by phil - October 14th, 2014 8:13 am
How low can we go?
So far, the Russell is the only index that's gone through a full 10% correction – falling from 1,180 in early September to 1,050 yesterday – actually 11% – so far. According to our 5% Rule™, if the 10% line is going to hold over the long term, we should hold -12.5% on any additional move down – that would be 1,050 from the 1,200 line. Let's call that our line in the sand for now.
Meanwhile, as I noted in our Live Member Chat room – we're comfortable going long on the Russell Futures (/TF) over the 1,150 line, looking for a nice run back to 1,080 but THRILLED with 1,060 – as that's already +$1,000 per contract! Failing to get back over 1,060, however, will be a sign that there's likely more downside to come.
Of course, thanks to the 5% Rule™ and our Big Chart, we knew to get bearish as soon as 1,200 failed on the Russell, way back in July. In fact, on June 30th, I titled our morning post: "Monday Misgivings – CASH!!! Is King as we Begin Q3" saying:
I'm NOT going to depress you.
If you want to be depressed about the market, check out my Twitter Account, where I posted our Morning Alert to Philstockworld Members (and you can become one of those HERE) in which I aired my concerns with the Global Macros.
by phil - September 8th, 2014 7:41 am
Sure you do, this was Friday's intra-day chart of SPY, the ETF that tracks the performance of the S&P 500. It's pretty similar to what happened every day last week, with a high-volume (relatively) sell-off followed by a recovery on almost no volume into the close, giving us the impression that the markets are flat.
Only Friday was a bit different. On Friday, the market manipulators were so desperate to close the week on a high note and so greedy, that they also got sloppy and now we have some very clear evidence of what complete and utter BULLSHIT this market is:
What do we see here? Despite a 0.45% rise in the S&P and a 0.39% rise in the NYSE, 0.4% in the Dow, 0.45% in the Nasdaq and 0.25% rise in the Russell, the FACT is that there were FAR MORE shares DECLINING than there were advancing. In fact, on the NYSE MKT (what used to be called the AMEX), declining volume outpaced advancing volume by 115%. 115%! Yet we get a 0.4% RISE in the index?
On the NYSE itself, 2,079 stocks declined while only 1,057 (33%) of the stocks advanced and there was 56% more volume to the declining shares than the advancing shares yet, MIRACULOUSLY, 160 NYSE stocks made new 52-week (and, often, all-time) highs while just 30 made 52-week lows. That's 84% positive! Isn't that amazing? Isn't that UNBELIEVABLE???
It is unbelievable, as in – something that should not be believed by intelligent people. When you see a magician on stage sawing a woman in half or levitating – you might be amazed at what a good trick it is but you don't start believing in magic, do you? What if that magician asks you to bet your retirement on the fact that he is really levitating people or that his assistant can medically be cut into pieces and reassembled?
by phil - August 13th, 2014 8:21 am
MORE FREE MONEY!!!
That's all this chart says to traders this morning, who are taking the European Markets up over half a point this morning and are goosing our Futures by half a point as well as bad news is good news and TERRIBLE news is even better in this Central Bank-sponsored market.
Private Consumption in Japan fell 5% in April, May and June and wages dropped 1.8% while sales taxes rose 3% and – PRESTO – there's your 5% decline in Private Consumption.
Obviously, giving the workers more money is out of the question in a Conservative Capitalist Economy like Japan and we're certainly not going to tax Corporations when we can raise sales taxes that disproportionately target the poor instead so the only solution is: MORE FREE MONEY!!!
Japan has increased their monetary base by 50% since last year and this year they are on track to add another 25% to pump it up to 270,000,000,000,000 Yen. In March of 2000, there were just 50Tn Yen in circulation so a 5x increase in the money supply and NONE of it ended up in the hands of the bottom 80% who, just like in America, saw their standard of living DECREASE over the past decade and a half.
