I agree with Jesse. Miners will rally from here, and small caps will outperform. It's (finally) time to open positions in AUMN and MUX.
Miners will see a modest gap up on Wednesday, tread water for most of the day, then launch into a multi-day (if not multi-week) rally following the FOMC announcement.
2nd_ave, I am afraid that AUMN can rally at this point only if silver and gold rally...
ReplyDeleteAs for the broad mining indices, they cannot rally during the stock market correction, which we will soon have. If, during that correct, the miners stay above their May/July lows, THEN we can say that they are ready for a rally. But we need to wait for the stock market correction first. I agree with Jesse -- S&P will correct down to the previous high of 1450 but not much more than that -- $85B per month printed by the Fed will place a floor under the market. The REAL correction will come when the Fed announces the end to QE.
ReplyDelete1,474 was the prior area of resistance. that's a logical stopping point.
DeleteI'll throw my hat in the ring, 1460 should be the downside limit.
DeletePRCP - This one really took off.
ReplyDelete"TOF- Re, natty production. Your not using the claim that the frac wells run out of gas much faster than conventional drilling are you? I've asked MOG about this twice and he says no way."
ReplyDeleteMark - I honestly don't know enough about that but I've read some convincing arguments for and against the well runoff amounts. I will say that I'm very skeptical of claims of unlimited supply and potential energy independence because of it. The nat gas companies spent a ton buying up land and doing estimates of the gas in the land. Then they all wrote down the asset values tremendously starting about 6 months ago. And hardly anyone can operate at a profit. Yet they are all touting it as the source for energy independence, hundreds of years worth of supply, and slow production declines at each well. It couldn't be that they're trying to unload that land off on someone else could it? Something smells like a rat to me. Kind of like the coal supercycle.
One thing I do know...a bunch of the producers had pretty dramatic quarter over quarter production declines in the range of 5% to 10% in q3 2012 and from what I can tell that data hasn't showed up in the reports coming out of the EIA.
Hmmm....if I had some resource that was at or near record low prices and supposedly high supplies, I would stop drilling so many wells and reduce supply to increase price. If this happened at a slow period where demand was also slow, I'd have the same plan and wait as much as possible for higher demand while pushing to build export terminals that would increase demand, reduce supplies and perhaps get a rising currency at the same time.
DeleteI'm sure the real answer is far less nefarious and much more along the lines of CC's take.
DeleteBTW, I'm impressed I could spell nefarious on the first try!
Yeah it will be interesting to watch. For now it is a trade for me…
DeleteKind of an interesting note I've brought up before from MOG. Unlike the Shell guy on TV all the time, MOG doesn't believe in peak oil. He calls it plateau oil. As technology increases, fracking, horizontal drilling, multi directional drilling, 3D mapping..and demand increases, the production will increase to match demand as best as possible. The scale will stay the same the only thing that will change is the price until that puts pressure on the scale itself.
DeleteTOF- Believe me, I know it's only a trade for you!! I was still looking into NIHD and you bailed already! :))
Deleteha - i'll be back in NIHD. just trying to catch up with the move in SNE.
Deletethis has been one of those days I just want to say F_ _ _ it and walk out. I don't have many of those so the rest of the week should be better.
ReplyDeleteBot 2 AAPL april 450 calls yesterday for a trade, and just a trade. I still plan on buying AAPL down in the 300's somewhere.
Also bought some NGD at 9.59 today for a trade up to the 11's. As usual it's a smaller position so no stops.
My EGHT has been having a really bad week, hanging on for now.
AHa, got stops in place for my VXX and TZA, for now.
And one last trade, I have too many accounts and I don't always circle around to look at open orders so I bot some AUMN earlier this week or maybe late last week at 3.75. I think I put that order out a month ago and it's in my long term (3 weeks as opposed to 3 days) account.
thats enuff, i'm gonna go listen to some rock and roll before bedtime
CHK - maybe that's the new triple long natty play.
port > just curious why you didn't have stops in place for EGHT? I saw some diverging readings in RSI_EMA weekly chart a couple of weeks ago that were showing that momentum was slowing.
