CTA Trading Desk Morning Report
[7:00am ET] Good morning.
There is not a lot to report this morning. The central bank of China raised its interest rates by +25 basis points (bp), which put a slight chill on the oil price here. The big miners have also pulled back a tad in London as well.
But the open looks mixed and there's not much more to say.
Have a great 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 | 2,965.27 |
 8.59 (0.29%) |
Components, Chart, More |
| ^BFX | BEL-20 | 2,719.71 |
4.76 (0.17%) |
Components, Chart, More |
| ^FCHI | CAC 40 | 4,087.80 |
3.00 (0.07%) |
Components, Chart, More |
| ^GDAXI | DAX | 7,294.98 |
 11.36 (0.16%) |
Components, Chart, More |
| ^AEX | AEX General | 370.18 |
0.33 (0.09%) |
Components, Chart, More |
| ^OSEAX | OSE All Share | 491.38 |
1.33 (0.27%) |
Components, Chart, More |
| ^SMSI | Madrid General | N/A | 0.00 (0.00%) | Chart, More |
| ^OMXSPI | Stockholm General | 359.39 |
3.45 (0.95%) |
Components, Chart, More |
| ^SSMI | Swiss Market | 6,613.78 |
2.64 (0.04%) |
Components, Chart, More |
| ^FTSE | FTSE 100 | 6,040.03 |
11.00 (0.18%) |
Components, 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
Good evening. Patrick here.
Same old script – opening weakness in equities is bought; prices drift up in listless trade, closing near session highs, POMO activities and an absence of sellers paving the way for the Fed to achieve its stated goal of asset price appreciation.
The S&P is a stones throw away from 1332 (close today 1324.57, +0.42%), the market up almost 100% as it nears the two-year anniversary of the bear market low. Taking out 1332 will target the higher resistance at 1348 and 1370, with initial support coming in at 1295 if the market decides to respect 1332.
Precious metals (SLV+3.35%; GLD+1.11%) shot upward around 8:20 eastern time this morning and remained well bid for the balance of the day. Traders should watch the action in GLD if and when it attacks the 50-day moving average up above at 134.08 (vs. a 133.14 close). GLD broke above the 50-day in mid-August holding above the line until January 5 when the recent decline picked up speed. Regaining the 50-day will be a good sign the selloff in January was a bullish consolidation, the yellow metal taking a much needed breather (the pause that refreshes) before breaking out to new highs and resuming its bull market.
Failure to take out the 50-day on the other hand, will increase the odds the past few months have all been one big rounding top formation and will signal a larger correction is brewing once the January low (127.80) is meaningfully breached.
None of us know which outcome will prevail; gold could break support and experience another scary decline, forcing out weak hands and overleveraged Bulls, just before it is about to rocket to 2000 dollars an ounce.
Following a few simple rules will make sure you have sufficient funds to ride the bull even if a few losses are taken prior to the resumption of the advance:
• Limit each position size to preferably 2-3% of funds available for trading – this reduces the possibility of “the risk of ruin”, losses so catastrophic a trader can never dig himself out of the hole just one outsized position can create.
• Use stops – limiting losses to no more than 8% on any individual trade. Mr. Market has a cruel sense of humor, somehow delighting in seeing us withstand 10 losses in row just to make sure we are managing our risk properly.
• Once you have had a string of consecutive wins and have grown your account, take surplus funds out and put in a savings fund. Traders have a tendency to raise their bets as wins pile up and confidence grows, almost guaranteeing a big loss is right around the corner as the law of averages kicks in.
• Never average a loss – which is different from scaling into a position. The latter is part of a game plan with stops determined before the plan is executed. Averaging down is losing strategy, a trader somehow “hoping” his position will eventually work out when all the other traders finally get religion. This trader is ignoring valuable information and is swimming against a rip tide – the market is telling you there are better uses for your hard-earned capital.
• Let your winners run – it is so tempting to take a quick profit especially if the losses have been piling up. The position quickly appreciating 10% are the ones probably destined to grow to a 50% gain. You need these big winners to compensate for smaller losses, and these are the trades that separate the winners from the losers in the trading arena.
• Resist the urge to overtrade. The past few months have been brutally dull and most of us are chomping at the bit to make “something happen”, confusing the thrill of the hunt with the reality of running a business. Taking a trade just to trade leads to stop outs, slippage, increased commission costs, and a loss of confidence. Too many losses can make a trader gun-shy, unable to pull the trigger just as his system is about to identify the next big winner.
It doesn’t matter if you’re a relative novice or a seasoned pro; all of us are internally wired to make these mistakes, so it is good to step back and take a good hard look at your trading journal to ensure your are managing your money wisely.
Have a great evening.
Comments
chinese picks
Update on MY " Yesterday Bank of America reiterated Buy rating on China Ming Yang Wind Power Group Ltd (NYSE:MY), and maintained $17 price objective. " have been using it as a covered call, about 6% cash on cash a month on the 10s.....also slowly easing into HEV.......DYOD for sure
Questions from Spain
The interconnectedness of today's world is evident here daily and we've seen it 22 years ago with the fall of the Soviet Union and again today in Egypt. There is a unity of people questioning the policies of governments everywhere.
"How're you gonna keep'em down on the farm after they've seen Paree?"
There is about to be a new Spanish on-line financial newspaper and they asked for an interview.
"I am a follower of your blog. I work for the economics section of a Spanish classical liberal online newspaper, LibertadDigital.com, with a strong Austrian flavor in economics. We have published exclusive interviews to people such as Jim Rogers, Marc Faber, Antal Fekete, Robert Higgs, or Gerald O'Driscoll."
Mish gave what I see as a good overall summary of where we are and how we got here today.
