Morning Call [7:23am ET] It’s not a given, but indications are there will be a rebound in equity prices in New York today. Equity futures are clearly pointing down, and the results earlier in the day, particularly Tokyo where the Nikkei 225 dropped -3.55% and Europe where trading at this minute is down on average about -0.85%, are ugly.
But traders must learn to follow the action of central banks and their trading in currency markets. Money flow speaks volumes. In fact, in a noisy marketplace, it speaks loudest.
Yesterday we spoke of the Bank of Japan and their desire to talk down the Yen. Traders want more. They want to see the money, i.e., another round of quantitative easing.
During the trading session in NY yesterday, the Yen strengthened. It was obvious that traders were selling risk, reversing the Yen carry trade. Words coming from the BOJ had fallen on deaf ears. The situation had gotten so dour in the afternoon that equities were sitting on the edge of the ledge.
S&P 1040 or thereabouts is the edge below which technical analysts will say that there will be a quick drop to 1010, then 950, then possibly 880. These are chart patterns where trading had to overcome resistance in a rising market, which becomes support in a falling market – just like for instance the market recently broke support at 1120, 1105, 1080, and 1065. So the money players seem to have huddled at these points to assess risk-reward and decide whether the trend should be up or down.
Since August 9, with the S&P peaking at 1129.24 and closing at 1127.79, the trend has been down. Traders have been less concerned with rewards and more concerned with capital risk. As we say, they have been selling risk and accumulating cash. Since a lot of that cash came from the incredibly generous coffers of the Bank of Japan in the process referred to as the carry trade, when capital risk is perceived as being higher than potential rewards from use of that money, even money that cost next to nothing is returned to the banks.
http://en.wikipedia.org/wiki/Carry_(investment)
http://tinyurl.com/24sd9ff
That’s what is happening today with money being returned to the BOJ, just as it did in the early 1990’s until mid-year 1995.
After that there was a massive quantitative easing and the Yen then weakened. The carry trade was on. As investors took on debt, equity prices lifted. There was too much money chasing too few stocks.
Here is a table of the Yen to the US Dollar by month over many years up to Nov. 2009 when it was 90.37.
Obviously the Yen is strongest when it takes fewest to make up a Dollar, and weakest when it takes the most.
In the period Feb-July 1995, the Yen to the Dollar was 96.93, 88.38, 83.77, 83.19, 84.77, 88.17, and 97.46. That was an over-bought crisis level, and the market is back to that point this week. This morning the number is 84-something.
Here is the current chart as of 7:15am ET.
Note that earlier this morning, around 3am ET, right after the Tokyo Exchange afternoon session closed, down a significant -3.55%, which is borderline panic, there was a trade causing massive weakening in the Yen, which the following chart shows. Only the BOJ could cause that. Intervention at work.
Perhaps a better chart to look at is the Euro to Yen because traders are particularly sensitive at this point to a stronger US Dollar, which pulls down equities and lifts US Treasury bonds. So, BOJ would be reluctant to sell Yen and buy Dollars, but they would likely prefer to buy Euro, which would help push equities higher or at the very least not cause them to drop.
Here is the Euro/Yen chart, which shows the Euro lifting from about 3:am ET this morning. As long as it continues to lift, which means the Yen is weakening, that would be a bullish factor for equity prices.
Now, if you have followed along so far, you must realize I am going to tell you why, which in fact is why I started this blog by saying that if things stay the way they are, the equity prices would be lifting (or at least stop crashing). Interestingly, the S&P is right at the 1040 support level, which is also now being supported by the BOJ.
Here is the chart of the S&P (SPY) overlaid on the Euro/Yen. As you can see, they are joined at the hip. I could interject and opine that if there is any anomaly, I’d immediately look to Crude Oil and Precious Metals – because money seeking risk has to flow somewhere if it doesn’t go into equities. More money at this point is not going to go into bonds because yields are simply too low, lower in fact than the risk of inflation returning before maturity of those instruments.
Over time your understanding of these factors will assist in your decision making.
Before closing I want to point to Hurricane Earl, which is a Category 4 killer storm bearing down on Bahamas, expected to miss Eleuthera and Nassau by maybe 190 and 250 miles respectively, but close enough to cause great anxiety, I am sure. Safe and sound in Toronto, I still watch these storms. Earl is massive – possibly going to be within two days as powerful (wind speed and low pressure) as Hurricane Andrew (1992), which was the 3rd or 4th most powerful hurricane to make US landfall in the past 100 years.
Hopefully Earl stays out to sea.
Back to the market; I do anticipate a lot of selling off the open, but should the Euro still be lifting and the Yen falling say at 10am ET, I anticipate a rebound in equity prices within the hour. How long that persists is a matter of how concerned traders are for the economic data trends that are being reported weekly.
Futures prices at 8:07am ET:
Have a good day.
CTA Trading Desk Post-Close Report
Overnight the e-mini futures hit 1037.5 matching the low of last week and finding support near critical support of S&P 1040. The late summer session was choppy and trendless for most of the day, with prices oscillating near break-even before a late short covering rally pushed prices higher on the final day of the month (S&P+0.04%).
Money is still searching for safe havens with US Treasuries (TLT+1.06%) and precious metals (SLV+1.61%, GLD+0.80%) remaining the asset class of choice for risk-averse investors.
The song remains the same as traders wait to see if 1040 is going to hold. The jury is still deliberating and we must patiently wait for the verdict to be reached.
Have a great evening.
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Comments
Cara 100 Ratings Changes
Good morning bath water level watchers.
POT - Potash downgraded to Neutral from Buy at Gleacher based on valuation, as most of the upside has been captured.
Great daily blog
Thanks Bill, very educational....
