by phil - May 7th, 2014 8:31 am
All of last week, I kept saying the market was only hitting highs because it was being manipulated that way and, by Friday we'd had enough and took our ill-gotten gains off the table once again. This week, it's obvious we're in trouble – but it's a lot harder to sell your stocks when they're already in trouble, isn't it?
It's a very hard discipline to take winners off the table but you should scale out of posiitons on the way up the same way you should scale into them on the way down (and the Strategy Section at Philstockworld has a great article about scaling – also lots of additional commentary in chat below the article).
There's nothing wrong with being in cash. Yesterday, from 1pm until 2:30, we had on of our Live Futures Trading Workshops (replay available here) and our 4 trades made $360 by the close (4pm) for a very nice $100+ per hour salary for just trading a few contracts. Our trade idea from yesterday's morning post (which you can get delivered to you pre-market, every day by SUBSCRIBING HERE) was to short the Nikkei (/NKD) at 14,350 and this morning we hit 14,050 – good for a $1,500 PER CONTRACT profit!
That's one of the things you can do with cash. We also have fun making earnings plays, like the FSLR trade we added to our Short-Term Portfolio yesterday. That trade idea was:
I think it's worth a try at selling 5 July $75 calls for $3 ($1,500) and buying, to cover, 4 Jan $77.50/85 bull call spreads at $2 ($800) for a net credit of $700 – let's do a set of those in the STP.
If FSLR is under $75 (it's about $69 after earnings), we pocket $700 PLUS whatever value remains on the January bull call spread (probably about half). That's against zero cash outlay ($700 credit, in fact) and possibly we'll just take quick money off the table…
by ilene - September 12th, 2010 12:51 pm
Courtesy of JESSE’S CAFÉ AMÉRICAIN
Two sets of charts tell the story.
The problem is that when workers are pressed to the wall on pay they lose the ability to consume without taking on debt. And at some point the debt leverage mechanism for consumption breaks down.
Perhaps the problem is related to the one Wall Street is now confronting. How do you continue on in business after having impoverished, alienated, or driven away most of your clientele in the heat of a short term greed enabled by a corrupted political and regulatory system?
Those who were around in the late 1970′s will recall the absolute disrepute in which equities were held by the public after the grinding bear market of 1973-74. Pit traders spent the better part of the day practicing their origami skills, for lack of serious ‘outside participation.’ Skinning each other when you have run out of greater fools is truly a zero sum game.
Weather report: Cloudy, with a chance of whirlwinds.
Fat profits, slim wages: the fruits of monetary bubbles and trickle down economics.
Charts courtesy of ContraryInvestor.
by ilene - September 4th, 2010 7:18 pm
Courtesy of John Mauldin at Thoughts From The Frontline
The Last Chapter
Let’s Look at the Rules
Six Impossible Things
Killing the Goose
Home and Then Europe
This week you will get a kind of preview as this week’s letter. I am desperately trying to finish the first draft of my book and am one chapter away from having that draft. I have promised my editor (Debra Englander) that she would see a rough draft next week, and the final version will be delivered on the last day of September. More on that process for those interested at the end of the letter. But this week’s letter will be part of what will probably be the 4th or 5th chapter, where we look at the rules of economics.
There is just so little writing time left that I have to focus on that book for a little bit. I am writing this book with co-author Jonathan Tepper of Variant Perception (who is based in London), a young and very gifted Rhodes scholar with a talent for economic analysis and writing. We each write the first draft of a chapter and then go back and forth until the chapter has been much improved. Alas, gentle reader, you will only get my first draft. You will have to wait for the book to get the new, improved version. But this is the last one I have to write. And Jonathan has done all his initial chapters. We are on the home stretch.
But first, my partners at Altegris Investments have written a White Paper entitled "The New Normal: Implications for Hedge Fund Investing." It is a very instructive read. If you are in the US and have already signed up for my Accredited Investor letter, you should already have been sent a link or a copy. If not, and you are an accredited investor (basically net worth of $1.5 million or more) and would like to see the paper, or are interested in learning more about how hedge funds, commodity funds, and other absolute-return strategies might fit into your investment portfolio, I suggest you click on www.accreditedinvestor.ws and fill out the form, and a professional will get back to you. And if you live outside the US and are interested, I have partners around the world who can work with…
by ilene - June 5th, 2010 10:09 am
Courtesy of Jr. Deputy Accountant
In the kind of ;gotcha! that’s been a trademark of this particular recession, temporary Census workers have discovered that their productivity has, in fact, worked against them. A larger pool of available workers means more talent in the pool, more talent means a better work ethic and a better work ethic means work gets done promptly, meaning checks evaporate weeks ahead of schedule, leaving these workers out of work once again.
Just as the 2010 census has been a boon for unemployed workers, the high unemployment rate has been a boon for the Census Bureau, bringing in skilled temporary employees who are eager to work. "The labor force that we’ve attracted to work on the census has a set of skills, experience and commitment to the job that exceeds all our experiences in the past," said Census Bureau director Robert Groves.
Because the temporary work force is more productive, the bureau is closing some offices earlier than it planned. Mr. Groves anticipates that will shave $170 million off the original $2.2 billion budget for door-to-door operations.
That’ll teach you to be productive.
by ilene - May 29th, 2010 2:18 pm
Courtesy of John Mauldin
Six Impossible Things
Reduce your Deficits!
Pity the Greeks
Should the US Bail Out European Banks?
Italy at Last!
