There are no indications this morning's
rally won't continue for some time, but it certainly feels like a short
squeeze. I'm tempted to bet against the rally. What's stopping me? I've never
had much success playing the short side. I liken a short position to swimming
near a strong rip current- a squeeze can quickly pull the position under water
and sweep it out to sea! So short plays, at least for me, tend to range between
a few minutes and a day or two at the most.
NGas. 'Nuff said.
ReplyDeleteThe last time I traded UNG at these levels, I was vacationing in Hawaii.
DeleteThat was late August. And now it's winter.
DeleteExactly. Maybe if it gets a reversal bar to close the gap.
DeleteI see this as two things.
1. Short squeeze. I'm selling trades into it.
2. Dividend payers that got sold into the year end non-sense which made them attractive on Friday/Monday. Those I'm holding as they are now paying killer divs and have decent cap gains for 2013. Examples: GGN 12.50's was a great price. CNSL low 15's was a deal. CHSCP low 29's. FGP mid 16's. BBEP low 18's. If those just hold their purchase price they will pay well over 10% in divs alone doing nothing, with cap gains it's easy money. Us old folks need income. That leaves the rest of the port to trade opportunities like SNE.
Aside from low sentiment, where's the bad news? I only see a misleading stream of diarrhea flowing from the geriatric ward.
ReplyDeleteI haven't turned on CNBC in a long time but I'd have to imagine people are giddy about how the Fiscal Cliff resolution has caused a jump in stock prices....however, stocks will only stay up temporarily before collapsing. No one is focusing on the next great bull market in Japan. the 23 year bear market is over and there is ABSOLUTELY NO ONE there calling a bottom. People spent 22 years calling bottoms in the USD/JPY and bottoms in Japan. Now that the bottom is clearly in place (IMO) all bottom callers have been wiped out and everyone is now skeptical and waiting for a lower low.
ReplyDeleteThis is all the perfect setup for a massive move higher in Japanese stocks.
Nice call on SNE, tof. As always.
DeleteI agree for two reasons. (Seems I on a roll with the twos).
Delete1. The debt ceiling bullshit will start shortly. I can hardly wait. I wish there was a spit commodity fund for Bloomberg, CNBC and most especially the Fast Money a-holes and Cramer. Spit will be in short supply.
2. The Yen, although I think it will be somewhat moderated by a lower USD, which is getting close to the 52 wk low already. Maybe the Yen does better as a carry trade because the dollar goes higher and then Jesse can be right in spades selling gold, T's and the short T's trade. I hope so.
Too bad there aren't more individual Japanese listings.
DeleteHow many do you need?
DeleteHow about more than a dozen?
DeleteIt's rare to see the major indexes rallying harder than the miners.
ReplyDeleteFlyer on UGAZ @ 18.91...
ReplyDeleteAdding UNG @ 18.02...
ReplyDeletePAL - WTH(WTF)?
ReplyDeleteWhat are the chances all these gaps up never fill, LOL, just like those from June?
ReplyDeleteWhat a bunch of BS......
The morning volume in UGAZ speaks volumes. How many positions are now underwater? Every freaking one opened since mid-June.
ReplyDeleteMan, with UGAZ/UNG it's all about position size. There's really no way to play it until you've discovered the ideal position size=one that will allow you to sit unperturbed. I thought I was keeping it small, but I'm starting to get perturbed...
ReplyDelete2 hours and change into the trading day, and >1m shares of UGAZ have changed hands.
ReplyDeleteThat has to be a freaking record.
DeleteSomeone's having a gas with natty, eh? Perturbed was a great choice of words.
DeleteAnother case of death by Congressional legislation or big boys trying to pull the wool over everyone's eyes, I wonder? No idea, another WTH!?!?!? ;)
You may be right about NGas, tof. Futes hit 3.17 this morning. It may ultimately hit 3.05 before trending back up.
ReplyDeleteNatty just did visit $3.05 last night according to this chart:
Deletehttp://www.finviz.com/futures_charts.ashx?t=NG&p=h1
I'm completely miffed, there's got to be some reason for the disturbance, did France give the go-ahead on domestic production or something?
Bewildered......
