Morning Call [7:38am ET] There go those Bulls again! The S&P 500 future has been trading over major technical resistance of 1080 for a time last evening and again through the morning. That’s like waving a red flag in front of the Bulls.
And our morning protocol (at 7:13am ET) shows us that the equities, commodities and precious metals will be strong and the US Dollar and US Bonds are under pressure.
I have been thinking a lot about women in the business of trading.
SELL!!
BUY!!
No, SELLLLLLL
No, BUYYYYY
Just like a woman, can’t make up her mind.
Caitlin Eve Cara July 10, 2010 Will & Fiona Cara
2030 Trader of the Year
Toronto Star, promoting the upcoming IZOD IndyCar Race in Toronto, and fan favorite Danica Patrick, had some thought provoking comments about competition among males and females, which I then transposed to my world. I thought about this yesterday as I interviewed a Swiss banker who said she wants to get into trading.
Here are a few sentences from the article.
In the traditionally testosterone-laden world of auto racing, women have become provocative figures in the sport’s modern narrative, and not just because of the optics.
Female drivers such as Lyn St. James and Danica Patrick have had meaningful successes in one of the few professional sports where men and women go head-to-head.
The sport’s sexual desegregation raises an intriguing physiological question: How have women racers managed to successfully compete with brawnier men during physically demanding races that go on for up to three hours?
So how do (Danica Patrick) and her female colleagues successfully jostle with fast and furious men at 200 m.p.h.?
“When there are difficult and uncommon situations, (women) should handle it better,” said Luc Tremblay, a specialist in perceptual-motor behaviour at the University of Toronto.
It seems the female central nervous system is better at processing multiple sensory cues such as sense of balance, vision and receptors that allow “feeling their bodies in space.”
“It costs more to insure a male driver than a female. While a lot of people attribute that to cognitive factors, one can also explain the difference to how women use their senses,” he said.
Men, it seems are more impulsive creatures, often acting on one or a few sensory cues. Women, by contrast, consistently contrast all of their senses and act on more comprehensive data.
“A crude analogy is to think of the man as a working set of RCA cables with different inputs (separate video and sound signals) while women’s sensory processing is more like a coaxial cable with the audio and video in one wire.”
… The mental advantage in auto racing’s battle of the sexes is essentially a wash with a possible slight advantage to women, Dallaire says.
“Women are generally better at simply focusing on the task where men are so often worried about how they’re going to look and that can sabotage their performance.”
Whatever the physical differences, auto racing’s head-to-head gender battles have enhanced the sport’s profile and interest.
“Competent, high-performing females are a competitive weapon,” says Terry Angstadt, president, commercial division of the Indy Racing League, adding up to 80 per cent of media storyline requests focus on female drivers.
Carole Oglesby, a sport psychology consultant and professor of kinesiology at California State University, Northridge, says fascination with gender competition is buried deep in our collective DNA.
“Even in elementary school, if teachers are trying to get boys and girls to try harder they’ll have a competition between boys and girls. There’s something about male/female competition.”
Without any scientific understanding on my part, I have long believed that women are capable of becoming better traders than men, under certain conditions. Mostly, they have to be able to work in a closed and protected environment, free to focus on the task at hand. Employers, males mostly, have never seen fit to do that, throwing the women in with the “boys” to do a “man’s” job. Logically, however, if it’s strictly results you want, I believe the same elements discussed in the Toronto star article are factors that lead me to believe that trading should really be a “woman’s” job.
I do intend to pursue this notion, although in the case of Caitlin Eve, I may have to wait 20 years. :-)
Have a great day.
CTA Trading Desk Post-Close Report
Strong quarterly results from Alcoa (AA+1.2%) and a weaker US Dollar persuaded traders to embrace risk today, with equities bid higher as the S&P (+1.54%) climbed to within a whisker of 1100. Somewhat surprisingly, bearish sentiment remains elevated even after the huge rally last week meaning many investors are unconvinced prices have bottomed, setting the stage for a proverbial “climb the wall of worry” rally.