It's a great race to the bottom in annual GDP growth overall as essentially all of the economic gains in Japan and the US accrue to the top 10% (people and corporations) while the bottom 90% circle the drain on the "Road to Serfdom" that Hayek warned us about 70 years ago:
“It is one of the saddest spectacles of our time to see a great democratic movement support a policy which must lead to the destruction of democracy and which meanwhile can benefit only a minority of the masses who support it. Yet it is this support of the tendencies toward monopoly which make them so irresistible and the prospects of the future so dark.
"If we face a monopolist we are at his absolute mercy. And an authority directing the
by phil - August 12th, 2014 8:28 am
"Forgive us our debts, as we have also forgiven our debtors."
Hah – what a crock! How many people who have recited that prayer have forgiven any debts? How many have had debts forgiven? Certainly none of the G20, who owe each other tens of Trillions of Dollars and certainly not Argentina's bondholders, who drove the nation to default and certainly not the bondholders of THREE Atlantic City Casinos that are on the verge of shutting down and putting 10,000+ people out of work in a county of 275,000 so about 5% of the working population.
Are casinos simply a bad business or is the economy not quite as strong as we are led to believe?
In the past 14 years, we have more than tripled the debt of the first 224 years of our nation's existence and, in the next 7 years, we are on track to add 150% more (than the $5Bn we had when Clinton left office).
The $2.4Bn Revel Casino opened in March of 2012 and was $1.5Bn in debt at the beginning of 2013 but did a pre-packaged bankruptcy last year that cut the debt to $272M but it's been hemorrhaging money since and the value of the casino has been slashed to $450M yet an auction scheduled for yesterday got ZERO bidders, which may now lead to yet another bankruptcy – making it an annual event.
This is no run-down property, this is a beautiful, modern building that LOOKS like $2.4Bn was spent to build it. It's a beautiful property with nice restaurants and great rooms and a nice beach and a swim out pool on the deck so you can use it even in the winter – no expense was spared but, like many grand projects, the cash flow isn't there to support the great dreams of the creators.
Even at $450M, if you could sell the 1,400 rooms (57 floors) into condos and got $300,000 for 1 bedroom apartments, that's only $420M and wouldn't be worth the effort. So, if you can't do that and you need 3,800 people to run the casino/hotel – that's a pretty big nut to cover each month. The casino loses roughly $3M per…
by phil - August 11th, 2014 8:22 am
"Thruppence and sixpence every day
Just to drive to my baby
I don't care how much I pay (Too much, Magic Bus)
I wanna drive my bus to my baby each day (Too much, Magic Bus)
I don't want to cause no fuss (Too much, Magic Bus)
But can I buy your Magic Bus? (Too much, Magic Bus) " – The Who
This is certainly one Magic Bus of a market, flipping on a dime or, more accurately, bouncing off the Dow's 200 day moving average at 16,350 back towards our predicted strong bounce line at 16,650. The Transports are also bouncing right off the 100 dma at 142, down from 152 and. per our 5% Rule™, we expect 146 to be tested this morning. This is not "surprising", this is what we said would happen on Friday morning.
As we discussed all of last week, BALANCE is the key in a choppy market and our Long-Term Portfolio finished Friday at $590K, up exactly 18% for the year, while our Short-Term Portfolio jumped to $136,000, up 36% for the year and together they are $726,000, up over 20% for the year on our two primary virtual portfolios.
Having well-balanced portfolios allowed us to ride out the dip and, in fact, buy more longs while the market was pulling back, rather than panicking out of positions that, for the most part, only went down with the market – rather than because there was any actual weakness in the stock.
Our general strategy of Being the House – Not the Gambler is also a great help in consistently making progress in our portfolios, even when the market has such a choppy week.
For most traders, it's "thruppence and sixpence every day" just to hold on to their positions as they gyrate up and down. As sellers of premium, we own the Magic Bus and we collect those daily pennies instead of selling them and that acts as a tremendous buffer to our long-term investing, where simply hanging on to a position allows…
by phil - May 15th, 2014 8:42 am
Options expire on Friday and last expiration day (4/18), we were 2.5% higher on the Russell and Nasdaq , which is about how much higher the Dow, S&P and NYSE are from where they were at the time.
