Bill Cara has extended his vacation another week, taking care of business in Nassau, preparing to move office and residence to Freeport Bahamas.
Today's data:
Personal Income - expected at 0.3%, reported at 0.5%
Personal Spending - expected at 0.3%, reported at 0.4%
PCE Prices - expected at 0.1%, reported at 0.1%
This data continued to buoy the stock futures prior to the NY open. What we find interesting is that income levels continue to be boosted by unemployment benefits. Now there is a reason for optimism...
November elections are around the corner. It is obvious to us that the Democratic Majority will use whatever tools they have at their disposal to make sure that things are "improving". If the Republicans were in office and fearful of losing as many seats as the pundits expect they would be doing the same exact thing - opening the money spigots.
Ok, so most everyone expects money to be pumped into the markets by the Fed. We are watching for the day when the Fed cannot push asset prices higher or, unexpectedly, decides not to do so. That is when the market sinks for real.
Well, it is the first day of the month following a positive month so it makes sense for the market to open higher after this mornings data.
To infinity and beyond!
– CTA Trading Desk
Addendum
Pinocchio is in the house!
And he lives in an Outside Bar.
Yesterday, the S&P 500 created an Outside Bar. It may also prove to be a Pinocchio Bar. A Pinocchio Bar is a name given by Martin Pring to a formation when the market is consolidating at a high level and continues to find resistance at roughly the same price, 1150 S&P 500 in this case, and then breaks out above it only to fail - thus looking like a Pinocchio nose. There are other names given to this formation, but we like "Pinocchio" and we look for him. Btw, both Outside Bars and Pinocchio Bars are reversal patterns and bear watching.
– CTA Trading Desk
CTA Trading Desk Post-Close Report
Another day of dull activity, fluctuating in a narrow range, traders lulled to sleep, wondering when and at what price the big boys are going to have the conviction to up their positions significantly.
It is really becoming challenging trying to describe Groundhog Day from a different angle each evening. The S&P spent five days in razor thin range just beneath the 1130 resistance level back in early September, and has now spent 10 days wedged between 1130 and 1150.
While the indexes went nowhere quickly Friday (S&P+0.44%), several high fliers started to come back to earth; Netflix (NFLX-4.63%) managed to fall from a high of 174.41 yesterday to a low 153.81 this morning, while Amazon (AMZN-2.13%) dropped from 161.78 to a low of 152.2 today.
However, before you jump to the conclusion all these parabolas are about to snap remember our advice earlier this week – wait for the uptrend lines to break, the 20-day moving averages to be violated, or weekly swing lows to give way. None of these conditions has as yet been met, so jumping in now on the short side may give a trader whiplash.
Yes, we know you miss the high but, doggone it, the probability you are going to have a winning trade goes way up if you are patient enough to wait for confirmation. Isn’t that what we all want – the odds in our favor before we place our bets?
Plan the trade and trade the plan.
The market is biding time, gathering its breath and storing energy getting ready to start another impulse wave. At a time when so many different capital markets are simultaneously stretched to an extreme, the subsequent move should be a multi-market international event.
Stay tuned.
Lastly, before you shake your head in disgust at underperforming the broad market during the September surge consider the following:
The Talking Heads were agog the past few days, breathlessly telling viewers this past September had the best return in 70 years. Did they bother to tell you what the next three years looked like?
Dow Industrials: 1939-1942 Bear Market
How do those returns look going forward?
Have a great weekend.
– Patrick Veech
Comments
Cara 100 Ratings Changes
Good morning.
No POMO Injections scheduled for today.
Today's Reports:
08:30 Personal Income Aug
08:30 Personal Spending Aug
08:30 PCE Prices - Core Aug
09:55 U Michigan Consumer Sentiment - Final
10:00 ISM Index Sep
10:00 Construction Spending Aug
14:00 Auto Sales Sep
14:00 Truck Sales Sep
------
AMZN - Amazon.com initiated with a Market Perform at Raymond James.
BRCM - Broadcom initiated with an Underperform at Exane BNP Paribas.
GOOG - Google initiated with an Outperform at Raymond James. Target $640
HBC - HSBC upgraded to Conviction Buy from Buy at Goldman.
NE - Noble Corporation downgraded Hold at Dahlman Rose based on fleet downtime and delays in newbuild deliveries.
------
"Bank failures are caused by depositors who don't deposit enough money to cover losses due to mismanagement." --- Dan Quayle
Re: Cara 100 Ratings Changes
"Bank failures are caused by depositors who don't deposit enough money to cover losses due to mismanagement." --- Dan Quayle
Well, the bailouts show American ingenuity can fix that — simply put in tax dollars.
One potatoe, two potatoe, three potatoe, four...
And to think he was only a heartbeat away from the Oval Office.
Re: Cara 100 Ratings Changes
If Quayle said it, it would have to be 'Banks fail because mismanaged depositors don't cover the losses.' Sorry- it's bannks.
Happy "Daze" Are Here Again
Personal Income - up 0.5%
Personal Spending - up 0.2%
UK manufacturing exports contracting
he Markit/Chartered Institute of Purchasing and Supply manufacturing PMI index fell to 53.4 in September from a downwardly revised 53.7 in August. This is the lowest reading in ten months and below forecasts of 53.8.
While the new orders index improved by almost two points, the export orders index fell below the 50-level which separates expansion for the first time since July 2009 as foreign demand declined.
http://www.telegraph.co.uk/finance/economics/80365...
NY Fed President Rears His Ugly Head
We need $500 billion more in POMO. Uh huh.
http://tinyurl.com/28y7eo9
Re: NY Fed President Rears His Ugly Head
Here is how opinions are positioned within the Fed (the reminder part):
(US) Fed's Dudley: Further Fed action to support the economy is likely; reiterates that Fed will not monetize debt
- Current economic situation is "wholly unsatisfactory," inflation is too low and unemployment is too high for the Fed.
