Friday, April 5, 2013
04/05/13 Instant Analysis
We can only conclude that today's action succeeded in
wealth destruction for the largest number of players, which is what happens each and every day in the markets. Hussman’s ‘Don’t Pass’
bet re the broad indexes finally paid off this week. Paulson had a front line winner in GLD on the final play, but
gave back a fractional percentage on the GDX place bet. Judging from Mark's comments today, he either started early, or he's mentally gone. I'm stepping in to do the 'instant replay.'
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Jesse is right. This elevation (at least, under current sentiment climate conditions) is no country for old men. Of course, we're all young guys- ha!. But being a prudent man, if an old guy tells me he's staying away during an avalanche watch, I'm going to follow his lead.
ReplyDeleteRemarkable slam to the VIX going into close.
ReplyDeletehttp://finance.yahoo.com/echarts?s=^VIX+Interactive#symbol=^vix;range=my;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
DeleteI like this chart...tells me a lot. i honestly think we're just getting out of a prolonged heightened anxiety period...look at the spike in 2011. the fear there was similar to the fear in Sept 2002 before the market went on to practically double over the next 4 years (while the vix spent the next 4 years going lower and lower until it hit bottom). what's double the bottom in 2011? a loooooong way higher from here.
look at the vix in 1991 when it was coming out of a recession. it went into a downtrend for 4 years until bottoming. the market went up 70% over that period.
i'm not saying we get 70% higher to 100% higher from the 2011 lows but i do think there is still way too much anxiety and hesitancy by people to get into this market. there is still plenty of value out there. i think people have become so accustomed to paying 7 to 10 times earnings for a lot of stocks that in other periods always traded for 13 to 17 times earnings. it takes time for people to warm up to those valuations which sets the stage for higher prices. today's report was just what was needed. toss in another healthy dose of skepticism.
Evening fellas
ReplyDeleteLet’s see what I remember from the last few days. All three of my favorite technicians seem to be saying the same thing. Carter Worth, who was definitely early on his sell all the rallies call a the end of Jan, Katie Stockton, who started calling for a correction maybe the second week of Feb??, I just know she was after Carter Worth but she also said it’s just a correction and we should go higher. Then Louise Yamada came on Fast Money this week and said we should consolidate for awhile. She also said that she there could be a drop as much as 10% and she would still call it a consolidation before we move higher. For a long term investor’s perspective, Louise makes sense.
I bot a little SDS 2 days ago but I didn’t pick up that much and it’s not offsetting my long term INVESTMENTS. I need to remind myself to leave the long term investments in the 401’s and just trade with the other accounts.
Outside counsel gave us a Dodd Frank presentation this week. There is no doubt in my mind that the new, or rather newly implemented Dodd Frank regulations have once again increased the profits of just about every legal firm in Washington and every other big city in the US. We have a whole flood of IT peeps I’ve never seen before working on our systems along with an increase in the back office staff to help with the new compliance. So there, new jobs created. Now me thinks the expense of adding all this will be a new drain on company profits and I’m betting no one is mentioning that yet. It would also be interesting to see if smaller companies can even keep up with the regulatory environment. I would also like to see stats on how many companies have reduced staff or simply shut down because of the new regulations. We always seem to hear about one or two but I’m guessing that most companies just try to make do for awhile before they actually give up or conditions change.
ReplyDelete
ReplyDeletehttp://www.cnbc.com/id/100608527
Here's a snippet from a CNBC article I was reading earlier this week that seems pretty accurate to me. I don't know this Brian Reynolds guy though.
"This is a credit boom and credit booms always end badly. But they typically don't end until people become over leveraged," Brian Reynolds, chief market strategist at Rosenblatt Securities told CNBC Tuesday. "Today's the day after April Fool's Day and it seems for many investors that the last four years have been a big April Fool's joke."
"It's not a credit bubble, it's a credit boom. Credit booms lead to bubbles elsewhere, but we're only in the fourth innings of this boom. We are seeing increasing demand from the pensions that are driving these credit markets and have for the last 20 years," Reynolds said.
Historically with credit booms most of the stock price gains come after the Federal Reserve begins to tighten its fiscal policy, Reynolds added.
"We're not even at that point yet," he said. "Our work indicates that even more financial engineering will be coming down the road. And yes it will end badly some day."
I just emailed Mark an article from Buzz and Ban that goes with the CNBC article. Hopefully he'll be a good fella and forward it on to you guys.
DeleteEverything always "ends badly I guess." If I had a beer for every time I heard a "guru" say that I'd be piss drunk!
DeleteTraders lost wealth today? Crap, I better get with it.
ReplyDeleteI traded the OGR and made money with SNE, SAND (a day trade) and FGP.
I added YRCW and I was up for part of the day then gave back a few pennies.
Overall not a bad day. Whenever we get those big news events like employment and it is over or under then it isn't unusual for the market to gap up or down and then pull back or go up after the open.
I found today to be pretty good as well. Probably because the smaller stocks where we mainly play did not too bad - Russel microcaps (IWC) down .2% and TSX smallcaps (XCS.TO) up .5%.
DeleteWhat is really interesting this year is how many people are saying to sell now or we are due for a correction now because of the big run and seasonality. I think what they are really doing is looking at the market for the last 3 years and it was smart to sell in April and get back in on pullbacks, so are looking to play the same pattern. But, when a pattern is that obvious, it rarely works again as it essentially gets hedged out. The way I think about it is if all these chart/seasonality players are selling and the market doesn't go down, what happens when they decide seasonality isn't going to work this year? Probably we just grind higher for the next few months.
BIDU - New 52wk low, looks to be in trouble.
ReplyDeleteI never could figure this one out.
DeleteTA - This chart looks really appealing to me for some reason, but with my luck it'd probably crash 30% about 30seconds after I take a position.
ReplyDeleteHow do we play this?:
ReplyDelete"There is no doubt in my mind that the new, or rather newly implemented Dodd Frank regulations have once again increased the profits of just about every legal firm in Washington and every other big city in the US."
Yellow Dog
ReplyDeletehttp://www.barchart.com/cheatsheet.php?sym=YRCW
Yellow Dog tune
http://www.youtube.com/watch?v=_qd08FyXY3E
Better version
Deletehttp://www.youtube.com/watch?v=pn7V8b5G4TE
new post
ReplyDelete