Archive for 2010

Short-Term Advance Could Set Up Major Top

Short-Term Advance Could Set Up Major Top

By David Grandey
 
So here we are, still in this B wave up, snapback rally, whatever you want to call it.
 
While the Full Stochastics are back to being overbought we have the general structure showing the potential of some more work to do on the upside next week.
 

 
A few weeks back we were talking about the 78.6% fib level. The drop off of the 1130 level down was so fast that one could say it’s the equivalent of a gap. Lately a lot of gaps have been getting filled and should this one get filled it would not surprise us. In fact we’d prefer it to get filled to get it out of the way if we are going to get a lasting top that is.
 
The pink uptrend channel is still intact with Friday’s action (albeit feebly) marking the start of a potential POH (Pullback Off Highs).
 
The wave structure whether you want to call it ABC or 12345 makes no difference to us as a potential wave C or 5 as shown in the chart above basically say the same thing. Of course they can truncate too you know (stall and fail).
 
Here is the 60 Minute OTC Comp chart to go along with the S&P 500 for your viewing pleasure.
 

 
For those of you who are not familiar with Elliott Wave remember it’s all about trends as in trendlines. This is for you:
 
With the S&P 500, it’s all about the Bottom PINK LINE. It’s all you need to know. It’s still intact and still the order of the day. We will not get any decisive break to the downside or the start of a C wave TILL WE BREAK THIS LINE.This is why it’s imperative that we continue to monitor this line.
 
In Summary:
 
It’s almost as if about the only thing that is going to get this market into gear is a news driven futures related computer program driven pop as manic Monday is upon us. And we all know what happens shortly there after that occurs right? Nothing. One can only imagine what the matrix will cook up.
 
Should we work higher next


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Jim O’Neill Redirects Greek Problems To The Wonderful World Of BRICs, Suggests A German-BRIC Currency Union (For The Sensational Journalists)

Courtesy of Tyler Durden

Read the following from Goldman’s Jim O’Neill, take two tablets of hopium, and first thing tomorrow use REDI to buy 10 times your net worth in BRIC stocks – buy indiscriminately – they are all going up, up, up. Also don’t forget to buy some Man U leaps. After all with a hundred years of momentum behind you (and billions of dollars spent in lobbying to preserve the status quo) it is not as if something new can ever come out of left field (both literally and metaphorically). At least Goldman’s permabullish analyst has had the chance to read the Goldman Monthly FX Analyst report, which substantially dropped its $/BRL 3/6/9 month targets from R$1.60, R$1.65 and R$1.75 to R$1.75, R$1.85 and R$1.90. O’Neill notes: “it does appear [the Real is] overvalued” Needless to say, we were looking forward to this happening for quite some time. And as much as Goldman touts the BRICs, we are confident that our own creation, the STUPIDs, will be getting much more airtime over the next decade.

I am just back from -another- fantastic trip to Brazil-Rio to be specific……large part of it vacation, a couple of days at the end , business, and the main timing of it, was  as a guest of the Mayor and his staff for a special BRICs conference Monday/Tuesday of this week, to help launch the opening of a new BRIC research centre at one of the local universities . I spoke on the opening panel with some well known important local figures, as well as a guest from Russia. There were a number of other panels that pursued aspects of the BRIC topic, including policy types from all the BRIC countries, ranging from the validity of their efforts to be a “joint force”, to environmental issues. Unfortunately, I missed most of these sessions as I had to earn my keep and visit a significant number of clients in Rio- which was also very interesting.
 
It is indeed, a tough life, but someone has to do it…It was such a dilemma that the event was held at the end of Carnival, and that the weather was over 40 degrees nearly every day, and I went to the Maracana again, and all sorts of other wonderful things…. It was quite a


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Swing trading virtual portfolio – week of March 1st, 2010

This post is for live trades and daily comments. 