---------------
Mish Interview on Spanish Site "Libertad Digital" Regarding the Global Economy
http://globaleconomicanalysis.blogspot.com
You may want to look at China Finance Online Co.(JRJC)
China Finance Online Co. Limited provides online financial and listed company data and information in the Peoples Republic of China. The company provides various subscription-based services on a single information platform that integrates data and information from multiple sources with features and functions, such as data and information search, retrieval, delivery, storage, and analysis. It collects, processes, and provides financial analysis tools, historical data, news, research reports, and online forums to its subscribers in one integrated information platform, which allows them to make informed investment decisions with respect to various listed company stocks, bonds, mutual funds, and stock index futures. The companys Website content and research tools also offer various services consisting of attracting visitors and market its subscription based service offerings; storing content and serving as an integral part of its information platform; serving as download platforms for its service offerings; and displaying online advertisements. In addition, its financial analysis tools provide securities market data, technical analysis, and fundamental analysis. Further, the company offers various brokerage and online advertisement services. It serves individual investors managing their own money; professional investors, such as institutional investors managing money on behalf of their clients and high net worth individuals; and other financial professionals, including investment bankers, stock analysts and financial reporters, and middle class individuals. The company markets service offerings through its Websites, jrj.com and stockstar.com, as well as through customer support personnel at its telemarketing and customer service centers. It has strategic alliances with China Telecom and China Center for Financial Research of Tsinghua University. The company was founded in 1998 and is based in Beijing, the Peoples Republic of China.
Cara 100 Ratings Changes For POMO Tuesday
Good morning.
1.5 - 2.5 Billion Dollar POMO Injection Today.
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Cara 100 Earnings, After The Close : DIS
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CTSH - PT Lifted from $76 to $82 @ Oppenheimer. Outperform
DIS - PT Lifted from $36 to $41 @ Wunderlich. Hold
SNDK - Sterne Agee upgraded Sandisk to Buy from Neutral. The firm believes the company is beginning to ramp 24nmTLC, which will drive improved margins. Price target is $65.
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"In California, they don't throw their garbage away - they make it into TV shows."
- Woody Allen
(US) Fed's Lacker: Distinct
(US) Fed's Lacker: Distinct improvement in the US economy since the launch of QE2 means the program requires "a serious re-evaluation"
- Sees US FY11 inflation around 1.5-2.0%, US FY11 GDP +4%
Re: (US) Fed's Lacker: Distinct
Wonder whether that is why gold has taken off. Euro has also backed off a bit.
Cara 100 Update
AMZN - rated new Outperform at Wells. Company provides a top-level customer experience.
IBM - IBM initiated with a Buy at Capstone. Target $190
Re: (US) Fed's Lacker: Distinct
This is likely why, I would think.
http://www.bloomberg.com/news/2011-02-08/gold-may-...
Re: (US) Fed's Lacker: Distinct
That has been talked about for a while. I think what Lacker said is an admission that the Fed in behind the curve (again!)
Re: (US) Fed's Lacker: Distinct
The Fed isn't behind the curve, its just lying about why it is printing.
The real issue here is housing, and housing price deflation, and the mark to market that hasn't happened to all the money created during the boom which (by all the rules) should have gone BOOM but hasn't yet.
If all the loans were marked to market, all the property foreclosed, all those big banks would be run through that new resolution facility and given new management, because their losses on all those bad loans would dwarf the capital they have remaining. Same thing for the Fed - it has over a trillion of home loans, 5% of which are probably not performing. So we have Bernanke inflating until someone takes away his printing press or until the housing market comes back, whichever comes first. He's enthusiastic, I'll give him that much.
Bernanke is printing money to save the banks, pure and simple. That's his job - his only job.
How's that working for us? How about Hosni Mubarak? Think he's fond of Ben's printing press?
Re: (US) Fed's Lacker: Distinct
hmmm not sure of that logic tbar. If JPM is accepting gold as collateral, I imagine more than a few astute investors (which being a gold investor would at least imply) must be asking if they'd see their gold back or a paper IOU :)
GIX.TO is converted to GXEXF in the US
Just using this as an example I figured out how I can trage other markets. Fidelity ATP is not the easest to use - you can't use the directed trading feature - you have to use the regular trading option and when I enter a trade it highlights in red the Toronto Exchange order placement and conversion rate. Cool!
Earl
Re: (US) Fed's Lacker: Distinct
Sorry, poor choice of words.
2s10s 290 bps.
We are literally swimming in oil and gasoline
From Bloomberg:
Oil Trades Near One-Week Low on Forecast U.S. Stockpiles Gained. Oil traded near the lowest in more than a week as tensions in Egypt eased and rising stockpiles in the U.S. signaled fuel demand may be faltering in the world’s biggest crude consumer. Investors should consider selling bullish oil positions as the Egyptian crisis subsides, according to JPMorgan Chase & Co. Futures slid 1.7 percent yesterday amid government talks with the opposition. U.S. crude inventories probably rose for a fourth week, a Bloomberg News survey showed before an Energy Department report. Supplies at Cushing, Oklahoma, the delivery point for West Texas Intermediate oil, are at the highest since at least 2004. “The reason for the moderation, especially with WTI, is the continued high stocks at Cushing, coupled with the fact that some of the geopolitical unrest in Egypt seems to be abating,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. Gasoline inventories probably climbed to the highest level in almost 21 years, according to the survey. Supplies of the motor fuel increased 3 million barrels, or 1.3 percent, from 236.2 million a week earlier, according to the median of 10 analyst estimates. The projected advance would leave stockpiles at the highest since March 1990.
http://tinyurl.com/4bp7pwx
GOLD jumped to $1363.10
Off to the races?
Re: We are literally swimming in oil and gasoline
The interesting is the spread between Brent and WTIC.
Brent oil that "the rest of the world" uses costs 99USD/barrel. WTIC sells for 87USD/barrel. Brent could be a little bit finer, but a spread of 12USD/barrel is extreme. It used to be 1-2USD/barrel.
ZH: Bruegel Think Tank Says Greece Should Restructure Debt Now
http://bit.ly/halrQG
Watching IWM this morning.
crucial 80 break yesterday. Looking for it to hold support if market is to move higher. A weak sell signal on IWM at the opening here could turn stronger as morning progresses.
