Friday, February 15, 2013

2/16/13 Summarizing the trade

Here's the rundown.

(a) Gold/miners have broken support, and prices are likely to fall further.
(b) I'm betting on a dead cat bounce ahead of an extended decline.
(c) The pattern I see playing out on Tuesday is a sharp dive in the morning, followed by a sharp climb into the close.  There's really no way for me to guarantee I'll catch the move at work, nor am I able to trade funds except at market close, so I opened a position in RYPMX today.

Win or lose, it's all good.  I can't win if I'm not in. 

101 comments:

  1. Sometimes we tend to think too hard. As I was going over the pros and cons, the 'sticking point' was, 'It's too easy to buy here. If it's that easy, it can't be right.' Yet for weeks I've had the idea that miners would retest last summer's lows, and if the XAU were to fall that far, I'd be buying.

    Here we are (more or less) at the lows of last July. What am I waiting for?

    ReplyDelete
  2. Sure looks like MUX found some buyers throughout the day, or were those shorts covering?

    With gold in backwardation, dumping spot for future months, pays.

    ReplyDelete
    Replies
    1. Gold in backwardation implies people are betting prices will be lower in the future - another sign of negative sentiment, so perhaps 2nd is right that we are due for a bounce.

      Delete
  3. Make no mistake. Miners have sold off, hard.

    ReplyDelete
  4. "Usually it is really hard to get a fill when trying to short the Ultra-products - have you been able to do this for KOLD with no issues David?"

    I haven't tried shorting it, because I have very little buying power left. I chose to buy longest-dated in-the-money puts on it...

    ReplyDelete
    Replies
    1. OK, that makes sense. You can get the puts, but when I've looked at the pricing on them, they take into account the normal ETF decay. KOLD is actually holding April contracts, so it looks like the avoid the monthly roll and do it quarterly instead to avoid some of the decay issues.

      Delete
    2. I guess a lot of traders long miners have been selling puts in order to lower their cost basis? Seems like that practice would tend to reinforce downward pressure on the sector?

      Delete
  5. From Kaimu...

    I have been noticeably absent over the past year or more in terms of juniors, but now I am moving back in, but selectively. Gone are the days when there seemed to be unlimited funding for juniors. You need to look for juniors who are either close to production or have a strong partner. Then you need to look at grades and depths within those choices. Mainly you need the best and most successful management possible to lead the company. Then stay within your limited risk tolerance and your financial limits as well as your debt obligations. Don't bet the farm!

    ReplyDelete
  6. Gold is a downer. Why bet on a downer?

    ReplyDelete
    Replies
    1. That's what it's come down to. So it's closing in on a +50% launch into space. The final frontier.

      Delete
  7. http://finance.yahoo.com/news/kingpin--marijuana-funding-model-starts-to-take-shape-212346330.html;_ylt=AgWep10iEs9IA1DJbx13SoeiuYdG;_ylu=X3oDMTN1OW1xYTI4BG1pdANGaW5hbmNlIEZQIE1lZ2F0cm9uIDIEcGtnAzAzYjFjNTQ5LWI5MmYtM2QxZC1iMTZhLTdmNjU5ZDI2MGY4NARwb3MDMQRzZWMDbWVnYXRyb24EdmVyA2YwNTg3NzMzLTc3YmQtMTFlMi05ZGRmLWU4Yzc3NzU5NmQ5OQ--;_ylg=X3oDMTFpNzk0NjhtBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3

    ReplyDelete
    Replies
    1. "Most banks remain unwilling to do any sort of business with cannabis operators due to federal regulations such as the Bank Secrecy Act, which requires financial institutions to report potential criminal activity to the government."

      I call BS, more likely they're accumulating vigorously. The fines are always small in comparison to gains, nobody goes to jail or loses their license, and shareholders take the licking but keep on ticking?

      Delete
    2. Additionally, is it not true fast food sales have been robust in the two states where recreational use has been approved?

