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Archive for 2009

Illusion of Prosperity?

Courtesy of Leo Kolivakis


Submitted by Leo Kolivakis, publisher of Pension Pulse.

Peter Boockvar, equity strategist at Miller Tabak. recently appeared on Tech Ticker claiming “it’s dangerous to short this market”:

Despite a penchant for bearishness, Boockvar says the rally can continue as long as the Fed keeps rates at zero.

 

“When you cut rates to nothing you’re encouraging people to take risk,” Boockvar says. “As long as asset inflation is [the Fed's] goal, the market could go higher but there are obvious consequences,” including inflation, as discussed here.

 

The Fed is trying to create “the illusion of prosperity” by fueling asset price appreciation, Boockvar says, staying true to his reputation as a deficit hawk. Even if the U.S. stock market keeps rallying, “non-dollar assets” like commodities and emerging markets will continue to outperform, he says.

 

Unlike the U.S., emerging markets are “not weighed down by enormous debt levels” and local consumers are “much better off” than their American counterparts, the strategist says, expressing a strong preference for China.

 

“If you want exposure to global growth, it’s going to be outside of the U.S.,” he says, recommending the following:

  • Follow the Money: Buy China-specific and Asian ETFs or mutual funds.
  • Go for Gold: A longtime gold bull, Boockvar says a correction could be coming because “the trade has gotten crowded” and Ben Bernnake’s recent comments about the dollar could spur a reversal. But “buy on any sharp pullback,” he recommends, suggesting gold is very likely to revisit its inflation-adjust high of $2300 “in the next few years.”
  • Reject Domesticity: Avoid U.S. retailers, REITs and consumer-focused financials, Boockvar says, suggesting the U.S. economy and consumers will be under pressure for the foreseeable future. “If you want to invest in US, invest in companies with big exposures overseas,” he says. “The growth is not going to be there in the U.S. “

As it turns out, last Tuesday I was in Toronto for a Global Insights conference where I got to listen to a senior economist for the IMF. She was excellent and she highlighted a few themes that that I outline below:

  • The IMF is acutely aware that excess liquidity is bidding up risk assets globally. They are particularly watching developments in China where a


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New York State's Toxic Spiral: Preparing For The Moody's Axe, As Cash Flow "Crunch" Accelerates

Courtesy of Leo Kolivakis


Submitted by Leo Kolivakis, publisher of Pension Pulse.

Peter Boockvar, equity strategist at Miller Tabak. recently appeared on Tech Ticker claiming “it’s dangerous to short this market”:

Despite a penchant for bearishness, Boockvar says the rally can continue as long as the Fed keeps rates at zero.

 

“When you cut rates to nothing you’re encouraging people to take risk,” Boockvar says. “As long as asset inflation is [the Fed's] goal, the market could go higher but there are obvious consequences,” including inflation, as discussed here.

 

The Fed is trying to create “the illusion of prosperity” by fueling asset price appreciation, Boockvar says, staying true to his reputation as a deficit hawk. Even if the U.S. stock market keeps rallying, “non-dollar assets” like commodities and emerging markets will continue to outperform, he says.

 

Unlike the U.S., emerging markets are “not weighed down by enormous debt levels” and local consumers are “much better off” than their American counterparts, the strategist says, expressing a strong preference for China.

 

“If you want exposure to global growth, it’s going to be outside of the U.S.,” he says, recommending the following:

  • Follow the Money: Buy China-specific and Asian ETFs or mutual funds.
  • Go for Gold: A longtime gold bull, Boockvar says a correction could be coming because “the trade has gotten crowded” and Ben Bernnake’s recent comments about the dollar could spur a reversal. But “buy on any sharp pullback,” he recommends, suggesting gold is very likely to revisit its inflation-adjust high of $2300 “in the next few years.”
  • Reject Domesticity: Avoid U.S. retailers, REITs and consumer-focused financials, Boockvar says, suggesting the U.S. economy and consumers will be under pressure for the foreseeable future. “If you want to invest in US, invest in companies with big exposures overseas,” he says. “The growth is not going to be there in the U.S. “

As it turns out, last Tuesday i was in Toronto for a Global Insights conference where I got to listen to a senior economist fo the IMF. She was excellent and she highlighted a few themes that that I outline below:

  • The IMF is acutely aware that excess liquidity is bidding up risk assets globally. They are particularly watching developments in China where a


continue reading





New York State’s Toxic Spiral: Preparing For The Moody’s Axe, As Cash Flow “Crunch” Accelerates

Courtesy of Tyler Durden

And somehow declaring that a bankrupt state is, gasp, bankrupt is expected to be surprising? At least that is the read of Bloomberg’s piece highlighting that the idiots over at Moody’s may cut New York’s Aa3 rating. What next: a $10 trillion deficit financed exclusively with new debt may force an upgrade of America’s AAA rating? Quote Moody’s: “The next three months will be critical to the state’s credit rating. The rating and outlook reflect the state’s current-year projected gap of approximately $3 billion and the deteriorating liquidity in the state’s General Fund, and also reflects our expectation that legislature will enact solutions to the budget gap and that revenue collections based on bonus payouts will exceed the state’s conservative projections. If there is no action taken by the state to close the gap, or if action is taken but is largely-one-time in nature (therefore increasing the structural imbalance in the outyears), and revenue collections in January are close to or below state projections, the state’s situation at that time would likely not be consistent with a Aa3 rating and stable outlook.” Which is why NY State comptroller’s earlier released report “New York State’s Cash Flow Crunch” will likely do little to improve Moody’s skepticism that New York can escape the fiscal abyss so well shown by Arnold to be inescapable. “[B]borrowing to address the State’s deficit would be irresponsible, incurring additional costs and adding to the State’s already high debt burden. As more time goes by without meaningful effort to address the State’s budget problem, the cost of inaction will grow and the consequences will be significantly more severe.” So sooner or later New York will also likely end up bankrupt, but at least Goldman et al. have massive NOL carryforwards that will prevent them from paying any state taxes for a considerable amount of time. That and one-way private jet tickets to any non-extradition venue of their choosing.

Full Moody’s report:

 

And an even more dire warning from the comptroller of the state:

 





Ukraine Flu Death Toll Hits 400

Flu News

Ukraine Flu Death Toll Hits 400

ukraine swine flu yuliaCourtesy of Joe Weisenthal at Clusterstock

The flu outbreak in the Ukraine, which is possibly the result of some virulent H1N1 mutation, continues to grow more alarming.

The Guardian: A flu pandemic in Ukraine that has triggered a nationwide panic is worsening this weekend with up to 400 deaths already reported.

The arrival of the virus, suspected by the World Health Organisation to be swine flu but possibly a combination of the H1N1 strain and a respiratory illness, has paralysed the country’s fragile health system and could even lead to the postponement of the general election which is scheduled for 17 January.

Seven people died and 35,000 new cases were reported on Friday, said the health minister, bringing the total number of people infected to 1.6 million out of a population of 46 million.

Meanwhile, the issue of H1N1 mutations is not just confined to The Ukraine. A new cluster of Tamiflu-resistant cases showed up at the Duke University Medical Center in North Carolina.

Also another virulent strain is showing up in Norway.

*****

Source: additional excerpt, with my yellow highlighting – Ilene  

Panic over hundreds of flu deaths exploited by Ukraine’s politicians
The Guardian

The onslaught of the virus has seen all the major political figures eagerly exploiting the outbreak. Prime minister Yulia Tymoshenko announced the arrival of an epidemic on 30 October, when only one case had been reported, and has closed all schools and banned public gatherings – including campaigning political rallies – for the past three weeks…

"This is very dangerous,’ said Igor Shkrobanets, chief of the health ministry in the western district of Chernivtsi. "One or another politician will gain from this situation, but the doctors and their patients certainly will not."

He said the level of fear was such that people were calling out ambulances when they felt the first touch of a fever and hospitals were "overloaded".

In such uneasy times, bloggers and conspiracy theorists have whipped up fears by suggesting that bubonic plague, or a new, more lethal strain of the flu, was sweeping Ukraine and that there was a massive cover-up of the numbers of deaths.

"We are seeing reports of bodies lying in the streets," said one. Others claim


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Is Gold Set To Hit $1,200 Within 24 Hours?

Courtesy of Tyler Durden

Early spot gold action indicates something is afoot in the gold market. Hitting an absolute record of $1,164 mere minutes ago, the momentum chasing algo funds are now in the picture, set to do to gold what they have been doing to the S&P futures and the SPY day after day for months now: if little volume will cause a move, look for the momentum chasers to crawl out of the woodwork. Yet the key factor determining today’s gold price: Comex gold option expiration later today. Over the past several weeks, speculators have accumulated a 3 million ounce option position with a $1,200 strike. With gold flying on the tiniest gust of speculative mania, the possibility that we may see a 1,200 handle on gold seems less and less improbable.