To learn more about the swing trading virtual portfolio (strategy, membership etc.), please click here

- Optrader





Some Thoughts on Fannie’s Horrible Year

Courtesy of Bruce Krasting

Fannie Mae released it’s annual and 4th Q numbers after the close on Friday and during one hell of a messy snowstorm. FNM posted a loss of $16.3b for the quarter and $74.4b for the year. An unmitigated disaster. The timing of the release suggests that they were hoping that no one would notice how bad the last twelve months were.  There was nothing particularly new in the most recent quarter, just more bad news. What is happening at Fannie is also happening at Freddie Mac and to a different extent at FHA. There are some trends that I think are worth noting.

It would be a gross overstatement to suggest that Fannie has found religion and is now committed to making ‘good’ loans versus ‘bad’ ones. In my opinion they still must tighten their lending standards if they expect to stabilize their credit losses. But they have moved to restrict lending to better borrowers. The process is ongoing, but the direction is becoming clear.

At this point all three of the D.C. mortgage lenders are pulling on the credit reins. It is obvious from the report the direction that has been taken. Significant additional measures have been announced by the Agencies that will kick in between now and June.

For those economists out there that are scratching their heads as to why they missed by a mile on their expectations of New and Existing home sales last month they need only look at this report for an explanation. It is harder to get a mortgage today than it was a year ago, It will be harder to get a mortgage in one month from today and even harder to get one six moths from today. For me the implications of this are very obvious. Broad RE values will have to go lower, high-end homes will suffer the most in percentage drops.

Consider the following slide.

A major issue for Fannie and the entire country is the REO problem. As of YE 2009 they had an inventory of 89,000 homes. Looking at the information provided one can add up the foreclosed properties from 2007-2009 (290,000) subtract the current inventory (86,000) and come up with a number of 200k homes sold in the past two years. And that number does not…
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GGB Investors Demand 7% Minimum Yield As Greek Government Demands Bailout From Rich Expats

Courtesy of Tyler Durden

The bond deal that was so very much rumored was going to get done in mid (and at most late) February, never really took off. The reason: with each passing day, investors (what little is left of them) are demanding a greater and greater premium, as the country now has less than 3 weeks of cash left at the current cash burn rate. And this is before even counting for €16 billion in maturities coming up through May. According to BusinessWeek the most recent expected benchmark pricing is in the 7%+ range: anything below that liekly will not price. 

For now, the tensions over Greece haven’t locked it out of the debt markets, provided it’s willing to pay up, said Michiel De Bruin at F&C Investments.

“We would consider participating in the new bond sale if there’s a good premium” over existing debt, said De Bruin, who helps manage $28 billion of assets as head of euro government bonds at the Amsterdam-based firm. “If they show progress on cutting the deficit, people will be more comfortable with Greek risk,” he said.

De Bruin estimates the country will have to pay a so-called spread of 30 basis points to 50 basis points more than the yield on its current 10-year benchmark bond, which traded at 6.38 percent on Feb. 26, according to data compiled by Bloomberg.

Not only that, but Greece has likely burned bridges with the last round of bond investors, who will think long and hard before giving Greece any more money.

Some investors in Greece’s five-year bond sale on Jan. 25 were allocated more notes than they wanted, and the securities fell when fund managers divested their holdings. The decline pushed the yield on the notes up 37 basis points, or 0.37 percentage point, according to data compiled by Bloomberg.

Another useful, if not too surprising revelation: the ongoing rating agency downgrade barrage does not need to lock out Greek bonds from ECB collateral – the cuts already may have already done necessary (and sufficient) damage. It turns out presumably sophisticated funds still make their investment decisions based on rating agency ratings.

Kokusai’s Global


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Step Aside Greece: How Gustavo Piga Exposed Europe’s Enron In 2001 – Focusing On Italy’s Libor MINUS 16.77% Swap; Was “Counterpart N” A Threat To Piga’s Life?

Step Aside Greece: How Gustavo Piga Exposed Europe’s Enron In 2001 – Focusing On Italy’s Libor MINUS 16.77% Swap; Was "Counterpart N" A Threat To Piga’s Life?