      Delete
    3. That's the kind of analysis I appreciate! The ability to spot relevant relationships amidst the mass of data out there.

      Delete
    4. Potential downside. Smoking pot might not be cool anymore. Kinda like the iphone.

      Delete
    5. Let's wait for a resurgence in long hair and bell bottoms to signal the return of the retro-sixties, then buy the shit of MJNA.

      Delete
    6. MJNA has real products as best I can tell, I watched the 60minutes interview on this company months ago and mentioned it on TT at the time. Anyway, Anthony W. Imbimbo is a member of the CIA (Culinary institute of America), so at least we know there's a kick-azz brownie recipe floating around somewhere?

      Some might say the business model is doomed to failure, you don't think they're right, do you?

      Okay, so maybe the company isn't properly set up in terms of shareholder rights, my only concern would be if the shareholder capital might mysteriously disappear overnight but why would that happen so soon considering the momentum will likely take share price beyond $1 and beyond, soon? I bet they have no shortage of customers? MJ isn't a fad, is it?

      These guys are at the right place at the right time, maybe they just weren't properly prepared for the rush considering their shoe-string budget? Perhaps the official explanation should be they couldn't obtain financial organization banking for what was an illegal activity. I'd be more inclined to think they had no idea of how quickly success would come and that they're not about to walk away from the unique opportunity without fully capitalizing it.

      Too good to be true, or fat pitch?

      Delete
    7. "Smoking pot might not be cool anymore."

      I don't believe that at all, but this company offers THC juices, as well, right?

      CC no doubt has more first hand knowledge of this company than any of us, we should consider his input.

      I'd have bought some Friday had I known there were unfounded rumors floating around and the share price was smacked down. I wasn't watching it, but I do believe there's a good chance it really takes off at least until a behemoth like KO or someone steps up, which may not happen for some time until they're absolutley sure the coast is clear, KO's such a barge it's gonna take time for the idea to sink in?

      I guess I need to add MJNA to my watch list so I can keep an eye on it.

      Delete
    8. I do see what might be a pattern of selling out Fridays though, someone anticipating a potential weekend Federale raid?

      Delete
    9. http://seekingalpha.com/article/1187411-chronically-criminal-shielding-the-public-from-medical-marijuana?source=yahoo

      Delete
    10. Name
      Titles
      Truth

      Michelle L. Sides
      "Chairman"

      Director and Controlling Shareholder

      Chief Operating Officer
      Delinquent from Florida Bar

      Owns ~48% of the Company with Llamas

      Michael Llamas
      Director and Controlling Shareholder

      Former President and CEO (until 9/17/2012)
      Under indictment for 19 Counts of Mail Fraud and 31 Counts of Wire Fraud in the Eastern District of California (Case 2:12-cr-00315)

      Extensive history of being named a defendant in civil litigation regarding mortgage shenanigans and other fraudulent behavior

      Owns ~48% of the Company with Sides

      Theodore Caligiuri
      Chief Executive Officer
      A CEO of a $370 million dollar company that is also an active Residential Real Estate Broker for Coldwell Banker? You decide...

      Babak R. Ghalili
      Medical Director
      Dentist in NYC

      Anthony W. Imbimbo
      "Independent Auditor"
      Not PCAOB Registered (therefore unqualified to independently audit an SEC reporting companies)

      Culinary Institute of America trained Chef (with a minor in cooking the books?)

      Delete
    11. Look, you really can't run a cannabis company with straight up dudes.

      Delete
    12. Exactly, these guys are obviously out of the box thinkers and doers. I like the one about buying up a block of homes at 50% discount, flipping them for a double and throwing in the down payment to seal the deal.

      I wish I was capable of swinging deals like that at the age of 22yrs.... Wow..

      Delete
    13. Yes, let's give these guys the benefit of the doubt. They're trying to turn their lives around with a legit business, after all. And I like their sense of humor. An auditor who signs off 'I'm a bimbo?' Priceless.