Been doing some research on Japan stocks and there are 400+ net/net stocks (stock value is cheaper than current assets minus liabilities). So, you could basically close the company for nothing and distribute the cash for more than the stock is worth. These are the type of stocks that Benjamin Graham made a lot of his money on.
ReplyDeleteI'm still looking into these, but TD doesn't trade Japan stocks, so I'd have to set up an Interactive Brokers account, so it's a pain, but these stocks should do very well if Japan does turn. The other option is interlisted stocks like SNE or ETF's/funds - Jeff Saut has an interesting writeup on one at http://www.raymondjames.com/inv_strat.htm this week.
Unlike TOF, I'm still not convinced the turn is real. A lot of very good contrarian investors have tried to pick the turn in Japan and been burned. From what I've read, the real problem is people in Japan still have very good lifestyles, so there hasn't been big pressure to change. Perhaps we have hitting the tipping point, but Japan culture seems very slow to move.
I think much depends on demographics going forward. As we've all heard, Japan (much like the US) has a rapidly aging population. Earnings estimates for each of the 400+ companies should be analyzed based on demographically driven metrics. Companies like SNE and TM aren't going to fade away. They just need to reinvent their products to appeal to changing demands.
DeleteUnemployment in Japan is 4%, a historic high. Doesn't sound like desperation to me.
DeleteAlthough, I should say I don't believe Japan's economy SHOULD have much to do with Corporate Japan's performance.
DeleteLook at Korea, Kim Jun Un announced this weekend he'd like to see improved relations and work toward a unified Korea.
PKX - This weekend, POSCO bought into another Canadian mining company as well.
UNG will trade >10m today.
ReplyDeleteUGAZ off at 19.10...
ReplyDeleteUNG off at 18.1x...
ReplyDeleteFor you nat gas guys, great chart on US drilling:
ReplyDeletehttp://canadianvalueinvesting.blogspot.ca/2012/09/us-oil-and-gas-drilling.html
Got to be good for prices.
MLNX - No doubt turns red in 6,5,4,3,2,1..........
ReplyDeleteIf today is not capitulation for NGas, it's certainly close. We may see 3.05 tomorrow. The ultimate would be to see it @ 0730 pst on Thursday.
ReplyDeleteVIX - How 'bout that VIX now, eh????
ReplyDeleteThe Patriotic Millionaires have this to say:
ReplyDelete"I start this year with a substantial bump in my taxes. In fact, the over-night increase in my taxes is itself more than the annual income of almost anyone I know. It won’t impact my lifestyle or outlook or enthusiasm for employing people a bit. In fact, the very thought of this brings me joy. Looking out my window as I type, seeing trees, mountains, the Puget Sound, shipping, church spires, the bustle of a classic small American town starting up a new year on a frosty morning, my spirit is buoyed by the thought that business men like me are being called upon to put a little more back into the community and economy that enabled us not only to produce what we have produced so far but that gives me a stable and enjoyable world in which to enjoy the fruits of my hard labor. I celebrate the opportunity to empower our society through progressive taxation."
- Rick Steves, travel writer, TV host, tour organizer and Patriotic Millionaire, Edmonds, WA
"This is going to be a great year for the economy, thanks to the 'job creating' increase in tax rates on the wealthiest taxpayers. The reaction of the markets to the Fiscal Cliff deal is immediate proof that higher tax rates on the wealthiest taxpayers will not 'kill jobs' or tank the economy. In fact the opposite will be true and investors in the stock market know it."
- Frank Patitucci, CEO of NuCompass Mobility and Patriotic Millionaire, Pleasanton, CA
"Passage of this bill to avoid the 'fiscal cliff' is good for the United States and the world. It is only right that those of us who have had such good fortune understand our responsibility to pay more in taxes to benefit those less fortunate. This is the American way."
- Michael Alexander, Founder of Student Financial Aid Services, Inc. and Patriotic Millionaire, El Macero, CA
"By its very nature, compromise means that you don't get everything you want. Those of us in the business world have a different name for compromise: we call it a win/win. There will be cynics aplenty on both sides who will find fault in the small print, but from my standpoint, this is a solid agreement that moves the country decisively in the right direction both on deficits and tax fairness."