Re: Great daily blog
Ad,
I second your opinion. Fantastic information & perspective Bill has, and shares. How lucky we are.
I know we should follow prices only, but it's difficult to overcome the emotion. Markets appear so fragile right now. Maybe its the anticipation of a sluggish economy as we transition into fall, or maybe the fear that it'll be years before we're back on track.
Tonite, B.O. speaks to the nation. I hope he indicates a changing of the guard at the Treasury & his Economic advisory. We need a positive event of some type to start the process of rebuilding everyone's confidence in our leaders & our govt.
Stormpulse.com
By the way, stormpulse is great. Beats the graphics on NOAA hands down. Thanks for the link Bill. With Fiona on Earl's heels and another depressionn following, this will be a tough week for the east coast. Stay safe.
Eurozone Joblessness
On the front page of the FT it says "Eurozone jobless rate flat despite growth." You could argue that this is a fairly neutral headline, however, look inside and you'll see Spain's unemployment rate has risen from 20.2 per cent to 20.3 per cent, setting a new record for the region and Ireland's rate has risen markedly from 13.3 per cent to 13.6 per cent. Both of these countries are experiencing a considerable level of distress in the sovereign debt markets.
Re: Cara 100 Ratings Changes
"Good morning bath water level watchers."
hehehe
nice job on vxx entry. First time I've looked at it outside a scalping timeframe. Monday lift off didn't occur as per my working thesis going into the week. good call.
SPY level watching on this forum
I find it interesting how much discussion here revolves around SPY charts and especially bearish implications.
The securities I hold long since the last week show a nice bottoming pattern and very constructive TA.
This reminds me the hysteria of March 2009 when SPY was making (much) lower low while "real" assets like FXI, EEM, miners, energy, and commodities were happily making higher low.
Now, this is not to say now=March 09. I would like to say now=January 09 or alternatively August 04 (don't know which).
Everything seems to get worse every day anymore
Took a loss on Intel in premarket.
Re: Great daily blog
DITTO !
Attention all Mozilla Thunderbird users
I just received and installed an important update to Mozilla Thunderbird. Unfortunately it appears to have deleted ALL EMAILS from the prior version. Back up emails before installing the software or avoid the upgrade for the moment. I am trying to see if the old emails are retrievable, or their import option is somehow hidden. Doesn't look like it.
EDIT: old mails all successfully recovered with a 3rd party add on feature to Thunderbird. If you have similar difficulties, let me know.
Re: Great daily blog
Your morning call and WIR is always great Bill. This morning is another in a long succession of superb posts and education.
Thank you!
J
Gold and Silver just took off ...
Get yours.
Thanks for this blog, Bill. Your daily views disseminated to the people is nothing less than revolutionary. I learn from you every day.
Cheers.
WIR
First thing every morning, it's coffee with BC. Soon, my wireless hookup on the water will make it even better, really fresh air. I've told alot of people about this site. No one else speaks democracy in the financial arena. Glad you're here.
Re: SPY level watching on this forum
jack black,
SPY is at a critical level here, which is the reason there is such a focus on it.
Earlier today, I pointed to the reasons why I believed there would be buyers coming into the market this morning, so for a while anyway the SPY may look ok.
As to being long some stocks, there are many really excellent quality companies that have stocks that are over-sold and represent good value.
But every trader has his/her own time horizon and risk tolerance, and these are the points most of us get our heads around in this blog.
Earl turning north
The 9am report from NOAA shows the storm track turning northerly, which means it ought to bi-pass Bahamas.
Re: Cara 100 Ratings Changes
Good Morning Bill H,
lol
p.s. Is Bill C good or what?
Gartner sees slower PC growth in second half of 2010
SAN FRANCISCO (MarketWatch) - Personal computer shipments are expected to reach 367.8 million units in 2010, up 19.2% from last year, but the pace of growth will likely slow down in the second half of the year, Gartner Inc. said Tuesday. The PC market posted strong growth in the first half of 2010, but Gartner analyst Ranjit Atwal said in a statement, "We have reduced our forecast for second-half 2010 PC growth to 15.3%, approximately 2% below our previous forecast, in light of the uncertain economic outlook for the United States and Western Europe."
Re: Cara 100 Ratings Changes
Flood of sell orders at the open were expected. Now we get to see if the euro can lift and the yen fall. Watch the VXX too as it must fall for equity prices to lift. The market is still undecided at this point. The early move into pm's is not sustainable if Dow 30 and S&P 500 volumes come in big on declining equity prices though, should that happen.
Cara 100 Update (Final)
CTSH - Cognizant initiated with a Hold at BGB Securities. Target $60
JOYG - estimate raised at Barclays. JOYG 2010 EPS estimate increased to $4.00 from $3.90 on more optimistic 3Q10 earnings. Long-term backlog remains attractive. Maintain Overweight rating and $70 price target.
------
Les: My VXX play looks good right now but it was bought in my Roth IRA. By settlement date, it might look like something else entirely. ;>)
George: Yep. Bill is my guru/hero. I learn so much living here.
This just sent market up screaming
however strange it may sound:
09:45:02
*(US) AUG CHICAGO PURCHASING MANAGERS: 56.7 V 57.0E
***Sub-indices:
- Prices Paid: 57.2 v 58.1 last
- New Orders: 55.0 v 64.6 last
- Employment: 55.5 v 56.6 last
- Inventories: 46.5 v 50.8 last
- Supplier Deliveries: 61.2 v 59.4 last
- Production: 57.6 v 65.0 last
- Order Backlogs: 56.2 v 57.6 last
Re: This just sent market up screaming
or something as Consensus was 56 Confidence due in 5 minutes Consensus 51
Consensus per Econoday
Re: Gold and Silver just took off ...