      Delete
    14. imbimbo could be a false name? Seems too obvious?

      Delete
    15. http://www.ancestry.com/name-origin?surname=imbimbo

      No comment re the Sicilian connection.

      Delete
    16. That document, FORM 144, it shows shares were issued to US Bancorp?

      Delete
    17. This company may be a fraud. I have made more already than I have in outstanding shares, so I'm playing with the houses $$$$.
      Reading the comments section on any story these days makes me wonder about people.
      Crazy.
      Thanks for uncovering this 2nd. It should be interesting to see what happens.
      There are other legit companies that will do well as they have multiple other legitimate business activities than marijuana.

      Delete
  8. Oil services - I see some red candles formed Friday.

    ReplyDelete
  9. LOL, Total Demand = What the ultra rich want to buy + bare subsistence for the 99.5%?

    http://www.heritage.org/research/reports/2013/02/budget-cuts-would-not-harm-the-economy

    ReplyDelete
  10. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1872211

    ReplyDelete
    Replies
    1. (5) tend to hold undiversified stock portfolios.

      Yeah, that's me in large part b/c managing more than a few positions in a market that can move several percent overnight is a little beyond my capability. Show me a market that's not so tightly correlated, then my strategy might broaden?

      Delete
  11. MJNA - I thought this company was headquartered in Colorado, at least that's what I recall from the 60 minutes program I'd seen last year. Or, maybe I wasn't paying close attention and just assumed the wrong location?

    ReplyDelete
    Replies
    1. They may have relocated to San Diego to be closer to (unemployed) friends who assisted with the mortgage shenanigans. For a venture like this, you need associates you can trust.

      Delete
    2. True. All that talk about $500,000 hydroponic systems- come on. They're not idiots. It's cheaper when the stuff falls off a truck. Ah, there's the Sicilian connection.

      Delete
    3. Man, when we put our heads together, are we not a slick group of stock analysts?

      Delete
    4. Pot's no laughing matter 2nd.

      Delete
    5. Which is exactly why you won't find too many straight up dudes in the biz. Legit or not, there's no avoiding the wrong crowd. I don't think the cartels will be walking away quietly.

      Delete
    6. Supply comes from around Shasta somewhere, sequoias have been clear cut?

      This might not even be the same company interviewed on 60 minutes, could've been another. I barely caught the segment and it's been a while.

      Delete
    7. Humboldt County is dangerous terrain.

      Delete
    8. No you guys. These are young guys with lawyers these days. Nobody hangs with the old dudes in the woods, they don't have to. They get out and market the stuff.
      Around here we have legal medical co-ops. Everyone, like in CA has cards and they have a legal limit. They grow indoors and market through the co-ops.

      Next year it will be through state licensed stores. Humboldt is so yesterday. They are going legit, there is no need to take chances with loose cannons or cartels.

      Delete
    9. I read a local story the other day about a legal group here in WA that advises these people on who will accept their CC transactions and banking, how to structure businesses, how to negotiate all the legal in's and outs. Not the States of WA and CO are involved. I just heard another state (I didn't get to hear where) has stopped arrests and is just writing tickets. They're next....

      Anyway, until I find that article again, here is the pot page of our local CBS affiliate. See for yourself.
      http://www.kirotv.com/list/news/pot-news/aGMt/

      Delete
    10. NOW the states of WA and CO are involved...

      I have thought about it losing it's allure by legalization, but if you look at alcohol after the 18th amendment it didn't lose anything it just became a huge business.
      That and there are two sides to this, the "recreational" part and the medical part, so there is some diversification. There are quite a few states with Med Marijuana, so I don't think that is in danger and, at least here, those outlets may get around the 25% tax on each level of marketing where the rec. users will be paying 25% at each level depending on how the State structures it. I'll have to check with my Paralegal person that works for the liquor control board.

