Moby Waller

Momentum, newsletter provider, etf investing, short-term horizon
Moby Waller
Momentum, newsletter provider, ETF investing, short-term horizon
Contributor since: 2008
Company: BigTrends
that longshot in 2nd messed up all our exactas and trifectas
posting Preakness picks article now -- interestingly, Price & myself picked the same Top 4 horses
Edit -- looks like TWTR will open around $45 ... watch round numbers like $40, $35, $30 on the downside if it pulls back in the coming days/weeks
I personally would wait a bit, based on what occurred with LNKD & FB. But the decision is up to you, ultimately.
2 sidenotes: In my personal acct, I bought FB around 20 when it plunged, sold it around 30. Also, the version of this article on the BigTrends site has been edited/cleaned up a bit and some more detail added.
Hi I work with Price and just wanted to reply with my 2 cents on the VIX and the market -- this analysis is mine, Price may not necessarily agree.
I wouldn't say the VIX is a perfect single predictor of future SPX prices, but it certainly shows the level of concern among options traders. And key levels on the VIX have been good pivot points for market trends over time.
In my view the VIX has become more of a 'smart money' indicator in recent years than it used to be. In the 1990s when we began studying the VIX, it was often a good contrarian indicator -- especially mini-VIX spikes during bull market trends (they were great long-side buy opportunities).
If you look back at the VIX long-term big picture, it has tended to remain in certain key ranges ... lower ranges during the stronger bull markets, higher range during times of more volatility. For example from 1991 to 97 it largely was 10 to 20 almost the entire time. Them during the internet bubble era from '98 to 2002 it was in an elevated state of basically 20 to 40. Then 2003 to 2007 another quieter bull run and the VIX was again largely 10 to 20. 2007 to 2011 saw the unprecedented spikes to over 80 (!), but mostly was in the 16 to 40ish range. Since mid-2012 the VIX has gone back to the 12ish to 20 range. Within this range are key levels around round numbers such as 12/12.5, 14, 16, 18, 20.
I consider the current VIX to be overall in a "safe zone" when below 20/18/16 (as the underlying market trend has been bullish over the past 2 years) -- with the bottom range of 12/12.5 to 14 being important. 12/12.5 has tended to mark VIX bottoms and short-term market tops in recent years -- but longer term we may be headed to a 10 VIX.
A 10 VIX doesn't seem 'logical' given the economic slowdown and uncertainty in the world, but if you think about things like Arab Spring and how well the market has shaken off events of recent years, it certainly is within reach.
One other rule of thumb about the VIX that I like is to consider is as the 12 month projection of potential gain/loss in the SPX ... so a VIX of 10 to 20 makes sense inherently in general to me, as the US market could go up or down 10% to 20% within reason most times, net over the next 12 months. A VIX of 40 is more like that of an emerging market with higher volatility/risk, not usually the case of a developed mature economy/market like the US.
Well I would really compare it more to the UFC, the NBA or British Premier League soccer in terms of being a global brand. I mention FB and LNKD because the social media reach of WWE is truly massive, they are top trending on Twitter constantly for example. DIS I mention as probably the pre-eminent content company in the world in my view.
I didn't anticipate such a violent reaction to Fed/Bernanke, as this tapering news wasn't exactly unexpected in our view. Stocks may well shake this off by the end of this week (or next week). Market performance after a big down 'Fed day' looks mixed in our analysis. But I'm not a 'perma-bull' and the forecast in this article was a possibility I saw/see, but is certainly subject to change. I probably should have mentioned in this piece that the "logical" anticipation of performance going forward this Summer was a choppy consolidating market, given that we racked up such strong gains earlier in the year (my SPX target for 2013 in Jan was 1650 +/- 50 SPX points, which was already reached) and the recent choppy volatile pattern we've seen since mid-May. I've previously done recent Fibonacci and trendline support analysis on support levels if the market pulls back more than anticipated -- the 1600 SPX area is obviously a key area to watch.
