Morning Call [8:01am ET] Because there are so many who fail to meet the challenges involved, being established as a pro trader is a symbol of success. There are many paths to take –income, safety, growth, currencies (including gold), emerging markets and speculation – but at the end of the day every successful trader knows what works best for him or her and where to get reliable information and worthy opinions.
What separates the participants of this blog is that we are on a voyage of discovery. Of course there are a few in every crowd who seem to think they have all the answers and that the rest of us should listen up, but, really, we know better. Most of those people, we have seen, are here today and gone tomorrow. Better that we invest our time in search of value-adding contributions.
One of the sources of information I read for purposes of setting up markers – a framework if you will – is Colin Twiggs of incrediblecharts.com. Yes, he will give you his interpretation of how the market is leaning, but showing the key technical support and resistance levels and direction of money flow in a single price chart is important to time-stressed people like me.
Today, Twiggs reports that Gold has broken down and is likely headed south. I noticed that earlier and have sold the Junior Gold portfolio to 79.5% cash, awaiting evidence that lower prices are forthcoming at which point I will put that cash to work in the relevant inverse ETF’s.
One who’s opinions I find rooted in the real world, i.e., not the sell side, is David Rosenberg, the former Merrill Lynch chief North American economist, now with investment advisor Gluskin Sheff. Interviewed by Tech Ticker, Rosenberg is a worthy read:
Part 1: http://tinyurl.com/2f46n6q
Part 2: http://tinyurl.com/26nfetp
Part 3: http://tinyurl.com/3y35c4m
Rosenberg speaks today of the need to be over-weighted in Income, which, cognisant of market risks today, is consistent with my being temporarily 68% in cash in the Emerging Markets portfolio, awaiting confirmation that lower prices are happening at which point I may utilize inverse ETF’s.
Trading in today’s market environment is truly the “meat-grinder” that Rosenberg says is the case. None of us wish that were true, but we must deal with the facts.
In last evening’s post-close report we discussed the “summer doldrums”. Not even the most fervent Bull or Bear can grab our attention. We know that’s just noise we can do without.
I was going to insert several graphics here, but I see it’s already 8:00am ET, so I’ll bring this to a close.
Have a great day.
CTA Trading Desk Post-Close Report
We speculated last evening buyers would enter the market if the S&P declined into the 1090 to 1100 region, expecting the late fade Wednesday to carry over into the following session. Mr. Market enjoys throwing traders curve-balls so we shouldn’t be too surprised traders awoke to a big gap higher in Globex e-mini futures.
When the sequence of events (price action) doesn’t follow the script it is usually best to step back for a moment and ask yourself if anything has changed. We wanted to get long in the aforementioned area but the market never gave us the early morning “easy” entry. A trader’s immediate reaction is to say, “I knew I was right – prices did rally and I’m not on board – I need to get long now or I will really miss the boat.”
This emotional response needs to be suppressed, as traders need to calmly observe the new information and reassess their battle plan. If you missed the idealized entry does it really make sense to buy the market 2% higher? Usually the answer is “no” and this case was no different.
The opening push upward attracted substantial selling as prices began to auction lower; once the eager-beaver buyers were satiated sellers took over, eventually driving the S&P into our target buying area (low 1092.82) in late morning trade. On cue, buyers emerged leading to an almost +1.5% advance before a wave of last-hour selling pushed the index modestly lower on the day (S&P-0.42%).
The initial sell off this morning was caused by comments made by a Fed member worried about the prospects for a deflationary downward spiral, similar to the situation faced by Japan after its market peak in 1989. Over the past few weeks influential monetary officials from both the US and Europe have hinted Quantitative Easing Part II is on the way, perhaps to give financial markets a boost prior to the November mid-term elections.
If QE II is coming to a country near you one would expect gold (GLD+0.25%) to begin to show some relative strength. The ETF has broken below a long-term trend line off the late 2008 lows on the weekly charts, needing to quickly rally back above this line (approximately +2% higher) to turn the short-term trend back up; stay tuned.
