The Landry article cited by Craig earlier today is so good I'm going to memorialize the link with its own post for quick reference when I need it.
http://tradersonline-mag.com/01_ezine/01_traders/en/2013/09/index.html#1/z
Every paragraph spoke to me.
David - I kind of think we're very close to a tradeable bottom here. We might get a drop below on some crazy event or news but it seems like the market won't go below the 1620ish area. that's around where the rally from the June lows stalled out before going higher. I've seen this similar pattern set up in the market in the past.
ReplyDeleteI think we may go up to new highs but I would be selling those. I just think we're going to be in a big trading range for a while here.
Part of why I'm saying this is the emerging markets may have put a floor in. We shall see. I was looking at the whole current account deficits thing in comparison to 1998 since so many people are focused on this and it doesn't appear to be nearly as bad as it was back then. Here is a good article on this:
Deletehttp://news.morningstar.com/articlenet/SubmissionsArticle.aspx?submissionid=175919.xml
My question is, why have EM tanked, and what has happened if anything to reverse the sentiment(aside from simply being technically "oversold"?
DeleteMy Boat - Pics, where?
ReplyDeleteWell, I don't have a photo on this computer apparently, but I found the exact same boat for sale so just so you guys can see the type of boat I run the lake in, it's actually a river boat designed for the Colorado.
http://www.performanceboats.com/attachment.php?attachmentid=159167&d=1336258416
Maybe I'll get around to taking a new photo but I'd have to post it somewhere and, well, it probably wouldn't interest anyone anyway....
PEIX - Pushing $900m in sales and can't find $18m somewhere in there to get EBIT positive?
ReplyDeleteLots of debt though so even if, shareholders may not have any gains to speak of?
MEOH - Still nearly a single digit forward, you guys still not interested?
ReplyDeleteLet's revisit China's real estate 'boom:'
ReplyDeletehttp://www.cbsnews.com/8301-18560_162-57597600/chinas-real-estate-bubble/
the problem, as always, is timing right? Lots of people knew the stock market was in a bubble in 1997 yet it went on for 3 more years and it ended up falling back to 1997 levels for about 6 months in 2002/3. so you could have said it was extremely overvalued in 1997 and you would have been bearish for the whole 5 years afterward, only to see it go back down to where you thought it was overvalued at. same thing could be said for the housing market in 2004/5. it's a tough thing to do, time a crisis...especially when lots of people are expecting it. and i kind of think that's the case with China right now...we shall see.
DeleteGold selling off to 1375.
ReplyDeleteNFLX> This weekend's recommendation='Flesh and Bone' (Dennis Quaid, Meg Ryan, James Caan) should check it out. I caught it in a theatre in 1993. The opening ten minutes, in its own way, as chilling as the opening scene in 'History of Violence.'
ReplyDeleteI'm going to cancel that recommendation. Meg Ryan totally ruined what was otherwise a promising story. She's OK in comedies, but unable to pull off a dramatic performance.
DeleteIMDB ranks it at 6.2. Not very good. I watched "Trance" recently. Interesting movie. I think it got a 7 on IMDB. 7 is usually my cutoff.
DeleteCP - I kind of think this whole emerging market selloff is just a buying opp. kind of like the panic of 2011.
ReplyDeleteThat's what I'm thinking as well. As you pointed out earlier, timing is everything. My belief is emerging markets have been buying US debt in an effort to push their currencies down and the result has been more dramatic than they anticipated.
DeleteSo if I understand correctly, now their currencies are depressed (India's Rupee down ~20%!), then if we take a position, the currency appreciates, and economic activity resumes, would we have any chance of having gains on our position?
Laundry's article is good indeed -- thanks, Craig!
ReplyDeleteIt makes me wonder what I am doing with IWM puts, if the big blue arrow is obviously pointing up. I also recall that Alexander Elder said that a pretty good entry point for a long trade is during a pullback to the line connecting the lows of the uptrend, i.e. NOW (for IWM). Now wonder futures are looking pretty strong. I might have to flip from puts into calls early on Tuesday, if IWM rallies above Thursday's highs.
On a different note, doesn't BALT look like a classic Laundry setup right now? A solid uptrend since December 2012, a large rally recently and a large pullback...