Deleteand one more thing, the energy biz has made houston one of the hottest markets out there. Houses in my neighborhood go option pending in less than a week and I'm hearing that the really hotspots inside the loop go in a day.
ReplyDeleteand I'm hearing some peeps are relocating from houston to the marcellus area due to the activity up there so I'm sure it's showing up in their housing market too.
ReplyDeleteShort vs long - I'm really beginning to think it's an much easier task to be a short seller than trying to go long, too often there's some obvious hunk of junk out there that unsuspecting victims who actually believe analyst tripe will buy.
ReplyDeleteThe more I look and read about MLNX, the more obvious it becomes this thing is a classic example of how wealth is extracted from victims led to believe knowing how to use smart phones and tablet computers qualifies them as technology experts.
GMO - A good read about Hanlong:
ReplyDeletehttp://online.wsj.com/article/SB10001424127887324296604578178693593527394.html
LNG/GLNG - Based on these charts, it appears a group of folks are anticipating natty export approvals.
ReplyDeleteWPRT - This one's gone nowhere, same for FSYS. What's up with that, about to witness rotation into these at some point?
NLY - Received the dividend today. ;) The total gain is still shy of that from AGO.
ReplyDeleteThis is what I call a gap up:
ReplyDeletehttp://www.kitco.com/charts/livesilver.html
GDP shrank slightly due to military contractor cutbacks.
ReplyDeleteCramer says sell SNE, revenue stream too weak/questionable.
That may provide our pullback with the Cramer followers.
DeleteVa commerce bank receives buyout offer.
ReplyDeleteBoeing: 4Q12 in line with our expectations but beats Street
ReplyDeleteL-3 Comm: 4Q12 results in line, higher 2013 guidance on lower tax
Adding GDXJ @ 19.18...
ReplyDeleteSmall positions in MUX/ AUMN @ 3.24/ 3.68...
ReplyDeleteAGO - Not getting my pullback! :(
ReplyDeleteBB clued us in on insurers about a year ago, yesterday UBS adds UNM.
DeleteAdd Unum Group (UNM)
Strong balance sheet, attractive valuation, and lower-risk business mix A continued rise in long-term interest rates should be a positive catalyst
for the life sector. As a result, we add UNM to the US Key Call list due to its strong balance sheet, high FCF generation, and attractive valuation,
driving 12% book value per share (BVPS) growth in 2013, one of the highest in the group. Shares currently trade at ~0.8x P/BVPS, well below the
~0.95x implied by UNM’s 2013E ROE and the sector’s current ~0.9x. While falling rates should negatively pressure life sector valuation multiples, UNM
should outperform the sector as BVPS growth should provide downside protection.
The UBS Key Call List Selected by U.S. Product Management and Research Management in consultation with industry analysts, U.S. Key Calls are
our highest-conviction stocks. Removal of a stock does not necessarily indicate a change in the analyst’s view
Hmm, analyst upgrades can be known for 1) Their complete worthlessness, or 2) Their knack for upgrading at tops and downgrading at bottoms?
DeleteAAPL - What were analysts saying at the top?
Anyway, the 10 year rate is back hovering around 2% level I think, maybe rates will drop a bit and my pullback arrives? Shazam, not working quite that way today!
DeleteAdding to GDXJ @ 19.14...
ReplyDeleteGG out for a flip
ReplyDeleteAREX broke out today only to fall back let go at 27.41
.50 fib from yesterday close to today's high is 26.65 may buy back in this area.
cannot find any news for the opening spike
Adding to MUX @ 3.20...
ReplyDeleteMiners are pausing briefly here to allow weak hands to disembark...
ReplyDelete(That would include t3d- Ha!)
TRUE 2ND, good call
DeleteNUGT kind of leads
MLNX - Take your dollar now!
ReplyDeleteTrouble in Egypt, who's stirring the pot?
ReplyDeleteFSYS - I finally think I know why this one's been weak, it's because of all the new players competing to get into the game.
ReplyDeleteAdded a bunch of DMND at $14.2. I think this is the 1st of many shakeouts as it grinds higher.
