CTA Trading Desk Morning Report
[8:15am ET] Good morning, Geoff here.
Yesterday showed us that the global printing presses are starting and shorts are getting slaughtered because of it. The rally may continue for a while, but a real solution to the sovereign debt issue has not been created so it is not time to go long and forget about your position. Don’t get me wrong, we are happy to be long now, but we also know that the issue will come back to haunt us eventually – the question is when?
Even if the 17 members of the EU can find common ground for a solution in the near term, it will not be a long term solution until all the debt is marked to market or cleared out.
As we have been saying for weeks, gold and silver miners have the most upside from here directly because of the printing.
Technically, we are back in the old trading range of 1230 to 1293 in the S&P 500. It will be interesting to see which way we break out of that range, but it would not surprise us to see 1300 tested after some consolidation of the recent gains.
Yesterday’s ADP Employment report came in at 206,000 which was higher than last months 130,000 (revised up from 125,000). This shows that private sector job growth is present and was the largest monthly gains since December 2010. This positive number will likely raise expectations for the government number on Friday.
This morning, ISM manufacturing data came in at a positive level rising to 52 from 50.2. Levels over 50 mean that the economy is expanding. As Bill has been asking the economic fear mongerers for months; “where’s the fire?”.
S&P futures are flat right now and, personally, a slow day would be welcome allowing me to get caught up with some administrative issues. However, the US dollar is looking a little weak to me so I’m thinking up again.
Have a great trading day!
Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.
| Symbol | Name | Last Trade | Change | Related Info |
|---|---|---|---|---|
| ^ATX | ATX | 1,824.00 |
 11.10 (0.60%) |
Components, Chart, More |
| ^BFX | BEL-20 | 2,070.14 |
3.81 (0.18%) |
Components, Chart, More |
| ^FCHI | CAC 40 | 3,138.40 |
16.22 (0.51%) |
Components, Chart, More |
| ^GDAXI | DAX | 6,040.86 |
47.98 (0.79%) |
Components, Chart, More |
| ^AEX | AEX General | 274.37 |
 2.76 (1.02%) |
Components, Chart, More |
| ^OSEAX | OSE All Share | 435.11 |
1.64 (0.38%) |
Components, Chart, More |
| ^OMXSPI | Stockholm General | 302.26 |
1.91 (0.63%) |
Components, Chart, More |
| ^SSMI | Swiss Market | 5,682.58 |
30.27 (0.54%) |
Components, Chart, More |
| ^FTSE | FTSE 100 | 5,523.70 |
18.28 (0.33%) |
Components, Chart, More |
| FPXAA.PR | PX Index | 871.30 |
7.60 (0.86%) |
Chart, More |
| ESI500000000.MA | IGBM | 842.87 |
3.10 (0.37%) |
Components, Chart, More |
| MICEXINDEXCF.ME | MICEX Index | 1,506.47 |
6.85 (0.46%) |
Chart, More |
| GD.AT | Athex Composite Share Price Index | 678.68 |
3.53 (0.52%) |
Chart, More |
http://finviz.com/futures.ashx
http://finviz.com/fut_chart.ashx?p=m5&t=ES
http://finviz.com/fut_chart.ashx?p=m5&t=ZB
http://finviz.com/fut_chart.ashx?p=m5&t=DX
http://finviz.com/fut_chart.ashx?p=m5&t=GC
http://finviz.com/fut_chart.ashx?p=m5&t=SI
http://finviz.com/fut_chart.ashx?p=m5&t=CL
The team will check in during the day, reporting in the Discourse when there is a new entry.
Enjoy your day.
Cara on Trends & Cycles
Vad's Catch of the Day
Kaimu's Sound Money
CTA Trading Desk Mid-Day Report
CTA Trading Desk Post-Close Report
Comments
Cara 100 Ratings Changes For Thursday
Good morning.
