Thursday, September 6, 2012
9/6/12 Floor to ceiling (Wall St)paper
The ECB announced a bond-buying plan this morning. And the reaction is positive. IMHO, that puts a floor under European stock prices. It also increases the likelihood of additional easing moves by the Fed next Wednesday, and perhaps China as well. Coordinated global easing substantially raises the ceiling for stocks worldwide, but especially for Europe and China. The positive reaction to the news may well be short-covering. But it may also be the beginning of the end to fears of a global apocalypse. US markets are priced too high for my tastes, but I like China and Europe.
Opened EZU @ 30.0x
Opened FXI @ 32.6x
Planning to open VEURX/ (re)open ICHKX at the close.
50/50 across the board.
[Addendum]
Debriefing. Here's my take.
(a) Sure, it's hard to buy into a +3% spike. But I'm able to do it. If I wait until next week/next month when it's up another +5%, I wouldn't have the balls.
(b) The majority of sidelined money was undoubtedly (still) able, but likely unwilling to buy today. They're sitting back smugly waiting for the 'inevitable' correction. Ain't happening anytime soon, IMO.
(c) Once the majority of sidelined investors buy in on 'confirmation' of a market rally, it's too late. In fact, it's almost over. At that point, who's left to buy?
(d) So last night I was bearish, and now I'm bullish? The market is comprised of people. People are irrational. Hence, the market is irrational. And I'm trading accordingly.
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So what's new today? Draghi came through, bro.
ReplyDeleteVolume seems low. However, that's likely due to sidelined investors thinking, 'I can't freaking buy HERE.' By the time they get around to buying, global indexes will be much higher.
DeleteGood luck with your trades man.
DeleteGood analysis 2nd - I agree that European stocks are very attractive and much cheaper than U.S. equities. China is still too hard to trust for me, but their prices have definitely come down a lot.
DeleteWe'll see how long you hold them this time, but I'm pretty confident you could buy most of the European markets now, put them away for 5 years (endure a bunch of volatility), and end up very happy.
I've been edging into some over the last 6 months, but it's hard to know the bottom - hopefully this event is the beginning of some normalization of those markets.
David - from the Toronto Globe and Mail:
ReplyDeleteIt’s only one month, but there is a hint that the the doldrums for junior stock trading are coming to an end.
Trading in August on the junior resource stock-dominated TSX Venture Exchange jumped 23 per cent in August from July. That’s the first month over month increase since February.
Throw in gold prices that are starting out September by cracking $1,700, and oil prices that are proving resilient, and there’s some hope that the vicious bear market that saw investors walk away from Canadian junior resource stocks en masse is drawing to a close. The main index tracking Venture stocks is up about 8 per cent since hitting a three-year low in late June.
That’s the good news. The bad news is the Venture index is still about half what it was in early 2011. Volume is down 19 per cent from August 2011.
But given what has been endured by junior investors -- and the bankers and traders who serve them -- any signs of life are very welcome.
"there’s some hope that the vicious bear market that saw investors walk away from Canadian junior resource stocks en masse is drawing to a close."
DeleteWhatever happened to the theory that the market had expanded too rapidly, sucking money into numerous bottomless pits throughout the land?
That's exactly the problem Kass has. No easy way to 'back off' on his recent highly publicized calls. But why not? We all make mistakes. I'll give him a week to find a way.
ReplyDeleteIf he makes a bad call, it seems to just go away. If he makes a good one, he talks about it over and over.
DeleteI still remember late 2008 / early 2009 when he was constantly saying he was "all in", leveraged long a couple of times, then the "generational bottom" in March 2009. I wonder how much he lost on all of those prior attempts to call the bottom.
he has to sell content so obviously he's gonna lie / fudge facts. but having an audience reading and possibly even following your trades puts unneeded pressure on your picks. if you're wrong you're less likely to bail because it's out there for people to read.
DeleteHurray for Global Easing!
ReplyDeleteWhy is it I always hear the roar of bulls right before the market drops a ton?
ReplyDeletei'm waiting for goldman to give the generational buy signal. i believe it was yesterday that they recommended going short / buying puts.
DeleteYeah, and NG took an immediate hit when MS pumped it two days ago.
Deleteman...now they're dropping nat gas to $2.75. you can make a boatload trading the swings correctly in ugaz/dgaz.