ReplyDeleteBy the way, I was thinking about the sentiment of Nat Gas traders and looking around to gauge what people are thinking and the first thought that came to my mind is this is EXACTLY the same as the sentiment of investors with regards to the overall market in 2009/2010. While the bottom was clearly in, people refused to believe it and on any selloff people would come out of the woodwork to say how we were heading to 666 and lower. I believe that any selloff should now be viewed as an opportunity to buy at least for a trade. I could be wrong and will obviously keep my mental stops in mind but I think this is the smart way to approach nat gas going forward.
Tap, tap, tap, okay so where are those chest-beating knuckle-dragging bears now?
ReplyDeleteThat's what I get for making fun of t3d...
ReplyDeleteNah, the moment of truth is going to be how they trade off of FED statement.
DeleteAdded more DMND at $14.07. I still think this is in a new uptrend and this dip should be bought.
ReplyDeleteGood thought's from Jesse's book.
ReplyDeleteA few more important ways to be different:
zz “Diversify, diversify, diversify.” NO—Invest in only the very best stocks that give you
a significant edge, know them inside and out, and always be ready to sell.
zz “Pyramid your way to success.” NO—Do not add as your stock advances. Risk/reward
is shifting out of your favor.
zz “Learn all of the indicators.” NO—Keep your approach as simple as possible and
become the best at reading price, volume, and the magic line.
zz “Learn the efficient market hypothesis.” NEVER—information arbitrage is
everywhere. You can crush the market!
zz “Study Finance.” NO—Study psychology. The market is all about social mood and
human behavior. Read Freud. Don’t read manipulated economic reports.
zz “Gather as much information as possible.” NO—Simplify. Actively question the
effectiveness of all of your information sources. Increased output = decreased input.
zz “Watch your stock like a hawk.” NO—Don’t obsess. Do all of your homework, let go
(have a stop-loss), and live your life. Watching like a hawk destroys vital energy.
zz “Invest for long-term capital gains.” NO—The cycles for the market’s biggest winners
are less than a year in most instances. By the time your long-term capital gain window
opens up, your stock may be back where it began.
zz “Read economic reports, government data, and “Macro News.” NO—Just look for
winning stocks. Any data provided by economists or the government is rigged for
you to lose.
zz “Learn every approach.” NO—Have a laser focus. Master one method and do it better
than anybody else.
zz “Only buy breakouts!” NO—EVERYBODY is taught this. My biggest gains were lowrisk
buys after and well below the hyped “breakout.” Buy when everyone else has
already been “stopped-out” for a loss.
Insider Buy Superstocks
201
zz “Invest through thick and thin.” NO—If something changes at the company or if your
stock isn’t acting right or…whatever, always be able to change your mind on a dime.
Be able to sell at a moment’s notice. This is hard to do. John Kenneth Galbraith said
it best: “Faced with the choice between changing one’s mind and proving there is no
need to do so, almost everyone gets busy on the proof.”
Yep, good stuff.
DeleteAREX has been in the .50 fib range multiple times, but just not feeling it. Perhaps the pop was off of CHK.
ReplyDelete4 block trades, strong vol
“Only buy breakouts!” NO—EVERYBODY is taught this. My biggest gains were lowrisk
ReplyDeletebuys after and well below the hyped “breakout.” Buy when everyone else has
already been “stopped-out” for a loss.
- I think every one of us on this board knows this from experience. It is the single reason why I don't buy breakouts and typically will sell them if they happen. The herd jumps in there only to get crushed. It's the reason I'm buying DMND heavier TODAY and not yesterday...it's the reason I sold NIHD yesterday. Most of my big gainers come from waiting for a big pullback after an initial thrust higher. SVNT was a great example. Momentum traders piled in after a big spike last summer...that spike fizzled out for a week or two before continuing. It pulled back almost to where it started its breakout from. I like looking at the finviz.com top gainers list every day to keep an eye on "breakouts" and wait for pullbacks. It's very similar to what Landry advocates I believe.
Exactly. New high knockouts or off long base moves with knockout/pullbacks. Knockouts/pullbacks that don't go all the way back to prior bases but big enough to knockout/shake out weak hands.
DeleteBreakouts fail because the risk is high and the momentum runs out. If I'm in a stock with a breakout I like to put in a stop at the base or follow it up with a mental stop. Sometimes they can go parabolic and it's nice to catch those. But those moves always end the same way. I want in them after the pullback so I'm on board during the breakout. Hopefully I'm selling to the breakout buyers.