08:30 Initial/Continuing Claims (402,000/3.74 million)
10:00 ISM Index
10:00 Construction Spending
15:00 Auto/Truck Sales
------
ADBE - Downgraded to Sell @ Brigantine. Target $23
PG - Procter & Gamble upgraded to Outperform from Sector Perform at RBC Capital citing valuation, improving fundamentals, long-term margin opportunity, and a rational growth strategy. Price target raised to $74 from $69.
------
"The truth is more important than the facts."
- Frank Lloyd Wright
huge dillema
My shorts since the early Nov top were stopped out yesterday (off course) and I lost my gains. Ouch! The bond positions suffered too.
Here is the thing: euro bonds yield are easing today, but stress indicators going up non-stop (Libor, euribor, TED). Which one is the true indicator and which one is head fake? I wish I knew.
I'm thinking this rebound is analogous to the one after flash crash in may 2010 and should be sold and shorted. Just like then, $NASI and $NYSI are falling and the rebound didn't even make a dent. VIX is sitting on lower BB, so it should go up, right? On the other hand the charts look like bullish flag, but I have a sneaky suspicion this was painted via trading coming from europe/asia and anemic US-based trading.
Anyone wants to hold my hand while I go in?
blog dead today?
???
AMR Bankruptcy
A good commentary on the friendly skies of trading in today's world. Be careful out there. JMO
http://goo.gl/0YR8z
Re: huge dillema
Jack - I would say a general rule of thumb is that if you need someone else to vindicate your trade, it's probably best to wait for another pitch you like. I am personally fairly bullish on equities right now from a valuation and balance sheet perspective. I reloaded last week what I had sold earlier in the month - and then did a little selling at yesterday's close to lock in some short term profits. My take is that upward is the path of least resistance for equities right now and most folks are too underweight in equities such that a significant move higher would leave them chasing. Buying on weakness and selling on strength while keeping a modest core long position has done me well since August.
Re: huge dillema
Jack... IMO, you are trying to trade on technicals in genuine news driven market. Technicals by definition work thanks to incorporating news in the price in advance. Current environment narrows the time frame for technical trading to intraday and even then you have to be there with your finger on the trigger.
Where's the fire
You have to be kidding me. A major European bank almost went out of business two nights ago. The house is on fire and you guys are sitting on the couch drinking beers. Go back and look at the last three times the swap lines were initiated. How bout 12/12/07? The Dow closed at 13473 and a month later it was 12000. On 9/17/08 the Dow was at 10600 rallied 700 point in to days and then closed at 8450 three weeks later. Investors keep whistling past th graveyard.
Re: huge dillema
Thank you both for responding. I opened a small pilot short position in XLF as banking is very precarious and I still sit mostly in (currently falling) bonds. This is very confusing and I guess there is no sense of trying to predict future.
CS Global Equity Strategy
Global Equity Strategy A. Garthwaite
Continue to focus on growth
We believe that investors should continue to buy investment-grade rated growth: i) growth as a style is outperforming (growth by 2%, quality growth by 9% year-to-date); ii) the real discount rate for investment grade companies is set to remain low, increasing the net present value of long-duration earnings; iii) the developed market recovery remains sub-par - and this should lead structural growth to trade at a premium; iv) growth as a style is cheap (trading on a premium to low growth of only 20% vs a norm of 50%), with the market paying too little attention to EPS growth and RoE; v) global excess liquidity is rising, which typically leads to a re-rating of growth.
What is growth? We identify growth stocks using three criteria: quant screens (above-average projected sales and EPS growth over the next three years), our analysts' views, and stocks exposed to our favourite growth themes. Of these the following are highlighted by all three of our screening criteria and are attractively valued (upside on Credit Suisse HOLT® or FCF yield above 5%): SAP, Swatch, Weir, Intertek, Fresenius Medical and Coloplast in Europe, and Apple, UnitedHealth and Oracle in the US. Among those stocks highlighted by at least two of our methodologies the following have a CFROI® at least one standard deviation above that of the market and low CFROI volatility: WPP, Shire, Reckitt, Diageo, Intel, Emerson and Kraft. Our quant screen of quality growth (superior earnings growth and asset turns, high CFROI and lower CFROI
volatility) highlights: Petrofac, Intertek, Sonova, Apple, Oracle.