Swing trading virtual portfolio – Week of November 23rd 2009

This post is for live trades and daily comments. 

To learn more about the swing trading virtual portfolio (strategy, membership etc.), please click here

- Optrader





Investor Sentiment: Happy Thanksgiving!

Courtesy of thetechnicaltake

In this holiday shortened week, there won’t be much to gleam from market action.

Over the past couple of months, Mondays have been kind to the bulls. Wednesday will be light as traders ready for Turkey Day on Thursday. Friday is another snooze fest that seems to go to the bulls --why spoil a great American holiday?

Will this week be another repeat of the last two where the best gains are on Monday and then the market struggled all week long? It seems plausible. Stock sponsorship (i.e., volume) has been pathetic, and I can’t see that improving this week either.

Over the longer term or beyond next week we say what we said last week:

“The major equity indices are in a topping process. This implies a trading range at best. There is risk of a down draft as markets “fueled” by the proverbial “liquidity” are prone to quick sell offs. The outlier trade is a market blow off or a spike in prices, and I do not rule this possibility out because of the ongoing downtrend in the Dollar Index. It is possible but it is not the high odds play. This is not the market environment that will take you from here to there.”

Have a Happy Thanksgiving!!

The “Dumb Money” indicator, which is shown in figure 1, looks for extremes in the data from 4 different groups of investors who historically have been wrong on the market: 1) Investor Intelligence; 2) Market Vane; 3) American Association of Individual Investors; and 4) the put call ratio. The “Dumb Money” indicator shows that investors are extremely bullish.

Figure 1. “Dumb Money” Indicator/ weekly
*****

The “Smart Money” indicator is shown in figure 2. The “smart money” indicator is a composite of the following data: 1) public to specialist short ratio; 2) specialist short to total short ratio; 3) SP100 option traders. The Smart Money indicator is neutral.

Figure 2. “Smart Money” Indicator/ weekly
*****

Figure 3 is a weekly chart of the S&P500 with the InsiderScore ”entire market” value in the lower panel. From the InsiderScore weekly report we get the following three insights: 1) after stripping out the buying in the financial sector from Regional Bank insiders, the “entire market” score was the second worst weekly


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The Most Recent Recipient Of Obama's Middle Class-Funded Generosity: Key Largo's Ocean Reef Club For The Mega Wealthy

Courtesy of thetechnicaltake

In this holiday shortened week, there won’t be much to gleam from market action.

Over the past couple of months, Mondays have been kind to the bulls. Wednesday will be light as traders ready for Turkey Day on Thursday. Friday is another snooze fest that seems to go to the bulls --why spoil a great American holiday?

Will this week be another repeat of the last two where the best gains are on Monday and then the market struggled all week long? It seems plausible. Stock sponsorship (i.e., volume) has been pathetic, and I can’t see that improving this week either.

Over the longer term or beyond next week we say what we said last week:

“The major equity indices are in a topping process. This implies a trading range at best. There is risk of a down draft as markets “fueled” by the proverbial “liquidity” are prone to quick sell offs. The outlier trade is a market blow off or a spike in prices, and I do not rule this possibility out because of the ongoing downtrend in the Dollar Index. It is possible but it is not the high odds play. This is not the market environment that will take you from here to there.”

Have a Happy Thanksgiving!!

The “Dumb Money” indicator, which is shown in figure 1, looks for extremes in the data from 4 different groups of investors who historically have been wrong on the market: 1) Investor Intelligence; 2) Market Vane; 3) American Association of Individual Investors; and 4) the put call ratio. The “Dumb Money” indicator shows that investors are extremely bullish.

Figure 1. “Dumb Money” Indicator/ weekly
*****

The “Smart Money” indicator is shown in figure 2. The “smart money” indicator is a composite of the following data: 1) public to specialist short ratio; 2) specialist short to total short ratio; 3) SP100 option traders. The Smart Money indicator is neutral.