PMV finally came to life. Up 7% on the ASX today.
http://au.finance.yahoo.com/q?s=PVM.AX
Cara 100 Update (Final)
AAPL - PT Lifted from $432 to $460 @ Canaccord. Buy
FSLR - Downgraded at Morgan Stanley to Equal-weight from Overweight, Morgan Stanley said. Valuation call, as demand could fall in Europe.
TGT - rated new Market Perform at Wells Fargo. Company is behind with its online efforts and facing increased competition.
WMT - rated new Market Perform at Wells Fargo. Company is losing market share to dollar stores, but expanding online.
CGR
California Kid - I sold 2/3 my position and may buy that much back if it pulls back - otherwise I'm going to let 400 shares run. thanks much!
Earl
Kinross
I wonder what is wrong with this stock. It's been on a downward trend even the other seniors appear to be have been doing well. Can anyone shed some light on any possible reasons why this company is such a dog?
Kinross
I wonder what is wrong with this stock. It's been on a downward trend even the other seniors appear to be have been doing well. Can anyone shed some light on any possible reasons why this company is such a dog?
Re: Kinross
Dave lee I'd like to know that too.
I wrote some puts and they did pretty well, but KGC the stock didn't seem to react so well off the lows except for that first day. Then when you mentioned it here today, I looked at the weekly KGC:GDX chart, and compared to its index, KGC has really been performing badly. Since the crash, it's underperformed the GDX by 50%!!
BCON
Baz, I put in an order for 5000 shares at .29 and got 90 ROFLMAO.
regards,
Earl
(US) Federal Reserve issues
(US) Federal Reserve issues proposals related to designation of systemically important nonbank financial companies
- Federal Reserve Board on Tuesday requested comment on a proposed rule that implements two provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act related to the designation by the Financial Stability Oversight Council of systemically important nonbank financial companies for consolidated supervision by the Board
- The Dodd-Frank Act requires the Board to issue regulations that establish the requirements for determining if a company is predominantly engaged in financial activities for purposes of Title I of the Act and that define the terms significant nonbank financial company and significant bank holding company.11 Accordingly, the Board is requesting comment on a proposed rule that would establish these criteria and define these terms.12 The Board is requesting comment on the proposed rule at this time because the proposals are relevant to the authority of the Council to designate nonbank financial companies for supervision by the Board under section 113 of the Dodd-Frank Act. As noted previously, the Council recently requested comment on a proposed rule to implement the designation standards and process for nonbank financial companies under section 113.13 The Board believes soliciting comment on the proposed rule at this time should facilitate public understanding of, and comment on, the Council's proposal, and allow the Council to consider potential designations of nonbank financial companies under section 113 promptly after the Councils rule is finalized
- Predominantly Engaged in Financial Activities. 1. Two-Year Test Based on Consolidated Financial Statements The proposed rule provides that a company is predominantly engaged in financial activities if: The consolidated annual gross financial revenues of the company in either of its two most recently completed fiscal years represent 85 percent or more of the companys consolidated annual gross revenues (as determined in accordance with applicable accounting standards) in that fiscal year; or The consolidated total financial assets of the company as of the end of either of its two most recently completed fiscal years represent 85 percent or more of the companys consolidated total assets (as determined in accordance with applicable accounting standards) as of the end of that fiscal year
Rosenberg: Looking at Sales, Not Just Earnings
We are hearing how great S&P 500 sales are doing so far for Q4 — up 7.7% and beating estimates by the highest margin in a half-decade. We scoured the data as best we could and found that almost all the growth in sales is coming from outside the U.S.A. where revenues are growing at barely a 3% annual rate. The pace is around 20% for foreign-derived sources. So the question is what happens to revenues if the foreign stuff comes under some downward pressure in view of the policy tightening in most emerging markets and the fiscal tourniquet being applied through most of Europe.
The two reasons why companies have had such success in driving their profit growth into a V-shaped recovery has been via an exceptionally robust foreign sales performance and relentless cost-cutting. But you can’t cut costs forever and we are already seeing signs that the downward momentum in unit labour costs is subsiding. On top of that is the surge in material costs, which we have not seen percolate yet, but will surely compress margins from their current five- decade highs.
We should start to get some corporate guidance numbers next week but for the time being we do have the analyst upgrade-downgrade ratios, which has stagnated recently. They are no longer going up and are actually going down in six of the ten sectors. Those with positive momentum include technology and materials. Utilities and consumer discretionary are not screening well at all.
Re: (US) Federal Reserve issues
Hi Vad,
I'll believe their serious when they put some teeth in Fed regs - bring back the French scaffold... can start with Frank and Dodd...
regards,
Earl
Re: (US) Fed's Lacker: cont
(US) Fed's Lacker: Not yet prepared to end quantitative easing, could stop QE earlier than planned if see strong employment and consumer spending data
- Q&A- Could begin the withdrawal of stimulus in the near term under some circumstances; could stop the bond purchases if the economy shows strength over two month period
- Cannot blame Fed policy for rise in commodity prices; core inflation to remain subdued, and has bottomed
- Sees risk of headline inflation increasing rapidly even if core is contained.
- There are many options for winding down quantitative easing.
Re: BCON
Bought back my 1000 now that I'm satisfied it's not a scam. Thanks to the person who linked us up with John Peterson.
Kinross
There are a few things overhanging K:
1. There is some market scepticism over the Redback acquisition.
2. Some say that K's new production pipeline is not as visible as others.
I have held K for a while (through the Aurelian Resources acquisition). I was advised by someone that I respect well over a year ago that K would be a laggard in the sector and that I should look for other names. He suggested IMG. I did find some other names but kept K......hope Paulson is right.....
Re: BCON
Hi Les;
that was... best regards and good luck with it. ACPW and BCON 'as core business' do not compete as best I can tell they serve different markets (ACPW in the ~1mw range smaller UPS backup systems and BCON in the ~20mw range which can be expanded for utility 'support').