Our favoured growth themes are: branded GEM consumer plays (Swatch, PM, Yum Brands, Diageo, BMW), automation (Rockwell, ABB, THK, Fanuc), underleveraged banks in underleveraged economies (Sberbank, Kasikornbank), ageing
population in emerging markets (Novartis, Prudential), the beneficiaries of the rise in global trade (K&N, Global, China Merchants, UPS), especially testing/verification (Intertek), global travel (Dufry, Air China), water (Sembcorp, Sabesp, Hyflux), oil-field services (Baker Hughes, Halliburton, Petrofac, Weir, Amec), energy efficiency (ABB, Schneider), software
(SAP, Oracle) and semis (Intel, Micron). We have set up Delta One baskets, offering exposure to our preferred growth names (Bloomberg code CSERGROW in Europe and CSUSGROW in the US).
Fed saves Europe's banks as ECB stands pat
http://www.telegraph.co.uk/finance/financialcrisis...
Well, I searched when was the last time U.S. Fed did currency swap lines with ECB and it was on 5/10/2010. We know what happened next.
Prior to that was 2008. Hmmm!
Federal Reserve taking cues from Wall Street
via WSJ
Wall Street executives, in a private meeting with a top Federal Reserve official in late September, recommended a coordinated effort by central banks to remedy the European financial crisis, according to Fed documents received in an open-records request. The meeting, led by Louis Bacon, founder of hedge fund Moore Capital Management, preceded a joint action Wednesday by the world's major central banks, which banded together to provide liquidity to the markets through cheap U.S. dollar loans. Wednesday's moves involved central-bank coordination to lend to European banks, and it couldn't be determined what precisely prompted the Fed and the other central bankers to act. Mr. Bacon is one of 12 Wall Street members of a 14-member Fed panel, the Investor Advisory Committee on Financial Markets, set up in the wake of the financial crisis to give New York Federal Reserve Bank President William Dudley a pipeline into investors' thinking. The Sept. 27 meeting with Mr. Dudley exemplifies the private meetings some Wall Street investors have with top Fed officials, in which they can gain access to potential early clues about Fed actions. Hedge funds have been pushing to get more information about the inner workings of the Fed, according to people familiar with the situation, as detailed in a Wall Street Journal page-one article Nov. 23. The Fed's meetings with investors present a delicate situation for U.S. officials. They must balance the need for information from investors about the markets against the Fed's internal policy discouraging employees from arranging meetings with investors that would confer a commercial advantage. The Fed's Mr. Dudley declined to comment. In a statement, Mr. Bacon defended the meetings, saying, "The Fed and Treasury canvass market opinions extensively through a variety of private-sector committees, contacts and trading desks in their task to fund the nation's exploding debt load, stabilize markets and optimize economic outcomes." Members of the Investor Advisory Committee on Financial Markets include some of the biggest names on Wall Street, including Keith Anderson of Soros Fund Management; Mohamed El-Erian of Allianz SE's Pacific Investment Management Co.; Peter Fisher of BlackRock Inc.; Joshua Harris of Apollo Management LP; Alan Howard of Brevan Howard Asset Management; Deryck Maughan, a former chief executive of Salomon Brothers who now is at Kohlberg Kravis Roberts & Co.; and David Tepper of Appaloosa Management LP. The group suggested a number of ways to address the European crisis, including "coordinated credit easing and/or quantitative easing by" the European Central Bank. The group also urged "central bank guarantees of sovereign debt," "investments in European sovereigns and banks," "implementation of capital controls" and "government guarantee of bank funding and/or depositors," as well as "recapitalization of the IMF," according to the minutes.
http://tinyurl.com/7d7ccdg
SVM
Anyone buying here?
Bought some this morning in the low $7.7x. This is a re-entry for me after taken a bath during the whirlwind of rumors. Hopefully those storms are behind us and we can now look towards more "normalized" trading.
