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Dr. Duru

 
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  • Identifying Counter Plays for the End of QE2 [View article]
    This is indeed a tough decision - and a decision that the author of this article sought to make easier by showing the clear correlation between rallies/sell-offs and the start/end of QEs. The raw statistician in us warily states in disbelief, it couldn't be THIS easy to predict could it? For those who used QE start/end as a guide since 2008, kudos to you, because I bet you are confidently preparing for a 20% pullback!

    Anyway, I like Tripleblack's third scenario of the 20% pullback, followed by QE3. This fits the pattern shown above. The Fed is indeed painted in a corner and cannot be proactive against a pullback because they will get ripped to shreds when they can't come up with compelling evidence for the need of more printed money. Nothing like a sell-off to scare folks into action.

    For planning, I say forget about looking to invest in safety. If safety exists in the stock market, then I want to buy and hold onto it for dear life until I retire. I say either hedge or get to cash and wait for the opportunities. If you fear missing out on another 10% ride over the summer, but some SPY Aug/Sept calls and call it a day.

    Having boldly made prediction, now I will pull back and state what I am watching for clues that a crash/QE3 is coming:

    1. Strong relief rally in the dollar not accompanied by improving economic news, especially in housing. I will assume this is hot money leaving carry trades in anticipation of economic weakness.
    2. China Watch - hard to react quickly to news flow from China, but I am guessing a correction in the Chinese stock market will precede ours.
    3. More big cap leaders stumble. We have seen quite a few big cap tech names crater. Not enough to say a top is surely here, but enough to raise my eyebrows.
    4. A sudden run up in interest rates.
    5. Anything that was completely unexpected by the vast majority of us

    If any of the above provide convincing signals a correction is imminent or underway, then I only reverse course once the Fed starts discussing its method for intervening again.

    Absent any horrible decline, I am just continuing to keep things close to the vest, keep overall risk exposure low, and trades short in duration.

    Hope that made sense!
    May 20 01:03 AM | 12 Likes Like |Link to Comment
  • Buy The Rumor, Sell The News: The Case Of Apple's Worldwide Developers Conference [View article]
    I don't think I really qualify as a pundit.

    I didn't think there was space in this article to explain my latest trade on AAPL. Particularly SA's policy against technical articles made me cautious not to go there in this piece. I will be explaining the latest trade on my blog. Bottom-line: I sold my shares on Friday as I noticed a fade developing. I interpreted it as a *short-term* sell signal. I am VERY eager to buy the dips (thus my disclosure that I could go long within the next 72 hours). I am also very focused on my Apple Trading Model (also covered on my blog) which could have me long as soon as Monday morning depending on how the open unfolds.
    Jun 1 04:57 AM | 9 Likes Like |Link to Comment
  • Evidence That Big Inflation Is Coming [View article]
    Thanks, Adam for this piece and the data. I am fascinated by the (theoretical) battle between deflationists and inflationists, and I remain in the inflationist camp based on classic monetary theory. The trick, as always, is with timing...but I would rather prepare for inflation in the future than get overly caught up in the panic in the present.
    Jan 25 09:11 AM | 9 Likes Like |Link to Comment
  • It Only Takes 5 Million Dollars To Buy A Home [View article]
    Where do I imply that? It is not evil or unfair. It's the market. Indeed, if it were not for this demand, I could not even talk about a housing recovery.
    Feb 5 05:34 AM | 6 Likes Like |Link to Comment
  • Chinese Academic's Rare Earth Forecasts at Odds With Industry Experts [View article]
    After some more thinking, I realized that I should have done at least a brief review of Dr. Zhanheng's prior work to give these latest comments better context. Just as a quick and dirty survey, click on "Like" on this comment to let me know whether this might be of interest or useful to you. (You can of course also comment and tell me it's a waste of time). Thanks everyone for the insights!
    Jun 20 06:36 PM | 6 Likes Like |Link to Comment
  • Identifying Counter Plays for the End of QE2 [View article]
    That was a good summary and the conclusion that the Fed will go ahead with QE3 after the market corrects is consistent with the analysis here.
    May 20 07:43 PM | 6 Likes Like |Link to Comment
  • The Housing Market May Be Starting To Crash [View article]
    So it seems to me that bears and bulls can see what they want to see because there are enough data to fill in anyone's blanks. The public builders are doing the right thing now. They are not trying to sell homes to everyone, everywhere, and anytime. They are about picking their targets. As long as they are focused in the places where the economic fundamentals are sound, and there are plenty of them now, I am betting with them.
    Feb 27 06:49 PM | 5 Likes Like |Link to Comment
  • Identifying Counter Plays for the End of QE2 [View article]
    Those numbers provide a great example. The trend is truly everyone's friend - who is leaning the correct way anyway. A rare moment of performance for the leveraged ETFs. One question I have often wondered is whether the options "price in" the expected amount of friction on the underlying leveraged ETF....
    Jun 20 10:47 PM | 5 Likes Like |Link to Comment
  • Market Conditions Quickly Move Molycorp to Price Share Offering and Convertible [View article]
    So what is preventing the U.S. from developing those skills? The lack of domestic opportunities? If so, might the military get motivated enough soon to develop some of those skills (whether directly or through research grants, etc...)?
    Jun 11 04:45 PM | 5 Likes Like |Link to Comment
  • Gold And Silver Enthusiasm Soar To Historic Levels In The Wake Of Collapsing Prices [View article]
    Oh wow - thanks for pointing out the incorrect link! I am submitting to get that corrected now. (In the meantime, people can find the "Gold Slam" article at http://seekingalpha.co...

