Morning Call [7:58am ET] I know today’s green and we’re all Irish, but what’s going on here? The S&P 500 ETF (SPY) has lifted 13 consecutive days in a row, since February 25, seldom seen in the past 20 years. But, why the bullishness when S&P trading volume is down in March–40.4% (at 4.38 billion shares average daily volume) over the average of March 2009 (7.34 billion)? In fact, trading is even drying up this year as the February average daily volume for the S&P was 4.45 billion, and in January it was 4.79 billion.
http://ca.finance.yahoo.com/q/hp?s=spy
To confirm the disappearance of traders this year, I noted that Ameritrade (AMTD) and Schwab (SCHW) are down –6.05% and –6.29%, respectively, since the close on January 4 (first day of trading in 2010), while the SPY is up +2.71%.
Given that much of the trading today is computer program generated, which may not be down in volume all that much, it appears to me that humans have walked away. If that’s the case, how much trust can we place in the current prices?
I’m stumped. The stocks of over +40% of the Cara 100 companies hit 52-week highs yesterday; yet the volumes are diminishing by the week.
So far today Europe is up an average of +0.6%, while Asia-Pacific markets were up over +1.0%. The beat goes on.
The AP headlines this morning reads: “Central banks give world markets a boost.” Hmm, maybe they’d like to do the trading for us too.
Today is St. Patrick’s Day. But do you know what it means to be Irish?
My family sent me this list:
1) You will never play professional basketball.
2) You swear very well.
3) At least one of your cousins is a fireman, cop, bar owner, funeral home owner or holds political office. And you have at least one aunt who is a nun or uncle who's a priest.
4) You think you sing very well.
5) You have no idea how to make a long story short!
6) There isn't a big difference between you losing your temper or killing someone.
7) Many of your childhood meals were boiled. Instant potatoes were a mortal sin.
8) You have never hit your head on a ceiling.
9) You spent a good portion of your childhood kneeling in prayer.
10) You're strangely poetic after a few beers.
11) Some punches directed at you are from legacies of past generations.
12) Many of your sisters and/or cousins are named Mary, Catherine or Eileen .... and there is at least one member of your family with the full name of Mary Catherine Eileen
13) Someone in your family is very generous. It is more than likely you.
14) You may not know the words, but that doesn't stop you from singing.
15) You can't wait for the other guy to stop talking before you start talking.
16) You're not nearly as funny as you think you are... but what you lack in talent, you make up for in frequency.
17) There wasn't a huge difference between your last wake and your last keg party.
18) You are, or know someone, named Murph.
19) If you don't know Murph then you know Mac. If you don't know Murph or Mac, then you know Sully. Then you probably know McMurphy.
20) You are genetically incapable of keeping a secret.
21) You have Irish Alzheimer's... you forget everything but the grudges!
22) “Irish Stew” is a euphemism for “boiled leftovers.”
23) Your skin's ability to tan.... not so much. (Only in spots!)
24) Childhood remedies for the common cold often included some form of whiskey.
25) There's no leaving a family party without saying goodbye for at least 45 minutes.
26) At this very moment, you have at least two relatives who are not speaking to each other. Not fighting, mind you, just not speaking to each other.
Have a great day.
CTA Trading Desk Post-Close Report
The 10-year anniversary of the great 2000 bull market melt up is fast approaching and the month of March is historically fertile ground for important turning points in market direction. In addition, we've seen a relentless string (now 13 in a row for the Spyder ETF) of consecutive gains this month. It makes sense that prices should begin to erode.
Yes, according to the efficient market hypothesis, the belief participants always act in a sane, rational manner. The problem is that market movement is not always rational, as many decisions to buy or sell are made in emotional fits of panic or intoxicated states of greed.
Two of the greatest panics of the past 20 years were caused by reliance on systems, probability, statistics, and the unquestioned belief that the most brilliant quantitative minds of our generation have mastered the nuances of price behavior. In 1998 Long Term Credit Management – led by Nobel Prize winners and former Salamon Brothers wiz kid John Meriwether – nearly took down the financial system. Their models rated a default on Russian debt as an infinitesimal 25 standard deviation probability. Their models got it wrong.
In 2007, all those MIT and Ivy League mathematics wizards figured out the pairs trade (one long against one short), calculated the correlation between various asset classes, put on the carry trade (borrow in yen and invest in the assets of higher yielding currencies), and levered it up 30 to 1 to print obscene amounts of money from now until eternity. Oops – one small problem – in times of panic historic correlations don’t hold. In fact, your portfolio insurance goes against you as quickly as your biggest losers.
As traders we need to wait for price confirmation before initiating positions. Idealized forecasts only get us in trouble. The valuations were absurd in early 2000 – the momentum was off the charts. Just because a stock has advanced five days in a row doesn’t mean it is a good short; it could rise in the next five consecutive sessions. The trend is your friend until it isn’t.
Next major resistance is 1228, minor support is 1150, important support is1130.
Have a wonderful St Patrick’s Day.
Comments
question for bsi87 Re: Max pain opts expy
Did you back test it to be reliable?