Thanks for this blog, Bill. Your daily views disseminated to the people is nothing less than revolutionary. I learn from you every day.
I especially like your very insight-fullness regarding the currencies!
*(US) AUG CONSUMER
*(US) AUG CONSUMER CONFIDENCE: 53.5 V 50.7E
Re: Cara 100 Ratings Changes
Thanks for taking the time to explain this Bill. Enjoying my daily lesson.
What the Novice Investor Has Learned this Year
1.) When it looks like prices will fall off a cliff, they rally.
2.) When it looks like prices will explode higher, they nosedive.
3.) Everything is technical > technical analysis is the way to profits.
4.) If short, take profits ASAP.
5.) If long, take profits ASAP.
My take going forward: none of these will work. The average investors is scared sh*tless to hold anything long for anything longer than a week. This makes me more bullish than I have been in almost a year.
CSC/SPLS/.SCHW
looking at these for ST trade. SPLS looks the best this AM.
Do your own homework.
Done deal
It seems to me just a matter of when we break 1040, will be adding to shorts then.
Re: CSC/SPLS/.SCHW
long SPLS @ 17.78.
SPLS giving Triple RSI buy signal. Max pain 23 for Sept
CSC Triple RSI buy signal
SCHW Accumulation zone.
Morning Call
Bill - Excellent read on this mornings action. Great commentary and incredible articulation of what you are seeing in the global markets. You are definetly "in the zone" right now, as they say.
Re: Morning Call
I've been with surgeons who tell you textbooks don't really teach you the method of surgery, they are just filled with descriptions of what happened before leaving out anything remotely useful. But having your commentary side-by-side the flow of data definitely is teaching.
Re: Morning Call
At 9:56am ET I took a 30% position in EDZ (3x short emerg mkts) when every tell I read was indicating a reversal, and I never looked at the time -- a couple minutes before the econ data was released. I paid 38.54 and 16 min later, EDZ was 37.93. Then it moved to 38.27 and then back to 37.90. Maybe a bad trade.
I was too busy smiling in the mirror to be doing my job. That's life. We do the dumbest things at times. Now I have to trade out of it.
I say this so you don't go overboard on the platitudes. You'll never stop making mistakes, but, in the end, the only way you'll lose is if you don't try to learn from them.
Re: Morning Call
Well, Bill, it's a Bear market. Short term stochastics could be suggesting the morning bounce is overdone.
Mistakes
Nothing done.............Nothing done.
contrarian signals
There was a lot of bearish emotions expressed on this blog recently, and especially yesterday. To balance that lets look what smart money are doing:
http://www.marketwatch.com/story/insiders-reaction...
http://blogs.wsj.com/financial-adviser/2010/08/24/...
And the biggest contrarian sign:
“For the first time since at least 1997, fewer than 29 percent of ratings for stocks covered by brokerages worldwide are “buys,” according to 159,919 recommendations compiled by Bloomberg. Analysts are turning more pessimistic even as they push up estimates for profit growth among Standard & Poor’s 500 Index companies to 36 percent, the highest since 1988. . ."
http://www.ritholtz.com/blog/2010/08/are-wall-stre...
Re: *(US) AUG CONSUMER
Misplaced confidence. It was only yesterday that the commerce department revealed personal consumption expenditure to be rising faster than incomes.
Re: contrarian signals
jack,
I guess I'm guilty as charged. Regardless of contrarian views, I do wish that someone would be able to look at the chart of $SPX from April 26,2010 and tell me that it is somehow bullish and that there is now some compelling reason to be long $SPX due to this or that happening with prices. If so let me know?
"If anybody has any better ideas, I'm all ears." -- Ross Perot
RIMM loss
I just realized a considerable loss on RIMM. so go right ahead and buy it here I'm sure there is a bottom forming... it always happens when I sell.
anyway it looks very cheap from a valuation perspective or I got it all wrong?
Re: *(US) AUG CONSUMER
"Misplaced confidence. It was only yesterday that the commerce department revealed personal consumption expenditure to be rising faster than incomes.'
Mark - just a thought, but isn't it possible that rising personal consumption could be a reflection that consumers, which have spent the last couple years attending to paying down debt, are now more comfortable allocating a little less to paying down debt and a little more to consumption?
Over a few quarters, could that change in consumer behavior actually drive growth and itself result in improved incomes/employment?
Re: contrarian signals
I don't trade SPX.
There is a number of securities though laboring through higher lows since end of May or beginning of June 2010. EEM, FXI, OIH, DBA, NTAP come to mind.
They did not do it back in Sept 2008 when the first dip crash happened.
FD: long of some of the above.
Re: contrarian signals
jack,
It would seem difficult to trade equities when not in sync with the "market". The rising tide lifts all boats and vice versa adage would seem to dictate risk minimization as much as possible.
Re: RIMM loss
sorry for your loss Boris.
FWIW I have an alert set on RIMM at $40.
40 level is where RIMM spent late 08 and early 09.
Bear E
Re: RIMM loss
RSI 7 day is 19.5, 7 week is 23.38, 7 month is 35. Max pain for Sept is 52.50.
Regardless whether RIMM is a "good" stock, good entry prices are critical.
FD:long @ 43.43
Re: contrarian signals
My experience is different as I am least successful trading your "market" (ie indices) while I make most money trading "out of sync" securities, especially gold and miners.
Re: contrarian signals
respectfully jack,
Gold is a different asset class. Also none of these are related to that EEM, FXI, OIH, DBA, NTAP.
I don't like TBT pattern today
If TBT is leading, that would be bad news for the market later today.
