[8:37am ET] Politics and money usually gets into social equity issues, but it doesn’t have to. Last evening’s nationally televised heathcare reform speech to Congress by President Obama is a case in point.
I must admit, I didn’t watch it. Yes it was on in the TV in the room, but the volume was turned off and I was looking the other way, talking to friends at the Marley Resort bar in Nassau, enjoying AÑEJO and Coke. This wasn’t a matter of lounging around, this was a meeting of traders. We were discussing the events of the day, not the fight that is going on in Washington.
When I returned to my residence, I did tune in to the replays for about as long as it took me to hear the word “deficit-neutral” and not being brain-dead I tuned out. Yes, for social equity if anything, we need healthcare reform, but how can anybody in their right mind believe a politician who says he has a near trillion dollar budgetary expense but there will be cut-backs elsewhere to fully compensate, and read his lips, there will not be a single penny of additional cost to the taxpayer.
But isn’t that the problem? The taxpayer will have healthcare but no job, hence no taxes to pay or, to put it another way, no revenues by government to continue to pay their workers healthcare or even their pay.
If big government continues to get bigger, I foresee bigger lines at foodbanks and obviously lineups for healthcare. Does the US deficit not concern these politicians who jumped to their feet in support of the President last evening?
Debt, deficit, denial, discouraging, depression. I don’t like the trend.
As traders, as long as we have the right to sell as well as buy, which is a right that we may not have for long if the nonsense in Washington keeps up, we can continue shorting the US Dollar and buying gold (and silver). But, we had better buy physical gold or unhedged miners of physical gold, because we don’t want a piece of paper that says its gold, but is really wooden nickels.
Take the case of Barrick (ABX). Yesterday they sold $3.5 billion in stock to raise cash to buy back their gold shorts (called hedges) because they cannot deliver physical gold. They cannot buy it in the physical market because the owners would only sell it for $1200, $1500, $2000, and much higher.
http://www.bloomberg.com/apps/news?pid=20601082&sid=aOtemPIX8MVk
So what’s Barrick going to do with the cash? They realize it has little value (the treasury rate is 0.1% return), so they are going to deliver this $3.5 billion stack of wooden nickels to the holders of their gold contracts, waiting for their gold. Even the world’s oldest profession won’t take wooden nickels, so, burn me once, shame on you; burn me twice, shame on me, now the gold futures market is going to die. Contract buyers will no longer trust sellers. And other than Barrick and a few other desperate mining companies, who are the sellers of these contracts anyway? Well, guess what, it’s Humungous Bank & Broker (HB&B), led by none other than Jamie Dimon, the JP Morgan CEO who, on behalf of his HB&B colleagues is Ben Bernanke’s puppeteer.
So this all comes full circle. Is it any wonder that a once powerful US Dollar is now just a pile of wooden nickels, costing a banker nothing to borrow from their banker, the one that has a phony balance sheet.
And yes the swan dive of the US Dollar is going to pump up share prices for a while, but as an officer of the Bank of China remarked today, its creating an asset bubble everywhere he looks, whether its stocks, bonds, commodities, whatever.
Forewarned is forearmed. Prepare yourself. Every time you see a dip in the gold price, buy the physical or the physical backed stocks of companies like Central Fund and Silver Wheaton. This could be the 1930’s all over again, where gold was the leading asset class and the old Homestake Mining was the leading stock.
Comments
Bill said:
"now the gold futures market is going to die. Contract buyers will no longer trust sellers."
I'm sorry, how does that relate to this contango/backwardation issue. Backwardation meant that buyers couldn't get gold at any price. Futures means what?... that gold is now going to become incredibly expensive? If I think you are not going to deliver me gold, I am going to ask for 1200, 1500, maybe 2000 dollars an ounce instead? Is that the what will happen to futures? Bill suggests it is going to collapse, but I cannot fully appreciate the consequences of that.
Or perhaps I can appreciate what will happen. If futures collapses, then as Bill suggest every trader and investor in town zooms in on the physically backed stocks like CEF or SLW. Hmmm that is interesting.
Kaimu, what will happen to Silver Resources downunder in such an event. Has SLR got more room to run than its present price of A$1?
gold
Bill, with all due respect, do you really believe that small retail investor will be able to benefit from long gold short dollar trade if this pair will make a drastic move ? I think it is pretty much a guarantee that gold will be expropriated (physical and paper) and commodity equivalents denied to small investors if things turn really sour (and they likely will). It happened before (in many countries including US) and I strongly believe it will happen again. Sorry for pessimistic tone.
Re: Bill said:
Think it through Les. Gold hoarding will escalate. Supply and demand will push the price higher.
ABX gold hedging
I just don't get it. Why can't they deliver physical gold? They are producing 8.1 million ounces a year.
Cara 100 Update
FSLR - RBC Initiates Coverage with a Sector Perform. PT = $150
Re: gold
I am concerned that gold will be expropriated in the US as it was in 1933. The present government (and their partnership with HB&B who are short gold) is the one to do it too. I know people who have buried gold bars and coins because in the 1930's the safety deposit boxes in banks were sealed -- not so safe huh? Americans are too trusting of their government and their bankers. They are obviously irate at this point, but deep down they still trust them to do the right thing. I think that there are infrequent times -- maybe once every tenth or twentieth Administration -- they shouldn't. Maybe the pendulum has swung so far out, the thing breaks. I think the present people running the White House, Senate and House are capable of breaking it. Supposedly brilliant bankers broke their financial system with their stupidities and greed, so what's so special about the current crop of politicians that the same thing cannot happen to the Dollar?
ETF RSI scan
one cancels other order
SRS triple RSI buy buy stop 11.33/11.38 limit target 13
REW accumulation zone buy stop 30.21/30.26 limit target 35
SSG accumulatioin zone buy stop 22.69/22.74 limit target 25
do your own homework.
Re: ABX gold hedging
I don't get it either. If they sold their forward production to hedge on price, just as a corn farmer might, they sold in the futures market i.e. a paper transaction. Now they plan a paper transaction to cancel their hedge.
Also seems that this is removing a future supply that's already been "paid", so
now the equivalent "demand" is still outstanding, if it was real, which should be bullish for the POG.
BTW, my stink bid for ABX yesterday didn't get hit by a few cents :-(
Re: Bill said:
I switched from Gold miners to CEF yesterday so I think my actions are proof of what Bill is saying Les.Physical Gold is what I trust the most.It does not mean that I wont trade miners if a short term opportunity arises, but for keeping I want CEF ,SLW.
Re: Bill said:
Ok, so let's say some of us here go long on SLW on the US markets. Is there any risk that the Presidential decree of 1933 will be brought back to haunt US market and bullion trader/owners?:
http://www.financialsense.com/editorials/phillips/...
Should we be long US markets or thinking about Canada/Australia? Is the ABX issue a blip or is it about to trigger something more significant?
edit: Bill still is the fastest gun in the west. Beat me to the question I was asking.
Unhedge Gold Miners
Can someone confirm which miners are unhedged? GG, KGC, etc.
I believe with hedging Barrick must sell gold to it's creditors first, at the agreed upon price. Please correct me if I'm wrong.
Housing can fall another 25%. Foreclosures at records
But hey, the unemployment improved from the expected number this morning. all must be fixed! Pass the kool aid
"Home Prices Could Fall by Another 25%: Whitney"
http://tinyurl.com/kuc3ca
"Foreclosures Up From Last Year; Remain Near Record Levels"
http://tinyurl.com/kmvo8e
Re: ABX gold hedging
i suspect the deal with silver wheaton slipped under the rug while the hedging debacle took centre stag.
what we are seeing is the culmination of a large cap miner who has for the better part of a decade been bearish on the price of gold and been wrong.
they have talked of being unhedged for years, it has been fantasy as more news of increasingly complex hedging comes out creating losses.
Barrick tried mining alchemy, turning what they thought would be a secular bear market in their product into a cash for clunkers program via shorting and exotic hedging programs.
gold must move up parabolically if these miners are to be saved.
Re: Unhedge Gold Miners
Otis... let me add UXG to your list.
Re: Unhedge Gold Miners
Otis, a couple of tips from the Mad Hedge Fund Trader:
Last year, FCX mined 102 billion pounds of copper, 40 million ounces of gold, and 266 million ounces of silver. Talk about being in the sweet spot. A doubling of copper prices since January enabled FCX to announce blowout earnings. The stock has more than quadrupled since my New Year recommendation . Did you know that this is the number two performing stock in the S&P 500 this year? If you want a core holding that is in many right places at the right time, use dips to back up the truck for FCX.
One good way to play gold at this late stage might be the shares of highly leveraged unhedged producers like Rangold Resources (GOLD), Jaguar Mining (JAG), and royal Gold (RGLD).
http://blog.madhedgefundtrader.com/
Re: ABX gold hedging
Dr Cosa
Since I been following your posts I have come to the conclusion that you are not a big believer in owning gold mining stocks and as for the price of physical gold you are some what bearish. Is that correct?
Re: Unhedge Gold Miners
UXG is a core precious metals holding (though I lightened up, awaiting another purchase opportunity), but it is not a miner. It is an exploration company that holds a couple interesting properties, one of which appears to be mineable upon further development work. I like it a lot, but it is volatile.
How about holding currencies.
Bill said we should accumulate gold and agree that is true but also keeping a few Swiss Francs or Euros' around. Smaller denomonations than a 1 0z gold coin.
Re: Unhedge Gold Miners
Les, excellent. Thank you.
P-E of S&P 500 now at 129
While some traders have enjoyed the stories of all those earnings surprises where the HB&B analyst estimates were beaten, they probably forgot about something important, which is the absolute earnings, as reported, are absolutely dreadful. Chartoftheday.com has reported the S&P 500 P/E ratio has soared from well under 20, which is respectable, to a stunning 129.
Here is what that person wrote:
Today's chart illustrates how the recent plunge in earnings has impacted the current valuation of the stock market as measured by the price to earnings ratio (PE ratio)... Generally speaking, when the PE ratio is high, stocks are considered to be expensive. When the PE ratio is low, stocks are considered to be inexpensive. From 1936 into the late 1980s, the PE ratio tended to peak in the low 20s (red line) and trough somewhere around seven (green line)... The price investors were willing to pay for a dollar of earnings increased during the dot-com boom (late 1990s) and the dot-com bust (early 2000s).
As a result of the recent plunge in earnings and recent stock market rally, the PE ratio spiked and just peaked at 144 – a record high. Currently, with 97% of US corporations having reported for Q2 2009, the PE ratio now stands at a lofty 129.
Re: Unhedge Gold Miners
Mr Cara
Thanks for the UXG comment.
Have Gold and the Miners Finally Broken Out?
Just some TA and comments that I put together after doing the charts and noticing recurring similarities. Thought that some here may find it of interest.