Courtesy of Tyler Durden

It is not often that one finds smoking gun reports which refute all claims, such as those by EuroStat and Angela Merkel, in which the offended parties plead ignorance of the fiscal inferno raging around them, kindled by lies, deceit, and blatant mutually-endorsed fraud, and instead, now facing themselves in the spotlight of public fury, put the blame solely on related party participants, such as, in a recent case, Greece and Goldman Sachs. Yet a 2001 report prepared by Gustavo Piga, in collaboration with the Council of Foreign Relations and the International Securities Market Association, not only fits that particular smoking gun description, but the report itself was damning enough of another country, a country which used precisely the same off-market swap arrangement to end up with an interest expense of LIBOR minus 16.77% (in essence the counteparty was paying Italy 16.77% of notional each year as a function of the swap mechanics), in that long ago year of 1995. The country – Italy (for confidentiality reasons referred to in the report as Country M), was at the time panned as the Enron of the European Union due to precisely this kind of off-balance sheet arrangement by the Counsil of Foreign Relations. The counterparty bank: unknown (at least in theory, since the swap was highly confidential, and was referred to as Counterpart N), but considering the critical similarities in the structuring of the swap contract to that used by Greece in 2001, and that ISMA cancelled Piga’s press conference discussing his findings out of fear for the academic’s life, we can easily venture some guesses as to which banks value their recurring counterparty arrangements more than human life.

And only an idiot (here’s looking at you, EuroStat) would miss this striking revelation in the ISMA report made almost 10 years ago, envisioning not only Italy but Greece, which joined the euro on January 1, 2001: "Piga has unearthed some rather striking documentary evidence: an actual swap contract, indicating that one EMU entrant (who, owing to an agreement with the source of the documentation, will remain anonymous) used swaps to mislead other EU governments and institutions as to the size of its budget deficit,…
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Step Aside Greece: How Gustavo Piga Exposed Europe’s Enron In 2001 – Focusing On Italy’s Libor MINUS 16.77% Swap; Was “Counterpart N” A Threat To The Author’s Life?

Courtesy of Tyler Durden

It is not often that one finds smoking gun reports which refute all claims, such as those by EuroStat and Angela Merkel, in which the offended parties plead ignorance of the fiscal inferno raging around them, kindled by lies, deceit, and blatant mutually-endorsed fraud, and instead, now facing themselves in the spotlight of public fury, put the blame solely on related party participants, such as, in a recent case, Greece and Goldman Sachs. Yet a 2001 report prepared by Gustavo Piga, in collaboration with the Council of Foreign Relations and the International Securities Market Association, not only fits that particular smoking gun description, but the report itself was damning enough of another country, a country which used precisely the same off-market swap arrangement to end up with an interest expense of LIBOR minus 16.77% (in essence the counteparty was paying Italy 16.77% of notional each year as a function of the swap mechanics), in that long ago year of 1995. The country – Italy (for confidentiality reasons referred to in the report as Country M), was at the time panned as the Enron of the European Union due to precisely this kind of off-balance sheet arrangement by the Counsil of Foreign Relations. The counterparty bank: unknown (at least in theory, since the swap was highly confidential, and was referred to as Counterpart N), but considering the critical similarities in the structuring of the swap contract to that used by Greece in 2001, and that ISMA cancelled Piga’s press conference discussing his findings out of fear for the academic’s life, we can easily venture some guesses as to which banks value their recurring counterparty arrangements more than human life.

And only an idiot (here’s looking at you, EuroStat) would miss this striking revelation in the ISMA report made almost 10 years ago, envisioning not only Italy but Greece, which joined the euro on January 1, 2001: “Piga has unearthed some rather striking documentary evidence: an actual swap contract, indicating that one EMU entrant (who, owing to an agreement with the source of the documentation, will remain anonymous) used swaps to mislead other EU governments and institutions as to the size of its budget deficit, so as to falsely suggest compliance with the Maastricht Treaty.” Once all is said and done, and both the euro and the eurozone are forgotten history, it will…
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TCW On Greece: “Let It Burn”

Courtesy of Tyler Durden

TCW, which incidentally is facing some pretty serious problems of its own lately, chimes in on Greece. Komal Sri-Kumar, Chief Global Strategist, is painfully realistic in believing that Europe should be much more worried about keeping the strength of the eurozone intact, and if that means jettisoning Greece, and devastating the euro, so be it. In fact, for an export-heavy Germany, this is precisely, as Zero Hedge has long been claiming, the end goal.

