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Vikram Saxena  

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  • Long Term Treasury Yields Likely to Rise, Pressuring Dollar Lower [View article]
    All the green shoots being sighted are unlikely to grow into trees, if the longer term interest rates continue their upward march. Unless Ben does a Greenspan, and encourages people to use ARMs, the Fed efforts to re-capitalize US consumers via cheaper rates on fixed rate mortgages will be in serious jeopardy if this spurt continues. Long bond yields tend to move in big spurts and the current spurt has taken the yield on the 10 year up by more than 70 bp since the low reached after the Fed's quantitative easing announcement in March. This trend will "Round-Up" the green shoots if not arrested.
    May 1, 2009. 05:14 PM | 3 Likes Like |Link to Comment
  • Is Bank of America Poised for a Major Move Up? [View article]

    I was intrigued by your comments so tried out a log scale. This following link shows how that looks on a 6 month and a zoomed in version (3 month).

    To me even the log graph clearly shows a W shaped double bottom on the right side of the cup. I have marked it with yellow lines. It is a stronger pattern since the second low was higher than the first low. In fact the log chart tends to de-emphasize the steep fall which would have worked against the pattern.

    If you just consider the closing prices (third graph) we can see a V shaped. However this closing low was well (23%) above the intra-day low reached on the capitulation day which had much higher volume. Further the closing prices ignore the true range of the stock especially if the swings are made on high volume. Sure the base is very spiky but we are trading in very volatile times.

    Trade smart and enjoy your gains.

    Apr 13, 2009. 05:40 PM | 3 Likes Like |Link to Comment
  • Is Bank of America Poised for a Major Move Up? [View article]

    The market has thrown out all rules during the past year. Further the scope of the market decline has matched some of the worst bear markets in history. As a result the ratios which may have worked well in the past can not be applied religiously here since the market is not behaving in a manner when those rules were developed and refined.

    As I noted in my article, even if we accommodate for stretched ratios, the pattern is not perfect and has to be traded with a lot of caution. However, there is no denying that the 1st order metrics of the pattern, especially how the volume has behaved during different price periods are close to what Mr. O'Niel suggests (higher green volume bars, rising volume into right side, falling volume during the handle, high volume at capitulation low and breakout days etc.)

    One aspect which I disagree with you quite strongly with you is your claim of a V shaped bottom. I see no V here; I do potentially see a W on the right side of the cup. I also would reiterate the fact that in a market with extreme moves like this, some of the basing action is bound to be more spiky and choppy than more normal times . However the handle over the past few weeks has been much better behaved, reflecting a gradual stabilization the market, which is also being reflected by the VIX.

    This a period where disciplined traders can make money and BAC is one of the stocks with the potential to do so, as long as you are careful about when and where you enter the position and when you take your losses.
    Apr 12, 2009. 10:23 PM | 1 Like Like |Link to Comment
  • Technicals: Where Is the Pullback? What Pullback? [View article]
    After some time in the seat, my conclusion is that Charts do not lie; but fundamentals/economic indicators may have a source bias. To dwell on one while ignoring the other is inviting disaster.

    I did a quick analysis of historical SPX data from Yahoo and a five week up streak is followed by another Up week 52.3% times (since 1950).

    The market is in a bull run; whether it is a bear market rally or a true bull market does not matter much. A disciplined trading approach with appropriate stop loss levels will work in this market
    Apr 9, 2009. 11:15 PM | 7 Likes Like |Link to Comment
  • Some Caveats on Trading Ultra ETFs on Big Move Days [View article]

    What I wanted to highlight was that on trend days with large moves, the 3x ETFs are not to be bought in anticipation of a reversal. Any continuation of the move results in significantly large percentage losses which can not be made up by a reversal the next day in the underlying index to the original purchase point. These distortion exist everyday but their amplitude gets magnified on a day when the underlying index makes a 15% move, cutting the value of the opposing 3x ETF by 45%. A trader who started buying FAZ towards the close of Monday had to endure a much larger percentage loss in his capital for every equivalent move in the index, To profit from the the reversal,the index will have to make a much larger move to break even. on Tueasday.
    Mar 25, 2009. 11:38 PM | Likes Like |Link to Comment
  • Sell the Dollar, Buy the Euro? Think Again. [View article]
    Mistrofan: The issues are:

    i) The size of the debt compared to the total size of the economies both of the debtor nations and the bond holders; think Iceland.

    ii) Currency Issue: A large amount of the debt is issued in Euros and not in local currencies. Investments in Eastern Europe were made in the hope that it will be the China for the Europe. With the slowdown, the exports have dried up, and the currencies have fallen. As a result not only have the assets underlying the debt have become less (or even non producing) but their real ability to service a debt in Euros has gone down.

    iii) Legacy Issues: Some of the Eastern European countries also suffer from the challenge of their communist/socialist past. For example Hungary has a huge pension obligation which lies at the heart of its problem.
    Mar 25, 2009. 07:38 AM | Likes Like |Link to Comment
  • Sell the Dollar, Buy the Euro? Think Again. [View article]
    Some more thoughts:

    1. I also wanted to add the Norwegian Krone (NOK) as one of the key currency to go long against the Euro. The Krone has a strong commodity link and the Norwegian economy is one of the best when it comes to fiscal discipline.

    2. Among the long currencies I will under-weigh the Canadian Dollar with relation to the AUD, NZD and the NOK. The Canadian economy is too closely linked to the US, a correlation I would like to reduce in this trade.
    Mar 23, 2009. 01:33 AM | Likes Like |Link to Comment
  • Sell the Dollar, Buy the Euro? Think Again. [View article]
    I do recognize that the USD is going to be under-pressure because of issues which are very well known. However my article's focus was that the rush to the Euro is unjustified.