S&P back to where it was near yesterday's close
The S&P 500 future did not break below 1051 until moments before Monday's close. We are back below 1051 now at 1049. I don't know why the hopefulness. The rally may have run out of steam.
Yen has strengthened a lot since 10am ET and the euro weakened. The VXX is lifting. Watch your stops.
SPX money coming from...where?
Where is the money coming from? Certainly not bonds, which are up 0.82%, and certainly not gold or silver, which is up 0.87% and 1.6% respectively. Perhaps oil (-3.11%), but I can't think of where else.
We do have a bona fide move up, i.e. utilities and healthcare aren't leading the charge, but I'm definitely not feeling the magic here of an overall market move off the bottom. Still I remember last march when things bounced around for a few days before eventual liftoff - perhaps the same will happen here as well.
I'd still like to see bonds drop.
Re: SPX money coming from...where?
short covering?
Did you mean last February?
Fronteer buys AuEx: reminder that Nevada is not played out!
So many headlines about junior miners covers Canada (particularly the Yukon of late) . It's easy to forget that the US produces over twice as much gold as does Canada. And, 80% of that gold comes from Nevada.
Is this just due to the major discoveries of the '60s and '70s? Or is there more in store? Well, there's some press about Allied Nevada's Hycroft deposit with 7M oz. indicated. And yesterday, news of Fronteer's acquisition AuEx, its 49% partner in the high-grade Long Canyon deposit.
I wrote recently about my visit to Nevada's "Sleeper Mine" which produced 1.7M oz. and has just been acquired by Paramount Gold and Silver. During that trip, I stopped in at Nevada Exploration because, 2 miles west of Sleeper, they had identified groundwater laden with minerals found near operating gold mines.
This tiny (C$6M cap) company has 10 years experience pioneering groundwater analysis as a tool for targeting drilling in the 50% of the state which has basically NOT been explored, the basins and valleys where the bedrock is covered by sand and gravel.
Nevada was subject to "block faulting" whereby geologic processes mov ed bedrock vertically, some upwards to become mountains, some downwards to become covered basins and valleys. The lion' share of prospecting has taken place where a geo can sink his pick into an outcropping of bedrock.
This company has taken thousands of water samples, built a state-wide database. So far, work in 1/5 of the prospective valleys and basins, and has identified 30 properties considered worth staking.
At this rate, their work alone would lead to staking at least 150 properties. And while large high-grade discoveries are becoming harder and harder to find in conventional, heavily prospected areas, who's to say what potential lies beneath the sand and gravel of Nevada's basins and valleys.
Here's and 8 minute clip from the History Channel's program on goldfinding which reviews this company's "better mousetrap":
http://www.youtube.com/watch?v=P6_RGMDlNA4
Disclosure: I'm biased, having just invested in Nevada Exploration
On being Biased
jock, people biased with a position are more real than tv reporters. Just for a chuckle, here is a funny.
"I have opinions of my own, strong opinions, but I don't always agree with them."
-- Former President George Bush
FOMC minutes
14:00:32
*(US) MINUTES OF THE 8/10 FOMC MEETING: SAW RISK OF AUGUST DECISION SENDING WRONG SIGNALS; RISK OF DEFLATION SMALL; SOME FED MEMBERS NOTED SHOULD PLAN FOR MORE EASING IF NECESSARY
- Labor market weaker than expected; downturn in housing market may be over
- Economic growth still seen picking up in 2011
- The information reviewed at the August 10 meeting indicated that the pace of the economic recovery slowed in recent months and that inflation remained subdued
- Industrial production was little changed in June after three months of strong increases. The output of utilities was boosted by unseasonably hot weather while manufacturing production declined. The drop in manufacturing output included a reduction in motor vehicle assemblies, but they were scheduled to increase noticeably in July
- Revised data indicated that consumer spending fell more sharply in 2008 and in the first half of 2009, and subsequently recovered more slowly, than previously estimated. Real personal consumption expenditures (PCE) rose gradually during the second quarter
- Real business spending on equipment and software rose strongly again in the second quarter, with increases widespread across the categories of spending
- Prices of commercial real estate appeared to have increased in the second quarter, though the number of transactions was small. Nonetheless, commercial real estate markets remained under pressure. Delinquency rates for securitized commercial mortgages continued to rise in June, and commercial mortgage debt was estimated to have contracted by a sizable amount again in the second quarter
- Overall inflation was projected to remain subdued over the next year and a half. The staff's forecasts for headline and core inflation in 2010 were revised up slightly in response to the higher prices of oil and other commodities and the depreciation of the dollar. Even so, the wide margin of economic slack was projected to contribute to some slowing in core inflation in 2011, though the extent of that slowing would be tempered by stable inflation expectations
- Some limited easing of lending standards was noted for consumer loans, but credit availability remained a constraint and consumer credit continued to contract. However, several participants noted that with credit quality improving, some bankers were more actively seeking loan growth, though the same bankers also indicated that the demand for loans remained weak
- Mr. Hoenig dissented because he thought it was not appropriate to indicate that economic and financial conditions were "likely to warrant exceptionally low levels of the federal funds rate for an extended period" or to reinvest principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities
- Mr. Hoenig was also concerned that these accommodative policy positions could result in the buildup of future financial imbalances and increase the risks to longer-run macroeconomic and financial stability
currency move
Just a small point, but a couple minutes ago the euro broke a new low for the day (against the yen) and the yen simultaneously broke upper resistance on the day (against the Dollar). EDZ shot up from 38.14 to 38.27 in an instant, back now to 38.03. But by watching these minute by minute moves you can pick up experience for the day to day or week to week moves as well. The same principles are involved. Longer-term perspectives are actually much better to rely on as Big Money will deliberately try to trick you into putting on bad trades, knowing most traders trade on the basis of emotion rather than experience.
