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Mercenary Trader

 
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  • Not Even Wrong: Why Data-Mined Market Predictions Are Worse Than Useless
    Fri, Sep. 12 JNK, UUP, SPY 27 Comments

    Summary

    • The standard deviation for the S&P the past ten days has been the lowest in 15 years. One writer believes this creates an 89% chance of bullish action.
    • This “89% chance” way of thinking makes no sense to us. In fact, we would consider it “not even wrong.”.
    • The potential trajectory of equity markets is directly impacted by the trajectory of debt and currency markets (which are the opposite of boring now).
  • The Euro's Pain Is Just Beginning, And Passive Indexers Are Asking For A Punch In The Face
    Thu, Sep. 11 FXE, EUO, ERO 6 Comments

    Summary

    • The euro (EURUSD) saw its biggest single-day drop in years this past Thursday. ECB president Mario Draghi surprised investors with the aggressive nature of his actions.
    • The story is nowhere near done. Europe is still asleep at the wheel… things will get much, much worse before they get better.
    • The eurozone is at risk of a deflationary downward spiral. Deflation is very hard to reverse.
  • Market Outlook: Too Much!
    Wed, Jul. 23 FDN, JNK, KBE 14 Comments

    Summary

    • We see too much divergence, too much complacency, too much downside risk in this market.
    • Small caps have broken trend while the Dow, S&P and Transports are near highs. The fed recently called out specific sectors as overvalued.
    • Stocks have gone up by 107% when earnings increased by only 53%. There is too much risk in this market.
  • Large-Cap Breakout Failure Is Ominous For Bulls
    Thu, May. 15 DIA, SPY, IYT 5 Comments

    Summary

    • The divergence between large caps and small caps has been ominous in recent weeks.
    • Today, large caps are breaking down - indicating a failed breakout.
    • As investment managers unload risk, the breakdown in blue chip stocks could continue.
  • How Do We Know The Bull Market Isn't Over?
    Mon, May. 12 DIA, IWM, SPY 16 Comments

    Summary

    • Mark Dow states: The bull market is not over, but it’s not a smart time to press your bets. The longer (for) this limbo, the more attractive the upside will become.
    • We say: How do we know it isn’t over? How does one quantify “over” versus “not over?"
    • What if the upside to be patient here is not in longs, but shorts?
  • Your Favorite Beloved Tech Stock Was Just A Giant Macro Bet
    Wed, May. 7 AMZN, CRM, KING 39 Comments

    Summary

    • The high-beta tech group has been slaughtered, even though the major indices have held up well.
    • Many investors are hoping for a comeback in these names.
    • Beyond a certain valuation level, the growth story itself no longer matters. Only capital flows matter — which are a function of the macro picture.
  • Death Of The Omnipotent Central Bank Narrative
    Tue, May. 6 GLD, IWM, OIL 49 Comments

    Summary

    • The "Omnipotent Central Bank Narrative" has dominated markets for the past five years. It has driven anything and everything before it.
    • The Omnipotent Central Bank Narrative is now drawing to a close. As equity markets cease to levitate, the mighty magicians lose their power.
    • The Fed's power is linked to crisis prevention measures. And now with the U.S. economy on the mend, the morphine drip has been put on last call.
  • Repeat After Me: Boring Is The New Sexy
    Thu, May. 1 SPY, DIA, IWM 13 Comments

    Summary

    • High-beta social media, biotech and cloud stocks have experienced a blood bath.
    • Yet large caps are within striking distance of all-time highs.
    • A reversal of the Fed's zero interest rate policy should continue to drive capital out of speculative stocks.
  • China To Bypass The United States... Blah, Blah, Who Cares?
    Thu, May. 1 FXI, UUP, UDN 31 Comments

    Summary

    • The Economist reports that China will become the world's largest economy by the end of the year.
    • But this moment in history is not the end of American dominance. If anything it is a beginning.
    • Being big is not reason to brag, or a necessary source of power - especially if beset by crisis and troubles and constant fires to put out at home.
  • Herbalife: Advantage Ackman?
    Thu, May. 1 HLF 131 Comments