DeleteOh damn, all this global easing seems to be putting a nice bloom on gasoline prices, wow, talk about red hot!
ReplyDeleteNice work, global easing!
shhhh...we don't have any inflation...i'm thankful we actually have money to trade the market and stay ahead of inflation. just imagine living paycheck to paycheck and getting hit with those gas prices with no savings to fall back on. that's not cool.
DeleteAt the risk of sounding stupid, ANR and WLT triggered buy signals on false breakdowns.
ReplyDeleteHow 'bout KOL?
ReplyDeletesame deal man. looks awesome from risk / reward. go long here stop out below $21. Target could be $26 to start.
Deletesee lead post for 'Addendum'
ReplyDeleteDraghi looks like he just returned from fishing as opposed to surfing, he has an obvious white forehead to go with his reddish cheeks.
ReplyDeleteSo he made good on his promise by committing to buying of unlimited quantities of debt, Bundesbank president called it printing.
Doesn't do much of anything to solve Europe's economic problems which began as financial problems, just lets debt holders off the hook.
That's the thing. Investors don't give a ----. So I have to go along and not give a ----.
DeleteAgreed, just make sure to sleep with one eye open! ;)
DeleteDon't look now, but David may be on his way to proving the only path to life-altering gains is to concentrate your portfolio in 1-2 stocks and ride out the waves.
ReplyDeleteIt's just that no one in his right mind would be able to do that.
Deletebtw, don't think for a moment that I just calmly open/close positions. Quite frequently I agonize over the decisions. This morning was one of them. I had to first decide to exit HDGE (albeit at only a minor loss). Then I had admit the long side looked good- probably for quite awhile. Then I had to decide to bite the bullet and buy. At that point, I became quite calm and placed the trades.
Delete$compq - Looks cleared for takeoff, target 3750...
ReplyDeletehttp://stockcharts.com/c-sc/sc?s=%24COMPQ&p=W&yr=14&mn=0&dy=0&id=p42539441839&a=258677702&r=766
What's next? Jobs. Then FOMC. It really never ends.
ReplyDeleteGreat post bro.
ReplyDeletedid nothing today but sell the last of my SLV which by the way, i would once again like to tof for pointing out the breakout.
ReplyDeleteso it seems that all i see are breakout patterns
this morn at DOW +70 premarket, something I read said CS would benefit from the latest ECB program. It made sense that most of the eruo banks would do good so I looked, I think it was up $.50 or so premarket. It closed +$1.10.
Don't know why I didn't pull the trigger. It would have been easy to do. Entry would have been somewhere around $20 probably with a stop around 18.30, $500 stop loss gives me 290 shares. dang
matt mcabby of bourbon and bayonets sent out another email saying the market is going higher but he makes it sounds like volatility is about to increase. I posted his year end prediction the other day where he says the DOW goes to 15,000. Here's his latest free email comment
ReplyDelete"All of this comes by way of analogy to explain the next phase of the market, which we believe will dizzy and confound the entire investing public. The sheer speed of the action, the heights that will be reached, and the panicked cacophony that ensues will likely put folks out of their minds, as the frenzied rush of the crowd to own equities takes its grip.
It won’t be a pleasant sight. Something like watching a thirty car pile-up, we figure. Macabre, grotesque, but just try to keep your eyes off it.
The Writing’s on the Wall
For those having a difficult time accepting the bullish argument, we can’t blame you. All of it is counter-intuitive and wouldn’t make sense under normal circumstances. But we’re plainly not living in normal financial times.
The Bank Of America (NYSE:BAC) ‘Sell Side Consensus Indicator’ (shown below) is proof enough of that.
As a measure of the average equity allocation recommended by Wall Street Strategists, it’s as reliable a contrarian indicator as there is. The current reading is only slightly above its all time low, indicating that at no time since 1985 has there been a better time to own stocks."
we have had several periods where you really need to place your bets at the end of the day, maybe we're moving into that phase again.
ReplyDeleteJobs report - Looks like jobs report is gonna be fairly good, thus a FED excuse to print may not be in tomorrow's cards. Also, the euro still needs to soften against the dollar?