When I first heard from you about it, end of 2008 (IIRC), I tested it some and did not seem to work. Those were very anomalous times though.
What is the % of hits vs misses currently?
The site is subscription only now, one cannot test it without $$$.
Re: question for bsi87 Re: Max pain opts expy
Nope.
What is Option Pain?
In the option market, wealth transfer between option buyers and sellers is a zero-sum game. On option expiration days, the underlying stock price often moves toward a point that brings maximum loss to option buyers. This specific price, calculated based on all outstanding options in the market, is called Option Pain. Option Pain is a proxy for the stock price manipulation target by the option selling group.
How Should I Read the Option Total Chart?
Option Pain point is represented by the lowest bar in the chart. At this price, all the options in the market have the smallest dollar value.
How Should I Read the Call and Put Chart?
This chart plots the total value of calls (green) and puts (pink) separately. At a specific price point, if the call value is greater than the put value, the stock price may be manipulated below the strike price, making all call options worthless. If the put value is larger than the call value, the stock price may stop above the strike and make the put options worthless.
Why Does Optionpain.com Have One Chart WITH DATA From Yahoo! and Another from CBOE?
We make our best effort to make sure our calculations are accurate. We obtain the data from two different sources and our accuracy is verified by having the identical results from two independent calculations.
Does Option Pain Theory Really Work?
It has been observed over and over again that, near option expiration, option buyers suffer significant losses. According to a New York Times article, it is likely that option sellers, including firm proprietary traders, "manipulate stock prices by selling large numbers of shares whose prices they wanted to keep from rising and by buying other shares whose prices they wanted to support."
What Should I Do if I Hold In-The-Money Options Near Expiration?
You may want to sell the in-the-money option, call or put, one week before the final option expiration Friday. If you hold these options to the last moment, very likely you will see your options become worthless.
O'Cara 100 Ratings Changes
Top o' the marn, lads un lassies.
ADBE - Upgraded to Buy @ Brigantine. PT = $42
BRCM - Auriga U.S.A. Initiates Coverage with a Hold. PT = $32
POT - PT raised from $130 to $150 @ Morgan Joseph. Buy
NE - PT raised from $50 to $62 @ FBR. Outperform
-------
http://tinyurl.com/ykdfnob
Perhaps I'm just cementing my DENSA status...
"The S&P 500 ETF (SPY) has lifted 13 consecutive days in a row, since February 25, seldom seen in the past 20 years. But, why the bullishness when S&P trading volume is down in March–40.4% (at 4.38 billion shares average daily volume) over the average of March 2009 (7.34 billion)?"
1) How much of the "wealth" evaporated over the last two years and is no longer available to trade?
2) Many of the "little guy" have lost faith in the markets and just won't play, preferring saving money in an non-interest bearing account is better than losing sleep at night
3) Of the alternative asset classes available in which to invest, which right now makes more sense than stocks? Real Estate? Bonds? Entrepreneurship/small business? The USD? (Resource stocks of course. Precious metals will be dicey because they are the enemy of big government control).
4) If I look at a chart of SPY since Apr 08, I see what seems to be accepted volume patterns for capitulation in late '08 into March '09, even the most recent pullback exhibits the same behavior.
5) Perhaps the volumes, which began to accelerate rapidly in spring of '07 when the first cracks in the mortgage market hit, is now returning to the pre-crisis levels, and are actually more "normal" conditions.
bad housing news
Well more bad housing news today - MBA purchase apps fell -2.3% w/w (seasonally adjusted). They can't blame this on snow. Un-adjusted, this average fell -1.8% vs. last week, and was down -13.8% as compared with the same week 1 year ago. Average interest rate was 4.91% for a 30 year fixed 20% down.
One can only imagine how much home purchasing was going on mid March of 2009, but I'm guessing it wasn't a flood, given March marked the lows in the equity market and the overall mood was pretty bad.
http://www.mbaa.org/NewsandMedia/PressCenter/72250...
Now we get to see whether the market pays attention, or ignores this bit of bad news.
Re: question for bsi87 Re: Max pain opts expy
Re: "nope"
I don't understand. You use it for months or years with unknown performance?
TED spread lowest in 5 years!
http://www.bloomberg.com/apps/cbuilder?ticker1=.TE...
The crisis is over, but top is near.
FD: mostly in cash.
re: setup fade on failure
Submitted by bobbyo (454 comments) on Wed, 03/17/2010 - 02:21 #59171
Since your up. Fade on Failure means to enter a trade on a breakout failure or in other words trade the channel between support and resistance.
Bob
Sorry, wasn't up anymore :)
The idea is to go against the "normal" setup when its necessary condition fails. For instance if a breakout setup at $20 has holding above support at $19.80 as necessary condition, you can also view it as "short at 19.80 breakdown if stays under 20." Not all of them and not always are two-sided, but this is one of the ways to play it. Setup failure is a setup too, right?
Re: question for bsi87 Re: Max pain opts expy
Yup.
O'Cara 100 Update
BA - Upgraded to Outperform @ Wedbush Morgan. PT Raised from $60 to $79
BHP - Downgraded to Hold from Buy at Societe Generale, which cites a less attractive valuation and fading momentum from negotiations over iron ore pricing.
