012249866048.html?mod=BOL_twm_col
Can JPM be trusted for an objective analysis, or is it more likely they are distributing their holdings?
DeleteWhat metrics do you suppose he's using to determine that "risk looks cheap" and which group(s) is he talking about?
Delete"Paul Quinsee, the chief equities investment officer of JPMorgan Asset Management, remarked in a client note last week that risk looks cheap in the stock market. He noted that the discount assigned to less-predictable companies with more-volatile stocks is wider now than it's been 96% of the time since the mid-1980s."
NSPH - From the CPHD CC, this leads back to DHR, one I'd considered last week:
ReplyDelete"We also face emerging competition from both established companies such as Beckman Coulter, Danaher and development stage companies that are entering these markets. Several companies are currently making or developing products that may or will compete with our products. Our competitors may succeed in developing, obtaining FDA approval for, or marketing technologies or products that are more effective or commercially attractive than our potential products or that render our technologies and potential products obsolete. As these companies develop their technologies, they may develop proprietary positions that prevent us from successfully commercializing our products."
Barron's cover article :Will the euro fall to parity with the buck?
ReplyDeleteThat's some dollar upside.
Excellent article david. Remember to wear a sport coat when you start making appearances on CNBC. I like the feedback you are getting too.
ReplyDeleteI'm currently more concerned about stagflation than anything else.
NIFTY - Seems to have rolled over in it's coiling action, seems like it could lose 200pts rather quickly. Wonder if that's due to it's inverse correlation with the dollar?
ReplyDeletehttp://stockcharts.com/h-sc/ui?s=$CNXN&p=W&b=5&g=0&id=p66958419146
Bruce Krasting made an interesting analysis today of what the Fed can do during the August meeting:
ReplyDeletehttp://bit.ly/O49i8l
His conclusion is that a cut in the deposit rate from a 1/4% to a 1/8% is the most likely outcome of the meeting, and while it seems like a small change, it would provide a significant boost for commodities, he argues. That could just be the event that lights the fire under gold and silver, if they don't take off until then.
Pretty interesting take.
DeleteDBC - This sucker is flying.
ReplyDeleteTop CEO buys of the week:
ReplyDeletehttp://www.forbes.com/sites/gurufocus/2012/07/21/top-ceo-buys-of-the-week/?partner=yahootix
California Proposes Tax On Driving
ReplyDeleteGPS devices would record mileage and charge drivers accordingly
Graphene-based materials for catalysis
ReplyDeletehttp://pubs.rsc.org/en/Content/ArticleLanding/2012/CY/c1cy00361e
My latest article on SeekingAlpha:
ReplyDeletehttp://seekingalpha.com/article/737841-dissecting-golden-minerals-latest-production-update
Mark, you of course are aware that real sports cars have no A/C, right?
ReplyDeletehttp://cgi.ebay.com/ebaymotors/1967-Datsun-Fairlady-Roadster-1600-Complete-restoration-/120951946332?pt=US_Cars_Trucks&hash=item1c294c3c5c
Kinda cute. I always liked the 240Z. If I'm ever dumb enough to buy another car though, it will probably be a Fiat Spider.
DeleteLove the looks, a buyer would have to overlook:
DeleteDrum brakes
No A/C
Puny power
Better looking than 240Z IMO though, even the 240's biggest complaint was puny power.
DeleteSpyder - Good one as well, I place the Sunbeam tiger up there too.
DeleteFrom Hussman tonight:
ReplyDelete"On the economic front, as we expected based on leading economic evidence, new orders and order backlogs have dropped abruptly in recent reports. These indices are short-leading indicators of production, which is likely to show a striking decline beginning in the July data.
The key question - in view of extreme credit market strains in Europe, and accelerating economic deterioration in the U.S. – is why the S&P 500 continues to trade within a few percent of its April bull market high. The answer is simple: investors are scared to death of missing the widely anticipated market advance that they expect to follow a widely anticipated third round of quantitative easing. Good economic news may be a relief for investors, but bad economic news in this context is just as much of a relief because it brings forward the anticipated delivery date of the sugar. The follow-up question, however, is that if more QE is widely anticipated, and a market advance is widely anticipated to result, isn’t that the precise definition of an event that is already priced into the market?
