I have decided to make the following changes: From Monday through Friday there will be two entries: (i) "Blog" and (ii) "Tables & Charts".
The T&C will be fully automated.
The Blog will be broken into four parts:
(i) U.S. market pre-opening guidance from me, when available
(ii) On-going commentary from myself and Vad, mostly Vad
(iii) Post-close Trading Desk Report, mostly Geoff and Patrick
(iv) Community Discourse (you all).
The ratings system will cease but there will be a complaints protocol.
Today's Trading Desk Report:
According to Investors Business Daily, the Nasdaq has managed to rise on higher volume only twice over the past 5 weeks, and today was no exception. If institutional money isn’t willing to pay up for exposure at these elevated levels, why should independent traders? Over the long-term, volume is needed to drive prices higher, or the move is doomed to fail.
Gold (GLD +1.88%) continued to rapid ascent to new highs, yet prices of the gold miners (GDX +3.03%) remained a bit subdued, with most large-cap goldminer stocks well below their all-time highs. As we have previously said, these types of divergences need to be closely monitored; December has historically seen some fairly severe downdrafts in gold stocks. With the daily, weekly, and monthly RSI-7 readings all above 70, gold prices are in the Distribution Zone and large players may be lightening up here, hoping to scoop up some beaten-up miners if a sharp pullback materializes.
Meredith Whitney told CNBC she is as bearish on large cap bank stocks (BKX +1.07%) as she has been in the last year; maybe that is why Bank of America (BAC –0.69%) and JP Morgan Chase (JPM +0.33%) traded heavy all session long.
Nothing more to add; prices are extended, but have been many times over the past few months. At the end of the day, do you think it really makes sense to aggressively buy stocks after one of the sharpest, most persistent advances on record?
Patience is required, perhaps the most difficult thing for any trader to master.
Have a great night.
Comments
Stocks Overvalued, Recession Will Return: Meredith Whitney
Stocks are overvalued and the US economy is likely to fall back into a recession next year, well-known analyst Meredith Whitney told CNBC.
I haven't been this bearish in a year," she said in a live interview. "I look at the board and every single stock from Tiffany [TIF 42.99 0.75 (+1.78%) ] to Bank of America [BAC 15.86 -0.12 (-0.75%) ] to Caterpillar [CAT 60.44 1.66 (+2.82%) ] is up. But there is no fundamental rooting as to why these names are up—particularly in the consumer space."
In a wide-ranging interview, Whitney, CEO of the Meredith Whitney Advisory Group, also said:
She was disappointed that Fed Chairman Ben Bernanke didn't spell out how the Federal Reserve planned to exit "the biggest Fed program to date, which is the mortgage-backed purchase program." In a speech earlier Thursday, Bernanke said the central bank was watching the dollar's decline but is likely to keep interest rates low.
The US consumer was going through the biggest credit contraction ever—even bigger than that during the Great Depression. "That credit contraction is accelerating," she said. "There's nowhere to hide at this point."
The banking sector is not adequately capitalized and will need to raise more capital in the coming year.
The residential real estate market is likely to worsen and remains a much bigger threat than the commercial property market. The government's mortgage modification program won't result in any major improvement in homeowners' ability to stay above water, she added.
"I don't know what's going on in the market right now because it makes no sense to me," she said.
"The scariest thing about the Fed's program is that the money on the sidelines isn't going to support that asset class," she added. "So the trillion dollars of Fannie (Mae), Freddie (Mac) and mortgage-backed securities that the Fed is holding—there's no substitute buyer there."
Meridith Whitney video
http://tinyurl.com/yhf5bcf
Small Business Poll
I am in the solar and energy efficiency business. Surprisingly, our revenues are down somewhat this year, but our profits are up (increased efficiency).
Customers are incredibly curious of every little detail in how their money is being spent.
This poll is very eye opening. It is extremely bearish, especially since this represents over 10,000 business owners, at least half of them small business.
South African Gold on Final Deathwatch
"South African gold on final deathwatch as top grade scientist finds residual gold is more than 90% less than claimed." This is from Mineweb and I think it will be of interest to readers.
I guess it takes a very hard slap in the face to learn
to never trust those that control the money flow... I had that slap back in 01' and 02', as I suppose many here also experienced... I did very well in 2008 simply for that reason alone.. That is why I cannot, Must Not, ever have more than 10 - 15 % of my trading capital in the markets overnight, EVER... That is the only way I can sleep, much less breath, without having panic attacks ( I'm not kidding ).. I have learned to Never trust what any CEO or TV personality says... This market can literally Destroy a person if you are not 100% on top of your game, everday... If not, it's best to take that day(s) off... You can hate yourself one day, and can do no wrong the next.. The sad thing is, nobody will ever know all the tragedies this market has wrought,,... A former golf buddy took his life at the height of the crash... the pressure and wrong moves he had made at the bank he worked for were to much... He was found in a motel room.. I cannot, and will not, ever, forget that.. It is such a very thin line traders walk, daily... The trading desks at JP and Goldman really don't care what happens out here where we exist and work... That is why I am so damn thankful for Bill and all of you who are out here, trying to make make some sense of the insanity we witness on almost a minute by minute basis... Maybe, as in ' The Terminator ', the ' battle against the machines ' has just started...
Preparing to buy more SRS tomorrow
If it goes up, that is. Placed a buy stop limit order on it, stop at 8.6, limit 8.61. I still haven't replaced fully all the SRS shares I sold at around $10 a couple of weeks ago.
Re: I guess it takes a very hard slap in the face to learn
baz - please remember that it's only money my friend...
Re: I guess it takes a very hard slap in the face to learn
wow baz sounds like you're suffering there man. I can dig the "minute by minute" basis you remark upon, being pertinent to the HGSI play I remarked upon yesterday. Before I remark on how HGSI worked out permit me to paste some remarks given by Vad to myself yesterday:
[14:35] {Les} it's a mantra easy to say but difficult to practice: take the stop, take the stop...
[14:36] {Threei} till certain moment, yes
[14:36] {Threei} then something clicks
[14:36] {Threei} it becomes so ingrained
[14:36] {Threei} and a few weeks later you just can't believe you even had any problems with it
[14:41] {Threei} when you start taking stops as they are hit with no thinking at all, eay and with no hard feeling, and forget about them in seconds - this is it
[14:42] {Threei} a few weeks later look back at the times when you used to hold the loss for days, tortured and unable to think of anything else, and you will be like:
[14:42] {Threei} why did I do that to myself?
http://www.realitytrader.com/blog/2007/05/stops-wh...
HGSI 15 mins - look at the chart. talk about a short squeeze. I was one of the squeezed. So what did I do? I took the stop (albeit belatedly) and went long for a profitable gain. No need to mention that I gave most of those gains back by shorting into the close. Vad's remarked before that "the trend is your friend" and I can reflect now that this is pertinent even on an intraday basis, as HGSI's correlation with SPX (the black line)shows.
cheers
Re: Preparing to buy more SRS tomorrow
I was stopped out of DOG(inverse DOW 30) and SH(Inverse SPX) yesterday still have RWM (Inverse Russell 2000). I will be less keen to short indices in future and wait until the market shows its hand instead of trying to be clever and pre-empt the change in trend.Far from being clever its been a dumb move on my part to be too early.