Cara100 RSI signals
5 Sell signals
17 Distribution mode.
DJIA RSI Scan
1 Sell signal (BA)
5 distribution mode
SP 500 RSI scan
29 Sell signals
61 Distribution mode
No buy signal/accumulate mode
O'Cara 100 Update
NUE - Downgraded to Neutral @ Longbow
MZZ closing trade
in 3/11 @ 18.86
out today 18.01
O'Cara 100 Update (Final)
GOOG - estimates increased at FBR. Its 2010 estimates were raised because of strength in the advertising market. Strong dollar is also helping the company. Outperform rating and $810 price target.
MSFT - estimates, target raised at Citigroup. Shares of MSFT now seen reaching, $32. Estimates also boosted, because of cost-cutting. Buy rating.
Bill's list of Irish traits
Interesting. I read the list and thought to myself ... me, me, me again. With emphasis on "Irish alzheimer's". ;)
Éirinn go Brách!
And, oh yes, the market is running on auto-pilot. Anyone with a lick of sense is not chasing this risk and is watching from the sidelines.
GE
Looks like its finally stalling. Precursor for the rest of the market?
Re: SP 500 RSI scan
I have on the 15min, 60min, Daily, Weekly charts the RSI is ~83, ~88, ~93, ~75... currently waiting and nibbling on 3x short that have single digit/low teen RSI
Re: GE
Wrote some calls on my position (too soon, as usual- but plan to hold for the low 20's unless it gets called from me.) No matter what happens, nothing will hurt as bad as the $5 calls I wrote on 3k shares of TCK at a purchase price of $3 and change in the middle of the meltdown- only to now see TCK trading at over $40...
Re: Perhaps I'm just cementing my DENSA status...
Perhaps I'll try my hand at a membership in the DENSA club...Volume confuses me. Actually what confuses me is people's belief that volume tells a clear tale. Personally I think it's an even noisier signal than price. When I try to burrow down into what volume says, all I keep coming up with is:
Prices rise and fall because of demand and supply imbalances. The bigger the imbalance, the greater the price change. Can't one have big imbalances on low volume days and small imbalances on high volume days? And who knows what causes a particular day's imbalances? One day it might be dominated by the currency arbitragers working to correct a distortion. Another day it might be the retail investor's animal spirits at work. Another day it might be margin calls. Another day it might be the institutional money rebalancing. On and on it goes.
As to why prices are rising on seemingly low volume these days...
1) Is it really low? Yes, I suppose compared to March 2009, which was an all-time record month, it appears low.
2) Sidelines money, disgusted at no return in cash, and with the prospect of no return "for an extended period" is still capitulating and buying back in to a blindingly-obvious trend in equities. There's a host of reasons why it's taking some of them so long. Maybe they had no disposable $ until now. Maybe they were afraid of what happened early last year. Maybe they were waiting for volatility to drop. Maybe they were waiting for some signs that the economy was improving - there are some signs, aren't there? Maybe they were under pressure to delever in the past but now they've reached a better balance? Maybe they have only now noticed that stocks are going up? On and on it goes.
Anecdotally, I'm seeing it daily at work. People who were fleeing 1-2 years ago are scrambling to get back in. But I also think a lot of them are wiser and more cautious this time around.
BEE
Teamonfuego, if I'm not mistaken some time ago you liked the stock BEE. I never pulled the trigger on it, but it has had a great run. Any thoughts on it at this point? TIA, G
Re: Perhaps I'm just cementing my DENSA status...
Oh, I forgot to mention another reason why I believe prices are rising, especially the S&P 500:
US equities, for global investors, were a laggard last year. As the epicentre of the crisis of confidence, and with a weak currency, it was a bit of a dodgy proposition. There are signs (beginning Oct-Nov 2009) that that's all changing. With the global economy stabilizing, and the US $ settling down, what's not to like in the top 500 companies in the world's largest, most transparent, and liquid market? At least on a relative basis...
Re: BEE
it has made quite a run...i'd rather find something before it makes a run.
I like these companies as beaten down, but potentially undervalued:
ACMR - just reported today...earnings (losses) were significantly better than expected despite lower sales than expected. this is a turnaround story...lots of cash, no debt, trading at half book.
FBCM
MNI
ZAGG
SOKF.ob - this isn't really beaten down, just very undervalued.
high flyer
RBCN breakout possibility.
Rodney Dangerfield recovery
We all view things differently. If we stay in one location, that's our world if we don't open our eyes to other regions and see what's happening.
Here's an excerpt from part of March 16th perspective from Liz Ann Sonders, VP, Charles Schwab. (Note: This is a longer trend view perspective, not a day trade viewpoint)
A Rodney Dangerfield recovery—getting no respect
"Within each of the Fed's most recent statements the assessment of the economy has been at least mildly upgraded. I continue to view the economic recovery as legitimate and more self-sustaining than many believe. The latest economic releases support that view:
• The 11-month gain in the Leading Economic Indicators is stronger than either of the two recent "jobless" recoveries, and is in line with 1983's strong recovery pace.