- The Fed has the tools it needs to assist the economy. Fed could buy medium or long-term Treasuries and mortgages.
- Dudley states a $500B asset purchase equals a 50-75 bps rate cut.
- More explicit rate guidance, including price target comments, may be needed.
- Disinflationary pressure and high level of slack in the economy have elevated risk of US moving closer to deflation.
***Reminder: On 09/14 the WSJ's Hilsenrath wrote that Fed officials disagree on "slowdown threshold" that would require further easing action. Hilsenrath stated that Lacker, Plosser and Hoenig are part of the vocal group "reluctant to expand Fed's $2.3T portfolio" while other Fed voters such as Rosengren and Yellen (replaced retiring Donald Kohn) see high unemployment as reason for the Fed to buy more bonds.
- On July 14th, the WSJ commented on disagreements among Fed members; Fed members including Warsh and Lacker have been reluctant to restart the central bank's asset purchases; Fed officials including Rosengren, Dudley and Lockhart are more open to additional asset purchases; Fed Chairman Bernanke has been keeping his options open.
There is no inflation
1) Is the consumer spending adjusted for (no) inflation?
2) Anybody who uses food, energy, educates their children, pays healthcare costs, or insurance knows there is inflation.
All that being said, I still think TPTB were afraid to break it out on the last day of the quarter, and we'll see how it goes today.
Cara 100 Update
AMZN - Downgraded to Hold @ McAdams, Wright, Ragen. PT Lifted from $140 to $160
NE - estimates lowered through 2011 at Citigroup. New ship was delayed and the company is facing a higher tax rate this quarter. Buy rating and $36 price target.
WAG - Upgraded from Equal-Weight to Overweight at Morgan Stanley. $40 price target. Company faces easy comparisons for the flu season.
Dudley Q/A
(US) Fed's Dudley: A smooth exit from QE is as important as its dual mandate - Q&A
- Unclear what the US economy's "natural" unemployment rate should be in the long term, but it's clearly way below 9.6%.
- Regarding QE2, will not "prejudge" what he will advocate at the November meeting.
- On track for 2% GDP growth, double dip recession is very unlikely.
As far as I am concerned, unemployed Fed would be very "natural unemployment."
Closing WFC
At 25.44, and back to 100% cash.
Simple Truth
At Mish today a small business owner tells what the Fed, congress and the White House should learn about QE.
http://globaleconomicanalysis.blogspot.com/
----------------
Views from the Trenches: Business Owner Discusses QE
"QE actions by the Fed have no effect on us."
As a former small business owner I totally agree. (Except for the indirect effect on all taxpayers.)
Re: Dudley Q/A
"As far as I am concerned, unemployed Fed would be very natural unemployment."
Indeed. Where is Louis XVI when you really need him?
FLIP THAT ...
ALOHA!!
The real estate bubble from a different perspective ...
LINK: http://www.chartoftheday.com/20101001.htm?T
Please see addendum to the Trading Desk Morning Report
Pinocchio is in the house.
THE 300
ALOHA!!
NO ... not the Spartan warriors but the 300 economists ...
DON'T KILL GROWTH AND JOBS IN THE NAME OF DEFICIT REDUCTION ...
In the fall of 2008 the U.S. and other major economies were in a free fall in the wake of a global financial crisis. Emergency stimulus policies here and around the world broke the fall, but brought us only part way to full recovery.
Today there is a grave danger that the still-fragile economic recovery will be undercut by austerity economics. A turn by major governments away from the promotion of growth and jobs and to premature focus on deficit reduction could slow growth and increase unemployment – and could push us back into recession.
History suggests that a tenuous recovery is no time to practice austerity. In the Great Depression, Franklin Roosevelt’s New Deal generated growth and reduced the unemployment rate from 25 percent in 1932 to less than 10 percent in 1937. However, the deficit hawks of that era persuaded President Roosevelt to reverse course prematurely and move toward budget balance. The result was a severe recession that caused the economy to contract sharply and sent the unemployment rate soaring. Only the much larger wartime spending of the early 1940s produced a full recovery.MORE
LINK: http://ourfuture.org/files/documents/don%27t-kill-...
Haven't we had "stimulus" for some 96 years now? If "stimulus" is defined as government creating debt to fund private industry projects. To me Defense spending is "stimulus", mainly for Defense Contractors and the various domino businesses and labor. How long ago was it Eisenhower warned us of the military industrial complex? Yet here we are still policing the World and expanding military spending not shrinking.
In essence these 300 Economists who propose more stimulus are following my investment theory whereby the USD is debased along with every other major currency, so to preserve wealth during this MEGA currency crash you buy stuff that cannot be debased. In other words "assets" not "liabilities". Anything with the word "debt" attached is a liability.
These 300 Economists argue that our government should take advantage of the now record low interest rates and borrow(deficit spend) even bigger sums because at some time in the future the cost to borrow will go much higher. None of that argument works unless you actually intend to stop spending and pay down the principal on the debt. As I have pointed out the last time in American history any politician paid down the principle was 1836, when Jackson actually paid the entire debt off. He had to outlaw central banking to do it. What the 300 Economists are telling our government to do is borrow like crazy because the American people are broke but don't ever cut spending or pay off one dime of the principle. Sorry to inform these guys but that's what we have been doing in America since I was born and look where we are now ... mired in debt, which is exactly where the central banks want us. Banks prosper on debt WE THE PEOPLE and America does not.
Tomorrow, Friday, Sept 30th, is the YEAR END reporting day for the US Treasury FY 2010. The US Treasury according to their own Statement for Sept. 29th has spent a net $4.31TRIL USD(less redemptions). So tomorrow that number will be higher. So that is $4.31TRIL spent and last year on Sept 30th Bush spent $4.59TRIL USD. We can assume that the next "regime" in office will spend roughly the same amount or more, right around $4.4TRIL per year. What is the total mortgage debt market worth now in the USA? I believe it is around $14TRIL USD. Do the math ... The US Treasury spends the total US mortgage debt roughly every 3 years. Let us further dissect that via this article from Seeking Alpha whereby the average Mortgage Debt/GDP ratio has always been 50% prior to 1977.