    Summary

    • In 2013, hedge fund managers Bill Ackman and Dan Loeb took opposite bets on Herbalife.
    • Today, Herbalife's share buyback program has failed to materially boost the share price.
    • Could hedge funds who were squeezing Ackman be using the share buyback as an opportunity to exit?.
  • Tim Cook, Macro Genius
    Wed, Apr. 30 AAPL 16 Comments

    Summary

    • Apple has turned itself into a stable "widows & orphans" stock with stock split and dividend hike.
    • Investor flight to safety favors stocks with strong cash flow and safe business model.
    • Apple's surge does not reflect optimism for tech, but more capital flowing to safe businesses.
  • Sorry Twitter, They're Just Not That Into You
    Tue, Apr. 29 TWTR 83 Comments

    Summary

    • We're short Twitter heading into earnings.
    • A decisive shift in investor sentiment could send TWTR shares sharply lower.
    • Lackluster user engagement has been a challenge for twitter and will likely continue to pressure shares.
  • Is Shorting China The New Widowmaker Trade?
    Tue, Apr. 29 FXI 28 Comments

    Summary

    • A crisis in China is coming - the only question is how big it will be.
    • Timing is suspect and could be a long way off.
    • Price action currently favors "wait and see" rather than bearish exposure.
  • The Dollar Is Quiet... Too Quiet
    Tue, Apr. 29 Comment!

    Summary

    • There is a significant sea change underway from "risk on" to "risk off."
    • Markets will react to data from the Fed this week.
    • The impact of sanctions on Russia is impacting capital flows.
    • Never short a dull market - the U.S. dollar could be ready to move higher.
  • Tiger Soup
    Tue, Apr. 29 ARWR, CRM, FB 11 Comments

    Summary

    • Small caps and high beta tech names are in steep decline.
    • Julian Robertson's "Tiger Cubs" are caught in the crosshairs.
    • More selling could ensue as panic sets in and forced selling resumes.
  • Consumer Retail Stocks - Return Of The Bear?
    Tue, Jan. 14 LULU, BBBY, ULTA 1 Comment
  • Who Gets Hit By A Vulnerable Housing Market?
    Dec. 13, 2013 HD, LOW, Z 9 Comments
  • Don't Underestimate The U.S. Dollar
    Editors' Pick • Nov. 28, 2013 UUP 121 Comments
  • Behold The Apex Predator: 'The Everything Store: Jeff Bezos And The Age Of Amazon' Review
    Nov. 13, 2013 AMZN 61 Comments
  • Gold Is In The 'Too Hard Bucket'
    Nov. 5, 2013 GDX, GLD, SLV 36 Comments
  • Australian Dollar Could Be Headed For Low 80s
    Nov. 1, 2013 FXA 8 Comments
  • Tanker Stocks Have Triple-Digit Upside (If They Survive)
    Oct. 14, 2013 DHT, FRO, LNG 16 Comments
  • Rare Earth Metals: Not For The Faint Of Heart
    Oct. 1, 2013 AVL, DY, EU 23 Comments
  • Dry Bulk Shippers: Turnaround Or Mirage?
    Sep. 23, 2013 GNKOQ 28 Comments
  • Low Cost Airlines: 3 Key Threats To Profits
    Sep. 18, 2013 JBLU, LUV, RYAAY 9 Comments
  • Chinese Internet Stocks: Explosive Growth Vs. Slow Death Stragglers
    Sep. 17, 2013 BIDU, DANG, NTES 1 Comment
  • Jewelry Stocks - A Turnaround Gem And A Vulnerable Short
    Sep. 13, 2013 NILE, SIG, TIF Comment!
  • Central Banks, Earnings, And Economic Recovery Data Are Now Headwinds For Risk Assets
    Jul. 1, 2013 FXI, XLU, UUP 7 Comments
  • Facebook's Valuation Is Still Too Optimistic
    Jun. 30, 2013 FB 16 Comments
  • Welcome To The Desert Of The Real
    Jun. 25, 2013 EEM, FXC, FXE 44 Comments
  • All Hail King Dollar!
    Jun. 20, 2013 EEM, FXI, XLP 9 Comments
  • And Now Back To Your Regularly Scheduled Program
    Jun. 10, 2013 DIA, EEM, FXI Comment!