If you look at the Federal Reserve’s own research on quantitative easing – large scale asset purchases (LSAPs) – nearly every paper emphasizes the “portfolio balance” effect. Put simply, as the Fed removes longer-term Treasury securities from the menu of portfolio choices available to investors, it forces investors to consider alternative securities, raising their prices and lowering their yields – with a particular impact in driving down the risk premiums of risky securities. Indeed, as we’ve noted, QE has generally been effective in helping stocks to recover the peak-to-trough loss that they have suffered in the prior 6-month period (though the most recent LSAPs in the UK and Europe have been failures in that regard).
Still, once risk premiums are already deeply depressed (we estimate the likely 10-year prospective total nominal return for the S&P 500 to be only 4.8% annually), once stocks are trading near their bull market highs, and once Treasury debt already sports the lowest yield in history, should investors really expect much of a portfolio-balance effect from further attempts at QE? Frankly, I doubt it, but in the eventuality of a third round of QE, we’ll focus on our own measures of market action – not on any blind faith in the Fed."
"The key question - in view of extreme credit market strains in Europe, and accelerating economic deterioration in the U.S. – is why the S&P 500 continues to trade within a few percent of its April bull market high. The answer is simple: investors are scared to death of missing the widely anticipated market advance that they expect to follow a widely anticipated third round of quantitative easing. Good economic news may be a relief for investors, but bad economic news in this context is just as much of a relief because it brings forward the anticipated delivery date of the sugar. The follow-up question, however, is that if more QE is widely anticipated, and a market advance is widely anticipated to result, isn’t that the precise definition of an event that is already priced into the market?"
DeleteI love reading or listening to anyone that knows with certainty why the market is acting the way it's acting. That alone is reason enough for me to not follow them closely. I mean how the hell does he know for sure that the reason the S&P is within a few percent of April highs is because people are anticipating QE? Hasn't he been in the business long enough to understand the naivete of this comment?
In late 1982 when the market skyrocketed higher in the face of significant negative headwinds in the economy, I'm quite sure that people said it was just another headfake. In fact, in the summer of that year it is well known that everyone agreed the US was essentially doomed by rising unemployment and high inflation. There were several well known publications that covered this. However, the market continued to rise without much more than a 8 to 10% pullback for 5 years, tripling over time.
I'd argue the reason the market is not pulling back is because earnings support it. Throw in the fact that the market has traded sideways for 13 years and it's pretty clear the market is not even close to overvalued.
Can it trade lower? Absolutely. But my belief is that the market is susceptible to very sharp rises at any point in time. Let's say we slow down and get a drop in earnings to $90/share. Let's say the market drops to 1,150. Do you think that earnings will rise sharply after taking a dip? History suggests it would. Take a look at this chart again and pay attention to the years when earnings dropped. Within 3 years earnings skyrocketed higher:
Deletehttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/spearn.htm
I think this period is very similar to the 1970s. From 1969 to 1981 the market traded slightly higher; however earnings went up well over 100%. This set the stage for a major bull market. Since 1999/2000 we have traded sideways for 13 years. Earnings in 1999 were about $51 or $52 a share. They are now around $100. This is only setting the stage for another bull market.
TOF, here is what Hussman has to say about earnings:
ReplyDelete"Profit margins are nearly 70% above their historical norms at present, but these margins reflect very high deficit spending and very weak savings rates – something that can be related to corporate profit margins through accounting identities. Unless one anticipates continued deficits indefinitely, either revenues will revert closer to the level of labor compensation, or less likely, labor compensation will increase toward the level of revenues, but in any event the gap will tend to narrow."
Well, maybe the stock market is looking out at most a year or two at this point, and over this time horizon the market DOES see continued deficit spending by the US government and hence (by the virtue of accounting/economic identities) corporate profit margins that refuse to go down...
what hussman fails to mentioon is there have been times where profit margins have fallen and yet the market has risen. instead of assuming they are positively correlated he should post a chart of corporate profit margins and correspponding performance of equities from the 50s thru the 80s. he would see that margins fell yet the s&p rose substantially.
Deletethat would be much more objective and actually do service to his readers. remember this is a guy who 10 plus years. it is human nature to find reasons to support your outlook on things. if youre bearish you are more to likely to find negative articles and facts that support your bearish outlook and vice versa.
also here is an article talking aboutt the relation between margins and external factors:
http://m.seekingalpha.com/article/428181-debunking-s-p-500-profit-margin-anxiety
sorry meant to say who has been bearish for 10 plus years
DeleteHey, I'm bearish right now!