Cheers
Ad
Re: gold
We can and should trade using all legal tools to the best of our abilities until it is possible. But in my view the next decade in US for a small investor is more a matter of survival and wealth preservation than making good profits. I am long gold (physical and paper) but feel myself increasingly unease about the future of this position. No country in history survived qualitative increase in debt and US will bear the consequences too (unfortunately). I do not want to sound paranoid but I feel this time there are too many electronic/paper trails that would prevent most of us to use gold as ultimate storage of value, buried or not.
If anything it may be preferable to own something that is difficult to expropriate without causing major unrest. Real estate perhaps (fully assuming that it will further drop but perhaps not as much as dollar) or shares of selected big US exporters that make things difficult to steal/copy (like Intel) hedged against market decline with put options on broad market indices. In some sense it may be safer than physical gold considering that some guy can decide overnight to take it away from me for the sake of some high moral purpose (only a minority will complain if that happens).
Regression Channels..Stockcharts
Aucourant, from you post last night.
The only way to do Regression Channels with Stockcharts is to use their chart annotation tools, heres the link to the explanation.
http://support.stockcharts.com/forums/30077/entrie...
As far as the Hurst channels around MA, not sure about that one, will have to do a little more research to see exactly what you are trying to do. Send me (contact the author) a chart showing the details, the process and I will see if I can figure out a better method than your current manual tracings. There are often ways to use existing overlays and indicators for different purposes by modifying their parameters.
Quasi
Re: ETF RSI scan
long SRS @ 11.33
Re: Unhedge Gold Miners
I have been searching for hedges on Randgold and found this Les.
http://tinyurl.com/l242ag
Randgold hedges some of its production and, at end June, was committed to the forward sale of 79,248oz at an average price of $466/oz by the end of 2010.
Re: P-E of S&P 500 now at 129
This is something I track as well, and I did an update yesterday. However, I only look at the companies with positive earnings, and the current P/E is 45.04. If we consider companies with negative earnings, then the ratio would skyrocket.
http://nexalogic.com/sp500.html (click on the various date tabs to view averages).
For comparison:
In August is was 44 to 47
In July is was ~49
In June it was ~43
In May ~40
In April it was ~16...
Re: P-E of S&P 500 now at 129
I don't think anyone honestly believes it will be at 129 for another year.
CTAB-MANNA
There may not be a Daily Report today (I'll try), but my job is keeping me too busy to indulge in my hobby. We are open for business in Canada today.
Our partner, for purposes of meeting regulatory requirements, is MANNA Asset Management. Officially, we are sub-advisor, but in fact we are the traders, including some of their personal assets, while they are responsible for account set up and compliance. They are exceptionally good people and I am very pleased they contacted me with a solution I was seeking.
When I can, I will post the MANNA Introduction on the CTAB website. In the future, I will be seeking similar relationships in other countries that presently prevent us from trading in securities on behalf of companies and individuals, as Canada did until now.
To help me in that regard, I recruited a friend and former business associate who is an ex-CEO of BMO Investorline and HSBC Direct (Canada and USA). He has agreed to join the team in a business development role. He will go on BNN-TV in Canada and talk about our business model and so forth. This man, who I will introduce on the CTAB website (when I can get to it) was the youngest ever VP at BMO and ran all the MasterCard ops, then their national branch banking ops until he designed/founded Investorline for that bank. He then did the same at HSBC. He was my contact at HSBC when my company was in a correspondent relationship, and he knows I will get CTAB right and it will be a major success.
25% allocation of JAG
playing what we've talked about here, JAG is down for the day when all the other miners are rebounding.
JAG is behaving a little differently from other stocks. Some selling off after 52 wk high. Some info on JAG:
http://seekingalpha.com/article/157836-jaguar-mini...
Traffic spike?
Sorry. The server shut down for about 30 minutes and needed rebooting. I guess we had a traffic spike. Amazing. We just got a huge new server. Our server btw is now in Washington (DC area) in the world's most wired building, so the bigger server and the Internet access should be very good.
Re: 25% allocation of JAG
Jaguar Announces US$110 Million Offering of Convertible Senior Notes
RBY - Rob McEwen
Anyone looking at RBY. It is another Rob McEwen (UXG) PM exploration company.
It just broke out of a 3 month base ($3.19) and made a new 4 year high on very strong volume. It is now at $3.5. It has been in a nice upward trend since its December 2009 low of .76.
I bought some RBY around 2 a few months ago and then sold at $3 in June after it seemed like it was overbought. I bought it again @3.20 last week when I saw it breaking out of it its $3.19 52 week high on strong volume.
Disclosure: I own both RBY and UXG. For UXG, I actually bought when it was 6 and rode it down to 1. I did double down at $2 and I am still holding it.
Re: 25% allocation of JAG
ah, I didn't think thru the implications of the offering. Dilution is it?
Re: P-E of S&P 500 now at 129
For those who are interested, here's the actual chart: http://www.chartoftheday.com/20090821.htm
I kept meaning to post this a while back, with a comment that it was my personal reminder that the long side was dangerous right now, but I completely forgot. This chart is part of their free service, which I find to be excellent -- just about every chart has some sort of great insight. They have a paid service as well, but I've never tried it.
Re: ABX gold hedging
gold miners are a trader's play. up and down, rinse repeat. as a non-investment professional and fake doctor i dont regard gold miners as viable long term safe investments, just trading vehicles.
gold is gold. long term bullish, and short term who knows.
i dont buy into the false logic that gold is manipulated any more than currencies are.
Another interesting stock pick
GMO......General Moly.
Re: gold
Today's commentary is a great example of why I (a longer term trader/investor) come here.
We know we are being lied to by so many in government, the media, the financial community that a simple and straight forward assessment of today's condition is what I want.
Congressman Wilson, who unwisely cried out, "You lie!" may have just been overcome with the level of BS. He was expressing outrage at what I have come to expect from Obama.
Perhaps Obama doesn't even realize his never-to-be-fulfilled promises are lies...after all he got his political schooling in Chicago where oligarchy, patronage and lack of transparency are a long time tradition passing for representative government. Or, perhaps he is adopting a "depends on what is, IS" approach to truth.
What matters is how do we defend our assets. I'll continue to buy gold and hold.
Swiss Gold ETF trading in NY
Just as gold is showing its strongest performance in a year, exchange-traded fund provider ETF Securities is set to launch its first bullion-backed gold fund. The ETFS Physical Swiss Gold Shares, backed by one-tenth of an ounce of Swiss-stored physical bullion per share, is set to begin trading on Wednesday through the NYSEArca exchange under the ticker SGOL.
http://seekingalpha.com/article/160800-gold-etfs-f...
I don't understand why it's only backed by 1/10th of an ounce. What's the other 9/10th?
http://www.indexuniverse.com/sections/features/633...
Re: Traffic spike?
FYI, we just hadn't configured the database server for that many connections. It was just a minor configuration problem, and I'm sorry it took us down. The server still didn't break a sweat.
GSX
busting a move?
GE, HBAN, ABK
Doubled down on GE $14 Sept Calls because of the change in sentiment surrounding the whole industry (look at MTW, BUCY, CAT as well) and it's gravitation toward $15, which I think will fall.
Bought more HBAN at $4.03 following on my theory that the bank has fully funded its liabilities through equity raises and that it held the 200 DMA yesterday.
Bought ABK at $1.66 because I like the chart and when I look at the other mortgage/bond insurers, I see strength in them.
Re: RBY - Rob McEwen
ulvy
I sent you an email.
Re: gold
Occam-razor said, "or shares of selected big US exporters that make things difficult to steal/copy (like Intel) hedged against market decline with put options on broad market indices."
I was reading last night and came across the following statement by Larry McMillian per a Barron's article from 7/11/07 which I have not read. It stated, paraphrasing, S&P puts are not a good hedge for a broad portfolio but that the VIX options are.
You sound very knowledgeable about options, when you get time could you comment on the above? TIA
Re: P-E of S&P 500 now at 129
I wonder how many people actually believe the P/E will be 129 in 2010.
UXG - meet RBY
Poking around The Motley Fool's CAPS site and looked up UXG. A quick checking of UXG's star rating puts it at a 3 out of max. 5.
Bill just mentioned UXG is exploration. Well I was introduced to another explorer the other day, although I didn't know it at the time.
ToddinFL punched out a great chart with bullish implications for this Canadian explorer - Rubikon Minerals Corp. Given a 4 out of 5 star rating I'm getting more interested in this company. The CAPS page on RBY:
http://caps.fool.com/Ticker/RBY.aspx
ToddinFL's chart on RBY:
http://chart.ly/mpvta2
Re: 25% allocation of JAG
FWIW
I can't figure out your strategy on many of your buys. The JAG 7 day RSI is 44 so it's not close to either a Triple RSI buy or a RSI capitulation play where the RSI is below 10. It's not near its 50 DEMA, either.
I like to trade things like JAG if I see a kangaroo reversal, a capitulation where RSI < 10, etc. AND only if there are options where there is some pull in the direction I want the issue to go.
To control risk, I limit the position size to either 6% of my total equity or usually a smaller amount based on my equity and the volatility of the issue.
In the case of JAG, let's say your total portfolio is $100,000. A $6000 position would be the maximum size. Figuring the other way, let's say we wish to risk only $1000 of our equity on the trade. The 10 day ATR is .79. We have to decide how long we will let the buy move against us before exiting with a sell-we always want an exit point. Let's say 2 days. $1000/(2*.79)=625 shares of JAG. So if JAG drops by 1.58, we sell out and lose approximately $1000, leaving $99,000. Further if the portfolio drops 6% at any time within a month, one would sell all positions and go to the sidelines until the next month, leaving time to refine the trading strategy and/or waiting for the markets to become more favorable. The other benefit of position size is that it reduces the position size if your trades are doing poorly and increases them if you are doing well. The 10 day ATR (large the ATR, the more volatile the stock) also reduces risk by reducing position size if the stock is volatile.
In the case of SPNG, there are no options traded so that makes it more difficult as there is no pull upward. The maximum shares would be 25,000 ($1000/(2*10 day ATR) 10 day ATR = .02.
I spend more time running RSI scans and calculating position sizes and entry/exit points than about anything else.
GL
I went long
a bunch of GMO at 3 or so...still holding this one should be good
50% allocation of evg.v
Evolving Gold Corp (EVG.V) - CA$1.54; (EVOGF.OB)-1.43us
There is a potentially new large gold discovery in the United States. Evolving Gold has recently been reporting some close to bonanza grades at its 100% owned Rattlesnake Hills property in Wyoming, just 45 miles from Casper.
This most significant to date discovery in Wyoming is an Alkalic system with a potential for multi-million ounces of gold. Its geology is similar to Cripple Creek, Colorado which has been producing gold for over a hundred years, accumulating to a total of over 24Moz gold. Although in the early days of the Colorado Gold Rush, the high grade zones were exhausted by miners, today, AngloGold Ashanti is still operating a series of Cripple Creek open pits and a large heap leach pad. They produce about 300,000 ounces of gold each year.
Rattlesnake Hills appears to be a very similar Alkalic system of high grade gold mineralization surrounded by an extensive halo of lower grade gold values.