(Submitted by Zaydac (29 comments) on Mon, 02/07/2011 - 12:13 #79236 (in reply to #79216)
Earl - This pick could give you bragging rights. See this:
http://seekingalpha.com/article/246099-energy-stor...
If it interests you, and you have the time, the comments are as useful as the article.
FD: no position yet but thinking about it)
Re: Rosenberg: Looking at Sales, Not Just Earnings
Mark,
I find nothing surprising in this. US companies have been moving operations to cheap labor countries beginning in the mid -1980s and presently keep only a skeleton crew here. They have managed to also cut cost buy working those who remain ever harder — no raises, but additional responsibilities and fewer benefits.
Only those with government jobs and pensions have increased spendable income.
Companies have been cutting expenses while still selling expatriate products here to those without shopping freedom (price is king) — a double gain.
But this amounts to a double-whammy for US workers/consumers.
The ultimate question may be: "Why keep any domestic operations at all?" Let them go on welfare and still sell them cheap stuff.
This is essentially the same strategy which worked since WW2 — only the roles have reversed on us.
Re: (US) Federal Reserve issues
Earl, Vad,
The Financial Commission Report on how we got here has had little play in the media. So far Goldman Sachs and J.P.Morgan have been charged, but I would not expect anything more than a fine (paid with Fed donated taxpayer dollars).
Yes, bring out the pitchforks and the guillotine!
http://www.fcic.gov/
Grym
Re: Rosenberg: Looking at Sales, Not Just Earnings
Grym,
Napoleon once referred to the UK as "une nation de boutiquiers." I am beginning to think he was right.
Anyway, that's your consumption problem solved. Only problem which remains now is to work out how we are going to feed and clothe the great unwashed.
Re: (US) Federal Reserve issues
Grym, I'm not a big cry baby but in this case I really feel like it - not being a baby... I feel sorry for people - all of us... my family, you, everyone here and what this government has become in the last 100 years; we've done some very good things for other nations - sacrified a bunch of fine good men... I'm going to get off here and leave with the conslusion posted on the site you provided. I've got to get ready for working nights - so I can hand GS more of my earnings... That's what the system has made this all about.
(The Commission concluded that this crisis was avoidable—the result of human actions, inactions, and misjudgments. Warnings were ignored. “The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done. If we accept this notion, it will happen again.”)
best regards,
Earl
Suez Canal workers on strike?
Can anyone confirm?
Re: Rosenberg: Looking at Sales, Not Just Earnings
Grym,
Let me see if I have this correct. The Chinese make the goods, ship them to the US and UK and them come here to buy them? What a world we live in.
Re: Rosenberg: Looking at Sales, Not Just Earnings
Grym,
Let me see if I have this correct. The Chinese make the goods, ship them to the US and UK and them come here to buy them? What a world we live in.
.......
Good morning, Earl... you probably already read this today, but drilling continues to go well...> http://finance.yahoo.com/news/Timberline-Drills-71.......
Re: Suez Canal workers on strike?
Mark H -
Looks as if there is a strike but it has not, as of yet, affected the canal operations. Oil is climbing on the news.
http://tinyurl.com/46r4rs8
Got oil?
Re: Suez Canal workers on strike?
Dr. Strangelove,
Yeah, I saw it there first. Put #Suez into Twitter and came up with this:
Suez Canal Company workers from the cities of Suez, Port Said, and Ismailia began an open-ended sit in today. Disruptions to shipping movements, as well as disasterous econmic losses, are expected if the strike continues. Over 6000 protesters have agreed that they will not go home today once their shift is over and will continue their sit-in in front of the company's headquarters until their demands are met. They are protesting against poor wages and deteriorating health and working conditions.
SOURCE:
http://english.ahram.org.eg/NewsContent/1/64/5231/...
Re: Suez Canal workers on strike?
Looks as if the main stream media's focused on AOL's purchase and suppression of the liberal Huffington Post website. Now the HuffPo will fade with AOL's thousands of dial up subscribers. Shut down of the Suez Canal does not concern you. There's nothing to see here. Move along.
Re: Kinross
FWIW......I for one am still skeptical about the Redback acquisition. Not that it isn't a world class property, but the takeout price was so rich that I think it will take a long time for it to pay off. Kinross' earnings multiple is not all that attractive compared to the future prospects for some of the other majors and intermediate majors, IMHO. Its not that I don't think the company will do well in the long run, but absent unexpected organic growth (new major exploration discovery), I think it will lag peers that are better at buying projects in their earlier stages and exploiting/developing the assets from early stages rather than buying already producing projects like Redback. Just seems to me the possibilities for explosive growth have been capped by the purchase...........
Hedge fund managers arrested
http://finance.yahoo.com/news/Hedge-fund-managers-...
Are these guys being singled out for things that HB&B does routinely? Ie, taking the fall to throw us off the trail of abuse?
Re: Rosenberg: Looking at Sales, Not Just Earnings
Sorry but this guy needs to man up and admit he's wrong. There's nothing wrong with being wrong. I'm pretty sure we're all wrong on a daily basis. I'd respect the guy more if he was like...yeah, I kinda screwed my call up.
CALAIS RESOURCES PINK:CAAUF
-Calais Resources owns (100%)and operates the Cross / Caribou gold and silver mine operations in Colorado and the White Caps mine operation in Manhattan, Nevada.
-The company is currently in the process of reopening the fully permitted Cross Mine and resuming exploration activities in Colorado as well as continued exploration activities in Nevada.
-The company is currently traded on the Pink Sheets exchange under the symbol CAAUF and is in the process of completing, auditing and filing all of the delinquent SEC financial reports and filings for the past several years. These reports are expected to be completed and filed with the SEC in the first quarter of 2011.
-The Company plans to relist on the Bulletin Board exchange in the US as well as list on the TSX.V exchange in Canada.