ReplyDeleteIf Japan doesn't like such a strong Yen, then why aren't they buying eurodebt with freshly printed paper?
and what i never get on a day like this is why is the dollar down when the new news is that they are printing euro dollars?
Delete"Why is it I always hear the roar of bulls right before the market drops a ton?"
ReplyDeleteLooks like you are dead on tonight, CP -- gold and silver are being dumped big time in Asia for no apparent reason...
Great timing, port, for exiting your silver -- looks like we'll have a big gap down tomorrow...
ReplyDelete"Don't look now, but David may be on his way to proving the only path to life-altering gains is to concentrate your portfolio in 1-2 stocks and ride out the waves."
ReplyDeleteThat was exactly my thinking, 2nd_ave. While I was doing trading between 2006 and 2010, my average annual portfolio gain was only 15% -- that's not going to change my life. However, buying into a 30-year low valuation of gold miners (judging by XAU:gold ratio), and not just buying XAU, but buying a HUGELY volatile company (which nevertheless has great resources in the ground and a great plan for developing those resources) all the way to its bottom at $3.30 (down 90% from its previous high), and not just buying with my own cash but also borrowing as much money as I can from all possible sources -- THAT should provide a life-altering gain when AUMN inevitably rises to new highs (which can easily happen within a year from now).
David - I commend you on your conviction and hope you make what you're expecting to out of AUMN. Don't take what I'm gonna say the wrong way, but keep in mind:
Delete(1) there are over 60,000 stocks in the world and there are hundreds/thousands that are setting up to make you money at any point in time
(2) there are ALWAYS set ups that exist and being married to one stock will prevent you from making steady gains
(3) always keep risks in mind should the unthinkable happen because if you lose most/all of your money not only is it mathematically very hard to make it back but it is mentally anguishing...i understand it's only money and ultimately doesn't have a bearing on your life but why take risks like leveraging up and putting undue pressure on yourself?
I'm not one to shy away from risks, but I've learned the hard way to make sure I understand the downside risks of every trade and to cut bait when I'm clearly wrong. Again, mathematically it is so hard to make back your money after a big loss and a big loss can saddle you with so much mental abuse. Despite making some blunders this year I've still managed to be up around 30% this year because I know I have to check my own ego at the door and admit defeat if my trade takes a turn for the worse. None of us here are perfect and as much as we might have conviction in something, we're not smarter than the market. It takes an unusual ability to weather a loss of 50% or more and still keep in mind the long term potential. And if you do have that ability to ride out that kind of a storm the odds that you will be able to then ride out a similar drop in the future are diminished. Again, there are always set ups out there and surviving a manageable loss allows you the peace of mind to look at those other set ups objectively and not carry around the mental baggage of huge hits to the port.
agagin, I hope you prove us wrong here with AUMN...and in looking at the chart it sure does look good now. But I just hope you do keep the downside risks in mind going forward. We shouldn't have to lever up in an attempt to claw back to even.
Wow check out how similar the chart of the Shanghai composite is to the S&P 500 from 1982 as it was breaking out into a new bull market. I believe I read somewhere that the China market trades at a 7 p/e with a 3.5% or so yield. Sounds a lot like 1982. FXI should do very well if the parallel holds.
ReplyDeletehttp://www.google.com/finance?q=SHA%3A000001&ei=l4NJUKjgIemsiQKvygE
Deletevs
http://finance.yahoo.com/echarts?s=^GSPC+Interactive#symbol=^gspc;range=19810827,19820825;compare=;indicator=volume;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
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DeleteFor reference the three lowest p/e's for SP 500 since 1929 are:
Delete1932 5.1x
1982 6.2x
2009 9.9x
And not to pile on "HOPE" is not an investment strategy. If 15% does not meet your goals, how does taking a major loss get you closer to your goal, respectfully?
T3D - I have no idea what point you're making...???
DeleteTOF -- I do agree that for *traders*, there is no reason to limit their trading setups to just one stock. However, because of my habit of sleeping late, I could only perform swing trading, which earned me only a 15% average annual gain.
ReplyDeleteSo I decided that the only way to make real money is to buy something that is greatly oversold and then KEEP buying if it goes even lower (as opposed to taking a loss and moving on), in the hope that whatever I am buying will eventually rebound and rise to new highs. Naturally, a safe way for doing that would have been to buy GDXJ, which doesn't have a single company risk. However, I think GDXJ will at most double between May 2012 and May 2013, while AUMN can rise 10X in that time frame. So I consciously took on much more risk (i.e., subjected myself to a single company risk) in the hope of getting a MUCH greater return.