But then, if you look at BALT's chart in early April, you would see that it would be a VERY hard trade. A nice rally since mid-February, then a pullback right to the line connecting the December low and February low -- a perfect entry, right? Well, there was a little rebound from that entry, but then BALT collapsed BELOW the early April low! So Dave would have been stopped out, right Craig? Well, after that the stock slowly crept up to the top of the rebound and then started rallying powerfully. So you would think that it is safe to enter it, right, since it finally got above the April rebound level? WRONG! The stock again collapsed below the April rebound level. At that point all those who were interested in getting into the early uptrend were totally disheartened, and so no wonder the stock rallied right back to the top of the May spike. At that point those who were placing buy stop orders just above the May spike to $4.05 were shaken out repeatedly over a period of 2 weeks by the intraday volatility -- the stock rallied above $4.05 multiple times, only to collapse later on in the day. Finally, when everyone gave up on the idea of catching the break above $4.05 early on, the stock rallied like crazy almost to $5. So do you think trading this stock from the long side will suddenly become easy? :)
DeleteNo. I think the problem you run into is that you're intelligent. Being able to convincingly argue almost any point of view (along with any opposing point of view) is a disadvantage in the capital markets (unless you're selling a point of view).
DeleteAPA - Did you guys notice this one jumped 9% Friday? I guess on better news from Egypt?
ReplyDeleteThey sold a pretty big chuck of assets in Egypt.
DeleteChina econ data manufacturing index 51.1, that's growth... If you believe the data from China.
ReplyDeleteBut, I thought they were sandbagging, in retaliation towards Japan's monetary policies?
REDF - Big volume spike, was it Thursday?
ReplyDeletehttp://www.schaeffersresearch.com/commentary/content/ezines/all+is+not+lost+for+market+bulls+plus+why+were+still+watching+the+vix/mondaymorningoutlook.aspx?id=117594&obspage=2
ReplyDeletehttp://www.thereformedbroker.com/2013/09/02/the-number-one-threat-to-the-market/
ReplyDeleteMy best guess is the US goes sideways (+/- 10-15%) for the next year or two as every other market catches up as a result of the fluctuating global monetary stimulus game. It's best to look elsewhere now probably. IEV yields about 3%. The more I read about Greece the more I like it.
ReplyDeleteI think Europe still looks good and there is still lot of time to buy. Valuations are much better than the U.S., the economy is improving from a very low point and you can trust their accounting and rules of law without doubt.
ReplyDeleteA simple example is Heineken versus Budweiser. Heineken is at a forward P/E of 11 and BUD is at 17.
BUD at 17 is tough to justify and you'll probably do OK, but make 5% or 6% a year including dividends. HEINY traded in a 17 P/E range prior to the financial crisis - don't see any reason it won't do it again as things get better, so you've got 50% upside on the stock.
Harder to buy because it is an ADR, but worth the work to find these.
Time to Look for European Corporate Earnings Pickup?
Deletehttp://blogs.wsj.com/moneybeat/2013/09/02/time-to-look-for-european-corporate-earnings-pickup/
10yr - Looks like yet another gap down, still wondering why mREITS didn't respond to the last gap down on the 29th.......
ReplyDeleteCP, stock market is way too complex to expect things like this to always happen. You can't simplify it down to a few factors.
DeleteRight, I figure a good thing can keep on going longer than anticipated and emerging markets appear to be selling US debt b/c their currencies have depreciated spectacularly.
DeleteI'm sure you all see them, but 2 AUMN SA articles were published today.
ReplyDeletePlaced a sell stop order for my IWM puts at the same price at which I bought them. More often than not, the market keeps moving in the direction of the gap, so if the market gaps up tomorrow more than 1%, then I want to exit my puts early.
ReplyDeleteNOKer..I can't believe they actually did it.
ReplyDeleteTOF tried to tell us.
DeleteARO - Dead meat?
ReplyDeleteNES CEO bout 900k shares... He has 95M shares so keep that in perspective.
ReplyDeleteIt's tempting!
DeleteIDX - Worth a shot?