After the close Tuesday Intel (INTC+2.24%) reported better than expected earnings and raised forward guidance, giving a boost to futures in after-hours trade. If prices continue higher tomorrow, closely observe the price action at these potential resistance levels:
– 1095 (50-day moving average)
– 1115 (50% retracement)
– 1111 (200-day moving average)
– 1131-32 (June high and 89-day moving average)
– 1139 (61.8% retracement and upper Bollinger Band)
Whenever financials (XLF+2.58%) and semiconductors (SMH+2.51%) lead a rally you can be sure large money is behind the advance. Prices are certainly extended short-term but many investors have been left at the station, missing the departure of the northbound express. Do not underestimate the pressure under-invested money managers are feeling to chase prices higher in an attempt to increase upside exposure.
Although volume has been largely absent on the most recent rally, buyers are firmly in control at the moment. Most of us would expect a pullback to test former support at S&P 1040, but maybe too many traders are looking for the same thing and will be unable to find a “comfortable” long entry point.
With black box strategies fueling increasingly exaggerated movements in either direction, it is a distinct possibility that prices stretch higher uninhibited by the short-term overbought readings on most indexes.
If the potential reward is inconsistent with your risk tolerance under current conditions simply retreat to the sidelines patiently awaiting a set-up that fits your trading plan.
Sometimes independent traders have an advantage over portfolio managers – nobody is putting a gun to your head, forcing you to make a trade. Take only the highest probability trades in your back-tested system. Be content to let others trade in the sea of uncertainty.
Have a great evening.
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Comments
Cara 100 Ratings Changes
Good morning.
There is nothing to report at this time.
careful...
http://finance.yahoo.com/news/Vivus-weight-loss-dr...
buys & sales...
http://www.thestreet.com/_yahoo/story/10801606/1/c...
Re: careful...
What's wrong with regular exercise and a healthy diet? Do we really need drugs such as these?
Cara 100 Update
CVX - estimates increased at UBS through 2011. Company is guiding toward better results, aided by lower costs. Buy rating and $95 price target.
RCL - numbers lowered at Goldman. RCL estimates were cut through 2012. Company will likely see lower net yields. Neutral rating and new $25 price target.
Re: pictures
" can't make up her mind ".... Took awhile, but found out that, although a woman may not always know what she wants, she damn sure ( always ) knows what she doesn't want.....!
Re:pictures/baz22
amen to that........looking to start selling MYGN puts....looks bottoming here/still short the VVUS 5 puts for fri/looking to sell more ARNA 3 puts for next mo/my excitement for fri is naked some SPY 110 calls and 108 puts....closest thing to combat left for me to do since thuds in vietnam.......great trading to all.......watching POZN w/u baz
Re: Cara 100 Update
I am becoming more suspicious of opinions, especially from bulge brackets. The eye opener was C recommending shorting the financial sector (don't remember exact date) but the sector went on to run uphill. Use as contrary indicator?
edit: Shorted RCL today (GS opinion didn't play into decision) at $24.94 because gap filled and chart pattern and lack of volume on the bounce.
granddaughter
Congrats Bill on your new granddaughter.
Re: granddaughter
Hearty, hearty congratulations on your granddaughter! What a rush of blood to the head when I saw the pictures and your thoughts: I am expecting my first grandchild (a boy) in a month or so.
Market intensity doesn't seem to be high, but to my mind, while support and resistance levels are broached, what could make the most sense is that HB&B knows/has been told that money will be printed, so you might as well get on for the ride. It doesn't make much sense with what's going on in the yield curve, but then I'm on the outside so what do I know.
Re: granddaughter
lowell,
Thank you and all the best for your first grandchild.
As for the market, there has been a distinct reversal in the EUX:USD since early June. At the time of the change, most traders believed the bump in the Euro would be short-lived. This morning, they are having a second look. US election season is coming up and the political fight will likely be the dirtiest in years. Right or wrong, there will be a number of serious accusations leveled at the lawmakers and policy makers. Moreover, the US economic data is likely to disappoint those people to the extent that Quantitative Easing starts up again whether they like it or not. The debt bubble will simply grow, so that the roll-over problem will be moved further out. Interest rates will stay lower for longer, leading to a period down the road where interest rates go higher than otherwise would have been the case. The name of the game is jobs, and the US Administration and Fed will do everything in their power to make that happen. So, I think there might be, in fact, a lot of rationale, for a lower US Dollar and higher equity, commodity and precious metal prices.
Sovereign credit ratings
http://www.thefirstpost.co.uk/65788,business,us-an...
