[9:45am ET] Someone made a comment that this was a blog about options trading, which I took offense to, mostly because I happen to trade options a lot, which I do in order to manage risk as much as to seek opportunity, but I don’t cover the subject much here.
Also, one of the issues I have with the idiotic guru rating services on the Web is that they are covering the subject of trading and impacting a trader’s reputation, but they don’t know how to trade themselves. That’s not right.
In practice, I could say that I like a stock, which then sidetracks and I make a lot of profit on the put write. So why does somebody think they have the right to call me the bottom of the barrel among so-called gurus?
First of all, I am only a guru perhaps in the academic sense of the word, and these media clowns think they are being cute by running these services. Trust me it’s only entertainment.
A study of my records shows that I do trade options frequently. In fact, over a recent period of several months, the % of options trades to total was 63.56%.
Among the cash trades (36.86%), the ratio of long to short was 28 to 1.
As a % of all options trades, the types of options strategies employed was as follows:
CALL= 36.67%
PUT= 7.33%
COVERED CALL= 2.67%
CALL WRITE= 4.00%
PUT WRITE= 49.33%
SPREADS= 1.33%
HEDGE= 2.00%
PAIRED TRADES= 3.33%
The average duration of options positions is 15.0 days, with the longest being 80 days. But, the average duration of equity positions is 9.7 days, with the longest being 72 days. This shows that we believe holding an equity position long or short is riskier.
The equities have not been nearly as profitable for us either.
AVG GAIN/LOSS OF ALL EQUITY TRADES= +13.88%
Biggest percentage gain= +55.69%
Biggest percentage loss= -15.25%
WINNING TRADES= 40
LOSING TRADES= 13
AVG GAIN OF WINNING TRADES= +13.78%
AVG LOSS OF LOSING TRADES= -6.11%
But the options trades have been remarkably successful.
AVG GAIN/LOSS OF ALL OPTIONS TRADES= +197.21%
Biggest percentage gain= +2900%
Biggest percentage loss= -49%
WINNING TRADES= 89
LOSING TRADES= 4
AVG GAIN OF WINNING TRADES= +207.48%
AVG LOSS OF LOSING TRADES= -31%
These are unaudited (and not entirely accurate or representative) results, but part of a study being done for our securities commission filings. As soon as our system gets entirely automated, I will publish these summaries on the CTAB website, and the monthly records will be filed with regulators. I have nothing to hide.
One issue is that there is some debate as to the calculation of profitability on options writing. Some people believe that the maximum possible gain is 100%, whereas I believe that it’s wrong to calculate an infinite gain as being 100%. For example, we write a put at $1.00 and the option expires worthless and we earn the full $1.00; that is not a 100% gain because our cost basis was zero. It was an infinite gain. However since we always buy in a short put before expiry, which is our cost, and the original write premium is our revenue, I believe the accurate calculation is to calculate the profit as the gain being a percentage of the cost basis.
In any case, this data I think gives a picture of how we trade and that we know how to trade, at an expert level. We put together a new team, with new systems, moved to a new country, got ourselves registered in three countries, and it’s working out well. In addition I set out to prove it could all be done with no serious money invested on my part (which means no investment partners telling me what to do), and that the team and the clients as well would come from the Cara Community.
As someone who is soon to join us on the team remarked, “This is like the NY Yankees with no payroll obligations.” Yes, but we have to keep winning games, and the occasional World Series. As I say, we eat only what we kill and our clients pay us only for that.
Our issue today is that we are unable to trade the market with the confidence required of a 100% commitment. We are not taking the risk that we’d like to for clients. But we know these are extreme times, and our Job #1 is to manage risk. We never force a trade.
In closing, I know we are in the top tier among traders and we are getting stronger all the time, so I’d like these guru reporter-analysts to cease and desist. They make a joke of the capital markets.
Some of us live for marketing; but as for myself, I live to trade. Because real money is involved for the purposes of wealth management, I consider myself above the level of entertainer, which of course is an admirable profession in other walks of life.
Have a good day, and thank you again for tightening up the dialogue.
Comments
long Gasco GSX
long Gasco GSX
ok
I just won huge GSX babeeee
Re: long Gasco GSX
sharkie, what price, why, what do you expect to gain, and how long do you expect to hold the position? Anything less than that is going to see stuff like this entry removed because there is zero value add and it wastes everybody's time here.
Re: ok
sharkie, it's not ok.
Any more of that stuff and you are history!
Why I bought it
Here's the thing about Gasco
It went up thru the 200 day moving average today, broke above it's 20 minute opening range and I sold it when the price stalled for 3 minutes. Do that over and over and you too will be driving an '05 Corolla.
Shark's trading lesson for the day ^
Re: Why I bought it
Forewarned. I have zero patience.
Look, I am going to be proud of this place or I'm not going to make it open to people who want to take me to their level. End of discussion. From now on, I act.
Gasco
It would help if : GSX:A (American) opened @ 39 cents, up to 44 cents
52-Week Range 0.18 - 2.26
Re: Why I bought it
That's good. This stock is up 32 percent since I mentioned it yesterday.
Also, I would re-buy it it it looks good again today or soon, but with smaller size. That was by far the most number of shares I ever owned for 5 minutes.
Anyone with a normal timeframe might also want to buy this one anywhere in here as it should continue to be good. I however preferred the proverbial bird in hand. They ARE worth 2 in the bush, you know.
I was and am willing stay in/to get back in but that's where the art meets the science.
GSX
I just type this into my scottrade to see what i missed. At low it was 38 cents and at high it was 46 cents. Not to be a jerk, but how many $$ is a huge win?
Barrick ABX
ABX:T ABX:NY the e-news this morning is the most disturbing ever, indicates Peter Munk deserves many of the acid comments thrown at him.
Now down 4% , should go way down. Short anyone ?
Option trading
Bill, I also trade options alot. I too am amused at all the "experts". I have about 60 stocks I follow along with the option strands daily. I pointed out yesterday that I am currently interested in shorting some retail and casual dining stocks. With a weak dollar these will eventually break down and sell off after the insiders sell their shares during this pump or short covering rally. I have been using this blog for a long time for free and I will occasionally throw in my best idea as my contribution. On that note I like Mens warehouse Oct 25 put with a limit order of 1.20. Earnings are due out tonight.
Parabolic moves- does volume spike, or does it shrink?
(a) On the one hand, one might expect an increase in volume as bears capitulate.
(b) On the other hand, I have to think 'smart' money is off the table and not participating at these levels, so it's possible that volume trends down as prices enter the stratosphere (leaving only the least risk-averse players on the field).
Any opinions?
SLW- An analysis
Yesterday's news on the Barrick deal was a blockbuster for SLW because it substantially increases it's growth. But at what cost?
To finance this deal, SLW will issue about 8.3% more shares at a price of $11.10 (this includes a 15% overallotment). The total cost of the deal runs to about $4.00 an ounce over and above the $3.99 price of every ounce extracted. CEO Peter Barnes, in fact, stated that this deal would be profitable as long as silver exceeded $9.00 an ounce. I concur with that estimate.
SLW further stated that they would have enough funds, without having to issue more stock, for another blockbuster deal. I like that! If you do your homework, you could probably come up with the most likely targets. I am not prepared yet for that study.
The key question for SLW relates to the price of silver 5 years down the road. This estimate will assist in giving a price per share estimate for SLW. Is $25, $50, etc. reasonable? I would like to hear your thoughts on this matter.
Re: Option trading
pauldkk
I don't follow Mens Wearhouse (MW), but thank you for the idea, and would appreciate a follow up. I think you noted a pull-back in volume going into this quarterly report.
Re: SLW- An analysis
papadynamite,
You know I like this company. I like management because they are dead serious about creating shareholder value. The PE is always too high, but the assets in the ground they control is "real money", so the SLW is always going to be highly leveraged to the price of silver, rather than earnings.
In my view, this is the best silver play.
Real Estate Bottom ?
Following up from yesterday's site, there were several comments on real estate. Many seem interested whether residential properties have reached a bottom. Perhaps we have reached a plateau in the entry level market but I'd guess we will see a broadening out into the midlevel market with further price declines ahead.