-On January 13, 2011, Brigus Gold agreed to extend the forbearance period to June 30, 2011, for the three notes held by Brigus Gold which are secured by the Colorado assets of the Company. The original forbearance period with respect to these notes was scheduled to expire in early February and March 2011, respectively. Management believes that the extension will allow sufficient time for Calais to satisfy and / or extinguish the debt.
-A new NI 43 -101 Technical Report prepared by SRK Consulting is expected to be filed imminently...http://alturl.com/28zws
02.06.11 Letter to the Shareholders from the New Chairman - R. David Russell
http://alturl.com/xcpy2
Re: Rosenberg: Looking at Sales, Not Just Earnings
I like reading his stuff. Things are clearly going up right now - primarily because of money printing, and economic improvement due to stimulus, but reading about the cautionary points of view keeps me from taking too much risk. I don't trade based on what he says, I trade based on what the market is doing, but I value his material.
I think too many people are buying this rally while preparing to bail out at the first sign the liquidity party is over. I don't get the sense there are a big batch of long term buy and hold folks acquiring stuff with a 3-5 year holding period. Why would you, when the Fed is printing money (printing money!!!) and the USG is borrowing 9% of GDP each and every year? Neither of those things are sustainable. You can neither borrow nor print your way to prosperity.
I believe that Investing right now is done with one eye fixed on the exits. Reading Rosie helps remind me of this fact. Because we have gone so long without a correction, I believe once the equity market price charts show weakness, we will have very little time to get out of the water before the sharks come.
Fed's Fisher
I don't think I've ever seen Feds admitting debt monetization before:
(US) Fed's Fisher: Would dissent against further monetary easing, concerned about any evaluation of an expansion of the balance sheet further
- Current debt monetization is risking Fed credibility
- Availability of credit no longer an issue
- Chances for a double dip or deflation have declined
- Note: comments are similar to his comments in a radio interview yesterday. Fisher is a voting member of the FOMC this year. It was somewhat of a surprise when he did not dissent against the majority in the Jan FOMC policy announcement.
Re: Rosenberg: Looking at Sales, Not Just Earnings
TOF,
I assume you say he's wrong because the market has gone up. Right?
While I read him everyday (among several others) I have to remind myself that he, like most economists, reacts and comments largely based on government data and some stats which I tend to ignore.
I wouldn't say he is wrong, per se. From what I recall of your posts here I would say the two of you may simply be working different time frames. I'd say his strategy is far longer range thinking which is closer to mine.
I'm not buying much at all right now and waiting for the stocks to come back down to what the economy and what I see around here is telling me is reality.
Let's wait to draw any conclusions.
Re: Fed's Fisher
Hmm, that's an excellent point. Did he actually use the words "debt monetization"? I haven't heard that before either. Perhaps it was a slip of the tongue, never to be repeated.
Re: Fed's Fisher
Yeah, those are his comments as quoted by a news wire... All we heard before was "We are not going to monetize debt."
Re: Kinross
Thanks for all the feddback everyone. I think that I'll be looking to switch to another name when an opportunity presents...
Question for Bill - from what you know, does Kinross still belong to the Cara 100?
Re: Rosenberg: Looking at Sales, Not Just Earnings
The reason I posted it was because he says emerging markets (EM) were a significant source of sales growth and in recent months there has been a divergence in some EM indices. I think I mentioned the Bovespa yesterday.
Re: Fed's Fisher
Turns out Mr Fisher made comments about debt monetization immediately after Ben's Money Printing Announcement last November. Worth reading.
http://www.businessinsider.com/dalls-fed-chief-fis...
"My perspective, as with those of all other members of the FOMC, was given a thoughtful and fair hearing at the table. After deliberation, the majority of the committee concluded that under current and foreseeable conditions, the better approach was to purchase $600 billion in Treasuries between now and the end of the second quarter of next year, on top of the amount projected to replace the paydown in mortgage backed-securities. The math of this new exercise is readily transparent: The Federal Reserve will buy $110 billion a month in Treasuries, an amount that, annualized, represents the projected deficit of the federal government for next year. For the next eight months, the nation’s central bank will be monetizing the federal debt.
This is risky business. We know that history is littered with the economic carcasses of nations that incorporated this as a regular central bank practice. So how can the decision made last Wednesday be justified?"
The first line of the paragraph reminded me of a quote from the Gestapo Major Hochstetter character from the old Hogan's Heroes: "You will be given a fair trial, after which you will be shot!"
Re: Fed's Fisher
Great investigative work.
Amazes me that none of media opposing Fed and their policies carried that. You'd think it should be plastered all over websites, banners, t-shirts and whatnot.
Re: Fed's Fisher
ALOHA!!
- Current debt monetization is risking Fed credibility
On that same note the US FED just crossed the $2.4TRIL mark for credit issued to federal reserve banks the first month of 2011(Jan). That is the most credit issuance the US FED has had in its entire 98 year existence.
If it was just DEBT MONETIZATION that was ruining the UD FED's credibility then I would say they are in great shape, but their credibility in every sector they are involved in from consumer credit to bank credit to financial stress tests to employment have been nothing but abysmal failures. The very reason America is where it is now in fiscal fraud is due to the US FED's direct involvement.
- ELIMINATE THE US FED
My next SOUND MONEY I will have US FED charts showing new perspectives. These charts were never "officially" released to the media, yet these charts sit there over at the US FED in archive.
Homebuilders
Don't look now but homebuilders are continuing to run - up almost 2% today. Have been in bull mode since late-August with the rest of the market. Yes, home prices are still stagnant and buying is muted, but a lot of these companies have really cleaned up their balance sheets by raising money and taking write-downs.
Check out the move today on BZH which reported earnings this morning, an initial "negative" reaction and then a move up all day - now up 3%. Some of the earnings reactions I have seen are suggesting a lot of the negativity is baked in.
been dipping my toes in on some beatup housing names: BZH, MHO,PHM,SPF
All of them have had initially negative earnings reactions only to bounce......