Another perspective. Something to think about.
At the end of the day, the US and UK will not fail to meet their obligations. They will simply create more longer term debt, pushing up the price of money, commodities and precious metals higher than they would otherwise be.
Anyone have any feedback on the ' Honda Insight ?
thinking of buying one .
Tobyt,
you may want to take a look at ' vnda '... option volume is very interesting, especially going into august....
Chinese rating agency strips Western nations of AAA status
Interesting indeed!!! What’s next? Downgrading Western Nations Huge Debt??? Or a Rating war between East and West. We downgrade their debt and they downgrade ours, how about that :). Guess who will be the winner out of that WAR?? GOLD of course, what else do I have to say more..
By the way, Congratulations Bill on the arrival of your bundle of joy granddaughter. Not sure if you have just become a grandfather for first time now :)
http://www.telegraph.co.uk/finance/china-business/...
HFT explained by Carl Denninger, a trader, what?
http://maxkeiser.com/2010/07/13/kr59-keiser-report...
Shows up at the 12:00 mark.
He explains how false bids show up as a flash crash and some of it is most definitely illegal despite what some such as Blankfein and others say.
Re: HFT explained by Carl Denninger, a trader, what?
..."despite what some such as Blankfein and others say"....
Strange company for me to find myself in, but whatever. Count me among "and others."
Re: HFT explained by Carl Denninger, a trader, what?
And others is not my attempt to brand you or say I got ya. Actually, I meant by this term to refer to HFT's. I understood Mr. D to say that liquidity providers are tasked with not jumping in front of customers and not sending false signals to the market. Do you still feel that you want to be among the cadre?
Canaco Resources - CAN.V
I have had this one on my watchlist of African gold explorers for awhile now. They released some excellent results from their Tanzania project yesterday and the stock got a huge pop and today it is running huge again, up 35%. I have no position but this one may be interesting to keep an eye on.
I continue to feel that Africa is the place where huge gains are going to be made, especially in many of the countries that are just now opening up to considerable outside investment. Lots of diamonds in the rough within African gold exploration IMO.
rally today: explained by Bloomberg!
Bloomberg suggests: "U.S., European Stocks Rise on Alcoa Profit" further explaining that AA beat earnings estimates and that caused joy worldwide.
Only problem with that narrative, AA itself opened at its 50 dma and promptly lost most of its gains in the first hour of trading. The market tells me a different story - SPX up +1.65%, gold up $20, oil up $2.30, euro up 1.20 - my guess is, traders are believing in the money printing thesis outlined by the Fed at the start of this rally on July 8th. Traders remember what happened the last time Ben cranked up the presses; who wants to be left on the sidelines once the helicopters start flying. Get in on the ground floor, buy now while supplies last. Homebuilders, retail, discretionary, and financials lead the list of gainers.
So those of us with functioning memories might be asking, so what happened to the housing double dip? The US economy double dip? The european sovereign debt crisis? Barton Bigs pulling the plug on his tech stocks at the bottom? Gone, all gone, like it never happened - like Season 9 of Dallas - washed away in the enthusiasm for fresh, crisp, newly printed money from the Fed.
That's my narrative. Perhaps I should write for Bloomberg, and then you could all make fun of me...
Re: HFT explained by Carl Denninger, a trader, what?
I don't know what "cadre" you refer to - my (many times stated and detailed) point is, HFT, LP, false bids etc is a perfectly legal part of the game and should stay so; popular lately attacks on them is misguided attempt by those with best intentions and willful distraction by those with agenda.
You know, I think I said what I had to say on this topic many times over, latest being this past weekend. I'll leave this endless and pointless fight. Just one thing left to do for me in this regard: explain why I so adamantly oppose this "blame HFT and LP" game. I'll do it over next couple days.... got a few urgent things to finish to prepare for seminar in Las Vegas in Sept which should take today and tomorrow.
Re: rally today: explained by Bloomberg!
dave
I think the real "reason" is that despite all of the problems out there, corporate earnings are going to be good for at least a few quarters as corporations have really been getting lean, cutting expenses, and gaining efficiency/productivity over the last year. They are doing more with less. So even if revenues are not growing at incredible clips, profits are still increasing. The great, well managed companies have been doing this all along as they should have. The mediocre/poor companies are doing this now out of necessity and survival.