ReplyDeleteOGRe day. Played the SDS card at 38.15
ReplyDeleteIf the FED does taper this month, should that be positive for PM's? I wouldn't think so, it should be positive for US$'s, right?
ReplyDeleteI'd say taper is US$ positive and PM negative. If the economy is getting better and rates rising, why would you want to invest in gold? Much better places to put your money.
DeleteSeems like so many good PMI numbers this last week from many countries around the world. I think the economy may be hitting escape velocity finally and we start to see self-reinforcing economic growth.
ReplyDeleteDoesn't mean the market goes up short term, but sure bodes well for the market over the next year.
BB - Tough call...I posted an article on here a few years ago that showed basically less correlation between GDP growth and market returns than you would think.
DeleteNOK - Upgrade to Neutral - My broker is such a turd eater!
ReplyDeletePACB could be interesting here. Not for me though.
ReplyDeleteNOK - I was calculating $2 Billion at most for the handset division. I can't believe they sold it for $7 Billion. Unbelievable. I guess MSFT is going at it alone? Why would they bother offering other handsets now?
ReplyDeleteNOK - No wonder the response. MSFT - Has to do something, Windows is substandard junk IMO.
DeleteOSTK - The only way you can explain the valuation of this company (0.5X P/S vs 2.0 to 4.0 for GRPN, TJX, ROST, EBAY, AMZN) is because it's headed by a nutbag, Patrick Byrne. I guess he was right about the naked short selling fiasco, though.
ReplyDeleteI know this company quite well because they're tough competition in my space. They have the lowest prices for pretty much any home and garden product.
Here is Chou's latest shareholder report:
Deletehttp://www.scribd.com/doc/164320321/Francis-Chou-is-Worried-about-Canadian-RE-and-Chinese-Bubble
He sold about 75% of his stake in OSTK. I didn't realize he bought it 7 years ago at around $20 or so. I'm surprised he would be bearish on it now because it's operating better than it ever has and the valuation isn't crazy. Maybe he doesn't expect operations to improve any more? I think of it like this: this is the 5th most trafficked mass merchandiser site behind AMZN, EBAY, Walmart.com, and Shopathome.com (per Nielsons). The trend to online retail will continue for years and years. While it's a far cry from Amazon, its still a major force in online retail and will benefit from this trend. Traditional bricks and mortar stores like ROST and TJX trade at 1.2 to 1.5 times sales. OSTK trades at a heavy discount to all of these because of the nutbag CEO but more so because of inconsistent earnings reports over the years. However, I do expect it to at some point trade up to those other retailers and etailers valuations and because online retail will continue to grow much faster than traditional retail, someone will eventually be forced to gobble them up.
SRS or TBT, which is the better hedge for mREITs?
ReplyDeleteSo if you took an effective hedge, then you'd still collect the dividend, right?
Sounds good to me, till the crash subsides?
Or maybe TBF b/c this one doesn't have as much decay?
DeletePMT - How much cash does this company have, is it really twice the market cap?
ReplyDeleteSDS - Yep, the OGR is workinggggggggg!
ReplyDeleteRAD just keeps chugging.
ReplyDeleteARR - Maybe I can get this one down if I scream loud enough????
ReplyDeleteTalking to my friend at Blackberry and the rumour is that MSFT had to buy NOK as NOK was looking to move away from Windows8 to Android.
ReplyDeletePlus, they are having cash flow problems and were thinking of declaring bankruptcy which would have killed their Windows 8 sales as well.
Good for NOK for making the sale. For MSFT, it is nothing given the cash they have.
Moving away from Windows sounds like a great plan to me, no wonder NOK was dying on the vine.
DeleteIBM has killed their fair share of good companies as well, with their ridiculous ideas.
Bought a little NBG at $4.09. I view it as a zero or a five bagger over the next year or two.
ReplyDeleteRight, I have a feeling if Merkel wins the election then Greece is out of EU and then everything there flies.
DeleteThere's no way in h*ll they will let Greece out.
Delete"There's no way in h*ll he will let XXXXX out of his sight."
DeleteYep, it does seem similar to spousal abuse. Just on a much larger scale.
ARR - Half my previous position back @ $4.06
ReplyDeleteMaybe it goes lower, in which case my response will be to add......
Added a little OSTK at $27.85.
