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Mr. Massive's  Instablog

Mr. Massive
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  • USD
    I wanted to make sure this prediction was in print.

    The dixie or USD would not be coveted in a normal world. However, we don't live in normal times.

    I have been bullish on the USD since 5/11. My theory may or may not be unique, but I like to call it, "The best option in the land of shit."

    Simply put, currencies are at war. To sustain our global economic paradigm during unfavorable times, or crony capitalism with finite resources, debasement is assured. Over the next year or two, countries that are facing massive headwinds will find themselves resorting to their last resort: currency debasement through printing more money and slashing interests rates.  Essentially, if they can't grow organically, they will summon Keynes, and grow artificially. In less words, they are following the US 20008-10 model.

    Sooo...

    Since we already achieved the bottom of our cycle : besides confidence or lack there of in foreign governments, nothing is propping up the US dollar due to semi- failed Keynesian accommodative fiscal policy. Therefore, in relation to other currencies: euro, yen, yuan, etc there is only one logical way the USD can go: up. This is due to foreign necessity to debase their currency, for it is high in relation to USD. Markets play out in cycles. Think of it as two great wheels of light and dark churning against each other.  The USD is in a period of darkness, which is turning UP. Conversely, and with no surprise, other currencies are in relative periods of light, ticking towards darkness. 

    I fully expect a 1:1 ratio of USD:EUR by 3/1. I'm not sure if the markets will freely advance this agenda or through government intervention.


    Oct 11 2:02 PM | Link | Comment!
  • Massive's Missives
    Today

    Early pumpfake pivot, followed by steady dip buying all day. As predicted, bullish bias would continue with average jobs data. We ended the day above 1160, the most recent lowest high.

    Tomorrow

    The next resistance lays at 1175, the second most recent high. We still maintain a bullish trend, especially ending at the day's highs for the third straight day. What I am watching, and the world, is September's jobs report. Here is some analysis. Personally, I don't think it will be bad, because the market can't afford it. If its awful we tank. If its strong the dollar goes up and we fade. If it is marginal (goldilocks), I think we continue the rally.

    If I had to guess

    I feel a buy the rumors/ sell the news price action waiting in the wings. Specifically, I think we will rally to begin the day, up 10-15, pivot, then trend down for the majority of the day.  Market is substantially overbought, RSI has been chilling at 70. Finally, towards the end of the day (215-345 est), barring no poor news/reports/speeches/innuendos, we end with a rally.

    Trading strategy for tomm

    Being bearish on the macro environment, I refuse to initiate any long positions ( stocks I want to hold for 3 months- 1+ years). The closer we reach the top of this range the less I want to risk being long.  I missed the boat at 1100. 

    I will be looking to play 1 swing trade through calls/puts. I do not know the jobs data, so I can't forecast which way it will swing first, why, or when. My suggestion is to look for the point, when you believe the market is acting most disproportionately. Enter the trade, buy/short, against an index. SPXU/UPRO are 3x  etf examples. What I can predict, 95 % sure we will get between a 10-20 point swing up to down, down to down, down to up, or up to up in the day.  Don't be greedy.  Have an estimated risk/reward amount in mind, and scope out the best long/short mechanisms. On friday's, I recommend using the next week's call/put expirations. Time premium is little, but the current volatility can result in massive gains.

    Check my stocktalks early in the day. I will announce my trade by 10am most likely or tell to wait for better entry. I like to evaluate the bidding of stocks/spy v the actual indices. Normally, the day's bias can be sniffed out within 15 minutes as determined by the bidding.

    My risk/reward tomorrow is 1000-1500 dollars. I will be looking to use up to 1500 in calls/put to make 33%-100% gains.

    PS - I sold my yhoo calls to raise cash and secure profits. 200-300% in 3 days is nothing to balk at. Nov 20 calls were most profitable, in at .04, out at .3. The spxu part of the trade is down about 20 percent.  I have a tight stop loss on the 1250 shares. The minimum gain for this trade sits at 5k, and that includes getting kicked in the balls by spxu.