I think the real long-term fear for investors right now should be that the recent market whipsaw and fear has gotten investors too bearish and that they risk not being able to keep up with average market gains. Of course it is hard to jump in and chase now after the jump.
Can you believe that the USD 10-year note was yielding below 3% a week or so ago?? Now that is crazy IMO. Less than a year ago people were talking demise of USD and only months later they are going gonzo over USD as a flight to safety! Craziness.
How about that:
15:37:39
Toyota Motor Corp Initial investigation from the US Transportation Department found that the sudden acceleration complaints may just be driver error - WSJ
- National Highway Traffic Safety Administration studied data recorders in vehicles whose owners complained of sudden acceleration and found the throttles were wide open and brakes weren't applied
- Note: This would completely disarm the plaintiff's argument that there is a throttle mechanism issue that causes the cars to surge into uncontrolled acceleration
Re: HFT explained by Carl Denninger, a trader, what?
Enough said from me regarding the group of traders that like to represent themselves as providing liquidity, definitely needed, but in fact use their regulated power to send false signals which they promptly withdraw...this is illegal and leads to flash crashes; my point and thus "the cadre". I guess I am just jealous because I do not have the technology to do the same to my customers.
Shorts getting blitzed
INTCs report pretty much assures a battle at the 200 DMA tomorrow.
Take a look at how the markets acted in 1998 and compare them to this sovereign debt crisis. I think we're going to see a similar pattern. What is it that Mark Twain said? History doesn't repeat but it often rhymes?
Hiring about to pick up?
Check out this chart on temp hiring...there is a HUGE disconnect between temp and perm hiring. In each of the past 2 recoveries in the past 20 years, significant perm hiring happened right after a discrepancy like this.
http://static.seekingalpha.com/uploads/2010/7/8/sa...
Re: rally today: explained by Bloomberg!
Corporations may be getting leaner and more effcient, but can the same really be said for banks and other financial institutions? It is most definitely not true for most sovereigns and central banks, nor the housing market. Given this uncertainty I can't see multiples expanding no matter how much money is printed. Underweight investors whether professional or individual can jump aboard, but what happens when the music stops?
Re: rally today: explained by Bloomberg!
I do believe that banks and financial institutions are getting leaner and healthier than they were before (that is not to say they are healthy, just healthi-er). Think about it - the worst of the worst no longer exist. The weakest of the survivors have been shedding assets to stronger hands and have unloaded many of their toxicity onto the government.
On to sovereigns/central banks. Have they gotten leaner or more efficient - heck no! They have assumed all sorts of liabilities from the financial institutions and their balances sheets are a wreck. However, that never really stopped a stock market rally (see Zimbabwe!) until they are forced to start raising interest rates/draining liquidity from their market. (We are still a ways off from that).
As far as housing goes, while this is certainly no bull market, things have stablized over the last year. Again, this may not mean sizeable increases in home values but the market as a whole is slowly, gradually improving. Sure, there are still many bad and difficult individual situations but for the most part, foreclosures are slowing and individual financial situations are finding some relief. Prices may not tick up for years but financing availability is improving.
All in all, if the central banks are the only issue here, and they are willing to keep the presses running, I don't see what is preventing this bull run from continuing further.
Re: rally today: explained by Bloomberg!
BillyS,
I'm with you on this one. Watching Bloomberg tonight, and they were talking about "the bubble". Is it worse now than 2, 4, 8, 12-weeks ago. Think about all the times in the interim when the same "on-air personalities" read a script that said the problems were in hand, and the market should be looking up. These people are playing us, and for sure some of us are not listening.
Re: rally today: explained by Bloomberg!
Billy said - "As far as housing goes, while this is certainly no bull market, things have stablized over the last year. "
Yes - but why have they stabilized? Sometimes the "why" matters, if we're going to try and see what's in store for the future.
If you put a large enough engine on it, you can even convince a brick to fly. (They say the F-4 Phantom was the prime example of that thesis; perhaps Ross can tell us more) Housing has only stabilized because the US treasury is backing 97% of all home loans, 30 year rates are at 4.6%, and STILL pending home sales dropped 30% last month to the lowest numbers on record when the home buyer bribe ended. Incomes are not rising, the massive shadow inventory is hanging over the market like the sword of Damocles, and if the economy DOES pick up, then interest rates will rise, leading to further drops in prices.