      Delete
    11. Won't lose allure IMO, big buzziness. Catching a buzz without the ill effects of alcohol?

      Delete
  12. Relative Value Strategist: Our thoughts on the world
    February 15, 2013

    We tactically unwind our long SPX, short IG19 trade as the outperformance of stocks over credit is likely to take a breather for the next few weeks.We also discuss the risk-reward of a Main-IG trade.

    ReplyDelete
  13. AVP - Ex-div is 2/22, 12mo PO raised from $20 reiterated 2/11, to $24 Venezuelan bolivar devaluation is baked in.

    ReplyDelete
  14. Gold - It seems Soros sold his gold position sometime within the last three months? I seem to recall he bought sometime around June last year?

    So it looks like he sold near the high, that which he bought near the low. Pretty good trade.

    The question now is if he's a buyer here, we won't have that answer for another three months?

    ReplyDelete
    Replies
    1. That's what he did last time. About the time they report he's a seller he starts buying.

      Delete
  15. SLW - $50 12mo PO.... Lowered from $53 1/8/13, top PM pick.

    ReplyDelete
  16. Mortgage REIT Roundup: Q4 results continue to drive performance

    2/17/2013 6:39 PM

    Mortgage REITs outperformed the broader market this week as more favorable valuations and improving incremental investment returns attracted investors back to the sector.
    Download PDF Report (271kb) »

    China Commercial Vehicle Industry: Heavy truck - a weak start in 2013: Jan sales down 14% MoM

    NFP reported 4Q cash EPS of $0.85, well ahead of our est. of $0.78 and consensus' $0.69. Raising 2013 estimate from $2.50 to $2.55 and increasing PO from $18 to $21. Neutral.

    ReplyDelete
  17. A little President's Day TA.

    http://goldstocksforex.com/2013/02/17/sp-500-still-cautious/

    ReplyDelete
  18. Holy Shit:

    http://www.theglobeandmail.com/report-on-business/international-business/asian-pacific-business/in-china-silvercorp-critic-caught-in-campaign-by-police/article4528671/?page=all

    ReplyDelete
    Replies
    1. at what point do you just say "f it, this isn't worth it"?

      Delete
    2. The minute you hear there is a problem?

      Delete
    3. I know a guy who stupidly took some MJ with him to Japan, he spent a week in the center of an 6x6 cell in his tidy-whities on the balls of his feet. Maybe the ceiling was very low?

      This description is second hand, I never saw him again once he returned.

      I bet Chinese prison food is to die for......

      Delete
    4. Sounds like this guy's been staying in hotels, not prison. Makes me wonder if he's really been in police custody????

      Delete
  19. I really wonder if this marks the end of the theory that "buy and hold is dead".

    http://finance.yahoo.com/blogs/breakout/16-old-actress-turns-stock-day-trader-143823005.html;_ylt=AogMqPvJ6IjlHBrVjFVJpZiiuYdG;_ylu=X3oDMTN1bTZqMXB1BG1pdANGaW5hbmNlIEZQIE1lZ2F0cm9uIDIEcGtnA2E0NWUwMzQzLTBiZDktMzFjMS1iM2YxLThlOGJkNGY5NjBmZQRwb3MDMgRzZWMDbWVnYXRyb24EdmVyA2YzNWQ1MmMzLTc3YmQtMTFlMi05ZmVmLWU1MWFjNzZjMjVkMQ--;_ylg=X3oDMTFpNzk0NjhtBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3

    ReplyDelete
  20. http://www.economist.com/news/finance-and-economics/21571898-fund-seeks-opportunity-weed-audacity-dope

    ReplyDelete
  21. http://www.alternet.org/drugs/hemp-harmless-potential-economic-miracle-and-still-illegal-america-tide-seems-be-turning

    ReplyDelete
  22. CSTR Alert - Three customers at local machine last night while waiting for 15 minutes in parking lot.

