Saturday, November 17, 2012
11/17/12 Bourse de Sade
Mere weeks ago it was all about new highs on the SPX by year-end (and we may in fact get there by then). Where are all those 1500-callers now? Lying low to avoid attracting a second wave of hate email.
Now it's all about new lows around the corner. Whoa. Whoa!
The market is a sadistic beast, delighting in the pain and suffering of those who buy at tops and sell at bottoms. I was schooled with a cane right across my back, but it's alright, bro> once in awhile I nail the ----er under my thumb.
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Just for the record, Deron and Big Dave have been on the short side for a while. As everyone here knows, Dave scans several thousand charts a night and their sectors and virtually all were rolling over with obvious internal weakness.
ReplyDeleteDeron uses ETF's with less beta, but the timing on both Deron and Landry was identical.
I also read Geoff each morning and he was risk averse at that time as well.
Then Thursday both Deron and Landry warned of a bounce while Geoff was pointing out the oversold technicals. Landry mentioned it in the service Thursday night and Deron wrote of it on Friday morning.
A person could do a lot worse than putting these guys on their evening and morning first reads.
Honorable mention goes to TOF and 2nd when they both sensed a bounce for Friday. I agree with the levels mentioned. I suspect Deron will call for a bounce to the 200 dma which will be a Landry 'gatekeeper' and another chance to go short on the right signal indicating the resumption of selling. If that fails then we can look for a December rally or at least a neutral sideways market. Tax wise I suspect if that happens we'll see a rally in the new year.
If we do this: http://www.youtube.com/watch?v=ckAwT9AkRgE Then going short is a no brainer.
GMO- Looks good to go.
ReplyDeletehttp://www.blm.gov/nv/st/en/fo/battle_mountain_field/blm_information/national_environmental/mount_hope_project0.html
This will definitely receive a response, wonder if their capital requirements are completely fulfilled?
DeleteYou have to admit, 'fiscal cliff' is reminiscent of 'Y2K.'
ReplyDeleteYes!!!! Exactly!
DeleteIf you look at it from an individual company basis, I really don't see the fiscal cliff having much of an impact on most company's business. Sure, if you owned stock in a supplier to the army, I'd be worried about it (but it's probably priced in now, so buying those ones might be good here). But other than that, the impact will be small and let's say MCD's sales are hurt by half of one percent, does that really matter in the grand scheme of things?
DeleteI still think the market is a buy on either a resolution to the cliff or no agreement and the cuts happen. Uncertainty will be gone and people can go back to looking at stocks and the actual businesses.
NSPH- I emailed and heard back from Roger Moody, the CFO. They have no intention of issuing shares. Will access the debit markets, probably through a revolver, to get them to cash flow positive. Could be simliar to the $50M revolver ENPH just did.
ReplyDeleteOkay, that explanation seems consistent with what they've been saying, or attempting to say, in the various conferences. Wonder why they haven't made a better attempt at clarification.
DeleteYeah, sometimes I wonder how well they prepare their remarks. I guess we have to remember they are all egg heads :)
DeleteIn anticipation of receiving funds from my credit card next week, I have just placed a buy limit order for 1K more shares of AUMN at $3.6 -- the lower the price goes, the larger position size I want to have. I don't care how low it will go over the next month -- all I care about is where the price is going to be one year from now, and I am sure it will be above $3.60.
ReplyDelete"I am sure it will be above $3.60."
DeleteRisk certainly appears much lower now than it was in, say, Sept.
We have a gold/silver mining company that will turn cashflow positive in 1Q2013, and whose average production in 2013 will be noticeably higher than in 2012, then in 2014 (by the end of which they plan to maximize the extraction rate at their autoclave facility and also finish "upgrading one of the sulfide plant ball mills and the addition of flotation and filtration capacity at the sulfide plant to increase processing capacity" and achieve annual production rate of 4M oz of AgEq at the average cost of $7/oz) it will be noticeably higher than in 2013, then in 2015 it will be noticeably higher than in 2014. After that, they will start increasing Velardena throughput from 1150 tpd to 2000 tpd (and increasing their annual production to 8M oz of AgEq), which is the appropriate rate for Velardena based on their initial estimate during the merger with ECU.
DeleteSo how low does AUMN need to fall now in order for you folks to decide that it is worth buying some shares and not looking at them for a year or two?
I would be careful here David and not rush things. In my experience, this is often a difficult time in the lifecycle of a mine. Sometimes things go very smoothly, but often this is a time where problems pop up and costs can be higher than expected and even production delayed. If problems do occur, you very likely will get even better prices.
DeleteAAPL looks good @ the 200 Month MA...about $100 bucks.