An underperforming single country ETF that I would be looking at is Brazil (EWZ) -- they have the Soccer World Cup coming there in 2014 AND the Summer Olympics coming in 2016 ... there are/will be huge amounts of infrastructure spending and gotta think other things going on that may juice the economy there. EWZ has been in a consolidating sideways range since basically May 2012 -- a breakout above the top range of that in the 57/58/59 area is what I would be looking for as a potential entry trigger.
On a 6 month basis I would use my preferred charts and technical system indicators ... I would be looking for a pullback in either of these to get in at a low risk entry point, because EWJ and DXJ have basically been in accelerating uptrends since November 2012 (which is also when the US market rally began as well), without much of a pause. DXJ has been outperforming EWJ since this November bottom, so I would prefer that one. As far as pullback levels that would provide a good entry point, I would look at the 45/44 and 40 levels currently on DXJ.
Nice piece ... interesting
Stanley: Our best trades come from momentum/trend breakouts, then we normally utilize low-risk pullback entry points within a confirmed bigger trend (in either direction using options). "The trend is your friend" as they say ... we prefer that to "catch a falling knife".
Add Pimco's Bill Gross to the latest of the "Cult of Equities is Dead" new perma-bears ... meanwhile, SPX is up 10% ytd and 5% since June ...
Hi, I just want to note real quickly that I actually wrote this article on Thursday July 26 in the morning ... before the market had 2 huge up days on Thursday and Friday.
Also, I receive quite a few outside articles as Director of Editorial for, and there has been a preponderance of bearish ones lately from a variety of angles and writers (sentiment, Fed, economy, technical, gold, Europe, etc).
Meanwhile, the overall price action in stocks has been generally strong and our technical analysis on the broad market is largely positive -- I view this scenario bullishly from a contrarian sentiment perspective. The chart tells the tale, to paraphrase Jessie Livermore.
But we certainly don't rely 100% on contrarian sentiment indicators in our trading ... this AAII data is just kind of an obvious one that has set up recently, in my view.
(I work with Price): side note - Although SA prefers fundamental talk over technical analysis/charting, I would also point out that SPX 1360 & 1361 are key Fibonacci retracement levels I've been watching on both a Daily chart of the December 2011 lows to April 2012 and also on a long-term Weekly chart of the 2007 highs to 2009 panic market low. Definitely an important level to keep an eye on if the SPX approaches it again this year.
Opening screw job print they did at $45, then it quickly drifted down to $38 to $42 range for rest of day -- not a great sign for the short-term, I would say.
The greed of the underwriters to jack up the IPO price to $38 now looks like a mistake.
I know many people say "unfriend" but i've been on FB forever and i say "defriend", so i used that - but nice job on getting the IPO shares!
great link, thanks for that granger ... the concepts presented in that article are certainly very speculative long-term ones, but just the kind of thing we need/should to be thinking about, especially from the U.S. and/or trading/investing perspective
Folks, I tend to agree with you that risking 0.92 to make 0.08 isn't enough profit sometimes. It was just a theoretical example for this article. That's why I said in the piece:
"That return is a bit lower than I usually prefer for my front-month credit spreads (i prefer 15% to 60% max potential gains), but since 125 is such a key technical/psychological level, let’s just use this as a theoretical example."
On the other hand if you could make 8.7% return on risk every 1.5 weeks, you would be well ahead of the markets every year.
2 things:
You are all focusing on my speculation that SIRI shares could go to 0 in the future. The primary focus of this piece is that I anticipate an increase in volatility and a big move in the stock before the end of the year. The narrow trading range it's been in should be broken. Hence the straddle suggestion, where you can profit if it moves in EITHER direction.
As to the bankruptcy, etc -- I'm not saying that this definitely will happen, but we've all certainly seen stocks go to 0 before. As you know, this doesn't mean the company is going out of business -- but at times stocks do go worthless when a company reorganizes. And companies with heavy debt, not very good profit margins, a lot of outstanding shares, and a stock price near 1.00 could certainly be considered a candidate for this.
