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Playing the Ponzi

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  • Commodities And Emerging Markets Update [View instapost]
    My short answer to your questions is "no idea." Philosophically, I try not to worry about trying to figure out causality behind price movements. I just watch the price action as a proxy for investor sentiment and try to notice when it seems to have gotten to an extreme and seems likely to revert toward the mean.
    On one hand, last week's reversal in the S&P was fairly predictable. It happened right on a trendline that's support 11 reversals since 2009. On the other hand, a lot of individual action surprised me. EWZ broke above resistance, as you noted. For my own trading dollar, I would want to see another week (or two) of upside follow through to consider the resistance well and truly broken. It is not uncommon for a temporary break to occur. EWZ has broken above the same trendline (and closed the week above it) in the past. So to me, it's still an open case. If/when it does break out, it would seem there is plenty of room to rally before resistance. Same with EEM.
    GDXJ surprised me by continuing its beatdown, falling all the way to a double support line. JJC surprised me by rallying back to resistance. JO shocked me by rallying (6+%) back to resistance. But in all of those cases, the above charts reads are still in play. None of those reads have been confirmed or denied yet, imho. We'll see how they play out.
    Apr 18 10:15 PM | 1 Like Like |Link to Comment
  • BofA talks mobile, cost cuts, legal reserves on earnings call [View news story]
    BAC is one of my favorite shorts. A rising bearish wedge since '11 has shown the market coming to an increasingly universal agreement on a price well above the 3 year mean average. Such agreements on price are usually wrong. And technical support is now broken. Follow-through to the downside usually ensues.
    http://bit.ly/1hUTyzB
    Apr 16 09:59 AM | 1 Like Like |Link to Comment
  • Treasurys give up gains after dive in jobless claims [View news story]
    So amusing to see good news for the economy as bad news for equities, and vice versa day after day.
    Apr 10 02:09 PM | Likes Like |Link to Comment
  • State Street Investor Confidence Index drops for March [View news story]
    February and March provide the two highest readings on record (dating back to just 2005). SSIC last peaked in March 2007 at 118ish.
    Mar 25 10:34 AM | Likes Like |Link to Comment
  • The Fed and Treasury are examining the extent to which Bloomberg terminal usage by top officials was tracked by Bloomberg journalists. Bloomberg reporters were reportedly using terminal login data "very openly" to determine when traders were suspended or let go during the London Whale situation. Another report says Bloomberg employees accessed a transcript of a call of former Fed Chairman Alan Greenspan to the company's help desk. [View news story]
    That is indeed often the way it goes, Cliff. I also recently saw reports that reporters "extracted private information", which I had previously missed (I guess I should do less skimming of stories). That certainly sounds like a pretty clear cut breach of ethics if it is what it sounds like. So maybe I ought to retract my previous comment.
    May 11 07:53 PM | 1 Like Like |Link to Comment
  • The Fed and Treasury are examining the extent to which Bloomberg terminal usage by top officials was tracked by Bloomberg journalists. Bloomberg reporters were reportedly using terminal login data "very openly" to determine when traders were suspended or let go during the London Whale situation. Another report says Bloomberg employees accessed a transcript of a call of former Fed Chairman Alan Greenspan to the company's help desk. [View news story]
    I have never used a Bloomberg terminal, so maybe I'm missing something, but I fail to see what would be wrong with identifying when/whether someone is online. From what I understand, users have the option of making themselves appear off-line. Isn't prying what journalists are paid to do? I fail to see what's wrong here (and I was a journalism major... then again, maybe that's why I work as a propagandist rather than a journalist).
    May 11 06:27 PM | 1 Like Like |Link to Comment
  • On the surface, today's selloff in gold has all the earmarks of a dollar-related move. After all, the Dollar Index has risen nearly 2% over the past two days. Couple that with the standard Friday jitters, its only natural for support levels to be breached today. However, Oppenheimer's chief market technician Carter Worth says today's action all part of a bigger technical move. "A multi-year bull market has transitioned to a bear market," Worth says, and "the backing and filling of late is the normal setup for the next leg down." [View news story]
    I agree with Carter. Gold broke its decade-old trend line support, rallied back to that line and was soundly reject this week.
    http://bit.ly/YNdJwu
    I am short GLD, but I will also be using the sell-off that may persist to accumulate more of the real stuff. I suspect the difference between the listed priced of (paper) gold will continue to gradually separate from the price of the physical stuff. Until Central Banks self-destruct, there is no reason to stop buying the real stuff. I don't buy gold because I think it will go up X per anum, I buy it because I expect to wake up one morning and have my paper buy markedly less than it did the night before. Gold is simply an insurance policy (and maybe not the best one) for that scenario. In that sense, I completely agree with those who commented before me. But in terms of the chart, I agree with Carter that this looks like a good spot to short GLD.
    May 11 04:38 PM | Likes Like |Link to Comment
  • President Obama is likely to approve a GOP proposal to suspend the debt ceiling until May 19, which has the backing of Senate Majority Leader Harry Reid as well. The House is due to vote on the measure today, with the bill also requiring both chambers to pass budgets by April 15; if they don't members' salaries would be withheld. [View news story]
    It's tricky to buy into the bull story when you believe it's a bull(s--t) story.