2nd_ave
your call on US indices going up is correct so far. Fortunately, the things I short are down today.
This is what I think that is happening: 2010 was a year when investors rotated from US stocks to international/emerging. Now they are jumping back.
OPEN
Put premiums too high for me to take a play on it, but interested to see what this P/E monster of a stock does after earnings are reported after the close today.......Not sold on the long-term prospects for this one as unlike Netflix, the target audience for those making reservations is substantially smaller. I also can't see the global community, especially Europe (where the restaurant culture is much different than the US) adopting this en masse...$2B market cap vs $140M revenue estimate for 2011....somethings got to give.
weird VIX action today
is this a misprint or did it really jump below 15 and back?
Re: Kinross
davelee.
Does Kinross still belong in the Cara 100? Probably not. I'm having a difficult time figuring that one out. Recall that several months ago, I finally washed my hands and within days or hours the stock soared.
If you are not comfortable with any holding, you need to dispose of it. Why worry unnecessarily. The market is tough enough as it is.
Re: Fed's Fisher
hmmm so straight from the horse's mouth. Does it represent something more than his hawkish thinking i.e, will Congress get greedy and use the stick and carrot on Mr Ed to get him to sing just... one... more... time:
http://www.youtube.com/watch?v=gGZwmelwnBU&feature...
Re: Homebuilders
My thoughts on the builders has to do with the whole fraudclosure issue. Fraudclosure broke big in late november/early december, and that's when the XHB outperformance started (see XHB:SPY).
New built homes have no legal issues surrounding their title, and I'm guessing the folks who wanted to buy homes stopped looking for foreclosures and have instead focused on the new built homes, so the builders get a pop. If fraudclosure ever gets cleared up, this may end up fading, but for now the rally makes sense to me.
No position.
story behing UNG?
The recent selloff surprised me and I got stopped out.
Is this a buying opportunity or a trend change? Not sure and I will stay away.
Re: Rosenberg: Looking at Sales, Not Just Earnings
Grym - Every time I see clips of him on TV he just seems like he's skeptical of/bearish about everything. That suggest to me that he's probably a little too biased to accept positives going on in the market. I personally don't really listen to him so I could be wrong.
Commercial Real Estate Boom?
I'm a holder of RAS and I came across a very interesting article on the commercial real estate market:
http://raitft.com/upload/RAIT%20Expectations%20-%2...
At first glance it looks very positive. Looks like I have some good reading material tonight.
Re: story behing UNG?
I know UNG is a tricky beast but I've heard from enough traders that the energy rally is getting long in the tooth and what looks like a tombstone doji on OIH's daily yesterday ain't encouraging.
I'm eyeing FDX for a breakout as $TRAN plays catchup, which may well be aided if and as energy continues to pull back.
EEM also has a downtrend line of resistance that it looks ready to break out from in the hourly chart. watching it too.
-----------------------------------
China rare earth hoarding news pumping REE and MCP again:
http://finance.yahoo.com/news/China-Looks-To-Bolst...
Re: .......
Yes Sir, the average 1.22 grams/ton. We were at this price on Jan 3, I hope it will consolidate here for a bit and build a new support base.
Take care
Earl
Taking OAKBX off at the close
Opened in the buy-and-hold account at last Friday's close, exiting at today's close.
jack- The indexes are likely to continue higher for a few days, but it's no doubt prudent to start taking things off the table here.
Still holding CSCO in the trading account.
earl..
looks like someone is gathering shares at tl... move to $ 1.40 very soon ???
Twisting and trading
Selling can often be right in the darkest hour before a rally.
Took K out and shot it at $16.48 Cdn late January, after months of frustration. Maybe Paulson wants the whole company. When I think of it, PMV is in the same neighbourhood, better valuation. I did the same to SVM and UXG only a week after I bought them as gold kept getting whacked.
I retreated and bought a couple of tech stocks that have me in the same position as if I had held on.
Did the same with BRCM today, as I didn't know why it was falling. Maybe they are losing ground in the chip race to NVDA and QCOM.
Rolled the dice on HNU.TO more or less on a whim at $5.48. It looks close to a bottom and could rally from there.
http://www.cmegroup.com/popup/mdq2.html?code=NGGLO...
Re: (US) Fed's Lacker: Distinct
Les, I think it comes across as a pretty top of the line endorsement of gold= money.
Ps I forgot to get back to you re the $hui. Yes it is a US index of unhedged gold miners. Back in 2001 it was interesting to see the leverage to the gold price in play as an upward sloping monthly ihs. Whereas the xau was an ihs as well but with a horizontal neckline representing the lesser accelaeration off the bottom being a little less leveraged to the pog than the hui is.
Barrick was added to the hui after they became unhedged(if that is completely true I wonder)
re kinross, I like the potential ihs that might get it back to the old high, also at 50% fib res currently.
twisting and trading/westcoaster
Re the chip/tech stocks....noticed on the 10 year chart SOX has normally topped when it gets over the upper bollinger band for a week or two.....guess where we are today???? be careful. the article earl/baz referred to on BCON also mentioned HEV in passing......time will tell...DYOD of course
Re: story behing UNG?
The fundamentals for the long end of the gas curve are improving but near-term pricing is continuing to be overwhelmed by an abundance of gas in storage. Due to the way UNG is setup, it will perform well in a backwardated market but not in a contango market (where we are now). The thing is, even in a bullish natural gas market, if you are continually rolling into a more (seasonally adjusted) expensive contract like UNG is, the gains will be muted.....reversing to a backwardated market will require an event that starts draining the storage supply in earnest......
Re: twisting and trading/westcoaster
Thanks Toby, my finger is getting closer to the sell button, couldn't push, we'll see tomorrow.
Kinross: A Takeover Candidate?
FWIW
Could Kinross become a takeover candidate itself? Could a large miner find KGC's reserves attractive?