• The improvement in industrial production is also tracking 1983's strong recovery pace and is twice as strong as the two prior "jobless recoveries."
• Nominal consumer spending has jumped to above its 2008 peak, with real consumer spending at a new cycle high.
• The death of the consumer has yet again been exaggerated, with real consumer spending expected to jump 3.5% (annualized) in the first quarter as per ISI's forecast.
• Household net worth is up nearly 12% since its trough, thanks to the surge in the stock market and house prices that are no longer declining precipitously (these being the two largest components of net worth).
• ADP's small business employment measure is markedly stronger than suggested by other surveys, including that of the National Federation of Independent Business.
• Major improvements in key jobs surveys, including from the University of Michigan, the Conference Board, the Empire Manufacturing Index and the Institute for Supply Management, all suggest a strong jobs recovery, not a "jobless" recovery.
• Temporary help and profits, which are key leading indicators for increasing payrolls, are both surging.
• As of year-end 2009, corporate cash flow exceeded capital spending by a record 16%, which bodes well for the business investment component of gross domestic product as well as job growth. The Fed noted this in its statement today: "Business spending on equipment and software has risen significantly." (Bold emphasis added.)
• Long Beach container exports are up 31% year-over-year and railcar loadings are up 19% year-over-year, highlighting both strong export and domestic growth.
• In a good sign for the economy, and possibly even for deficits, federal corporate tax receipts in February were up nearly 56% year-over-year.
• Global stock markets are in rally mode again, while corporate credit spreads continue to narrow.
• Growth in emerging markets is surging, albeit with troubling inflation implications.
However, not until the recovery gets a lot more of the respect that Rodney Dangerfield was lacking should we expect the beginning of a rising-rate cycle."
Re: Perhaps I'm just cementing my DENSA status...
I agree about the money on the sidelines. People are still loaded with cash and especially bonds. When both cash and bonds allocations are low, then it's good time to short.
BTW, I just noticed that SPY's MACD histogram just turned positive on weekly charts.
Re: Rodney Dangerfield recovery
How can Ms. Saunders say the recovery gets no respect when there has been a 60% rise in the market. This list is just a bunch of questionable and unrelated factoids with misleading adjectives: Surging,strong, new high. Ect ect. Come on Ma and Pa. Get back in the market will ya!
Re: SP 500 RSI scan
Just curious but..why? If it was me I would need to acknowledge that "I think it will turn down.." but as Vad and others has pointed out, why trade against the trend. Do you have good history timing the change? An opinion I saw, may be here is that the market will probably trade range bound till options exp.
peace
Re: Rodney Dangerfield recovery
Perhaps she views "the recovery gets no respect" as the market has risen as you point out, 60%, while people stayed on the sidelines. Maybe not you or me, but yes, mom and pop. Ms. Sonders turned bullish last summer as I recall so I understand her view.
Reference money on the sidelines, I notice jack black on the post prior to you agrees.
I certainly don't want to get caught up in a discourse reference the post, but thought I'd post a different viewpoint for the community as there are times a number of posts focus on only the negative.
Right now no doubt the market is overbought with some stocks in nosebleed territory. Calls for caution. However, I agree with Vad and (carefully)trade the trend I see.
Happy St. Pat's and have a good day!
Re: Rodney Dangerfield recovery
Umm bobbyo, did you catch the full 60% rise from the march 9 low? What percentage of investors did? Most money in the market is buy-and-hold institutional money, some on behalf of pensions, endowments, and the like. If you played buy-and-hold all last year you only had a 22% YOY gain and that was denominated in a currency that lost about 8% relative to its global peers. Mix in a tad of inflation, and a couple of 100bps for participation costs and, in real terms, that's a piddling 7-9%. And that followed a butt-ugly loss of wealth the year before, not to mention an overall pretty awful decade. So, you can see why ma and pa (and a few others) are taking their sweet time to come on back. Maybe they are thinking that if there is some real wealth creation to come out of these markets, it hasn't shown itself yet. :)
ACMR
Took a position at $2.96...I don't like buying after a nice runup intraday but this looks like a classic turnaround play. They had another quarter of losses but the losses are getting close to breakeven and they have about $1.50/share in cash and a book value of over $6/share. They are saying that 2010 should be a better year. The stock has gotten crushed and sentiment is really low.
Any thoughts here on WATG,
Any thoughts here on WATG, YONG and some other chinese players, I am in WATG. Also looking at PRGN as a shipper, seems to have solid earnings and nice dividend. Still holding CRIS and VRNM as long term plays on Biotech and Clean fuel Tech
Re: Any thoughts here on WATG,
I really like WATG...They had huge insider buying recently and the stock is down 25% from its highs. They recently announced they are working with BYD, which is owned by Buffett, on electric motor operated vehicles
A player in the China auto market at a reasonable valuation and heavy insider buying...what's not to like?
Consumer Discretionary Stocks
I think shorting this group at some point soon could be a good play. The reason is because of oil. Here is my thinking:
(1) if market continues higher then oil will continue higher and that will crimp discretionary spending a little bit, bringing the premiums in these stocks out
(2) if the market goes lower they will go lower at a faster rate;
(3) these stocks have had huge runs and valuations look a little bit stretched.