LINK: http://tinyurl.com/28s295b
Now lets move to the debt side and see how much debt the US Treasury created in order to pay for that spending since tax revenues fall way short. Based on the Sept 29th Statement, marketable debt issues, US Treasuries, are around $8.3TRIL issued. The total net change in Public Debt added another $1.6TRIL to America's debt burden. While net tax revenues to cover all this spending and debt issues was only $1.56TRIL USD. Now naturally tomorrow we get the debt issues for Thursday, when the US Treasury always issues more debt, so the debt levels will grow maybe closer to $8.5TRIL issued. The way I read those numbers is that the US Treasury has defaulted on roughly 20% of total debt issued for FY 2010. What is a deficit other than a default ... a partial one? It means you cannot pay your obligations. Lucky for the US Treasury those "partial defaults" just keep getting rolled into the next fiscal year and the next one. Now there is supposed to be a "limit" like we all have credit card limits, but imagine if every time you reach your limit you could raise it. Well, that is exactly what the US Treasury does with the help of the US Congress and the approval of the US Fed. The US Treasury has "unlimited credit". Since 1940, in FDR days, the US Congress has always raised the "debt ceiling"(limit) on the US PUBLIC DEBT. It is safe to say that is a trend that will continue in the future. Right now the "debt ceiling" the Statutory Debt Limit is set at $14.294TRIL USD. Another $878BIL and the US Congress will have to raise the limit yet again. Makes you wonder why anyone takes that "debt ceiling" seriously after some 70 years of limit violations. What would happen to you and I if we kept asking our credit card company to raise our limit every year? Would they do it? No, they would consider us a high credit risk and close our account.
I have complete confidence in the US Treasury's ability to spend and debt beyond its means for eternity or until it defaults on its debt service, whichever comes first. I do not believe Geithner cares one iota whether we are in a deflation or inflation, so long as the US Treasury can borrow more and spend more he is happy and so is the US Congress and presto-changeo, so is the US FED. It has been the political and fiscal path for as long as I have been alive and it has been the path of many, many previous Empires as well. You just DEBT yourself to death until the entire Empire collapses under its own hubris.
It is interesting to note that the price of gold went up during the Great Depression, especially after FDR confiscate it and as we see today the price of gold has been going up in this Great Recession as well. In fact it seems gold does even better now days than before the SubPrime crash. How many people here argued that gold would falter in a depression? You messed up ... because you assumed spending would stop and you thought that gold was only a hedge against inflation. You bought the herd mentality. I think its safe to say that gold is a hedge against the C WORD, against "monetary liabilities", which is to say the entire "floating currency" regime we now call money! Its a hedge against debt, the basis of modern money. All for one reason. Gold is an asset not a liability. Gold never files bankruptcy or defaults on its debt because it has no debt, no debt service, no counterparty liabilities.
Remember what that word "mortgage" is derived from?
[Middle English morgage, from Old French : mort, dead (from Vulgar Latin *mortus , from Latin mortuus, past participle of morī, to die) + gage, pledge (of Germanic origin).]
Translated a mortgage is a "death pledge" ... This is the basis of the AMERICAN DREAM that the bankers have created, only they have never marketed a mortgage as a "death pledge". Would you sign a "death pledge"? The US Congress and the US Treasury sign one every day, of course, on your behalf, as your elected representative.
Re: THE 300
"How many people here argued that gold would falter in a depression? You messed up ... because you assumed spending would stop and you thought that gold was only a hedge against inflation. You bought the herd mentality. I think its safe to say that gold is a hedge against the C WORD, against "monetary liabilities", which is to say the entire "floating currency" regime we now call money!" - kaimu
In Armstrong's latest essay, he shows proof that gold is NOT a hedge against inflation through the first half of the 20th century by following the movement of Homestake stock ("no empirical evidence") but that "Gold is the hedge against political instability and government DEFAULT." (Martin Armstrong, p.2, 'Gold An 11 Year High for 2010?')
http://tinyurl.com/2dhmvcx
My view: QE II will expedite the default whereas austerity will lead to a form of Middle Age surfdom, debauchery, and POOR HYGIENE. Are we there yet?! Which would you prefer for your grandkids: austerity or default? Can't have it both ways.
Re: Please see addendum to the Trading Desk Morning Report
"Pinocchio is in the house."
Thanks, Jack.....but shouldn't that read, "Pinocchio is in the WHITE House"? ;^)
Regards,
BH
Outlook
I think we have a minor sell off today down to about 1135. Monday I think we'll see a pop back up to 1140s followed by 2 weeks of ugly. Sept 16th blog I gave my S&P target of 1158. I was a few cents off but think we've seen the top. My next target is 1100 within a few weeks. Best of luck Gents.
Opening Comments
"This data continued to buoy the stock futures prior to the NY open. What we find interesting is that income levels continue to be boosted by unemployment benefits. Now there is a reason for optimism..."
Do you have numbers to back this up? What were the total people on the dole at this time last year and now? Does it account for the full rise in incomes? What about the number of employed? Has that gone up since this time last year? If anyone has these numbers I'd be interested in seeing them.
My first reaction to reading the above is that it is just another skeptic calling everything a conspiracy theory. Sorry, just being honest.
Re: Outlook
Are you short yet? What stocks or indicators are you using to project this scenario?
Thanks
Re: Outlook
I picked up some more TZA this morning and plan on selling at first sight of 1135. We may bounce off and back down to it at the close after auto and truck sales. Monday I will buy more and manage it avoiding POMO days and taking gains on sell offs.
I'm looking at the beginning of August action as we hit the 1130 ceiling. IMO market sentimate turned too bullish and the elections right around the corner is sure to cause some uncertainty.