 





Ze Germans: “Only The IMF Can Help Greece”

Courtesy of Tyler Durden

Those banana-hugging Germans strike back, and by doing so, throw the rotten apple of the imminent Greek collapse straight into America’s back yard: in today’s edition of Handelsblatt, German politicians have said that only the International Monetary Fund is the right institution to save Greece from going bankrupt. While the increasingly irrelevant Greek rumor-spreader has been very busy over the past few days, getting Greek newspaper Ta Nea to announce that now Caisse des Depots has entered the KfW bailout syndicate, in an interview with German TV station ARD, Merkel said that not only is this yet more gibberish but that there is no legal basis for any of the rumored actions. So what will happen to Greece? Well, if former ECB Chief economist Otmar Issing has his way, Greece’s dirty laundry will end up being washed by American taxpayers, because you see Greece is just as much a member of the IMF as it is of the EU, or so the Germans claim.

Rough google translation from Handelsblatt:

Former ECB chief economist Otmar Issing provides a similar view: “My preference is that you turn on the IMF, since Greece is a member of the IMF, not the European Union“, said the current chairman of the Intergovernmental Commission for the financial architecture for information in this newspaper recently the Europe Committee of the Bundestag. The monetary union was not a state, Issing argued, but a community of sovereign states. If you could help Greece, other countries refuse to help little, “he said.

Not all that shocking, a Greek default (but, but, it is only 0.00001% of world GDP or whatever), it is now confirmed, would be the next Lehman:

A bankrupt government would meet not only the euro zone, but shaking the entire global financial system. After the video of Obama, Merkel and Brown said the spokesman for the U.S. president, Robert Gibbs, Obama was convinced that the EU would respond “appropriately and effectively” to the crisis. On the foreign exchange markets, the continuing uncertainty sparked a new wave of speculation against the euro. According to the U.S. inspection CFTC, the number reached bets on a falling euro share price, a new record. This year, the euro against the dollar has lost about ten percent of its


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Weekly Wrap-Up – Buffett’s Daring Derivative Deal Does Well

I was going to talk about Buffett's annual letter to investors.

Fortunately, I procrastinated and other people did some detailed reporting like Ravi Nagarajan, Andy Fry, Scott Patterson and Joe Del Bruno – who does a great job of pointing out that Berkshire's 4th quarter results were propped up by Buffett's $1.05Bn gains in derivatives betting (something Buffett himself once called "weapons of mass financial destruction" but, as we well know – if you can't beat them…), which accounted for 1/3 of Berkshire's $3.06Bn profits

Buffett's biggest bet was selling a put against the S&P 500 back in March – a move I said at the time was BRILLIANT and Buffett himself now says about his own options trading:  "We are delighted that we hold the derivatives contracts that we do.  To date, we have significantly profited from the float they provide. We expect also to earn further investment income over the life of our contracts."  

What did Buffett do?  Exactly what we teach you to do here at PSW - he took advantage of an irrational move in the markets and SOLD INTO THE EXCITEMENT, getting a fat premium from some sucker that bet the S&P would not hold 666 5 years from now.  Buffett effectively sold $5Bn worth of puts that expires worthless at S&P 700 between 2019 and 2027, putting $5Bn in his pocket and holding aside $1Bn in margin, which is how much he's already ahead on the bet.  Like a good options trader, he has a plan and he's trading his plan, making sure his investment is on track and patiently letting time do it's work as it eats away at the put-holder's premium. 