Does anyone have a list of the consumer discretionary stocks that have run the most recently?
Re: Rodney Dangerfield recovery
I'm going to observe that her bonus probably involves Schwab doing well - which involves Schwab's retail investors moving that cash off the sidelines and into the market. She's conflicted.
While she has interesting (and probably valid) points about the economy, her notes are one sided. She's not doing an analysis, she's doing a sales piece. When the title of your article suggests a thesis, and all you mention are things that support that thesis, its sales, not analysis.
If she is suggesting the market is undervalued and now is a great time for buy & hold guys to come in, I think she's either talking her bonus, or she's crazy. Buying at triple RSI distribution levels just seems - like more HB&B tactics to me.
But then again I'm still learning what "a wall of liquidity" really means, and how it affects the market. Last year, I knew the Fed was buying all those treasuries and MBS, but I had no idea what that would really do. Now I know.
Never short a dull market
I think the adage needs to be changed to never trade a dull market.
I don't think it gets much duller than today. NQ has traded within a 1.5 pt range ($30 per contract) over the last 40 minutes and counting. I'm going to join the masses Bill mentioned this morning and do something productive with the rest of the day.
Re: Consumer Discretionary Stocks
LZB?
LULU?
ZZ? (not so much)
ARGN?
I terms of SOKF TOF are you
I terms of SOKF TOF are you expecting a NAS listing to be the next catalyst or something else?
Re: I terms of SOKF TOF are you
Honestly I'm holding it for a longer term period because I think it will do well over the long term. I believe they have a tremendous growth opportunity ahead of them. Next quarter's earnings should be good and it will eventually move up to the Nasdaq. Valuation is dirt cheap right now at only 7.5 times trailing earnings when they are growing earnings greater than 50%.
Re: Rodney Dangerfield recovery
Seamus,
I was not upset with you in the least for posting a bullish story. We need more of these to balance our bearish leanings on this board. Maybe all these facts will indicate the bull run of all bull runs. Dow 20,000 here we come. :).
Mack, If I was honest with myself I would have to admit that I am Ma and Pa and guess what. I am never coming back in to be an "investor" again. No target fund for me. I have caught only a small portion of that 60% rise and my 1 year performance compared to an s+P benchmark is pathetic and you know what? I don't care. To give myself some credit, I stopped being an investor in March of 2008, I went flat. So my 2 year performance as compared to the benchmark is wonderful. Of coarse now being a trader I don't even look at performance this way. All I care about is wins and losses and making clean entries and exits. Every once in awhile I do what ifs like-- What if I held on to those 500 shares of DTG that I bought at a $1.00. It would be worth what?
Bob
Re: Rodney Dangerfield recovery
I guess it depends on whether you are talking about a stock market recovery or economic recovery.
Obviously the stock market is up over the past year, though not back to cover the two year plunge.
Likewise the economy has not recovered. Our new number as of yesterday in my home town is now a new high of 20.8% unemployment. That does not come anywhere close to measuring the losses in job quality.
With the loss of more than 10,000 in a decade and a half, part time, no benefits and service jobs like lawn care or handyman don't come close to a machinists package of our history.
It "don't get NO respect" around here.
Re: Rodney Dangerfield recovery
Liz Ann is a sweatheart. She's also a shill. She's also articulate but missed the last several significant inflection points. This is not to imply she is incorrect.
Every 'talking head' should answer the following question prior to the interview; who pays you and why?
Follow the money.
Top real interest Rates
Green is not for the green buck. The top countries to invest money in, in terms of effective interest rates:
- Ireland (+4.20%), Brazil (+3.92%), Indonesia, China (+2.61%), Iceland, Australia
The worst:
- India (-12.97%), UAE, Venezuela, Turkey, U.K. (-3.0%), Israel, Thailand, United States (-2.35%), Saudi Arabia, Greece, Canada
(full table at http://shockedinvestor.blogspot.com/2010/03/top-30...)
Chances of Brazil raising today are 50%. It is either today or next month. BZF is the ETF.
An unlikely MOMO stock!
Take a look at the move IP is making today.
Bob
MNI
I know Kaimu doesn't like my calculation of Free Cash Flow, but take a look at MNI. The stock is at $5.05/share and is valued at $426 Million on the open market.
Here is a look at their FCF the past 10 years:
2000 136.7
2001 159.9
2002 137
2003 146.9
2004 138.7
2005 139
2006 -665.5
2007 299.7
2008 360.5
2009 109.6
AVERAGE 96.25
The average of $96 Million includes 2006, which was impacted by its purchase of Knight Ridder. So basically this stock is trading at 4 times cash flow.
This is what I mean when I'm saying that there are still really cheap companies out there. You could make a case for this to trade at $12/share and still be cheap.
Re: Rodney Dangerfield recovery
ALOHA!!
Just a quick pop-in here, as I can't stand flawed data when I see it ...
"In a good sign for the economy, and possibly even for deficits, federal corporate tax receipts in February were up nearly 56% year-over-year."