Re: Opening Comments
TOF,
I fear that one requires a degree in scatology to decipher this report, but take a look for yourself:
http://tinyurl.com/29zpvm
Bubble Vision cheerleader, Bob Pisani, even mentioned the effect of extended unemployment benefits on the report.
I find it difficult to understand your optimistic view of the economy. Perhaps you could elaborate?
Regards,
BH
Re: Outlook
OK, now that is a plan; hope it works out(Cara trading desk "may" be in agreement). Have you planned in case it does not work out, like a stop?
I really do not know, but am playing both the short and long with an option(put on SPY) and a financial, regional bank of all things...holding up so far.
Good luck and consistent skill to you :)
Re: Outlook
I hardly ever use stops. Too many times they have made me sell the dips, which is not worth the few times its saved me from my own stupidity. I feel they also show your hand and a target for market makers to make their by driving through a large amount of stops and then covering after the dust clears. If we see a close above 1150 I will go to cash and watch for a few. If anything else changes my outlook, I'll be sure to post.
Of interest on foreclosures
From the NY times today...
Foreclosures Slow as Document Flaws Emerge
http://tiny.cc/5bnrl
Re: Outlook
Jet - why buy TZA (Russell 2000 3x short) and then make a plan to sell when the S&P 500 hits your target of 1135? Wouldn't you be better off establishing your target based on the index you are shorting?
Although the general trend of the two indices is correlated, in the presumably smaller time frame you are working within, the difference in movement can be substantial. Russell 2000 has been outperforming S&P 500 for a couple weeks here and I believe is in favor (and may continue to be) due to takeover/M&A speculation...........
Re: Opening Comments
http://tiny.cc/vq6pk
"... the rise in income comes primarily from an increase in agriculture revenue and unemployment benefits, according to Robert Dye, a senior economist at PNC Financial Services Group."
Re: Outlook
I find it easier to go by the driving force of everything, IMO the S&P. I may miss a few cents but I try to watch as few things as I can to try and keep it simple. I trade TZA, SPXU, SRTY, VXX on occasion as well but TZA and SRTY perform best on sell offs. I am still concerned about a crash because of something happening overseas. If, God forbid, this does happen, I've reduced the risk because there's a chance I'm holding on to one of these at the time.
.........
' avav ' looks interesting... lot going on.
EC releases official report on May 6th "flash crash"
12:10:11
(US) SEC releases official report on May 6th "flash crash"
- The broad-based increase in risk on May 6 was evidenced by a number of indicators. Premiums on credit default swaps increased for a number of European sovereign debt securities, including debt from Greece, Portugal, Spain, Italy, and Ireland. In addition, the Euro experienced downward pressure in global currency markets.
- In the course of the day, the S&P 500 volatility index (VIX), a measure of the expected volatility of the S&P 500 Index, increased by 31.7 percent, which was the fourth largest single-day increase in VIX. Prices on gold futures rose 2.5%, while yields of ten-year Treasuries fell nearly 5% as investors engaged in a flight to quality.
- Starting at about 1:00 p.m., an overall increase in risk also began to manifest itself in the price volatility of individual equities. The number of volatility pauses, also known as Liquidity Replenishment Points (LRPs), triggered on the New York Stock Exchange for individual equities listed and traded on that exchange began to substantially increase above average levels.
- By 2:30 p.m., selling pressure had pushed the Dow Jones Industrial Average down about 2.5%. By this time, buy-side liquidity in the E-Mini had fallen from the early-morning level of nearly $6 billion dollars to $2.65 billion (representing a 55% decline). Buy-side liquidity in SPY had also fallen from the early-morning level of about $275 million to $220 million (a decline of 20%). Some individual stocks also suffered a decline in both buy-side and sell-side liquidity by this time.
- For full report, please see http://www.sec.gov/news/studies/2010/marketevents-...
Car Sales
Chrysler + 61%
Ford + 46.3%
GM + 10.5%
These are comparisons with Sept. 2009 sales. September 2009 was the first month after the expiration of "Cash For Clunkers"......an easy month to beat.
It is all about image or it use to be
This young CEO is making waves, taking names and calling a spade a spade all at the same time. Is it or it is the next generations time...a question or a statement...I am wanting a change, know there needs to be a change(not like Obamanations)and would welcome change:
http://www.businessinsider.com/what-drives-america...
Re: EC releases official report on May 6th "flash crash"
Plain English translation for we DENSA members:
http://tinyurl.com/278jchx
-------
So, it was a computer algorithm ?
Pull the plugs.
Chase the money-changers from the temple.
------
"President Obama said he plans on training 10,000 new math and science teachers. How about teaching math to that economic team of his?" - Jay Leno
Re: EC releases official report on May 6th "flash crash"
So the risks are even greater at this moment.
And did anyone think they would say "more sellers than buyers?"
Re: EC releases official report on May 6th "flash crash"
I am far from having read the entire thing, but this jumped to my attention, page 6:
While the withdrawal of a single participant may not
significantly impact the entire market, a liquidity crisis can develop if many market
participants withdraw at the same time. This, in turn, can lead to the breakdown of a fair and
orderly price-discovery process, and in the extreme case trades can be executed at stub-quotes
used by market makers to fulfill their continuous two-sided quoting obligations.
If that's not a fancy way to describe what I called "no bid market." Shrug. Now, you may remember that I was talking about exchanges breaking the trades and creating a lot of uncertainty in the process, so market participants don't want to get caught with half-trade. report acknowledged this:
A further observation from May 6 is that market participants’ uncertainty about when trades
will be broken can affect their trading strategies and willingness to provide liquidity. In fact, in
our interviews many participants expressed concern that, on May 6, the exchanges and FINRA
only broke trades that were more than 60% away from the applicable reference price, and did
so using a process that was not transparent.
Re: EC releases official report on May 6th "flash crash"
i don't know where they got this interpretation that computer algorithm is blamed in this report. I don't see it.