ReplyDeleteInteresting stat re the higher taxes we will likely see from the fiscal cliff resolution:
ReplyDeleteDespite the common perception that tax policy affects market returns, historical evidence suggests that it is the business cycle that ultimately determines stock market direction, not tax policy. In fact, over the past 100 years, taxes have been increased just 17 times and just seven times in the post World War II period.  Average market returns on the years immediately following a tax hike have been extremely strong with the S&P500 returning 18% during the first year after a tax hike. Not only that, but higher levels of tax are not an impediment for dividend paying stocks. By contrast, market performance is generally weaker in the years immediately following tax cuts, largely because the economy is weaker in those years, not because of tax policy.
There have been quite a few special dividend announcements in advance of these anticipated tax increases.
DeleteWhipsaw? Wonder if we'll experience a period of whipsaw just to keep us all guessing/questioning ST future direction?
ReplyDeleteBAC closed @ 9.3x (opened @ 9.0x).
ReplyDeleteQQQ partial close @ 62.9x (opened @ 61.9x).
QLD - Looks like gap up from $48.49 was closed.
ReplyDeleteQQQ - Gap up from $61.24 remains, but we nearly filled it.
PAL - Dang this thing's low enough now isn't it?
ReplyDeleteGDXJ off @ 22.0x.
ReplyDeleteRemainder of QQQ off @ 63.0x.
GMO- I don't get it. That news was out Friday, although we missed it then. Did the entire market?
ReplyDeleteRats were busily deserting ship Friday, and GMO always gets hit hard just prior to good news. Today's new longs are being rounded up for sheering?
DeleteLooks like we might get a V shaped recovery in the markets. First test though is the 50 DMA around 1380ish. i think there's some truth to this DECK rumor of a buyout. i've looked at valuations of recent buyouts in their space and they should be able to get $60/share. NKE just unloaded on another brand...perhaps they're raising cash for a buyout?
ReplyDeleteI'm thinking the same thing - we've had the 5% drop due to fiscal cliff worries which should be recovered (assuming it is a done deal as being reported), plus we are moving into year-end rally time.
DeleteNot sure what there is to knock the markets down now.
GMO - All we need now is some financially dilutive news and we should be set for our touch and go price?
ReplyDeleteNote today's gap up represents an obligation, I don't think the ROD should've been a surprise.
DeleteThey've got to raise the cash somehow. I assumed debit. Have you read otherwise? Both are dilutive to EPS of course.
DeleteAGO - Sunk right back to it's low of day, are there some flooded out bonds sitting in a New York vault somewhere that represent new financial losses?
ReplyDeleteDoubt it - no news out there in the public at least. Could be just some tax loss selling for people cleaning up their year-end books. Hard to know why a stock does what it does on most days.
DeleteThx, no news is good news at this point, I really want to add to this position but it's not quite reached my downside potential target yet. Will it? As you point out, hard to know.
DeleteShort squeeze underway. Hope it lasts all day.
ReplyDeleteGold - I'm quite certain by now CC has already declared victory on predicting a monster gold rally.
ReplyDeleteGMO - All I've read is the BACML report suggesting GMO needs at least $200M of additional capital, there are also contractual covenants with PKX and the other large investors concerning contractual penalties.
ReplyDeleteAs I've said before, it's impossible for me to properly assess (due to lack of skill or just public info?) these contractual obligations.
The management team is top-notch, the deposit is there, there are legal disputes concerning water, the county commissioners who were fighting the project were recently voted out, the BLM and the state have given the project approvals.
What's not to like?
Yeah, too funny...thanks.
DeleteHo-Ho to sell to Groupo Bimbo.
ReplyDeleteWe couldn't make this up if we tried. IMO thse a-holes should be gagged with twinkies.
http://www.bloomberg.com/news/2012-11-19/hostess-ceo-says-sale-to-grupo-bimbo-a-misconception-.html
VXX is getting killed.
ReplyDeleteTVIX as well, in the weeds now. Nice perpetual downtrend on these and so much more, huh?
DeleteFor a few days anyway. I never trust these news driven bounces for more than a quick gain.
DeleteYep, wait till the 401K statements arrive showing how any gains were completely consumed by parasitic fees.
DeleteNot to mention....anyone that thinks that a photo op with a bunch of politicians resolves the fiscal crisis deserves what they get.
DeleteLook at the long term VXX chart for 6 mos. If it were any stock it would signal a bottom. It looks like the ski slope on Wide World of Sports....the agony of defeat.
Thank The Lord for self-serving politicians, I guess Boehner is putting shorts on today.
DeleteVXX - Gosh, volume sure has swelled in Oct and Nov, looks similar to UNG chart during it's famous crash.
DeleteLOL! I went in to make a pot of coffee and my silly partial sell order for MDBX sold for a quick $500. As you will recall. MDBX is the marijuana dispensing machine co. They also dispense other prescription meds with fingerprint verification.