- Tal Zlotnitsky, CEO of iControl Systems and Patriotic Millionaire, Trinity, FL
"I'm delighted. This will help give lower income families a chance to make it up the ladder as my coal miner father had when I was young."
- Fred Rotondaro, Patriotic Millionaire, Washington, DC
"While, in my view, this is only a start, it is at least that; a start. And while I recognize that our primary focus has been on the taxation side of this equation, called in Washington's new term, revenue, the real intent needs to be more about the total dollar return on both reduction AND revenue. I think that the world, Wall Street and smart, thinking people are looking for 4-6 trillion dollars over the next decade. This is far short of that. But it is a start."
- Stephen Prince, President and CEO of Card Marketing Services and Sterling Card Solutions and Patriotic Millionaire, Nolensville, TN
"Happy to do our part. Now it's time to get to the real structural budgetary issues that threaten our economy. We are nowhere near done yet and the entitlement system needs reform."
- Emanuel Stern, Patriotic Millionaire, New York, NY
"All I can say is that it's about time! Now to begin closing some of the entitlements that we who are wealthy enjoy."
- Judy Pigott, Patriotic Millionaire, Seattle, WA
I'd like to know why there isn't some sort of organization out there busily identifying and documenting the lying SOB's who spread all these negative rumors we're constantly barraged with, put that a-hole Norquist and whomever he's working for at the top of the s**t-head list.
DeleteSo, today's gap and go completes the 13 week symmetrical triangle and also repeats last January's gap and go.
ReplyDeleteIncredible, huh.......?
I think I may have posted this before so if I did I apologize but this is an email I sent to a friend of mine about SNE (he's diehard AAPL and loathes anything that competes with them):
ReplyDelete+++++++
If you want to consider it from a fundamental perspective then look at the valuation of just one piece of the puzzle: the movie biz. Sony/Columbia pictures had a 17% market share in 2012 vs 7% for Lions Gate. Lions Gate's (LGF) market cap is $2.2 Billion. For simplicity's sake let's take 2.4 (ratio of Sony's market share vs LGF's) times $2.2 Billion. That yields a $5.3 Billion market valuation for SNE's movie business. So the market is trying to tell us that the remaining portion of SNE's business which does $80 Billion in sales is worth $5.8 Billion? Really?
Let's look at price to sales of some other tech companies, all of which I would call "dogs":
HPQ - 0.25
DELL - 0.31
NOK - 0.38
RIMM - 0.54
What is SNE's? 0.14. I would love to hear someone justify why a global powerhouse like SNE trades a such a huge discount to all of these businesses when the Yen has made a major bottoming process and is in the midst of what might be a huge bull market.
+++++
"For you nat gas guys, great chart on US drilling:
ReplyDeletehttp://canadianvalueinvesting.blogspot.ca/2012/09/us-oil-and-gas-drilling.html
Got to be good for prices."
BB, those charts show that oil drilling is at a multi-year high and is rising, and since NG is obtained as a by-product of oil drilling, maybe we don't need to drill for NG at all? Seriously, can you find info on how much NG is produced now by oil wells? How much NG is expected to be produced by the oil wells that are about to be drilled?
Good question David, but if no-one is drilling for nat gas including companies like DVN, ECA which are pretty much nat gas only producers and Exxon is not doing anything with those EXCO field they purchased, you have to believe production will fall at some point.
DeleteYep, and based on my uneducated understanding, rising oil prices should lead to lower NG prices unless oil producers revert back to the age-old practice of excess disposal by venting the NG to atmosphere.
DeleteOh, and the seasoned chart readers will tell you though that NG has already bottomed.
DeleteSo I ask, shouldn't steel producers, fertilizer co's and utilities be a buy with NG here?
DeleteOne might think so, MEOH converts natty into methanol for instance. Many uses for cheap natty in chemical industry.
DeleteFolks, don't miss the price action in PNPFF -- we are getting a double bottom both on a 1-month chart (early December and late December) and also on a 1-year chart (last summer and now). This is THE bottom, and considering the fact that this closed-end fund is trading now at a record 50% discount to its NAV, you really can't go wrong buying PNPFF now...