Actually, the function of the market is to determine your assessment and then trick you into making the decision. I have no problem with that. But I do think that regulators ought to be examining more deeply the role of computers and flash trades.
volatility increasing here
EDZ from 38.06 to 38.27 to 37.95 to 38.18 in roughly 12 minutes. Those are big percentage moves.
Increased volatility is often a sign of a break-out -- up or down -- from a tight range.
Just for the record
The yen has almost printed in the 83's to the USD (84.02), and it has only done that for those two months I showed you in today's blog (Apr-May 1995) since well into the 1930's I think, and maybe it has -- except for those two months and this one -- never happened in the past 100 years. This is a phenomenon.
Bottom line: the Japanese exporters can't take it. The Japanese economy is imploding or will unless there is some relief soon.
Case in point: Toyota Motor (TM) at 67.91 is trading back at prices not seen since March 2009.
Re: On being Biased
George - You write "I have opinions of my own, strong opinions, but I don't always agree with them." -- Former President George Bush
Interesting you should mention that oxymoron, whose successor will tonight tell us why he's leaving Iraq, but doubling down in Afghanistan! Maybe Obama doesn't always agree with his strong opinions either ...
Re: On being Biased
Beating the Bushes
"I have opinions of my own, strong opinions, but I don't always agree with them." -- Former President George Bush
Is actually attributed to George H.W. Bush
My favorite of his:
"I do not like broccoli. And I haven't liked it since I was a little kid and my mother made me eat it. And I'm President of the United States and I'm not going to eat any more broccoli."
and a close second is:
"You cannot be President of the United States if you don't have faith. Remember Lincoln, going to his knees in times of trial in the Civil War and all that stuff."
Clinton's best, IMO...
"It depends on what is, IS."
S&P 1040 being tested
1042.75 was low a couple minutes ago; now 1044.25.
EDZ moved from 37.95 to 38.86 high in about 36 minutes.
Re: volatility increasing here
Bill, am I right in thinking that you have chosen EDZ because when risk is dumped by traders, it is dumped in emerging markets first and foremost?
TLT
Added to my TLT a couple times yesterday.
TIPS hit negative real yield
http://tinyurl.com/25scj5f
Re: volatility increasing here
Hi Les,
EDZ is the triple bear. EDC is the triple bull.
Re: S&P 1040 being tested
Bill, I'm just guessing here, but this must be the most challenging market you've traded in your career. How can EDZ move so fast? I know it's 3X, but there has to be some ultra fast, high frequency computer transactions. How can anyone realistically compete on a daily basis?
Re: TLT
Grym,
There's safety running in the middle of the herd, but you might be on the edge. Watch out for the predators.
Where will the money go when the bond jig is up? Precious metals?
Re: TLT
4ever,
"There's safety running in the middle of the herd, but you might be on the edge. Watch out for the predators."
I'm a believer in stops.
I think real metals (coins) are still a good choice and added a week ago. Will do again if/when it drops a bit.
I'm not good at predicting and just watch for a trend. Not "in love" with my choices due to past experiences.
Edit: In 1987 as the market began dissolving, I was on the road (pre-cell phone era) and wishing I could cancel some stops. By the time I got to a pay phone I was glad I had not. I wrote in my little black book... NEVER REMOVE A STOP!
I have sold early at times to take a gain, but will stay with my insurance stops to prevent a large loss.
VIX behaving oddly
With bonds continuing their big rally and SPX basically failing in its rally attempt and returning back to flat again, the VIX is negative on the day. Curious.
closed my EDZ 3x short the emerg mkt
Gain was almost 1%. Could have tripled this had I wanted to take more risk, but my job is to manage risk first and let prices come to me.
I sold the EDZ at 38.83 and a couple minutes later it's 38.34 -- well below my cost of 38.54.
My concern at the eod was BOJ having a panic attack tonight with the Euro to Dollar under 84. QE from Tokyo could zip the equity market in the morning, and I didn't want to be short.
Re: TLT
That would be the kickoff for a dollar crisis, wouldn't it, when holders of treasuries become afraid to hold them any longer.
Germany's post WW I depression was ended by QE, too, but things didn't work out so well in terms of the "exit", LOL.
Maybe little kids will use the stacks of dollars for blocks and build castles out of them like the kids back then did....
Was a time not long ago
it was a given to turn bullish on the day when Obama was to stand up in front of the masses and give one of his hopeful speeches.
As of the last 8 months it's a given to be bearish when Obama stands up in front of the masses and gives one of his wishful speeches.
Tonight Obama goes up in front of the masses again and tries not to show everyone that wishful and hopeful speeches are really meant to keep the masses from revolting and take their country back from the grips of the banksters that have ruined the likes of a working middle class.
Rich get richer, middle class becomes poorer.
Tomorrow may be the bear of all bears????????
Don't be long with another Obama speech on the horizon!!!!!
Lesson closed
[3:39:14 PM] Bill Cara: sell edz to 1% at mkt
[3:39:44 PM] Geoff Goetz (conference calls): filled
[3:40:00 PM] Geoff Goetz (conference calls): 38.83
[3:41:07 PM] Bill Cara: I think BOJ will do QE tonight and the mkt will hold up tomorrow so I didn't want to be short
[3:41:50 PM] Bill Cara: 83.94 yen to dollar
[3:42:01 PM] Bill Cara: BOJ must be scared
[3:42:54 PM] Bill Cara: euro has been plunging against yen and tomorrow it ought to start rising and that will push stocks higher
At 3:47pm, EDZ had plunged to 38.15. If you check the tape, the second I hit the sell, getting 38.83, there was a top price of 38.837. Had I have been more aggressive I would have simultaneously bought the EDC and rode the plunging VXX.