From today's Daily Pfening/ C. Butler
Research by Fitch... "Between now and 2011, roughly 70% of option ARMs, with a total value of about $189 billion, will reset." $134 Billion of these ARMs will reset in the next two years, and the monthly payments are expected to jump 63% on average, or $1,053 per month, for loans adjusting this year and next"
The fat lady hasn't sung yet.
Housing purchase/loannetter
Posted this in the morning before new chat was up, figured I'd repost it...
loannetter &others
Wanted to share my housing report. After a 6 month search which took me to a couple dozen houses for a look and probably gave my real estate agent an ulcer, I finally closed a deal, buying a foreclosed property owned by Deutsche Bank. In the end, my agent was able to locate the property for me and I bid on it the day it went on sale and the bid was accepted soon thereafter as my strategy was to leave little time for anyone else to get their due diligence done on the place.
The house is a 2-story 2000 sq ft. brownstone town house in old South City in St. Louis. 117 Years old and located in the historical district near where the beer barons lived in Victorian style mansions at the height of the St. Louis brewing boom. Near local parks and walking distance to two of St. Louis' nicest fine dining resteraunts.
Since the house was foreclosed on, utilities were turned off and the place was generally left unnatractive and unkept - I had to take the risk that some things may not work properly, but inspection of the system revealed they were fairly new all around. A few lights on and a vacuum job would have done wonders for the sale price. I am still in amazement of how the foreclosure process works as it is baffling to me the lack of concern on value once the property is foreclosed on.
This house went on the market at the end of July at list of $99,000. House had been foreclosed on for $148,500 last year. This is a 3br/2.5 bath house that should rent for at least $1000/mo and possibly more. Seeing that the list price was undervalued and in my opinion was low enough to spark interest in this desirable price range, I bid $100,000 the day it was listed and requested the seller to pay up to 4% of the purchase price in closing costs, which was accepted. I think part of the attraction of the bid was that I used conventional financing (which is apparently unheard of right now) and was willing/able to close by 8/31.
Went off hitch free. 5.25% 30year fixed. 20% down. Seller paid closing costs which included 1 year of homeowners insurance, title fees, and used the leftover to purchase points down on my loan so that none of the 4% was left on the table. Now I need to amend my return to get my $8k from Uncle Sam to put towards a few repairs.
All in all an emotionless process. The listing agent probably could have cared less what the sales price was as long as he could get the minimum ask the property owner was looking for. He got his listing bonus with virtually no work as the place was under contract within a week of listing. At least for the low end of the market, it may not be "the bottom" but I am not sure there will ever be this amount to choose from at once from such indiscriminate sellers.
Ocean Power Technologies OPTT
I bought some of this stock today. Here is why...
Stock trades at about a 50% discount to cash holdings. I believe with the current burn rate the cash will still last 7 years as the company grows it's technology. The daily rsi7 crossed up above 30 today triggering a buy signal. The 1 year chart looks like a double bottom. Earning reported this morning.
http://tinyurl.com/n3cc2j
Re: GSX
How huge?
You are talking about the trade, right? Ok. If you bought it and sold it well as I did, you might have picked it up 6 cents per share, a nearly 15 percent gain.
Had you done 5000 shares you would have made three hundred
7000= $420
15,000= $900
But when I say big win what I really mean is, big success. As you probably know I was alerting the room to this yesterday at 34 cents. I described why and what. It was big because it worked right in all it's phases, not how much money I made. This game 'aint about any particular gain....It's about learning to play the game, which I am just beginning to do.
Options Performance
I trade options for my LLC with some other guys. To make things easy, I keep all options performance relative to account. "This trade would be worth 7%" on the account means more to the guys rather than I made 150% on a 2.00 option that became 3.00.
Likewise on sold options - each sold spread is worth x% of account if held to expiration. The question for your peformance calculations on write positions is that they have unlimited loss potential in theory. Using cost basis may be confusing using the following example:
Sold an option worth 4.00.
Bought it back at 6.00.
Cost = 6.00, revenue = 4.00 results in profit = -2.00
Would this be a loss of 33% (6-4)/6?
Or more accurately, your maximum profit was 4.00 or 100%, but instead the trade went against you by 2.00 (or -50% of trade value) and you bought back at 6.00. Instead of making 4.00, you lost 2.00 which was 50% of trade "value." This gets really insane if you buy back at 12.00 which means you lost 200% of trade value.
Since the premium gets dumped into your account immediately, your $100.00 account becomes 104.00 (4% target profit), instead you lost 2 and now sit at $98.00. You lost 2% overall - not a big deal...Keeping everything relative to overall portfolio is something everyone understands.
Took a position in opxa
This is an initial spot, as their platform is unique, and I will add as appropiate... With the blast yesterday, I can only go on volume and price points on an hourly chart. Could it dip to the $ 3's ? Sure, and that is what makes trading such a challenge...
SLW targets raised today
Salman Raised to C$22.50 from C$18.50
TD Raised to $13 from $10
Greenspan : Gold Rally Signals Move Away From Currencies
The gains are “strictly a monetary phenomenon,” Greenspan said today at an investment conference in New York. Rising prices of precious metals and other commodities are “an indication of a very early stage of an endeavor to move away from paper currencies,” he said.
Re: GSX
Shark...are you still long or did you sell.
I actually have been accumulating GSX between .25 and .30 over the past month.
My target is to sell half at .50 and then hold on to the rest and see what direction Nat Gas goes this winter. My long term target is $1.
Re: GSX
Good job.
I cashed out right around ten o'clock and didn't re-buy (yet). Maybe tomorrow. I have to bring mom to Target.
I just went long freddie on an alert I set
Volume
I am noticing a few of the stocks that I own/follow have been having trouble getting volume in the last few days, despite the return from summer vacay. Both UAUA for example and CPN have traded way under 3 month avg volume the last few days. This is interesting because there are large short positions in both of these stocks, yet there only seems to be volume coming in on the few down days we get. Suggests to me that shorts are using any mild weakness to try and knock these stocks down, but aren't succesfully shaking shares free, which is leading to these up moves on light volume. I am thinking we are destined to keep up this rally until we see an upward capitulation in which large volume takes place on an up day. That would signal an ultimate short capitulation.
interesting data on UAUA:
Date - Share Price - Short Interest
8/14/2009 - $6.15 - 31,833,413
6/30/2009 - $3.19 - 29,712,687
So the price approximately doubled in 1.5 months, however, there was an additional 2 million shares shorted - no net covering on a 100% move. That is what I call some trapped shorts.
Looking for UAUA to surpass its recent $6.84 high sometime soon - maybe even today.
GPR
I own some GPR and the daily volume can be as low as 1200 to 20,000. So average daily volume is 6k. Yesterday the volume was over 600k (100x). The opening prices was .76 and the price spiked to 1.10 and then closed at .77. So at the end of the day the stock only went up .01 on 100x volume. A similar event happened about 3 weeks ago.
Is there some type of manipulation going on or is this being accumulated?
I wish I sold these plus 25% spikes as I think I have a big gain but then the stock is almost at it opening price at the end of the day.
Insider Trades on Yahoo
I like to see if insiders are buying or selling their company stock. I will look at yahoo's insider trading section and I see the following.
Direct Acquisition (Non Open Market)
Direct Disposition (Non Open Market)
What does Direct Acquisition (Non Open Market) mean? Is that a stock option exercised. Same as Direct Disposition (Non Open Market)
Thanks,
ulvy
HBAN
added more at $4.02. Again, they announced intentions to raise another $150 Million and the executives stated in their release that they are done raising capital. This will be more of a longer term trade with a trailing stop loss of about 8% or so as I think this will clearly change the sentiment surrounding the company. It could take a couple of weeks for the trade to materialize but I feel comfortable buying a bank in this environment of low interest rates and that is trading at price to book of 0.40 and is down from $25-$30 to $4.
UXG
Mr Cara... I remember you mentioning once that you held a position in UXG. Any chance I could get you to share your thoughts on where you think this stock is headed?
the Kirk Report - powerful numbers behind his words!