What about the risk?  Well I can't speak for Buffett's stop-loss technique but we're talking about a company that has (had) $40Bn in cash using their excess margin to make a $5Bn bet that the S&P would not stay below 700 for 10 years.  Buffett and I both tell people – NEVER buy a stock (or sell a put against one) that you are not willing to own for 10 years.  The S&P was 5% below at the time and would have had to drop, perhaps, 20% more to cost him $1Bn so let's call the stop 550 on the S&P where Buffett risked 2.5% of his cash against a posible 400% gain on his $1Bn risk allocation over 10+ years.  While it is true that if the
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Zero Hedge

Enemy Of The People?

Courtesy of ZeroHedge. View original post here.

Via The Zman blog,

There has never been a time when normal people did not know the media was biased and biased in a predictable direction. For every non-liberal in the media, there were at least ten liberals. The ratio was probably higher, but then, as now, some lefties liked to pretend they were independents or some third option.

The media used to invest a lot of time denying they had a bias and an agenda, but the only people who believed them were on the Left, which had the odd effect of confirming they had a bias and an agenda.

...



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Phil's Favorites

A 2019 Earnings Recession?

 

A 2019 Earnings Recession?

Courtesy of 

Shout to Leigh!

On the new Talk Your Book – Josh Brown is joined by Leigh Drogen of Estimize, one of the leading providers of crowdsourced financial and economic data to talk about the trend in corporate profits that could potentially lead to an earnings recession later this year.

What is the thing that Leigh is seeing in the data that Wall Street isn’t yet picking up on? What segment of the stock market is most at risk? Why is the crowd smarter than the narrow consensus of Wall Street analysts?

Check out Estimize ...



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ValueWalk

D.E. Shaw Investment Calls For Leadership Change At EQT

By ActivistInsight. Originally published at ValueWalk.

Elliott Management has offered to acquire QEP Resources for approximately $2.1 billion, contending the oil and gas explorer’s turnaround efforts have done little to lift the company’s share price. The company responded and said that a thorough review of the proposition is imperative in order to properly act in the best interests of shareholders, “taking into account the company’s other alternatives and current market conditions.” The news came only a month after Travelport Worldwide agreed to sell itself to Siris Capital Group and Elliott’s private equity arm Evergreen Coast Capital for $4.4 billion in cash and two months after Athenahealth was bought by Veritas and Evergreen for $5.7 bi...



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Kimble Charting Solutions

Gold & Silver Testing Important Breakout Levels!

Courtesy of Chris Kimble.

Gold and Silver from a long-term perspective have created a series of lower highs over the past 8-years. Will 2019 bring a change to this trend? A big test is in play!

Gold since the lows in 2016 has created a series of higher lows, while Silver may have created a double bottom.

Gold & Silver are currently facing break attempts a (1) and (2). These falling resistance lines have disappointed metals bulls for the past few years.

The direction of Gold and Silver weeks and months from now should be highly influenced by what each does as they are attempting to break above important resistance levels.

To become a member of Kimbl...



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Insider Scoop

UBS Says Disney's Streaming Ambition Gives It A 'New Hope'

Courtesy of Benzinga.

Related DIS Despite Some Risks, Analysts Still Expecting Double Digit Growth From Communications Services In Q4 ...

http://www.insidercow.com/ more from Insider

Digital Currencies

Russia Prepares To Buy Up To $10 Billion In Bitcoin To Evade US Sanctions

Courtesy of Zero Hedge

While the market has been increasingly focused on the rising headwinds in the global economy in general, and China's economic slowdown in particular, while the media is obsessing over daily revelations that Trump may or may not have colluded with Russia to get elected, a far more critical, if underreported, shift has been taking place over the past year.

As we reported in June, whether due to concerns over draconian western sanctions and asset confiscations following the poisoning of former Russian military officer Sergei Skripal, or simply because it wanted to diversify away from the dollar, Russia liquidated virtually all of its Treasury holdings in the late spri...



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Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's failure based on his personality, which was evident years ago. This article, written in 2017, references a prescient article Bill wrote before Trump became president, in July, 2016, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

Reminder: We are available to chat with Members, comments are found below each post.

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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