Operators of the New York Stock Exchange and the New York Mercantile Exchange said Sunday their trading floors would be closed Monday and remain closed until officials say New York is safe from Hurricane Sandy, the monster storm expected to hit the city early in the week.
Both exchanges said they would continue electronic trading uninterrupted. Operators of the Nasdaq OMX, an entirely electronic platform, haven’t announced any plans to curtail trading.
If you missed listening to UBS conference, one of the things they were positive on was Shanghi Composite SSEC if it broke what they called major resistence at 2136. Looking at the weekly chart this is where the SSEC broke out on FEB 09 off o8 lows.
This week the SSEC failed to deliver and sold off now trading at 2064. This week's Barron's had two people Zulauf and Faber saying China has a shot here.
Zulaf:
What is happening in China?
The biggest recorded credit and investment boom in history has gone bust. The Chinese stock market has given back almost 90% of its rally off the 2008 lows. After the government changeover in mid-November, expect some economic stimulus. That could help Chinese stocks rally. In the next six to nine months, Chinese stocks are an interesting bet, and Chinese exchange-traded funds such as the FXI [ iShares FTSE China 25 ] and the GXC [ SPDR S&P China ] could be good vehicles.
Faber:
Barron's: The Chinese, you note, invented paper and aren't afraid to use it to print money. Will monetary easing spur growth?
Faber: The Chinese economy was driven by massive credit growth in the past three years, and economic activity was centered heavily on capital spending. Now China has massive overcapacity in several industries. If easing leads to further stimulus directed at capital spending, you will have more misallocation of capital. The Chinese can postpone a more serious recession by easing, but it won't solve the problem. The Chinese stock market could outperform for a while.
China just announced(this weekend) some sort of tax relief on consumer items as another form of stimulus, not sure of the details.
I'm thinking China has backed down on their offer to assist Europe and a couple of other "promises", so what we hear and reality can be quite different.
50% retrace is a good observation, thanks for pointing that out.
Deron on TMF: "Now, it appears as though TMF is setting up to break out above resistance of its 3-month downtrend line and resume the long-term uptrend that has been in place for nearly 2 years."
He also mentions a low correlation with broad markets.
mark - I'm thinking that the risk/reward setup on MITK is very good. there are a couple of MAJOR catalysts right now: (1) - Bill Pay > hints at it being announced in early Nov (2) - That prepaid launch with AmEx and Walmart could turn out to be very good > probably will get some comments on that in the next quarterly conf call
It looks like a buy here with a break below $2.70 would be a good risk reward. Upside could be at least 60% and downside is 13% or so.
that is, it was hit back earlier in year and then hit again last week for same exact reason. how many times can a stock fall for the same reason? the company still has a profitability business to rely upon...no cash drain, about 50% of market cap in cash. again, very low risk-reward setup. if you can get it at 0.62 it could be an awesome setup. very little downside risk and potentially several hundred percent upside.
"In physics a singularity is where the mathematical models no longer work. For example, models based on the physics of relativity no longer work if one gets too close to a black hole. If we think of too much debt as a black hole of sorts, we may understand why economic models no longer work."
This is a key point for all of us to keep in mind: while an increase of the US Debt/GDP ratio was OK at low levels of debt, it has a very negative impact at the current high levels of debt and the extent of its negative impact on the economy will get progressively worse. One major change that happens when the level of Debt/GDP increases is that the "fiscal multiplier" increases. Here is what Mauldin wrote about it last week:
"The chief economist for the International Monetary Fund, Olivier Blanchard, and his associate Daniel Leigh gave us an eye-opening three-page paper, buried in a 250-page World Economic Outlook release last week (http://www.imf.org/external/pubs/ft/weo/2012/02/pdf/text.pdf). They studied an economic concept called the fiscal multiplier, which is usually defined as the change in real GDP that is produced by a shift in fiscal policy equal to 1% of GDP. In simple terms, if the fiscal multiplier is assumed to be 1.0 then a change in government spending by 1% (either an increase or decrease) would produce a corresponding change of 1% of GDP.
Most institutional economists prior to this paper assumed the fiscal multiplier to be about 0.5. Again in simple terms, this would mean that government spending cuts equal to 1% of GDP would reduce actual GDP in the coming year by about 0.5%. The fall in GDP would of course reduce tax revenues, which means that you would have less than a 1% actual cut in the deficit. If the tax rate is 30% in this example, the deficit will be reduced by only 0.85%. That may be an acceptable outcome when an economy is growing nicely or the deficit and total debt are too high and the bond market is forcing the government to cut back.
While Blanchard and Leigh agree that in the past the fiscal multiplier was generally about 0.5%, they suggest that in the recent fiscal crisis the fiscal multiplier has been much higher. Their study suggests that it has been at least 0.9 and perhaps as much as 1.7."