Kirk is in the rarified atmosphere (along with Bill and VERY few others)of bloggers who IMO merit reading every day. A recent interview this unassuming trader "lifted the veil" a bit.
http://wallstcheatsheet.com/knowledge/interview-kn...
For the 1st time, mention was made of his lifetime returns. He has turned $2K into "over $1M" purely through private trading. His blog says he has been "investing and trading over 17 years", which would mean a CAGR (cumulative annualized growth rate) of 44%.
BUT, Kirk is only in his mid-30s, and spent 4 years in college, and 3 years in law school, so I estimate he may have been full-time trading for 10 years, which would imply a CAGR of 86% if his gains were achieved only during his full-time-trading years.
I'm rather impressed by a CAGR ANYWHERE between 44% and 86%.
His style, which has evolved over the years I've read him, involves screening stocks on fundamental criteria to create a watch-list of stocks that appeal to various types of fundamental investors.
For entries, he reviews candidates technically, using (among other measures) 180 day regression channels. He aims to enter as a stock comes off "oversold" from the bottom of the channel. Exits are indicated by trailing ATR-based stops.
I suspect this approach has him trading technically against mostly fundamental buyers and sellers. Sounds like "an edge" to me !!!
DBA
DBA, an agriculture ETF is moving up today, had gapped down Fri. to a long term support line. Can it fill the gap? Pull off an island reversal? Most commodities strong lately, so based on technical support and chance that DBA will play catch up I took a small position. Weak resistance 2% away at 25. Nice channel since bottoming in the Nov '08 implosion. Looking to hold for 5-14 days unless it runs fast or goes negative for me. Mid recent range of 26.5 is about an 8% move.
Suggestion for tonight's speech
New Slogan: Change we can Bereave
The "Stupid Stocks"
My son calls them the 'stupid stocks'...the microcaps that although "legitimate" trading vehicles, often are candidates for pump and dump campaigns and so forth...
It's bad enough that I trade some of them, and do so in the context of momentum pullbacks (e.g. ADX > 35, PDI > MDI, Stochastics or RSI pullbacks)...this methodology (or similar) is the message here...
They've done excessively well lately...a possible marker for late-stage frothiness, but you never know.
FWIW a lot of the "junk" that's up in this class, is doing so on negligible volume...a very high stakes game of chicken for traders where price dissociates from fundamentals. We never know when the abyss lurks.
You guys remember GMO
General Moly?
Take a look at the charts.
Out of freddie made a sandwich:)
i think gasco will be good
i think gasco will be good for more than 50 cents
Consumer discretionary - Retailers
Pauldkk, I also am looking at the retailers and consumer discretionary for a hint of crisis. But honestly, it's the position where my short bets in the last few weeks have been really losers!
It seems that retailers (stocks) are weathering the storm that I see in the real economy.
XRT (retailer etf) was some 44 in June 2007 (top), then 15 in November 2008, then 18 in March 2009, and now it is 33! From March is +80%!!! Poor me, trying to short it!
I also have my own list of stocks about consumers that sometimes I try to short: http://xrl.us/bfjkxq and by the way MW was included in my monitor too.
So far the only almost good bet was against LMDIA that I shorted in the distribution zone of Bill's RSI system.
I'm still shorting some, but soon I'm afraid I must leave...
To bullish....
Always said watch AAPL.... its now at a 52 high... I am selling most of my positions today...
Bill, what still just burns my butt, is the praise of quarterly
' window dressing ', yet shorting is ( was ) equated to being a traitor to your country... Bubblevision is the worst of the lot in promoting this practice... Fleckenstein has raised hell about this in his daily... I guess the more things change, the more they stay the same... damn.
Re: the Kirk Report - powerful numbers behind his words!
jock,
I to like Charles. I have an interest in moving to Cedar City at some time in the future. Charles said if I'm in the area again we can play a round of golf. I just wish his blog was open like Bill's to comments. But it appears it isn't going to happen. Do you think his blog as set up helps you in trading? Are you a member?
Bev said:
"Les we are talking to ourselves.... Mr Cara started a new blog."
oops *sheepish grin*, I thought you were having a go at me. Sorry :). I got lost there somewhere.
See end of yesterday's blog for thoughts on intraday descending triangle in gold price
http://caracommunity.com/content/caras-commentary-...
TBT
I was posting a comment the disappeared, so this may be a duplicate post.
While developing positions for a TBT trade, I discovered that the implied volitility for TBT is opposite of equity IV. This means the call options increase in price as TBT increases instead of decreasing. I don't know if this is because bond are traded as commidities or it's a function of 2X etf's.
I will get back later on this, but it interesting more from the put side as risk is reduced a the price drops.
Dan
Re: To bullish....
Why is AAPL at $175 too high when it was at $200 a year and a half ago? In that time the iPhone has gone on to become the premier smart phone and in my mind a total game changer.
TBT
Note: risk reduction is in short puts if price drops.
Dan
Re: Real Estate Bottom ?
Option ARM's resets will be painful and not just in Calif. and Florida. I expect that the 30 year conforming will be raised from $417,000 to somewhere around $600,000 nationwide within the next 9-12 months. The prime book is starting to be impacted as well due mainly to job losses. The 'bottom' in housing looks like the fuzzy catepillar in my driveway.
Re: To bullish....
Hi, Team.... I just cannot rationalize paying almost 30x earnings... but I also talk to a lot of people with I's and no-one I spoke with is going to 'upgrade' for at least 1 year... everyone is cash-constricted.. but mainly, Team, the hype is overbearing... I accept the fact Apple could trade to $ 200.00... but, the % gain to that level does not justify ( to me, anyway ) an investment of $ 100,000 in just one stock... I try to spread out the risks... Anyway, i really enjoy your post's..... Baz
Re: Consumer discretionary - Retailers
Lelik, part of the problem with buying options on etf's is the ETF weightings. by shorting XRT your really shorting WMT(which I would'nt recommend. I've maintained the rally in retail stocks is due to short covering on low volume. I try to isolate stocks that I feel have no business trading at certain levels and will benefit or be hurt by macro conditions. The problem is these stocks can stay overvalued for a long period of time. It makes more sense to me to short the retailers which are vulnerable to macro conditions. Just look at the insider registrations at MW. Although I have just started buying the Oct puts I have every intention of continuing to buy puts even if it goes higher until the stock breaks down and trades at $18 where it belongs. As it gets more and more overvalued you need to increase your position. The thing about options, you can recapture months of losses in a few days. Believe me I went into 2008 with lots of loses from homebuilders and auto puts. It only took a couple of months to be up huge. I always tell people "hope is not an investment strategy" and that is what is carrying this market especially the retailers.
ABX capitulates
Repost:
http://caracommunity.com/content/caras-commentary-...
sorry gang, not quite sure what to make of the following article. Has ABX tacitly admitted complicity in working with JPM to manipulate gold prices? Apologies if already posted/discussed. Saw Kaimu's reference early this morning and didn't know what to make of it at the time:
http://jessescrossroadscafe.blogspot.com/
Is ABX in the toilet because of this, trading wise?
Re: To bullish....
Baz - I think you have to look at it from a longer term perspective. AAPL currently has a tiny share of the smartphone market. I believe they will eventually get 25% of that market and I think the entire market will be 50% of the cell phone market, which is about 1 Billion annually. So 1 Billion x .5 x .25 = 125 Million phones. I'm assuming the average selling price will come down to $150, which means about $20 Billion in additional revenues and about $8 Billion in additional earnings. That justifies an additional $160 Billion in market cap in my opinion, excluding any additional growth in the Mac side of their business.
You also have to take into account the cash on their balance sheet. They have over $30/share in cash and if you back that out you're talking about a company worth $145/share or less than 20 times 2010 earnings (which I think will easily beat estimates of $6.80 or so).
Additionally, look at them from a free cash flow perspective. They generated $8.5 Billion in FCF in FY 2008, which was growth of 100% over FY 2007. TTM FCF is $10.2 Billion. They should grow FCF about 50% over 2008, which puts FCF at $12 to $13 Billion. Their current market cap of $155 Billion is only 12 times that, which is very cheap for a company growing as fast as it is.
Re: ABX capitulates
ABX is doing a large share offering at $36.95 that will be used in order fund the closing out of their hedge book. Looks to me that the shares are just trading down in sympathy to the offering price.