    Do you play the short game (long) or the long game (short)?? It feels just like 2005 or so...
    Jan 23 10:17 AM | Likes Like |Link to Comment
  • Bank of America (BAC +2.2%) takes out a new 52-week high, rising on back of the Citigroup's plan to cut 11K jobs. Citi will take a $1B charge in Q4, but save more than $2B over two years - a pretty nice return on investment. The XLF +0.7%[View news story]
    Exactly, divestor. It's a sick cycle where tax policy favors larger corporations, and with the majority of large corporations publically owned, each penny in each quarter's results is the overwhelming emphasis - not providing jobs or supporting a local community. Profit is not enough. A lot of profit is not enough. No, it must be more profit than was projected by Wall Street. Anything less and the stock will be punished... so we get this sick cycle where cutting jobs to make more money in profit is an applauded exchange, regardless of how much profit the company was already making.

    No doubt that money will serve a far greater purpose sitting in reserves (or in SPY futures, as might be more likely) than it would providing food, shelter and consumption fuel for 11K human beings. Right.

    There is no sense of corporate responsibility to a community. No doubt the explosion of multi-national monoliths is the overwhelming factor in the dehumanization of communities in the eyes of executives, but it is still sad, and will still prove to be destructive in the long run, imho.
    Dec 5 09:55 AM | 1 Like Like |Link to Comment
  • More on Pending Home Sales: At 104.8, the index is up 13.2% Y/Y and - taking out spikes surrounding tax credits - at its highest level since March 2007. Gains were led by the Midwest and the South, but the West and Northeast both saw small declines last month. [View news story]
    Still here, Tack. I hope and expect a housing rebound to continue. Like many, my house is my single biggest "investment" stake too, so I'm certainly rooting for it. :)