With a current market cap of $19.37 billion and 51 million oz of gold reserves... that's roughly $379 and ounce.
The Sovereign Wealth Fund of China just opened for business in Toronto. Perhaps the Party is out to buy some gold reserves? Would they find KGC an attractive acquisition?
I think KGC, sans takeover, could rise to $23 in 12 months from it's current price of $17. That's a 35% gain if the stock hits the target price. Just my opinion.
A rising tide floats all boats.
Re: Kinross: A Takeover Candidate?
Last time KGC cost 23USD the gold price was at least 300USD lower than today. Something is wrong and the chart has been telling that for a long time. Even if it breaks out, other companies will perform better.
"When bullish we need to sail the strongest winds, for they carry the farthest. When bearish we need to throw rocks into the wettest paper sacks, for they break most easily."
KGC is trying to sail without sails!
Industrial & Commercial Bank of China - 220 million
account holders > http://www.onlinestocktrades.org.in/wgc-icbc-launc...
The Chinese are coming
Just watched a very good detailed BBC documentary about the Chinese in Africa, "The Chinese are coming". Started in Angola, went through Zambia & Congo, ended up in Tanzania. Wow, the world is indeed changing and these guys intend to come out on top. Closing scene a warehouse at the Tanzanian docks, full of big bags of cobalt, rough-cast copper ingots, and manganese. "All this used to go to Europe" said the manager. "Now it all goes to the Far East. Mainly China". And the Chinese control the trade every step of the way. Lots of Chinese coming to settle in Africa. Starting farms, trading, developing real estate, everything. Estimated to be a million Chinese in Africa already, more arriving all the time. They skipper the tugboats in the docks, build and run the railways, control the construction industry.... The Africans are even complaining that they can't sell their chickens in the market any more because the Chinese chicken farmers get up too early and grab all the business.
Next week the programme is in South America.
I looked at all the economic activity on the film and I thought, one day nobody will worry very much about what happens in the UK, most of Europe, even the USA. We are on the way to becoming marginal players. Ten years from now they won't want to export their crappy goods to us; they will be sending them all to Africa and South America in exchange for raw materials.
Come to think of it the only reason they export to us now is to get our money so they can use it to buy raw materials from South America and Africa. When the day comes that our money isn't worth much in these places they just won't need us any more.
Gold 150DMA
I was wrong the other day about gold breaching its 150dma. It didn't. Very odd how the metal has bounced off its 150dma every time it has touched it in recent times.
Re: Rosenberg: Looking at Sales, Not Just Earnings
TOF,
He has been bearish ever since I've been reading him — no doubt. But I have him beat, since I've been bearish even longer ;-)
Still, I think it is function of time frames.
You think in terms of "positives going on in the market" because you are more of a trader than he or I.
In my view bankers, Congress, the Fed, (both Greenspan and Bernanke), the media — all are pumping dollars and hyping news using unreal accounting procedures to create a false picture and try to impart confidence in the economy.
While this is going on, I cannot see anything positive due to what they are doing to our nation and see the future for my kids as being far from what I knew.
You are right to ignore his view and go with what moves the market short term. But I'm locked into the long term effects. I saw it coming (and have been protecting my assets), see it in my neighborhood, my son's loss of income and my next door neighbor's loss of retirement income — none of which are positive in any stretch of the word.
He may be skeptical, I'm long past skepticism and a confirmed cynic. I want someone to pay for this. There are some hopeful signs that reality will prevail, but see no sign of real justice on the horizon.
record braking Brent/WTI crude spread
I searched a lot for reasons for the record braking Brent/WTI crude oil spread (exceeded the 2008/2009 peak) and came with a lot of conflicting explanations. My take is it boils down to 2 possibilities: WTIC will go up or Brent down. Not sure which and plan to sell my USO puts soon just in case.
Re: Kinross: A Takeover Candidate?
MoKat,
Back in October, Kinross was noted in Value Line as a potential acquisitor. I have not noted anything that refers to the possibility of them being taken out, but I think it's possible. As to the Chinese investment office being set up in Toronto in January, yes, Kinross is also in Toronto. Anything is possible.
Re: The Chinese are coming
Well, it's globalization, poor will be be richer and rich will be poorer. It's unstoppable now, but vary fair. Definitively bullish on global resources play, even though that play seems overextended now and I'm waiting for a correction.
Ten Year Bond
Rates on longer term treasuries blasted off from yesterday's closing line starting before 1 PM during mid-session. Never looked back. Up 2.2% @ 3.73%. Continues strong uptrend.
Re: Rosenberg: Looking at Sales, Not Just Earnings
Grym
Forget eye for an eye justice, you won't see it in your life time.
Since the dismantle of Glass Steagal by the well connected the only laws passed in the last 10 years were passed to protect the thieves in the US.
http://www.youtube.com/watch?v=N-shtVewSOM&feature...
Re: Rosenberg: Looking at Sales, Not Just Earnings
LOL!
I'd like to apply for franchise to sell that product — it's a winner.
BTW, I totally agree with your assessment. This was a well planned, well executed rip-off by well the connected. They make the mafia look like amateurs.
TMX to merge with LSE in marriage of world’s premier mining mark
http://www.theglobeandmail.com/globe-investor/cana...
Re: TMX to merge with LSE in marriage of world’s premier ...
123,
I hope the Brits can run the Toronto Exchange better than the idiots in Toronto. That had to be the worst run major exchange in the world.
And, I told them so!
Killer Joe/ Seven Straight For The DJIA
Reminds me of the day in 2010 (posted here) the almighty 'seven-out' ran down every shooter at the table for 2 1/2 hours straight.
Here we are with seven gains in a row for the Dow. What's next? I don't know, but I have no bets on red tomorrow. When was the last time the DJIA rose eight times straight? That would make a killer headline.
http://tinyurl.com/2f7a8mm
See the Post-Close Report
In the commentary at the top of the page.