Re: EC releases official report on May 6th "flash crash"
FWIW
"according to two people with direct knowledge of regulators’ findings"
http://www.businessweek.com/news/2010-10-01/waddel...
Opening FAZ position.
http://bit.ly/agDxkF
I like the risk reward here. I sense it is being accumulated since April.
I think i missed the memo - Where is Bill Cara?
Vacation?
thanks in advance.
Reuters: Waddell & Reed To Blame
NEW YORK (Reuters) - Market regulators say a massive sale of futures contracts by Waddell & Reed exacerbated the market's plunge on May 6, in what has become known as the "flash crash."
KEY POINTS: * The crash resulted in high volatility in markets and a liquidity crisis. * The May 6 crash sent the Dow Jones industrial average down some 700 points in a matter of minutes before sharply recovering -- an unprecedented breakdown that exposed deep flaws in the electronic marketplace now dominated by high-frequency trading. * Citing an internal exchange document, Reuters on May 14 reported that Waddell & Reed sold a large order of e-minis during the plunge. [ID:nN14198678] * The report cites a "liquidity crisis" in the S&P's E-Mini futures contract, a trade executed by Waddell & Reed. A sell program of 75,000 E-Mini contracts were executed in a 20-minute period, much faster than normal for a program of that size.
Re: Opening FAZ position.
May I ask why do you "sense" FAZ is being "accumulated" since April? And more importantly, what kind of investor would think of holding or accumulating a 3X ETF for a period of time?
BTW, since April: FAS -41%, FAZ +11%
Since 2008: FAZ -98%, FAS -74%
(2X ETFs are the same, http://1.bp.blogspot.com/_iV5yDiKxCdk/TKYcyJqzJ6I/...)
Selling 1/3 TZA
No reason to look a gift horse in the mouth. If it goes up, I still have 2/3.
Re: I think i missed the memo - Where is Bill Cara?
Bill is taking a bit of time off to relocate his Bahamas residence.
Re: I think i missed the memo - Where is Bill Cara?
thx
Re: Opening FAZ position.
I would agree that these etfs are for day trading.
but since april faz has held support
Re: Opening FAZ position.
"what kind of investor would think of holding or accumulating a 3X ETF for a period of time?"
As far as 2X ETF's go, I'm guilty as charged.
I accumulated a ton of SKF from Oct 2007 thru March 2008. Turned out to be my biggest score ever.
I've never been able to replicate the feat.
Regards,
BH
Re: I think i missed the memo - Where is Bill Cara?
Looking forward to his first post. It's always good to step back and get a fresh perspective every once and awhile.
Re: Opening FAZ position.
My advice would be to do the technical analysis on the underlying product that your ultra-ETF is based upon - in this case XLF. The ultras have almost completely unreliable long-term chart patterns due to the decay factors.
Also, take a look at JPM breaking out today which is one of the leaders of the index............
Taking bets on the close
Purely for entertainment, as I have no plans to put real money on this. From a psychological standpoint, I think the bears almost have to lose going into the close. I say we close at the highs of the day.
Re: Opening FAZ position.
thx. i have looked at jpm and $RIFIN/XLF. not looking to much at intraday movements. too much noise for me. looking at monthly, weekly and daily.
JPM is just going to go back to $40. its like a magnet to that price. until it isn't
Re: Taking bets on the close
I agree. This close is huge. Bernanke has us right within reach of going on another run. Is there enough conviction to close above 1150 or not?
Re: Opening FAZ position.
Precisely BillyS. Since 2X or 3X are merely supposed to track an index and since they severely corrode overtime, the concept or support or resistance on them is not very meaningful.
By doing nothing and going and and down 1% every day, they will easily break support in a a matter of days or weeks (not resistance, since they both bear and bull versions will go down).
BTW, I thought FAS/FAZ claimed to track the Russell financials not XLF.
BullH: re. SKF it's the other 95% of investors who lose that is the problem, but usually only the wins are posted.
These things were a terrific invention for the issuers, the losses on them are probably over a $T by now.
Re: Taking bets on the close
I'm with you there - pretty much anyone that has tried to step in front of the train this week has gotten flattened. No one likes to take underwater shorts into the weekend. Could likely see an afternoon push up as they get closed out (voluntarily or forcefully). I also think we close at or near HODs.
Re: Opening FAZ position.
SiO2 - you may be right on the the FAZ underlying being Russell Financials - sorry I thought I remembered it being XLF but I haven't touched those ultras for awhile.
In any case, the point remains that inverse ETFs are not reliable for TA and one should use real underlying index for TA.
Re: Opening FAZ position.
Buying and holding 3X positions is very risky. I completely agree. I do not judge the price of these funds like I would a stock's price. I find it much easier to trade them on the waves and managing longs over weeks or months. Just my strategy.
Descending channel set up question.
Vad,
In regards to yesterdays catch of the day. As always I have questions.
The trend line is confusing me. Is that drawn to illustrate what happened or was that drawn in real time to indicate resistance and point of reversal. If the latter is true. Why was the trendline drawn at that point and not at the drop off point of the previous consolidation (the middle step) which would make a significantly steeper slope.
I'm guessing within the descending channel the 20 ma holding relative resistance at 79.60 gave the trigger, the previous consolidation the stop and the trend line is what you draw afterwords. As always please correct my misunderstandings.
look how commodities fared for the day
stocks up yes - softies and grains nope. DBA breaks its trendline - well and truly surpassing cover target, probably got more falling to go. CORN returns to trendline support.
Re: Descending channel set up question.
Bobbyo,
descending line is drawn roughly through the upper ends of the tails. Notice, I say "roughly" - this is because I don't take it as exact indication of the entry point, it just gives me a zone of the bounce top. Just like MA, such line can be fuzzy indication - price may pierce it a little or not touch it to the cent. Natural volatility of the stock matters, and CAT is not exactly gentle kitten, it can and does bite. So, to me it's a two step process: first, trend lines or BBs or MAs give me a zone where I look for entry; second, I find exact trigger by watching particular candles around round numbers. In this particular case, trendline gave me zone arond .60 - .65; previous top gave me resistance at .70 for the invalidation or stop level; finally break back down under .60 gave a trigger.