    ReplyDelete
  23. NG article

    The production decline rates of the shale gas wells that are providing the bulk of new U.S. supplies are so high—60 percent in the first year and up to 85 percent by the end of the second year—that we may never be able to return to today’s production level.

    Mark did you say that MOG disagrees that the NG wells have fast decline rates?


    http://www.csmonitor.com/layout/set/print/Environment/Energy-Voices/2013/0218/Investors-are-subsidizing-natural-gas-consumers.-But-it-won-t-last

    ReplyDelete
    Replies
    1. Christian and science seem like an oxymoron to me, is this the crowd who wants us to believe the current administration's policies have led us into a ditch and we should return to trickle-down economics ASAP?

      Delete
    2. T3d, while that article correctly states that companies are switching to drilling for oil, it did not mention how much gas as a byproduct the oil rigs are getting. It may be the case that all natural gas demand can be met with the "free" gas obtained as a byproduct of oil drilling...

      Delete
    3. Do not know, but they usually have decent articles.

      Delete
    4. Sorry, I instinctively caught a whiff of Grover Norquist when I saw the URL.....

      Wonder the oil production decline rate of these shale wells looks like?

      Delete
    5. Despite all the announcements of the chem industry increasing cap-ex and concentrating on ramping US production due to natty logistics, perhaps this imminent collapse in natty production would also provide some downside limit for coal and nuclear?

      Interesting how every time Ron Paul starts harping about the gold and silver price relationship to dollar weakness, gold takes a nosedive despite real production costs still exceeding spot price.

      And asuming the US intends on challenging Chinese power via naval authority(as per Christian Science Monitor), then perhaps my brokers price objective of $30 for HII is overly pessimistic?

      Defense: The Army is leading the decline in investment outlays:

      %YR/YR Change 2010/2011/2012
      RDT&E
      Department of the Army 0.5% -17.7% -29.3%
      Department of the Navy -13.1% -19.1% -6.4%
      Department of the Air Force -9.6% 61.2% -8.9%
      Defense agencies -7.9% 5.2% -8.5%
      RDT&E, TOTAL -8.7% 12.3% -10.8%
      Procurement
      Department of the Army -16.4% -14.7% -28.5%
      Department of the Navy -3.7% -0.6% -12.5%
      Department of the Air Force 77.9% -59.3% 5.5%
      Defense agencies 10.9% -4.2% -13.7%
      Procurement, TOTAL 10.3% -25.8% -14.3%
      Source: U.S. Treasury

      Delete
    6. Perhaps things are turning up for CHK though, considering my broker has assigned an 12mo price objective of $36?

      Delete
  24. Molydenum Backwardation: "The London Metal Exchange (LME) futures contracts also remains below $12, and the 3-month contact is now in backwardation relative to spot prices"

    "rarely a positive sign for this market."

    ReplyDelete
    Replies
    1. I don't see how this is a positive sign. The futures price reflects all currently relevant information for predicting what the spot price is going to be in the future. So if the futures price is lower than the current spot price, then the consensus of investors is expecting the spot price to be lower in the future.

      Delete
    2. It's not. That's why it say's 'rarley' above.

      Delete
    3. OK, got it. I thought it meant "a rare positive sign"... :) Maybe because I recently read an article by some pundit, who said that gold is also in backwardation and it is a *positive* sign...

      Delete
    4. Perhaps, low prices may be indicative of lower prices?

      Possibly reduces the chance moly producer shares are about to gather upside momentum?

      In the case of GMO, I found an article that announced Hanlong's financing for Sundance was delayed again. I don't see how Hanlong's inability to arrange Sundance financing should be considered a positive for GMO, although it may be that GMO is a better opportunity for Hanlong and thus preferred in the event Hanlong's credit would become overstretched by taking on both projects single handed?

      Delete
    5. LOL, I just read an SA article on backwardation written last Spet that posited the CORN ETF would benefit from corn futures backwardation. CORN is now 17% below where it was at the time, with just a couple of bounces.