ReplyDeleteMy daughter works for Group Health and she recently participated in training for what they are calling "Waldo", which is an automation/tracking system with cards that track employees and patients by using rfid chips and a processor within the cards. They also have a series of buttons for certain patients (say someone getting allergy shots) that may suffer some anaphylaxis or allergic reaction)so they can alert the doctors or nurses by using the card. Now think about MDBX accepting the cards to automate some prescriptions.....
BTW, if GH is doing this then I suspect you will see Kaiser adopting it soon as well.
DeleteI knew I should have bought DVAX on that panic selloff. Rebounding very nicely from the other day. Reminds me a bit of ATRS which is another one I failed to capitalize when it sold off (used to be under another symbol).
ReplyDeleteStill holding on to my YRCW, DECK, Z.
full disclosure my original purchase of YRCW was at $6.20 and through $7 (my average was around $6.7 I believe). Anyway, I did sell about 1/4 or so at $8.1 and $7.5 and sold more at $6.7 to $6.9 today. I''m still holding some but I'm looking at this more in terms of a trading stock because it broke it's 10 WMA and isn't holding any moves up. I still view it as a potential HUGE turnaround but I'm not willing to stick my head in the sand.
DeleteI wasn't even paying attention but anyone notice how NSPH came down to the $2.40 level which happened to be exactly where the 200 DMA was? You can't make this stuff up. What a great low risk / high reward trade right there.
ReplyDeleteYou're damn right I noticed!
Delete"I would be careful here David and not rush things. In my experience, this is often a difficult time in the lifecycle of a mine. Sometimes things go very smoothly, but often this is a time where problems pop up and costs can be higher than expected and even production delayed. If problems do occur, you very likely will get even better prices."
ReplyDeleteAre you going to be saying this, BB, at *any* price for AUMN, even at $1? If not, then below which price would you feel that the reasonably possible production delays are already all priced in and you can just buy some shares and not look at them for a year or two?
David, I personally still think it is too early to look at miners in general and that there are easier place to make money.
DeleteBut specifically, the junior miners are hard to own. Some do well and get to production pretty much on time and budget like Newgold (NGD).
But others are painful. Minefinders (MFL) is a silver company that got bought by PAAS and were really bad at getting their mine to production. Over budget and time, raising equity when the stock started to move upwards, painful to hold and not unlike what you are going through with AUMN. Worked out in the end when PAAS bought them, but they could have done so much better.
Another example is Copper Mountain (CUM in Toronto). They are a copper miner with a great brownfield development, but have constantly missed metal delivery and gone over budget due to some issues with grates in their conentrator and their stock has gone from $8 into the $3.50 range at a time when it should have been doing very well.
I think a lot of it is management - NGD is run by the ex-CEO of Barrick, so good experience, by MFL was run by the geologist who discovered the mine.
Anyhow, all my point is that you probably feel like things can't get worse with AUMN, but my experience with these junior miners is a lot more things can go wrong than I possibly thought and things can take a frustrating long time, and I would have often done better by be patient as getting mines to production is really hard.
Incidentally, the buy limit order I placed for 1K shares of AUMN last night at $3.60 was partially filled today -- got 919 shares that price... Could it have been THE low for this pullback in AUMN? I actually thought THE low was at $4.30 a few weeks ago...
ReplyDeleteNow that would be fantastic David, I was very tempted last Friday but wanted to see if they would drive AUMN under $3.
DeleteI can't believe this nonsense, it's not only AUMN but so many others across the board as well.
GMO - Mark, BACML released an updated report on GMO today, I forwarded this to your email.
ReplyDeleteFeel free to share with anyone interested.
Mark, can you please send me that report? Thanks!
DeleteDavid, do you still have access to the previous report as well? These two dovetail and should both be taken in context, IMO.
DeleteSince last Thursday’s close, the DJIA is up +1.8%, the SPX is up +2.1%, QQQ is up +2.5%, and BAC/GDXJ are up >4%. So I think it’s safe to say stocks are out of the ICU for now, and I have either closed positions already, or will close them (RYSPX, RYPMX) by end of day.
ReplyDeleteThey all play on penny whistles
You can hear them blow
If you lean your head out far enough
From Desolation Row
Across the street they've nailed the curtains
They're getting ready for the feast
NLY - Somehow I knew this one would be red prior to end of day.
ReplyDeletehttp://www.centralpennbusiness.com/article/20121116/REALESTATE/121119859/Warren-Buffett-jumps-into-the-real-estate-brokerage-game&template=realestate
ReplyDeleteWhat's the play here? I'm assuming it's the RLGY's of the world. What about ZIPR?
Buffet has made several comments recently that there is good money to be in single family housing, but it is really hard to buy 100,000 houses and manage them efficiently, so i would think this a less direct way of playing the rebound in American housing.
