August 2008
2 posts
BACK FROM DUTY
Finally, done withe Grand Jury Service, 4 weeks of interesting look into the legal system.
While gone, the market made the expected bottom, the once again reliable McClellan Summation Index. Energy and commodities have gone into bear market declines (20% drops). It will take a few days to reacquaint. I am looking at the battered energy sector for counter-trend trading opportunity, but it remains...
THE LOST MONTH
Only 3 days left on my Grand Jury Service.
This is how I spent my summer.
Not following market at all. CNBC has become hard to watch. Fast Money has become a comedy hour, with the once insightful Jeff Macke reduced to funny one liners.
At least I will save on my electric bill by watching less.
July 2008
12 posts
EARNINGS PICTURE -- NOT PRETTY
Aftermarket, SNDK;AAPL;MRK;AXP all down. Problem — 2H:08 guidance not up to snuff.
I have been commenting that the second half of 08 in earnings is vastly overstated. This is going to be tough. If we were not oversold on an intermediate-term picture, I would be really scared.
On price, we may retreat to 1180-1200 SPX. We will stay oversold and remain committed to a compicated bottoming...
TECHNICAL CONSIDERATION
With the NYSE McClellan Summation Index (NYSI)finally turning up, after a prolonged almost 3 month decline, I cannot be short-term bearish. Putting aside all the bad fundamentals and the upcoming (IMHO) global slowdown, which is what I believe the commodity and energy downturn foreshadows, I will play the long side for now. For a couple of weeks, I have highlighted my favorite technical indicator...
QUICK RALLY
The tendency would be to sell into this rally and just say that downward we go again. Howard Lindzon makes a good point in looking for “tells” on the market. In this case, it is the financials and looking technically to see if they hold above previous bottoms or some gap zone.
The SPX 1200-1225 provided a trading bottom. The VIX got above 30. the McClellan Summation Index (NYSI) got...
BINGO!
Today, I started a stint of jury duty, that lasts for 4 weeks. Out of the jury pool of over 200 people, 69 were needed. I felt safe that I was able to skate by and serve a couple of months down the road. As the names were read, i felt more comfortable about my chances. Down to #69 and here comes the ball out of the bingo machine. My name!!
With the commute to the court location, my day is shot.
...
MEDIA, PLEASE SIMMER DOWN NOW!
CNBC has formed too many panels and guests all trying to mold the opinion that we are near a bottom. All day long, especially the 4 pm hour led by DK and his non-factual reasons for being an optimist.
I believe that is why the VIX has not spiked. Too much chatter about being at a bottom, just because we have hit bear market (20% declines). Please be more objective and present both sides of...
OSCILLATOR UPDATE
NYSE McClellan Summation Index (Ratio Adjusted) -880
SPX 1252
VIX please spike!!
If there is indeed a price break in energy, AG, commodities like we have seen in the past few days, where is the money going? I do not see any rotation or money going to other sectors yet. Certainly, not in the financials.
If this market does turn for a trading rally, watch the your sectors closely. That is a...
ANOTHER SCARY HEADLINE
Geneva - The global financial crisis could lead to losses of 1,600 billion dollars for financial institutes, according a report in the Swiss Sunday newspaper SonntagsZeitung. It quoted a confidential study by the hedge fund Bridgewater Associates as saying losses for banks holding risky assets could be four times greater than the 400 billion dollars previously estimated.
The hedge fund expressed...
OSCILLATOR UPDATE
NYSE McClellan Summation Index (Ratio Adjusted) -800
SPX 1262
Now we look for a tradeable rally, within a new bear market trading range.
Bottom —?
Top —— 1350
BRAZIL
A few weeks ago, Brazil upgraded to investment grade as a country, years after severe currency and debt problems.
Result — Brazil market has dropped 16% since 5/20. Sometimes the action is already built into price.
The BRIC countries (Brazil, Russia, India, China) markets that everyone loved on a few short months ago have dropped significantly from their highs.
Answer — Global...
OSCILLATOR UPDATE
NYSE McClellan Summation Index (Ratio Adjusted) -650
We are in the zone of a bottoming area for the above oscillator.
Past bottoms in bear markets are more complicated than in bull markets. The bottoming process is usually not a “V” type rally, but some rally failures, re-tests where internals improve and an eventual sustained rally. Look for down days to enter the markets. We...