This is total bunk economics built on a data anomaly. The horses mouth over at the US Treasury shows that corporate tax receipts are down overall not up and not up 56%.
Here is the data just for the month of FEB for FY 2009 and FY 2010. You can see CORP TAX DEPOSITS(receipts)are up in an anomaly, but not 56%, its up 300%. Then look at the same data with the "tax refunds" added in and for FY 2009 in Feb there was a negative tax receipt(deficit) for the month of $3.36BIL. Yet for the YTD numbers there is virtually no change in corporate tax receipts, depending on how the US Treasury rounds off "millions". In my opinion this lady at Charles Schwab cherry picked a total anomaly to present a more rosy picture of the US Treasury. Her Treasury data is like "weather forecasting in Hawaii" ... it can be sunny in the morning and a down pour at lunch ... just depends on when you look out your window!
FEB FY 2010(in BIL)
CORP TAX DEPOSITS - $14.35
CORP TAX REFUNDS - $10.99
CORP NET TAX DEPOSIT - $3.36
CORP TAX DEPOSITS YTD - $79.59
FEB FY 2009(in BIL)
CORP TAX DEPOSITS - $4.65
CORP TAX REFUNDS - $8.01
CORP NET TAX DEPOSIT - $($3.36)
CORP TAX DEPOSITS YTD - $79.56
In terms of US deficits it is a complete economic fallacy to just look at "receipts", which is gross revenues, without accounting properly for the "net" tax revenues, whereby refunds are subtracted from gross receipts. I could tell you I made $150,000 this year but in actual fact I could have a net loss and be broke. You never learn the BIG PICTURE from "gross" numbers.
These are the latest "facts" as reported by the US Treasury, not Charles Schwab. All numbers are for March 12th per fiscal year. All numbers are YTD ...
FY 2010(in BIL)
CORP TAX DEPOSITS - $85.45
CORP TAX REFUNDS - $54.41
CORP NET TAX DEPOSITS - $31.02
FY 2009(in BIL)
CORP TAX DEPOSITS - $81.01
CORP TAX REFUNDS - $42.58
CORP NET TAX DEPOSITS - $38.43
FY 2008(in BIL)
CORP TAX DEPOSITS - $119.6
CORP TAX REFUNDS - $33.98
CORP NET TAX DEPOSITS - $85.62
FY 2007(in BIL)
CORP TAX DEPOSITS - $125.16
CORP TAX REFUNDS - $21.54
CORP NET TAX DEPOSITS - $103.62
There was a slight uptick in "gross" receipts of $4.44BIL from 2009 to 2010, but that is nowhere near 56%, more like 5%, which can change on any given day or any given month, depending on when you set your data points. So you can see corporate "NET" tax receipts are in a downward trend since Q1/2007, prior to the financial crisis. In fact in 2007 corporate receipts were 47% higher on a YTD basis compared to FY 2010 YTD, so the US Treasury is showing no signs of a "real recovery", but if you are an analyst at Charles Schwab and cherry pick numbers to make your point then the "jobless recovery" is full steam ahead and the US deficits are history!
I would not bet the farm on a one month anomaly. The long term for the US Treasury and US deficits and debt is still negative based on the data I see reported on a daily basis by the US Treasury.
More like "Rodney Dangerfield Data" ...
UUP went outside the lower BB
with a constructive RSI(7) action on daily charts. RSI(7) of 30 was the support since Oct 09. Will it rebound again?
FXE is doing the opposite, higher BB.
FD: selling the last allocation of GDX. 100% cash.
Re: Rodney Dangerfield recovery
ROSS,
Liz Ann is, I believe, a former student and disciple of Larry Kudlow. I'm not sure, but I remember some pretty blond who he used to chat with on CNBC.
Even so, for those who lost between 30 and 50% of their investments in the meltdown, a 60% recovery from the lows is not something to be too happy about.
Too many people listen to the heads instead of doing the math. I know at least one person who says he has quit looking at his monthly financial statements. Is it any wonder they keep getting away with this BS reporting.
Re: SP 500 RSI scan
Why short now... SPX has ~90 rsi7 number with other indices just as high... too much risk on the long side... in addition $USD is close to its 50 and UUP hit and bounced off its 50dma...
nibbled and will sell if mental stops are triggered
COLM
RSI 7 hit 97. wow.
Re: COLM
that's a big number...
Re: COLM
that's a big number... and the weekly is just as big ~91
Re: SP 500 RSI scan
I agree top is very near. I'm waiting for negative divergence on indices and more extreme bullish sentiment. $CPCE is almost there though.
BIDU
Wow...I haven't looked at that one in a while. It's now at $565. Trading at 45 times 2011 earnings. Craziness.
Re: Rodney Dangerfield recovery
Good catch on those Treasury numbers kaimu
Closing Trades
Closed out of most of my long positions with the exception of SOKF and some GE...Just too much froth in the markets for me right now...
Who ever said An RSI of 90 is a sell signal?