Hope it helps. Next catch of the day is coming in a few min.
PMV Bounce Into Close
No news to justify bounce. Showing a high for the day of .48. Monday will be interesting.
Catch of the day
Dreamy chart
http://tradinglog.realitytrader.com/2010/10/fri-oc...
AAPL - too obvious?
http://bit.ly/coTCPF
PMV.V closed up 39% today. WOW
Thanks Kaimu for the golden tip, I took a huge position when you mentioned it on the blog here. I owe you a big lunch :). Congratulations on your huge one day gain today. it does feel like 1999 all over again, you are absolutely right. Niceeeeeee.
Re: PMV Bounce Into Close
ALOHA!!
Yes ... we can call that a "reverse flash crash"! Up near 40% today on not so stunning volume of nearly 1mil shares. Its getting tight as the Toronto institutions I have been watching have been in full on accumulation mode this whole week. The intraday high hit $0.48CDN closing down at $0.43CDN. Just $0.05CDN more on the intraday high and PMV turns into my first $1milCDN+ play.
FD: 1.9mil shares
Re: PMV Bounce Into Close
Congrats kaimu! It must be true then that it gets easier after you make your first million ...
Re: PMV.V closed up 39% today. WOW
ALOHA!!
Yep ... good on ya!!
That is the value of Private Placements(PP) in action. Never discount the high risk, but with such risk can come some huge rewards. Sometimes it just takes one. Its been a struggle, not to say it will be easy sailing from here on out, but the worst of the dismal fundamentals that has held this company back for so many years is over and now the market will see the primary value of PMI GOLD, which has always been its land holdings on very prolific gold belts.
This says it all ...
We've been acquiring land and exploring for gold in Ghana for 6 years. Our focus now is bringing our projects to near term production. We control 12 concessions covering 537 sq kms -- in the heart of Ghana's major gold belts. Our holdings on the Asankrangwa gold belt alone are more than 70 km long -- the equivalent length of the entire Carlin Trend in Nevada -- and cover 3 past producing large scale mines and dozens of small historical operations.
LINK: http://www.pmigoldcorp.com/s/Home.asp
Essentially PMI GOLD owns the Ghana equivalent of the Carlin Trend ...
I am hoping to visit Ghana next year ...
Re: AAPL - too obvious?
Nyu,
I guess your suggesting a short of apple on a macd cross? With a stop at the apex I don't see a favorable R/R ratio. 1:1? Besides, why get in the ring with the heavyweight champ? There has to be 100s of other journeyman fighters with similar setups that are ripe for a knockout.
Bob
UNX Energy Corp
Recently I wrote about UNX Energy Corp UPWRF (formerly Universal Power)
I mentioned I think this company could be taken over without producing a drop of oil.
The same geology that PBR has offshore Brazil is being found offshore Namibia except it is
much more shallow.
"Universal Power Corp. is an oil and gas company focused on building a portfolio of high impact exploration targets in offshore Namibia, Africa. The Company has approximately 52,000 gross square kilometers of Namibian offshore concessions along the prolific South Atlantic Margin. The Company has a newly expanded managerial and technical team supported by strong Namibian partnerships, and is thus well positioned to make a significant contribution to the exploration and development of Namibia's offshore oil and gas concessions."
The stock was trading around $2.40 on Sept 15. July 21 it was at $1.50.
Today the stock closed at $3.36 today.
No current position but have a GTC order in at $2.26.
Re: Catch of the day
Vad,
Just looking at that chart it looks like a short setup, Double top right before the consolidation. It seems on aggressive entries there is more art and intuition then tape indications. An .85 break is what the chart seems to be saying. What outside indicators made you take this entry.
Bob
Kaimu hits Gold
Congrats Kaimu....You are really on a roll lately.
Are you going to take your cap gains this year to avoid a possible tax increase?
Obama wants to tax gains at ordinary rates. $2m in gains would be about $800K in tax plus your contribution to the Hawaiian treasury. UGH!
Uncle Sam...your involuntary silent partner, is wanting to get paid and Timmy has already spent it.
Re: PMV Bounce Into Close
"It must be true then that it gets easier after you make your first million"
By the time you finish making your first million, your central bank has certainly debased your currency enough that making the second million will be much easier.
I guess that's why the saying isn't "It just gets easier after you make that first brick of gold" ;-)
Re: Opening Comments
Bull - I'm optimistic on the economy longer term, not sure about the next year or two. So I would say I've been more optimistic on the markets than the economy. Corporations are just killing it right now, much to the chagrin of the bears. I just think people are too pessimistic about things right now in large part because that is the information they are being force fed. A perfect example of this is the run up in gold and silver. I know people that are buying gold and silver stocks that have no freaking clue about why they're buying it other than it's going up and they are hearing that the Fed/govt is spending like crazy. This is so pervasive in our country right now and its keeping a lid on the equity markets which I think will eventually be blown off. You can see the bearishness everywhere: in blogs, in news articles, on the comments of every single positive article written on Yahoo Finance, Minyanville, etc. People are just so skeptical of everything. Maybe they're right. I'm more of a trader (not a daytrader, but a trader nonetheless) so my calls are more over the short/medium term, i.e., 1-2 months or so. But I've thought that building longer term positions over the past month or so would be very profitable.
Re: Opening Comments
TOF,
"I just think people are too pessimistic about things right now in large part because that is the information they are being force fed."
What are job and housing conditions like where you are?
People I know (myself included) are pessimistic because of personal experience largely in those two categories. Also many lost a big chunk over the last two years and have not recouped it. A 30% loss followed by a 50% gain (if they cashed out at the April high) is still a downer.
