by phil - November 1st, 2014 7:26 am
And we're back!
Quite the recovery since last week so I figured we'd better take another look and go over our positions to make sure we're well-balanced. We're UNbalanced in our recovery, with less volume and more height than we've had before. Technically, we're looking bullish but, Fundamentally – there are still a lot of questions.
We'll discuss outlook and such in the Member Chat Room over the weekend, this article is just to check our balances, not an extensive review like we had last week. I'm on the way to Vegas today ahead of our Live Seminar next weekend (last chance to sign up), so I'm just going to note the items I think need adjusting this morning.
As an overview, last week our LTP was up 19.2% for the year at $596,170 and our STP was up 94% at $194,183 for a total of $790,353 (up 31.7% overall) following our aggressive strategy. As of Friday's close, the LTP had climbed to 21.5% ($607,710 and the STP fell to 82.5% at $182,498 for a total of $790,208, essentially flat at 31.7%. We turned more bearish on Wednesday and it may have cost us some gains but our aim into the end of the year is to lock in these profits, not "go for it."
The more conservative Income Portfolio was up 2.4% last week and finished yesterday up 8.5% at $542,304. Combined with the hedges in the Income Portfolio, that pairing is at $734,538, up 22.4% for the year and miles ahead of our 10% goal.
Our Butterfly Portfolio was as boring as its supposed to be, up 18.7% last week ($118,740) and up 18.1% today. The $25,000 Portfolio slipped from $30,745 to $28,802 as we added two bearish plays that, so far, have not worked out.
The reason we flipped more bearish this week was because we are back in the tops of our channels now AND we're heading into an election where, no matter who wins, half the people will be disappointed – that could lead to a small sell-off at least, along with a dozen other bad things that are going on in the world that we've decided to ignore again while the market engages in…
by phil - October 31st, 2014 7:49 am
She knows how hard her heart grows under the nuclear shadows
She can't just escape the feeling repeating in her head
When after all the urges some kind of truth emerges
We felt the deadly surges discovering Japan – Graham Parker
The shorts are certainly getting a scare this morning as the BOJ hands out another $124Bn (yes, we did the relative math in this morning's Alert to our Members) and that was more than enough to pop the Nikkei 5% in 90 minutes, with the /NKD Futures now testing 16,850 – almost catching up to the Dow for the 3rd time in 2 years.
Unfortunately, each time the Nikkei has matched up with the Dow's gains, it's marked and overbought top and led to a sell-off so we were forced to officially reverse our long call on Russell Futures (/TF) from yesterday morning's post and flip short at 1,169 (with tight stops over 1,170). That's OK though because a move from 1,132.50 to 1,169 on /TF is a profit of $3,650 per contract – not bad for a day's work, right?
See, I told you we could pay for your trip to our Las Vegas Live Seminar next week with a Futures trade!
Not that we advocate holding Futures positions overnight – it could just have easily gone the other way. That's what Wednesday's TNA spread was for – the longer-term long position on the Russell, which will pop TNA well over our $80 goal this morning – that trade has a 316% profit potential in less than a month!
by phil - October 30th, 2014 7:54 am
It doesn't matter what the Fed did yesterday.
Let's make that clear at the start. The Fed has been tapering all year but what they have been tapering is their INCREASE in bond buying and thank God they have because the Fed balance sheet is now over $4,000,000,000,000.00 – that's a lot of money!
As noted in the chart above, $4Tn is the entire GDP of Germany or Japan, the level of stimulus has added up to 22% of our GDP since 2009 or about 4% a year. Our GDP is only 2.5% WITH the 4% added stimulus – what will it be without it? Fortunately, we don't actually have to worry about that because the Fed will be rolling that $4Tn over, at a rate of roughly $800Bn a year to keep the party going forevermore.
This is what is misunderstood by – well pretty much everybody. The Fed is not cutting us off, they are just not adding to the already biblical levels of stimulus we've grown accustomed to.
As each Fed bond or other asset is redeemed, the Fed will still buy a new one to replace it. And, since our Nation's NEED for money has decreased by 2/3 – it means they are now buying a SURPLUS $300Bn or more of assets each year. Hmmmm, now who will that be bailing out I wonder?
That's right, the Fed will continue to pump $300Bn or more each year into the coiffers of our beloved Banksters for many years to come. The more Obama reduces the deficit, the more money (our money) the Fed can funnel to their Bankster buddies – what a fantastic system – don't forget to vote for more of the same on Tuesday! .