Using the same cutoff at Rattlesnake Hills as AngloGold Ashanti uses, the drilling indicates an average grade of 0.96 g/t. This is an excellent grade for a potential open pit operation.
In the 2009 program to date, the Company has completed 24 drill holes totaling 9,376 meters (30,762 ft). The Company plans a total of 25,000 meters (45 to 50 drill holes) for the year. This compares to just 15 holes for the whole of 2008, the year when the property was purchased.
“Drilling in 2009 is designed to expand and confirm the body of bulk tonnage style mineralization, and the high grade zones within it which was reported at the end of 2008 drilling. The 2008 drilling defined a body which measured approximately 450 meters long, 200 meters wide, and 550 meters deep. The 2009 drilling is also designed to better define the mineralization at Antelope Basin, up to 750 meters to the south and explore the potential connection between the two zones of mineralization”.
To date, here are some of the more important drilling results:
* 146 m at 2.92g/t;
* 131 m at 2.74g/t;
* Nearby halo mineralization– 359m at 1 g/t;
* 374.3 m of 0.89 g/t (including 50.2 m of 2.75 g/t)
* 67.1 meters at 10.8 g/t
The deposit remains open in all directions.
The Company targets its first resource definition and a scoping study to be completed by the first quarter 2010, but timeframes are likely to be tentative.
Re: Another interesting stock pick
Hi Shark - Another moly deal I track is USEG (U.S. Energy) who is in joint venture with Thompson Creek Metals (TC-a real moly producer) on a Colorado moly deposit of substance -if not easily permitted. USEG has picked up a breeze lately due to investing with Brigham Exploration (BEXP)a new star in the Bakken Shale play of the Williston Basin. Have owned them all at one time or another - but none now. Happy Trading
Re: gold
I do not get it.
In the 1930s all currencies were linked to gold. Thus in the 1930s the expropriation of gold at $32 oz. and the reestablishment of its value at $32 oz. was essential to the preservation of all currencies.
But today the dollar is not based on the gold standard. Nor is any other currency. So what purpose would the expropriation of gold serve? And if it were expropriated, at what price would the expropriation occur?
Re: Traffic spike?
Korvus, if ever you tire of the busy work involved with most upgrading and anticipating storage growth, check out http://www.inlinecorp.com/index.htm
They are setting the standard and have definitely broken the mold...a game changer.
Re: 25% allocation of JAG
bsi, I wouldn't have a clue what you are talking about there...
But seriously.... no I still don't have a clue what you're talking about. I've something new to learn I think.
Cara 100 Update (Final)
ADBE - Price target higher at Thomas Weisel to $34 from $31 on positive 3Q expectations. 2009 and 2010 EPS estimates set at $1.51 and $1.70. Maintain Overweight rating.
ERTS - Downgraded at Goldman to Neutral from Buy. Estimates are now below consensus, as the company's turnaround could now take longer than expected. $21 price target.
Re: 25% allocation of JAG
If you don't know how to calculate position size, the average daily trading range, and how to set exit points....
Suggest you get Elder's Trading for A Living and Come into my Trading Room and read.
Re: 25% allocation of JAG
Good Money Management Practices
Here are some more good money and risk management guidelines in addtion to bsi87’s framework which some may find helpful. I found this last night after Jock mentioned about ATR stops in his post.
Good Money Management Practices
• Only use money that you do not need for living expenses.
• Do not put more money at risk than what you have.
• Investing and using a credit line or leverage (e.g., futures, options) should only be done with money you can afford to lose in full.
• Depending on the amount of starting capital, you must spread the money among several stocks.
• You must limit the loss in a single trade to 1% up to a maximum of 2% of your portfolio’s total value.
• You must limit the loss in one trade to no more than a 15% maximum of the trade value.
• If your starting capital is too low to invest in more stocks, you can use an Exchange Traded Fund (ETF) tracker of a stock index. The index takes care of the necessary stock risk spread.
Good Risk-management Practices
Keep an initial stop based on:
• The maximum allowed loss in a trade.
• The maximum allowed loss in relation to the total portfolio value.
• The use of an initial stop based on technical analysis.
• A risk-to-reward ratio of a minimum of one to three.
Keep a trailing stop for maximum profit based on:
• The volatility of the stock.
• Applying a method for distributing profits or losses between stocks in your portfolio.
If you are interested more can be found here.
http://tinyurl.com/nphllc
Re: 25% allocation of JAG
Done. Come into my trading room it is. thanks.
Re: 50% allocation of evg.v
Hi Szoya - Hope you started moving into it in July when I flagged this one for the community. Not sure I would consider the grades in the bonanza league, but pretty good for bulk tonnage deposit. I entered the morning of the announcement in mid-July but took gains a month later. Now before they announce the next set of drill results (I expect some later this month)I hope to re-enter on a retracement of the gold price. Happy Trading
Re: Another interesting stock pick
Thanks Luggie,
GMO is struggling to get above 3.15 minor resistance which it should clear and advance nicely. Being me, I already took partial profits, but really the thing to do is hold it all.
It's getting good. As an investment. What I'm holding I will keep most of if it closes strongly.
Position Sizing
For a position size calculator go here:
http://oak.ucc.nau.edu/del/stockcalcs/sizer.aspx
Les for a discussion on position sizing, just Google "position sizing."
Re: 25% allocation of JAG
Read them both. And probably need to read them 3 times each to get the full benefit.
ignore post
One book a day's enough.
INWK - setting up a trade
INWK showed up on the RSI screener I follow.
Oct max pain is 7.5 so there's some upside potential as it's trading under 5 bucks.
Nice divergences on the chart, kangaroo tail reversal this AM. Setting buy limit order @ 4.43 GTC.
10 day ATR is .35. If one wishes to risk $500 on the trade, 500/(2*.35)=714 shares. Sell stop would be 4.43-.7= 3.73.
We'll see what happens in next couple days.
Re: ignore post
haven't read that one. But I have gotten a lot of value out of his materials.
Re: Another interesting stock pick
Hi Shark - USEC(USU)suffered after the government bagged them on a loan guarantee, but the powers that be are still working the deal for our only uranium enrichement company. Someone took an interest in the stock this morning with 2 times usual volume. I am long on this one and been in and out a number of times. Happy Trading
FPL (florida power) at 53.30
So FPL is one of those boring stocks I follow that isn't too volatile and has a reasonable dividend (which is more than I can say for short term treasuries). FPL is into wind power, which fits in with my "peak oil" thinking, and they have a nuke plant or two also. Who knows how it will fare with ultra cheap natgas, but it will probably be well situated for the whole cap & trade situation.
Anyhow, its daily RSI is around 11 right now (the lowest RSI I've seen on the stock) and it is showing signs of accumulation today. I bought some yesterday and some more today, and wrote some short puts as well. It is sitting right at support. It has a 3.5% dividend.
It's not one of those exciting stocks, but - I'm in a mode these days where I need to go long to balance out my shorts, and I try to pick stuff that's relatively cheap to do it.
Position sizing
Why complicate this issue and devote whole new rounds of reading to it... it's very simple task.
No trade should carry risk bigger than 2% of your trading account, and 1% is a norm for many.
Stop size is dictated by a chart - without intending to describe the idea of a stop placement roght here, let's say loss of a support level signals a stop.
These two principles is all you need to figure out position size. Let's do a simple example.
Your account is $50K. Your max loss on a single trade is $1,000 if 2%; $500 if 1%. You want to buy a stock when it breaks $20 with stop under 19.80. With possible slippage and commissions, let's say 25 cents. How many shares can you buy within these parameters, to satisfy 2% and 1%? make your choice, do your math. Simple as that.
If you deal with unconventioanl stock with too low volume and/or high volatility, incorporate additional risk as slippage can be bigger.
Re: Another interesting stock pick
shark,
Do you find breakouts to be your best trading tool for your day trades? You have commented on the 20dma as being a good place to enter trades in the past. What are your criteria for entering trades. You seem to be successful at it.
SLW and Mr Market
I think Mr. Market agrees with Bill (and many other posters here) about the desirability of owning SLW. Nice move today - its back to where I sold it a few days back! Sheesh. I just didn't have the guts to buy back in.
Re: FPL (florida power) at 53.30
http://rsi-trader.blogspot.com/
It's on the list. Buy limit 53.54 for now.
Divergences / MW / Agribusiness
Today DBB is losing a lot (near -3%) while XME is over +1%. Strange divergence. I'll go long DBB and short XME. Generally they are correlated.
Pauldkk: thanks for suggesting MW (to be short) yesterday before earnings. Today is -8%! Any other pick? ;-)
I like to have a look at agri-stocks, and today we have a positive DBA (after a while) and coming out of very low RSI, but MON is falling hard!
30 year auction at 1 PM ET
The always exciting long bond auction is coming up soon today.
I wonder who is buying these things?
Too bad CNBC won't show the ' 2 ( or 3 ) year to date ' charts,
instead of ' year to date ' charts... that would be enough to remind people how rigged this ' back-alley ' market is.... Anyone got the latest monthly money-into fund inflows yet ?
Oil:nat gas and gold:silver ratios and US$ conundrum.
I posted this this AM but just before Bill opened today's thread (I hate when that happens). So, I'm reposting:
I have been following the natural gas story as it turned out into a big black swan. The ratio is extremely high and exceeded 28:1 recently, before the rebound. One can see the historical ratio here:
http://bespokeinvest.typepad.com/bespoke/2009/08/o...
Something has to give, right? or can it go any higher?
On a similar note Gold:silver ratio almost normalized to 60:1. Anyone thinking it will go much lower?
On one hand, I'm thinking Gold and silver are ready to explode for the last dance as Bill says, but on the other hand, looks like US$ should go up after the beating it took recently.
Re: Position sizing
some of us are slower than others to grasp the concept of position size as it pertains to total equity and any particular stock's volatility... like me for many years. I was never long enough with a winner and was always way long with a loser. And could never get my stops set correctly esp since they'd get gunned based on the chart - everyone sees trendline support/resistance.
IMO this concept of position size and stops is much more important than the actual stock selection. If it's practiced correctly, it keeps you in the game.
Re: RBY - Rob McEwen
Hi ULVY ,Here is a link to a short interview with Rob McEwen from UXG homepage,its an interview on BNN from 15 June 09. He mentions Rubicon and also mentions some money should be in bullion.It could be of interest to you.
http://tinyurl.com/l8dlg8
Re: Position sizing
should add that Bill's Triple RSI screen was the missing piece of the puzzle to identify overbought/oversold conditions in multiple time frames in a very quick manner.
Re: FPL (florida power) at 53.30
long at 53.54.
Re: RBY - Rob McEwen
Thanks johnuk!
RSI blog scan
these stocks looked interesting yesterday for capitulation plays and offered upside potential based on max pain. I may have positions in any of them or not. suggest anyone do their own research.