Re: Opening Comments
Housing in San Diego has clearly bottomed. Jobs according to my friend in the headhunter industry (he is a partner at a big firm here in San Diego) are and I quote "On fire" (he told me this last week and said that in just the past month business has picked up considerably for the first time in a couple of years). Another friend of mine works for a billion dollar public company in the tech sector that sells to Samsung, INTC, TXN and a few other big companies and he told me that their employment levels are above pre-recession levels now.
Also you said:
"Also many lost a big chunk over the last two years and have not recouped it. A 30% loss followed by a 50% gain (if they cashed out at the April high) is still a downer."
Isn't that how cycles work? You can point to people that bought in March 2009 and are up 70% and they probably don't think things are too bad. Or to people that bought in 1987 and are up 4 fold from there.
Closing Comments
"Lastly, before you shake your head in disgust at underperforming the broad market during the September surge consider the following:
The Talking Heads were agog the past few days, breathlessly telling viewers this past September had the best return in 70 years. Did they bother to tell you what the next three years looked like?"
Pat - I have seen this on a lot of bear blogs before...don't mean to be a stickler but back then we had Hitler invading and taking over France, which caused a cascade lower in our equity markets. I don't see anything like that happening in the next 7 months.
Re: Opening Comments/ Both Sides, Now>The Roaring Twenties
http://tinyurl.com/6b8jsn
Grym- There are (at least) two sides to every story. People are naturally optimistic, and will find ways to survive and prosper. People who have lost jobs find new ones. Trades and professions that fade into obsolescence beget new ones.
What's new in the Bay Area? Quite a bit. INTC is looking for new sources of revenue. Facebook and Google are trying to redefine social networking- one of my wife's nephews spent the summer working for one of them, and was offered a full-time position upon graduation next spring. Larry Ellison is working to have San Francisco host the 34th America's Cup, which is expected to inject $1.9b into the US economy. High-speed rail is pretty much a done deal looking ahead 10 years. I could go on.
Partly in response to all of the above, housing prices have stabilized and have actually begun moving back up. We recently refinanced, and were pleasantly surprised to see the appraisal come in above our expectations.
Everything is relative. Try looking at things from another perspective, and it may seem as if we're entering a new age- the Roaring Twenties might be closer than you think?
World War of currencies?
Team,
A little history. On Sept 1 1939 Poland was invaded and World War 2 officially began. This led to the historic September in the market. Then as you pointed out the War escalated and the market tanked in mid 1940s.This obviously gave birth to that old wall street saw of " Go long when Poland is invaded. Go short when Denmark surrenders." Has worked every time, so far. Anyway i think Pat's point was more to the fact that a regression to the mean is likely. Can we expect a 10% gain every month?
Just like we could definitively point to the surge in September 1939 to Hitlers war. We can point to the September surge of 2010 on Bernake's war on the dollar. How long are other countries going to wait before they try to torpedo their own currencies? Let me suggest a Blitzkeieg of world wide monetary devaluations is our near term future. Which in my opinion will create an expanding range market. Higher highs and lower lows.If so this will result in a market that is very difficult to trade on any time frame. Now if Poland is invaded I will know what to do.
Bob
Cara or DeMark?
http://ronsen.blogspot.com/2010/10/poor-mans-demar...
Mirabile dictu. I've had the good fortune to meet both and count both as quality people!
Re: Closing Comments
TOF
As a student of history I am well aware of what was happening in the world in 1939. While some may argue the situation today is every bit as combustible,that was not the point. The point is Tout TV has an agenda and they trot out people and present statistics in such a way as to influence their viewers to see things in a particular way.
I know plenty of TV reporters and have heard their spiel-they are attempting to sway opinion-CNBC is doing the same. If they were trying to help viewers they might have said chasing performance rarely works over the short term. Endlessly reporting the market had its best Sept in 70 years subconsciously exhorts their viewers to buy before the train leaves the station, when in fact it might be the worst time to climb aboard.
When you write a closing commentary each and every night many times you are going to be proven wrong-so be it. All we try to do is give our readers our take on the markets.
We don't expect readers to agree with us 100%-everyone is entitled to his or her own opinion
toby
' arry ' had good news A.H..... Although its phase I, its linked with their cancer mono-clonal platform.. have a good weekend, baz.
Re: toby
Baz & Toby,
There are so many biotech stocks and I have had losses on several over the years. One survivor I have followed is EXEL. Low now. Potential?
Insiders have been buying. I do believe they have superior bio-science brains in their favor. Down side may be an emphasis on cancer.....a tough nut to crack.
Excellent ' Gold ' read
from ' Ask Fleck ' section... http://adventuresincapitalism.com/post/2010/10/01/...
Re: Excellent ' Gold ' read
Thanks this is interesting to say the least.
I started looking at JOYG and did not understand why a company such as this that is servicing the mining industry has so much selling. sec.gov
Re: Excellent ' Gold ' read
Picks and shovels, gforce, picks and shovels ! That is one of the main reasons I will not sell ' TLR '...
Re: toby
As David Simms told Roy McAvoy, after Roy's ' 12 ' on the final hole at the US Open,, " I gotta hand it to you, Roy. When you go down, you go down in flames " ! Man, can they crash.. I'm trying really hard ( Samual Jackson in Pulp Fiction ) to focus on those with good tech and good partnerships. After many ears of occasional napalm enema's, one is either still trading or.... I do take two steps back when the Quants get involved, and ' trade only '.. I will, however, always trade around a core position. Have traded Exel.. god company that could be lbo'ed, since Pharma is running dry, although the FDA is, imho, stiffing the competition. Thanks for writting, Illini...
Re: Excellent ' Gold ' read
baz22, Comrad Kuppy is an on the ground (or under it in some cases) excellent analyst. His observations are quite insightful and useful.
Personally, I own only enough gold to breach most international borders but I respect honest and objective analysis. He's a keeper.