ReplyDeleteNo need to jump in right away, IMO. It may be more than a one-day selloff this time.
ReplyDeleteNaturally, there are a few intrepid dip-buyers already wading in.
DeleteI agree. Sold my VXX at 14.33 (14.05). Bought my PDS back at 7.24. Still holding CEF, considering doubling it.
DeleteLooking at TBT as well.
I didnt read your post clearly. LOL
Deleteoff PDS at 7,29
DeleteWant to own it going forward but will buy lower I think
Ouch, LOL! $USD is the place ya' wanna' be. So they loaded up the truck.........
ReplyDeleteFrom BMO - I say they nailed it:
ReplyDeleteBased on recent client conversations most seem bewildered by the fact that the S&P 500 is up for the year, let alone generating returns in excess of 8%. From our perspective and as we discussed in last week’s report, US Strategy Weekly, “Scaling the Wall of Worry,” investor skepticism appears to stem from the increasing concerns with regard to China, the US “fiscal cliff,” Europe, US politics, and corporate earnings. Yet despite all the consternation these issues have caused lately, stock momentum has been seemingly undeterred and this has made some investors even more nervous (us not included). To be clear, we are not minimizing the potential risks that stocks and the economy still face. However, we have learned through experience that it is best “not to fight the market.” In fact, as Chart 1 illustrates, almost every major US recession since WWII has been preceded by a prolonged period of negative stock market momentum. But as you can see from the chart, stocks have remained in an uptrend for the past three years. This signals to us that imminent recession fears are likely overstated. In addition, we believe most global and domestic investors are already positioned for bad news.
Furthermore, the market environment over the past four years which has been characterized by
elevated correlations and volatility, rising risk premiums, consistent equity fund redemptions and heightened macro sensitivity has driven most equity investors to manage their portfolios in such a way as to “not be wrong,” in our view. As such, we believe many investors have abandoned what we believe is a core foundation of investing. Namely, fundamentals are what ultimately define investing environments, not fear, chaos, or emotion. We continue to believe US fundamentals remain attractive and sound, providing a template of stability and consistency for which other regions around the world will likely model over the next several years. And we believe that it is just a matter of time before more investors begin to refocus on underlying fundamental trends (as opposed to chasing macro headlines).
From the interesting, but probably not useful file, Bespoke says:
ReplyDeleteBased on average chart pattern, S&P 500 makes its summer low on July 24th during election years since 1928
Kinda strange, but the market is still selling hard and just about all the stuff I follow has risen since the open. Also kinda interesting is F again. I would have thought it'd get creamed on MCD.
DeleteMark - what's the correlation between F and MCD? People use fords to drive to mcdonalds?
DeleteWhat I think is also strange in an ironic sort of way is the stocks I have put low-ball bids in on, no-one wants to dump.
DeleteCome on, people, get scared of this market and sell me your stocks cheap!
TOF- MCD comments about EU/EM on earnings call.
Deletetof- More or less. Customers/patrons of F and MCD belong to the same pool.
DeleteI just don't see bulls recovering quickly from a one-two kick to the head.
ReplyDeleteGive me parity, or give me death!
ReplyDeleteWhy shouldn't Germany want parity, wouldn't the worker wage haircut help southern Europe at least temporarily?
I guess it would help Germany by the same mechanism, but not the same extent b/c the German worker has more leverage than the southern Europe worker?
Keep an eye on stocks that are holding up strong. If they hold up ok here then when the market selloff ends they will rip higher. We've seen it time and time again.
ReplyDeletePay attention to stocks that are green or that are near the highs of the day when the market is near the lows of the day. If this selloff is a trend that continues for several days and then we have a final drop lower in the market which brings those strong stocks down, then those are the ones to target for long trades.
DeleteTLM - Nice move up.
ReplyDeleteBased on COONC deal.
DeleteChina, who I would say is the ultimate long term investor, putting $1.5 billion into TLM, and CNOOC buying Canadian energy company Nexen at a 61% premium.
DeleteCanadian energy companies are starting to say "well, Obama, if we can ship our oil to the U.S., China will be happy to take some".
Think it shows the undervaluation of energy companies if you are patient.
TLM 50sma is $10.73, wonder if it holds? They say production is booming, My issue with oilers is what happens if/when oil supply goes surplus?
DeleteTOF, looks like you can get DECK back where it was before my daughter convinced your UGG's were on the fashion bad list.