The close on the EDZ was 38.40, but holders will be dreaming if they think they get anywhere close to that in the morning.
But enough is enough. I'm just happy that Earl turned north. With landfall in Bahamas there would have been many lives lost. It appears that won't be the case.
Re: Lesson closed
Bill,
EDZ is trading under 38 as we speak. Great exit - 10 cents under day high.
BizWeek's cover: grinning young GOLD billionaire!
The cover is gold, with rays emanating from behind the subject's grinning face! I think Bloomberg has generally improved Bizweek, and was thus surprised by their fawningly "Forbsey" cover story this week, entitled "The Rock and the Evangelist":
http://www.businessweek.com/magazine/content/10_36...
They way I read it, the story implied that 47 year old Thomas Kaplan led Paulson and Soros into "investing alongside Kaplan" in Novagold. He's taken 18% of Gabriel Resources, with its stalled Rosa Montana project.
They tell of how Kaplan, as CEO of Apex Silver, moved a Bolivian town (to get at the silver). They DID at least report that 4 years after he resigned, the company went bust.
Now, he is ready to move the town atop Rosa Montana to get at what is considered Europe's most valuable gold deposit. His fund has bought the old Sunshine mine in Idaho's "silver valley".
He's clearly done a lot, but I did expect a somewhat more critical stance from BloombergBizweek. Maybe the "magazine cover curse" is telling us to sell Gabriel Resources and all our other gold stocks.
BREAKING NEWS
J. P. Morgan said today that they will be shutting down their proprietary commodity trading operations in reponse to the Volcker Rule in the Financial Reform legislation. - Bloomberg
Now that's a game changer in the metals.
Locked in 3.875 15 year fixed today
thought some you might be interested. Lopped off 1 year of payments and about 30K in interest.
Rocket Man
http://tinyurl.com/yg6le49
Take a look at the one day chart of the DJIA. You can visualize the repeated attempts to shake out weak hands- at the open, over and over again during the day, then a last-ditch attempt in the final hour.
So I've finally found (in a Karate Kid kind of way) 'vindication' for those daily workouts in the inverse leveraged funds- immunity to being shaken down by run-of-the-mill non-superhuman adversaries -)
Get ready for Wednesday morning. Zero hour, 9 am. And the SPX's going to be high as a kite by then.
Re: Locked in 3.875 15 year fixed today
Now that's truly worth a post unto itself- a 3-handle on a 15-year fixed. Congratulations!
Re: BREAKING NEWS - JP Morgan's commodity trading
Keep your eye on the ball. Won't they likely spin it out to some JPM hotshot trader, and finance his "independent" operation?
Locked in 3.875 15 year fixed today
Way to go, Pill!!!! You can't do better than that and I believe you may have nailed the bottom (save the Note & Mortgage for your grandchildren to take on Antiques Road Show).
I am so jealous.
Re: BREAKING NEWS - JP Morgan's commodity trading
And they will find a way to fund it and reap a hunk of the take, as well.
I bet the operation isn't even shut down for 1 trading day as a result. Figure they will move it to a lower tax venue while they are at it, LOL.
Re: Rocket Man
The gap up open scheduled for tomorrow should get things rolling nicely. SPX +10 in early trading.
Question regarding Bonds please
What would cause people to sell the shortest end, the yield rose and buy the other stuff on out the curve, the yields were down...this coming from stockcharts.com?
How many are shorting yen at this level
I tried a week ago but was stopped out. I'm eying another entry as this feels like once a decade opportunity.
RE: What Confirmation??
http://finance.yahoo.com/news/Stocks-end-a-brutal-...
"Some investors worry that the signals of weakness in the economy emerging recent weeks could suggest a slowdown throughout the second half of the year and possibly even a dip back into recession.
Joseph Battipaglia, market strategist at Stifel Nicolaus & Co., said the drop in August matters less than what caused it: signs that economic growth is slowing, or worse.
"The evidence suggests we're going into a recession," he said. "The S&P has held nicely north of 1,000 but we'll break through it."
"
NOTHING FURTHER TO SAY....
Re: Rocket Man
ALOHA!!
Thanks for the 1972 musical reminder 2nd ... I was living in Perth, West Australia then attending the Uni of WA doing English and photography on my way to the National Geographic. I think about then I was digging my car out of a sand bog at SPOT. My how things CHANGE!
IN 1972
Total Outlays = $230.68BIL
Total Receipts = $207.3BIL
Deficit = $23.38BIL
1972 OUTLAYS
Defense = $77.6BIL
Education = $5.5BIL
Health & Human Services = $25.3BIL
Social Security = $39.6BIL
General Services Admin = $655MIL
HUD = $3.6BIL
2010 OUTLAYS(11 MONTHS)
Defense = $359.3BIL
Education = $215.6BIL
Health & Human Services = $89.9BIL
Social Security = $522.9BIL
General Services Admin = $17.4BIL
HUD = $70.7BIL
WE SPEND ... THEREFORE WE ARE!
Remember America was up to our necks in multiple wars against Communism, but mainly it was called the Vietnam War. We love our Defense and it shows, even in the Obama years as he outspends both George Bushes.
Wow ... look at Education from $5.5BIl in 1972 to $215.6BIL today. Have we gotten our money's worth? Well, in terms of brainwashing political and monetary robots we have. In terms of modern creative heroes we have the likes of Steve Jobs and Bill Gates.