So you think you are a risk taker?
ReplyDeletehttp://www.bing.com/videos/search?q=Garrett+McNamara&view=detail&mid=F541558F3739DEBDDF3CF541558F3739DEBDDF3C&first=0&FORM=NVPFVR
and
http://www.bing.com/videos/search?q=Garrett+McNamara&view=detail&mid=F541558F3739DEBDDF3CF541558F3739DEBDDF3C&first=0&FORM=NVPFVR
That's a high risk entry with no defined stop out point!
DeleteCashed in UGAZ at $20.33. 7% in one day?
ReplyDeleteWhy not!
Deleteit's probably going to go higher but i wanted to have some cash on hand if SNE pulls back and to buy some more DMND
DeleteAUMN, silver rips and it goes down, the boys sure have control of this one. And what a strange chart pattern last three months. What would you call it, a reverse cup and handle?
ReplyDeleteAt least low vol
MUX chart looks like inverse C&H to me, the handle section looks like bear flag play worked as might've been anticipated.
DeleteHmm, none of this kind of analysis coming from BC's generous crew?
MLNX - This action has to be shorts covering, there's no other explanation.
ReplyDelete"Knockouts/pullbacks that don't go all the way back to prior bases"
ReplyDeleteDoes the current MUX chart describe this phenomenon?
This thing has gone well beyond prior bases. I know this guy (McEwen) is supposed to be some miner-genius, but right now his stock is done like dinner.
DeleteI'll use an example of something I'm watching...URA.
I like the current pullback but I wouldn't like it if it pulled all the way back to 6.80.
Now I want to see it reverse and re-establish the prior upward trend.
Okay, in this case the base reference was established June through August. Maybe I can learn something from this chart.
Delete"This thing has gone well beyond prior bases."
DeleteHmm, somehow that seems like a huge positive, LOL!
man some of these china stocks are paying big dividends...not sure if they're sustainable but if you can pick up 20% dividends annually then you don't need to work.
ReplyDeleteXUE
"Most of my big gainers come from waiting for a big pullback after an initial thrust higher."
ReplyDeleteSo THAT'S what you are waiting for with SNE! :) I was waiting for a pullback too, but then figured that another way to play this is to use the trick of position sizing. That is, open a small position on a breakout, and then if it continues up, then you'll at least have small gains. If a pullback occurs, then you can load the boat and have large gains.
See Jesse's rules.
Delete"zz “Pyramid your way to success.” NO—Do not add as your stock advances. Risk/reward
is shifting out of your favor."
So wait for the pullback and then trend to re-establish, then buy a full position. If you are worried, put the stop just below the low of the pullback.
Using the position size idea has you chasing, and if it turns against you it turns you into an 'investor'. "Don't eat like a bird and shit like an elephant."
If you miss a move then wait for the pullback. If it doesn't pullback, F it, there are thousands of other stocks with the right set up.
ultimately i think it's going to $30 to $40 over the next couple of years...most likely there are 1,000 other companies to offer the same return (DMND?) but this one is safer and if I can get it on some idiotic panic selloff I'd love to. RIMM and NOK both presented opportunities to buy on panic selloffs. I don't think it will be as extreme of a case as those two since SNE is a much more stable company in my opinion, but there will be a point where it pulls back hard and presents us with a chance to get in on a low risk entry...might be at $17 but it's all about risk-reward.
Delete1498 - Bears need to see this number, looks like they're being denied.
ReplyDeleteI was thinking: why can't the miners behave like SNE? That is, when silver starts surging and they are staying flat, why can't they at some point mount the mother of all rallies, like SNE did a few weeks after FXY started collapsing? Unfortunately, I've never seen it work out like that. If the miners are not going up when SLV surges, it means they are waiting for a pullback in SLV, and when it does come, they drop to new lows.
ReplyDeleteBasically it's size. SNE is a big stock and it moves like it. Miners tend to be small, with small floats and higher volatility, so they move more, require more room, and they are hyper-sensitive to their resource price.