Good news out of China last night on infrastructure spending has Chinese markets up, so FXI should be off to a good start this morning.
ReplyDeleteITNC cuts Q3 revenue growth
ReplyDeleteINTC
Deletedid they mention anything in particular? not the greatest signal especially after fedex warned. shouldn't have an impact on the market right now though given its in full on bull mode.
Deletefrom seeking alpha
Delete8:12 AM Intel (INTC) -2.3% premarket after issuing downside guidance for Q3, lowering projected revenues ~7% to $12.9B-$13.5B from $13.8B-$14.8B due to "weaker than expected demand in a challenging macroeconomic environment." INTC sees customers reducing supply chain inventory, softness in the enterprise PC market segment, and slowing emerging market demand
i'm sure people will say it's because pc demand has weakened. i doubt it. i think the big upgrade cycle for people to new smartphones drove demand across the board for all tech companies. i still think the 9/12 presentation for the iphone 5 will mark a top for AAPL and possibly for tech. i think it would take blockbuster new features to get people to upgrade and even then i think people are content with their existing smart phone. i just don't see how much more upside momentum AAPL has given the iPhone is now available at Verizon in addition to AT&T. when the iphone became available at Verizon it caused a huge short term pop for apple's business and that effect is now gone. just look at the EPS numbers over the past few quarters. the market, as usual, is completely ignoring this. i'm not saying apple is going to crash because i think they will continue to win over people to their computers but i think there was such a massive shift caused by the verizon iphone launch that it will take a while to get back to that spike up in profits.
DeleteCould be people holding off on new PC purchases for Windows 8. As I recall (but did not go back and verify), same thing happenned around Win 7 launch.
Delete$0.36 EPS $1.55 EPS $2.28 EPS $3.94 EPS $5.37 EPS $9.07 EPS $15.15 EPS $27.67 EPS
ReplyDeleteAAPL's 2004 to 2011
Seems to me it has to come from the Ipad for it to possibly continue.
If the analogy to the 1970s still holds true, which I think it does, then it's pretty highly likely that we see a short/intermediate top today or early next week followed by at least a 10% drop. i still think it's a waste of time trying to predict these moves. i made a mistake trying to get those turns correct and while i might still make money on my TZA trade should we drop 10% from here, this wasn't the smart thing to do. rather, i think its wise to just wait for the inevitable panic to hit the market after a 7-10% or so pullback.
ReplyDeletewhat you can tell that is very similar in the charts is that we have continued to make higher highs over the past 3 years. From 1974 to 1982 the market continued to make higher highs. if this holds true i would expect the next low in the markets to be around 1,330. again, just for the fun of it i think we go 1,440 > 1,330 > 1,500 > 1,330 > 1,700.
"it's pretty highly likely that we see a short/intermediate top today or early next week followed by at least a 10% drop"
Deletesorry meant to say at least a 7% drop.
"what you can tell that is very similar in the charts is that we have continued to make higher highs over the past 3 years. From 1974 to 1982 the market continued to make higher highs."
Deletemeant to say higher LOWS...
Would make sense - a lot of overly positive press for the bulls today, so likely gett too optimistic and setting up for a pullback, but longer term, think we have a multi-year bull run as all of the people who have sworn off the market are sucked back in.
Delete"Even as the S&P 500 doubled since 2009, investors pulled money from mutual funds that buy U.S. stocks for a fifth year in 2011, the longest streak in data going back to 1984, according to the Investment Company Institute, a Washington-based trade group. Withdrawals were $135 billion last year, the second-highest total after 2008, and about $75 billion has been pulled in 2012."
BB - Yep totally agree. I think this will be a trader's market for another few years but there will be a constant bid under the market by the negative nancies that always try to short the market.
DeleteNG - Told you I'd get my ass-hat handed to me!
ReplyDeleteKOL - Seems like coal believes Romney will be our next president?
KOL definitely had a false breakdown. looks awesome.
DeleteINTC @ 24.27...
ReplyDeleteP- I hope AAPL never mentions high end residential construction...