Waren, I'm basically saying there is a high likelihood of a big move in the stock before the end of year in EITHER direction -- so playing an option straddle (buying both the call and the put) is a way to bet on a big move in the stock price with a fairly small cash outlay. The two straddles I mentioned are priced around 0.10 ($10) and 0.20 ($20) and each option controls 100 shares of stock -- on a very simplified basis if the stock moves more than that you can potentially profit. For example if the stock moves quickly to 1.50, the 1.00 Call would be worth at least 0.50 ($50) and the 1.00 Put may be worth a couple cents still.
All the comments above are Bearish -- so that immediately rings my Contrarian Bullish Bell -- ring ring!
ive edited the first few paragraphs in the "instablog" section to take out the incorrect info ... can't edit this version here.
*Red-Faced* Looking back, I did make an error ... SY came up on one of my price performance screens, and in doing some research I got it confused a bit with STEC, which I was also looking into (and I haven't traded either at this point or given recommendations on either). But the "quiet" breakout its experienced on various charts was the point of the article, really. Price action in the stock is what we focus on, looking for 2 day to 3 month moves, not 2 year projections.
Sorry, you are correct ... I had trouble defining it in a pithy way. I certainly don't claim to be an expert in enterprise and mobile software solutions for information management, development, and integration worldwide. I do look at fundamentals and read up a bit (there were 2 articles cited, but one was SA and the link was removed), but I prefer Jesse Livermore, "the tape tells the tale". Which is why there are 3 charts on there, and no projected future revenue/earnings graphs.
I do maintain in this piece and another I wrote earlier this year that Japan is likely to outperform relative to other country ETFs this year in my view.
If the troubles with Toyota fade away quickly, then it is a bit reminiscent of the long-ago troubles with Audi ... and if we have approached the end of this bad news cycle for the company, it may be a good opportunity to jump in on the long side. But in general I shy away from automobile companies, so I'm saying a basket of Japan stocks may be the safer way to go.
the number scaling on the right of this chart got a bit messed up, sorry about that, but the 110 and 115 levels are correct
<img class="authors_reply" src="">

Hi TLassen, good question.
It's a bit tricky and others may have some more clarification, better than mine.
The VIX itself measures 30 day expected volatility on the S&P 500 (used to be OEX, now on SPX). My understanding is that this is also an annualized projection, but that may in fact just be my "rule of thumb". For example, in all the quiet years of the 90s when the market went up 12% a year like clockwork, the VIX basically was between 10 and 20. Then during the crisis over the past year, we spiked to as high as 90. To me this was saying the market could go up or down 90% in the next 12 months. And look how big the recovery from the March lows was. But even 40 is a very high VIX if you look at it in these terms, that is more like "emerging market" volatility on a historical basis.
Standard deviations, while part of the option pricing formula (and used for risk management purposes, tails, etc), are not part of the VIX calculation itself as far as I know. However, I certainly would think that saying a VIX at 18 equals 18% +/- projected annual return would fall within 1 standard deviation is prob accurate.
As an aside, I show the actual vol on the SPX over 30 days as around 11, according to livevolpro data.
Interesting piece. I need to look at it closer.
its from an ETF performance sorting tracker on MSN Money ... it does capture some illiquid ETF names, which we note ... but its one of the better, easier to use performance trackers that I've found
hmmm... how was this call ... Crude topped at $147, now $40

On Jan 06 10:41 AM rbagby wrote:
> It's amazing how badly this guy Moby missed the mark on CHK
It's amazing how well rbagby's comment was a contrarian indicator on CHK -- topped out near 20 that day, currently below 14.
I actually was looking at a Straddle on CHK for my subscribers, but ended up going for the Bearish direction, for various reasons. I certainly saw big potential for a volatile move in either direction, but chose the down side. It rallied from 15 to almost 20, now currently below 14. If you had been long the straddle, you could have sold out the Call side on the move up and ended up most likely with a "free" Put that is now worth serious premium.
After writing this report, I just found this article from a few days ago:
Goldman bought 93,000 apartments in Germany for $1.2 Billion in CASH. Valued at $3.4 Billion including debt. Largest property transaction in Germany since credit crisis began.
Is there any doubt who the "smart money" firm is?
Airlines -- not a good investment in generally every environment...includin... now