Jack and Scott,
I'm not picking on you guys. I have seen the magical 90 Rsi number bantered about alot lately. I have read many articles on RSI and I cannot remember any of them recommending selling when RSI is at 90. Lighten yes. Sell the entire position, no. The sell signal for RSI is usually when a stock goes below 70 rsi and that is usually on a 14 period chart. Look at any 6 month daily chart of an up trending stock. Many of them have hit 90 multiple times and kept going up price wise. The best way to of used the rsi the past year would of been to BUY when RSI hits 70. Overbought gets "overboughter" in this market.
Bob
A bit about oscillators
I see a lot of conclusions about sell signals coming from RSI or other oscillators being in overbought zone. Let's talk a bit about these indicators so no one gets trapped.
Couple words in general first. So-called "banded oscillators" (RSI, Stochastic) work in more or less straightforward way in a range. Oversold - buy it, it will go back up. Overbought - short it, it will go back down. Not so in trends. What happens in a strong trend is: price moves up, oscillators moves in overbought zone, price stalls and consolidates - and guess what oscillator does? It retreats back down, "freeing the room" above for the price to move higher again.
To make itr a bit more scientific: please go to http://stockcharts.com/school/doku.php?id=chart_sc..., scroll down to Banded Oscillators, read whole thing. Look at charts and carefully compare price action to oscillator action - you will see how far from straightforward it is.
Also, for those who want very brief version, here is a quote:
"Banded oscillators are designed to identify overbought and oversold extremes. Since these oscillators fluctuate between extremes, they can be difficult to use in trending markets. Banded oscillators are best used in trading ranges or with securities that are not trending. In a strong trend, users may see many signals that are not really valid. If a stock is in a strong uptrend, buying on oversold conditions will work much better than selling on overbought conditions.
In a strong trend, oscillator signals against the direction of the underlying trend are less robust than those with the trend. "
Etc... I'd strongly advise to read it
Re: Who ever said An RSI of 90 is a sell signal?
the 90 doesn't indicate anything other than risk is high... I prefer the weekly number over daily... 97 with any time frame shows risk high... nothing more
I use 15min, 60min, daily, weekly charts to time entry and exits
SRS RSI is lowest in 1+ year(s)... doesn't mean I am diving in... we could see $5 easily... use it to gauge risk
there are other leaders that are in the 80+ area... watching is what I am doing and nibbling a little...
thanks for your reply...
Re: Who ever said An RSI of 90 is a sell signal?
For the record, I was the guy who pointed out yesterday that SPY daily RSI(7) of 90 has a lousy record for timing tops (at least in the last 3 years).
What I said today was based on sentiment ($CPCE or similar) and USD bottoming action. There are also candlestick formations on PM that I follow that preceded selloffs in the last year. I will upload them later.
Re: A bit about oscillators
Good post Vad. Didn't we have this same discussion, only upside down when markets were on the way down, especially Sep-Dec 2008? Let's move on, already! :)
CNBC
I turn on CNBC for one minute and Fast Money is on and all I hear is bullishness. Man, it's gotta be hard being these people. You can tell what the market is doing without even looking at the tape. All you have to do is listen to how bullish/bearish these guys are.
Re: Who ever said An RSI of 90 is a sell signal?
"the 90 doesn't indicate anything other than risk is high."
Ugh. Not necessarily. It's essentially the same as the stochastic oscillator and all that shows it that the current price is near the top of the range in which it traded during the time-frame in question. If a stock is trending methodically upward(they do that sometimes), well it's RSI/Stoch oscillator is going to be high. About the only use for RSI in an upward trending market is spotting good entry points - when RSI is low and rising. Similarly, about the only use for RSI/Stoch oscillators in a downward trending market is in finding good spots to short - i.e. when RSI is high and falling. Finally, RSI/Stoch is useful at both extremes in a sideways market.
Of course, another problem is to use the right parameters for your trading time-frame. e.g. RSI-7 is pretty useless to focus on if you like to catch a 10-20% move in a stock over a few months (except when you've already decided to buy and are trying to finesse your entry. Then I suppose drilling down through narrower and narrower time frames, confirming all the RSIs are on the upswing or downswing, might be useful.)
Re: A bit about oscillators
"Didn't we have this same discussion, only upside down when markets were on the way down, especially Sep-Dec 2008? Let's move on, already! :)"
Happy to. Last thing I want to be is catcher in the rye.
Re: Who ever said An RSI of 90 is a sell signal?
Great points on RSIs. The issue with RSIs is also that the optimum parameters are very different for buy and sell signals, as well as the desired target ROI and timeframes, which are different for each user. I am testing using a tool we developed that optimizes these parameters and a few others. Indeed very rarely is RSI 7 the best indicator. I am attaching some charts for SPY (RSI7, 30-70), as well as optimum parameters for buy and sell signals that perform significantly better for a target ROI of 5% and various timeframes (anyone who is interested in using/testing the tool please drop me a line directly and let me know which stock you would like tested).
Brazilian CB left rates unchanged, 5-3 decision. April will be fun.
Re: A bit about oscillators
No,Wait,please.
Some of us are slow learners or just starting to try a few things and others may have just found this site. If it's valid and worthy, but you already know it — simply skip on.
Re: A bit about oscillators
No worry Grym... Having met many blog participants in person, after many hours of trading related discussions, dinners, drinks etc, I am perfectly comfortable with any discussion or question, and have no doubt that many will benefit from it.