Today I was driving into Pahoa to the bank and post office and grocery store in my wife's car. She has a Joseph Campbell CD that I was listening to and he was talking about ancient civilization and mathematics and heroes. Here is some ...
LINK: http://www.youtube.com/watch?v=FnPix6cunzo
Now we use our mathematical geniuses to "shuffle paper" on behalf of HB&B trading desks. Not nearly so lofty or utilitarian for the masses as the Mesopotamians, but more to remove the wealth of the masses. Pretty much the same old Royalty and Peasant class clashes of the past 2000 years only disguised by $5000 suits and the SEC(Securities and Exchange Crime).
Perhaps HB&B employees and US FED professors need to view this ... Who would have thought that a baseball player speaks with more authority?
LINK: http://www.youtube.com/watch?v=aGx4IlppSgU&feature...
As the Asia markets bounce from yesterday's plunge
I am reminding myself that might be all that is going on. Nikkei down 3% yest. up 1% tonight.
Re: Rocket Man
Thanks Kaimu,
I haven't thought of Joe Campbell since I decided not to think about Joe Campbell. He was one affected but interesting fellow. I guess comparative mythology and the comparative history of the great civilizations are somewhat linked.
We have no mathematical geniuses. Western money thought simply outran its recents customs for now. The fulcrum was improperly placed and the lever broke. You could expand that concept into a 10,000 word essay but like you say, It Is What It Is...
Re: volatility increasing here
This I understand George. Why EDZ instead of say TZA? Is this currency movement having an impact on commodities and thus commodity (and emerging market) nations like Brazil - subsequently EDZ was specifically chosen for this event - or is EDZ simply Bill's preferred tactical bear tool?
In the longer time frame as this present period of market instability was developing circa 2008 I recall comments from Bill that risk is withdrawn from emerging markets and contracts to developed markets (although perhaps that reality is soon to reverse). Can this risk factor be nailed down to an intraday timeframe, making EDZ a useful intraday reversal tool?
And So The Wheel Turns
and people take fright again at scapegoats and strawmen:
http://www.spiegel.de/international/germany/0,1518...
http://www.spiegel.de/international/europe/0,1518,...
futures 2:30am - Asia mostly up but Shanghai returns to support
S&P +8.50 / +0.81%
Level 1,056.80
Fair Value 1,048.31
Difference 8.49
Nasdaq +15.75 / +0.89%
Level 1,782.25
Fair Value 1,767.25
Difference 15.00
Dow +57.00 / +0.57%
Level 10,063.00
Shanghai Composite getting close to bottom of its range despite the big bounce elsewhere in Asia.
Re: Rocket Man
Joseph Campbell rocked.
futures 4am - Europe gap up open and drop
S&P +5.00 / +0.48%
Level 1,053.30
Fair Value 1,048.31
Difference 4.99
Nasdaq +11.50 / +0.65%
Level 1,778.00
Fair Value 1,767.25
Difference 10.75
Dow +27.00 / +0.27%
Level 10,033.00
Euro autos flat or worse, ditto the French banks. Risk was sold at the opening, direction difficult to discern.
Re: futures 4am - Europe gap up open and drop
direction is now discerned. it's up, and ripping traders with some decent volatility. Makes me think of Marlin, trying to get to grips with Squirt's (market entry) technique:
http://www.youtube.com/watch?v=KWGihB1RGso&NR=1
S&P +12.20 / +1.16%
Level 1,060.50
Fair Value 1,048.31
Difference 12.19
Nasdaq +24.50 / +1.39%
Level 1,791.00
Fair Value 1,767.25
Difference 23.75
Dow +75.00 / +0.75%
Level 10,081.00
Looks like intervention continues this morning.
http://www.fx360.com/commentary/kathy/3992/usdjpy-...
Re: futures 4am - Europe gap up open and drop
ALOHA!!
Kathy's commentary makes no sense unless you use trader logic.
Unlike the U.S. and Japan where central bankers are actively engaging in easier monetary policy, the Swiss National Bank is amongst the few that are considering tightening.
Is the optimal word "considering" ... I mean pretty soon FX commentary will follow Bill Clinton and we'll be trading based on the word "is"!
So the SNB rate is at 0.25% just like the US FED and the BOJ rate is at 0.10%, so what exactly is the SNB tightening, monetarily speaking? Going from 0.25% to what 0.50%? Meanwhile Kathy posts a chart of central bank rates that shows RBA at 4.5% and the RBNZ at 3%. How many more decades do we have to wait until the US FED and SNB even hit 2% much less 4.5%? Tightening seems to be all relative and the other day I pointed out that the external debt per capita for the Swissies is over $175,000, not even the US has external debt that bad. I am just trying to figure out what it is a Swiss Franc is backed by that makes it the "lesser fiat evil" in the FX since its not frugality and a Swiss Franc is not the same as gold, as it was perceived to be back in the 1970s.
Another quant I notice is that when the spread between the AUD/CHF reaches about 1000 basis points the AUD closes the gap. Anyone else notice that? Its there yesterday and now the AUD is in rally mode this morning closing the gap again up 1.55%. Alas also the POG and POS are moving up but not much in the way of currency confirmation on those moves showing up right now as only the CHF and the HKD confirm. The USD is tanking but WTIC isn't exactly making a big confirmation on that either.
DO SOMETHING!
ALOHA!!
We are nearing the DO SOMETHING mentality in America. This is the same psychology that runs lawyers, doctors and public works inspectors, whereby they are looked at as not earning their fees if they "do nothing". What good is a doctor who is not "doctoring" or a lawyer who is not "lawyering" as whether you need it or not is immaterial! Politics and central banking are the same. We voted for you so ... DO SOMETHING! In reality it would be best for America if politicians gave themselves a pay raise and then went on a two year vacation, leaving Washington DC empty like a ghost town!