They've strapped a massive Government engine on the big lead brick of housing, and even with the engine running at full power, the brick is having difficulty maintaining level flight. Once the engine is removed, what will happen? Can government support continue indefinitely? Ask Kaimu how much the US treasury is really spending on supporting the housing market. How long will those foreigners really keep funding all those engines we've strapped to all those lead bricks?
perhaps
intc will reach back & print $ 22.09 tomorrow...most probable $ 22.16
BP Bonds update
I go away for a few days and the world just becomes a safer investor friendly place. My last BP Bond post was on 6/26/2010 and the midpoint yield for the BP bonds that mature on 8/11/2011 with a coupon of 1.55% was 7.3025%. As of today’s close the midpoint yield is 3.985%. I remember posting a comment from Reuters dated 6/16/2010 that Pimco’s Bill Gross had bought some short term BP notes and APC paper. What a difference a few days makes.
Flying Bricks
"If you put a large enough engine on it, you can even convince a brick to fly. (They say the F-4 Phantom was the prime example of that thesis;"
Yes, perhaps. I worked in "Advanced Design" on the later F-4's as a young aero engineer in mid 60's (McDonell Aircraft...now Boeing with a change to McDonell Douglas in between.) The Phantom was a brute which required power eating and innovative "boundary layer control" forced across it's wings to get up and go. From what I heard though, from an engineer that worked previously at General Dynamics...the B-58 Hustler takes the cake. He said it was a flying fuel tank with a primary mission to deliver the big one: nuclear or in the the euphemistic technical jargon of the time....Special Weapons. Reagan used the B-58 (or was it the F-111 swing wing?) to blast Kadafi's palace sans nukes.
The foreigners of today are willing to fly our more sophisticated bricks with the help of the Military Assistance budget. The beat goes on...and on.
Re: rally today: explained by Bloomberg!
Dave f
Love your flying brick analogy. The F-4 was one of the first aircraft that could take off with fuel and ordinance equal to its empty dead weight. The vibration caused by the afterburners would reverberate so much that plate glass would break within 50 meters.
The mortgage markets have indeed been goosed but to little avail. The primary problems remain. It's not so much afterburners or JATO packs that will get this puppy to fly but a really really long runway. Say another 4 to 6 years to absorb actual and shadow inventory that continues to appear willy nilly.
Americans and others have been sold on the premise that the 'dream' is a function of whether you can make the monthly payment. Given current circumstances however, many are questioning whether debt at any low price is something they need.
A really stupid idea that I might offer is that when interests rates on 30 year mortgages begin to climb in earnest, (from 5 to 6 to 7%) people will pile once again into housing as an inflation hedge. I remember a guy who bought a home in 1980 who was thrilled to get a below market rate of 11%.
Our demographics are vastly different from the 1970's so the natural family unit dynamics are different but when inflation psychology changes, and it will, money will again chase prices.
Most economists are corrupted by either politics or a misunderstanding of their own polymath. An economist's wife knows how the world works...
Re: rally today: explained by Bloomberg!
Ross, the inflation hedge thing has me thinking as well. I feel that Americans turned from savers to debt users because of the 70s. Saving during the 70s was just plain silly, given the inflation during the period. Far better to use debt, lever up, and keep ahead of the money printing that way. The habit just continued from there. The seeds of our housing boom were sewn in the 70s, I think.
So could it happen again? Perhaps. But they key would involve people's income rising along with inflation, so they could continue to make those inflated payments. If commodity prices rise, and incomes stagnate (as might happen with 20% unemployment) well that's just a recipe for serious unpleasantness...
Re: rally today: explained by Bloomberg!
Housing?
Well, around my northern Illinois neighborhood nearly all the same houses are for sale as a year ago. (2 of 12 have either sold or been abandoned) Two or three have been added to the market recently. One has been vacant after having been bought last year and a July 5, auction failed to draw bidders.
The problem IS the job market is worse than 12 months ago. I think it safe to assume several of these would not be on the market if the owners still had good jobs.
A property directly behind our house was taken off the market due to real estate agents giving the owner such a low likely sale price that he is now commuting daily to Milwaukee — the nearest he could find work.
Obama and Congress need to wake up — keep your grandiose plans — people want work and you're killing the economy!