      Almost looks like a decent place to re-enter here but I'll pass, considering Brazil was planted "fencepost to fencepost" and CNH has been on a rocket ride and sugar is still falling.

      Delete
    6. I saw that CP. Do you still have the link?

      Delete
    7. Well, I lost the link.

      Anyway, we can follow Sundance news and share price using the SDL.AX ticker

      http://finance.yahoo.com/q?s=SDL.AX&ql=1

      Delete
    8. "The futures price reflects all currently relevant information for predicting what the spot price is going to be in the future."

      Very good choice of words David, much better than just saying backward or forwardation.

      Delete
  25. UPL- Any take here. Not you CC :)), we know yours!

    ReplyDelete
    Replies
    1. EPS looks pretty severe, cash is about gone? Considering gas well depletion is not only rapid but also rabid (according to christian science monitor), they may need to try dumping assets or dilute shareholders?

      APA - These guys operation in Egypt are the booger in the soup, must be a non-issue considering the bang-up job the "mission accomplished" gang produced in pooch screwing the middle east?

      I was thinking about VMW and the renewing interest concerning cyber security?

      Delete
  26. Australia - Well, it's refreshing to see at least Australia puts white collar criminals in jail, although 27 months seems like a small price to taupee.

    •Hanlong Former Executive Gets 27-Month Jail Sentence

    ReplyDelete
  27. GMO - Colonal Possum bought some Friday, but he didn't and hasn't mentioned anything about Sundance?:

    http://eurekaminer.blogspot.com/

    Also, my broker is bearish on industrial metals right now.

    AKAM/UPL - No broker coverage on these.

    VMW - $106 12mo price objective "As part of our Data tells a story series we are focusing on VMware to highlight some key areas such as ELA growth, vCloud suite, and the Pivotal Initiative. LT winner targeting $50bn TAM."

    ReplyDelete
    Replies
    1. GMO- 3.09 is the biggest VWAP area over 180 days. Monthly is 2.80-3.20...So this is a really interesting area.

      Delete
    2. From our friends at Twitz...

      "$GMO From 52 week high to POS in a month."

      Delete
    3. I'd expect GMO won't be a POS for long if Hanlong makes good. Sounds like they maybe bit off more than they can reasonably chew and need to find some partners before China Development Bank gives the final okey-dokey?

      I feel like GMO is where it is currently due to the recent Sundance delay. Twitz doesn't mention Sundance, I'd bet.

      Delete
    4. How about insider activity, anything there? Finviz reports 17% insider ownership.

      Delete
    5. Insiders sold about 250,000 shares in January, similar to last year? Gotta have money to eat.

      Delete
    6. Also, there might've been some selling in sympathy with MCP? Similar phenomenon as when Obama goes to Thompson Creek Windows to talk about energy conservation TC jumps?

      GMO's $7 price tag from 2 years ago was similarly attributable to the MCP crazies.

      Delete
  28. Actually, I seem to recall GMO was trading around $2.40 before Hanlong entered the picture, and the permits have been obtained since. That adds value.

    PKX(POSCO) looks good to go on Asia strength, so POSCO might even step up their position if Hanlong coughs up an hairball.

    ReplyDelete
  29. 3993.hk/601958.ss - Sometimes these can give a clue as to what might happen for GMO and TC.

    IMH - Gonna break to the upside?

    ReplyDelete
  30. VMW - Looks very cheap...why is EMC buying so much of their stock? I know they were a big shareholder but what's up with that?

    ReplyDelete
  31. Sure is tempting to start a position in gold miner Barrick (ABX). Trading at a forward p/e of 6, good yield, good management. If they would decide to restart their hedging program to better manage their business I would buy. They got rid of this a few years ago when gold prices were skyrocketing and they eventually took a $1b+ wwritedown. But in the current environment with stable prices and downside risk, hedging would be a great strategy to lock in prices when building new mines, etc. to lock in profits.

    ReplyDelete