ReplyDeleteAUMN - Passes SVM, one day behind my estimate
ReplyDeleteTTM - Not bad, huh?
Added CAF @ 18.64. Now 100% long.
ReplyDeleteGL buddy!
DeleteCADC - Seems China infrastructure is helping this one a little bit..., LOL!
ReplyDeleteI'm starting to get worried I'll never place a trade again.
ReplyDeleteHey man, are you ever planning on buying something NG????
DeleteUGA - Another new high, hurray for monetary easing!
ReplyDeleteGot to hop. L8r
ReplyDeleteNG - Sheesh! When Obama said he wanted to create 600k new jobs in the gas industry, did he mention opening up public lands for drilling?
ReplyDeleteSeems that way...
this is the reason i bailed on the nat gas trade. seems like you can always get it lower.
DeleteYeah, both times I wanted out the instant I bought.
DeleteBoil - Damn, $2 and change haircut on this thing today alone...
DeleteF Me!
AUMN looks awesome.
ReplyDeleteCheck out PNPFF. :) I've clamoring about it for a while -- that was an EASY trade, buying it under $0.90 at 50% discount to NAV...
DeleteBesides, by mid-August it had built out for itself a flat 3-month base, so the downside momentum was obviously over. I tried to convince all my friends into buying it, but only one of them did, and only very little of it...
Deleteman i was THIS close to buying AUMN at $5 about 3 weeks ago. I opted for AGQ...and sold that at $41.50. yikes.
DeleteOkay, so now the question is if NG will fall appreciably under $2.50
ReplyDeleteHoly bat out of hell! AUMN!
ReplyDeleteLooks like BTU put in a higher low relative to late July. Nice... When it was at around $22, I purchased some January 2014 calls, so I do have some skin in this game...
ReplyDeleteMy sell limit order for 10 October $5 AUMN calls was hit today at $1.50. That's about the price I paid for these calls. I sold these calls as a part of my roll-over from October calls into January ones, which I bought first (when AUMN was around $4.30, but wasn't able to sell the October ones same day as no one wanted to buy my call at the ask).
ReplyDeleteAfter this sale, I have 23 contracts of October $2.50 calls which I purchased at $1.65. Since I am sitting on large gains in these calls, I won't sell them, but instead will get the shares assigned to me (at a low cost basis) and will then hold them for a year so as to pay a long-term capital gain on them.
I also have 10 contracts of October $7.50 calls, for which I placed a sell limit at $0.50.
The rest of my AUMN calls have expiration in January or April 2013...
Seems like a good day all around. David's flying high, and tof got the ---- out of UGAZ just in time.
ReplyDeletefunny stuff:
ReplyDeletehttp://goldnews.bullionvault.com/files/04122012-bernanke-bull-market.png
I just noticed that SLV is trading now at its early February price, but AUMN was at $10 then! So unless silver pulls back hard, AUMN should be at $10 in no time...
ReplyDeletehttp://www.ritholtz.com/blog/wp-content/uploads/2012/09/sge2.png
ReplyDeletekeep in mind that this was last updated around july but it shows just why the market has rallied. remember the death of equities special CNBC did the weekend before june 4th? was that not THE time to load up on stocks?
When I was watching that I was thinking the exact same thing!
DeleteThe 3.75% 30-yr fixed has been funded.
ReplyDeleteIncredible, how can home values possibly drop as long as those kind of rates are offered?
DeleteWell, folks, I think I'll start working with some bank now to see if I can get an FHA loan with a 3% downpayment. I intend to start selling my AUMN gradually at $10, and so pretty soon I should have enough cash for a 3% downpayment on a small home. Do you know any banks in the Bay Area offering FHA loans?
ReplyDeleteGreat!!!! 2nd's loan shark might do FHA's.
DeleteIn early April, I purchased 2000 shares of PNPFF at $1.17. I figured that I'll start raising cash by placing sell limits for these shares: 1K at $1.25 and 1K at $1.40.
DeleteI'll keep the 15K shares I accumulated during the summer at $0.86 for a year, so as to pay a long-term capital gain tax on them...
The reason why I want to do an FHA loan is because I think we'll have a LARGE inflation by the end of the decade, and I want to pay back my mortgage with worthless dollars (so I want to have the largest mortgage with the smallest downpayment), while keeping as much of my cash as possible in the PM sector...