On the whole, we don't really give a crap. We pretty much cashed out our Member Portfolios with huge profits for the year and that leaves us free to have fun day-trading and playing the futures while we get ready to enjoy our holidays.
by phil - October 29th, 2014 7:24 am
Check out this chart:
That's the NYSE McClellen Oscillator, which hasn't been this high (overbought) since July of 2011, when the S&P plunged from 1,345 to 1,123 (16.5%) in 4 terrifying weeks. Yesteday's rally was a very low-volume affair 101.3M on SPY (about 60% of normal) and we were goosed by Peter Schiff on CNBC at 1:10 pm, claiming QE4 was right around the corner:
Ahead of tomorrow's decision by the FOMC, Peter Schiff ventured on to CNBC to discuss the economy, the fed, and gold… among other things. Schiff rightly fears that while the Fed may well stop QE3 tomorrow, QE4 will not be too long behind it as he notes, rather eloquently, that "an economy that lives by QE, will die by QE" as the Fed's total lack of willingness to allow stocks to fall (see Bullard 2 weeks ago) or a 'cleansing' recession leaves the nation's economy in far worse shape than it was before the Fed's intervention. Schiff calmly replies to the anchor's questions (as she proclaims "I am not on the side of the Fed but…"), gently explains his view on gold when challenged about his 'wrongness', but when a guest starts hounding him for being dangerous to CNBC viewers wealth… Schiff (rightly) loses it – must watch!
It seems bulls are confident the Fed will end QE on schedule and at the same time give bulls dovish comments about conditions (“don’t mess with us”!) going forward. Many pundits are discussing interest rates remaining unchanged for several years and longer.
That means companies like IBM can continue (another $5 billion share buyback announced today) their financial engineering to lessen float making it easy to report better earnings at the price of future innovation and company growth. But bulls don’t care about future growth, only what takes place now. Besides, this is the
by phil - October 28th, 2014 8:03 am
More free money today as Japan backs off their tax hike and Sweden cut rates to ZERO.
Don't worry, Japan isn't going to take that lying down and their 3-month bills are now -0.037% and, you may wonder who the Hell would buy those but the BOJ is buying those securities from the banks for -0.15%, so the banks that buy the 3-month bills are able to flip them for a 4x profit a day or two later – isn't that special?
Are we reaching peak insanity on Central Bankster Manipulation? Maybe… Japan's 10-year bonds are now 0.46% and 20-years are 1.3%. 2-years are still positive, at 0.005%.
“Financial companies know that the BOJ will always buy government debt from them, and that’s part of the reason why bill yields became negative at an auction,” said Kazuhiko Ogata, chief economist at Credit Agricole SA in Tokyo. “The BOJ needs to buy treasury bills as well as JGBs in order to meet its monetary-base target.”
Meanwhile, the cost of credit-default swaps on JGBs rose 51 basis points yesterday, back to the year's highs and only Greece is worse to insure than Japan this year as Japan's total debt went up to 1.039 QUADRILLION YEN (that's 1,000 Trillion!). Even Zimbabwe is saying "WOW!" to that number!
BOJ policy makers have denied that they are financing government deficits, saying that government bond purchases are aimed at achieving their price target.
“It’s becoming obvious that the BOJ’s easing in its current form is not sustainable,” Akito Fukunaga, director and chief rates strategist for Japan research at Barclays, another primary dealer, wrote in a report on Oct. 24. “The BOJ may make technical adjustments to allow unlimited buying of notes maturing in five years or less.”
by Sabrient - October 27th, 2014 7:49 am
Courtesy of Sabrient Systems and Gradient Analytics
Bulls showed renewed backbone last week and drew a line in the sand for the bears, buying with gusto into weakness as I suggested they would. After all, this was the buying opportunity they had been waiting for. As if on cue, the start of the World Series launched the rapid market reversal and recovery. However, there is little chance that the rally will go straight up. Volatility is back, and I would look for prices to consolidate at this level before making an attempt to go higher. I still question whether the S&P 500 will ultimately achieve a new high before year end.
In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable trading ideas, including a sector rotation strategy using ETFs and an enhanced version using top-ranked stocks from the top-ranked sectors.
I am in NYC this weekend between trips and visiting my daughter at college, so I’ll keep this short. After some profit protection kicked into gear in the face of an exaggerated Black Swan scare around Ebola, along with all the other usual worries about slowing global growth and terrorism (and the delta-hedge short selling associated with options expiration), investors finally came to their senses. The S&P 500 enjoyed its biggest week of the year (+4.1%), and yet active investment managers (including hedge funds) are now underinvested after dumping shares during the selloff.
As I said in last week’s article, investing is about stacking the odds in your favor, and the more severe technical conditions become, the greater the odds of a bounce or outright reversal. So far, it appears that a classic V-bottom reversal scenario is trying to play out.
But I seriously doubt it will be party time again for the more speculative names. A high-quality balance sheet has become very important. New market psychology has set the stage for lower equity correlations, selective stock picking, and capital flight to the highest quality companies, i.e., those with strong market position, solid cash flow, and low debt levels.