OSCILLATOR UPDATE
NYSE McClellan Summation Index (Ratio Adjusted) -588
Getting within range of -600 to -800 needed to consider a lower-risk entry point. New quarter and new opportunity; or new quarter and same problems. Your call!
June 2008
12 posts
MORNING NOTES
McClellan Summation Index (Ratio Adjusted) -450
SPY trading within 2% (126.41) of .382 FIB support, measuring from the 10/02 bottom to the 10/07 top.
VIX at 23.93. No fear spike yet.
I do not expect a repeat of Thursday rout. Yet, to expect any recovery with oil above $141/barrel would be difficult.
Kudos to CNBC. Great interview with Sam Zell. If you can watch it, go to www.cnbc.com video...
WHAT I LOOK FOR IN A NICE BOTTOM
McClellan Summation Index (Ratio Adjusted NYSE)
Current —- -380 Looking For -600 to -800
VIX ——— 23.8 Looking For 30 to 34
These levels often define a lower-risk intermediate-term entry point.
Today is just plain awful, so far. But there is no spike in the VIX. The FOMC has become irrelevant, talking the talk, but not walking the walk. Weaker $ is not...
MY BLOG FRIENDS
Just because you link to another blog, does not give you, the blogger, the right to call him/her my friend. I have seen so many bloggers say, “my friend James, my friend Roger, my friend Howard, and have the gaul to hyperlink the name to that persons blog.
These people are not your friends. They are part of your online social network group, an individual you will probably never see in...
OPEC, SCHMOPEC
The end of Q2:08 is coming up fast, only 6 more trading days. Do you think that any fund manager is going to push the sell button aggressively before the end of the quarter in the best performing energy sector?
OPEC raises production to help out, but refiners are hurting, therefore less gasoline.
The market trades poorly, except for the same energy,ag, names. Below SPX 1350, as stated before, is...
WALL STREET'S NEW TERM OF ENDEARMENT
The tendency of Wall Street to describe any set of events that cause an out-sized outcome is to find some key term or catchphrase to entice the public.
The recent events in the market, energy pricing, interest rates and so on have caused markets to trend in a direction that have amazed most of the public.
The term I have heard more times in the past few days than any other expression is that we...
RBS PREDICTS.....
Royal Bank of Scotland credit analyst:
The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks. “A very nasty period is soon to be upon us - be prepared,” said Bob Janjuah, the bank’s credit strategist. A report by the bank’s research team...
FOLLOW THE LEADER
Last week, Mr. Bernanke says he is concerned about inflation and signals the need for a stronger dollar policy.
ECB head J.C. Trichet trumps Mr. B and imples that rates will be headed higher at the next ECB meeting. This trumps Mr.B comments, the $ weakens and oil skyrockets.
Mr. B follows JC and implies he is now worried ablout inflation, at the expense of economic recession.
It seems that we...
COMFORTABLE LEVELS OF LEVERAGE
LEH discloses that they have deleveraged their balance sheet and are now comfortable with 25x asset leverage. Seriously, these guys and gals better have their thinking hats on and have a great trading desk to carry this risk in an arena where hedges are working poorly and volatility is causing inter-market chaos.
Remember- every mistake going forward creates the need for new capital raise and...
BOOK VALUE DESTRUCTION
LEH this morning says it will raise $6B in new capital. The price, according to CNBC is $28/share for common and an acceptable premium for the convertible preferred.
Bottom Line — Any investment in money center banks and b/d’s, should first be considered as to book value. With this raise, LEH B/V should be around $26/share. In bad times, financials trade to or close to B/V. In peak...
REVISITING A PRIOR POST
On 5/7/08, I stated that a pullback to the SPX 1350-1375 would be appropriate given the overbought technicals. That would be a good entry point for traders to re-enter this range bound market.
We are almost there, but the background story has changed. We now have oil hyperbolic, having risen almost $16/barrel in two days. Unemployment has risen a surprisingly .5% to 5.5% and private sector jobs...