A couple quotes on that subject ...
Monday, August 30, 2010
Don't Just Stand There, Print Something
The eyes of all were turned to the Reichsbank. The pressure exercised on it became more and more insistent and the increase of issues, from the central bank, appeared as a remedy.
The authorities therefore had not the courage to resist the pressure of those who demanded ever greater quantities of paper money, and to face boldly the crisis which...would be, undeniably, the result of a stoppage of the issue of notes. They preferred to continue the convenient method of continually increasing the issues of notes, thus making the continuation of business possible, but at the same time prolonging the pathological state of the German economy.
-Costantino Bresciani-Turroni
posted by The Cunning Realist
Then where will all this failed global monetary policy lead to? Maybe history does rhyme as the posts in Der Spiegel that LES has point to.
Still I think monetary policy can be condensed into this one MISES quote from his writing ON THE MANIPULATION OF MONEY AND CREDIT(1937).
Inflationism, however, is not an isolated phenomenon. It is only one piece in the total framework of politico-economic and socio-philosophical ideas of our time. Just as the sound money policy of gold standard advocates went hand in hand with liberalism, free trade, capitalism and peace, so is inflationism part and parcel of imperialism, militarism, protectionism, statism and socialism.
My apologies to the deflationists in the room, but we did not get to where we are today since 1913 with prices, debt and credit via deflationary monetary policy. You have to look at what came first over the past 96 years not just the past two years.
Before you tell me that WW1 and WW2 happened during the gold standard recall that the USA and the UK had to go off the gold standard for those wars. FDR not only went off it he stole it all by Presidential Decree! Its not hard to imagine what the FDR Jrs in DC will do when things get that desperate again.
Which monetary camp are you in? If you're not in the gold standard camp then by all means vote for a Republican to cure America's ills. As long as the US FED exists you don't even have a choice in the matter. That is how a monopoly works. Applaud Obama bringing the troops home from Iraq, but whats next? There's always a NEXT when it comes to America and its military. We now go full circle again as I say ... "Why spend a third of our GDP on a military and not use it?" Just as in Public Works there is no difference in Pentagon jargon and both operate their budgets on one motto ... USE IT OR LOSE IT!! And so they do ...
Re: Question regarding Bonds please
gforce,
"What would cause people to sell the shortest end, the yield rose and buy the other stuff on out the curve, the yields were down...this coming from stockcharts.com?"
The longest bonds have the greatest potential to fall — as rates drop a bond at 3% going to 2% has a larger gain as a trade. It is a good thing for those who owned them when the yields went down.
Those who had been holding the shortest are not necessarily the same ones now buying the long end.
The short end buyers are looking for ST safety — the long end buyers are expecting lower rates.
Re: *(US) AUG CONSUMER
Billy,
Your guess is as good as mine. The consumer is very fickle. The point I was trying to make is that this divergence was given as a reason for yesterday's sell-off and yet today we are told the market is rallying because of a rise in consumer confidence. Maybe it's just me, but I can't see the logic in that.
RE: What Confirmation??
Analyst65,
"The evidence suggests we're going into a recession," he said. "The S&P has held nicely north of 1,000 but we'll break through it."
Let me reverse the question:
What evidence is there that suggests we are NOT going into recession? For that matter what says we ever got out of recession?
The one year market rise was due to government suspension of real mortgage problems, "free money" for houses, cars, appliances, cash to seniors — a massive national can-kicking of economic problems.
The job losses have continued to rise, continuing claims increased, a huge tax added to small businesses, and individuals (health care bill) — all indicative of a worse economy to come.
Eventually the stock market and the economy must converge.
"The end is near" :-(
Re: futures 4am - Europe gap up open and drop
yeh I think they're jawboning the market Kaimu. Last I looked at my bank as I near refi negotiations they had gone and dropped their 10yr fixed another 10 basis points. Don't know what strength the SNB see when one of the largest lenders keep dropping their rates at the long end.
I am curious as to the nature of this indebtedness, but can't really reply to it. Public servants are overpaid here, so public spending is significant (I know from my wife), but this balances a high cost of living. Infrastructure projects of continental importance continue but other that that - I dunno where the money is going.
The Swiss Franc is still backed by some gold - don't quote me on this - to the tune of 20% or so. Unfortunately direct democracy permitted some idiot or idiots to challenge the need for large gold reserves in the early 90's and they were subsequently reduced after a popular referendum. What holds it up today - no idea.
RE: What Confirmation??
Grym..
You are absolutely right, I agree with you on this 100%. I was just continuing my opinion on the matter by sharing other's opinions too. My opinion on this was laid out loud and clear in my comments a couple days ago here in the blog as below. However, no follow up by others or counter comments except one and that's fine, I will live :(, (kidding here). I am sure many here have different risk levels and time frames for when to enter or exit the market and have their own opinion as well and that's 100% fine. But I usually look at the big picture and the trend and trade accordingly.
I realized that listening to other's opinions could be very costly. Frankly I was cheated from my huge Gold shares positions by selling too quickly before this recent rise in Gold bugs just because majority here and elsewhere were saying gold has toped and was heading lower, I sold with a small gain because the rest of people and TA told me we are in way overbought area and better to exit now safely but miners stayed in overbought area and continued to go higher until this minute. I should have held strong and firm and just bought puts to protect my huge position but Grrrrrr, I didn’t. And you know what, I will never do that again. I will always buy puts to protect my gold position but will not sell my GOLD positions again that quickly at least for next few yrs to come.. That's how I feel now strongly about it. Mark my words.
GLTA
http://caracommunity.com/content/bill-cara%E2%80%9...