ReplyDeleteYep, I have to agree it seems like daytraders should simply buy the closes and sell the openings.
ReplyDeleteMaybe the better approach is to sell the opening once it's revealed and then cover at close?
sure seems like they're trading the market in ranges until the Fed meeting.
Delete10 minutes remaining, what could go wrong?
ReplyDeleteWas stopped out this morning of my January IWM puts flat. Still keeping the CNI puts and the single IWM November $103 put I added when IWM was at $101.30.
ReplyDeleteLooking at the past, I realized that staying with a downtrend trend (if you are short) and not getting shaked out by violent reversals is REALLY difficult, so it is only an illusion that if I can short IWM at the top, I'll make a lot of money. I'll most likely get scared and close my position with a minor gain or flat.
Thus, I should REALLY focus on making trades IN THE DIRECTION of the multi-month trend, which brings me back to BALT once again.
Today, BALT dropped below the previous resistance at $4.40 (looking at the intraday data over the past month) but then finished above $4.40. So do you folks think it makes for a good entry now?
BALT does look pretty good to me, actually. I'm wondering about DRYS, as well.
DeleteWhile you guys were thinking, I recycled the money I got today from selling IWM puts into BALT at $4.44. Will exit if BDI drops below yesterday's close.
DeleteReversals are very destructive to option values as you lose time value, usually the volatility priced into the option decreases and you lose value as you move away from the strike. I found it very hard to hold options through reversals when I used to try and trade them.
DeleteRe BALT, I haven't looked at it in detail, but do own shipper NM (one TOF found last year). BALT's chart, industry and valuation look similar.
DeleteMy general comment would be shipping seems to be turning the corner. Distressed value guy, Wilbur Ross, has put a bunch of money into liquid natural gas ships and last month started investing in Dry Bulk Ships, which BALT appears to be. From what I read, a lot of the older ships are being dismantled and this is driving up rates. Additionally, capital is needed to fund the new, efficient ship builds and Ross and guys like that are providing this. These are very smart guys and are looking for big wins.
NM has a good balance sheet, is undervalued at half of book, pays a good dividend and is being opportunistic in the current environment (eg. buying bankrupt ships from the banks) and are setting themselves up to outperform this cycle. Not sure about BALT, but would assume similar.
So, in general, I think shipping is a good place to invest. The hard part is these stocks have had such a good run and I hate paying up. Using your approach of buying stocks in an uptrend like this could work here, but I do find when stocks like this, they do correct hard as you have a bunch of trend followers in the stock at that point and they bail quickly, so you need to have a plan I'd say. It honestly wouldn't surprise me to see a correction of 20% or even 30% in these stocks in the next few months. That would likely be a time someone like me would feel more comfortable buying.
NM - This one has doubled from the bottom. Damn!
DeleteARW - Price to sales ratio is 0.23 for this one.
ReplyDeleteEPI - Somebody wanted some this morning.
ReplyDelete"Semiconductor inventory: Shallow correction thesis supported – buy semis"
ReplyDeleteFRAN - What the heck is this one.....
ReplyDeletePKX - This one's heading for the hills.
FRAN- I think it's a discount store type thing.
DeleteActually it's clothing.
DeleteI was watching FRAN for a while until I saw their at some fairly large discount store and they had a liquidation sale on all of their stuff. I thought it was very bad sign given that it was supposedly a rapidly growing company that just IPO'd. This was probably 18 months ago or so. I stopped following it after then.
Delete...until I saw their PRODUCTS...
DeleteI longed NLS and MBI this morning. $6.47 and $12.42
ReplyDeleteYRCW sure looks ready to rock again.
ReplyDeleteBetter keep my money in BALT than in stinking IWM puts... :)
ReplyDeleteShort IWM at $101.88 only for a day trade.
ReplyDeleteClosed for a $80 profit. Lunch is paid for.
Deletehttp://schaefferstradingfloor.com/study-of-the-week-breaking-down-the-bearish-engulfing-pattern-on-the-dow/id=6000
ReplyDeleteNLS and TA both look quite similar.
