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Thomas Sobon

 
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  • Bull Market Continues, But Will Cash Be Summertime King? [View article]
    In effect, the stock market is a house of cards and the bigger fool theory will prove to be the correct approach to participating until the day of reckoning comes. What amazes me is that during the last 18 of 21 trading days, the market moved sideways and then trended higher even though the volumes of shares traded were below the 45 day norm. For the 21 days referenced, by an average of minus 13%. This is very uncharacteristic of a sustainable bullish move in the market. But, when you are in a barroom environment you should either drink up or get out. Which ever course you choose, remember that you are the designated driver when it comes to managing your investment portfolio.
    May 31, 2014. 09:51 AM | 7 Likes Like |Link to Comment
  • Forward T-Bill Rates Drop 0.24% On The Long End, Projected 10 Year Treasury Yield In 2014 Down 0.15% [View article]
    Itscalled,

    You are absolutely correct with your comment. Therefore, instead of using a fundamental analysis approach when coping with rates, it is better to use technical analysis and just settle for being able to identify trends and reversals as they occur. Anybody using a fundamental approach is likely to go wrong with confidence.
    May 30, 2014. 11:00 AM | Likes Like |Link to Comment
  • Beware The Placid Island Of Investment Ignorance [View article]
    Eric,

    An excellent overview of what has been pervasive behavior of the investment community in recent years. You might have included the REITs with the other asset groups that you referred to. No where was the performance more dramatic than with them during the run-up to the peak in mid 2013 and the subsequent trough that followed. But the performance of all the groups referred to appears to be repetitious and the same peaking process will likely occur again at some not too distant date. This tale sort of reminds me of Pavlov and his dogs.
    May 29, 2014. 09:52 AM | 1 Like Like |Link to Comment
  • It's Really Quiet Out There [View article]
    Joseph, Thanks for the bird's eye view of what's going on around the world; very comprehensive. It may be the calm before the storm. You might have pointed your finger at the do-nothing Congress and put the blame on it for our lackluster economy and weakening the position of the U. S. in world affairs. A substantial infrastructure program could work wonders but the right wingers are against anything that would make the Administration look good.
    May 27, 2014. 09:03 AM | 1 Like Like |Link to Comment
  • Stocks Need To Breakout Before They Breakdown [View article]
    baerrus,

    You may have to use the published figures relating to volume. I have an extensive workbook in which I track some 400 stocks, ETFs, interest rates, etc. I use the RSP as my overall barometer on the market. But I also calculate my own index which I call the S280 which is equal weighted but some stocks have less than one weight. I use index numbers so the S280 is not distorted by high or low priced stocks. GLW is a low price stocks and it has the same weight as APPL which is high priced. The S280 correlates highly with the RSP. I then calculate a volume index by using index numbers that show each day's volume against its 45 day moving average. This way the high volume stocks don't distort the importance of the low volume stocks. As a result I get a truer picture of what is going on in the market. I developed my workbook over a period of about 30 years when I started from scratch not even knowing how to program a computer. The program is now about 17 megabites in size and I am continually refining it. But updating only takes about 3 minutes and I often update on an intraday basis.

    If you want to see what I look for when I prospect for individual stocks, take a look at the chart that is included in the article I wrote on EXR a few months ago. I do a lot of work on the general market and my goal is to trade 4 issues: SPXL, SPXS, TMF and TMV which are all 3X leveraged. I would also be interested in trading special situations, EXR is an example of what I consider a special situation. I really would like to concentrate on the SPXL and the SPXS but the low interest rates have caused the market to levitate to lofty levels while avoiding corrections.

    I am about the same persuasion as Eric Parnell when it comes to the market and especially the Fed with its misguided QE policies. I doubt his opinion of Ben Bernanke and his ilk is any lower than mine.
    May 27, 2014. 01:55 AM | Likes Like |Link to Comment
  • Pictures At A Stock Market Exhibition [View article]
    Brian, here is a quote from Emerson's brilliant essay on politics written about 200 years ago.

    “The society always consists in the greatest part of young and foolish people. The older and wiser people, however, know all about the hypocrisy of courts and politicians” … “Year after year, property will write every statute that respects property. What the owners wish to do, they will do either through compliance with the law or in defiance of it.”

    I fully agree with your point of view. The banks have the most powerful lobby in Washington. The politicians and especially those on right are in their pockets. There is no way that we are going to see the kind of reforms that you and I would like to see take place. In a perfect world the reforms would be automatic. But ours is an empirical world and it will remain so until the arrival of Judgment Day. I think it would be a huge victory for justice in just one of the major bankers was sent to jail to set an example for the other rascals. But any victory would be short term in nature. They would still find ways to corrupt the system.
    May 26, 2014. 05:31 PM | Likes Like |Link to Comment
  • Stocks Need To Breakout Before They Breakdown [View article]
    Eric,

    I believe that one of the key indicators of what moves the market will be the volume of trading. During 17 of the past 22 days, the volume was below the 45 day moving average. It averaged 23% below average during the last 5 days. Thanks to the misguided policies of the FED and their low interest rate goals, investors are holding on to stocks because they can't get an attractive return on bonds. The dividend yield on the S&P Equal Weight Index is a meager 1.4%. And, they don't want to sit with cash. Treasury notes and the long bond are 200-250 basis points (at least) below historical norms. When the day of reckoning comes, the correction could easily be the 30-50% that you alluded to.