DeleteI assume this is the Realtor agencies like ReMax and Coldwell, for example.
DeletePretty sure that is it. Interesting that Brookfield is selling as they are some of the smartest in the real estate business and they generally are good at selling things for full value. But Buffet is an astute buyer, so he must see value here. Maybe it is a scale thing and Brookfield didn't have the scale?
DeleteI'm hearing the real estate inventory is at decade lows and it's become a sellers market.
DeleteWow - strong finish to the day and S&P up 2%. Hard to see that we turn right back down after a day like this. Hopefully we see some follow through tomorrow.
ReplyDelete2nd_ave -- your timing of the bottom of the pullback has proved impeccable once again, and the fact that you did not take off your positions on Friday and were able to wait for the day like today is equally impressive. Way to go!
ReplyDeleteCP, if you thought there was a chance the sellers could drive AUMN below $3 but that chance was small (after all, the company has much more cash on hand than it had in May, the gold/silver prices are much higher than they were in May, and the expected 1-year production from this point is noticeably higher than from mid-May, when AUMN bottomed at $3.38 on a closing basis), why didn't you open a 3/4 position last Friday at $3.50 with the intention of deploying the remaining 1/4 if AUMN was indeed pushed below $3? Haven't we all been taught by now that bottom-picking is futile and a gradual scaling in is much more rewarding in the end (if you start it from the greatly oversold/undervalued point, say below $4 on AUMN)?
ReplyDeleteIf all my AUMN call options (90% of which are expiring next April and 10% expiring in January) are assigned to me, then I'll have 67K shares of AUMN. Now, *that* is a respectable position size. :)
ReplyDeleteCan someone please suggest a not very immoral offense I can do so as to be put away for 2 years and released when AUMN is trading at new highs, above $30?
Sure. Down a bottle of Nadurra in public, and the rest will take care of itself.
DeleteRob a bank, insiders get away with it all the time thus it must not be immoral.
Deleteany of you energy guys follow CAK? came up on a screen.
ReplyDeleteRYPMX/ RYSPX closed +3.1% and +1.97% for the day, respectively. Total port now +18% YTD, with minimal exposure to the market (probably 4 weeks out of 46).
ReplyDeleteI heard tonight that real estate inventory is at decade lows and it's become a sellers market.
ReplyDeletehttp://www.businessweek.com/news/2012-11-18/s-and-p-500-in-cheapest-bull-market-since-reagan-trade-26-percent-from-peak
ReplyDeleteHmmm, not a bear in sight. That was easy.
ReplyDeleteIFF they do let all the tax cuts expire then the dollar will probably start to rally even if buddy Ben starts to print more dough. I can't find that bet on intrade though.
ANR made a higher low on the daily's, I may buy tomorrow and put a stop in just below 6.88.
ReplyDeleteACI just like ANR with a stop below 6.20.
YRCW - that one likes to jump up and drift down.
AGM - it's in the right sector. Have you guys been mentioning this one and I'm just now seeing it? It made a new 52 week high today.
ReplyDeleteWas a Landry setup buy on 11/8/12 around 27.90, closed at 32.11 today. Need to wait for a pullback and a buy trigger.
Business from Yahoo below.
Federal Agricultural Mortgage Corporation provides a secondary market for various loans made to borrowers in the United States. It engages in purchasing eligible loans directly from lenders; providing advances against eligible loans by purchasing obligations secured by those loans; securitizing assets and guaranteeing the payment of principal and interest on the resulting securities that represent interests in or obligations secured by pools of eligible loans; and issuing long-term standby purchase commitments (LTSPCs) for eligible loans. The company also purchases or commits to purchase eligible mortgage loans secured by first liens on agricultural real estate; purchases the portions of certain agricultural, rural development, business and industry, and community facilities loans guaranteed by the United States Department of Agriculture; and purchases, guarantees securities, and issues LTSPCs for eligible rural utilities loans made by cooperative lenders to finance electrification and telecommunications systems in rural areas. Federal Agricultural Mortgage Corporation was founded in 1987 and is based in Washington, D.C.
"I heard tonight that real estate inventory is at decade lows and it's become a sellers market."
ReplyDeleteThis info is from the rear view window. Looking forward, however, there will a huge inventory coming into the market next spring/summer, since the banks have been delaying almost all of their foreclosures until the scandal was resolved last spring, and it usually takes a year from the time the foreclosure is initiated until the house hits the market.
Good point, then we should be preparing in advance. I guess there must be some plans in the works to allow banks to roll this inventory with a minimum of pain, real estate brokers are bound to make some hay.
DeleteI guess building materials, appliances, etc. should be good as well.
The HPQ copier we just bought works pretty well???
ReplyDelete