by phil - October 9th, 2014 8:30 am
Flip, flop & fly
I don't care if I die
Flip, flop & fly
I don't care if I die
Don't ever leave me, don't ever say goodbye – Joe Turner
It's deja vu all over again!
Please see Tuesday's "1,975 or BUST!" post and you will be all caught up on our battle plan for Thursday. Remember – I can only tell you what is going to happen and how to make money trading it – the rest it up to you…
Those DXD calls we disussed in Tuesday's post were cashed out ahead of the Fed with 100% gains in just two days. Today, we're right back to the extact $24.52 DXD was at Tuesday morning, and the calls are back to our 0.60 entry after topping out at $1.27 yesterday (up 111%).
We made the call to get out right at the beginning of our 1pm Live Trading Webinar (sorry, Members Only) but, FOR FREE – in yesterday's morning post – we also called a very wise exit to our TZA spread (up 190%) and flipped long on the /TF futures at 1,070 and those finished the day well past our 1,080 goal – all the way back to 1,100 for a $3,000 per contract gain. That's in a single day folks!
This morning, in our Live Member Chat Room (and you can join us here before the prices go up next week), we took short positions on the indexes with me saying to our Members in a 6:41 Alert that was sent out via Email as well and, for good measure, it was tweeted out (follow us here) and posted on our Facebook page (follow here):
Clearly we can short /TF at 1,100 with a stop above or /NQ 4,040 or /ES 1,965 or /YM 16,900 simply stopping out if any two of those go higher. On the other side, Oil can be played long at $87.25 (again) and gasoline at $2.30 since it's Thursday.
by phil - August 29th, 2014 8:24 am
Saved by the bad news!
August has been a spectacular month in which we ignored the most bad news ever ignored by a species that is still not extinct. With any luck, an asteriod will head straight for us next month and we can rally the markets another 5% in anticipation of more Fed easing on impact. The asteriod struck the other side of the Earth this morning as Russia Invaded Ukraine and Euro Zone Inflation plunged to 0.3%, miles below the 2.0% target considered "healthy".
This is, of course, GREAT NEWS, because it means Super Mario is free to go ahead and do something – like he always says he will do but never does. That doesn't stop people from believing it because they WANT TO BELIEVE – they want to think someone is going to save them and make all their hardships go away. 11.5% of the people in Europe are still out of work, double the rate in the US. Over 25% of the people under 25 are out of work, about the same as the US. These are horrific figures – of course people are eager to hear the words of a potential savior.
Since it's Friday, we're not going to debate the merits or discuss what a farce it all is – we've done that this week. Today we'll talk about making money.
On Tuesday, in the morning post, I suggested the TNA Sept $72.50/76.50 bull call spread at $2, selling the Sept $68 puts for $2. 10 of those would not have cost you a penny (since it netted out to $0), though about $7,500 in margin on the short puts. Today the spread is $2.50 and the short puts are $1.15 for net $1.35 or +$1,350 in 3 days, which is an 18% gain on the committed margin despite the fact that TNA has essentially gone nowhere.
I don't point this out to brag, we have plenty of trade ideas that have done much better – I point this out because it was a free trade idea, right in the morning post which anyone could have done and it…
by phil - August 27th, 2014 8:09 am
2,000.02 – We did it!!!
Unfortunately, we can't afford to pop the champagne because the 0.03 we spend on it would put us back under – so we'll watch and we'll wait another day before celebrating a milestone we've been expecting since last week (see "Will Jackson Hole Give Us S&P 2,000?") and we went with that TNA trade we discussed in yesterday's post to cover the expected bull run.
We also picked up long plays on BAC and DBA in our Live Member Chat Room and BAC has already rocketed on the settlement news but DBA is only just making the turn and still makes an excellent play that we'll be adding to our Buy List (Members Only) along with 10 more picks we'll be making this week.
As you can see from Dave Fry's SPY chart, we have set a new record for this decade for low volume on a full market day. Last Christmas Eve was 43M on a half day, for example, but the Christmas Eve before that was 53M and those were the lowest two days I could find before I got bored looking (very scientific).
Anyway, the point is that 38.9M is VERY LOW VOLUME – so low that paying attention to a dot on a chart that is drawn in such a light touch is just silly. That makes yesterday's jaunt over 2,000 completely meaningless and more so with the additional evidence of the intraday action which, as Dave notes, could not have been more manipulated.