SLW
Davefairtex.....nice call yesterday on the SLW weakness. Looks likely to trade down to the 11.10 offering price.
Average Mo/Mo change in USD since 1975
lifted from Jesse's website:
http://4.bp.blogspot.com/_H2DePAZe2gA/SqbX9m9pISI/...
graph suggests a bit of give there Bill in the USD heading into Winter. Is it different this time?
Team, thank you for the excellent breakdown on Apple.....
but I still like it lower.... around $ 152 - $ 158.... But, if I miss it in this range, there will be others... I am just too leary of all the media hype on the ' new bull '....*** Bill Fleckenstein talked last night about an article from Jim Grant, talking about the crash of optimism in March, and the birth of full blown pessimism... the key point being, this pessimism was born ' fully grown ', which will lead to stocks staying irrationaly higher for a longer period of time than they ' normally ' would have in a recovery period.. Eventually an equilibrium will be reached... that is what I am leary of at this point in time.
Re: ABX capitulates
ABX:T and ABX:NY
believe that Munk is doing this as a "CYA" move only.
Re: GSX
I am not going to sell my 50% stake at .50. My .50 target has been met but on strong volume. I will let it run higher to .60 and use a trailing stop.
miners leading gold down
Goldcorp through first support at 40, now heading for next level at 38.50
Down -4.32% today. Gold in negative territory. Volume heavy.
Re: Parabolic moves- does volume spike, or does it shrink?
I think it is option (b), 2nd_ave. The short interest is very small already as it is, and most of it is probably a hedge on the long positions, which means that it will not "capitulate" on an emotional spike up that would feel horrible only to a naked short with a large position (I think all such large naked shorts are dead now).
Re: ABX capitulates
yes,
a large share offering in order to close out hedges or something as such.
all this in spite of many announcements that they were no longer hedging years ago, and then subsequently that they had "closed" all hedges, and now today that there were hedges attached to financing...
im waiting for the next annoucement of Barrick's hedging of base metal and currency contracts to explain its dismal performance.
even better, lets put Mr. Munk on CNBC detailing how he see's gold going "much higher" in the future, as if he knows something anyone of us dont, but it will be no doubt touted as some sort of psuedo-bullish news.
this is nonsense. today's action in gold miners while down is tricky because of the barrick situation and how it takes top billing in most gold miner ETF's.
gold is taking a small dump today, its difficult to really say what this means other than a move down in gold and the miners on high volume appears to be in the works. if it took hold, we would need to see a move below about $900 or so to really accept the fact that this might be a triple top that will spell the end for gold miners as an entire sector beyond buy and hold for long term modest gains. imho. jr's will fare even worse.
this could occur against a back drop of eternally strong oil prices that will render the entire model of business about as profitable as wild-berry-farming.
now dont take this the wrong way just because gold is down a few bucks. just remember that lots of nervous nellies were assuming gold would blast off above and beyond $1000 next time it touched the magic number, but thats not happening, and the market is looking ready to roll over all while the USD is massively oversold. please, post another seasonality chart about how strong gold is in september and how indian buying is at record levels.... anesthetize me with more nonsense stories about "strong demand" and GATA inflexted "manipulation" claims...
i need a drink....
bought more SRS
I just noticed that a buy limit order was triggered for me recently to buy SRS at $11, expanding my SRS position by about 10%. The total size of my SRS position is about 10% of my portfolio now. I just placed a sell limit order for these shares at $11.50. Putting some new fuel into the "money pump" :)
Re: Team, thank you for the excellent breakdown on Apple.....
i hear what he's saying but i'm on the other side of the fence. i think we have been in a period of 10 years of sideways action so it's probably not a terrible point to be constructively bullish and my handy dandy long term indicator (SPY above it's 200 DMA) is telling me this.
on AAPL - my opinion is longer term...I think this is a $400+ stock in a few years.
Re: ABX capitulates
dr.cosa, don't forget that the Chinese are exhorting their people to buy gold.
You'd better buy now while shares are still available...
what happened?
$USD perked up just a little but equities AND gold have just gone down the toilet...
This brings me to what I wanted to say about gold after observing (for a long time but especially during the past few days) the intra-day moves in S&P futures, gold and $USD: I don't think the sustained move up in gold has begun. I think the move to $1000 happened ONLY because of the collapse in the $USD rather than because of some fire lighting under gold. Furthermore, I am observing that the link between $USD and equities is not "one way", with $USD driving equities. Rather, I get the feeling (from constantly looking at the charts) that sometimes bouts of increased risk aversion in equities DRIVE increases in $USD.
Therefore, I am concluding that bet on a sustained move up in gold now is equivalent, IMO, to the bet on S&P rising A LOT from the current overbought levels AND $USD going down much further, which I think is unlikely. Gold is just a puppet in this game. Don't overanalyze the puppet -- look at what the puppeteer is doing.
Re: the Kirk Report - powerful numbers behind his words!
This is one of the best articles I read on trading in a long time. A road map for those wanting to travel a road less traveled. It should be printed, read (here it is in word form) and parsed by all.
A comments:
1. Kirk says "I also think it is important to build trading skills by trading in simulated “paper trading” accounts." I disagree and think you should trade very small instead as paper trading is trading without the emotion of gain or loss.
2. Kirk said, "I think it has to do with the fact that as traders we are engaged in a zero sum game." Trading in futures and options are zero sum games, but due to peoples different time horizons, I do not consider stocks to be zero sum.
Great article.
Re: Team, thank you for the excellent breakdown on Apple.....
TOF - have you heard much about the coming release of the Motorola/Google Android phone?
My one concern regarding your AAPL thesis is that eventually all phones become commoditized (see Moto RAZR). Therefore they require continual reinvention. AAPL has been very good at this in various products but its not clear to me how they will keep margins high in the future (i.e. replace the IPhone with new and better versions that will continue to command premium prices).
Re: the Kirk Report - powerful numbers behind his words!
Greg -
I joined Kirk's blog a few years ago. He doesn't share trade set-ups, but offers info you can use to shape your own strategy. You can send him comments, to which he responds in "mailbag" sessions.
Although Kirk shares many of Bill's views on markets, his blog is limited to learning to be a better trader; no discourse or focus on social equity.
I believe Kirk lacks time, inclination. and patience to deal with off-topic or ill-mannered, wing-nut comments. Bill's site is more comprehensive, and ultimately more "nourishing" - especially if Bill's planned measures work.
The Coming Consequences of Banking Fraud
"On August 15th, when BB&T (BBT) purchased failed US bank Colonial Bank, it wrote down Colonial Bank’s loans and real estate collateral by 37% and Colonial Bank’s construction loans by 67%. Yes, 67%! The severe markdowns of Colonial Bank’s assets should have set off warnings akin to a five-alarm fire among the financial media, but it did not, for the media increasingly caters to the interests of the elite bankers of this world at the cost of truth and freedom. If there are several things we can deduce from Colonial Bank’s failure, it is the following..."
http://seekingalpha.com/article/160619-the-coming-...
sell stop hit on my KGC
I just noticed that a sell stop order was hit on my KGC at $20.99. I had only 2% of my portfolio in KGC and the cost basis of these shares was in mid-teens, so I suppose it was a good trade that I can forget about and not worry about chasing KGC if it moves up now. Thanks, Bill, for alerting us about KGC a few months ago!
volume update
Did anyone notice that despite the last two trading days in the market being reasonably good up days, the volume of the up-moving stocks (and the volume advance-decline line) actually declined? Here is the chart:
http://stockcharts.com/h-sc/ui?s=$NYUD
Could it be that the Big Boyz are still on the sidelines, letting the speculators give the market one last boost before unloading their shares at higher prices? The market collapse during the last 20 minutes looks very ominous...
Re: ABX capitulates
Mineweb:
The company's current gold hedges include 3 million ounces of fixed price contracts where Barrick does not participate in gold price movements. The contracts have a negative mark-to-market position of $1.9 billion as of September 7th. In addition the company has 6.5 million ounces of floating contracts where Barrick fully participates in gold price movements. The current negative $3.7 billion MTM position of the gloating contracts does not change with gold prices. No activity in the gold market is required to settle these floating contracts.