    I honestly haven't thought of how far a bounce could go. I rarely give upside targets since central banks are proving they will operate with boundless enthusiasm for acocmodative policies. I stopped trading gold and silver a while back and decided to just sit on my portfolio, accumulating when prices get good (like now).

    I agree economic weakness will tend to pressure gold and silver, but it will also tend to pressure central banks to increase money-printing. Like a self-reinforcing loop.

    At this point, my horizon has stretched out for several years as to when the precious metals may surge again like they did from 2004 or so through 2011.
    Apr 22 12:48 AM | 4 Likes Like |Link to Comment
  • Facebook Shorts Get Washed Out [View article]
    This is correlation, not causation. More importantly, the news flow on FB has greatly improved over this timespan. FB has gone from the most obviously bad IPO in history and one of the most hated stocks of the year to a must own, contrary play. The headlines on FB now are mostly positive and focus on all their business initiatives with a positive spin.

    This is all about sentiment and it can (will?) flip back just as suddenly as the stock has rallied.

    The massive amounts of shares coming onto the market are also suppressing potential of short squeezes.
    Dec 14 12:52 PM | 4 Likes Like |Link to Comment
  • Our Long Range Investing Outlook Is Not Bright: Great Depression 2.0? [View article]
    I also thought that this article was going to explain the path to Depression!
    I have just one comment on your bullet points. A device that replaces 10 workers CAN deliver more economic growth IF it drives down the cost of production such that the end products are dramatically cheaper. Consumers of those products have more money to spend on other things. If all works out OK, they spend money with other business who need to hire to meet increased demand. One big wildcard is whether the job market is fluid enough such that displaced workers can find work elsewhere or in a different industry. In this transition period, such job transfers have tragically been very hard to come by.
    Aug 7 02:33 PM | 4 Likes Like |Link to Comment
  • Gold and Silver Almost Go Parabolic as Currency Wars Heat Up [View article]
    William - I fully agree with you. However, if gold and silver went inot parabolic moves ahead of the Fed's next meeting, we would have to seriously consider the prospect that this could finally force the Fed's hand to put QEII on the shelf. The market is supposed to discipline policymakers. Hasn't worked so well to-date, but I could see a scenario where the gold and silver run so hard and fast, the Fed gets a lot of political/public pressure to cool it. Call me a dreamer?
    Anyway, what I noted is that gold and silver looked ready to launch into parabolic moves but that formation stopped abruptly on Thursday. My experience with parabolic moves has almost never been good - just sticking to my rules. I have been on this train a very long time, so I feel no pressure to squeeze out every penny of profit possible. Still long GG and betting against the dollar with Australian dollars.
    Oct 9 01:21 PM | 4 Likes Like |Link to Comment
  • How Companies Should Take Advantage Of Markets [View article]
    Great post. You make excellent points. FB really got handed a gift by getting added to the S&P 500 and the company is taking full advantage of it just as it took full advantage of the liquidity from the IPO last year. Anyone worried about dilution should look at all those shares outstanding and understand that massive share issuance is part of the deal here....
    Dec 20 03:38 PM | 3 Likes Like |Link to Comment
  • Supply/Demand Imbalances Continue Building In The Housing Market [View article]
    We actually don't really want wage inflation engineered by monetary policy. We want higher productivity engineered by private enterprise. This *should* lead to greater prosperity and wages....
    Feb 25 02:18 PM | 3 Likes Like |Link to Comment
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