It's been an interesting month watching our indexes diverge but, as we discussed in our Tug Boat Example last week, this sort of behavoir simply doesn't last very long. The end of that discussion (last Thursday) was:
As you can see from Dave Fry's Russell Chart, the RUT resolved it's triangle sqeezy thingy to the downside – after the requisite head-fake and now we're back to the…
by ilene - May 14th, 2010 2:08 pm
Courtesy of The Pragmatic Capitalist
- Everyone is making a big fuss over the fact that four U.S. banks went 61 days in a row without any losses. Well, the better question in this environment is how did any bank manage to not make a profit on all 61 days? These big banks are borrowing from the Fed for nothing and can effectively sell low risk bonds back to the government for a 3%+ annualized gain. This is a no-brainer when it comes to making money. If you’re a big bank you’re just laddering into a massive fixed income portfolio without almost no risk. The confusion or misrepresentations made by many regarding this “phenomenal performance” is that these firms are just sitting around “trading” the Nasdaq 100 like Joe Schmo does at home. That couldn’t be farther from the truth. These firms make most of their “trading” revenues by playing market maker or “trading” in these low risk fixed income markets. They’re essentially just pairing buyers and sellers and scraping a fee off inbeteween. Yes, there are other higher risk portions of their portfolios, but for the most part these firms are just vacuuming money up from off the NYSE floor at every twist and turn. It should shock no one that the big banks are making profits. A better question for the Morgan Stanley’s and Goldman Sachs’s of the world might be why they still have their bank holding company status? Allowing these firms to borrow from the Fed at 0% is a slap in the face to every other hard working financial firm.
- Bondsquawk pointed out this morning that the LIBOR OIS spread continues to widen. According to Prospects Daily:
“Dollar money-market rates to highest levels since August. The cost of inter-bank borrowing for three-month dollar funds increased to the highest level in almost nine months, as the IMF/EU’s $1 trillion financial plan for Europe failed to boost confidence sufficiently in commercial banks to step up their lending. The three-month London interbank offered rate, or LIBOR, for dollar funds increased to 0.43% this morning from 0.423% yesterday, the most since August 17, according to the British Bankers’ Association. Meanwhile, the three-month rate for euro, or EURIBOR, fell to 0.624% today from 0.628% yesterday, after soaring to 0.634% last week. Notably, EURIBOR established fresh lows each trading day over January 2010 to date. The
by ilene - April 6th, 2010 10:47 pm
Courtesy of Chopshop at Fibozachi
Monday, Tyler Durden of Zero Hedge noted that the ISE had instituted special rebates for specific option liquidity providers in an attempt to bolster volumes and capture market share ~ "Let The Churn in QQQQ, Citi and Bank of America Hit Infinity…." And the NYSE didn’t miss a beat; responding in kind with an extremely aggressive option pyramid pricing scheme.
NYSE Euronext’s U.S. Options Exchanges Announce New Pricing and Fee
New York, April 5, 2010 – NYSE Euronext’s U.S. options exchanges, NYSE Arca and NYSE Amex options, announced new rate changes for each market center that became effective April 1, 2010. NYSE Arca options is introducing higher posting credits in premium tier products, tiered customer rebates in non-premium penny pilot issues and a reduction in the LMM rights fees. NYSE Amex options is introducing a reduced electronic broker dealer rate, a reduced electronic firm rate, tiered pricing for firm proprietary manual trades and the implementation of the Professional Customer designation.
In an effort to dredge a moat around market share for Amex & Arca, the NYSE has implemented a new Penny Pilot "Premium Tier" pricing schedule for the options of 15 specific issues. Liquidity providers transacting serious size across these anointed sticker symbols … AAPL, BAC, C, DIA, EEM, FAZ, GDX, GE, GLD, IWM, QQQQ, SPY, UNG, USO & XLF … will (yet again) enjoy additional rebates as the NYSE attempts to  stave off competition from other options exchanges and  further buoy an anemic equity market, which continues to plow forward on phantom volume at 3 am on Sunday night (like the accelerator of a Toyota Camry beneath a sleep-driving Ambien junkie approaching a raised drawbridge with both eyes closed shut, one hand on the wheel and the other on his sixth bear claw).