Re: huge dillema
Jack Black,
I think like an investor but the game is to be a trader.
So now I watch for the patterns, and wait for the set up.
By the end of Thanksgiving week I saw that the market was oversold. Sunday night market moved up a lot premarket. Same on tuesday night. Does not leave a guy much chance to get in. As Vad says it is all about interday trading with finger on the trigger.
Geoff Here commentary in the last few weeks about positioning your self for market has been spot on. Thank you Geoff.
Most of the trades are computers, quants, deviations and all kinds of non investor related moves.
I urge you to get Vad's book Techiques of Tape Reading.
BearE
Re: huge dillema
Without a supercomputer tied directly into the market, deep pockets to take advantage of nanocent anomalies lasting nanoseconds, you are just gambling. The only advantage the average investor has is the willingness to bet on a long term outcome-- the quants cannot be bothered with anything that might take as long as a day, or week, or (horrors) even longer.
KBX Kimber Resources Inc
Does anyone here follow this company? There looks to be some insider buying http://canadianinsider.com/node/7?ticker=KBR. The past couple weeks had a good test at $1.00 and it appears that was rejected pretty well – starting to move up a bit. I’m hoping for $1.40 test soon. I started a small position last week.
regards,
Earl
Let's hear it for cycles...
You'd better bet there is a 40-year market cycle, so 2011 should repeat 1971 and 2012 should repeat 1972...
The 40-year cycle comes about this way. 1) We all know that there is a marked 4-year cycle; 2) there is a less marked 10-year cycle. The LCD of 4 and 10 is 20. So, yes, there is a 20-year cycle. But bearish and bullish biased 20-year cycles alternate. Hence our 40-year cycle. The last bullish 20-year cycle ended in FY2000, at which time our 20-year bearish cycle began.
See: "It’s Beginning to Look A Lot Like…1971"
http://macromon.wordpress.com/
Euro
I have been bearish on the EUR since it cracked in late August (1.45 => 1.36 in seven trading days). In mid October it roared back on intervention and filled the gap around 1.42 and printed a beautiful island reversal on the daily chart.
As long as it does not rebound above the October high, I expect a lower EUR. A value below 1.32 should trigger a new wave of selling.
Not only does the technical picture look negative, but fundamentally things could definitely be better. I doubt the ECB can hold rates at 1.25% for a long time. This would mean a stronger USD, which should put pressure on the world markets. However, I am rather neutral on stocks. No wonder I like cash!
Request for feedback
Hi all,
Bill has requested that I poll the CaraCommunity members and see what the level of interest is in forming a Premium Traders Club. Bill does not have the time right now to organize it, but he will be an active member.
It will be focused on the exchange of trading ideas and not educationally motivated. It will be a place where Bill and the club members could discuss, explore and exchange in a more focused environment their ideas on trading.
I can administrate it in the interim until it gets started and the group decides who the annual leader and club rules would be. Let me know what you would like included as featured content in the Premium Traders Club. I will then collate all the suggestions and we can together fine tune the final product. Along with your itemized suggestions please give me an idea of how much you would be willing to pay for membership in this Premium traders club on a monthly basis.
Please send me your ideas and thoughts on this at athangadanidis@billcara.com
CaraCommunity will always remain for free. We are actively exploring a variety of enhanced fee based products, information and services that we can offer to the CaraCommunity members.
Thank you for taking the time to write in your feedback in the past, it is very appreciated and always welcome.
Looking forward to hearing from you,
Athan
Re: Request for feedback
1. What are the necessary qualifications to participate?
2. What is the purpose(s) of a monthly fee:
a) profit/income/compensation
b) covering actual costs
c) keeping trade-unrelated discussions/"elements" to a minimum
d) all of above?
Re: huge dillema
"Without a supercomputer tied directly into the market, deep pockets to take advantage of nanocent anomalies lasting nanoseconds, you are just gambling."