    Future

    Monday is a unique day. Stock markets are open, but banks are closed due to Columbus day.  Therefore, bond markets will be closed. I view this as very risk on and positive for equities. Over the past 5 years, the week of Columbus day has been very bullish, with last years gaining over 4%. Typically, Columbus day coincides with the beginning of earnings season. Pepsi, JPMorgan Chase, and Google are the heavyweights reporting next week. I expect earnings to be solid, but with downside guidance. 

    I am not buying the fall melt up scenario. I would rather remain in cash and stick to my convictions: we are in the third leg down of a secular bear. The market is too fragile to survive. We are addicted to innuendos, unsustainable valuations, and stimulus. Our root problems remain unsolved. I do think earnings will be great, but future guidance will be cut significantly. Especially, growth stocks.  Remember, the 4th year of a presidency favors value. Holler at growth/value/dividend plays. Choices remain MSFT, VZ, and TOT. I will continue to short growth stocks with absurd P/E ratios. I have been recommending NFLX, but the carnage may or may not be done. 

    To conclude, global growth is stalling or cooling and global indices are in bear markets.  The United States has failed to enter either state, but it remains my belief that it is much more viable for others to drag us down then for us to lift them up. No exceptionalism, just mining the facts. International data has been poor and suggests a slowdown. Europe has wisely chosen austerity over growth. I expect rate cuts in the future as well. The euro should continue to depreciate in value. I have been shorting the EUR via USD through EUO since the Euro fetched almost 1.50. Overall, the problems aren't going away. I don't think this will be a repeat of '10, per growth and indicators are much worse. In the end, dollar strength and global worries will drag the US economy down to recession levels. I think a correction needs to occur to achieve the next boom. 

    Be Massive,

    MM



    Tags: Sipe
    Oct 07 1:49 AM | Link | 1 Comment
  • Massive's Missives
    News of the day:

    1) RIP Steve Jobs. He will go up there with the all time great USA businessmen and visionaries. Irrefutable impact on the lives on millions, and for the better.

    2) Palin not running for president.  Makes me happy.  Too dense to be president.  Would have stolen credence from more qualified candidates, such as Herman Cain.

    Today's Market

    As suggested, if we received good data, we would rally 1-2%. Spot on. Thought it would be bad, so off in that regard.

    Tomorrow

    I really hope there will be little to no speculation on the death of Steve Jobs in relation to the market. Initial and continuing claims come out pre market - with both expected to come in just at the mendoza line of @ 400k and 3700k. Expect a negative revision to last week's numbers. With that being said, a very bullish bias remains, so I don't think we will be negatively effected unless the numbers are abysmal. With the theme of continuing to observe data and draw own macroeconomic conclusions... 

    I plan to synthesize aforementioned US data with the following international relevance

    1) Germany manufacturing orders, which comes out @ 0600 ET
    2) ECB meeting (rates) @ 0745 ET.

    Read this article for a preview of the meeting.

    Personally, I don't think the market will react to jobs or manufacturing data, unless it helps prove the bullish case. The X factor is the ECB meeting.  The implications of their actions and potential rate hold/cut will dominate the market.  The dollar could substantially climb, which never bodes well for the market. ECB could also announce a euro Tarp or whatever you want to disguise government interference in free markets/stimulus/easing/etc. They have the potential to cause a massive rally/ or equally disturbing fall.

    Trading

    I remain in cash, gold, and my brilliant spxu/ yhoo call trade.  Today was down 6% on spxu/ up 100% on yhoo calls...

    5 x -.06 = -.3
    1 x 2 = 1

    profit = .7 units

    If positive data, I will look for healthy stocks to buy on dips and exit quickly.  MSFT and TOT remain my ideal candidates. Conceivably, if ECB does something crazy I will enter out of the money calls on FAS.  Weekly or 10/22 expiration.

    Mid Term 

    I'm really paying attention to the 1160 SP500 level. Pull up the 1 month SP 500 chart. If you notice from 9/16, the trend has been down: lower highs, lower lows. If we were to  close above the 1160 for the week, would serve as a bullish indicator. At the same time, remember bear markets have a funny way of playing out and markets rarely move in straight lines. Continue to be nimble and stick to your convictions.

    Oct 06 12:07 AM | Link | Comment!
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