Let's say that the fiscal multiplier in the US is 1. This means that if the taxes in the US are raised by the amount equal to 1% of the GDP, the GDP itself will contract by 1%, and if the average tax rate in the US is 30%, then the tax revenue will actually drop by 1*0.3 = 0.3%. So the actual revenue from taxes will only increase by 0.7% of the GDP. This means that the level of US Debt one year after this tax increase will be 0.7% smaller than without this change, but the new level of GDP will be 1% less, and hence the Debt/GDP ratio will actually increase as a result of the tax increase. The same logic works in reverse -- a decrease in taxes will actually decrease the Debt/GDP ratio.
Think about this, folks, when you compare the economic proposals of Obama vs. Romney.
This latest research also shows how much off is CBO in its projections -- they are suggesting that if all Bush tax cuts are reversed, then the Debt/GDP ratio will come down significantly in the future, which is totally wrong.
The Fed and the US government are rearranging chairs on the sinking Titanic. Many smart people tried to figure out how we can stop the growth of the Debt/GDP ratio, and none of them could find a way that would be politically acceptable...
let's see, on friday all i did was sell short 2 NOV 63 strike TBT puts for $1.45. If the shares are put to me, that would be a basis of $61.70. One reason I don't like selling just a couple of puts like this is it's about $.16/share in commission if they get put to me. It's about $.06/share if they don't.
On the streets of new York, looks pretty certain, but the markets, sounds like we are going to have a flat day as they will probably be closed
ReplyDeletehttp://www.marketwatch.com/story/hurricane-october-jobs-data-in-spotlight-2012-10-27?pagenumber=1
DeleteOperators of the New York Stock Exchange and the New York Mercantile Exchange said Sunday their trading floors would be closed Monday and remain closed until officials say New York is safe from Hurricane Sandy, the monster storm expected to hit the city early in the week.
Both exchanges said they would continue electronic trading uninterrupted. Operators of the Nasdaq OMX, an entirely electronic platform, haven’t announced any plans to curtail trading.
Here is the DeMark article and vid for those interested.
ReplyDeletehttp://www.businessweek.com/news/2012-10-24/demark-sees-s-and-p-500-index-peaking-around-1-480-before-12-percent-tumble
Thanks - could see that scenario playing out as the timing with the election would be pretty good.
Deletehttp://finance.yahoo.com/news/u-companies-delay-earnings-reports-000226739.html
ReplyDeleteIf you missed listening to UBS conference, one of the things they were positive on was Shanghi Composite SSEC if it broke what they called major resistence at 2136. Looking at the weekly chart this is where the SSEC broke out on FEB 09 off o8 lows.
ReplyDeleteThis week the SSEC failed to deliver and sold off now trading at 2064. This week's Barron's had two people Zulauf and Faber saying China has a shot here.
Zulaf:
What is happening in China?
The biggest recorded credit and investment boom in history has gone bust. The Chinese stock market has given back almost 90% of its rally off the 2008 lows. After the government changeover in mid-November, expect some economic stimulus. That could help Chinese stocks rally. In the next six to nine months, Chinese stocks are an interesting bet, and Chinese exchange-traded funds such as the FXI [ iShares FTSE China 25 ] and the GXC [ SPDR S&P China ] could be good vehicles.
Faber:
Barron's: The Chinese, you note, invented paper and aren't afraid to use it to print money. Will monetary easing spur growth?
Faber: The Chinese economy was driven by massive credit growth in the past three years, and economic activity was centered heavily on capital spending. Now China has massive overcapacity in several industries. If easing leads to further stimulus directed at capital spending, you will have more misallocation of capital. The Chinese can postpone a more serious recession by easing, but it won't solve the problem. The Chinese stock market could outperform for a while.
So we should be alert to this market.
BTW over the last 18 days .50 Fib is 2068.
DeleteChina just announced(this weekend) some sort of tax relief on consumer items as another form of stimulus, not sure of the details.
DeleteI'm thinking China has backed down on their offer to assist Europe and a couple of other "promises", so what we hear and reality can be quite different.
50% retrace is a good observation, thanks for pointing that out.
Faber:
ReplyDeleteWhat does your portfolio look like?
I'm 25% in gold, 25% in equities, 25% in bonds, 25% in cash, and 25% in real estate. I use the same accounting standards as the U.S. Treasury
Stormy Monday - Stay to the south of the eye and you'll be out of harm's way.
ReplyDeleteI'll be on the road today.
ReplyDeleteDeron on TMF: "Now, it appears as though TMF is setting up to break out above resistance of its 3-month downtrend line and resume the long-term uptrend that has been in place for nearly 2 years."
ReplyDeleteHe also mentions a low correlation with broad markets.
election rally coming soon. lots of vested interest...