Deletedavid - i think you have to look at the bigger picture too: SNE has been in a multi year downtrend and the Nikkei has been in a 24 year bear market. Despite a rally of 60% for SNE and 25% for the Nikkei look where they're coming from. The bear markets in both are over so traders will go forward with the mentality that dips should be bought. The same can't be said for miners/precious metals (regardless of how low AUMN is relatively speaking). There obviously could be more room to run with PMs but it has been in a bull market for 13 years now so it doesn't have the same tailwinds as SNE/Nikkei. Again, there's always that chance that it turns into a 25 year bull market but those are not all that common. If it does then obviously it's going to be fine longer term.
DeleteMining stocks used to behave like that in the 2001 - 2007 period when we were in the commodity bull market. You'd see stocks go from $2 to $20 over a couple of years. Now people don't seem to believe in higher commodity prices and companies are having cost problems, so they are more like regular stocks now and being evaluated on cash flows, dividends, etc.
DeleteDavid- What's the holdup with the AUMN/MUX trade?
ReplyDeleteActually, I like the pullback. Makes a launch later in the day far more durable.
ReplyDeleteTune into 2:15
ReplyDeletehttp://www.youtube.com/watch?v=Wt4JSRHIKYk
"David- What's the holdup with the AUMN/MUX trade?"
ReplyDeleteI don't know about MUX (which is a larger and a more prominent stock than AUMN), but I have already figured out that AUMN is traded mostly by computers, which do their best to confuse human traders by often moving AUMN opposite to GDXJ. That's why I said that for the next 9 months AUMN will trade sideways (assuming that silver stays flat), and company-specific uptrend will start only in 4Q, when the company announces completion of the San Mateo ramp down to the productive Santa Juana area.
*(US) FOMC HOLDS FED FUNDS
ReplyDeleteSubmitted by Vadym Graifer (3798 comments) on Wed, 01/30/2013 - 14:18 #117094
*(US) FOMC HOLDS FED FUNDS RATE TARGET AT 0.25% (AS EXPECTED): HOUSEHOLD SPENDING AND BUSINESS INVESTMENT HAS INCREASED; WILL CONTINUE TO PURCHASE $45B IN TREASURIES PER MONTH
- Vote 11-1 (George dissented)
- Affirms will maintain purchases until labor market outlook improves substantially and inflation remains below 2.5%
- Reference Link: http://www.federalreserve.gov/monetarypolicy/fomcc...
- http://www.federalreserve.gov/newsevents/press/mon...
YRCW crapping out
ReplyDeleteBad news yesterday on the union negotiations to consolidate customer service centres. Not a good sign as they need a better union contract to make a go of things.
DeleteAh, thanks.
DeleteCBMX, chart wise, mentioned by Jesse James today.
Hi guys-
ReplyDeleteTo continue yesterday's comments regarding NG. From ST 1/11:
"The latest Commitments of Traders report didn't show any major changes. Perhaps the most notable was evidence of small speculators extricating themselves from natural gas contracts that they had been loading up on during the prior few months, to the point where they're holding the 3rd-lowest amount of net long contracts in a decade."
In my view, that's a significant development. The REAL moves always happen when nobody is on board. Combine that with the fact that the biggest NG bull in history stepped down yesterday. It wouldn't surprise me in the least that McClendon's departure marks the exact cycle low going forward. As we know, the market seems to work in strange ways.
Lastly, rig count appears to have made a bottom around 413ish. Rig count has slowly been trending up over the past several weeks. In fact, for the past 2 years, rig count has been a major topic of discussion in Firstenercastfinancial NG forums. Over the past 2 months, there has been no discussion of rig count.
To me, this shows that traders have finally become numb to the indicator that for so many years has predicted NG pricing inflection points.
Thank you for bringing NG to my attention TOF. Gotta give credit where credit is due.
Forgot to mention to look at the perfectly symmetrical 2 month reverse head and shoulders pattern on the 12 month contract (UNL). Could signal a powerful thrust to new highs. Stop at yesterday's low. Just what we like- Extreme R/R...
DeleteJesse said, "McClendon's departure marks the exact cycle low"
Deletethat's an interesting observation.