I strongly disagree. Trading those same patterns I trade for many years, 5 wins out of 6 trades today. 6 out of 8 yesterday. Etc, posted for everyone to see every day. No supercomputer, no nanocents or nanoseconds, old fashioned mouse clicks.
Re: huge dillema
I too enjoyed techniques of tape reading by Vad, and would like to suggest it to other members of Cara's community.
Mansis
Re: huge dillema
Thanks for a good word guys, much appreciated
Double bottom could be in for day
Double bottom could be in for day.
http://bit.ly/sxVVQM
if it plays out anything like yesterday's dbl bottom, we should see 1254-60 on the ES.
Long ES at 39.
good luck folks.
Sorry for all the messy lines.
EZPW
Nice breakout - needs to pass and hold 30 will help to move up.
Index resistance, dollar support
as seen by DJIA and UUP. See attached.
another way your android phone spies on you ...
Fox news piece on pre-installed "carrier iq" software which apparently reports every keystroke, transmits data in cleartext over supposedly encrypted https link.
It seems that HTC and Samsung for sure pre-load this software, which always runs, and from which you may not opt out. It may be that verizon allows an opt-out, but not other carriers:
http://www.foxnews.com/scitech/2011/12/01/is-your-...
context on android spying
Once your private data has been recorded and sent to a carrier, it is vulnerable to acquisition by the gov't, and likely by private investigators working for business rivals or disaffected spouses.
"but I have nothing to hide .... " many respond.
If you hope there to be bold political leadership in future, you want privacy for future public office holders. Imagine a future young Martin Luther King being surveilled by a future J. Edgar Hoover or Dick Cheney.
If you visit heart or diabetes health sites, you do not want insurers purchasing data on your surfing history. A Wall St. Journal reporter, working on a series called "What They Know" stated that such sale of surfing history is now quite legal.
THUS, in a sense, we all have something to hide -- our private data.
UXG
Anyone have any insight as to why UXG continually underforms its peers both on the upside and the downside?
Closed my ES at 46
i guess the floor boys/gals are waiting for tomorrow's data.
Re: UXG
TOP 50 INCREASES
Ticker
Symbol Company Nov. 15 Oct. 31 Change
=============================================================================
BAC BANK OF AMERICA 238,719,041 189,889,789 48,829,252
XLF SPDR-FINL SELECT 199,320,225 181,278,264 18,041,961
JEF JEFFERIES GROUP 25,224,521 8,337,945 16,886,576
NOK NOKIA CORP-ADR 119,524,489 102,961,287 16,563,202
S SPRINT NEXTEL CO 104,439,513 92,491,700 11,947,813
CIM CHIMERA INV CORP 53,166,913 43,951,044 9,215,869
PBI PITNEY BOWES INC 34,922,611 26,256,318 8,666,293
FTR FRONTIER COMMUNI 81,719,706 73,179,500 8,540,206
ENB ENBRIDGE INC 8,636,908 2,007,836 6,629,072
SPF STANDARD PACIFIC 24,204,239 17,680,952 6,523,287
EXC EXELON CORP 37,324,477 31,247,281 6,077,196
GM GENERAL MOTORS C 49,392,477 43,434,666 5,957,811
UXG US GOLD CORP 17,308,547 11,462,123 5,846,424
^^^ Big short increase lately...
Re: another way your android phone spies on you ...
Finding and cleaning out your smartphone’s Carrier IQ poison:
http://www.zdnet.com/blog/networking/finding-and-c...
Re: UXG
Perhaps someone is front-running a capital raise by UXG? They will need to raise capital to build the project next year (I assume) and without current cash flow are more likely to offer equity than debt. So, perhaps someone is planning to cover with new shares? Just a thought.
Only 32 comments here all day
Is that a low?
Re: Only 32 comments here all day
Enjoying the bounce, bought calls on MSFT, INTC, JNJ on the way down as Bill suggested. My purchase is on these less volatile companies because of my comfort level. Also, I feel less like a "gambler" when I purchase products associated with these type of strong companies. I also own these stocks as core holdings.