May 2008
16 posts
NEW DISCOVERY
I am always looking for new blogs or websites that provide information in a way that is well formatted and easy to read. I have found a new one. Take a look at bookmark it! http://www.1440wallstreet.com/index.php/
OIL SPIKE
A couple of weeks back I spoke about crude oil pricing and stated that although in a strong uptrend, the parabolic nature of the commodity had not yet been evident. Well, in a matter of a few trading days and $20+/barrel added to the price (now close to $135/barrel), the angle of ascent has steepened to almost 80 degrees. That now constitutes as parabolic in my book. In a post yesterday, the...
DYLAN GETS IT RIGHT
I like Dylan Ratigan. I have known him for years, going back to his BBRG TV days. He is likeable and very sharp and very smart. His show is better than MAD MONEY, by far. Today, he made an obvious but important point on CNBC TV. He stated that many investors do not realize how much exposure they have to energy pricing. He mentioned the highly correlated sectors as Brazil, Russia, Commodities,...
SELLERS APPEAR AT MID-DAY
After a strong morning run into SPX 1440-1460 resistance, the market reversed and gave up most of the gains. The NASDAQ COMP actually reversed completely and closed down .50%. The bears have a chance to do some damage in the near-term. There were many bearish candlestick formations as well as a number of outside days on the big momo winners. What to do? Read some prior posts. Too lazy to repeat...
OVERBOUGHT SECTORS
As we start the week, 4 SPX sub-sectors are overbought, according to a Bollinger Band Analysis (above upper bound on a 50-day SMA, 2 Standard Deviation). Three of these sub-sectors remain in a bullish uptrend, yet overbought. They are TECHNOLOGY,ENERGY,MATERIALS (gee, what a surprise!). CONSUMER DISCRETIONARY sub-sector is overbought as well, but the uptrend has just started and is not...
WHAT INFLATION?
The latest CPI numbers out yesterday. CPI — +.02%, Core CPI —- +.01% These numbers are hard to accept. What I accept is the changing methods as to how inflation is calculated. Barry Ritholtz at http://bigpicture.typepad.com/comments/ has been giving us great updates and info on the changing face of inflation stats. If the market wants to rally, then so be it. I remain skeptical of this...
BLOG GRIPE
To all bloggers and blogettes who use a black background and white lettering. Please, please, change your color scheme. Some of us older folks have eye issues and cannot focus on that kind of color scheme. Especially difficult after you have had an optical migraine. There are some great blogs I just skip over.
BLOWOFF TOP IN OIL?
I characterize blow-off top by degree of ascent and time. For crude oil, since January 2007, the level of ascent is 55 degrees, not close to the 75-80 degree angle of ascent seen in typical blow-off tops or parabolic moves. Therefore, strong pricing power and supply/demand suggest corrections likely within an overall still bullish sector. The noise is getting strong on the media and the street as...
GLOBAL FINANCIAL POWER BASE CONTINUES TO SHIFT
From Marketwatch today,NEW YORK (MarketWatch) —- Banking giant Citigroup is increasing its foothold in the cash-rich Middle East after announcing Wednesday that it will move it global co-head of investment banking to Dubai.The big push has started and should continue to focus more and more on these emerging markets. Wall Street perceives this as one of the main ways to overcome the growth...
SPX HITS A WALL
As we stated in previous comments, the fight for control begins at SPX 1420-1440. So far, that level has proven to be a hard barrier to overcome as the SPX chart shows a short-term double top at SPX 1420. Now, it would seem we traverse back down and give back some of the March-April gains (almost 14%). I remain committed to the “no need for a retest of the lows again” and look for SPX...
MID-DAY CRUSH
DJIA now down 200 points. The tells that this will stick for today is that the sectors that get blamed for the original market drop, financials and real estate are both down big. Always watch the SRS and SKF (the double Proshares ETFs’) for confirmed market direction. A FOR TRADERS EYES ONLY comment. I thought I heard Cramer say on CNBC that financials have been on the “shiva...
SHOULD WE WORRY ABOUT THE PRICE OF OIL?
GS looking for a super-spike in oil, to $150-200/barrel over the next 6-18 months. The consumer is toast, with more and more discretionary funds going toward energy use. That means less for almost everything else. The equity market does not come close to reflect the energy pricing structure. Why? The belief is we have passed the worst case for financials (debatable) and energy pricing will abate...
MSFT/YAHOO (NO)! THEN WHO?