The remaining balance of negative $2.7 billion MTM floating contracts is expected to be repaid or refinanced.
The company said it made the decision to gain full leverage on an increasingly positive outlook on the gold price on all future production. "The company expects global monetary and fiscal reflation will be necessary for years to come, resulting in an increased risk of higher inflation, and a future negative impact on the value of global currencies."
Barrick also cited continuing "robust gold/supply demand fundamentals."
For 2010, Barrick expects gold product to grow to 7.7 million to 8.1 million ounces at lower total cash costs than this year.
Re: what happened?
David
Do you think the gold miners have had their 15mins in the spotlight and the long awaited move is over?
Re: Team, thank you for the excellent breakdown on Apple.....
Billy,
What makes the iPhone unique in my opinion is a few things:
(1) the gadget is just plain cool.
(2) it has an embedded iPod and given the prevalence of the iPod and people being tied into iTunes, this gives it a major advantage over others
(3) it has central mass when it comes to developers and the apps and if we learned anything from eBay it's that central mass of buyers/sellers (or developers/iPhone owners) can last for a long long time.
sold my DBA
I just sold my shares of DBA at $24.32 that I bought at $24.10 a month or two ago. With the $USD having fallen so much since then and DBA basically not moving, I am scared to think what will happen to DBA when $USD will move up. That was a small position for me anyway (2% of my portfolio), and I would rather not think about it anymore. Besides, it is hard to monitor the contango spreads on all the agricultural commodities that DBA is tracking, and I don't want to think about that either.
Re: what happened?
David - I think a move from 1036 to 1028 is not really going down the toilet...
Re: the Kirk Report - powerful numbers behind his words!
jock,
Are those regression channels and trailing ATR stops from Telechart? They aren't in my TOS platform.
Re: what happened? / Not a USD move
David, I think you're not correct regarding the recent moves up in gold being spurred by USD.
The big move in gold came 2-3 Sep, from 955 to 990. On those two days, USD was basically flat. The big move down in USD was yesterday, premarket, and that caused gold to gap up, but it lost all those gains during the course of the day.
This hasn't been a USD play, as far as I can tell. There's something else going on - I'm not sure what it is, but it's not a USD move, from what I can see.
Re: Team, thank you for the excellent breakdown on Apple.....
I do think the application function is interesting - although I am not 100% sure how it lends to earnings. AAPL certainly has a dedicated user base, so they are hard to bet against. I wonder how succesful Google will be in implementing them on their Android platform?
Re: SLW
On second thought, looking like it may be a mighty fine shakeout.....
Re: Team, thank you for the excellent breakdown on Apple.....
the apps don't lend into earnings other than creating a mass of users/developers that reinforces it as a product everyone must have. while people may not be looking to buy new iPhones yet as was mentioned earning, i can't think of too many people that wouldn't want to buy the iPhone if it was offered through Verizon. the demand is there for sure.
Re: Team, thank you for the excellent breakdown on Apple.....
Just was reading about Apple's event today
Every Apple event is good for some revealing statistics. This morning Steve Jobs let drop that the App Store to date has delivered a whopping 1.8 billion!
Apple’s App Store Downloads: 1.8 Billion Served
http://bit.ly/xiJXr
Re: volume update
Thank you David, I have another piece of the puzzle.
$NYHL is the number of stocks making new daily highs (I'll have to dig through my comments to recall the exact explanation). I recall that min. 100 was necessary for a healthy rally and that tally was definitely reached yesterday.
as you say $NYUD is down - the volume bars tell a similar story. Does HB&B continue to have free reign of the market? Are institutional investors waiting this one out?
Looking at how $NYAD - advance/decline - is rolling over from a top, the market may slide sideways or become choppy near term.
JMO
Re: Team, thank you for the excellent breakdown on Apple.....
I concur that if IPhone is offered using Verizon, demand for the product should surge. They are also developing a tablet type computer which should be pretty cool unlike Airbook which didn't fare well. Maybe they will link it to
Amazon with a Kindle like feature for downloading books and magazines too.
Overall, a promising future for Jobs & company.
Re: volume update
With zillion of indicators and studies available in quadrillion time frames and comparison bases, one can find some that will confirm or deny any point of view one fancies... how about this, old and traditional:
Market Internals update at 3:30pmET
- NYSE volume 930M shares, about 11% above its three-month average; advancers lead decliners by 2.3:1.
- NASDAQ volume 2.14B shares, about 19% above its three-month average; advancers lead decliners by 2.1:1.
- VIX index -4% to just over 24.50
DHT
capitulation play.
hit RSI 7 day of 10 two days ago, showing divergences now (lower price low but RSI is higher).
Max pain is 5. 50 DEMA is 4.85 so those are my rough sell points.
10 day ATR is .26
Do your own homework.
Re: volume update
Hi Vad, how are you? Yes I know we should not complicate our trading outlook but... actually you've got me there. Why did I need to look at that chart?
Oh that's right, I got burnt playing with that penny stock SPNG again &%%çç! So I've naught else to do but brush up on my astrology.
I've fairly certain now there's a reason we don't talk about penny stocks here, let alone trade them. One of these years I am going to catch on or so I hope.
Thanks for the fish slapping :)
KISS - "keep it simple stupid!". I should tattoo that on my forehead so I see it 20 times a day.
night all.
ARRT
also another capitulation play. Buy limit 2.83
Max pain 5 bucks.
Do your own homework.
SRS/SSG
triple rsi buys. Setting buy stop limit orders above 3 PM price.
do your own homework.
Re: ARRT
long at 2.83
Re: volume update
It's not as much about simple vs complicated, as it is about switching from indicator to indicator until you stumble onto one that confirms your bias... :)
Oh, and "Thanks for the fish slapping, night all" reminds me what dolphins said leaving Earth... "So long, and thanks for all the fish"... :)
Re: volume update
Les
Just some constructive advice. I found when I got started that it was very beneficial to keep a stable of 10-12 stocks of high quality, liqudly trade companies and peruse daily headlines. Over time it allowed me to get an idea of what kind of market developments made those stocks move and it allowed me to eventually make some trading decisions based on a couple years of watching movement and reaction of those companies).
Sounds like you've already come to this conclusion, but trading in illiquid small and medium cap names can be a very dangerous game. I made the mistake of messing around with some lesser known names, thinking I had some insight that I really didn't have. Often there is little news or relevant data to the individual investor, so you often ended up swimming with bigger-pocketed sharks in smaller cap names.
Sticking with high quality companies will help mediate the information disparity between yourself and others trading in a particular stock.
Re: volume update
Kirk says, "My goal every day is to get members to learn how to think about the market in an unemotional way by being fully aware of what has and will likely move the market and why. Most people, as you know, fall in the trap of looking for opinions and advice that confirm their own bias and portfolio positioning."
Re: what happened? / Not a USD move
Dave, I was watching $USD and gold at around midnight on Monday and saw, in real time, how $USD collapsed and gold spiked above $1000. As you point out, the correlation between gold and $USD is not that clear in daily closing prices, since gold is basically flat between the weekend and today while $USD had a major move down. But then, on weekly basis, the correlation comes back, since over the past week or so we have a major move up in gold and a major move down in $USD.
The loss of correlation on the daily time scale might be due to the gold traders "sniffing out" the moves in $USD a little ahead of time. If the big gold movers are the Fed and its friendly private banks (Gold"man" Sachs, JP Morgan, etc.), then it is not surprising that they take positions in gold ahead of the moves in $USD.
Re: what happened? / Not a USD move
ALOHA !!
THE ABX VOID
Yesterday I mentioned a term known as "force majeure". It means that a hedge contract or any forward sales or royalty contract cannot be sustained due to production. I believe technically ABX cannot deliver gold to cover its hedge book. I believe this is a red flag regarding gold backwardation that Fekete spoke of, but not in a COMEX trade, unless ABX has some COMEX contracts that cannot be delivered or won't be. God only knows when it comes to BArrick and JP Morgan(the COMEX gate keeper)! Now ABX is being allowed to fulfill its gold contracts not with the actual metal but with paper currency. This is why ABX must raise capital by dilution, $82mil shares worth.