ReplyDeleteNow that sounds like a Slope of Hoper!!!! I'm going to spend some worthless cash tonight on Margaritas!
Deletei'll use some funny money on a single malt.
DeleteLocking in a low rate now also helps, minimum down at these rates why not tie up someone else's money for 30 yrs?
DeleteI give it a week or two before the market cares about INTC and FDX warnings. We're in happy land right now.
ReplyDeletealtho on a weekly chart FDX looks like a nice hammer. could be a buy here actually.
DeleteValuation is ok for FDX. Trades at around 12.3 times earnings with expected growth of around 15%. Downside risk isn't that high.
DeleteI like Brown quite a bit, as a company.
Deletewe use both for my company...they have basically identical rates.
DeleteBy the time rates hit bottom, so many refinanced homeowners will no longer have much of a writeoff!
ReplyDeleteSold the INTC @ 24.10, and shifted those funds into TBT @ 15.65.
ReplyDeleteMight be a good choice, I was gonna wait till Bernanke takes the podium Thursday next week.
DeleteWhatever happened to the 9/12 German parliamentary vote, do we still have a date?
ReplyDeleteI think it is the Constitutional Court that will be voting...
DeleteOil looks like it's heading into a bear market. Anyone have any clue as to what would be the best play on this?
ReplyDeleteTOF, shouldn't wait until USO drops below the double bottom it made between October 2011 and July 2012 before declaring that oil is in a bear market?
DeleteI don't think it's in a bear market...I think it's heading into one. Going long SCO right here could be a nice low risk play because $WTIC is just below its 200 DMA and it hasn't been able to rally above it at all despite a booming stock market the past two days:
Deletehttp://stockcharts.com/h-sc/ui?s=$WTIC&p=D&b=5&g=0&id=p88372664139
that's a very negative sign in my opinion. Going long SCO with a stop on a close of $WTIC above $98 could be an excellent trade.
i won't take the trade because of the implications of easing worldwide and the likelihood of getting stoppedo ut.
Deletestoppedo-ed, that's what happens to me all the time. Its very similar to road kill.
Deletenow why did i sell my SLV? up 3% today
congrats david on AUMN
http://stockcharts.com/h-sc/ui?s=CREE&p=W&b=5&g=0&id=p75728937428
ReplyDeleteCREE looks awesome.
Yep, it does. I have a problem though with their competition taking share.
Delete+1.7% return on the total port today, better than I expected when initiating positions yesterday.
ReplyDeleteLet's hope it continues on Monday... :)
DeleteIt will, for the next 1-2 months. I can 'see' it.
Deletehttp://www.forbes.com/sites/williampentland/2012/09/08/gamechanging-natural-gas-tech-gets-green-light/
ReplyDeleteThat's wild.
DeleteFrom this month's commodities future reports (http://www.cftc.gov/OCE/WEB/index.htm)
ReplyDeleteThe only commodity that the commercials are long and getting longer are Natural Gas and Coffee.
So may be worth continuing to watch Nat Gas here.
commercials are the big money right?
DeleteThat's the idea. Anything looking interesting to you? Can't find much here. NSPH presents today.
DeleteYeah, I noticed yesterday, commercials increased their NG position last week.
DeleteCoffee would be good too probably, too much rain in South America(Brazil?) caused fungus or something like that.
Mark - there's a few things I'm very interested in but I'm still waiting for a pullback. My initial target on a pullback was 1,430-1,440. We're there now. Last week "felt" like euphoria, which typically reverses harder than the euphoria that came before it.
Deletesorry meant my initial target BEFORE a pullback...I don't know what the pullback would come down to and don't really care. I just would like to get stocks on my watch list at cheaper prices than current. NSPH is one of the ones I'm watching.
DeleteNews on PXP is kinda strange. Looks like they've reversed their take on gulf assets.
DeleteBy the way, draw a trendline through the highs in June...the trendline was hit 4 times with the latest last week. Draw a trendline through the lows in June...does that not look like a rising wedge to you? Are those patterns typically bullish or bearish?
DeleteDamn, a quiz and I'm not prepared as usual.
