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Michael Kudrna
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"The market can remain irrational longer than you can remain solvent.” John Maynard Keynes In an industry which caters to the greedy and already wealthy, it has become increasingly complex for the individual investor to find a path to success. “Buy and hold” is an inadequate investing... More
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  • Weekly Homework: The Bond Market Holds The Truth (w/ Economic Calendar & Stock Radar)

    For the first week of 2012, it was not a bad week at all.  The action wasn't overly impressive for the bulls, but considering most were expecting a pullback, the bulls held strong. The question everyone is pondering is whether we will have some sort of pullback or are we going to continue to rise.  Friday may have hinted at more upside in the short-term, but we may need bonds to sell-off faster for this to happen.

    To the surprise of few, jobs data came in strong on Friday, not great, but definitely one of the best ones we've had in years.  However, this was expected by many due to seasonal hirings and improving weekly claims. The real test that market players are looking for is if next months job's data will be strong or will it show we lost what the seasonality recently provided us.  This time next month will be a crucial point to better understand if the economic recovery is going to continue on the pace of the slowest recovery in history or will it start to pick up steam into another the next gear. For the meantime, we have potentially a month of positive sentiment going into the next report and we can not ignore that key point as we navigate these trading waters. Any and all positive sentiment must be used to its fullest as we will regret this when the markets turn bearish again, which will happen at some point since the market always cycles back and forth.

    ProShares UltraShort 20+ Year Treasury (NYSEARCA:TBT) - Annotated Chart

    Bonds have shown some signs of unraveling this past week, which could fuel a strong surge higher in the equity markets.  I continue to use TBT as my shadow chart for the purpose of determining the bulls strength as quickly as possible.  We will need to answer whether this move up in TBT was simply a relief bounce or is it the start of an unraveling in bonds that will fuel a surge in equities.  I'm staying flexible and not betting aggressive until I see better odds of determining that answer, but I'm definitely biased to the long-side.  A pullback makes sense, but a sell-off in bonds would quickly overrule that logic.
     

    [Related: CLICK HERE FOR A FREE GOOGLE NEWSLETTER WHEN WE POST A NEW ARTICLE]

     

    Tuesday starts the International CES event.  This event has already started to bring some optimism towards technology stocks and I expect this will continue as exciting news of technological advancements and new products hitting the shelves circulate among the masses giving them the urge to buy.  This will keep my bias towards technology stocks for the week with recent hot money also flowing into biotechnology as another sector to watch closely.

    Economic Calendar

    We've ignored Europe for a bit, so economic data could be a bigger driving force until the handcuff to Europe shows once again. Numerous bond auctions take place this week that could at any time give negative sentiment for our markets. I'm optimistic only seriously negative news would hurt us from Europe over the short-term and most we can shake off in half of a market session (morning/afternoon).


    CLICK HERE TO SEE TO READ THE REST OF THIS ARTICLE ON KUDRNA'S STOCK MARKET TALK
     

    Kudrna

    Jan 08 11:56 PM | Link | Comment!
  • Senator Marco Rubio To President Obama: Raising The Debt Ceiling A Sixth Time?

    Another open letter to President Obama has gone viral among the masses via social media.  First it was Leon Cooperman's letter to President Obama that was highly discussed, now it is Senator Marco Rubio expressing his frustrations with the President after he recently requested another debt ceiling increase. 

    The dangers continue to grow as we recklessly add debt and make no significant cuts to balance the budget as Rick Santelli points out using basic math skills that anyone can understand.  Repealing the Bush Tax cuts on households making over $250k a year will only amount to $700 billion in savings over 10 years.  That equates to savings of $70 billion on a $1.3 TRILLION deficit, so clearly taxing the rich is just a political ploy to rally (blind?) the voter-base rather than an actual solution to the deficit problems.

    [Related: CLICK HERE FOR A FREE GOOGLE NEWSLETTER WHEN WE POST A NEW ARTICLE]

    What most don't realize is that we are forced to create inflation just to continue to pay our bills and that inflation is a form of a tax on everyone, regardless of your pay scale.  Every year, the government inflates (taxes) everyone, regardless if you are rich or poor, but it's an invisible tax until you start to realize that costs are going up around you and you're not keeping up with inflation by increasing your own personal revenue year-over-year as your dollar loses its buying power.

    After reading Senator Rubio's letter, I must applaud him.  He calls out the President for not making any serious attempt at cutting spending, but rather making his sixth attempt (and it will be yet another successful attempt) at increasing debt limits.  He points out how President Obama keeps pushing off the growing debt discussion which makes it harder to tackle every day we let it grow.  Hopefully more citizens become aware of the importance of this topic before it becomes too late and we reach the point of no return as we follow the path of Greece, Italy, etc... Some believe we have already crossed the point of no return.  Let's hope they are wrong.  The letter can be seen below.

    CLICK HERE TO READ THE REST OF THIS ARTICLE ON KUDRNA'S STOCK MARKET TALK

     

     

    Kudrna

    Jan 07 1:54 PM | Link | 2 Comments
  • Trading Lesson: Buy Winners, Not Losers

    Remember this basic strategy to save yourself from racking up big losses or holding lots of red and sweating it.  We have multiple discussions in the live chat throughout the day.  This point keeps coming up which is my ideal strategy yet most fail to understand it.  Try to rid yourself of wall streets bad habit pressed upon the minds of individual investors through major media.  Instead of buying when stocks are falling, constantly averaging down as if you have unlimited capital, buy on the way up. Buy winners, not losers!  That reduces risk because they are gaining momentum to the upside rather than trying to call a bottom which rarely works.

    I'm mostly cash right now because we have mostly losers and few consistent winners.  My problem is I tend to force trades when I'm bored or have limited exposure in the markets.  This is not a good trait to have, but because I'm aware of it, I have a better chance of remedying it.  Be aware of your own trading problems and you can remedy them as well. Right now, a big problem is the bad habit wall street has pressed upon the minds of individual investors.  The media continually talks about this like you must buy when stocks lose else you'll miss big gains.  That is completely illogical yet most don't realize it because so many preach it.  Take a step back and realize that 99% of the time, a bottom call is not correct.  If we actually kept the statistics of bottom callers, I'd imagine they would be terrible.  Nobody keeps track of them though, we only keep track of the one amazing call someone luckily made once in their lifetime.  That one call makes them forever considered an "oracle" on major media.  If you listen to them and constantly buy in a bad market trying to average down, you will not be pleased with the results the majority of time time.  That strategy means you will likely have to make up significant losses just to be profitable again.  My ideal strategy has me near my portfolio highs so that I can quickly make profits in the next bull market.

    The lesson is hold high levels of cash in uncertainty and wait until the market proves itself to aggressively buy longs.

    As always, do your own homework to see if you agree.  Good luck out there.

    Mike

    No positions mentioned

    SEE KUDRNA'S STOCK MARKET TALK FOR MORE ARTICLES LIKE THIS

    Sep 06 3:49 PM | Link | Comment!
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StockTalks

  • lots of window dressing into the year? Hard to buy/trust for me #stocks
    3 days ago
  • Stalking plays like $AXAS and $REI for quicker trades while still looking to build a bigger LT position in $GST, if price can fall more
    3 days ago
  • May look to start nibbling again in $GST and rebuild the LT position I've been trimming. Trying to take advantage of the beta
    7 days ago
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