Observation:
This blog seems to voice up on severe down days more than up days. Maybe several of the vocal members here have a bearish leaning or bias. I personally think the action will reverse when buyers are spooked or exhausted. It seems obvious that this Central Bank action is sticking a finger in the dike of problems. So it gives us a bounce. Possibly a collective message is being sent to the big boys that another Lehman will not happen? I'm guessing....
In any event the Central Banks message I picked up is, "we will print what is needed when it is needed." Europe just has to get organized and on board. Will they? Who knows. That's why I own calls on SDS and a few selected puts purchased this week.
Trading in this market environment is difficult in my book. A large part of me did not want to buy the calls I did but the extreme down action seemed right for the high quality buys that I did. However, the market has quite a labile personality at present and shows signs of being, "under medicated." I have a lot of cash because I cannot trade on a dime notice. grin
DB
Re: Only 32 comments here all day
Hi DBerryClan - Nice phrase to sum up Fed actions: Another Lehman will not happen. Hopefully the opaque Fed rounded up a bunch of undisclosed equity issues that will mitigate the crisis - what say you Kaimu. Happy Trading
I don't think the Goldman guys liked the Lehman crowd.
Fiscal Union For Europe?
Here are some possibilities. Good for delay tactics if nothing else.
" the likely policy path for European sovereign debt crisis would be a deal whereby countries that have deficit problems would agree to allow European oversight of their future budgeting process in exchange for some kind of supranational support. Indications are that Germany and France are trying to hammer out an agreement on specifics but reports indicate that the two countries are still far apart."
http://www.creditwritedowns.com/2011/12/the-ecb-is...
Ilya
On a light comment day I will offer appreciation for your almost daily, somewhat cryptic comments. Last night's gave me a good guffaw, only one of the day. Thanks. Good to have a chuckle in these times.
Also a big thank you to Les for his scouring of Europe. Liking Spiegle Online.
Re: Ilya
OK, if it's slow rainey day at the track, bet on the mudders and tell a few jokes.
Shortly after WWII, the BBC interviewed the only Danish air ace who had flown with the RAF.
"Sven, please tell our audience about the day you shot down five Nazi aircraft."
"Vell, we vas flying over the channel on our vey to France. I got lost in the fog and vas yumped by 5 folkers. I got on the tail of one and braaap, smoked him. I did a half barrel rool in a dive and came up on the tail of ze second folker and braaap, smoked him. " the interviewer interupted him and said, "for our listeners we should point out that a folker was a type of German aircraft." To which Sven replied "ya ya dis is true but on dat day dose folkers was flying messerschmitts."
If only those folkers in Europe spoke the most proper Queen's English, perhaps they could then come to a quicker conclusion! The three most univer-silly recognized words throughout Europe are; Eurodollar, Taxi and Coca Cola...
Re: UXG
Yes , I have been wondering this for a long time. Clearly I am long now but wondering if to load up AGAIN while it is this low. Something is amiss with the performance of UXG and has been for a while.
Post Close
see support and resistance marked earlier using DJIA and UUP. Gap and trap for a weak Friday? Can we hold at or above the index resistance marked? Something to watch.
$TNX - ten year yield back above 8MA in weekly time frame. The MACD was suggesting a continuation of trend. It is a lagging indicator, but combined with the thesis of a bear trap, which played out, suggested that the trend for yield was up. See attached.
VIX - breakdown of triangle leads to another test of 40MA support in 4 day chart. MACD negative crossover suggests continuation of downtrend. Is the market prepared to ignore the EU in favour of a Christmas rally?
Perfchart of UXG, SLW, SVM, GDX, PMV.V, SLV and GLD - UXG had its moment in the sun. It was in early 2011. The market breathed in, now it breathes out. But to wait for the market to takes its next breath and position oneself accordingly. JMO
Barnhardt
http://www.financialsense.com/financial-sense-news...
Re: Barnhardt
At the very least, futures brokers should no longer be permitted to advertise that your money is segregated (safe?) when it is quite clear that it is not.