    I am eager to load up on the TMV but I have to wait until there is some evidence that it may be making a hard bottom. At some point in time, this could be the buy of the decade. Until then, trading it is a crap shoot. However, I have had some success doing very short term trades with both the TMF and the TMV.
    May 25, 2014. 09:23 AM | 3 Likes Like |Link to Comment
  • The Greatest Farce On Wall Street [View article]
    Capt.

    Remember those insightful lines from the movie Red October: A high level politician says, "I am a politician and that means I am a liar and a cheat. When I am not kissing babies I'm stealing their lollipops." Well, consider the self-serving statements made by prominant people on Wall Street as well as those at the Fed and in the do-nothing Congress. But such is not newly invented behavior and there is always a silver lining somewhere. It is up to each of us to find it.
    May 24, 2014. 08:28 PM | 1 Like Like |Link to Comment
  • The Greatest Farce On Wall Street [View article]
    Capt. you forgot to mention that they are also looking to generate investment banking business.
    May 24, 2014. 02:25 PM | Likes Like |Link to Comment
  • The Greatest Farce On Wall Street [View article]
    kevin, if I am around when that day comes, I will run outside to see if the sky is falling because Judgment Day must has arrived.
    May 24, 2014. 12:56 PM | Likes Like |Link to Comment
  • The Greatest Farce On Wall Street [View article]
    The dog and pony act is used by spokesmen for the Fed as well as the principals on Wall Street. We are stuck with their propaganda and the best thing to do is ignore it. Everything is done to put a positive spin on whatever happens to make things look good. In a perfect world this would not happen. But thanks to such charlatans this is not a perfect world. They have axes to grind and they do their best to further their own biased interests. The one rascal that I dislike the most is Bill Dudley of the NY Fed.


    You have to understand that the world is not flat and it's not round, it is crooked.
    May 24, 2014. 12:17 PM | 1 Like Like |Link to Comment
  • Pictures At A Stock Market Exhibition [View article]
    Eric, if you can't learn from history, you just can't learn. The market crashed in 1929 and it wasn't until 1954 that it got back to the 1929 level. Good article and cogently written.
    May 23, 2014. 09:34 AM | 3 Likes Like |Link to Comment
  • The New Widowmakers [View article]
    biogiant &heliskiier,

    At some future date, the TMV could become the buy of the decade. However, if you look at the price chart you'll see that the stock is in a well defined downtrend as it makes new lower short term highs followed by new lower short term lows. At this point in time, it looks like it will continue to trend lower. Until there is evidence on the price chart that a tradable bottom is in place, the TMV and the TMF could be excellent trading vehicles providing one is a nimble trader. Gains or losses of 5-7% could be realized in a few days. Once a bottom has been identified, a # tactic would have merit. Until then, buy to hold will be a crap shoot.

    The interest rates extant on Treasuries are now about 200-250 basis points below historic norms. A reversion to those norms could result in gigantic gains for the TMV and the TBT. But much depends upon timing. I think it is too early to buy and hold those ETFs. And, I like the idea of trading them right now. When it comes time for me to sell the MTV, I might even buy the TMF. Its a tricky maneuver but I like the idea of gambling when I know that the FED is still looking to suppress any increase in rates. It only takes a swing of 15-20 basis points over a couple of days to move the TMV or the TMF 5-7%. I think both of them will continue to fluctuate widely in coming days much like they have during recent months. If you can cope with the volatility, this is the best game in town.

    Best wishes to all. And thanks to Joseph for posting such an excellent article.
    May 22, 2014. 07:32 PM | 1 Like Like |Link to Comment
  • Can The Stock Market Stand Naked? [View article]
    furner,

    Things endure according to the amount of virtue they contain. The Fed and the do-nothing Congress have bastardized sound economic and fiscal principles to large degrees for a long time. Some day the bill will fall due and I doubt that anybody can foretell how big it will be.

    Some lines from one of my favorite poems read a follows: "Ye fearful souls fresh courage take the clouds you so much dread. Are filled with mercy and shall break with blessings on your head." I guess the moral for each of us is to be diligent about the things we can control and be prudent in the way we respond to that which we can't control. As investors, the ways we manage our personal portfolios will determine our outcomes. BUT THEN, isn't that the case in good as well as bad investment environments? With that thought in mind, isn't the current environment much like any other?

    In this article Eric stated what he was doing to cope with the situation extant. If he can do it prudently, why not everybody else?
    May 19, 2014. 09:35 PM | 1 Like Like |Link to Comment
  • The New Widowmakers [View article]
    Very cogently stated.
    May 19, 2014. 02:38 PM | Likes Like |Link to Comment
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