MSFT backs away from purchasing YHOO and now the guessing game starts as to who MSFT should buy now. I find this speculation dumb, but the for the media it fills time. Some of the names mentioned have gone up today, but the names make no sense. These companies range anywhere from $2B to $10B market cap. Rationally speaking, a possible transformational deal of YHOO/MSFT at $45B plus does not equate...
WHILE CORPORATE AMERICA DELEVERAGES....
While corporate America deleverages, the investing public gets a chance to increase their leverage. Read the following: A new filing by Direxion Funds could seriously up the ante in the realm of leveraged exchange-traded funds. The firm, which is known for its leveraged index mutual funds, has filed 36 proposed ETFs with the Securities and Exchange Commission. There’s been a lot of...
TECHNICAL SIGNS POINT TO ...
Interesting technical characteristics on the SPX charts. As we have pointed out for a while, the technicals point to resistance in the SPX 1420-1440 area. That is defined by the 200-day SMA as well as previous support that turned to resistance on the break toward sub SPX 1300. Counter to that is the new bullish bottoming pattern of a reverse head-and-shoulders that has developed that points to an...
PARABOLIC STRATEGY
As far as I am concerned, a parabolic angle of ascent is the most profitable and the most dangerous. It all depends on when the buy point was effected. If you have trouble forming a strategy, I suggest selling into the strength on a scaled basis as the stock goes parabolic. Understand that the gains are expected to be hundreds of % from the original buy point. If you buy into the parabolic move,...
April 2008
39 posts
FRB PULLS A GREENSPAN
The FRB measurably cut by .25 bps today to 2% fed funds. The market, up over 150 DJIA points mid-day, sold off to close lower on the very middle-of-the-road, a little bit of this, a little bit of that commentary. I believe it disappointed both bulls and bears looking for a directional play. It sets up the market for a more lackluster upside, with the SPX 1420-1440 (if it should get there)...
GOLD
GLD ($85.82) has broken a head-and-shoulders top with a price objective of $72/share. This is hard to imagine, even though the technicals point that way. I choose not to play the downside for an objective of $72. The only way we get there is if the FRB starts raising rates and the $ rallies big time, something I do not expect in the near-term. I do not think it is a good risk/reward play at this...
NASDAQ HORSEMAN, AGAIN
As the market struggles today, awaiting the FRB meeting tomorrow, AAPL, RIMM,GOOG,BIDU rally again. It just tells me that the market is made up of more traders than one thinks. Commodities under pressure again, as the media blast over the past couple of weeks took us to another overblown and overbought sector. That is why I repeat to myself, DO NOT BUY PARABOLIC MOVES. Look what has happened to...
MARKING TIME, BUT HIGHER
Don’t fall into the trap that we are at SPX 1400. The resistance as I have pointed out is SPX 1420-1440. SPX 1400 means nothing. The good signs continue to be the awakening of the mid-cap sector which has already cleared the triple-top that the SPX is fighting with. That means more participation and a broadening rally. Funny money (fed rebate) will hit pocketbooks soon, and not...
A HIGH CHOLESTEROL PORTFOLIO
Warren Buffet may be a great investor. But be careful — Some of his companies are bad for your health. Coca Cola (KO) Dairy Queen (private) See’s Candy (private) Wrigley’s/Mars Kraft
THE PROBLEM WITH BASEBALL
Baseball has become a telegraphed, boring game. Few pitchers make it through 6 innings, The relief staff of most teams, other than the closer are mediocre at best. It turns a good and crisp game into a long, drawn out affair where anyone can win. Look at the standings and you will see most of the teams within a couple of games of .500. A perfect example was yesterday’s Yankees-Cleveland...
YANKEE UPDATE
Joba cannot save this team. As a starter or a relief pitcher. Both Farnsworth and Bruney are hurt. That leaves the only seasoned relief (other than Joba and Mariano) left is Latoya Hawkins. Also, Girardi seems to not care about pitching both Joba or Mariano more than one inning. Remember, with a bunch of young arms on the Florida Marlins, Joe used the pitchers way too much. The following year...
TRADING STRATEGY
I tend to want to be lazy on Friday’s, especially options expiry Friday’s and Friday’s where there is little major news. Trading on employment Friday’s, where volatility is created, is better for traders. If you sold the opening, then go take a walk or shut off CNBC.