ReplyDeleteUmmm..Z is $101.90. Holy shit. I bought that thing at $24
ReplyDeleteI know it sounds nuts because it has already run from $5 but I think OSTK has a chance of going to $100 by next year. They will need to show 2 more quarters of continuous top line and bottom line growth. The reason is simple: they trade at around 0.6 times sales whereas GRPN, EBAY, AMZN trade at 2 to 4 times sales. All 3 of those companies have international operations. OSTK has 1% of revenues coming from international; however, they are launching international operations in about 6 weeks. After then I think sales can go up 30 to 60%. The reason being all of the other internet retailers have about 50% of total revenues coming from international. If OSTK grows from $1.2 Billion to $2 Billion in sales via international expansion and you assign a 2X Price to Sales, you get a market cap of $4 Billion. That equates to a price of $166.
DeleteCan they do it? Shit if I know but I think the discount assigned to them, while somewhat warranted because they lack a history of consistent earnings, makes it a very attractive stock. About as good of a stock as I can find honestly.
So the key obviously is positive earnings continuation and being able to get momentum in international. That remains to be seen. For international I think they already have the traffic in place. I know from my own sites we get a big chunk of people from international and it's basically useless traffic for us. If they put the infrastructure in place to sell overseas they could kill it.
DeleteI'm seeing lots of low risk setups. Doesn't mean they will work but they all have clearly defined stop outs. So far the ones I like are NLS, MBI, OSTK, TA, RAS
ReplyDeleteI like all of those setups.
DeleteCheck out DECK too. Granted that setup is more just strength in the face of a weak market. But it consolidated the gains from last fall for about 4 months and is now breaking out. I bet that goes to $100+ again. Kind of like GMCR and NFLX...
DeleteInteresting day, not sure why some things sold off for a few days then something happened?
ReplyDeleteBelieve me, no-one knows. Some guy on CNBC will tell you it because of Syria or the Chinese manufacturing data or the British PMI, or some hedge fund exploded, but its all crap.
DeleteReality is, more people wanted to sell than but for a multitude of reasons for a few weeks and now more people want to buy than sell.
Okay, I was just checking.... I guess I'll never be able to actually comprehend most short term market action.
DeleteIDK - I'd probably buy this ticker if it existed.
ReplyDeleteBDI jumped above 1200 today. If CNI rises tomorrow above its August 23 high of $96.5, I am selling my CNI puts and rotating that money into BALT call options...
ReplyDeleteTITN - Earnings in the morning, wonder how it goes?
ReplyDeleteALSK - Holy crap, this thing jumped!
ReplyDeleteChrist!...Which way though!?
Deleteunbelievable. that was on my radar screen at $1.7 but i chose to stick with FMD instead.
DeleteDown now, apparently!
Deletehttp://www.youtube.com/watch?v=K2p84Xdx8ck
ReplyDeleteGood one from Hulbert...
ReplyDeleteYou’re a sucker to believe Wall Street
Commentary: What were advisers saying five years ago?
http://www.marketwatch.com/story/youre-a-sucker-to-believe-wall-street-2013-09-04
2008 - "If ever there were a time for Wall Street’s gurus to warn us of the impending doom, that would have been the time. "
DeleteExcept Wall Street didn't want us to know, it was tough keeping the secret contained.
DECK - It's been a tough road for shorts, hasn't it? They're still there, hanging on, wonder what they're gonna do about that?
ReplyDeleteI'm expecting mREIT's get hit today, 10yr rates are up again.
ReplyDeleteThis isn't rocket science, it's brain surgery.
Be Like Water Grasshopper.
ReplyDelete"Be like water" is a common analogy used in trading. You really do have to go with the flow. You have to be careful not to label yourself. If you are a bull then you find reasons to justify a market's slide-"Notice the 50 (or 200 or 500) day moving average has held", "This is a positive development, just what the market needed, a healthy correction." The converse it true if you consider yourself a bear-"This is only a corrective wave", "This rally is a gift, a chance to get in at better prices."
Believe in what you see and not in what you believe.
So, how do you go with the flow? You do your analysis, listen to the database, and let the market prove you right or wrong. Make decisions passive ones and not active ones. On new positions, resist the temptation to get in early, to seek a bargain. Let entries trigger you in. There's no guarantee that the position will continue to move in your favor, but at least it going in the right direction when you first get in. On existing positions that aren't currently performing, let your protective stop keep you in just in case the market is correcting or consolidating. And, let the stop take you out if it is not.
