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Sunday, March 3, 2024

Monday Mop-Up

Whee, that was fun!

I started the morning off boasting about my power to control the markets and I posted a chart that showed the different psychological points we go through as the market moves.  I have to thank the Nasdaq for hammering home my point by almost exactly following that chart in today's actual movements:


That is the intraday chart of the Nasdaq (in gray) against the chart from this morning.  How many other analysts do you know who draw the day's chart BEFORE the market opens? 

THAT is the kind of service you can expect at PSW!  On the less egotistical side of the market, I gave up a little early and drew back on front-month calls as the market weakness and my lack of puts (as I sold out on last week's dip) left me uncomfortably unbalanced.  It is interesting to see how my comments to members follow (or don't follow, as the case many be) the panic/euphoria model above:

  • 10:05, point 2 (The trend is holding, I'll buy at the next consolidation):

    • Index puts – I only have 200 DIA Sept $230s left and they are offset by 250 Oct $131 and $133 calls so I would have to say I’m neutral there. I’d really like to see us break up here but if 13,100 is going to offer resistance on a day when the Hang Seng gains 6% and Europe gave us a good start then I’ll probably be dumping those calls and upping the put side.
    • There’s no big data this week so it’s all about investor sentiment but don’t forget I just said above that we expect weakness today as the energy stocks drag down the financials and the other indices. As long as APPL, GOOG and RUT hold it together I can hold onto some hope. With volatility the way it has been this month, any move under 100 points is just chart noise anyway!
  • 10:45, point 3 (Damn, I missed the consolidation… Let's buy):

    • Setting tight (15% of profits) stops on all gainers over 50% as I just don’t like the internals so far. My perspective is I’d like to have more cash and less positions, especially as the big money index plays are proving so profitable it is almost a waste of energy to watch the small fry.
    • Energy sector recovering a bit but S&P still weak on financials
  • 12:40, point 9 (OK, let's wait for it to recover – otherwise this will have to be a really loooong-term investment):

    • VIX dropping on a down day is a very bad sign!
  • 1:03, point 11 (Enough!  I'm selling out!  And staying out!):

    • Index puts – just adding to my DIA Sept $130 puts at the moment, seeing how we handle 13,000.
  • 1:27, point 12 (Good thing I sold everything):

    • Speaking of stuffing money in a mattress – the 3-month TBill just dropped 1% TODAY. That is unheard of and horrifying. I said earlier that cash is good. Options will deflate with the VIX as we got quite a bump in premiums last week so cash is better than options at the moment. I suppose you could buy some stock but those aren’t too appealing right now either. GE, AAPL and TEVA are all great long-term but who’s to say where the bottom is in this mess.
  • 2:09, point 13 (It's going to tank again anyway):

    • I cannot overstate how major it is that the short-term treasuries dropped 25%+ today. That cash is gone and will not even be considering coming back to the market for 3-6 months. How are you going to have a recovery when all the fuel is being buried in long-term storage? This is serious stuff people!

      • 3:33 (response to clarification): T Bills – 3 to 6 months is long-term if you are waiting for cash to come in and pop your option positions. There is a big difference between moving money to sweep accounts as it flows out of energy and broker secors (because that indicates a pending rotation) and moving money to TBills
  • 2:31, point 14 (Told you so):

    • Oil – sickening as usual. Oil back to the low $60s is the only thing that is likely to get the market back in gear but these guys would rather see this country bankrupt than give up the last few billion they can squeeze out of consumers.
  • 3:10, point 16 (What the Hell?):

    • Wow, OIH turned positive! We are still at the mercy of programs and those programs are being tinkered with as quant funds scramble to make up losses so the possibility of a major screw up are increasing exponentially.
  • 3:20, point 17 (More crazies who are going to be taken to the cleaners):

    • Very low volume compared to Friday. I’d love a low volume break of last week’s highs, that would be enough to get me back in a little. Low volume indicates a lack of seller interest (as long as we drift up) and passing critical resistance around 13,250 will probably range us between 13,200 and 13,600 which is the low end of what I was hoping for in a consolidation but a failure at 13,200 will be a very nasty sign as it held a good floor for the first 2 weeks of the month.

      • 3:24: Is there ANY news that explains this run?
      • 3:29: Announcement of Dodd, Bernanke, Paulson meeting tomorrow seems to be the catalyst. I’m selling into this nonsense! If these guys seriously consider a drop from 14,000 to 13,000 a national emergency then I’m just going to all in long on GM and walk away because there is no end to this idiocy!
  • 3:39, point 18 (This is it!  I knew this was going to happen all along!):

    • Selling – getting out of Sept/Octobers that are up more than 50%. I’m in doubt so lots of half selling but I’m very upset about still being 20% invested, even though that is caused by big gains in positions. I think that a single piece of bad news can drop this market like a rock and the way it is gyrating and running around on rumors indicates that retail investors are in control which means professional bulls and bears are likely just yanking money out on both ends and dumping them into treasuries, indicating Q3 is going to be a write-off.
  • 3:59, point 19 (Drat!  I'll buy in again…):

    • Fed – I may be over analyzing but I say that they MUST say they do not see a problem worthy of extraordinary action. Any move to cut rates hurts our global position and we simply can’t afford it. Can we be THAT stupid and take a 3rd mortgage out on our future in order for RIMM to get to $250? Yes, we are that dumb as a country but I like to think we are not and I also like to think investors see through this putting a band aid on a severed limb sort of policy nonsense but they probably don’t either. I will be right, because fundamentals do matter, but they don’t matter to the goofballs who buy into this crap over the short run
    • This is a huge energy-led recovery. Well, at least 130 points used to be considered a big intra-day move… Just the Dow really (I did a DD on the puts), S&P barely positive, Nas up a few. CFC down 7% and no one cares, Russell way still flat, NYSE flat (usually up with the Dow), oil strangely selling off over an hour after the NYMEX closes.

So I suppose I don't react like a "typical" investor, although it was very hard to resist the late-day buying frenzy, especially with that 1,200-point Hang Seng gain hanging over my head but I just can't see what fundamental change occurred that should make me take my precious cash and cast it back into the markets winds, especially when they are blowing so unpredictably!

[conrad]Had there been a "good" reason for the rally, I may have felt differently but the market was running up on pure Fed speculation and I found out later in the evening that Sen. Kent Conrad (D – ND), chairman of the Senate Budget Committee, today called on St. Louis Fed President William Poole to resign for his comments last Wednesday that the Fed would not need to make a decision on interest rates before its Sept. 18 policy meeting barring “some sort of calamity taking place.”

[William Poole]Conrad says in a statement: “Mr. Poole made a reckless, irresponsible statement. When there is fluctuation in financial markets, people have to be able to rely on the statements of Federal Reserve officials. For Mr. Poole to state that there would be no action before the September meeting contributed to a lack of confidence in financial markets.”

Has Conrad lost his friggin' mind?!?  Aside from the very obvious fact that Poole's statement was the ONLY responsible one made by the Fed this year – he is, in fact, a VOTING MEMBER, which one would think a Senator would understand means that he is entitled to have AN OPINION, even if it doesn't conform to his!  Methinks Kent took a little hit in the markets last week…

See, I can be pissed at Democrats too!

Sage and I were on the phone at midnight watching the Hang Seng fly up another 600 points (yes we actually do this pretty much 24 hours a day!) and I went to bed thinking I was going to be a pretty embarrassed bear but they gave it all back by the close and the Nikkei pulled back as well but we'll deal with that in my morning post.




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