Support on the S&P remains 1080, first higher target in the 1130 to 1150 range; traders need to be flexible and adjust trading plans if prices begin to accelerate through either side of this tight cluster of congestion.
Have a great evening.
Comments
Morning Report
Thank you for your insight. I look forward to setting sail each morning with you at the helm.
Someone is negative on the economy.
What makes this not a wall of worry story?
http://kingworldnews.com/kingworldnews/KWN_DailyWe...
Blowout report
CLW
Clearwater Paper beats by $0.43, beats on revs, Reports Q2 (Jun) earnings of $1.75 per share, $0.43 better than the Thomson Reuters consensus of $1.32; revenues rose 8.5% year/year to $343.9 mln vs the $334.6 mln two est avg.
Day trader's morning
Can't think of better illustration to no-bias, "trade what you see" trading:
http://tradinglog.realitytrader.com/2010/07/jan-29...
another bad day for bonds
Today TLT is attempting to break below 98, a pretty significant line of support. It is already through the 50 DMA, and seems to be continuing its downward trend. Is this signaling a move out of bonds into equities? I'm not seeing it, if that's true. Perhaps the Fed has stopped pumping money over the past week? Or maybe some of our foreign creditors are taking profits, content to let someone else collect the 3.8% yield for 20 years.
FD: short treasuries
Re: Day trader's morning
Vad,
Looking at your "trades of the day" on your websiteis a big help.
Thank you for sharing your expertise. Bear E
Re: another bad day for bonds
Dave,
I also doubt it. I use TLT/TBT as trading tools. I don't think most of the people who've been scared into bonds move that fast or often.
Thanks for sharing your feelings on the market
Meat Grinder is how it feels for me at the moment, with enough mistakes of my own to add to the troubles. But since getting back from vacation the risk control has become paramount. Trying to enjoy the lessons of a turbulent market without putting myself out of the game. Come on September!
elsewhere:
Speculators Rediscover Agricultural Commodities
http://www.spiegel.de/international/business/0,151...
Re: Day trader's morning
Good to hear they help. Let me in throw one more fresh one:
[11:08] {Threei} Short Setup: X 44 break
Nice and easy, textbook setup
Re: Day trader's morning
Vad, What does DBI stand for?
Often times I see you refer to 1:4 or simular numbers that I could not find what those numbers refer to on your website. Thank you in advance, Bear E
SPY rejecting 200 day MA again?
Howdy,
I came back after a long hiatus.
Feels like the stocks are rolling down strong again. Retest of July 1? This is weird as the sentiments stay low as it is now. Sentiment wise this remains me the weird "topping" action we had in 2/2008, 9/2008 or 12/2008. I'm not a permabear and actually tried to buy the dips in May and June, but was dimed and nickled every time I tried. I guess stocks are trying to tell us that a major storm is on a horizon.
Yesterday I noticed an unusual XLU volume pattern previous day and got myself some in the money puts with a tight stop. I can say WOW today.
Any stories on the sudden rise and demise of utilities?
Jack
FD: long TZA, SRS, GLD, short XLU in speculative accounts since a couple of days. Plenty of cash in major accounts.
Re: Day trader's morning
Bear,
JBE and DBI are our core setups. JBE stands for Jump-Base-Explosion, attached image illustrates J and B phases; breakout of the upper envelop launches E (hopefully, lol). DBI is a mirror image of JBE and stands for Drop-Base-Implosion. Flip that JBE and you will see exact chart that X formed in the example above.
1:1, 1:2 etc is risk/reward ratio. Risk is a size of the initial stop, reward is profit you take. If you look at those two LVS examples, both trades had 10 cents stop level and gave 50 and 30 cents profit, thus yielding 1:5 and 1:3 r/r. X short for illustration purposes right now is at 1:9 at 43.10 (10 cents stop, 90 cents profit)
Meaningless Day?
Weird price action today. Sure looks to me as if today's market action is nothing more than a bunch of "late-to-the-party" money managers scrambling to get European exposure before the end of the month (French and Spanish Telecom with their 9% and 7% dividends seem to be being favoured). Bailing on US Staples and Utilities, smashing the $. Meanwhile Consumer Discretionary green and leading (How about BC +12% !! on 4X usual volume) and Energy, Financial, and Materials flying just under the radar.