ABX is the JP MORGAN hit man who mops up all the US FED trash and debris, like Placer Dome and its underwater hedgebook. it all gets moped up into one easy peasy toxic waste dump and that has been the ABX moniker for longer than I care to recall.
I am not sure just how diligent SLW has been with ABX as I doubt ABX would allow much, but picking up $625MIL sure helps out ABX in ts quest to hide its true "force majeure". ABX HAS NOT GOT ENOUGH GOLD! It makes me wonder if ABX will ever deliver on its royalties as well. That's the one weak link in the royalty business model as someone still has to actually mine the stuff! If ABX went down would SLW step in? Is the SLW ABX roytalty deal hedged somehow?
Now this should be a "heads up" to anyone who thinks that the same "cash settlement" will not occur at the COMEX and GLD and SLV. Also remember when it comes to "cash settlements" they do not have to be 1:1 ... I doubt shareholders get a say in that ...
BUYER BEWARE all around ...
IT IS WHAT IT IS UNTIL IT ISN'T ...
Re: volume update / market breadth
Les, the AD line actually broke out to new highs today for NASDAQ 100 and S&P 500. It is a little below the recent highs for Russell 2000. Hence, I am still waiting to re-open my 3X ultra-short positions. If the market moves down strongly tomorrow, then the chart of market indexes will start looking like a double top, and the story will change.
I believe today was a consecutive distribution day for gold
...and anything prec metals. The close was nothing new, hockey stick save.
My opinion is that Gold is a crowded trade in the near term. I am basing this on Stockcharts.com data but their site is down as I write this.
And notice C is no longer in overdrive, less than 1B shares traded and red, when xlf, aig, fre, fnm are all up for the day.
Enjoy the Obama sales pitch tonight.
Re: ARRT
bsi87,
What is ARRT? I tried to look it up and received a "not found".
Thanks,
Monty
UNG update
I just spoke on the phone with a representative from UNG, to follow up on their progress of purchasing more swaps. He said that they have almost lined up all the required dots and can purchase the swaps any day now. I asked him how long it would take them to purchase all the required swaps and he said only a day or two. So the UNG premium, which was 19% yesterday and is probably 17% after today's close implies that UNG can take a 17% hit any day now. Too bad I made this phone call after the market closed today. If UNG does not collapse tomorrow, I'll increase my put position in it.
Re: what happened? / Not a USD move
from the ABX press release:
"Barrick's Gold Hedges consisted of 3.0 million ounces of fixed price contracts where Barrick does not participate in gold price movements. These contracts have a negative MTM position of $1.9 billion as of September 7, 2009. Under the terms of the Gold Hedges, Barrick could purchase gold in the open market or deliver physical gold into these contracts in order to terminate them. Within the next 12 months, Barrick expects that, on an opportunistic basis, it will purchase these ounces in the open market and/or deliver gold from its own production in a manner which will seek to minimize the cost of settlement. These ounces will then be delivered against the Gold Hedges in order to terminate them. The cost of eliminating a Gold Hedge is approximately equal to the MTM position of that contract at the time of its elimination. A $10 per ounce increase or decrease in the spot price will result in an increase or decrease in the MTM position of $30 million on 3.0 million ounces of Gold Hedges. In addition, the MTM position is also impacted by changes in US dollar interest and gold lease rates but such impact is not material when compared to the impact of the change in the gold price."
Kaimu
Am I understanding this correctly? Is your theory that JP Morgan is on the other end of those forward hedges and will allow ABX to settle the hedges in $USD rather than actually delivering physical (which seems almost impossible given the 12 month time frame)? Seems that would be the only way to close out without absolutely rocketing the gold market?
"In addition, the Company has 6.5 million ounces of Floating Contracts where Barrick fully participates in gold price movements. Accordingly, the current $3.7 billion negative MTM position of the Floating Contracts does not change with gold prices. The obligation under the Floating Contracts is economically similar to a fixed US dollar obligation. No activity in the gold market is required to settle the Floating Contracts.
The remaining balance of the Floating Contracts (after application of the net proceeds of this offering not applied to eliminate the Gold Hedges) with a MTM position of negative $2.7 billion will be compared to alternative sources of debt financing and is expected to be repaid or refinanced to the extent that more attractive sources of debt capital are available. The Floating Contracts are non-amortizing and primarily have 10-year terms with a current weighted average financing charge of approximately 5%. The MTM position of the Floating Contracts is impacted by changes in US dollar interest rates but such impact is not material when compared to the impact of the change in the gold price on the Gold Hedges."
How is the MtM on the floating contracts so amazingly high? Is this the long term dollar depreciation that the floating contracts have been subjected to since inception?
Trying to wrap my head around what this really means!?!?!?
Re: Option trading
Pauldkk,
Thanks for the MW call this morning. Picked up one of those puts (in a tiny account :) for 1.20, and sitting pretty after hours (shares down 5%). What kills me is the headlines:
Men's Wearhouse Posts 40% Profit Jump
http://www.thestreet.com/_yahoo/story/10596455/1/m...
Um, sure, quarter over quarter, which is mostly seasonally driven.
Men's Wearhouse second-quarter profit rises 20%
http://www.marketwatch.com/story/mens-wearhouse-se...
That's more like it, using last years quarter as comparison.
Other points of interest, revenue fell 3.5% from same quarter last year and their earnings forecast for next quarter is 13% below consensus (guess you can only cut so much) and sales forecast is down 2% (is that on top of 3.5% sales are already down?).
Thanks again...
Edit: Just noted the forward P/E in yahoo is pegged at 24. Not sure if that includes just dropped earnings estimate, but at any rate, with shrinking sales seems like a rich P/E...
Money Market Funds
I was musing last night that MM managers must be feeling a bit of pressure these days. With this prolonged zero interest rate enviroment, the short-term nature of MM's investments, and the non-zero MERs associated with these funds, clients are now having to come to terms with essentially zero % return on their $s in MMs. As with all post-vacation (i.e. Sept) reviews of portfolios, I wonder how many clients are saying - enough is enough - and redeeming, moving their "hot money" elsewhere. It's just this sort of selling pressure that broke many a MM "buck" last September and short-circuited the Capital Markets. Granted, they tell us the credit situation is much improved since then, and indicators suggest it is.
Lo and behold, Bloomberg comes out with a long history of just that crisis today:
http://www.bloomberg.com/apps/news?pid=20601109&si...
Interesting read! Some highlights:
- "Paulson and Bernanke totally f---ed this up” - a potential problem arising from Lehman's failure in the $3.6 trillion MM space wasn't even on their radar. They were focused on CDS failures at AIG, etc.
- Their hastily cobbled-together solution (temporary government gaurantee for MM funds, a $50 billion insurance program, and the Fed buying CP) ends this Sept. 18
- The credit Rating agencies are, once again, given the bulk of the blame for the mess.
- Obama will receive a report on the feasibility of "floating Navs" Dec. 1. Volker's Group of 30 has some strong opinions on the matter.
Having discovered this weekend that there are thousands of strong, but silent, "finance managers" lurking behind the scenes at this community, I'd be very interested in hearing anecdotes and comments related to this interesting corner of the market.
Stockcharts is down
Message from Chip below:
Just a quick email message to let you know that the StockCharts.com website is currently offline due to an Internet circuit disruption that happened around 4:45pm Eastern time today. We are working hard with our ISP (InterNAP) to try and get the problem fixed ASAP. Right now we have no idea what happened.
If you are interested, we will be posting updates about this problem on our Status blog which now available at http://stockcharts.typepad.com/status/
Our apologies for whatever problems this disruption has caused.