DHT
SYNO
ARRY
JTX
HOTT
PLCE
INWK
Re: Swiss Gold ETF trading in NY
FYI
For those seeking an alternative to GLD, the new gold ETF SGOL may be an alternative. It appears to have a bit more transparency with bi-annual
independent audits and published bar numbers and a slightly lower fee than GLD. Gold is stored in Zurich and main custodian is JPMorgan and subcustodian is UBS. The URL below is a link to the fact sheet.
http://www.etfsecurities.com/us/document/downloads...
Les... in case you were not joking about the question "what's the other 9/10ths of an ounce" > share price is based on 1/10th of an ounce. 10 shares
equals one ounce.
PRECHTER SAYS
ALOHA !!
Imagine someone telling you this while you are having a BBQ in your backyard! Now imagine what would be the best hedge without any counterparty liabilities would be to this scenario. Now imagine Robert Prechter telling everyone to sell gold in the same breath!
"At some point during a financial crisis, money flows typically become a political issue. You should keep a sharp eye on political trends in your home country. In severe economic times, governments have been known to ban foreign investment, demand capital repatriation, outlaw money transfers abroad, close banks, freeze bank accounts, restrict or seize private pensions, raise taxes, fix prices and impose currency exchange values. They have been known to use force to change the course of who gets hurt and who is spared, which means that the prudent are punished and the thriftless are rewarded, reversing the result from what it would be according to who deserves to be spared or get hurt. In extreme cases, such as when authoritarians assume power, they simply appropriate or take de facto control of your property.
You cannot anticipate every possible law, regulation or political event that will be implemented to thwart your attempt at safety, liquidity and solvency. This is why you must plan ahead and pay attention. As you do, think about these issues so that when political forces troll for victims, you are legally outside the scope of the dragnet."END
From Robert Prechter's book CONQUER THE CRASH Chapter 27.
So that's the CAPITALIST system Michael Moore is trying to discredit. Sounds more National Socialist ... Crony Socialism to me ... Where's the Home Of The Free and the Brave in all that? What Liberty?
My business partner and I always used to see unions in this light, where the productive people always end up taking care of the unproductive people. What sort of productivity does Goldman Sachs generate?
So after all that Prechter tells you to get into cash.
I disagree with the very first sentence in that I believe money flows have always been political, not just during a crisis. Why else would we have a monetary system that sets no limits to DEBT, especially government debt. Now OBAMA wants to lift the "Statutory Debt Limit" ... HA!! Look at that con game. It started in 1940 with a "Permanent Debt Cap" set at $49BIL. Gradually the US Congress changed the status to "Temporary" in 1983. Now we may as well not have any cap! Does anyone here think that Obama's request to raise the "debt ceiling" will be rejected? Its like asking a heroine addict to self regulate! The US government and its two party system and the unending "conflict of interest" is just staggering!
So Prechter and Bill agree about the political aspects of the markets ...
Re: Swiss Gold ETF trading in NY
haha MoKat I am a dummy who needed to be wizened up a bit. Right I was thinking some sort of GLD scam. 1/10th gold and 9/10th who knows what backing each share. Didn't realise 1 share was valued at 1/10th of an ounce, thought only backed by 1/10th of an ounce. thanks.
HL - Hecla
HL is a silver mining company. It looks to be breaking of a 4 month base on high volume. It gapped up yesterday. One to keep an eye on.
There is also a lot of option action on the Sept., Oct, and Jan 10, $4 calls.
Re: Another interesting stock pick
"shark,
Do you find breakouts to be your best trading tool for your day trades? You have commented on the 20dma as being a good place to enter trades in the past. What are your criteria for entering trades. You seem to be successful at it."
Breakouts aren't a trading tool, they are a phenomenon one can use as a point of reference for trading or not trading. Last night and a few nights prior when reviewing daily charts (the best daytrades are also good investments) GMO appeared to be doing several things which are desirable. I leave it to you to tell me what those were. For if I were to tell you you would know the words but not the terrain. The map but not the jungle you need to fight in. So study the terrain and apply what you've read. I will be happy to tell you more at that point. But there are places on a chart where "something" has to happen, GMO was at one of those places.
My criteria for entering trades mostly involve buying what is going up.
Even if I said:
"Buy long after 45 minutes if the low has been made and the 20 minute range re-entered on good volume but only if it isn't after 3pm" it would never work for you anyway. Not really.
More and more I feel that everyone must discover the style, the timeframe, the risk attributes that are suitable to them, the organism in question. Just like in the undersea world, we all occupy niches where we can or can't make a living. What works for me and my personality would never have worked for Buffett or Dennis...I have a much shorter timeframe and less inclination to invest.
I can't eat like a starfish if I am a scallop, right? Actually, that's a good q.
Take David for example.......I know him only by reputation but I have to say, while I can see he knows what he's doing, That he's well spoken, appears highly intelligent etc...what he's doing seems quite different from what I'm doing. I don't even understand most of his posts fully. I'm serious. To me he's an example of, there's no one right way.
I don't think this has to be too complicated.
A stock has to be doing well before I will buy. It needs to trade about a half hour and begin rising meaningfully usually before I get involved.
It should be very buyable on every chart, in every timeframe, weekly too to be a big winner.
Also the market should usually be also doing well as well as the sector, the underlying commodity, whatever. Use your brain.
So much for distribution in SLW eh?
Re: ABX gold hedging
ALOHA !!
8.1million ounces ...
Whats the NET? Any time anyone brags about their income ask them what their NET is ... Now compare that to their hedging and CAPEX debt loads.
A couple years ago I was able to post the Blanchard CEO interview here where you can get a background on the JP Morgan/ABX partnership that has been documented since 1994. At one time JP Morgan through TrizecHahn Horsham was the controlling shareholder of ABX.
Now who would know more about ABX and JP Morgan than the company CEO who filed this huge lawsuit against, in reality, the US FED?
That is why I ask where are the ABX 19.125 million gold ounce "spot deferred" hedge contracts named in the lawsuit? ABX will only publicly claim 9.5mil ... What happened?
Then take a look at the ABX International Advisory Board. What "real" gold mining company has George Bush and Brian Mulroney as Directors? Add in the head of the German Bundesbank(central bank) and even Vernon Jordan the head of the NAACP ... What sort of political Whos Who is that?
Its a WALL STREET gold miner! As if we haven't already had enough lessons on what WALL STREET does to 401ks and US Taxpayers ...
Carbon Offsets (contracts)
Carbon Offsets (contracts) were selling for over $7 each in 2008.
Now they are trading for 25 cents.
http://tinyurl.com/pnlpur
I wonder what happened.
goldminers euphoria today
on this blog. I'm making exit strategy preparations for my heavy position in miners. The discussion here makes me think that miners could easily peak within a couple of weeks.
Faber is right, this is the freshly printed money at work, first went to equities, now to PM, who knows what next (nat gas?).
Loannetter - Real Estate
Hey Loannetter.
Yesterday you stated: "My biggest concern is that we keep the government loan programs alive and stop the devaluation of trillions in equity by a paranoid and over-regulated Home Valuation Code of Conduct, which is at last being revisited."
C'mon. Over regulated? Look what happened: Fan/Fred have been nationalized. Let's start with the simple idea that appraisers report on the market. They don't make the market unless they advocate. Many decades ago, HB&B successfully marginalized bank VPs by outsourcing collateral valuation to appraisers and putting the liability elsewhere. FHA then put residential appraisers in a box with its rigid ubiquitous forms. Once mortgage brokers dominated the Fannie/Freddie origination picture, the mortgage industry was allowed to freely shop residential appraisers to verbally guarantee the [sale price = appraisal market value] formula or get blackballed. Those are the facts. Appraisal fees did not rise for decades and were skimmed by the originator. In essence, residential appraisers, in general, became low-wage advocates or whores to the mortgage industry.
HVCC is flawed in that the middleman is again skimming the already supressed residential appraisal fee by some 40%. A little math: An appraiser is typically given 3 hours to bust his tail to earn $105 bucks before taxes [$350 fee less 40% skim = $210 split by the appraisal company = $105]. So if the appraiser does a ridiculous 2 appraisals per day for 11 months out of the year, he makes $46,200 pretax income usually with no benefits and is burned out by the volume.
Residential appraisers are easy targets because they are not employees of the banks and because their lobby is almost nill while NAR is a powerhouse working against appraisers' interests. But residential appraisers will better report the market even when allowed a 3-hour turnaround time and puny fees if HVCC does its job by blocking mortgage brokers, et al., from blackballing them if they don't advocate to 'make the deal work.'
Solution: Double the appraisal fee, give them 6 days to analyze the house, require a college degree, omit the mortgage broker pressure cooker and put the originator back into the hands of the bank employee. Residential mortgages should not be originated by the likes of Mr. Oxyclean.
Disclosure: My background is 25 years in commercial real estate development and finance including phased projects in excess of 600 units, community retail centers, quarter-million-square-foot factories, and office buildings.
Cheers.
Re: ABX gold hedging
There has been a long standing rumor that ABX helps the government short gold.
Re: Another interesting stock pick
Thanks for the input Shark. I could see that as one input point you were watching the recent high of 2.99 as a breakout point to 3.15 as the previous high as another resistance/support level. I was just wondering how you used the 20dma as a tool? But from your excellent post I was impressed with your full disclosure. Thanks for your help in your time frame of investing/trading. I know what you mean by David. He operates on a higher more sophisticated level. I would like to study his trading style in his time frame in more detail if he is willing to share it. This is where the really good stuff shows up for all posters. Please share your buy/sell concepts in the future. It is really helpful for posters trying to learn from others working in the various time frames. That kind of giving back is good Karma.
Re: RSI blog scan
bsi87,
I like your strategy in dealing with capitulation plays. Do you have any limits or guidelines on the market cap size or average daily volume of these companies?
Thanks for your posts.
Re: goldminers euphoria today
@jack black - what indicators will you be looking for as when to exit.
Many of the mines I am in have been basing for a few months. I was looking either for a breakout or a break down. It looks like a breakout.
It also looks like gold has been basing for 17 months. In this 8 year bull run for gold the typical time frame for gold to make a base has been 16-17 months.
So that being said, thing are looking good for another leg up in gold which should put a floor under the miners.
Re: HL - Hecla
Ulvy - I am long HL and SLW stock and holding HL Dec5 calls. HL upped the low end range for '09 production yesterday and lowered cost estite/oz to below $3 (from $4.50) based on rising by-product metal prices. That makes them one of the cheapest producers around and they have minimal debt. Could be explosive if silver continues the run (which I personally believe it will).
There is a huge gap above $4.20 that was created on 10/1/2008. Once it hurdles that level, could try to fill in quickly!
Re: RSI blog scan
like to see the price above 5 but very often, these are kicked to the curb and the price is under 5. Don't like the ones under a buck although CIT was a great capitulation trade. Volumes - I like to see ave volume 100K +, more like 300K if possible so the trade is liquid. I use candlesticks, I like to see that reversal off the low. Elder calls it a kangaroo tail reversal;proper terminology is a doji dragonfly where supply/demand come into equilibrium. It can mark a trading bottom/top. Usually set a buy limit order halfway down the tail.