It all looks either meaningless to gauge future market moves or else looks arguably bullish to me.
Re: Day trader's morning
Thank you for the explainations Vad.
I see X hit your $43.10 target. Well done!!
From reading your website I think now you will watch for X to set the 2nd bottom and go long untill it bounces up again. I see a long candle stick spike tp $43.60 so that would be a good place to set long target from low 43.
Stop at just under 43 just in case.
Mucahs Gracias, Bear E
Re: Meaningless Day?
I'm not so sure we should read anything into XLU's bad day today - XLU has been running hot and just broke out a couple of days back, and its been outperforming SPY for months now. It might be a turning point, or it might just be some profit taking.
My screen shows XLY (discretionary) down -1.53% while SPX is only down -1.1%. Perhaps you have a different indicator for that group than I do.
I see oil and the euro up, gold neutral, and the rest of the market selling off a bit, perhaps on the failure to penetrate the 200 dma a couple of days back. It doesn't feel bullish to me, but nor does it seem super bearish. Coming off the 70 RSI reading a few days back, I'm not buying right now, I'm waiting to see what it does when it hits the 50 dma at 1081.
Perhaps rather than trend either bear/bull, the market will be content to range between 1020 and 1120 frustrating both parties and allowing the big guys to collect premium in the meantime?
Re: Meaningless Day?
I agree that BC seems to be exception now. I just quickly scanned BC:XLY and the RSI(7) exceeded 70. Historically, this makes BC vulnerable short term. I nibbled small money in in the money puts with a stop at the high today.
Re: Meaningless Day?
"Perhaps rather than trend either bear/bull, the market will be content to range between 1020 and 1120..."
Possibly, dave. My comment today was just more a short-term observation about the day's action from open until noon in the equity indexes - specifically S&P 500. It really didn't look like a reflection of any sort of trend change or likely to continue. On the contrary it seemed to be going counter to everything else I was looking at.
Nevertheless, this battle line at 1100 SP500 is getting annoying.
LYM & SLR
ALOHA!!
LYM
In March I bought another 140,000 shares on the open market at $0.14CDN. Today I am exercising 125,000 full share warrants in Lysander Minerals(LYM:TSXV) at $0.15CDN. This was from a Private Placement I participated in 2009. The share price is up about 31% today on five times average volume. Volume is all relative when trading shares in these tiny under the radar resource companies. LYM has very low dilution and management has done well to keep it that way. I have written up LYM before. They just appointed a mover and a shaker to the Board, John Byrne.
Mon Jul 26, 2010
Appointment Of Mr. John Byrne To Board Of Directors And Management
LYSANDER MINERALS CORPORATION (the "Company") is pleased to announce that Mr. John Byrne has agreed to join the Board and management of the Company as Executive Chairman.
Mr. Byrne has recently retired as Executive Chairman of Western Coal Corporation (TSX: WTN). Under his leadership, Western Coal grew from an insignificant market capitalization (around $350,000) to over $1 billion.
Mr. Byrne joins an experienced board of directors. It includes Mr. John Conlon who has also recently retired from Western Coal.
The Company currently owns 100% of the Verticalnaya anthracite mine in the Donbass coal basin of Ukraine. The mine is permitted and construction can be initiated quickly.
A technical report, NI 43-101 compliant, projects that production can be increased in stages to eventually exceed 3 million tonnes per year.
A further NI 43-101 technical report covers the Verticalnaya North starter project, which will permit early production and access to the upper coal seams.
Ukraine and its Donbass coal basin are expected to provide further opportunities for the Company.
A very low cost of production per tonne at $23.25USD.
SLR
Silver Lake Resources(SLR:ASX)share price is up around 8.5% on news release regarding new JORC, Resource Update.
Upped its JORC by 70% to 2.5Mil AU ounces last night on some high grades, some running 9.4g/tAU to 37g/t AU along with some very shallow(less than 60m)high grade(7g/t to 25.1g/t) drill results out of Murchison.
