by phil - August 9th, 2016 8:32 am
Big push or last gasp?
2,200 is the top of our likely range at the moment and it's just 20 points away on the S&P and that's 400 points higher (22%) than we were in February and, according to our 5% Rule™, a 20% move up with a 2% overshoot is very likely to lead to a 4% pullback to about 2,120 before we'll see anything higher.
The volume gets lower and lower while the market climbs higher and higher and that's exactly the sort of thing Willie Wonka says just before something horrible happens. I'm just saying…
We're having lots of fun scalping profits intra-day but we still have a generally bearish stance. This morning, in our Live Member Chat Room, we already had a nice $250 per contract winner on the oil dip from $43.25 to $43 and now (8:15) we're back at $43.25 and, you know what? We can do it again! That's the nice thing about fake market moves – you can bet against them over and over.
I was over at the Nasdaq yesterday discussing my broad market outlook on FaceBook Live, so you can watch that and save us the trouble of going over it again. Needless to say we're still using yesterday's shorting lines on the Futures as, much like oil – they made great money yesterday and they can make great money again today as the market bucks like a bronco, trying to toss off the bears before it gets too tired to fight the gravity.
Remember, I can only tell you what the market is going to do and how to make money trading it – the rest is up to you!
We did pick up a long this morning in the Futures and that's an old favorite as well. It's good not to have all your bets in the same direction but our conviction trade is the oil (/CL) short – that's a melt-down waiting to happen (also outlined in yesterday's post). Gasoline (/RB) is already well off the highs of $1.39, back to $1.36 and that would put oil back at…
by phil - August 8th, 2016 5:33 am
What will it take to stop this market?
Like Rasputin, the market has been Poisoned (by bad earnings), Shot (by Brexit), Stabbed (by negative economic reports including 50% reductions in GDP forecasts) and is clearly Drowning in debt – yet it will not die!!! What is up with that? Not even the threat of Donald Trump becoming President of the United States is enough to spook the bulls – so far.
This morning the Asian markets were flying, led by Japan gaining 2.5% off the strong US jobs report that led to a strong Dollar and a weak Yen, which makes all the Japanese exporters happy, for as long as that lasts, anyway. Also lifting the markets are fresh rumors of an OPEC production cut, which had oil (/CL) hitting $42.50 along with $45 on Brent (/BZ) this morning and had us getting back on the Futures shorts in our Live Member Chat Room earlier.
We're also shorting the Futures at Dow (/YM) 18,500, S&P (/ES) 2,180, Nasdaq (/NQ) 4,800, Russell (/TF) 1,230 and Nikkei (/NKD) 16,700 but only if 3 of 5 cross under in which case we short the next one to cross and that's then confirmed by the 5th cross under and then we stop out if ANY of them cross back over – very simple and it stops you from losing much money while letting a winner run wild.
If you are bullish you can play it the other way but I'm not and neither are:
by phil - August 7th, 2016 11:36 am
I did an extensive review of the OOP during our Live Trading Webinar on Wednesday (@ 38:35) where we looked over our current positions and determined we were well on track to gain another $60,000 (60%) next year but, of course, we won't be just sitting on our laurels – there will be lots of fun trades to make over the next 12 months.
After our first year (we initiated the portfolio on Aug 8th, 2015) we are now the Top Performing Premium Portfolio over at Seeking Alpha and, in fact, our strategy is outperforming even America's best performing hedge fund (Gerbina Gold Group) by a wide margin. In fact the 2nd best performing hedge fund is also a gold fund (AIS) and is only up 33.7% for the year – so our diverse portfolio, using our "Be the House – NOT the Gambler" philosophy is proving itself in this market.
by phil - August 5th, 2016 8:10 am
It's jobs day!
On April 8th, we added 144,000 jobs and the S&P went from 2,045 to 2,060 to 2,040 and settled at 2,047. On May 6th we added only 11,000 jobs and the S&P went from 2,047 to 2,057 to 2,039 and settled at 2,057. On June 3rd we added 287,000 jobs and the S&P went from 2,104 (was the high) and fell to 2,085 and settled at 2,100.
So, there's really not much of a pattern other than we're likely to finish where we started and we're starting the day at 2,163 and we've been in a very tight range and we can expect Non-Farm Payrolls to revert to the mean and come in around 160,000 jobs at 8:30. What's more important is whether we make a little progress in the 4.9% Unemployment Rate – that has stopped going down lately.
From a market standpoint, we'd like to see hourly earnings continue to rise because, if we're going to move towards any kind of sustainable recovery, we have to begin to put more money in the pockets of our bottom 90% consumers.
Now the S&P is at 2,164 and that's up 6% since April and I don't see what job outcome would drive it higher than it is now. Either way, we're going to be hedging a bit bearish into the weekend as the Olympics open tonight in Brazil, which is a country that's in political and economic turmoil and right next to Venezuela, which is a country on the verge of collapse.