This is why we have been pressing our bear bets. Even though we have peace in Gaza and peace in Ukraine (for today) and even though we've forgotten about Europe's negative GDP and China's plunging property prices and Ebola – we still couldn't find more than 38.9M buyers for SPY – that's just sad!
Speaking of China, last Monday, for FREE, right in the morning post, we picked the following on FXI:
We shorted India last week (EPI) and now FXI has got my mouth
by phil - July 9th, 2014 8:29 am
Fed day (again).
Yesterday was TERRIBLE, with volume finally coming back – and it was all downhill, with 3x more declining volume than advancing. Still, as you can see from Dave Fry's SPY chart, the fix was in and the failure to hold $196.50 during trading hours was corrected at the bell by the powers that be, forcing the Market-on-Close suckers (401K, IRA, ETFs) to pay an extra 0.2% for their fills.
There's something strangely comforting about playing a rigged game like this. I yesterday's live webcast, we were able to make a quick $150 per contract playing a very predictable bounce in the Russell Futures (you can see the Webinar Replay HERE).
Of course that was small potoatoes compared to the trade ideas we gave you in yesterday's morning post (which you can have delivered to you every day by subscribing here) as the TZA Aug $14 calls shot up from 0.91 to $1.20 - up 32% for the day.
The QQQ calls I mentioned were the July $97 puts and we closed those out at $2.30, up 47% in less than a full day.
With returns like that, we could compound $1,000 into $1M in no time at all!
Though they were, in fact, small positions, our entire Short-Term Portfolio jumped up 2% on the day – as it's positioned bearish to protect our much larger and still bullish ($500K) Long-Term Portfolio, which is weathering this little storm quite nicely as we wisely moved it to mainly cash when we thought the market was toppy.
Now we anxiously anticipate earnings and the potential to bargain-hunt some more.
As you can see from our Big Chart, the Nasdaq and Russell were saved by their 5% lines (2.5% on the RUT) but the NYSE failed their critical 11,000 line and now we are 3 of 5 bearish and that means we lean bearish until one of our 3 lagging indices gets back over their line.
by phil - November 4th, 2011 8:24 am
Papandreou is trying to convince us he almost destroyed (the) Universe to get my consent. – Opposition leader Antonis Samaras
Ah the old "destroying the universe" ploy. It's the same one the Republicans are using in the Senate as they once again kill Obama's $60Bn infrastructure program that was meant to provide direct aid for highway and rail projects and set up an infrastructure bank. Without 60 votes, bills can't even make it to the Senate floor so nothing gets done.
This is ironic because, on the same day, China APPROVED another $160Bn of infrastructure spending – just to build new underground subway systems in 28 cities by the end of the decade – creating millions of Chinese jobs, lowering transportation costs and laying the foundation for continuing to kick our asses in the 21st Century. So, to be fair, the Republicans aren't destroying the Universe to advance their political agenda – just America.
Meanwhile, China's subway plans are coming AFTER they have developed the World's largest high-speed rail lines to connect to their World class shipping ports so goods can now be whisked around the country in a cheap and efficient manner while the knuckle-draggers in Congress debate whether or not it's worth fixing the potholes that are ripping the tires off trucks on our nation's roadways.
You don't make a nation great by talking about how great we are – you make a nation great by building a great nation and we are doing almost the exact opposite – squandering what once seemed to be an insurmountable lead in education, transportation, utilities, health care, housing and even environmental progress – and turning America into what is now one of the lowest-ranked developed nations in each of those categories.
Rather than employ millions of people to maintain our infrastructure, we allow it to decay and ship our manufacturing and jobs overseas to Nations that are willing to invest in their future and that leads to trade deficits that suck hundreds of Billions of additional Dollars out of our economy along with the hundreds of Billions of Dollars we ship overseas every year to pay for our addiction to oil because, for 40 years…
Obamacare Career Ending Votes; Republican Chance to Win Senate; Expect House Blowout; Stimulus Appetite Greatly Diminished
by ilene - October 22nd, 2010 1:20 am
Obamacare Career Ending Votes; Republican Chance to Win Senate; Expect House Blowout; Stimulus Appetite Greatly Diminished
Courtesy of Mish
The public is still angered over Obamacare so much so that Dems Find Careers Threatened by Obamacare Votes
Seven months ago, Speaker Nancy Pelosi spent a busy week rounding up votes to pass the Senate version of the Democrats’ health care legislation.
It wasn’t easy. She had to get Democrats who had voted no in November to switch to yes in March. And she had to get Democrats who had refused to vote for the bill in November without an anti-abortion amendment to vote for a bill in March that lacked that language.