Alice laughed. "There’s no use trying," she said" One can’t believe impossible things."
"I daresay you haven’t had much practice," said the Queen. "When I was your age, I always did it for half-an-hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast."
- From Through the Looking Glass by Lewis Carroll
Economists and policy makers seem to want to believe impossible things in regards to the current debt crisis percolating throughout the world. And believing in them, they are adopting policies that will result in, well, tragedy. Today we address what passes for wisdom among the political crowd and see where we are headed, especially in Europe.
I am reminded of the great line from the movie, The Princess Bride. Vizzini is the short bad guy who is trying to get away from Westley and every thing he attempts does not work. Westley just keeps on coming. At each failed attempt, Vizzini mutters, "Inconceivable." Finally, Vizzini has just cut the rope and The Dread Pirate Roberts (Westley) is still climbing up the cliff.
Vizzini: HE DIDN’T FALL? INCONCEIVABLE.
Inigo Montoya: You keep using that word. I do not think it means what you think it means.
European leaders keep telling us that the break-up of the eurozone is inconceivable. I do not think they know what that word really means. Let’s see if I can explain the problem so that even a politician can understand.
But first, and quickly. We have transcribed the speeches from my recent 7th Annual Strategic Investment Conference I put on with my US partners Altegris Investments. To say they were awesome is somewhat of an understatement. If you have registered for my free accredited investment letter, you should already have gotten a link or will get one soon to the speeches. David Rosenberg, Dr. Lacy Hunt, Paul McCulley, Niall Ferguson, Jon Sundt, Jason Cummins, Gary Shilling and your humble analyst. That is a world class line-up.
If you are an accredited investor (basically $1.5 million net worth) and have not yet signed up for my letter, then go to www.accreditedinvestor.ws and do so now. One…
by phil - February 4th, 2010 8:29 am
Greece is the word these days.
We are getting a sell-off every morning as Europe goes through the daily ritual of waking up and seeing the cost of default protection rise and rise. This morning Greece is with STUPID (Spain, Turkey, UK, Portugal, Italy & Dubai – coined by Zero Hedge) as five-year sovereign credit default swap spreads were recently at 4.23 percentage points, compared with Wednesday's closing level of 3.97 percentage points. That means the annual cost of insuring €10 million of Greek government debt against default for five years had risen €26,000 to €423,000. In a nutshell, that's 4.23% annually to insure Greek bonds from default so Greece needs to offer 4.23% more interest on their bonds than an Aaa nation to attract investors.
Of course, my new "I'm with STUPID" T-shirt franchise is going like gangbusters as we are getting orders from all over the US, especially California, as our own triple-A credit rating may not last the year. Japan is a strong customer (mostly small and extra-small) and sales are strong in France and, of course, Mexico and all of South America.
Keeping up with the STUPIDs is no easy feat as Portugal's CDS spreads jumped 15% overnight to an all-time high 2.26 while Spain gained 10% to 1.68%. (Have I mentioned I like TBT lately?) The moves followed news Wednesday that the European Commission had put Greece under more pressure to cut its deficit; that the Portuguese government sold only €300 million of treasury bills at an auction, compared with an indicative offer of €500 Million; and that the Spanish government had raised its budget deficit forecasts for 2010 through 2012.
As we expected in yesterday's post, Greek workers were none too pleased with the EU's budget plan for their country and is rejecting the idea of wage freezes on top of wage cuts. Greece's biggest union is moving towards a mass strike and the public-employee union is planning a job action next week as well. Tax collectors are striking, customs workers are striking, which is screwing up the airports and shipyards and delaying commerce all over Europe – shades of things to come perhaps?
by phil - August 11th, 2009 8:26 am
Our levels are holding so far.
We came right back to 1,000 on the S&P yesterday but it held like a champ and that gave us the confidence to take a bullish cover on our longer DIA protective puts, right at 3:04, ahead of the usual 50-point stick save but it was a move we initiated right at the bottom at 2:30, catching almost the dead bottom on our roll. Of course it's total nonsense but it's total nonsense we can count on with 8 stick saves of at least 50 points in the last 90 minutes coming in the last 10 market sessions accounting for 400 points of Dow gains or ALL of our gains since July 20th when we "broke out."
As illustrated in David Fry's SPY chart, the only exceptions to the stick save were the last two Fridays and I said to members in yesterday's chat, perhaps that is somehow significant that the collective we call "Mr. Stick", does not feel confident enough to make bullish plays into the weekend anymore. Today we should head right back to re-test 1,000 on the S&P but we are much more bearish overall, having taken profits yesterday and covered our unrealized gains in our $100KP - the plan we discussed in yesterday's morning post.
We got a re-test and a re-failure of the Russell at exactly our 574 target right at 11:15 and the the Qs never even mounted a serious threat on our 40 line so it wasn't a tough call for us in the morning. The other levels we are watching, Dow 9,297, S&P 1,000, Nasdq 2,017, NYSE 6,438, Russell 562 and SOX 308, are looking shaky and may not stand up to another test, especially if we get any bad news on our upcoming data with Wholesale Inventory and Productivity Reports on deck this morning. Our bearish additions were an ERY spread (3x Energy bear) and COF Sept $40 puts, which are already up 10% from our 12:17 pick. It wasn't all negative, we liked a couple of buy/write plays and we took a very bullish spread on FRE, which should do very well this morning. At 12:57 we had noticed FRE moving up and, in Member Chat, we were discussing the merits and my take was this:
FRE/Ifl – The float of FRE is just 650M shares and they