Sincerely,
Chip Anderson
President, StockCharts.com, Inc.
http://stockcharts.com
Daily Commentary&Community Chat: Guru Ratings
Bill,
During the last week, I think I saw, for the first time, the "list" you refer to. I brushed it off as useless immediately. As a long-time reader of everything written at this site I couldn't imagine how they came up with their figures in that table when we, the regulars, don't even know the details or mechanics of your positions. Of course this is how it should be, both from a regulatory and, utilitarian point of view. Someone put it appropriately here recently: "we're here to learn how to fish, not to be fed fish". I think the latter kind of fare, dished up on guru sites, is mostly stinky and indigestable, anyway. :)
The Last Hurrah and Seven Lean Years
If you are utterly confused (as I am) about why this market keeps going up despite all the good reasons as to why it should sell off, I suggest you re-read Jeremy Grantham's 1Q2009 commentary titled “The Last Hurrah and Seven Lean Years,” which he presented in a speech in Europe at the end of March when S&P 500 was at 725. I re-read it yesterday and it cleared up a lot of confusion I had. I am attaching the complete commentary, but for those who don't have the time to read it, below are some interesting excerpts:
“This Presidential Cycle effect is dismissed as an artifact by the great majority of financial academics, but they have a stalwart record of dismissing any data that implies even modest market inefficiency, and this effect implies great dollops of inefficiency. Simply summarized: since 1932, in the third year of the Presidential Cycle, the average S&P 500 return (from October 1 to October 1) is 22 percentage points ahead of the average of years one and two! And this is statistical noise? Year three is the time when, driven by politics, fi nancial stimulus and moral hazard are applied so that the economy – particularly increases in employment – can be a little stronger in the run-up to the election in year four. In years one and two, in contrast, the system is tightened in order to leave some room for re-stimulus in the next year three (except during Greenspan’s era, when he basically could never stop stimulating and so periodically upset the applecart). It is all pretty understandable.”
“Stocks are simply much more sensitive to stimulus than the economy. The second guess is that the Fed’s moral hazard is far more important than we realize, and is far more effective at moving markets than the modest financial adjustments. The implied promise to bail out speculators in years three and four if anything goes wrong, but to leave them hanging in years one and two (again, Greenspan excepted), is what drives this. Never underestimate the power of the Fed (or the Fed’s willingness to deny its own influence when it suits).”
“Which brings us to this present case. If the stock market is many times more sensitive to financial stimulus in the short term than the economy is, then we could easily get a prodigious response to the greatest monetary and fiscal stimulus by far in U.S. history. Second, if you don’t think there is a special, one-off, super colossal dose of moral hazard out there today, you are sadly uninformed. The moral hazard in play today is of a massively larger order than any we have ever seen.”
“So by analogy to the normal Presidential Cycle effect, driven by stimulus and moral hazard, we are likely to have a remarkable stock rally, far in excess of anything justified by either long-term or short-term economic fundamentals. My guess is that the S&P 500 is quite likely to run for a while, way beyond fair value (880 on our revised data), to the 1000-1100 level or so before the end of the year.”
“In a rally to 1000 or so, the normal commercial bullish bias of the market will of course reassert itself, and everyone and his dog will be claiming it as the next major multi-year bull market. But such an event – a true lasting bull market – is most unlikely. A large rally here is far more likely to prove a last hurrah … a codicil on the great bullishness we have had since the early 90s or, even in some respects, since the early 80s. The rally, if it occurs, will set us up for a long, drawn-out disappointment not only in the economy, but also in the stock markets of the developed world.”
Re: The Last Hurrah and Seven Lean Years
I'll buy that, but I'll also disagree that this "codicil" (you learn a new word every day!) is dated Mar.9. It's dated back in 2000 when this Bear truly started. So it's already 9 years old, during which most U.S. markets have returned zippo (less in real terms) or even less (Nasdaq). The real question is whether the disappointment is going to last 10 years (so that it's almost over) or 20 years (portending, maybe, a last up-down back to 666, or thereabouts, in say, 10 years.)
Re: UNG update
David, thanks for the UNG update. It makes me feel better about me punching out of my remaining UNG earlier today.
Re: The Last Hurrah and Seven Lean Years/why market continues up
Sorry David, I hate to directly disagree but in this case I must...
All the rationalizations like in that article are just that... rationalizations. IMO, that does not begin to explain why this market still goes up. All it can do is to deliver some comfort of pseudo-knowledge.
I wrote a lot on this market behavior, in general and in this particular case. Understanding of how and why this works is a cornerstone of understanding the market and building trading approach. There is a good reason why I start my seminars with exactly this, and then build up on that through the rest of sessions, showing how to turn this general idea into concrete trading system.
Here is the description of our first session in 2010 CTA conference in Freeport:
Market information vs. price action: What investors should learn from traders
• How often have you done thorough research and figured out what the market will do, only to see it doing the exact opposite. Learn why that happens and how to turn this phenomenon to your advantage.
• Delve into the eternal conflict between information and price. Learn how to move from endless frustration to consistent profits.
Re: The Last Hurrah and Seven Lean Years/why market continues up
I could kick myself - I can't make the conference again as we are in NZ with my wife's family, but geez I need to be in that first session Vad.
Is there going to be any way to access the educationall aspects of the conference other than being there?
Re: ARRT
correction
ARRY, not ARRT.
Not that it matters.
Obama Speech & market signals
Interesting that in after hours trading prior to tonight's speech, Smith & Wesson ( SWHC ) was up 16%. Was someone sending a message? I was shocked at the acrimony and barking out from the peanut gallery during was was a moving speech, IMO.
Re: what happened? / Not a USD move
ALOHA !!
"Barrick's Gold Hedges consisted of 3.0 million ounces of fixed price contracts where Barrick does not participate in gold price movements.
As of Sept 8th total gold held at the COMEX was 9.17mil ounces. So to put that into perspective the total Barrick contracts, both floating and fixed, equals, 9.5mil gold ounces, which exceeds the total COMEX inventory. So there isn't even enough gold at the COMEX to settle Barrick's "disclosed" hedges.
Yes, I believe Barrick will settle with paper, just the same as what would apply to the biggest short players on the COMEX, in the event they could not deliver.
Lets look at other hedge exposures ...
Newmont = 1.8mil gold ounces
AngloGold = 1.4mil
Look at the behemoth of hedging Barrick has at a "reported" 9.5mil ounces, nearly 7 times Anglogold.
Okay, what about the "spot deferred" hedges? Barrick had 19.125mil ounces hedged listed as "spot deferred" contracts at the time of the Blanchard lawsuit by 2005. Where is that "official" info from Barrick and what of the "Evergreen Clause" with JP Morgan, whereby these hedges get rolled over every 15 years without ever being called?
I believe Barrick is very selective in what they release to the public and the nuances are very difficult to decipher due to the collusion between them and JP Morgan. Its WALL STREET! Barrick is a WALL STREET gold miner.
Now AngloGold has been doing the same thing Barrick is doing now, which is reducing their hedge book exposure, however AngloGold is actually delivering real "gold". AngloGold is not diluting so whats up with the Barrick dilution all of a sudden? Does Barrick management know something they are not divulging? Is CAPEX going to cut into net cash costs?
Barrick is caught between their dual liabilities of their hedgebook and their CAPEX ...
So the "floating contracts" were entered into at the $420 POG range. I am not sure what US Dollar depreciation has to do with it, looks more like Gold appreciation ... HA!!
Where is the CFTC and SEC, the regulators? Why is there this mystery of "hedges" between the Blanchard lawsuit and what Barrick reports in their news release?
The devil is in the details and the Fekete premise is that gold will become unavailable at any price. That is what happened in 1980 when Volcker had to step in and run the Fed Funds Rate to 20%, so that those who held gold would let go and return to holding a US Treasury instead. Can America afford a Fed Funds Rate at 20% today? More to the point is CAN THE US TREASURY AFFORD IT? This is what SUPER DEBT gets you ... no room to maneuver! Believe me the US TREASURY is the KING OF DEBT!
Hummmmmm???
Re: Obama Speech & market signals
After hours movers from streetinsider: http://tinyurl.com/mtpmrq
Smith & Wesson Holding Corporation (Nasdaq: SWHC) 12.8% HIGHER; reports Q1 EPS of $0.16, 6 cents better than the analyst estimate of $0.10. Revenue for the quarter was $102.2 million, versus the consensus of $94.07 million. Based on current visibility, SWHC expects total company sales for Q2 will be between $103 million and $105 million versus consensus of $99.76 million.