And to cap it all off. To illustrate the fact that the very last natural gas bull has officially left the building (along w/ McClendon), one must simply take a look at the chart of GAZ lol.
Delete52 wk low- 2.60
Today's low- 2.61
Remember that NG is something like 75% off the lows.
CBMX came up on my screen yesterday. Have to check that one out.
ReplyDeleteNOW we are getting the pullback in SNE. But I have my TVIX to hedge it. :)
ReplyDeleteActually, the ideal continuation for me would be to have a large pullback in SNE on the back of a large market pullback and a jump in TVIX, which would allow me to plow my profits from TVIX into SNE.
DeleteI suggest taking TVIX off the table, David.
ReplyDeleteStaying the course with miners. I just don't see a reason to bail.
Miners will never be an easy trade.
DeleteAREX bought back 1/2 at 26.43
ReplyDeleteAGO my best stock today up almost 5% on no news in a down market.
ReplyDeleteThat's 22% in less than 2 weeks since Moody's ruled against them.
I figure either people are still jumping on board because risk is lower and there is still a lot of value here, or, the Flagstaff Bank case ruling is due this month and will likely be positive, so people are getting ahead of this.
Either way, I plan to keep into the $20's at least, so would just hold through a pullback, which would no be a surprise on the court news, regardless of which way it goes as I suspect people may be playing a "buy the news" scenario as it worked 2 weeks ago.
Also giving some support to this theory, Flagstar (FBC) is down almost 25% YTD.
DeleteGreat trade/investment
DeleteExcellent point concerning Flagstar. AGO volume is high.
DeleteAREX out
ReplyDelete"I suggest taking TVIX off the table, David. "
ReplyDeleteYou might very well be right, 2nd_ave. However, despite a jump in volatility today, VIX still finished at 14.22, which is VERY low by historical standards. When it rises above 15, then I'll take some TVIX off and will place a sell stop for the rest of my position slightly above my purchase price. In fact, I have just placed a sell limit at $5.88 for 500 shares I purchased at $4.88.
NSPH - Somehow this little tidbit snuck right past me, not sure how....
ReplyDelete"On December 27, 2012, Winton G. Gibbons, the Company’s Senior Vice President, Business Development and the Company mutually agreed that Mr. Gibbons will resign from the Company as of April 30, 2013. The Company has no plans to refill Mr. Gibbons’ position. "
At least no one got VELTed today.
ReplyDeleteYep, they sure got pelted, WTF!
DeleteFrom the article http://www.american.com/archive/2009/december-2009/how-likely-is-hyperinflation, regarding the impact of economic recovery (if we are indeed going to have one, following today's GDP report!) will have on the price of gold:
ReplyDelete"This means that central banks and especially the Fed are now confronted by a huge dilemma—huge because of the very dimension of financial support unknown in history, as illustrated by the figures presented above. And this dilemma is increased by the fact that high budget deficits of governments have to be financed. If expectations of households and firms become positive, another sizable asset bubble has to be expected because of the vast liquidity created. And inflation will follow the bubble if the Fed does not act speedily and strongly to reduce the monetary base and to increase the interest rate to normal levels. But such a policy may lead to another crisis and recession. On the other hand, if the Fed does act too late and not strongly enough, inflation cannot be prevented.
An escape from this dilemma seems only to be possible if the change to positive expectations and the rise of production follows a slow and continuous development, so that enough time is available to slowly increase interest rates and slowly reduce the monetary base and government budget deficits. But this path is not available in case of a rapid recovery. For then the danger of a sizable inflation is a real one."
FB - I thought I saw -10%
ReplyDeleteInteresting analysis of today's market action:
ReplyDeletehttp://www.zerohedge.com/news/2013-01-30/stocks-catch-down-credit-silver-surges
Those ZH guys not only are persistent, they're consistent as well. ;)
DeleteQCOM - Home run.
ReplyDeleteFB - Top and bottom line beat. Move along, nothing to see I guess.
Hey, at least I'm trying!
1510 - My knees buckled and my wings began to melt as we approached this number today.
ReplyDeleteMark - COG has gone from $30 to $50, and producers are on a major roll in general. Are you holding back info, is there something going on we're not privy to?
ReplyDelete