Figure 2. “Smart Money” Indicator/ weekly
*****

Figure 3 is a weekly chart of the S&P500 with the InsiderScore ”entire market” value in the lower panel. From the InsiderScore weekly report we get the following three insights: 1) after stripping out the buying in the financial sector from Regional Bank insiders, the “entire market” score was the second worst weekly


continue reading





The Most Recent Recipient Of Obama’s Middle Class-Funded Generosity: Key Largo’s Ocean Reef Club For The Mega Wealthy

Courtesy of Tyler Durden

A reader submits the following disclosure released by Ocean Reef Club, a country club, which very much unlike America’s 35 million food-stamp recipients, has roughly a $35 million net worth cutoff for members, who enjoy such amenities as 100 foot yachts, a private airport, and two golf courses. It is precisely in connection with golf that we see these very needy multi-millionaires follow in Wall Street’s footsteps and proceed to redistribute wealth away from those who actually work for their money, to those who merely use the dollar as a temporary (or otherwise) replacement for one-ply Cottonelle.

As a reminder, here is how one gets to become a member of ORC: in short, one doesn’t. Just like the Centurion, one is either invited, or not.

On the northern tip of the Florida Keys, sophistication and simplicity live in perfect harmony at Ocean Reef Club. Our members treasure a balance of luxurious lifestyle and uncomplicated pleasures. They enjoy The Reef’s exceptional recreation choices, its abundant natural beauty and the opportunities to relax in privacy with family and friends. In equal measure they value what they don’t find. Undisturbed by crowds and clamor, this is a peaceful place.

Above all, our members cherish their sense of connection to The Reef. More than a club, this is a community of individuals who share an affinity for the rewarding lifestyle here. Over the decades, Ocean Reef Club has quietly acquired international acclaim for its privacy and pristine nature. The prestigious Robb Report has described it as “one of America’s most exclusive club communities.”

To preserve the special nature of The Reef, membership is by invitation only. Invitations are extended to individuals who value a community that rewards their success and satisfies their quest for a rich and meaningful lifestyle.

For further information about Ocean Reef membership, please contact Executive Director of Membership, Michelle Simpson, at msimpson@oceanreef.com or 305.367.5921.

Yet it appears those who value a community that rewards their success and demand a rich and meaningful lifestyle, are just as interested in a lifestyle that is subsidized as much as possible by the US taxpayer. And lest these multi-millionaires actually have to pay to avoid walking on the club’s numerous golf clubs, here…
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Top 100 Most Active Cash Bonds

Courtesy of Tyler Durden

With volume in equities on collision course with singularity, courtesy of HFT’s vol lim->0 series, Zero Hedge is launching a new daily segment which will indicate the volume and number of trades per any given issue according to TRACE. As we believe the vast majority of human traders have largely shunned equities, the impact of credit treding will only get larger and larger. And while CDS has yet to get the "TRACE" treatment, the availability of this data in cash bonds is the main reason why we will bring it to public scrutiny. Furthermore, we will commence correlating this data with which desk has the most active axes in any given name, and implicitly determining whose Fixed Income division is making the most money on the bid/ask spreads and on traded cash volumes.

Our first report demonstrates the top 5 bonds traded, with volume and trade count data courtesy of TRACE:

  1. NRG: 51.1 million, 24 trades
  2. BONT: 40.3 million, 29 trades
  3. LVLT: 39.8 million, 15 trades
  4. AES: 38.7 million, 9 trades
  5. AMD: 36.5 million, 42 trades

Full list below.

TRACE 11.20.09 top 100

Attachment Size
TRACE 11.20.09 top 100.pdf 495 KB

 





 
 
 

Kimble Charting Solutions

Apple weekly breakout in play, $150 remains upside target

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

Apple closed last week at an all-time weekly closing high at (1) in the chart above. Apple recently broke above its 4-year rising channel, came back to test old resistance and pushed higher, setting this new record high.

In November of last year, when Apple was trading below $110 per share, the Power of the Pattern shared that Apple’s upside target stood at $150. (See post here) 

Below is a long-term update on Apple

...



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Zero Hedge

Gold Flows East - China, India Import Massive Quantities of Gold from Switzerland

Courtesy of ZeroHedge. View original post here.

Submitted by GoldCore.

Gold Flows East – China, India Import Massive Quantities of Gold from Switzerland

- Singapore, India and China continue to import staggering volumes of gold from the West
- U.K. exports of bullion to Switzerland increase 6 fold to a very large 97 tonnes
- Gold exports from Switzerland to both China and India doubled in March
- Shanghai Gold Exchange (SGE) becoming most important centre for physical gold trade
- LBMA says London gold...