    I just think better news is priced into ETF's like IYR and ITB than will be justified in the coming months. That doesn't require that houses stop being built or start selling for 20% less, just a little miss on the 100% price increase that's been priced into those securities via expectation.
    Nov 29 01:36 PM | Likes Like |Link to Comment
  • Thursday Morning, November 15, 2012 - Premarket Short Term Update [View instapost]
    I love coffee here and have been accumulating over the last few weeks, though I definitely don't qualify as "smart" money.
    Nov 28 03:37 PM | 1 Like Like |Link to Comment
  • Oct New Home Sales: 368K vs. 387K expected, 369K prior (revised). [View news story]
    I agree that in terms of real numbers one would hope there is nothing but upside for the housing market from these still-depressed levels. But in terms of securities, ETF's like IYR (Real Estate) and ITB (Builders) have rallied hugely for the last year. They have already priced in a couple rounds of good news. Anything short of significant strength will disappoint what's priced into them, imho. I am short both since I expect less strength than apparently the market does.
    Nov 28 10:37 AM | 3 Likes Like |Link to Comment
  • Uncertainty over the “fiscal cliff," the pending jump in capital gains taxes at the start of the new year and the looming debt ceiling that will be reached in late February all represent significant downside risks to the market over the near term, according to a new strategy note by Goldman Sachs. When those risks are factored in, Goldman thinks the S&P 500 could fall another 8% by the end of the year - and that's on top of the 7% decline we've already suffered since the year’s high reached in September. [View news story]
    Tack,
    I am not staunchly dug in on the short side. I saw the same as you did on Friday and took most of my short profits off the table from various Puts, and added some long positions. All told, I am leaning long at the moment, and despite the pessimism I hold beyond the very short term, and I am open to remaining long. But I do expect to layer in some new Put options if/as the market continues to climb deeper into downtrending resistance from its recent top. If it breaks cleanly above the resistance I see, I'll capitulate on my short thesis for now.

    I agree with you about some of the heavy capitulation on Friday. I bought into Apple as it set up beautifully for an entry (and I'm an AAPL bear and hater - but the set up was too attractive to ignore). But this capitulation could just be temporary as in the bigger picture, sentiment isn't especially negative. And as I noted above, the huge rally we saw on Monday is far more common in Bear markets than Bulls.

    You noted that financials have held up well. But it seems to me that they haven't really provided market leadership - up or down - for over a year now. The financials were not among the clue-givers to this most recent top and sell-off, so I'm not sure I see their relative strength as a sign that the broader market can't weaken. But I do agree with you that they are showing relative strength and that is traditionally a market positive.

    I suppose we shall see soon enough. That's what makes gambling fun.
    Nov 20 09:41 PM | Likes Like |Link to Comment
  • Uncertainty over the “fiscal cliff," the pending jump in capital gains taxes at the start of the new year and the looming debt ceiling that will be reached in late February all represent significant downside risks to the market over the near term, according to a new strategy note by Goldman Sachs. When those risks are factored in, Goldman thinks the S&P 500 could fall another 8% by the end of the year - and that's on top of the 7% decline we've already suffered since the year’s high reached in September. [View news story]
    Yep, we're on the same page. I think we might get a little higher yet to shake out the current "oversold" condition and get deeper into technical resistance, but like you, I think we're heading lower in the months ahead.

    And I agree that Monday's blow-off was relief and short-covering, little more.
    Nov 20 04:01 PM | Likes Like |Link to Comment
  • Uncertainty over the “fiscal cliff," the pending jump in capital gains taxes at the start of the new year and the looming debt ceiling that will be reached in late February all represent significant downside risks to the market over the near term, according to a new strategy note by Goldman Sachs. When those risks are factored in, Goldman thinks the S&P 500 could fall another 8% by the end of the year - and that's on top of the 7% decline we've already suffered since the year’s high reached in September. [View news story]
    Interesting, I'm not sure I follow you're reasoning . It seems like you're saying 500 point days were the norm a year ago and this relatively small move (you call it a "blip") is not bullish (I'm taking your question to be rhetorical and skeptical). If that is what you are saying, then we are in agreement. I don't think Monday's big rally is bullish. What I said, and what you'll find if you like at the 30 largest single day gains in market history, is that the overwhelming majority of them occurred in the midst of bear markets. In other ways, a rally this sharp and big is more typical of a bear market over-sold snap rally than a sustainable bull market or even a major reversal.

    As an aside, I do expect the rally to continue a bit higher, but I suspect we will move to new lows after that.

    As for 2011 here were the 20 biggest single day gains over the last 20 years: http://bit.ly/TdLPEt
    Nov 20 09:00 AM | Likes Like |Link to Comment
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