With 60,000 hours of TV coverage scheduled for the Olympics, I imagine the political and economic situation will get some air time and most people in the US are not aware of what sort of disaster is going on south of Trump's wall.
8:30 Update: Wow, 255,000 jobs were created in July – a total blow-out, way beyond expectations. Unemployment stayed at 4.9% indicating more and more people are coming back to the labor force, which is good and hourly earnings went up another 0.3% – also good. The initial market reaction was a quick pop in the indexes, but only 0.25%, tempered by a stronger Dollar,…
by phil - August 4th, 2016 8:31 am
"Whatever it takes."
That's what Goldman Stooge (yes, it's an official position, so we capitalize) Mark Carney says he is willing to do to get investors to ignore the fact that the Bank of England had to severely reduce their outlook for 2017 GDP, from 2.3% to 0.8% while, at the same time stating that: "recent surveys of business activity, confidence and optimism suggest that the United (for now) Kingdom is likely to see little growth in GDP in the second half of this year."
Today's move drops the UK's benchmark rate to 0.25%, half of what it's been for the last 7 years and Carney left the door open for even more easing – though not too much, apparently:
“I’m not a fan of negative interest rates,” says Carney. “We have other options to provide more stimulus if needed.”
“We see the effective lower bound as a positive number, close to zero, but a positive number.”
A positive number – but clearly not a positive whole number – that ship has sailed long ago! The FSTE jumped 1.5% on news that their economy will be right on the edge of recession next year but, of course, that's because the BOE is now pumping $50Bn PER MONTH into the $2.6Tn economy, which would be like our Fed tossing $380Bn/month onto the fire. That is a staggering amount of QE funneled through the banks by Goldman Sach's former Executive Director – just a coincidence, I'm sure.
Speaking of Goldman Sachs getting caught using their connections to manipulate the market – the firm was ordered to pay $36.3M to settle a case after they hired a Fed employee and used confidential information he provided to bring in clients to access their access. This went on for 2 years and involved Billions of Dollars worth of transactions and, in response to the $36M penalty, a GS spokesman said "Ow, my wrist!"
by phil - August 3rd, 2016 8:27 am
"There's nothing to hold on to when gravity betrays you
When after all the urges some kind of truth emerges
We felt the deadly surges
Discovering Japan" – Graham Parker
Despite the best efforts of the BOJ, Japanese 10-year note rates are rising at an alarming, er, rate.
A four-day rout pushed 10-year yields to within three basis points of turning positive on Tuesday for the first time since March, after Bank of Japan policy makers disappointed investors last week by leaving bond buying and their negative deposit rate unchanged even as they increased exchange-traded-fund purchases. Pacific Investment Management Co. and former Ministry of Finance official Eisuke Sakakibara both say central bank Governor Haruhiko Kuroda is running out of room to expand stimulus.
“The selling is insane,” Satoshi Shimamura, head of rates and markets for the investment strategy department of MassMutual Life Insurance in Tokyo, said Tuesday. “The market is picturing an end to Kuroda easing. There’s no telling how far this will go.”
How fast can Japan fall apart? Well, let's look at another BS currency that got overinflated as money flowed into risky assets searching yield: Bitcoin plunged 30% since June and 20% of that is this week as $65M "worth" of BitCoins (119,756) were "stolen" from Hong Kong's Bitfinex, who have now halted all trading, deposits and withdrawals.
It will be fun to see how this one plays out, hopefully not another Mt Gox incident. That one involved 850,000 Bitcoins "valued" at $450M back in Feb of 2014 – Mt. Gox ended up liquidating in April 2014 and, since then, Bitfinex has become the World's largest exchange – supposedly with better security.
Where oh where can we safely put our money these days? Even the banks are looking dubious – perhaps we should invest in safe companies and then invest in someone who makes burglary tools for good measure! Speaking of banks, yesterday FAZ trade got off to a great start and our WFC hedge held $47 for the day, so a good-looking trade all around.
by phil - August 2nd, 2016 8:30 am
Here's a nice way to boost the market:
Kick out the under-performing components! The Dow engages in this kind of manipulation all the time, most recently swapping Apple (AAPL) in for AT&T (T), who had a nice 100-year run before the American Telephone and Telegraph Company was replaced by a company that makes phones in China. Come to think of it – that's a very good summary of how the last 100 years has been going for America, isn't it?
Well, if the components that get kicked out are any indication of where countries are declining, we should be a bit concerned that Euro Stoxx kicked out Deutsche Bank (DB) and Credit Suisse (CS) this morning, replacing them with ASML (semi-conductors) and SGEF (Construction) in order to prop up Europe's version of the Dow as it begins to falter at the 3,000 line.