ReplyDeleteSimilarly with GDXJ -- the double bottom established in spring/summer has held. The only way is up now...
DeleteThe 3-month chart of AUMN is starting to look like a cup-and-handle now, suggesting that we may get a strong breakout above $5 soon.
ReplyDeleteSEE THIS CHART!!!!
ReplyDeletehttp://www.ritholtz.com/blog/2013/01/long-interest-rates-1790-to-present/
This is the inverse of the chart Jesse sent out urging refinancing, borrowing now, upgrading now.
Just turn this chart over and ask yourself, how long can this parabolic move last? Read Barry's comment.
Got TBT?
Hard part is if you look at that chart close up, the bottomming sequence often took years, so going with TBT may be difficult as Doug Kass has shown from the last 2 or 3 years. Perhaps this time will be more of a spike low with a fast bounce, but playing life insurers like MET which is up 6.5% today as they benefit from higher rates means you don't have to get the timing as precise as TBT.
DeleteExactly, the pros know more about what's going on behind the curtain and how to assemble a robust strategy than I ever will.
DeleteMET - Umm, yeah, closed $0.02 from it's high......
DeleteI guess rates increased today as well, TBT doesn't pay a div while we wait for the beard to stop yanking our chains does it?
SNE: Sporting a pretty nice cup and handle and bowtie up. Would be a very nice buy or add on a pullback, but I suspect the train will zoom out of the station with as few passengers as possible.
ReplyDeleteI think we rally pretty good until they start beating us about the head and shoulders with the debt ceiling horseshit. What happened last time we had that discussion and the credit downgrade? We can hope.... Maybe Jesse is onto something?
My neck and shoulders are callused from the constant hyperventilation and senseless floggings.
DeleteMSMHF - Matsushita doesn't even trade OTC in US market anymore.
ReplyDeleteWasn't good news supposed to light a fire under a market that's been climbing the cliff of worry?
ReplyDeleteSo now it's time to sell the good news?
I'm not a leg-humper Chihuhua.......
CP -- we didn't have any good news after the December meeting of FOMC, and the market was selling off due to fiscal cliff worries (and other stuff). Once the fiscal cliff issue got resolved (at least psychologically), it was only natural for the market to rally today.
DeleteUp 308 on the DJIA and 36.23 on the S&P isn't a good enough start?
DeleteI had a sense on Monday that the miners have bottomed, and I was debating whether to buy back the 1K shares of AUMN I sold a couple of weeks ago or to buy more PNPFF. After some deliberation, bought 5K shares of PNPFF. So far it seems that I made the right choice. :)
ReplyDeleteMore diversified, multiple resources, has currency going for it. I think you made the right choice.
DeleteCP, Big warning from MLNX after the close today and stock down 20% - no idea if it is a buying opp.
ReplyDeleteYeah, my suspicion is it already sucks longer term; as the market is a forward-looking mechanism.
DeleteSpeaking about interest rates, I think they will stay low due to Fed's purchases of Treasuries for as long as the market has confidence in $USD as a currency, which was the case in similar circumstances in other countries in the past. At some point, the confidence thing evaporated pretty abruptly, the currency started collapsing and the interest rates shot up. It is impossible to predict the timing of this event, but when it happens -- hold on to your hats...
ReplyDeleteIf we get into a stupid argument over the debt ceiling that could change pretty quickly. There needs to more buyers than the Fed although at these yields one would question their sanity unless they know something we don't.
DeleteThe TBT chart has a big gap up, an upward ST trend and a bowtie on it's side technically.
DeleteAs JS says, no one expects it, so it's more likely to happen.
Okay David, I have a question....
DeleteLook at the yield chart I posted from Ritholtz AND the chart JS sent out.
If I sent the blog that yield chart (inverted) and said it was a buy wouldn't you think I was fricking nuts? And, if I sent JS's chart and said it was a buy wouldn't you think the same?
Don't you have to sell a parabolic chart? How long can it go before it crashes spectacularly?