ReplyDeleteToo funny ;)
Deleteyeah i saw that. that is one volatile stock. there has to be some traders making a killing off that stock.
DeleteThe gap down needs to fill though, then we could finally say we made money off DECK!
DeleteThree days till earnings, maybe none of these downward gaps ever fill?
DeleteCOW - This one's holding up pretty well, tiny loss.
ReplyDeleteGGB - Testing lower trend line at the 50sma, pennant breakout delayed.
ReplyDeleteSQNM - They were loading the sheep into the holding pins on this one last week.
ReplyDeleteNothing to see here...I'll be back.
ReplyDeleteTo be honest, guys> we may have topped and are now on our way down to unimaginable (today, at least) lows.
ReplyDeleteExpectations for QE3 may lead to seemingly bullish action, but ultimately the effort will fail.
DeleteS&P 660?
DeleteYeah, kinda seems like market rallied in anticipation of QE, along with the standard set of implications that comes with news-driven events.
DeleteEUFN took a nice ride down
2nd - Do your personal observations outside of the zoo we call a market justify much lower prices?
DeleteNSPH - Well there's 50% of the opening bar formed on the 19th:
ReplyDeletehttp://elite.finviz.com/chart.ashx?t=nsph&ty=c&ta=0&p=i15&s=l
ENR - In the green - No doubt benefiting from lower materials costs?
ReplyDeleteWDC - This one seems to have been doing pretty well, I think. Earnings 7/25 AMC
ReplyDeleteBuying out Congress
ReplyDelete"New analysis from Strategas Research Partners shows irrefutable evidence that companies are getting a real bang for their buck on the money they spend trying to influence lawmakers"
Quite right, I've always thought politicians sold themselves out too cheaply. $2M for an earmark worth hundreds of millions is a screaming bargain.
GOOG green...it's one of the strong ones.
ReplyDeleteCMI
DeleteMish - "Job losses and Unemployment in China Skyrocketing"
ReplyDeletehttp://globaleconomicanalysis.blogspot.com/2012/07/job-losses-and-unemployment.html
Good article, TOF, on S&P profit margins -- now I feel less anxious. :)
ReplyDeleteNSPH:
ReplyDelete"Net proceeds from the sale of the shares after underwriting discounts and commissions and other offering expenses are expected to be approximately $23.4 million. If the underwriters exercise their over-allotment option in full, net proceeds from the offering will be approximately $26.9 million. The offering is subject to customary closing conditions and is expected to close on Tuesday, July 24, 2012."
Wonder how it trades after tomorrow.
I don't but I tried to get a starter position today at $2.58 and it never got there again after trading there very briefly. Volume was lite today.
DeleteGood sign that the banks seem to be recovering quickly today. BAC, JPM in the green, LION (a smallcap I own) up 1.5%.
ReplyDeleteIf the banks can get moving, pretty sure the market will follow.
WHR, which I have been thinking about as a way to play the US housing rebound, also in the green.
DeleteIf people thought things were completely falling apart, like the AP Article called "Global economy in worst shape since 2009" by some AP Econ write tries to sell us, stocks like this would be down.
Looks like a potential trend change for NOK in daily chart
ReplyDeleteDoes anyone know of the PE for any China ETF if that's even possible or believable.
ReplyDeletePretty soon we're gonna get to the point where everyone is out of the market waiting for a crash, the market will be elevated much higher than they want it, and then they will have to give in and admit that a crash ain't coming. That's when we rip much higher as the big institutions pour in. Calpers and the pension funds, the bearish hedge funds, all of them will be flooding the market with buy orders all at once.
ReplyDeleteIt amazes me that we have seen a market at significantly higher levels than in 2009, 2010, and 2011 and yet the bearish sentiment readings are at all time highs. A few months ago Laz said he expects it to be a 4 phase bull market where the 1st and 4th phases are the best returning phases. He said he thinks we're in the 3rd phase where people will finally give up on their bearishness and accept that we're not returning to prior lows. I totally agree.
I think it must be people are still shell-shocked the terrible losses they took in 2008 / 2009 - I don't know what else it could be.
DeleteYou look at the longer term charts and we are solidly in a bull market since March, 2009, and if I draw a channel, we are right in the middle of the uptrend, yet many sentiment indicators would have you think we are at a multi-year low, not up 8% for the year.
I think this poor sentiment bodes well for a very long, multi-year bull market as it will take many years of good stock performance to turn this attitude around and bid stocks up to overvalued. In the meantime, I think we can do really well by just finding the good stocks and take advantage of the unwillingness of people to buy.