Re: The Chinese are coming
Zaydac -
I will watch this with great interest. My wife is on her way to Morocco as I speak to give me a ground report on the Chinese influx there, if any. The documentary series is on the U.K. iPlayer network. Even though I'm outside of the U.K., I only watch the BBC tele via a U.K. proxy for $110/yr. BBC1, BBC2, BBC3, BBC4, and more. It's way way way better than the U.S. television crapfest and ... without commercials.
http://www.tvproxy.co.uk/
Cheers.
10 Year T
Continues to slide after hours: www.finviz.com/futures_charts.ashx?t=ZN&p=m5
Got Oil?!
"WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices
US diplomat convinced by Saudi expert that reserves of world's biggest oil exporter have been overstated by nearly 40%"
http://tinyurl.com/6dqnjnq
The world's largest oil fields have been pumped since the 1940s. That's a long long time. Opaque reserve data coming out of the House of Saud and its OPEC cabal has been a big big contributor to global instability along with U.S. monetary authority. Wonder if the Saudi expert is a better source than bloggers monitoring Google Earth data for changes in oil field operations and that guy in a one room office in Geneva with a network of port watchers counting oil tanker movements?
Audit the Fed AND the Saudi oil reserves for the sake of some market stability and fair trade. Give Peace a Chance.
Re: 10 Year T
Yeah in spite of my encouragement yesterday by selling my TBT the 20 year continued down as well. VIX was back down to 15.80 at the close. Even our friend IWM is making new highs. I guess oversold is getting oversolder. Glad I just sold TBT and didn't start thinking about actually buying TLT...
MDY and RTH
Hello everyone I have been following the blog for a while and impressed with the depth of knowledge. I trade my own portfolio and Rydex mutual funds at EOD. I wanted to give back and share my trades, do your own due diligence.
For tomorrow, at close I will be entering RYMDX (Mid caps) and RYRIX (Retail sector) trades. Good luck.
Tom McClellan gold ETF asset report dated Feb 4
This week's chart looks at the total tonnes (1000 kg) held by both GLD and IAU. As we can see, assets tend to rise during uptrends in gold prices, as more traders decide that they want to participate. The imbalance of demand for shares of these ETFs leads their sponsoring firms to issue more shares, and buy up more bullion. During downtrends in gold prices, people decide to flee those positions, creating an imbalance in the other direction and resulting in a drop in total gold held.
The point at which it gets interesting is when we see a sharp drop in total assets, reflecting a more urgent desire by investors to get out of their gold positions. The chart below shows one way to capture those events, using a 2-week rate of change. That's simply a reflection of where the total assets are now versus where they were 2 weeks before.
When total assets drop by 2% or more over a two week period, it marks a pretty reliable indication of a bottom for gold prices. It does not quite work as well for big positive changes in assets, perhaps because of a big underlying uptrend in asset growth as these ETFs gain greater investor acceptance. And the psychology of gold traders does not work the same for up moves as it does for down moves.
In our twice monthly McClellan Market Report and our Daily Edition, we have been discussing with readers our expectation for an important 13-1/2 month cycle bottom in gold prices due to arrive in February 2011. That cycle is only accurate to plus or minus a month, so as the cycle bottom date gets closer one must turn to other tools to focus in on where the bottom is. This 2-week rate of change in ETF assets represents one way to help us find out that a bottom-worthy shift in investor sentiment has occurred.
http://www.mcoscillator.com/learning_center/weekly...
another piece of the puzzle provided. I thank Patrick once again for sensible "actions on" in the if-then scenarios remarked on.
Using Tom McClellan to help my understanding of market breadth
I am following a swing trader who uses the short-term McClellan oscillator on the NASDAQ to better position himself in overbought, oversold and everything in between markets, or so I guess. So I have spent the morning trying to get a grip on the McClellan oscillator in order to give me a bigger picture outlook of market breadth than what stochastics is telling me in an hourly time frame.
I found the top twice in the hourly time frame preceding the recent small drops but was frustrated by the lack of follow through. Although I'm happy in that my short term indicators permit me to back off from losing propositions I'm looking for something that helps me to understand better when we are oversold or overbought in a larger time frame. I believe I found it in the attached chart.
The bearish divergence leading up to the recent pullback is clear, along with the bullish divergence on the 2nd dip which was subsequently bought, in which the indicator is screaming "get long". Definitely a chart worth a glance every day and combined with signals in a shorter time frame.
Re: Homebuilders
davefairtex,
Minor correction: lots of new built homes have 'clouds' on their titles from unpaid mechanics liens by subcontractors that were not paid by a bankrupt builder. In some states the unpaid party has a year to stake their claim which puts theirs in first position ie before your own shiney new purchase loan. Not to mention multiple bank investors and cross collateral lien holders taking a loss on how long they have extended credit...ur..debt. The second problem your new home may represent is unknown nicely painted over defects by a builder whose quality standards and bond may have lapsed simultaneously...so you will have fun attempting to have your Chinese drywall fiasco fixed after it has eaten your wiring and poisoned your air.
No easy investments these days. DYODD
Re: Commercial Real Estate Boom?
teamon, Would like your take after reading this. G'nite!
Compelling argument for fairly rapid Yuan appreciation
from one FX regular on Bloomberg's UK show. His thesis being that if China wants to be taken seriously and trump the Fed's ongoing bubble show repeat that continues to cause collateral damage then China could appreciate the Yuan sooner rather than later.
http://www.bloomberg.com/video/66570752/
This same analyst, along with the British Chamber of Industry are both speculating that the BOE will put in a rate rise this year.
http://www.bloomberg.com/news/2011-02-09/u-k-infla...
This when a number of central bankers have suggested that present inflation is a spike that will soon pass and doesn't yet necessitate rate rises.
Wouldn't Yuan appreciation pass further inflation on to consumers in the US, on top of whatever commodity inflation continues if and as the $US continues to weaken? Something to think about as the year and this unstoppable rally continues.