What about the districts of the House Democrats who cast the key votes that made Obamacare law? So how are they doing?
Take Betsy Markey of Colorado 4, who in 2008 beat a Republican who seemed fixated on the same-sex marriage issue. Markey cast a late-in-the-roll-call no in November, then publicly switched to yes in the week before the March 21 roll call. She’s currently trailing Republican Cory Gardiner by an average of 44 to 39 percent in three polls.
Consider John Boccieri of Ohio 16, who switched from no to yes in a TV press conference in which he said the bill would do great things for his constituents. Boccieri’s district was represented by Republicans for 58 years until he was elected in 2008. It looks like it will be again next year. In three polls, Republican Jim Renacci leads Boccieri by an average of 46 percent to 36 percent.
Then there is Suzanne Kosmas, a longtime real estate agent who beat a Republican with an ethics issue in 2008. She announced her switch from no to yes late in the week before the roll call. She’s now running behind Republican Sandy Adams by an average of 47 percent to 40 percent in three recent polls.
To put these numbers in perspective, it’s highly unusual for an incumbent House member to trail a challenger in any poll or to run significantly below 50 percent. But these three Democrats are running 5 to 10 points behind Republican challengers, and none tops 40 percent.
The article notes that Bart Stupak of Michigan 1 opposed the original bill over an abortion clause along with 5 others known as the "Stupak Five".
by ilene - October 21st, 2010 4:18 am
On Friday, Fed chairman Ben Bernanke made the case for a second round of quantitative easing (QE) claiming that inflation is presently "too low" to achieve the Fed’s dual mandate of price stability and full employment. By purchasing long-term Treasuries, Bernanke hopes to lower bond yields and force investors into riskier assets. That, in turn, will push stocks higher, making investors feel wealthier and more apt to boost spending. (Re: "trickle down", when investors increase spending, it reduces the slack in the economy and lowers unemployment.) Thus, QE is intended to divert investment to where it is needed and to lift the economy out of the doldrums.
That’s the theory, at least. In practice, it doesn’t work so well. Over a trillion dollars in reserves are still sitting on banks balance sheets from QE1. The anticipated credit expansion never got off the ground; the banks loan books are still shrinking. Bernanke fails to say why more-of-the-same will produce a different result. QE is also risky; in fact, it could make matters worse. Unconventional methods of pumping liquidity into the economy can undermine confidence in the dollar and trigger turmoil in the currency markets. Trading partners like Brazil and South Korea are already complaining that the Fed is flooding the markets with money pushing up their currencies and igniting inflation.
The threat of more cheap capital is causing widespread concern and talk of a currency war. If Bernanke goes ahead with his plan, more countries will implement capital controls and trade barriers. The Fed is clearing the way for a wave of protectionism. Quantitative easing, which is essentially an asset swap--reserves for securities--will not lower unemployment or revive the economy. Low bond yields won’t spark another credit expansion any more than low interest rates have increased home sales. The way to tackle flagging demand is with fiscal stimulus; food stamps, state aid, unemployment benefits, work programs etc. The focus should be on putting money in the hands of the people who will spend it immediately giving the economy the jolt that policymakers seek. QE doesn’t do that. It depends on asset inflation to generate more spending, which means that we’ve returned to the Fed’s preferred growth formula--bubblenomics.
Quantitative easing is also extremely costly for, what amounts to, modest gains. Consider this, from the Wall Street Journal:
by ilene - September 28th, 2010 12:43 pm
Courtesy of The Pragmatic Capitalist
Apparently I am not the only one who took issue with David Tepper’s comments that the
“Too bad we weren’t invited as a guest on CNBC last Friday to engage in a friendly debate with this portfolio manager because he didn’t outline the third scenario, either because he doesn’t believe it or he just plain didn’t contemplate it or he’s simply not positioned for it. That third scenario is that the economy weakens to such an extent that the Fed does indeed re-engage in QE, but that it does not work. So the “E” goes down and the P/E multiple does not expand. Maybe it even contracts since it already has spent the past number of years reverting to the mean as are so many other market and macro variables (for example, the dividend yield, savings rate, homeownership rate and debt ratios). In this scenario, the stock market does not go up; it goes down.
Is it possible that QE2 won’t work? The answer is yes. How do we know? Well, because the first round of QE didn’t work. After all, if it had worked, the Fed obviously would not be openly contemplating the second round of balance sheet expansion. If the objective was narrow in terms of bringing mortgage spreads in from sky-high levels, well, on that basis, it did help.”