CC, the interest rate chart you referred to was on a VERY long scale, and if the interest rates stay at the present level for another few years, that chart will not change a bit. I, personally, think that a major hyperinflation starts in US in 2014/2015. QE4ever has pretty much sealed the fate of the US in that respect -- balance sheet expansion at the rate of $1T per year (while buying Treasuries and MBS securities at record high prices) cannot lead to anything but hyperinflation, since the Fed will clearly lose money on all of their purchases if they decide to sell them back into the market (and thus the Fed will end up performing permanent money creation).
DeleteMLNX - "02-Jan-13 04:15PM MLNX Halted: Cuts Q4 Revenue on Weaker Demand, Cabling Issue at Barrons.com"
ReplyDeleteI repeat - 6,5,4,3,2,1.......... PLOP!
DeletePAL - This one gained 17% today, I'd much rather have own ed it going into close than MLNX....
DeleteIf you didn't like this former superstock once it gaped below the imaginary line at $61.78 then why would you change your mind if the imaginary line somehow shifted to $55.88? Wouldn't you instead anticipate another gap below the shifted line?
DeleteStill looks like the geometric H&S target is $40 to me, and it's still moving in that direction as of a moment ago.
CP- Re MLNX, do you have an opinion?
ReplyDeleteWait until 14-15 months after the top. It's uncanny how many of these I have seen bottom out for a trade 14 to 15 months after the top.
DeleteShould have just opened a position at 52.50 and closed it now around 53.6x.
DeleteCheck out OPEN, NFLX, APKT, TZOO from 2004/5, SINA, GMCR...all of them bottomed 14 to 15 months after their top.
DeleteTwo months ago DMND had a huge red bar in month 14…it's still above the lows from there and could be a really nice trade right here. The risk / reward is excellent.
I'll keep on eye on DMND.
Delete"Should have just opened a position at 52.50 and closed it now around 53.6x."
DeleteThat's probably the single best approach on this one, LOL
2nd, I think MLNX stinks to high heaven, to be honest.
ReplyDeleteOne bright aspect is Cramer advised selling it but best I can tell that happened at the top just as the CFO announced his departure.
$150M forecast transmogrifies to $120M then on to $70, and on and on...........?
OK, thanks.
DeleteThe after-hours action is wild, albeit on low volume.
DeleteYou know, there's a new opportunity every day. Every freaking day. All we need is to patiently wait for each one to arrive.
ReplyDeleteJPM - "Get over your stock phobia and move from cash and bonds into stocks."
ReplyDeleteDid anyone catch whether a 'deal' was cut re the AMT?
ReplyDeletehttp://www.marketwatch.com/story/what-cliff-deal-means-for-your-taxes-2013-01-02
DeleteHaven't heard anything about it yet, might've missed it.
DeleteYes, it is now indexed to inflation.
ReplyDeleteIt's about time.
DeleteRe MLNX, note that 23% of the float was short as of December 14.
ReplyDeleteSome interesting things on DMND:
ReplyDeleteI see some positive chart divergences over the past several months…and it's now 16 months after the top (i.e., just past the 14-15 month bottoming phase).
The amount they paid for Kettle Chips is more than their entire market cap.
Fundamentals for DMND, on the other hand, are horrible.
Bleeding cash and debt continues to mount.
This is setting up for a big move one way or the other. My guess: 50% short squeeze followed by a massive drop. It's a massive chess match between the charts and fundamentals.
Speaking of former high fliers: I got my first Keurig coffee maker this Xmas. Had I purchased this a while ago I would have been buying the stock on the pullback over the summer. While there are competitors the beauty of it is that they are coffee brand agnostic.
Keurig = GMCR
DeleteIs that the machine that uses the single-serve cartridges?
DeleteYes. At something like $30 a lbs for stale coffee.
DeleteJesse points out coffee....I would watch JAVA.
I'm not a fan of green mtn. but that doesn't mean you can't make some coin on it.
Full disclosure: I purchased a commercial coffee roaster and I'm starting a roasting company.
I've been roasting coffee for 15 yrs.
Damn. Now that's a serious endeavor. Let us know when your website is up.
Delete"I've been roasting coffee for 15 yrs."
DeleteIt improves with time, sort of like red wine?
The median analyst target price for MLNX is currently 110. What do you think they come up with tomorrow? 55?
ReplyDeletenew post
ReplyDelete