ReplyDeletemark - I'm thinking that the risk/reward setup on MITK is very good. there are a couple of MAJOR catalysts right now:
ReplyDelete(1) - Bill Pay > hints at it being announced in early Nov
(2) - That prepaid launch with AmEx and Walmart could turn out to be very good > probably will get some comments on that in the next quarterly conf call
It looks like a buy here with a break below $2.70 would be a good risk reward. Upside could be at least 60% and downside is 13% or so.
I'd take a shot at 2.70 also.
DeleteCBRX:
ReplyDeleteBuy around . 62. Just hit again for same reason buyers r out of stock no one left to sell. Awesome risk reward
that is, it was hit back earlier in year and then hit again last week for same exact reason. how many times can a stock fall for the same reason? the company still has a profitability business to rely upon...no cash drain, about 50% of market cap in cash. again, very low risk-reward setup. if you can get it at 0.62 it could be an awesome setup. very little downside risk and potentially several hundred percent upside.
DeleteI'm actually glad for the rain out. Got back very late last night and am just getting caught up with work.
ReplyDeleteFrom Mauldin today:
ReplyDelete"In physics a singularity is where the mathematical models no longer work. For example, models based on the physics of relativity no longer work if one gets too close to a black hole. If we think of too much debt as a black hole of sorts, we may understand why economic models no longer work."
This is a key point for all of us to keep in mind: while an increase of the US Debt/GDP ratio was OK at low levels of debt, it has a very negative impact at the current high levels of debt and the extent of its negative impact on the economy will get progressively worse. One major change that happens when the level of Debt/GDP increases is that the "fiscal multiplier" increases. Here is what Mauldin wrote about it last week:
"The chief economist for the International Monetary Fund, Olivier Blanchard, and his associate Daniel Leigh gave us an eye-opening three-page paper, buried in a 250-page World Economic Outlook release last week (http://www.imf.org/external/pubs/ft/weo/2012/02/pdf/text.pdf). They studied an economic concept called the fiscal multiplier, which is usually defined as the change in real GDP that is produced by a shift in fiscal policy equal to 1% of GDP. In simple terms, if the fiscal multiplier is assumed to be 1.0 then a change in government spending by 1% (either an increase or decrease) would produce a corresponding change of 1% of GDP.
Most institutional economists prior to this paper assumed the fiscal multiplier to be about 0.5. Again in simple terms, this would mean that government spending cuts equal to 1% of GDP would reduce actual GDP in the coming year by about 0.5%. The fall in GDP would of course reduce tax revenues, which means that you would have less than a 1% actual cut in the deficit. If the tax rate is 30% in this example, the deficit will be reduced by only 0.85%. That may be an acceptable outcome when an economy is growing nicely or the deficit and total debt are too high and the bond market is forcing the government to cut back.
While Blanchard and Leigh agree that in the past the fiscal multiplier was generally about 0.5%, they suggest that in the recent fiscal crisis the fiscal multiplier has been much higher. Their study suggests that it has been at least 0.9 and perhaps as much as 1.7."
Let's say that the fiscal multiplier in the US is 1. This means that if the taxes in the US are raised by the amount equal to 1% of the GDP, the GDP itself will contract by 1%, and if the average tax rate in the US is 30%, then the tax revenue will actually drop by 1*0.3 = 0.3%. So the actual revenue from taxes will only increase by 0.7% of the GDP. This means that the level of US Debt one year after this tax increase will be 0.7% smaller than without this change, but the new level of GDP will be 1% less, and hence the Debt/GDP ratio will actually increase as a result of the tax increase. The same logic works in reverse -- a decrease in taxes will actually decrease the Debt/GDP ratio.
Think about this, folks, when you compare the economic proposals of Obama vs. Romney.
This latest research also shows how much off is CBO in its projections -- they are suggesting that if all Bush tax cuts are reversed, then the Debt/GDP ratio will come down significantly in the future, which is totally wrong.
DeletePretty interesting take bro.
DeleteThe Fed and the US government are rearranging chairs on the sinking Titanic. Many smart people tried to figure out how we can stop the growth of the Debt/GDP ratio, and none of them could find a way that would be politically acceptable...
DeleteThis sounds a whole like starting off with $100,000 in the trading account, if you lose 10%,then you have to make 11.1% back just to break even.
DeleteANR.... http://www2.tricities.com/business/2012/oct/29/alpha-leader-confident-company-can-turn-it-around-ar-2320162/
ReplyDeletelet's see, on friday all i did was sell short 2 NOV 63 strike TBT puts for $1.45. If the shares are put to me, that would be a basis of $61.70. One reason I don't like selling just a couple of puts like this is it's about $.16/share in commission if they get put to me. It's about $.06/share if they don't.
ReplyDeleteBig news on China.
ReplyDeletehttp://www.theepochtimes.com/n2/china-news/chinese-tv-host-says-regime-nearly-bankrupt-141214.html
Created: November 13, 2011
DeleteLast Updated: December 10, 2011
SSEC
DeleteNovemeber 14 2011: 2529
October 29, 2012: 2062