Deleteha...if you guys want to read up on rising wedges here's a good primer:
Deletehttp://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:rising_wedge
they're pretty easy to recognize. i don't think there's confirmation yet that the market is in this pattern. typically you can kind of "sense" when the long side has lost momentum. in the above link look at the chart of ANN...perfect example. Just imagine what the sentiment of traders was during that period right before it fell...there was a new high in late April 99 and then a big down day that reversed most of the gain. This was followed by a few days of marginal gains and then a spike higher to test the old highs that was completely reversed. That was the signal that it was time to get out. the upside momentum was completely gone.
I'd like to see a pattern just like this in the market before saying for sure this is a rising wedge that we're in. So I'm thinking we drop to 1,410...then slowly rise back up with a spike to 1,440 that is reversed quickly.
I think you could kind of make an argument that some sort of intermediate top is in the process of being formed right now. Last week just felt like that euphoria near tops. Everyone is in agreement that central banks will propel us higher to infinity. Could be way off and don't really care that much. Just kind of watching right now.
Rising wedge looks like bear flag to me. It's probability is increased in a downtrend.
Deletehttp://en.wikipedia.org/wiki/Wedge_pattern
NSPH - Seems like this thing keeps revisiting $3.26 area, then jumps up in the afternoon.
ReplyDeleteUNG - Since we're discussing a commodity, the CCI is one metric that may apply? The CCI triggers a sell signal as it drops through 100 and a buy signal as it rises up through -100
ReplyDeletehttp://stockcharts.com/h-sc/ui?s=UNG&p=W&b=5&g=0&id=p17983006498
Wow. LF fell out of bed over the past week
ReplyDeletePAY - Is this one worth watching, I just heard something about potential new requirements for new taxicab meter system based on GPS tracking/position monitoring?
ReplyDeleteFB - To receive potential government contract for helping to prevent suicide?
ReplyDeletePAL - Over $2 now, is this of some significance?
ReplyDeleteFRO - Will this one rally on increased middle east oil production (peace dividend theme)
ReplyDeleteInteresting bits from Mauldin this weekend. On employment:
ReplyDelete“Almost all of the growth is in the birth/death number, which this month was 87,000 new jobs. For new readers, this is the number that the Bureau of Labor Statistics creates to account for new businesses created that were not part of the employment survey. The BLS surveys established businesses to get the employment data (thus this survey is called the establishment survey). Since, almost by definition, they can't survey new businesses, and net new businesses are one of the more important parts of the employment picture, BLS makes an estimate based on historical data. Then over time they revise the overall numbers. The direction of the revisions is very important, as it tells us much about the underlying employment trends. The revisions were all negative this time. That suggests to me that this month's birth/death number is probably higher than it should be, and over time it will get revised down as well. Ugh.”
Mauldin on debt/GDP ratio:
ReplyDeleteCristina Checherita and Philipp Rother, "The Impact of High and Growing Government Debt on Economic Growth, An Empirical Investigation for The Euro Area," European Central Bank working paper no. 1237, August 2010. http://www.ecb.int/pub/pdf/scpwps/ecbwp1237.pdf
"Checherita and Rother investigated the average effect of government debt on per capita GDP growth in twelve euro area countries over a period of about four decades beginning in 1970. They confirm and extend the finding by Reinhart and Rogoff in their 2010 NBER paper. A government debt to GDP ratio above the turning point of 90-100% has a 'deleterious' impact on long-term growth. In addition, they find that there is a non-linear impact of debt on growth beyond this turning point. A non-linear relationship means that as the government debt rises to higher and higher levels, the adverse growth consequences accelerate. ... Moreover, confidence intervals for the debt turning point suggest that the negative growth rate effect of high debt may start from levels of around 70-80% of GDP."
I hope this puts to rest, once and for all, the notion that our increasing Debt/GDP ratio is not a big concern, since we have already had episodes in the past when Debt/GDP ratio was increasing but the economy was still growing OK. We are already in the "nonlinear regime" AND past the turning point of 70%-80%, implying that further growth in Debt/GDP ratio will keep SLOWING DOWN growth at an increasing pace.
Will our increasing Debt/GDP ratio will be a big concern when Congress fails to address the fiscal cliff issue and the automatic cuts kick in?
DeleteCongress WILL address the fiscal cliff.