It's those few oddballs that send resentful e-mails, take different point of view as personal offense and make everything personal that I have very little tolerance for.
Re: A bit about oscillators
I am re-reading "Reminiscences of a Stock Operator" in the excellent recent annotated edition by Jon Markman. Highly recommend this edition. It's a classic, not unlike "Catcher." Some stories never get old. Same for the uses/abuses of RSIs, in my opinion. Learning and relearning. Rinse and repeat.
Re: A bit about oscillators
One of my all time favorites
571 new NYSE highs
The NYSE new 52-week highs reached 571 today. It is the highest reading since December 2006 suggesting that there is strong bullish momentum in the market.
But tailwinds can easily turn into headwinds if you chase momo. Perhaps tightened those stops.
CBOE equity put/call ratio ended at 0.47 tonight. Usually a pullback after options reach that level of speculation.
Just my 2 cents.
Re: 571 new NYSE highs
Re: the put/call ratio. I use 10 DMA to smooth the ratio. Today, it's the lowest in 3 years. The top is near. However, I will wait for that to start going up before any shorting.
Green Zone
Movie night. Anything with Matt Damon is a must-see for me. Did not know in advance this was about the US in Iraq 2003 and the huge deception re WMD intelligence. Totally unlike Jason Bourne; the man in this action thriller is a hero, I think. It was hard for me to tell who was who from CIA, Pentagon, Army, Special Ops, and so on, so I just listened to the noise and watched the gore with interest, a story lost somehow in the nuances upon nuances being presented by Hollywood. Without reading the book -- I wish I had the time, but don't -- I would love to hear from real people with skin in the game in Iraq at that time, just how they feel about this movie.
Im smarting from a short position
But tonights comments are good. All the negative economic outcomes of the near future are grease for a slide, looking ahead.... once it starts it could get lower fast.
Evening
sorry I missed out on the conversation but I had to go to work.
Have a pleasant evening and tomorrow.
GL/Good trading.
Optimum parameters for RSI.
SI02.
The charts you posted were not interactive for me. I would like to test 4 stocks if possible.
Down trending: NTRI
Up trending: F
Reversing: NOK
.............. VXX
for kicks and giggles.
Re: Optimum parameters for RSI.
if you are talking about the three charts SiO2 posted the reason why they are not interactive is because they are .jpg files. They are just a screen shot of the actual software he is using. hope this helps
Google vs. China
What are people's thoughts on this? Do you think Google will follow through with pulling out of China? I remember reading last month that Google will see how things pan out in the next year or two and then decide...but then I read this week that they are pulling out immediately and Google's partners in China are demanding an answer one way or the other from Google.
Are any of you trading GOOG / BIDU?
Re: Green Zone
Bill said: "I would love to hear from real people with skin in the game in Iraq at that time, just how they feel about this movie."
I'm interested in how the audience interprets the film. I recall a post-release analysis of "Body of Lies" with DiCaprio, which suggested that American audiences were bored of it, having expected a roller-coaster ride of action. I thought the intricacies of Arab-American relations being re-presented in the film fascinating.
(At this point I wanted to point to an article in Mother Jones, in which the US military conducted interviews with a number of Arab states, which concluded that due to the Israeli issue, Arab opinion of American leadership is very poor. Petraeus reportedly sought control of the Israeli theater as well as the other conflicts. The link has been discontinued. Mother Jones not as fearless as they declare themselves to be?).
It is by this popular medium that cultural elites reach out to the audience to share a story. I hope that audiences can surmount the bombs and thrills cliché and appreciate movies in the style of "All the President's Men" once again.
Matt Damon is a must see for you?. Funny, I appreciated him the most as a rat alongside Nicholson in "The Departed" :)
Dylan Ratigan interviews Michael Moore on Banking Lobby
http://www.huffingtonpost.com/2010/03/17/michael-m...
About $1M per representative is spent by the Banking Lobby. Michael Moore has his irreverant say what many people are thinking and feeling.
"Until we remove money-- and I mean remove it from politics-- we're doomed."
Is the trading volume really that low?
I don't think that trading volume is really that low. Of course, compared to the let's say special time in 2008 and 2009 there is a significat drop, but we are still above the 2007 levels, and way above the previous years. Even if we substract the 50% algo trading we are at the same levels as in 2005 and before.
Re: A bit about oscillators
Thanks, Vad.
While I will probably never become a day trader, I am cautious and value your advice re: waiting for a trend and the use of stops. (Something I have done for years.)
Simply finding out years ago there are such relief valves has saved me $thousands and stops on one lucky break purchase, Krispy Kreme Donuts (KKD) pulled me out of a 30% downer after 2000 took my "safe" mutual funds straight down in a 3-month plunge. I was using your plan of following this stock's seemingly irrational surge with raised stops sometimes two or three times a day until in crashed and burned.
The old ways are history and this old dog needs to learn a few new tricks — nothing too esoteric, but something where I may experiment with small amounts mostly as swing trades at least at first.
I've read Bill's book and find your posts interesting and informative as well.
Grym