Re: GE, HBAN, ABK
Bought some GE stock at 14.7. This is still 40% below where Buffett bought the stock back in October of last year. He has warrants to buy the stock at any time over the next 4 years at $22.50...I wonder if he'll be in the money on that. His GS bet paid off big.
Re: HL - Hecla
Regarding HL short interest.
HL hit its low of $0.99 on 11/13/2008 - at that time short interest was 17,024,262 shares
HL hit $3.20 on 8/14/2009 (most recent short data available) - at that time, short interest was 34,129,428 shares
According to Yahoo finance there are 236.49M shares outstanding.
So the price went all the way to $1 and back above $3 and now $4 and the outstanding short position has doubled? HL could end up being a short massacre (like UAUA!) if the price of silver gaps up nicely above resistance one morning. Not to mention that the stock becomes increasingly marginable if as price rise above the $4 level so will be attractive to a wider audience.
Re: Bill said:
ALOHA !!
Les posted-"Kaimu, what will happen to Silver Resources downunder in such an event. Has SLR got more room to run than its present price of A$1?"
Les-Companies like SLR(ASX) are the supply source for companies like CEF, SLW and the Perth Mint. Neither CEF or SLW produce anything do they? Where are all the CEF mines? Where is the SLW smelter? The Perth Mint refines through AGR Matthey, but they still need a supply. Those gold and silver bars stacked up at CEF have to come from somewhere, so when the above ground supply(Comex. LME and mints)is unavailable then who is in control? Its something that JP Morgan prefers not to happen ...
Now I wonder about these royalty contracts that SLW has. Can the producers renege and settle in cash? Anyone know how those contracts are written? In the event that ABX filed BK and stopped production, then the SLW royalty contracts would be worthless. When I was in the Public Works sector I, as the owner and contract manager, being a PRIME CONTRACTOR, had to write numerous contracts between my company and owners and subcontractors and suppliers. Usually it was "my contract" or the highway and if anybody balked then I always had a replacement lined up. I put in plenty of loopholes and "summary judgment" clauses, so it makes me wonder how good SLW is at writing contracts and negotiations. I recall the CEO mentioning that the ABX contract was the toughest negotiation he ever made in his career, so what did he give up? I tend to believe, given the ABX connection to JP Morgan, that they would say anything and do anything to get hold of SLW's $625mil, especially in a crisis mode.
SLR(ASX)-They are debt free, unhedged and currently producing 58,000 gold ounces not gold eq. They are moving to 170,000 and bringing on much more production in 2010. They are self funding all operations through actual CASH FLOW! Management has yet to miss any of their milestones. So YES, I do expect a higher share price than $1AUD ... Now if you bought SLR back when a USD bought $1.54AUD then you also scored a gain through the currency play when you cash out and convert back to USD or cash out and buy gold and silver, which is what I do with part of my profits. Or you can actually pay down your mortgage or car loan.
Right ... this play gets me outside the US stock exchange with its trader tax and outside US borders of currency restrictions and into one of the most mining and gold friendly countries in the World, Western Australia.
I have to say that SLR types of companies(with growing production)will be the safest plays in another credit crunch. With an explorer, who even has great drill results, they are still many years away from actual production and profits, so by then who knows what the political and environmental factions will do to erect further expensive and dilutive barriers to production. That is why I got out of Northern Dynasty(NDM) and moved to the ASX.
Another factor that speaks to the ASX is that many of the junior explorers there have retirement accounts backing them, "nominees" run by major Australian and foreign banks. I have yet to see a USA junior explorer with that kind of "community" backing. I believe that is due to the huge mining exposure that Australians live with as compared to Americans. What American here has a friend or relative who works for a mining company? How about a junior explorer? HA ... ZET is the answer ... With that kind of "community" and bank backing it makes it political suicide for Aussie politicians to mess with the mining industry. Can we say that about the US Congress or Obama or Bush? The US government prefers to tax and regulate anything remotely "profitable" and the environmentalist faction have no qualms about spending years in court battles enter twined with their US Congress backers! NIMBY but its okay in Mexico!
There will come a day when America will be forced to realize that we need to be more self sufficient and in order to do that we will need to expand the exploration and production of our own natural resources and not exploit Third World countries for an IMF pittance. There are many reasons that resource rich Third World countries are still Third World and a good deal of those reasons are US government backed IMF reasons. Oprah? Bono? Eh? China, hey wassup?
Americans need to think outside the box and outside America. I do agree with Prechter on that aspect.
Re: HL - Hecla
@BillySundance.
Thanks for the info. I agree! I have some HL shares as well as some Oct 4 calls.
Where do you find short interest?
30 year treasury auction
Well it looks like the market liked the results of the 30 year auction. TBT is getting absolutely stepped on and squashed.
How is it again that bonds can go up, stocks can go up, and precious metals can go up, all at the same time? Anyone think that's going to continue?
Re: HL - Hecla
HL Short Interest:
http://tinyurl.com/4uxd4f
Sector Rotation
last week I posted that I thought there was a sector rotation going on from the financials to the blue chips and that this would move the market higher. I noted that PG was one stock I thought would be a good buy. It has since moved from $52 to $56. I think we will see a lot more moves like this in blue chips, including PEP, GE, KO, etc.
Re: 30 year treasury auction
I mentioned a while ago that demand would continue to be strong because I believe the Fed/Treasury told the banks behind closed doors that they would have to continue to buy up the treasurys in exchange for taking their bailout money. The Fed is keeping rates low knowing that the banks can make a killing off the low rates and in return they asked the banks to keep their risk profiles low by buying tons of Treasurys...that's what I think is going on.
Re: HL - Hecla
Look at the insider trading over the past 12 months. I cannot tell if these are stock options but it appears they are buying and not selling.
Number of Insider Trades: 18
Number of Buys: 17
Number of Sells: 1
Net Activity: 989,987
Total Shares Traded: 1,000,247
Number of Shares Bought: 995,117
Number of Shares Sold: 5,130
Re: 50% allocation of evg.v
Evolving Gold Intersect Gold in Nevada- DOWJONES
Re: 30 year treasury auction
Davef, mad hedge fund trader was rather succinct on this issue:
1)Well, you certainly don’t need my help anymore. With everything in the world going up but the greenback, you certainly don’t need the advice of financial advisors, brokers, pundits, or sadly, even this humble online columnist. I never thought I’d see the day when stocks, bonds, gold, silver, oil, natural gas, copper and collectable beany babies were all up in unison.
Not only is the punchbowl ubiquitous, but the Kool-Aide is spiked with ecstasy, and it is so large, that there is a risk we might fall in and drown. Industry analysts are now putting out forecasts for their individual companies implying a 5% GDP growth rate next year, but macroeconomists at those very same houses see 2% as a stretch. All of this in the face of a catatonic consumer, $3.40/ gallon gasoline, and banks maintaining a death grip on lending to any but the primest of borrowers.
I guess this is what happens when the Fed is determined to keep interest rates at zero, for as far as the eye can see, and the printing presses in Washington DC are running so fast that I can hear them here in San Francisco. With $4 trillion in cash sitting on the sidelines there is a risk that the faith based rally will continue. Is the Fed trying to cure a burst bubble with a profusion of bubbles?
PAL
Looking interesting
Gotta love Geithner.............
If I say this is an pound of gold, it is a pound of gold... Now, it may look like a pound of quartz to you, but do not be mistaken... My friends in DC and GS have determined it is gold, and therefore it is... perhaps the way you are looking at this gold is not correct... if you view it in the light coming in from this window over here, it is indisputable that this is indeed gold, therefore any further discussion is nonproductive... Besides, our experts, which we have hired from the best ' firms ' available, certainly know more than you about this subject, so, I must move on to address other issues.
$NDX
http://tinyurl.com/nmqog8
SDS
buy limit 41.68 for the day. The big boys are messing but there's no volume on this rally.
Re: $NDX
nice ascending wedge with a LT descending trendline. wow.
Bears get clocked, chapter 2
Mr. Market knows how to write cliffhangers. At this point, I would say ultrashort holders (and I admit to being in their shoes for a brief time earlier this morning) have slid a few more yards down the cliff and are maybe starting to get worried. I don't profess to know how it all ends, but the market is not known for good endings. Stops will keep one from falling into the abyss, of course. Sometimes another abyss opens up (underneath you) while you're trying to prepare for the first one (which may never materialize).
GSX
long this stock....what with what's happening in natural I'm keeping it.
Re: goldminers euphoria today
I agree its a bubble created by money printing, but to win we need to guess correctly where it goes to next, and we need to out guess it by the 40% or so tax than we have to pay on any winning guess, just to break even in terms of real value.
Towel throwing/short capituliation
Seems like lots of towel throwing and short capitulation going on - seeing high volume in the airlines suggesting a lot of short covering taking place. The JPMorgan airline upgrade suggest to me we are nearer to the end of that rally than the beginning (though I still think there may be room to run further for the airlines).
I still like PMs but growing more cautious about the market in general and feeling like this short squeeze may be tiring after we busted through the new high on S&P today.
Just shortened up some airline positions and added a few IWM 58 Sept puts (expiring next Friday) to stabilize volatility in the portfolio while I take a small step back to look at the big picture.
Re: goldminers euphoria today
ALOHA !!
cheapy posted - "the 40% or so tax than we have to pay ..."
That's the short term max bracket on capital gains but before you can even gamble one cent in a US market as an American you must have discretionary income after you pay 54% on your overall income then you have all your debts that need servicing after that, so as I try to point out only the elite income producers in America can afford to gamble in the stock markets and bond markets and commodities.
The US government fleeces you first before you get wet then fleeces you again afterward you've been dunked again by Goldman Sachs!
With so many Americans underwater we can now consider ourselves sufficiently "baptized" by our "handlers" ... Somehow I do not think this is what John The Baptist had in mind!
Re: Towel throwing/short capituliation
"we are nearer to the end of that rally than the beginning "
This post here http://tinyurl.com/opd5d7 also suggests the same thing. To me it looks like they are starting to get their seats in the life boats.
Re: 50% allocation of evg.v
Hi Szoya - A nice drill hole to start out with on the Nevada property, but .03-.1 oz/ton gold at 2700 feet down the hole is not ore, but shows a real system with suitable underground grades (+.3 oz/ton) may be present in the area. I am with you on this one though since I respect the management and they are really on to something in Wyoming. Happy Trading
Market Internals update at
Market Internals update at 3:30pmET
- NYSE volume 895M shares, about 6% above its three-month average; advancers lead decliners by 2.3:1.
- NASDAQ volume 2.03B shares, about 12% above its three-month average; advancers lead decliners by 1.3:1.
- VIX index -2.75% to just over 23.50
DXO
To my suprise, and probably mine alone, DXO(double long oil) has suspended trading. Three days to get my money back, and pick a new one. UCO and OLO look to be possible candidates, but does anyone know if these ETFs are quite similar in concept? Thanks for any insights-I value the bits of knowledge gathered from Mr. Cara and all you others that post on a regular basis.