The S&P is down 1% since late May. In the same time frame, we have one long position that is up nearly 90% since then (I'm not saying this to brag, I wish there were a lot more). The point is, if I would have bailed as soon as things got a little iffy in the market, I would have missed out on one of the (admittedly few!) big winners of the year. And, these outliers are crucial for the methodology.
Don't micromanage and/or try to outsmart the market. Again, let the market make as many passive decisions for you as possible. Avoid labels and be like water.
Now, to the markets:
The Ps put in a decent rally, gaining over 3/4%. So far though, the recent slide/Bowtie remains intact and they only appear to be pulling back.
The Quack managed to tack on just over 1%, continuing its recent rally from the bottom of its trading range. So far though, it remains in that range.
The database often speaks. And, more often than not, it pays to listen. Right now, I'm still not seeing many meaningful longs other than in the Metals & Mining stocks, specifically, Gold & Silver. I am continuing to see more and more shorts.
Considering the above, I think the plan remains the same.
So what do we do? Honor your stops on existing positions and wait for entries on new ones (that horse has been sufficiently beaten). Outside of the aforementioned selected M&Ms, continue to avoid the long side for now unless you really (really really) like a setup. And, continue to look to fire off a short or two but only on entries (more beating).
If you're not saving lives, building buildings, repairing automatic transmissions, or doing other great things, then come to the chart show today!
Best of luck with your trading today!"
I have a spare Buick TH-350C transmission for one of my hoopties I've been meaning to tear into, maybe I should order the kit and get jiggy with it!
DeleteP.L.Brandt on NASDAQ 100 - "A close above 3150 by the nearby Nasdaq futures contract would indicate another advancing phase."
SLW - BACML: "Silver Wheaton Corp.: PO raised to $35; a leader in precious metals streaming
DeleteAugust 15, 2013"
RyanDetrick Sep. 5 at 8:54 AM
ReplyDeleteThis yr dropped off pace of '54 and '95 - still worth noting both of those yrs bottomed now. $SPY http://stks.co/gjrk
TITN - Well, looks like short covering, maybe.....
ReplyDeleteEPI - A good amount of volume lately, seems like.
ReplyDeleteTBT - Working as a good hedge for mREIT's so far.
ReplyDeleteIBKC is another one with a similar setup to NLS and TA. They're a regional bank that I've followed for a few years. They took over the assets of several banks that went under in 2009 to 2011. Could be a big winner longer term.
ReplyDeleteIBKC - Especially if Yellen is appointed as opposed to Summers.
DeleteBITA and NOAH continue to be the most volatile stocks I've ever seen.
ReplyDeleteFBP - Here's one for ya to check out.....
ReplyDeleteCYD - Quite some chart.....
ReplyDeleteThe drain on the brain is mainly on the wane?
ReplyDelete"Be Like Water" that's really good advice CC.
ReplyDeleteThe shipper's sure are flowing and Brazil while probably being early sure seems like its basing.
Speaking of flow, BSX has a nice blue arrow and I believe it is one of Bulkowski's best patterns for profit.
So most shipper's, EWZ, BRF, BSX and SLB all look good.
Our place is up for sale and I have not been following mkt much as all this other stuff taking up too much time. It could be anywhere from 6-12 months before we are really settled and I'm inclined not to do much during that time frame.
Good Luck to you all.
Good luck T3D, where in Az are you headed?
DeleteI shorted GRPN at $10.79 and $10.75
ReplyDeleteDaytrade only. Looking for gap fill.
DeleteUS worker incomes to remain flat to down for the next few decades (based on trend pattern).
ReplyDeleteARR - The bid quantity/size seems rather large.
ReplyDeleteBSBR- A mistake I know, but I took it off at 5.98. I just wanted to book the $2K. I'm getting pounded so hard in GMO I didn't want to give that back.
ReplyDeleteIt's the season to go hunting:
ReplyDeletehttp://www.wikihow.com/images/b/b8/Panax_quinquefolius.jpg
new post
ReplyDelete