Re: The Last Hurrah and Seven Lean Years/why market continues up
Sorry Ad, don't think so... let me offer as a substitute a few blog articles. Not the same, as in live session I can offer much better way and visuals to deliver the message, and then we follow up with the rest of the program, finishing with live trading, but still, main idea is there:
http://www.realitytrader.com/blog/2008/03/history-...
http://www.realitytrader.com/blog/2008/04/traders-...
http://www.realitytrader.com/blog/2008/10/informat...
When you read the second one, notice how similar the situation is to what we deal with today, even though it was different rally. Not much really changes in the market mechanics when you look at it under this angle, which takes us to http://www.realitytrader.com/blog/2009/08/trading-...
Hope it helps a bit but still - not a replacement for a few days of actual conference.
I'm working on a trader tax rebuttal
Here's how it's shaping up...much more to come...critiques expected:
tried to copy it directly into the blog, butlost all formatting I've attached the document.
Re: the Kirk Report - regression channels, ATR stops
regression channels - on TC (manually), stockfinder, tradestation, and elsewhere. ATR stops on tradestation, e-signal. Stocks and Commodities had them covered and printed in May, June, July for LOTS of platforms.
ATR stops avoid placing stops at obvious chart points, where the brokers take you out, and also beyond market noise, so your stops aren't too tight.
Re: I'm working on a trader tax rebuttal
Nemo, very nice. Let's hope somebody on the other side will listen and the little guy will win one.
Re: Housing purchase/loannetter
Nice story Billysundance! Sorry I had to sleep (just saw this today) Most foreclosures are in need of cleaning up but it's definately buyer beware. (Realtors have so many listed they can't keep them up) I've heard of pipes filled with concrete by the angry departing owner. The $8000 Tax CREDIT is for April 08-December 09 purchases. One wonders what the hue and cry will eventually create come April 2010 for the earlier credit that has to be paid BACK?
Exerpt from IRS RELEASE:
For 2008 Home Purchases
The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year.
For 2009 Home Purchases
The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1.
For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase.
http://www.irs.gov/newsroom/article/0,,id=204671,0...
Lots of Congress Members vying for your attention are proposing larger credits and not just for first time buyers so they have a few months to impress their constituents! Ask your CPA for the real skinny as it applies to your situaiton. All the BEST!
Re: Real Estate Bottom ?
MoKat, That's like purporting to call any market bottom. Depends on where you are, as cities and product niches are like stocks and why you are buying. There IS a tendancy to consider a home just that. Which niche or city starts going up when depends on how hard they fell just like so many other indicators of supply and demand. We in the PNW are fortunate to be a destination for the weary in search of a laid back lifestyle; we pay more proprtionately for our homes to earnings ratio. Certainly as many folks lept on teaser rate ARMS that will regret that mightily when they see how hard refinancing has become lately! Our values dropped less than 1% last month year over year and this has been a great summer so most folks make hay while the sun shines and only get back to home sale months (anecdotal) after kids are back in school...late summer to fall. This year the rush has been about beating the FTHB Tax Credit but so many of those contracts are falling over due to extended loan turntimes. Figure 60 days to close FHA and USDA now!
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.
Washington Post, August 1, 2009 New Appraisal Rules Backfire http://www.washingtonpost.com/wp-dyn/content/artic...
Re: The Last Hurrah and Seven Lean Years/why market continues up
I agree Vad
rationalization is a quick path to disaster one that derails a person from ever shifting realities...
Re: what happened? / Not a USD move
Perhaps instead of cash they would trade in live stock Kaimu, a few chickens and goats to balance out the books...
I miss the old days when you could go to Harvard for a cow and pig...
Re: The Last Hurrah and Seven Lean Years/why market continues up
Really top notch stuff Vad, thanks for taking the time to post it.
Here's hoping I can learn enough from it to pay for the trip in 2011 :)
Re: the Kirk Report - regression channels, ATR stops
Jock, as always I am grateful for your posts and very happy that you continue to post on this blog. Of course that applies to other posters here as well.
I was wondering whether there is any way to do regression channels on Stockcharts. I have searched there, but perhaps I'm missing something. What I would really like to graph in Stockcharts are centered moving averages with Hurst envelopes. You get a much cleaner view of the action of a stock with these envelopes, which have a fixed width and neatly enclose the prices. You can do this manually by putting a piece of trace paper on your screen, tracing the MA of your choice, and moving it backward half the number of days of the MA. I like to do this and then print out the chart from Stockcharts without any moving averages shown and overlay the centered MA on the chart, which allows me to draw the Hurst envelopes, but this is tedious. With MAs of different lengths, you can get quite a pretty picture that way, with nested Hurst envelopes.
Re: The Last Hurrah and Seven Lean Years/why market continues up
Thank you. That was very informative.
Re: The Last Hurrah and Seven Lean Years/why market continues up
"Is there going to be any way to access the educational aspects of the conference other than being there?"
For others of us who simply can't be there, is there any possibility of downloading a video or transcript post conference?
Having worked in advertising for most of my life I am always amazed how often the human factor is excluded from the study of market behavior.
We are, IMO, just beginning to see the flip side of about 10 to 15 years of bubble driven market euphoria. I believe current communication technology (internet and TV going at it 24/7) will exaggerate volatility and mood swings for even longer than usual.
Cara 100 Ratings Changes
Good morning.
There are NO changes to report at this time.
Re: volume update
Thanks Billy and others for constructive feedback. Too stupid to even mention what I did, but it was based on a valid chart setup, yet IB had already drawn my limit of daytrades for the given period permitted, so I had no place being in the market yesterday. Was simply lack of discipline and bad decision making. I have seen a better trader in me, and I suspect it will be a long hard fight to extinguish bad trading processes I have come to know too well.
Vad raised an interesting conundrum yesterday. I had no bias in what the market was going to do until I went over the NY composite chart I pulled out. After looking at it I, as Vad remarked, created my own bias at that point (I didn't have any bias beforehand Vad - honest!)
Like a student of Tao (or whatever discipline you choose) I have had for a week a fleeting sense of clarity in trading. At the computer by 2, catching up on posts here, monitoring premarket and then simply hunting down favorable volume/price action as reflected in chart patterns I've come to know and love (and learning patterns I don't even know yet).I've even given up on the news media (Joe Saluzzi twits the juicy articles worth posting here). And when Vad reminded me of the fallacy of crystal balling tomorrow today, I realised these charts in my "daily watch" list need no longer be there. Non of it is helping me trade better.
--------------------
I've just been delivered an enjoyable chart pattern book by Bulkowski. I have only had a quick glance but it looks like a good one too. The chapter I looked at opened with an anecdotal story and the chart pattern in question and how to read it/play it. In this case it was interesting recollection by the author of a friend holding Merck as it withdrew Vioxx from the shelves and the smart money had already pulled out - "how to play and profit from a dead cat bounce". Good stuff.
I now have four books to recommend to newbies:
1. Lessons from the trader wizard
2. Master Profit Plan
3. Techniques of Tape Reading
4. Getting Started in Chart Patterns.
GL today.
Re: volume update
Billy, If I was starting from scratch I assure you I'd follow the Cara 100 as my guide. But now I have more confidence in my trading and ability to take losses. I look forward to daytrading privileges as a means of "cutting loose" from these SEC handcuff's binding my trades. However, before that day comes I need to achieve further discipline in my actions.
UAUA
Upgrade to overweight from JP Morgan this morning. Trading up big in premarket @ $7.25 (yesterdays close $6.45)
Re: UAUA
Thanks for the heads up...This is the kind of info we need more of!
Re: The Last Hurrah and Seven Lean Years/why market continues up
Thank You so much. I must burn this to memory.
Re: UAUA
Totally agree.......TEAM approach - acronym for Together Everyone Achieves More :)
Re: volume update
Les
Sounds like you are learning some important lessons early on which is very important. I just figure I'd just throw out some caution signs I wish I'd seen a bit more clearly on my own path. Looking forward to seeing you progress.
gas:oil and gold:silver ratios and US$ conundrum.
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: the Kirk Report - regression channels, ATR stops
au courant, Im no expert on stockcharts, nor on Hurst envelopes. I use Alex Elder's auto-envelopes, which are available (for a price) from elder.com for TC, stockfinder, tradestation or e-signal.