I fear gold and respect it as an angst trade and who knows how much more angst there is yet coming. Palladium has always been a fun trade for me. It actually has a useful purpose! I consider her the kitten of the big cat trades. She has that youthful bounce and unpredictability but she is maturing with time.
I used to like silver but it becomes an ugly glob of oxidation without constant care. I'm holding a bunch of blackend Morgans from 1966 and seeking a solution, literally!
Kuppy is a great find. Fleck is a sweatheart and I envy his long ringlets and I only wonder when he ponytails up like Faber!
NEVER TRUST ANY INVESTMENT ADVICE FROM A MAN WITHOUT THE POTENTIAL OF A PONYTAIL!!!
DRUM ROLL PLEASE!
ALOHA!!
Today the US Treasury reported their last day for FY 2010, September 30th, and what a day it was! Really ... (drum roll please) ...
At the marketable US Treasuries table they created a total of $215BIL worth of debt issues. Look they even issued over $100BIL in Notes ... The US Treasury then deposited $218BIL of FRNs into their Federal Reserve Account just like you and I deposit our pay checks every pay day. That is because every Thursday is "pay day" for the US Treasury, not in hard earned cash earnings but in mouse clicked nano-second debt. I would have loved to be alive to watch the Reichbank back in the 1920s try to print up $218BIL worth of Reichmarks just to see the logistics in action. Whats more I would like to see Tim Geithner be forced to count from 0 to $218BIL just so he can understand what the hell he mouse clicks every Thursday! At least he wouldn't have time to be Treasury Secretary and maybe the recovery would really be over!
With this back drop of the final day debt tally I see that only a measly $4BIL USD in tax revenues came into the US Treasury on Thursday. Hardly even worth printing ... They could have just put down $4 and not a single economist would have noticed.
The real cool number for the day was over at the "Net Change of Public Debt Outstanding" line item. That went up $95.4BIL USD on Thursday, so we can add that to the US PUBLIC DEBT, practically 1/7th of a TARP in one day! That brings the total US PUBLIC DEBT on the last day of FY 2010 to $13.511TRIL USD. The Net Change of Public Debt ended up adding $1.65TRIL for FY 2010. To put that into perspective its about the same as M1, money stock, in the USA.
M1: The total of all physical currency part of bank reserves + the amount in demand accounts ("checking" or "current" accounts).
Here's the chart: http://research.stlouisfed.org/fred2/series/M1
Quite the last day fiscal fireworks! Next week we get to see how FY 2011 starts out ... My guess is that it will be more of the same FY 2010 stuff. I know I am going out on a limb here with that prediction but sometimes you just gotta live large ... pedal to the metal!
Congrats Kaimu
One side of me is steaming that I can't get on board yet. IB went and shut down my account just as I was looking to refund it after setting up a daytrading account with another mob.
Yet you have been the primary influence in my looking at the big picture. In that I see that the curtain is far from falling on gold and mining shares yet.
Much thanks for your ongoing participation
cheers
Always easier to blame a single person or entity...
as opposed to exploring complexities of systemic proportions:
"1 large trader led to May 6 stock market plunge - WASHINGTON (AP) -- A trading firm's use of a computer sell order triggered the May 6 market plunge, which sent the Dow Jones industrial average careening nearly 1,000 points in less than a half-hour, federal regulators said Friday."
http://finance.yahoo.com/news/1-large-trader-led-t...
Morons. Let's ban selling to correct the fault...
Re: Closing Comments
sure you can TOF. War, no, but the closing of global markets to international free trade as morons ratchet up the economic pressure for their own short-sighted political gain - absolutely.
Re: Opening Comments/ Both Sides, Now>The Roaring Twenties
Hi 2nd, no question the human mind thrives more in a positive state and it is a better way for man to live. But it is also important to have a good dose of reality of the current situation.
This chart shows the relationship to employment growth and GDP.
http://www.screencast.com/users/Telestar3d/folders...
This comes from Ritholtz's site and here is the link to a good article that includes the above.
http://tinyurl.com/2fp3ggk
Does knowing the above help in trading? Perhaps not as there is a clear disconnect between wall and main, but good to know.
Thanks for the Joni Mitchell song. Beautiful singer and lyrics and the first song I saved to my music folder in a while. Cheers.
Re: Opening Comments
TOF,
Glad to hear things are better somewhere — nothing like that here in Illinois.
I moved from skeptic to cynic over the past 20 years as things spiraled downward and am unlikely to believe anyone can know what a "bottom" in anything truly is. Even if things don't fall further I don't see any reason for any genuine upward economic moves anytime soon.
This of course does not rule out market moves due to government buying or additional stimulus producing short term optimism.
Not being a day or short term trader I am mostly thinking of preservation of principal for my wife and myself and not about to risk much on cyclical or any other investment theory.
Best wishes.
Re: Opening Comments/ Both Sides, Now>The Roaring Twenties
2nd,
"People who have lost jobs find new ones. Trades and professions that fade into obsolescence beget new ones."
How long does it take to retrain a 50 to 60 year old? How many can afford the time and dollars to do the necessary reeducation needed? What do you do when no one in your area is hiring beyond part time, low pay and no benefits? How do you move to an area like the Bay Area when the house you paid on for 20 years is under water? How do you sell when there is a glut of houses and people in the same situation?
These are real life situations for many today. My younger son is 45 and has lost two jobs in the last ten years, worked two part time jobs for nearly two years, finally got full time work and was cut to 32 hours this spring (a 20% pay cut), health insurance cut for all but worker himself and several people let go. He has his mortgage about 25% paid off, but not a prayer of selling it. No way he could afford to back to school to retrain without losing everything.
This, according to what I read, is quite common in other places too.
Around here we are in the end of the twenties and only the government support (social security, unemployment insurance, food stamps)is masking the real picture for many.
Sunday Morning Coffee: Let Them Eat Cake
http://ronsen.blogspot.com/2010/10/sunday-morning-...
Problems? Not in Wobegon.