I don’t entirely agree here. QE1 worked because we were in a different environment. The problem Bernanke was targeting in 2009 was one of bank balance sheets. Bank balance sheets were loaded with toxic assets so replacing these assets with cash was most certainly beneficial. It eliminated much of the risk associated with the banking system. As Bernanke said at the time, the point of QE was to alleviate pressures in the credit markets. As we can see from credit spreads he certainly succeeded in this regard. But this is no longer the environment we are in. As I said last week there are no bank balance sheets to fix. There is no…
by ilene - September 21st, 2010 4:20 pm
Courtesy of Steve Randy Waldman at Interfluidity
Last Monday, I had the privilege to meet up with a bunch of bloggers and Treasury officials for what might be described as a “rap session”. The meeting was less formal than a previous meeting. There were no presentations, and no obvious agenda. Refugees from the blogosphere included Tyler Cowen, Phil Davis, John Lounsbury, Mike Konczal, Yves Smith, Alex Tabarrok, and myself. Our hosts at Treasury were Lewis Alexander, Michael Barr, Timothy Geithner, Matthew Kabaker, Mary John Miller, and Jake Siewart. You will find better write-ups of the affair elsewhere [Konczal, Lounsbury (also here), Smith, Tabarrok]. Treasury held another meeting, with a different set of bloggers, on Wednesday.
It is bizarro world for me to go to these things. First, let me confess right from the start, I had a great time. I pose as an outsider and a crank. But when summoned to the court, this jester puts on his bells. I am very, very angry at Treasury, and the administration it serves. But put me at a table with smart, articulate people who are willing to argue but who are otherwise pleasant towards me, and I will like them. One or two of the “senior Treasury officials” had the grace to be a bit creepy in their demeanor. But, cruelly, the rest were lively, thoughtful, and willing to engage as though we were equals. Occasionally, under attack, they expressed hints of frustration in their body language — the indignation of hardworking people unjustly accused. But they kept on in good spirits until their time was up. I like these people, and that renders me untrustworthy. Abstractly, I think some of them should be replaced and perhaps disgraced. But having chatted so cordially, I’m far less likely to take up pitchforks against them. Drawn to the Secretary’s conference room by curiosity, vanity, ambition, and conceit, I’ve been neutered a bit. There’s an irony to that, because some of the people I met with may have been neutered, in precisely the same way and to disastrous effect, by their own meetings and mentorings with the Robert Rubins and Jamie Dimons of the world.
by ilene - September 13th, 2010 5:05 pm
Courtesy of Mish
Over the past few weeks, many people have asked me to comment on John Hussman’s August 23, 2010 post Why Quantitative Easing is Likely to Trigger a Collapse of the U.S. Dollar.
Most wanted to know how that article changed my view regarding deflation. It didn’t.
Several others went so far as to tell me that Hussman was calling for hyperinflation. They were point blank wrong.
Here is the pertinent section from Hussman’s September 6, 2010 post The Recognition Window.
A note on quantitative easing
One of the things I’m increasingly dismayed to learn is that no matter how much detail, data, and qualification I might include in these commentaries, my conclusions will often be summed up by writers or bloggers in a single sentence that often bears no relation to my point. For instance, my view that quantitative easing will trigger a "jump depreciation" in the dollar has evidently placed me among analysts warning of hyperinflation and Treasury default (a club whose card is nowhere in my wallet).
To clarify once again – I emphatically do not anticipate inflationary pressures until the second half of this decade. As I’ve repeatedly emphasized, the primary driver of inflation – historically and across countries – has been growth in government spending for purposes that do not expand the productive capacity of the economy.
Quantitative easing does not pressure the dollar by fueling inflation. It has a much more subtle effect (but one that can be expected to be amplified if fiscal policy is long-run inflationary as it is at present). Normally, equilibrium in capital flows between countries is achieved through changes in interest rates. As a result, countries with greater capital needs or higher long-run inflation tendencies also have higher interest rates. If interest rates can adjust, exchange rates don’t have to. But notice what quantitative easing does: by sitting on long-term bond yields (and creating a negative real interest rate differential versus other countries), quantitative easing prevents bond prices from acting as an adjustment factor, and forces the burden of adjustment on the exchange rate.
While some observers have noted that the value of the Japanese yen did not deteriorate dramatically over the full course of quantitative easing by the Bank of Japan – from its beginning until it was finally wound down