- 17.8Mil tonnes at 4.4g/t AU for 2.5Mil Au ounces.
- Extends mine life past five years.
- Moving forward towards 5Mil AU ounce JORC.
Now awaiting quarterly production which given the substantial rise in POG AUD should prove to be record revenues again. There has been minimal news on production, mostly focused on extending mine life and JORC Resource. I believe SLR will achieve its goal of 5 Mil AU ounces by Q3/2011.
SLR is in the take over target zone.
For more details see the link below.
LINK: http://www.asx.com.au/asxpdf/20100729/pdf/31rkpy6t...
U.S. close to Japan-style deflation, Bullard says
I have said the same thing many times before in my previous comments and here it is coming out now from the mouth of the FEDs member himslef. read on please...
http://www.marketwatch.com/story/bullard-says-us-c...
UXG per Otto
I wrote earlier that Otto had done a "fundie" analysis of UXG. Now he's released it for free on his blog. Worth a glance if you own or follow UXG:
http://incakolanews.blogspot.com/2010/07/us-gold-u...
I still think prices will get to one of the noted resistance lev
http://bit.ly/ahfgzC
noted by the blue arrows.
No positions right now.
Hints of a Rollover
The 200 day line on $SPX tomorrow will be lower than today's according to the StockCharts measure. Right at the end of June, 2010 this last happened for 9 or so trading days per StockCharts.
200 trading days ago from yesterday was 10-12-2010 according to Yahoo Finance and $SPX closed at 1076.19. Dropping that day off and replacing it with today which is obviously higher than the 10-12-09 close would result in a 200 day line higher mathematically, so I'm a little confused as to their calculations. I guess I'm overlooking something and wish someone would show me the error of my ways. Doing the math from the .19 cent or so decline in the average multiplied by 200 would indicate that there wouldn't be a lower 200 day ma tomorrow if there is a 38 or so point rally in $SPX tomorrow.
Even with all this minutia, we aren't making net progress on the upside.
Gulf Oil Missing
Several reports surfaced in the last couple of days that the surface oil in the Gulf is missing. Fox Biz news just showed a video of a fly- around and little oil is visible. Has the Corexit dissolved it or is it consolidated in the water column below the surface or settled it on the bottom? Out of sight out of mind?
BP now trading $38.
Re: Gulf Oil Missing
Rush was talking about the missing oil today as well. He was also wondering why "they" couldn't find the missing 3,700,000 jobs etc. It's back to the Johnny Carson skit about the Fugawi's. lol
Undersea Mining
For Junior Gold Speculators
Just a heads up on a company seeking to engage in the undersea mining of gold,copper and zinc. Nautilus Minerals Inc (NUSMF.PK) based in Toronto Canada. The stock is also traded on the Toronto exchange.
Nautilus has discovered rich mineral deposits located within sulfide deposits on the sea floor off the coast of Papua New Guinea. Additional drilling is currently ongoing. They have received their environmental permit from authorities in PNG and are waiting on the receipt of the final mining permit.
Nautilus is developing the process whereby the deposits are scraped from the sea bed by an deep sea excavator, mixed with sea water into a slurry, pumped to the surface onto a barge for dewatering with with the sea water returned to the sea bed and the barge transported to the port of Rabul, 50km fromthe mining area, The technology comes from current deep water technologies deployed in the oil and gas sector.
The process seems much more environmentally friendly than surface mining, development costs are a fraction of a surface mine, operating costs appear to be lower, no requirement for a fleet of mining trucks, drivers, fuel, etc.
Nautilus is seeking further mining concessions in in waters off Tonga, Fiji and other South Pacific sites for future exploration.
Several large mining companies have taken a stake in the company...Teck, Anglo Am, and a Russian metal oligarch are some of the players.
Here's a report from the company.
http://www.nautilusminerals.com/s/Media-NewsReleas...
I thought this company may be an interesting speculation... perhaps a stock to buy and put in the drawer for 5 years. Current price is $2 per share.
DYOD
FD: Small long position in this stock
Re: Undersea Mining - economical?