Yale Endowment
Yale Endowment lost 30% (per CNBC)in the last 12 months. How is that for professional money management. They now need to make about 42% just to recoup the lost capital and get it back to even. That should not be to hard as the market has just rallied 50% in the last six months, just 5 months to go.
ATI, since I mentioned it yesterday, I just let it go. Will look to reload on pullback.
Re: RSI blog scan
bsi87,
thanks for the info on OPTT yesterday, after reading up on the Co. and plugging it in to the RSI tool (buy alert 2 days ago) I bought some this morning
bought more UNG puts
That was an amazing rally today in NG futures, and UNG went along. Interestingly, the NG spot price is down today according to http://intelligencepress.com/. But then, when the same "divergence" happened a few days ago, the NG spot price jumped up the next day. We'll see what happens...
I have a feeling that many UNG short positions were closed today, and the rally seems to be over for the day. So I just bought some October $11 puts on UNG. NG is not a stock that can be hyped up arbitrarily high -- there is still A LOT of gas in storage and the demand is still very weak, so it is hard to imagine that the NG futures will keep going up at the same rate for much longer.
Stimulus Money Outsourced
Over lunch today I was reading the WSJ and there was an article about
$500 million of stimulus money being released recently. Almost 60% was given
to Iberdola SA, a Spanish company, to construct wind farms in several US states. This really burns my butt. I'm sure there are American companies which could perform this work.
Time may come soon where we may have to employ some of the French revolution tactics to those running the Federal government or the country we once loved will be no more. Maybe it's already too late.
GSX
Sold 50% @51 Will let the rest ride.
Re: bought more UNG puts
I don't know if you saw my post on oil:gas ratio, but this cannot go on forever, even though we are in an uncharted territory.
At some point, there could be a an influx of investor money into NG futures and they can go flying despite the storage issues. We had that happening with oil futures in early summer 2008.
Long term, there could be also some arbitrage going on as you can convert cars to compressed gas, install natural gas heaters, and build NG powerplants.
I'm looking into entering NG play now but not sure if best timing is now.
Re: Stimulus Money Outsourced
MoKat - the stimulus grant to Iberdrola (and other wind producers) is a replacement of the existing production tax credits authorizd in the last energy bill. Developers used to be able to monetize those future tax credits during the financing process (I.E. financiers were more willing to take those credits into account as a future revenue stream in the financing process). During the credit crunch, financiers no longer were letting the developers monetize those credits, which essentially made proposed wind turbine projects grind to a halt.
The American Recovery and Reinvestment Act allowed those production credits to be replaced by a direct stimulus. Instead of recovering them as a tax credit during after the project is in production, the developer can now apply and get funded up front, which allows the project to get off the ground.
So, to my understanding, this change only moves the government stimulus to the near term. Its not a new free giveaway (its an old free giveaway.) Its available to foreign and domestic developers alike.
Morgan Stanley internal fight
Do you recall a few days ago I asked a question, what's up with Morgan Stanley (MS)? The stock has been performing strangely, and now we get word that John Mack will be stepping down as CEO. Fired? Well, where there's smoke there's fire.
Re: goldminers euphoria today
Don't get me wrong, I'm a PM/miners investor for a long haul, but I trim the miners position 30-70% when they seem to spike over their MA, as they always go back under the MA in short time. Doing this prevented me from suffering too much during the crash of 2008.
Now, GDX is spiking again. I may wait for a second phase of the spike (if any).
Re: Morgan Stanley internal fight
Bill,
Are you suggesting a trade here on Morgan (MS)? What would you do? CBS made a move to a new high for the year going back to October of 2008. Closing price was 11.95 or the high of the day.
$1,000 reward being offered
I have decided to set up BillCara.com as a portal for CTAB, CTAB-MANNA, Cara Community, CTAB Team Members (Pierre, Pascal, Vad, kaimu, and a few others), Virtual Investment Club, Emerging Stock Club, and Cara Conferences. We have the technology to make this a rather simple front-end, but it needs to look good.
So everybody is invited to submit an artistic design (which will be returned if not used) and a $1,000 prize will be offered for the winning design as chosen by our 15-person team. We reserve the right to alter any design in any way before using it, but the winner will clearly see the similarity if the end result is modified in some way. Jack Senett, our corporate communications manager, will help establish the guidelines, which he will likely do tonight. I'd like to make a decision in a week or so.
Re: bought more UNG puts
jack black, the oil:gas ratio is a very long-term indicator. I bought October puts on UNG today because its premium can collapse any day now and also because the November futures, which it will start tracking next week (and will keep tracking right about until the expiration of my October puts), closed at $4.25 today while the NG spot price, according to Bloomberg, closed at $2.67 today. If I recall correctly, the November futures were trading below $5 when the spot price was at $3.50 in early August. So I am assuming that even if the spot price were to rally another 50% over the next month, the November futures will still stay below $5.
While it is tempting to consider such a strong bounce to be the beginning of the new uptrend in NG, we should not forget that the same strong bounce happened in the Spring, when UNG rose from $13 to $17, but then fell back as the fundamentals prevailed. Of course, if I keep thinking like that, I will definitely miss the beginning of the new uptrend. But then, the current contango ensures that UNG will go up MUCH less than the spot price (if the spot price indeed keeps going up) for the next couple of months. So it is like playing a game when the odds *seem* to be stacked greatly in my favor. The key word is, of course, is "seem." :)
Re: P-E of S&P 500 now at 129
At Standard & Poors website, they list P/E based on reported earnings of 129, but on operating earnings of 18.95 for 2009 (full year estimate) and 14.05 for 2010 (full year estimate).
Anyone have a simple explanation for the difference in calculation of reported earnings vs. operating earnings?
Mark
Re: 30 year treasury auction
They can't all move the same direction for long. Something is going to give
Re: $1,000 reward being offered
be sure to be clear if you are looking for a visual design - the brand/logo/color scheme - or a product design (of the portal) - which includes interaction design and what in lay speak is the function and behaviors
suggest Jack use the creative brief model to describe what you need - http://www.nancyschwartz.com/nonprofit_creative_br...
Re: P-E of S&P 500 now at 129
Reported earnings include non-operating costs such as asset write-downs and mark-to-market hedge losses that do not have an immediate cash impact. Thats why the 129 P/E number is so huge - it incorporates all sorts of writedowns and mtm losses that are now swining the opposite direction.
Credit Card Interest
I have never paid interest on my credit cards. I never carry a balance. Nonetheless, Chase sent me notice that the interest rate on any credit card purchase balance is now 15.9%, and on any advance is 19.9%.
I can not imagine the interest rate being charged to credit card holders who rely on paying the monthly minimum. I have heard rumors that its over 30%. I wonder if their monthly minimums have also been increased. I notice that my minimum was increased from $20 to $27 although I do not know if that coincides with the interest rate increase since the last time I looked at the minimum was more than a year ago.
It is unrealistic to expect a consumer purchasing uptrend since so depends on credit debt that consumers do not expect to repay.
Volcker says banks should not own hedge
http://tinyurl.com/rdy6mz
Why is he not our economic leader?
Re: Credit Card Interest
"It is unrealistic to expect a consumer purchasing uptrend since so depends on credit debt that consumers do not expect to repay."
I agree. But the consumer spending DOES NOT constitute 70% of GDP. If one cuts thrugh the BS of gov. reporting, it's only 40% or so.
My point is Fed can produce a boost in economy the same way Japan was dealing with their credit deflation since 1990.
I believe that will end with inflation, but I'm not entirely sure.
question about NG futures
Can anyone answer some of the following questions about NG futures and spot price dynamics?
Why would October NG futures jump 15% today when the spot price has actually declined? Is the spot price highly predictable over the course of the next few days (and weeks) and do all smart futures traders (who have access to the right information) already know that the spot price will rise over the next few days (and hence they bid up NG futures today)? The October NG futures closed around $3.25 today -- does it mean that the smart players are actually EXPECTING today that the spot price will reach $3.25 by the time the October futures will expire? Similarly, are the smart players EXPECTING today that the spot price will reach $4.25 by the time the November futures will expire? Should we, the uninformed players, use futures as the best guess for where the spot price will be when those futures expire?
Thanks!
Re: 50% allocation of evg.v
Luggie
From Evolving Gold: Recent drilling at our Carlin Property in Nevada has confirmed the presence of gold. Assays are still pending for the bottom 70 meters of this drill hole.
Assay results from Rattlesnake Hills are anticipated early next week. We now have 5 diamond core rigs drilling on the property.
Re: question about NG futures
David,
Spot price at Henry Hub on any given day is based on the actual demand for gas in the physical market. It reflects actual producer supply and consumer demand for spot delivery of gas - whether it be to heat your home, fire a power plant, or store in the ground. Unlike a future, you can't buy spot gas today to sell it tomorrow unless you own gas storage space where you can hold it until you choose to sell it. Prices are low because the gas essentially has nowhere to go because storage levels are at historic highs.
Earlier this week the spread between the October 2009 and Dec/Jan 2010 contracts reached an all-time high. The market was predicting that due to a lack of storage and excess supply of gas, it is very difficult to buy the October gas to sell in Dec/Jan. If you had storage available, you could lock in very large profits by storing the cheap gas now and selling it in the winter.
For example, in certain pipeline locations near New York City, when there is unexpectedly cold winter weather and everyone is blasting furnaces, spot gas can rise in a parabolic fashion. Prices can rise to $50+/MMBtu as suppliers panic to supply the last incremental demand into the physical market. But this spot price really means little in regards to what the price for gas will be at that same location 3 months later, when it is spring.
Re: Volcker says banks should not own hedge
Last time they appointed Volcker, he fed the US a dose of tough love that worked, but was definitely not politically popular. They're afraid that if they appoint him this time, he'll do exactly the same thing - he'll actually try to fix the underlying problem, ignoring politics, sacred cows, and political contributions.
I think honest men scare politicians too much.
I feel there are a whole collection of people waiting in the wings who are willing, able, and tough-minded enough to do what needs to be done to get us back on track, but they are being kept offstage by the guys who caused the problem in the first place that don't want to give up control.
Barry Ritholtz write an opinion piece that suggested Obama missed a bet to reform the financial industry - by picking healthcare instead, he "wasted a crisis" and left folks feeling Bush = Obama in terms of change we can believe in.
http://www.ritholtz.com/blog/2009/09/finance-refor...
Re: Position sizing
Vad, the reason many complicate position sizing or take too much risk in sizing is twofold.
First, many of the investing resources out there complicate the issue (think Van Tharp's 500 pages of rambling wordiness). I agree that it really is as simple as you say it is. In theory. In practice, for small players, it's not, and that raises point #2.