MITK- That left a mark.
ReplyDeleteMy friend bought into this after I bought it at $2.00. When it was at $4.20ish he asked me what I thought he should do. I said to sell 1/2 then and to sell the rest if it fell below $3.7. We had a poker game on Thurs night and I asked him about it. He said he sold the 1st half at $4.2 but held on to the last half and didn't sell and was asking me what to do with the other half. I told him to sell it immediately Friday morning. I'm hoping he did. Still a great trade. A lesson in not worrying so much about your trade.
DeleteYou know what's crazy? I haven't seen any data that the shorts have covered yet.
DeleteYou probably don't remember, but 3.70 was my GTFO price AH's on earnings day...Since that doesn't show up on charts, that was a smart level to watch.
DeleteI remember that trade Mark - great instincts in a really tough situation.
DeleteMark - that's interesting.
DeleteNice little flag in CPHD. I'll tell you though, that CC was brutal.
ReplyDeleteBIDU- If you can believe it...
ReplyDeleteBB- Thanks man. I'll never forget that trade. In fact, it's probably the only single trade I'll ever remember!
HSTM is one that got away....almost went all in last year around $10. Earnings after hours.
ReplyDeleteNot sure if I'm going to be able to add more NSPH at $2.52 which was my target.
ReplyDeleteThe coals were suprisingly strong today. JRCC and BTU look interesting. JRCC looks like Nat Gas from mid June. Failed rallied that killed all hopes before the real rally.
BTU - Reports Bmo tomorrow. I continue to hold 1/2 of a position taken last year at a great % loss, . Sold the other half at a reasonable loss.
DeleteNSPH - See my reply to your earlier post. I couldn't get any at $2.58 today. I like this story stock.
CLF - I made an intra-day score today (shot up in last hour). Third time traded this month for profit. Bumps along $44 support. Great fundamentals too, although I have enough of the coal biz thru BTU exposure. (Cliffs mostly iron ore}.
I have reduced trading this year and am trying to be an investor, as I was years ago. Hard not to take a fast profit though in this market.
What happened to VVUS? Ain't no way there isn't enough obese potential customers out there.
ReplyDeleteYou must have some knowledge of the corn fed porkers out here in the midwest.
DeleteSorry man. They're everywhere now bro.
DeleteI can attest to that, they're everywhere I look.
DeleteLooks like Mark Slezak picked up another 1 Million shares of NSPH at $2.40 on the private placement:
ReplyDeletehttp://phx.corporate-ir.net/phoenix.zhtml?c=214748&p=irol-SECText&TEXT=aHR0cDovL2lyLmludC53ZXN0bGF3YnVzaW5lc3MuY29tL2RvY3VtZW50L3YxLzAwMDEyMDkxOTEtMTItMDM4ODA0L3htbA%3d%3d
This dude has been buying a sh*tload of stock over the past two months.
Electric power went out here today, so I decided to enjoy the heat and humidity outdoors.
ReplyDeleteYou guys lucked out in that respect, LOL!
Now I'm checking to assess damage.
NSPH - I see a hammer, unfortunately it closed under the 20SMA but at the high though....
ReplyDeleteNo debt, which is nice. I bet banksters can't stand the thought of this company not owing them their first born. ;)
"Weekly U.S. coal carloads have increased for the first time, year-over-year, since mid-January. Coal car loads climbed to 122,507 compared to 119,547 from the same timeframe last year with western U.S. railroads being up 22% from their April low as PRB coal makes a comeback as Nat Gas prices continue to rise. "
ReplyDeleteJRCC looks excellent.
TOF, BB: I think the reason people are so bearish now is because they see things in Europe getting worse, and they are rightfully afraid that a breakup of the Eurozone will cause the banking system to freeze and the Lehman-type experience to occur. There is a lot of truth to that argument, and the fact that the US economy is not doing badly so far has no relevance in this type of an event...
ReplyDeleteEurope is in the middle of our own 2008/9. Lots of those markets affected are down 50% plus. pay attention to what happened after 08/09 in the US markets. that's what's coming in europe. greece exits the euro flies and our markets are at new highs. germany and the IMF have that $$ to use toward spain/italy. mark it down on ye calendar.
Deletenew post
ReplyDeleteTLT - Just keeps on kickin' Axx and taking names...
ReplyDelete