    Imagine, a dozen Treasury Secretaries, all with different political and economic compulsions, trying to come to a consensus. The ECB was clearly wrong last spring when they could not get off the inflation band-wagon leading to the rapid decline of the Dollar and the subsequent oil bubble, which weakened of the US consumer-base.The Germans, who are typically against bail-outs were the first in Europe to bail-out a major corporation!

    The global economic picture will either worsen or get better. However the Euro is not positioned to benefit from either scenario.

    In the positive scenario, the currencies which are likely to gain are the once which do not carry the baggage of a damaged financial system, have some organic domestically driven growth capability, and can participate in any upswing in the world economy. The commodity sensitive currencies fit the bill best.

    In the negative scenario, where the global economy continues to worsen, major new shocks are much more likely to come from Europe than the US. If risk appetite decreases further, the bias will be to head towards the safest bets where the uncertainty element is the least. This includes the USDollar, and perhaps the Japanese Yen. The Euro will not be the safe-haven of choice, when it is not clear who is in control, what their plan is, which nations are next in line to join the union, or in some cases even thinking about leaving the Union.

    And in times of crisis, the psychological significance of military strength should not be discounted. Europe has been getting a free-ride on the US Taxpayers via the NATO umbrella, when it comes to defense spending. If that situation changes, it will have a negative impact on European economies.
    Mar 22, 2009. 01:49 AM | 1 Like Like |Link to Comment
  • Boeing's Bad Balance Sheet May Doom It [View article]
    There is a big difference between Pension Fund Assets going to zero (or negative) and the over-funding going to negative. With stock prices cut in half in six months it is not a surprise that the excess in Pension Funds is no longer available.

    What would have really helped is an analysis of how the damage to balance sheet might force Boeing to raise capital at significantly depressed equity price levels. Further is there any indication that Boeing's ability to raise debt is impaired (CDS spreads widening, ratings falling etc.)?
    Feb 28, 2009. 10:08 AM | Likes Like |Link to Comment
  • Trading the Crude Oil Contango with Two ETFs [View article]
    The issue is the amount which each fund rolls over versus the magnitude of the contango. USO rolls over all contracts; USL rolls over only 1/12th. So the impact of the contango is more on USO than USL. Note that since USL rolls out to the contract one year out, the size of the contango can be significantly higher than the contango on with the next month which USO rolls into. But unless the annual contango is 12x higher than the monthly contango, USL will outperform USO around the roll time.
    Feb 18, 2009. 08:41 AM | 2 Likes Like |Link to Comment
  • Clearance Sales and Sony Pricing Power [View article]
    Sony was able to command a premium because in the Analog world their products provided better results which consumers could feel with their senses. With Hi-Def TVs the gap between the best quality product and the average product is not that drastic. Similarly MP3s/portable music players have reduced the focus on the quality of sound reproduction. As CEs penetrate emerging markets the price premium for incrementally better quality will be even harder to maintain, and volumes will be king. Pioneer, the leader in high quality Hi-Def TVs has decided to exit the market completely. Lifestyle brands like B&O or even Bose have a better chance to command a higher price than Sony or Pioneer, since like Apple they offer differentiated products which have a unique appeal.
    Feb 15, 2009. 02:32 PM | 1 Like Like |Link to Comment
  • Distressing Details of the UltraShorts [View article]
    In a non-trending market with a lot of ups and downs, both the long and short Ultra funds will not return 2x the result of the underlying. This is a simple mathematical result and not some voodoo; the result of these funds resetting their relationship with the underlying every day. These funds are best used as trading vehicles for swing trading; zig-zag direction will affect their results.
    Jan 24, 2009. 10:28 AM | Likes Like |Link to Comment
  • How the iPhone and Poor Management Contribute to Apple's Downfall [View article]
    Most CEOs would love to be able to be in a subscription based model, with virtually guaranteed revenue going out many quarters. Many software companies, especially those selling to enterprise customers want the same. Even consumer software sellers want users to subscribe to the use of software on any annual basis. AAPL is suffering because there is a huge dark cloud hanging over consumers. At under 100, it is the steal of the year, given their huge cash balance, their unique position as a must have product, their deferred revenues and impressive supply chain which delivers a personalized iPod to your door in a few days!
    Jan 22, 2009. 09:25 AM | 1 Like Like |Link to Comment
  • ICICI Bank: Bellwether Emerging Market Short [View article]

    Have you looked at the food and energy futures lately, or the level of inflation in India lately? Your predictions of the demise of the Indian Middle Class are greatly exaggerated. In spite of all the talk of outsourcing in the West, India is primarily an organic growth story; and that story will not change till the hundred of millions of poor Indians aspire to reach a standard of living close to the lower middle class. Short term asset price bubbles will occur, but in India they are much better supported both by income and demographics.
    Dec 20, 2008. 02:10 PM | Likes Like |Link to Comment
  • Great Depression Not Imminent, But Inevitable [View article]
    The author's basic premise is that the lack of insurance providers will significantly limit business as usual in the more riskier markets/projects where CDS were needed to hedge risk. To me this is another way of saying that investors will be a lot more prudent in their investments and do their own due diligence instead of just buying CDS to hedge a part of the risk.

    What would really help is an estimate of the size of CDS secured projects with relations to the total number of projects. Is that size significant enough to cause a depression?
    Dec 20, 2008. 01:59 PM | Likes Like |Link to Comment