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Chart School

Vehicle Miles Traveled: Our Evolving Behavior

Courtesy of Doug Short.

The Department of Transportation's Federal Highway Commission has released the latest report on Traffic Volume Trends, data through February.

"Travel on all roads and streets changed by 2.8% (6.1 billion vehicle miles) for February 2015 as compared with February 2014." The less volatile 12-month moving average is up 0.20% month-over-month and 2.36% year-over-year. If we factor in population growth, the 12-month MA of the civilian population-adjusted data (age 16-and-over) is a smaller change, up 0.13% month-over-month and up only 1.23% year-over-year.

Here is a chart that illustrates this data series from its inception in 1971. It illustrates the "Moving 12-Month Total on ALL Roads," as the DOT terms it. The ...



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Phil's Favorites

Reader Question: Is the Minimum Wage Really a Maximum Wage?

Courtesy of Mish.

A reader asked me if I ever hired someone for the minimum wage. He also believes the minimum wage is really a maximum wage.

From Drew ...
Mish, I’m curious if you have ever had to actually pay someone minimum wage to work for you week in, week out, year after year?

I’ve signed plenty of paychecks myself, and honestly, I could never employ someone and pay the minimum wage knowing it was not enough for that person to live on, regardless of whether or not the “market” says I could hire them for that price. I have willingly paid more, and they always very much appreciated it, and I also felt like I got more effort since they knew I was paying them more. But I know that’s not how large corporations work.

I believe you would argue whether or not the minimum is enough on which to live is irrelevant a...



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OpTrader

Swing trading portfolio - week of April 27th, 2015

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Digital Currencies

Why Bitcoin's male domination will be its downfall

Here's an interesting argument by Felix Salmon, although I think he is taking two correct observations and mistakenly attributing a cause-and-effect relationship to them: Bitcoin is going nowhere because women are not involved.

More likely, in my opinion, women are not involved in bitcoin because bitcoin is going nowhere (and they know it). Or maybe, simply, bitcoin is going nowhere and women are not involved. 

Why Bitcoin's male domination will be its downfall 

By Felix Salmon

Nathaniel Popper’s new book, Digital Gold, is as close as you can get to being the definitive account of the history of Bitcoin. As its subtitle proclaims, the book tells the story of the “misfits” (the first generation of hacker-l...



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Sabrient

Sector Detector: Earnings and GDP temporarily take investor spotlight off the Fed

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Sabrient Systems and Gradient Analytics

As we get into the heart of earnings season and anticipate the GDP report for Q1, the investor spotlight has been taken off the Federal Reserve and timing of its first interest rate hike, at least temporarily. Even though Q1 economic growth will undoubtedly look weak, the future remains bright for the U.S economy – even though many multinationals will struggle with top-line growth due to the strong dollar – and any near-term selloff resulting from weak economic or earnings news should be bought yet again in expectation of better results for the balance of the year. High sector correlations remain a concern, reflectin...



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Promotions

Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene

 

The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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Market Shadows

Kimble Charts: South Korea's EWY

Kimble Charts: South Korea's EWY

By Ilene 

Chris Kimble likes the iShares MSCI South Korea Capped (EWY), but only if it breaks out of a pennant pattern. This South Korean equities ETF has underperformed the S&P 500 by 60% since 2011.

You're probably familiar with its largest holding, Samsung Electronics Co Ltd, and at least several other represented companies such as Hyundai Motor Co and Kia Motors Corp.

...



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Mapping The Market

S&P 500 Leverage and Hedges Options - Part 2

Courtesy of Jean-Luc Saillard.

In my last post (Part 1 of this article), I looked at alternative ETFs that could be used as hedges against the corrections that we have seen during that long 2 year bull run. Looking at the results, it seems that for short (less than a month) corrections, a VIX ETF like VXX could actually be a viable candidate to hedge or speculate on the way down. Another alternative ETF was TMF, a long Treasuries ETF which banks on the fact that when markets go down, money tends to pack into treasuries viewed as safe instruments. In some cases, TMF even outperformed the usual hedging instruments like leveraged ETFs. There could of course be other factors at play since some of 2014 corrections were related to geopolitical events which are certain...

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Pharmboy

2015 - Biotech Fever

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

PSW Members - well, what a year for biotechs!   The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down!  The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months.  What could go wrong?

Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.

Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies.  A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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