Poorly capitalized or undercapitalized beginning traders are handicapped by a plethora of rules and regulations imposed on them by brokerages (often HB&B in drag) and by exchanges. For example, if your round trip commission per trade is $50 or more, as is common for HB&B outfits in Canada (where you still need to phone in all short trades, at one major player), the only way to offset this is to increase your position size so that commission is perhaps 1% of the trade. Unless you want to be eaten alive by commissions, this means about a $5K PS, or 10% of the account at risk PER TRADE using your example. Sure, you can set stops as you say, and to be clear, I agree with you. But continuously paying $50 per trade plus your loss is going to put a big dent in a 50K account unless you have an extraordinarily good system (ie few trades, on average big winners, on average small losers). Good luck with that if you're a beginner going against HB&B's supercomputers.
Then there are exchange restrictions. For example, I believe the TSX mandates that a short trade must be 100 shares. That's your minimum position size, like it or not. Go to a US exchange to get around that and have fun paying to find out about stop running.
Now, you'll probably say: 'but you can get much better deals than $50 per trade these days - problem solved.' Well, not so fast my Russian friend.
Looking around the Canadian scene, for example, sure, there's Interactive Brokers for 'professionals' as Mr. Petterfy's outfit likes to put it. They're quite selective in who they hand margin accounts to. Just ask our friend Les here about getting locked out of his long-only IB account. Basically he's lending his money to IB for the chance to indulge his hobby of a long-only play once in a while. In any event IB doesn't even want you completing their application unless you've done 100 trades at HB&B first. So then there's HB&B's ripoff commissions. But lest we blame everything on HB&B, look at Bill Cara's QTrade. Commissions there are comparable to the HB&B brokers, unless one is an extraordinarily active trader, which I maintain is not a good thing to be for a beginner who doesn't yet understand position sizing. So small fry are going to get screwdoodled on commissions in Canada no matter what. Not surprisingly, even Bill's QTrade is structured to attract and reduce commissions for players with big capital. 'Social equity' in reverse, if you will.
At the end of the day, even with a system having a good expectancy, a beginner or low cap player (usually the same thing) is facing stiff odds and is going to be doing a lot of unpaid work with most fruits going to the broker and stop losses. The only real solution is more capitalization (min. 100K+) and the economy of scale, but that's a Catch 22 for small traders.
A low-cap beginner can therefore attempt to break out of the institutional box by using A LOT more risk than is prudent, as I can only assume some around here are trying to do by reading their dangerous trading moves: bigger position sizes than the textbook theory recommends, in volatile penny stocks, coupled with what they hope is a very good system. The odds of this succeeding are low and you'll soon be food for HB&B. This is a big boy's game not suited for mom&pop. The way the system is set up speaks for itself. 'Social equity' and playing the markets is a contradiction in terms.
Update on Self-Directed IRAs
Below comments apply to Entrust.
(a) Sliding scale fee schedule, based on value of account(s). Minimum $125 per year. Maximum (which applies to accounts 500k and above) $1850 per year. Not bad. Have you checked the expense ratios for your mutual funds lately (even the ones on MMFs)? What about the transactions costs you incur with trading?
(b) If you don't have the funds to purchase a home outright, it's possible to partner up and hold title as Tenants-in-Common (TIC). Not something I'd personally consider- when it comes to financial transactions/obligations, I want as much independence as possible.
(c) Promissory Notes. Surprised at the number of times this option was brought up. The difficulty of obtaining a bank loan the past twelve months may explain it. An interest rate of 9% was mentioned (personal loan via IRA funds to a close friend was the situation).
(d) It may take several weeks for transfer of funds. No surprise, as the company which currently has custody of your IRA will be in no hurry to release the money.
Re: gold
Telestar3d - I am not an expert in options trading even though I do understand the underlying math. 90% of my option trading are put writes to enter equity position, covered call writes to exit one and buying puts (usually deep ITM) to hedge core holdings. I may enter more complex option strategies when/if I complete my algorithm trading platform - I am too slow of a thinker to operate with multivariate probability distributions in my head :)
lessmore - there are multiple reasons to expropriate gold, the main one is that a parallel unmanaged currency is a big NO in any Keynesian system. Another reason is it is usually the upper-middle class who pays for the looting and it must (and will) be stripped of assets (at least partially) to compensate for QE effects. Taxation is one possibility but expropriation of gold is much easier to do politically and it targets existing wealth (not some future promises). After all gold is evil isn't it :)
Re: question about NG futures
OK, so why did NG futures rise today while the spot price fell? Does the $4.25 price for November futures imply that smart traders expected today the spot price to reach $4.25 by the time November futures expire?
Re: gold
Occam-razor, thank you for your input. I appreciated it very much.
I have been reading, Generate Thousands by Dr. Samir Elias which focuses on put writes and am planning to incorporate this strategy going forward. I feel comfortable with the strategy as a tool for entering longs or collecting premium and think the big risk is only if the market craters and longs are put to you at really unfavorable prices.
Of course it is all a work in progress and the big thing for me is developing a feel for if the premiums charged or collected are reasonable for the risk taken.
Thank you again. T3D
P.S. Bill Cara stated a while back that, paraphrasing, when the VIX is very low, its not a good time to write puts and call options, and when its high, it is.
Re: Volcker says banks should not own hedge
IMO, banks should not be allowed to loan to the hedge funds, either, as the funds collateral can become worthless very quickly, as last year's debacle proved.
Catching the bottom v Catching the center- which returns more?
The case for much higher returns trading the center of a trend:
(a) Trying to catch the bottom, even with tight stops, will generally set you back at least a few percentage points.
(b) Even worse, you forego the stops, and find yourself in a deep hole. The pain clouds your judgment, and when the position finally bottoms and starts climbing, you give in to the temptation to get out 'even.' Think you're immune? The market knows exactly how to shake you out- back to your basis, then one or more violent spikes back down will generally do it...just before it gaps up on high volume for 5 consecutive days, which denies you any kind of (re-)entry.
(c) On the other hand, trading the middle of a trend is relatively stress-free. You will generally have no losses to 'make up,' and therefore will have the patience to let the position ride. After all, most of the time, it will be going your way.
What's not to like?
Re: question about NG futures
David- I'm sure you'll get plenty of knowledgable and well-reasoned responses, but I'm going to weigh in with my take. NG futures are a slot machine. It drains your quarters (or whatever denomination you're playing) for days on end, interrupted only by the occasional small win. As you get up to leave, it suddenly hits you with a big win (or maybe it hits your trading 'neighbor' with a big win) and sucks you right back into the action.
Re: question about NG futures
Hey 2nd...Que Pasa Amigo?
Regarding natural gas, the smart money types are reading expensive research reports and hearing from highly paid analysts that gas should do well and could do VERY well in the upcoming period. Not surprising considering it's coming off such a calamatous low.
Check out a stock called Petroquest Energy symbol PQ. Could do well if the sector continues to perform. Put all your clients in it:)
Re: question about NG futures
I think it may have everything to do with the contango spread in nat gas
ECA.TO
- EnCana Corp said on Thursday it was rekindling a plan to split into a natural gas producer and an integrated oil firm less than a year after the financial crisis forced it to defer the move.
Here are some details of the two companies that will emerge from the split -- Cenovus, the oil sands company, and EnCana, the unconventional gas producer. Forecast 2009 North American Production (after royalties)
Cenovus EnCana Natural gas (mmcfd) 820 2,815 Oil and NGLs (bpd) 111,000 27,000 Total (mmcfe/d) 1,490 2,975 Total (boed) 248,000 496,000 Proved Reserves (year-end 2008) Natural gas (bcf) 1,855 11,822 Oil and NGLs (mln bbls) 909 97 Total (Bcfe) 7,309 12,402 Total (mln boe) 1,218 2,067 Land (year-end 2008, millions of net acres) Developed 4.5 5.O Undeveloped 3.6 10.6 Total 8.1 15.6 Forecast 2009 Operating cash flow (billions)
Re: question about NG futures
The November NG futures contract rose to $4.25 today because the market is predicting the average daily spot price at Henry Hub for November will be $4.25. Why did today's spot price fall from yesterday's spot price? The price is a combination of all factors of supply and demand for natural gas purchased TODAY at Henry Hub. Weather, storage capacity, industrial demand, etc. Remember, it must be purchased and either used or stored TODAY.
How can the spot price fall and the futures price rise in the same day? There is very little storage capcity available to physically store spot gas purchased today for sale in the future. Unless "smart traders" are owners of storage, they are not making bets on spot gas versus futures.
What is driving the bounce in the futures market? One possibility is that the forward market had been sold down so heavily that short trade has become crowded and sellers have momentarily refused to sell gas for future delivery at cheaper prices. In Q4 2002 natural gas was down below $3. By Q1, prices hit over $10. Wild things can happen in this market.
Re: question about NG futures
Thank you for your answers, BillySundance. I am now wondering whether the $4.25 price for November futures now might simply be due to the fact since storage is VERY expensive now, those few people who want to *ensure* some NG delivery in November are charged a very high price. That is, those who want to put a ceiling on their NG cost ahead of time are willing to pay $4.25 now. But the *average* of all current market expectations of the spot price in November is actually below $4.25 -- could this be the case? Is it reasonable to expect that only few participants care about the *maximum* possible NG cost that they will incur, while the other participants care about the *average expected* NG cost and hence are not even buying futures now and instead are just waiting to buy NG at the spot price in November?
Re: Position sizing
Ann,
in my post I exclusively addressed your point 1: "many of the investing resources out there complicate the issue." So, being Mr. KISS, I indicated how it should be done - based on common sense, 3rd grade math and, for a good measure, 1 lb of chicken entrails.
As for Canadian specifics, well, you are quite right: it's no secret that we Canucks are being dealt much tougher hand than our US brethren when it comes to brokerage standards. Still, there are quite a few Canada-based traders that made much better arrangements than you describe. It's not THAT grim :) And seriously, anyone still pays $50 a trade?? I mean, it's been a while since trade orders stopped being sent on a stone tablet carried by triceratops, it's all home pigeons now..? :)
Re: Position sizing
ANN, I appreciate this commentary. I am USA/Scottrade and do not have the problems you mention. I also do not access to TSX, on the downside perhaps.
Re: question about NG futures
In the SPOT market, there are buyers (physical consumers) who want to ensure price (cost) protection and sellers (physical producers) who also want to ensure price (revenue) protection. Both parties are in the market to ensure price certainty in one way or another. For every buyer that wants a ceiling on cost, there is a seller that wants a floor on revenue.
In the FUTURES markets, there are the same physical buyers and sellers, but also speculators(us traders/hedge funds/etc). Our function is to acquire risk from the physical buyers and sellers so that they can ensure price certainty.
Your statement above implies that todays settle of $4.25 was a "very high" price. That is purely the opinion of the speculator. If gas futures run to $6, the price will of course turn out to be very cheap. But $4.25 is the level at which the market will allow physical buyers and sellers to achieve price certainty right now, today.
So the November futures price and the "average of all current market expectations of the spot price in November" are one and the same - $4.25. Its up to the speculator to determine if that is high or low.