Rupert Murdoch (Wall Street Journal) owns the Dow and Deutsche Bourse (DBOEY) owns the Stoxx Index and both can do whatever they want when it comes to manipulating the numbers that global investors use to make trading decisions. Trillions of Dollars invested in ETFs that follow the indexes controlled by these two Top 1%'ers. Whether that makes you comfortable or uncomfortable is probably a good indicator of your political viewpoints…
As you can see from our first chart, these shenanigans didn't even buy them the entire morning before the index plunged right back down from the small lift they got overnight in the futures (though the actual substitution takes place on Monday – so watch out for that!). Europe is down about 1.5% overall this morning, led lower by Italy and Spain, who have their own bank crises to deal with.
As you can see from yesterday's NYSE volume chart, despite the "flat" day on the S&P, what was really happening was that the headline stocks that move the indexes were propped up to mask MASSIVE selling in the broader market.
As I noted in last week's Live Trading Webinar, it's very easy to game the markets on low-volume days because the Banksters and Fund Managers know FOR A FACT that Billions of Dollars from people's paychecks (401K, IRA) will flow into the…
by phil - August 1st, 2016 8:31 am
That's what Jeff Gundlach of DoubleLine Capital is telling people this morning as he said many asset classes look frothy and his firm is hanging onto gold to hedge their cash, saying:
"The artist Christopher Wool has a word painting, 'Sell the house, sell the car, sell the kids.' That's exactly how I feel sell everything. Nothing here looks good, Gundlach said in a telephone interview. " The stock markets should be down massively but investors seem to have been hypnotized that nothing can go wrong."
Well, halfway through summer vacation, he had me at "sell the kids!" Gundlach is not alone, however. Now Goldman Sach's (GS) Christian Mueller-Glissmann has gone outright bearish, with a "tactical downgrade to equities for the next 3 months." Here is the reasoning behind Goldman's creeping sense of gloom:
by phil - July 29th, 2016 8:18 am
As you can see from the Nikkei chart – it's been a wild morning already as the BOJ ended up doing nothing, sending the Nikkei down 600 (3.6%), then back up 600, then down another 600 then back up 300, down 300 up 500 and now settling down 120 overall – what a mess! Imagine what would happen if they ever tightened (don't worry, not going to happen).
Still, lack of loosening is tightening as far as Japanese traders are concerned and the Yen blasted 2.5% higher, which is about as much as a currency ever moves in a single day and we're back to just 103 Yen to the Dollar, well below the 110 the BOJ and the Keiretsu demand to keep the exports flowing.
The BOJ left the door open for more easing at the September meeting by saying there would be a "comprehensive assessment" on the effects of easing but I think the Western Press is misinterpreting it as the Japanese don't like to say no and this, to me, sounds like a no, which is not surprising given the INSANE amount of easing they've already committed (yes, like a crime) in the past 2.5 years of Abenomics.
Sure it's only Yen but 400Tn of them begin to be real money – close to $4Tn, which is about the balance sheet of our own Federal reserve except that our GDP is $20Tn and Japan's GDP is now less than $5Tn and falling fast. Nonetheless, no matter how low rates go in Japan (-0.1% now) – they have been unable to dissuade people from buying JGBs – after all, getting 99% of your money back after 10 years keeps you well ahead of their 0.4% annual deflation, right?
This is not the CPI chart of a healthy economy folks and Japan is $12.5Tn in debt which is, if you care to count 1,287,000,000,000,000 Yen – that's 1.287 QUADRILLION Yen in debt – not even Zimbabwe had enough fake money to cover that sort of deficit and Japan is adding another 10% of the GDP ($500Bn) to the debt pile every year. This is why the BOJ seriously…
by phil - July 28th, 2016 10:28 am
That's what we got from our Fed yesterday in a statement that held no new action and not indication of when there would be action and nothing is no longer good enough to sustain record high market levels – especially with the very mediocre earnings that are being delivered in the broad markets.
As you can see from the Fear and Greed Index, the greed is still fairly extreme and the complacency is extreme too with the VIX down under 15 this morning and Treasuries (TLT), which we're short on, are still up at the $140 line post-Fed – as if they still might turn around and loosen further than they already have.
Arguing for the loose camp, the Atlanta Fed released their GDP Now Forecast for the end of July and Q2 has been downgraded 40% from 3% to now 1.8% over the course of the month so now we understand why the Fed didn't raise rates yesterday – the economy is much worse off than people have been supposing!
Since the BS upgrades began (which we said were BS all the way up) in May, the Dow has gained 1,000 points, from 17,500 to 18,500 and the S&P is up from 2,050 to 2,165 and those are both ridiculous in a flat economy and it was these RIDICULOUS upgrades to GDP outlook that acted as the catalyst to turn us around in the first place! Here's my commentary on the subject from May 27th (GDP Friday – Yellen Spins Us Into the Holiday Weekend):
…now we have the Atlanta Fed providing supporting data as they have raised their GDP Now forecast by 100% this month.
Forget the fact that the core Durable Goods were terrible or that Auto Sales are falling off or that Consumer Comfort is