DeleteIf they don't, they US will go into a severe recession (read: negative growth), and our Debt/GDP will go through the roof. Europeans have already shown that austerity during weak economy is a recipe for *increasing* Debt/GDP ratio.
DeleteDavid - How do you know a severe recession isn't the goal(think global warming), or that a peace dividend won't offset recessionary pressures?
DeleteSeems like WDC's entire purpose in life is all about creating opportunity(volatility) primarily for HB&B's benefit.
wow. i really screwed up today. was waiting on an entry point on UGAZ that i got too picky on. F*ck.
ReplyDeleteAAPL cranking lower. Nasdaq giving up a big chunk of Thursday's gains.
ReplyDeleteI was thinking iphone5 could be a sell the news event but it's setting up to be a crash the news event if this kind of trading continues.
DeleteSeems reason enough to go long nasdaq, aside from the looming WDC political deadlock issues that may begin to weigh.
DeleteDamn, my $28.92 TBF bid came close to filling... I should probably cancel it b/c I just can't figure out which way it's likely to go. A self-inflicted recession will/won't cause rates to fall?
Rates are already pretty dang low, but they could go lower. Of course if WDC creates a recession then will they or will they not have difficulty selling debt?
DeleteI'm gonna say they will have no problems selling debt.
I saw where Hollend, France's president changed his growth forecast to 0.80 and they're talking about a 75% corporate income tax for a couple years in order to pay off debt.
$666 looks like a good point to stop the selloff in AAPL
ReplyDeleteif you want to get all evil on it, that is.
DeleteWe're there now!
DeleteAAPL - Let me know if/when this one falls under $600 and I'll consider it.
DeleteSaut sticking to his call that we see the short term high this week, followed by a 1-month pullback, then a rally into year end. - following the bespoke election year cycle.
ReplyDeleteMaybe its just me, but I think this is too well broadcast now and something different will happen.
Yeah, seems too easy doesn't it?
Deletethere are only two potentials that i think happen right here:
Delete(1) we hit the highs for the bull market last week
(2) we just continue to go higher without significant pullbacks.
those are the only two options i see that people aren't looking at right now.
i'm not willing to call a top but last week just "felt" like one.
DeleteIt did feel like it.
DeletePretty much all of the gains from Thursday in the Nasdaq are gone. That's the leading sector of the market. It could just be day trading so will have to see if there's any follow through over the next week or two.
DeleteCould have been a short term top, but I doubt it's the high for the bull market.
DeleteIn my opinion, you have to have 1 of 3 conditions for a bull market to end:
1. Rising inflation and interest rates
2. Excessive optimism and overvalued stocks
3. Excess leverage and a financial crisis like 2008
I don't see any of those at this time. Maybe you could make the case for another financial crisis via Europe, but even the odds of that seem to be decreasing.
Yeah who knows man. I'd love to see a nice 10% drop or so and get some of the stocks I like at even cheaper prices.
DeleteI agree that very few of the stocks I follow now are great buys, but not many of them are sells though either. I am looking more to sell than to buy now though.
DeleteA 10% pullback would probably be healthier in the long term anyhow.
UNG- What happened here?
ReplyDeletemy guess is typical bullshit. but really it's been bouncing between the 200 dma and the 50 dma. lots of shorts. storage numbers should be good again this week.
DeleteSexting while driving is dangerous?
ReplyDeleteShort Crude, Long Nat Gas (UGAZ) will be the best market / sector trade of the next 6 months.
ReplyDeleteCould be. Makes a lot of sense given what producers and consumers are doing. The trick with Nat gas is the weather and how cold the upcoming winter is.
DeleteWhat's up with the crazy natty rally today? Yesterday I took the preschooler to the park and then we walked around the neighborhood. We have not done that since April.
DeleteThe winners on my watch list today:
ReplyDeleteREDF
GREK
NBG
SVNT
YRCW
DMND
NM
That list tells me something and is typical of what we see at the end of rallies.
i sent etrade a note last year telling them it would be pretty cool if i could make notes somewhere in etrade. for instance, i just opened my account for the first time today and i noticed there is an alert that MMM met my target low of $91.00. Now I have a bad memory when it involves something I did more than 2 days ago and now I don't remember when or why I set that alert up.
ReplyDelete