Re: Position sizing
Ann
I am not sure why you believe that Interactive Brokers is particular about who can open a margin account. I have opened a margin account there with as little as $5,000 funding. You do have to fill out the questionarre to certify your "level" of trading but that shouldn't be a problem. I am not sure if there are any extra restrictions for Canadian account holders so I can't speak to that.
IB has the most reasonable fees out there - US markets trades are $1 and options are $0.75 I believe. Canadian markets about the same. $10 miminum acct charge/mo (which is essentially a maintenance fee if you do not generate $10 worth of commissions in the month). I've NEVER had a problem shorting shares once with IB - no shares unavailable stuff that I hear others talk about. Execution is VERY fast.
For any moderately active trader I believe IB is the best platform around for cost-minimization and execution.
Eminem (m and m) : MTW and MVL
Bought in yesterday and 7% up on the day. Good diversified company, will do well if the global economy and construction picks up.
Teamonfuego, i notice you trade MTW a bit. Whats your thoughts on this?. Can it last?. Will it hit $10 and correct down or head for the 40's?.
I must admit that reading Sharkies messages recently gave me the inclination for this type of trade and within 3 minutes i had made 5%. Not bad for a tea break. I only mention this since there is always a debate here on the content of people messages. All incredibly valuable no matter the content or nuance. Thanks to everyone again.
Still dont understand the MVL situation as the stock continues to climb. Who owns the intellectual property and its future profits now?. DIS or MVL. Who's stock benefits the most?.
Re: Regression Channels..Stockcharts
Quasi,
Thanks for your response to my question. I looked at the link to the Stockcharts annotation tools. They have something called Raff regression where you draw a trendline with their line tool and the build a channel around that. However, the difference I am looking for is use the price data to statistically calculate a regression line or curve and then simply overlay that on the chart. It doesn't seem like a big deal for Stockcharts to add that capability. I have a TI-83 calculator, for instance that will overlay several types of regression-linear, quadratic, exponential, etc-over a series of data points. Why can't Stockcharts do that?
My purpose in trying to get centered moving averages is to use them to compute regressions--specifically trigonometric regressions. The idea comes from signal processing. A violin playing the note A gives a rather complex wave form different from, say, a clarinet playing the same note. This waveform can be decomposed into elementary sine waves with different amplitudes, phases, and frequencies. This is normally done using Fourier analysis. You can then, for instance, synthesize the sound of a violin or clarinet. Similarily, in this way you arrive at the sine waves for different market cycles that when added together give you an idea of future market direction. Another technical analysis tool which can be used in conjunction with RSI, MACD, etc. The only one I know of who is doing this is Charles Nenner.
I should say that when you see the beauty of these cycles added together, you will be amazed at how they account for triangles, pennants, head and shoulders formations, etc. The difference between this approach and conventional technical analysis, however, is that you see them coming in advance and you have a good idea how, for instance, a triangle will resolve, either to the upside or the downside.
While all of this is mathematically somewhat sophisticated (I haven't noticed that signal processing is a popular college major!), with easily available tools it's a piece of cake.
Re: 50% allocation of evg.v
szoya,
This appears to have been taken directly from a Resource Stockguide Newsletter. Did you get it there or somewhere else? I have a problem with seeing something for which I pay being posted like this. Perhaps I'm mistaken in this. If so please correct me. Thank you.
Re: Position sizing
@ Vad, I thought that as a Russian you would appreciate a fatalistic outlook on trading. It's all a tragedy! ;-) Seriously, I pay $50 round trip trades as do many if not most Canadians, the exceptions being day trader types on frequent trading plans or the Questrade crowd. I tolerate it because my purely mechanical 'always-in' system only generates about 50 trades per year, which basically are bought/sold at market open (by design). So even the most useless dinosaur HB&B brokers in Canada can execute that simple but effective system without difficulty and the commission with so few trades is negligible vs. the return.
@ Illini, glad you enjoyed my tirade. :-) But I don't want to discourage Americans from playing our market. For one thing I think the stop rules are more favourable on the TSX vs NASDAQ.
@ BillySundance, I don't use IB mostly because of inertia but I have associates who do and think well of them. So I'm not knocking them. Most mom&pop types I talk to in Canada have never even heard of IB. I've seen Les here chafe under IB's long-only account, which are indeed trivial for mom&pop to get. Trouble is the Canadian version of that restricts you to long-only and only on the CDN markets, plus you must wait 3 days for trades to clear. Any HB&B plan beats that. And I think most serious traders would find those restrictions almost impossible to design an effective system around. Or at least a system that wasn't severely restricted in earning power right out the gate. I simulated many strategies under these IB restrictions and would not personally bother with them. Even with higher commissions the competition was easier to design around. I talked to an IB rep last year, who chuckled and said one could just fill in the application with whatever information is needed to make it 'pass' you as a customer. While he didn't directly advise doing that, the implication seemed clear. It seems to me they're turning away a lot of customers with their paperwork requirements which even their reps just laugh at. I can only assume they don't want the small fry, which HB&B basically signs up for margin in a 2-3 day process and 4-5 pages of paperwork, from my experience. With IB it's weeks and dozens of pages of forms.
preparing to buy more SRS
I am placing buy limit orders on SRS at $10.5 and $10. If both of them get hit, then another 1% of my portfolio will go into SRS. I got a feeling today that it has become unfashionable to talk about shorting the market. The shorts were proven wrong so many times already, even when it *seemed* like they should have been right. Who else is left to cover? Who else is left to go long? It seems like everyone who had *some* convictions in this market has already had plenty of opportunities to act upon those convictions. The large naked shorts are all dead now, and so it seems like everyone must be long by now. When everyone is on one side of the boat, it will tip very soon.
How can we NOT be close to the end of this rally and a start of EITHER a downtrend or a sideways move (both of which will be good for my SRS "money pump" strategy of scaling-in/scaling-out)?
Still, to ensure my survival, I am adding to my SRS position in tiny amounts, just to give myself a feeling that I have done *something* during each rally and prevent myself from doing more. :)
Re: Regression Channels..Stockcharts
aucourant, if I understand your intention correctly then I think you'll find John Ehlers, among others, has done this sort of stuff and it's been around as a trading indicator for a decade at least. Look at his MESA indicators and books. Metastock, Tradestation, Amibroker, to name a few, all have implementations.
$USD / market futures
I am seeing something now that I haven't seen in a while: $USD is down AND market futures are down a little. As Bill was predicting, at some point the falling $USD will be looked upon negatively by the equity market, as it would imply higher prices for goods purchased from abroad by the US consumer. I can also add that a greatly oversold $USD creates an expectation that it should rebound (or at least that a significant downside is limited), which encourages people to buy bonds (as they will get their payments in currency that is going up in value). This might explain a good result of the treasury auction today and a jump in all Treasury bonds. So can it be that the main driver of this rally is becoming a hindrance? What, then, will keep pushing up the equity prices?
Re: $USD / market futures
David you are up late. My sentiment is with you as far as market direction and recovery, but I will take the other side. If we are posting a bottom in the dollar now won't the US equities market as well as the US bond Market look attractive.A non american gets currency gains along with equity gains. You might say you can't have it both ways, but they are having it both ways. Who thought this rally could go on this long. Is it not a 70 year record. Who's to say it will end. All news is good news!
I think the key will be interest rates. Will the dollar dip so low that the Fed will have to defend it? They really can't do this because of housing. Housing although it caused this crisis, still props up the financial sector. The financial sector props up the govt. The govt is suppose to prop up the dollar, but it can't because of housing. Going back to your boat analogy. I guess what we are betting on is who will be thrown overboard first. My guess is it will be the dollar because it only affects ordinary people. How could C, WFC, JPM et al still be in business if Meridith Whitney is right and housing goes down 25%?
Bob
David Fry illustrating market at key point
See his write up and weekly charts. Foreign ETF's close to breakout. Bev pointing out yesterday key point being arrived at in qqqq. Yet I'm not interested in shorting. I have no daytrades available to me so I'll watch these various tickers for indications of breakout or resistance being respected. Wouldn't surprise me if profit taking will be particularly popular this afternoon. I won't be holding anything this weekend.
http://seekingalpha.com/article/160927-friday-outl...
Re: Position sizing
If I am not mistaken, HSBC bank in Canada has a brokerage company called InvestDirect that offers trades for $6.98c to about $9.98c depending on account size. I think $100K is the minimum amount and under that it is a whopping $29.00 flat fee. I think you also have to have an HSBC account to qualify for an InvestDirect account. Neverthless, IB seems to be a traders dream and can't understand why most folks whether day trading or position trading would not use them?
The Coming Consequences of Banking Fraud
From Seeking Alpha, this is a long read but covers numerous issues that
have been brought up in this community.
http://tinyurl.com/nvhv7a
What Would Carlin Say?
http://ronsen.blogspot.com/2009/09/what-would-carl...
Oh Oh
http://www.nytimes.com/2009/09/11/business/11inves...
RSI Scan 400 stocks
http://xrl.us/bfjwwu (from A to K)
http://xrl.us/bfi4rf (from KB to Z)
Here it is a list of 400 big worldwide stocks (all listed in US) with the results of Bill's RSI system. After September 10, out of 400 stocks there are:
6 sell alerts
12 distribution zones
3 buy alerts
(no accumulation zones)
So, the market seems to be a little more bearish than the last few days, but still quite neutral.
Re: What Would Carlin Say?
Thanks for mentioning VXX in your blog.
http://finance.yahoo.com/q/bc?s=%5EVXO&t=3m&l=on&z...
This is supposed to follow the volatility indexes but has continued to move south from them recently, to the point that any connection to what they are supposed to track is suspect. Anything could happen, I suppose, but how these would catch up with the indexes when investors who are trapped and waiting for a bounce to unload is a matter of conjecture. This may be worse than some of the comparison BK companies that Ron brought up, because this is actually SUPPOSED to track something. HA!
Re: Position sizing
Ann,
It still seems all your evidence about IB is second hand and anecdotal. I sat down with my father about a year ago and helped him to open a new IB margin account with access to global stock and forex markets in less than 1 hour. Sure, you have to fill in the questionarre certifiying that you have done X amount of equity trades and X options trades, but that is standard for any broker.
I'm not sure why think opening an IB account should take dozens of days and require any more forms than opening account with HB&B. And believe me, they want any new account they can get. Thats the whole point, it is not a full service hold-you-hand broker, so any and all generated commissions are pure gravy.
Paying $50 per trade is crazy! $2,500 a year for 50 trades! Sometimes I make 50 trades in one day for $50! You could go to any number of other cheap online brokers (Scottrade/Sharebuilder/Fidelity/etc) and be paying a small fraction of that $2,500 amount.
You should just sit down and walk through the sign-up process. You'll realize its worth the hour or two. Don't mean to sound like an advertisement but I literally think IB has a the most superior online product. Save yourself a few grand.
Re: Loannetter - Real Estate
Dr Strangelove, your bias is showing. Once all the new regulations eliminate the competion for banks (independent mortgage brokers) I will retest your love for them!