NYSE Arca Fee Changes
NYSE Amex Fee Changes
For a complete explanation of the new NYSE Arca options rates and fees: http://www.nyse.com/futuresoptions/nysearcaoptions/1159439190411.html
For a complete explanation of the new NYSE Amex options rates and fees: http://www.nyse.com/futuresoptions/nyseamex/1228420271739.html
by phil - December 30th, 2009 11:38 pm
OK, I got a new toy today so I’m going to put up some charts!
Rather than my usual spreadsheets, I thought a visual representation of what I think is going on would be appropriate. So far this week, we have failed to break my levels, which were predicted by our own 5% rule way back in July. I don’t have a drawing tool for the 5% rule but I’ll try to give you an idea of what I see when I look at a chart, now that I can capture them for you.
First of all, let’s look at the S&P, which the analysts are ga-ga over as they make a 50% retracement of the March dive:
Notice the 50% mark is right about our 1,127 watch zone but we didn’t get 1,127 from that spot, we calculated 1,127 as it was a 30% move off the real floor of 867, which is our 5% rule drop. The 5% rule sensibly tells us to throw out spikes and, while it’s hard to think of a 3-month, 200-point drop as a spike, in the grand scheme of things it still is. Here’s how the same Fibonacci series looks if we take 867 as a bottom, rather than 666:
Not quite as impressive a recovery is it? Do you see how the adjusted chart makes far more sense on the way down – with support at the 61.8% line, then at the 50% line and then clearly at 0. The big difference is, in my view of the action, it has been an easy slog to make the effectively dead-cat bounce back to 38.2%. This recent action proves nothing as we have yet to test 1,135, which should provide heavier resistance. It’s going to be a long time before we do a "life cross" (where the 50 wma moves above the 200 wma) so that 1,220 mark is going to weigh very heavily in the future as well, probably all the way into August before the S&P is ready to make a real move up (assuming we don’t fall down in between).
Running the same series on the Dow, we get this:
by Zero Hedge - November 27th, 2009 9:49 am
Courtesy of Tyler Durden
The NYSE hedged its bets earlier by invoking the rarely used Rule 48, which "provides the exchange with the ability to suspend the requirement to disseminate price indications and obtain floor-official approval prior to the opening when extremely high market-wide volatility could cause delay opening securities on the exchange." The full disclosure was made on the NYSE blog:
Rule 48 is intended to be invoked only in those situations where the potential for extreme market volatility would likely impair floor-wide operations at the exchange by impeding the fair and orderly opening of securities. Accordingly, the rule sets forth a number of factors to be considered before declaring such a condition, including:
- Volatility during the previous day’s trading session;
- Trading in foreign markets before the open;
- Substantial activity in the futures market before the open;
- The volume of pre-opening indications of interest;
- Evidence of pre-opening significant order imbalances across the market;
- Government announcements;
- News and corporate events; and,
- Any such other market conditions that could impact floor-wide trading conditions.
And some other "do not panic, we have nothing under control" information dissemination by the NYSE:
The invocation of Rule 48 is in effect only for today. Previously, the NYSE invoked the rule on 11 March, 2008; 23 Jan., 2008; 22 Jan., 2008; and 12 Dec., 2007. The rule was approved by the Securities and Exchange Commission on 6 Dec., 2007.
Now add 17 March, 2008 to the list. I kind of had an uneasy feeling all weekend about Bear Stearns, and felt even worse upon seeing the announcement on Sunday night. To my train buddy at Bear Stearns and his colleagues, I’m sorry to see this happen.
And just for reference, here’s a link to our circuit breakers. Here’s hoping we don’t need them today. Or any other day, for that matter.
Good luck today, everyone.
Good luck indeed.