NUS is an interesting experiment for sure. As I understand it, they are adapting technology developed for oil and gas, among other areas. Many have questioned whether the "big company" shareholders are as interested in the future prosperity of NUS itself, as they are in the development and experience gained in new technology for their own future reference. Submitted, FWIW ...
iPad, Kindle and ... Ballmer
http://online.wsj.com/article/SB100014240527487035...
It's interesting to me that developments in the mobile devices market is so similar to the auto industry of say 75 years ago.
Casey's General Stores
Casey's General Stores are a buyout target by Canadian Couche-Tard Inc.'s TSX: ATD.A. Casey's is shaking it's head no, and the bod has announced a 500 million buy back at 38.00 to 40.00. Could get interesting. Casey's has been on a mission buying up convenience stores all over the midwest the past 3 years.
http://www.twincities.com/business/ci_15622333?ncl...
http://finance.yahoo.com/news/Caseys-General-Store...
http://www.csnews.com/top-story-update__couche_tar...
Post close report
You're just teasing us to see if we are paying attention, no?
Guess you're going green and recycling old posts.. All in fun.
Do you believe
I thought this was a good n short Barron's article http://tinyurl.com/38rxcvp worth reading. Titled "Do You Believe in Technicals or Fundamentals?"
The bottom line...
From the article: "My view on the outlook could not be clearer. They may be wrong, but at least they are clear. We still call for sub-2% 10-year bond yields and equities below March 2009 lows."
Recently, I have been using BDI as my canary in the casino and it's been up the past few days. A 15 month chart of solid lines shows three major "dips" 9/09, 2/10 and 7/10. Each time $SPX and $CRB had a nice rally. So why would this time be different?
Good trading to all.
Re: Post close report
You are on to something there Ross.
Re: Undersea Mining
This is a stock that has been touted recently by Stansberry & Associates: hence the move from below $1.50 to above $2.00. I would wait until it drops down further; probably in the usual September-October-November time frame. I don't believe that events indicate that anything of great import is likely to occur anytime soon (except for someone touting it again).
Re: Post close report
And I was wondering, where did I read this before, where,,, hummm, of course where else except here in the Post Close report section some time ago :)). I guess it doesn't hurt re-cycling old previous post close reports if market conditions today return to the same kind of conditions/state that took place yesterday, heck why not since we have been trading in a narrow range that frustrated many of us but still many can make money trading the 2x or 3X ETFs trading them daily in these market conditions.
I apprecite the post close reports Bill always and all your work here. Thank you.
Re: Post close report/ Back to the future
Maybe it's a preview of tomorrow's action.
futures 1:40am Asia joins the party in red
S&P -3.30 / -0.30%
Level 1,093.70
Fair Value 1,098.20
Difference -4.50
Nasdaq -3.75 / -0.20%
Level 1,853.50
Fair Value 1,858.63
Difference -5.13
Dow -23.00 / -0.22%
Level 10,386.00
GDP report today if I remember correctly.
futures 4:45am - A sea of red
S&P -4.70 / -0.43%
Level 1,092.30
Fair Value 1,098.20
Difference -5.90
Nasdaq -7.00 / -0.38%
Level 1,850.25
Fair Value 1,858.63
Difference -8.38
Dow -35.00 / -0.34%
Level 10,374.00
well at least Latvia has held the course.
Re: Undersea Mining - motivation of owners ..
If the largest shareholders aren't primarily motivated by seeking profit on their investment, can the stock ever be a bargain? That's MY question !
SIAM Journal on Financial Mathematic link
FWIW...SIAM (Society of Industrial & Applied Mathematics) started a Journal on Financial Mathematics this year. These papers are mainly theoretical; however, a recent paper addressed leveraged ETFs...
http://siamdl.aip.org/sifin
It's the next to last pdf (pp. 586-603) in this list:
http://siamdl.aip.org/dbt/dbt.jsp?KEY=SJFMBJ&Volum...
Here are some links to code that might be of interest as well:
http://www.global-derivatives.com/index.php/pricin...
http://www.math.ku.dk/~rolf/teaching/ctff03/9binom...
http://www.dipic.unipd.it/Impianti/Profs/Canu/file...