9.1 C
New York
Saturday, November 26, 2022

Subscribe

Which Way Wednesday – 1,333 or Bust!

SPY WEEKLY1,333.

That’s the number Art Cashin is looking for on the S&P as our breakout line.  I’ve been using 1,332 but Art is right as the bottom on the S&P in March, 2009 was 666.79 so, tecnically, 1,333.58 is a 100% gain on the S&P off that low, not 1,332, which was my lazy rounding off 666.  “Everyone’s got this psychological area of 1,333 [on the S&P 500]—they want to prove that we can double where we were from the panic lows,” Cashin told CNBC. “So later in the week, the bulls are going to circle the wagons and take another shot at it and that will tell us whether it’s a rest and recoup or not.”

Well, that pretty much sums things up.  Have a good day everybody…  

We had a good day yesterday with our bullish positions really starting to fly and our $25,000 Virtual Portfolio is up to a virtual cash position of $26,240 in day 12 with a fairly even mix of winners and losers in our still too-bearish mixture.  The mixture on the Nasdaq yesterday was also bearish and you wouldn’t know it from their down 5-points finish (0.17%), but declining volume yesterday was 1.35Bn vs. just 637M of advance.  

Fortunately (by some amazing coincidence that could not possibly have anything to do with IBanks masking their selling by pumping the top of the Nas while selling the rest), this 2:1 bearishness in volume did not scare off the after-hours crowd, who immediately popped the Nasdaq futures from 2,382 to 2,391, right back to Monday’s highs as if 2 days of selling never happened.  

IYT WEEKLYThe Dow is just as excited with 80 points worth of gains since 3:30 yesterday and the S&P is, of course, right up on their 100% line, as are the Transports (see Dave Fry’s chart), which we’ll be watching as they test the 95 mark on IYT.  I had mentioned to Members in Chat yesterday that the Transports were the key to breaking the S&P over the line and we discussed FDX’s amazing action in yesterday’s post that seemed like a Gang of 12 effort to manipulate the Transports ahead of Cashin’s predicted run at 1,333 – NO MATTER WHAT!

We agreed and we were so bullish on yesterday’s dip that we even bought NFLX!  Now that is bullish!  Just a short-term in and out but you know the market is idiotic when NFLX sells below the $240 line and we decide it’s a buy.  We had a half-dozen other long-term bullish plays including, I’m happy to say, DE, who had a nice report this morning.  

We had a long conversation at the end of yesterday’s chat about building a more bullish virtual portfolio as we are resigned to bringing more cash off the sidelines on the bull side if the market does get through our levels.  We’ve been adding bullish positions for two weeks, beginning with our Breakout Defense Virtual Portfolio ("5 More Trades that Make 500% in a Rising Market) from the 5th, which is already up ridiculously.

For example, one trade idea was a short sale of the SPX March $1215 puts for $6.  Those are already $3.30 for a nice, 45% gain in 11 days.  That was paired up with a bull call spread that is still working so I can’t talk about it here (our net was just .60 though, so imagine the gains as the S&P goes up and up!) but you get the idea – Members of the top 1% investing class can use leverage to make bets like this (that the S&P won’t fall below 1,215 by March expirations) and make 45% in 11 days to keep us ahead of inflation while the bottom 99% suck wind.  I don’t think it’s fair – I think it’s the worst thing in the World and I say so pretty much every day but that’s the game and we’re not going to play to lose, are we?

I do my charitable bit, of course.  Go back and read our totally free "Secret Santa’s Inflation Hedges" that I published on Christmas Day and see if this kind of trading would have been helpful to you for the past 6 weeks.  If so, I would STRONGLY recommend not missing the next round IF the S&P breaks the levels Art and I are watching because this runaway inflation train may have, as Ian Anderson tried to warn us: "No way to slow down."  The POMO train left the station yesterday at 11:12 and TradeBot 3000 reminded our Members to buy the f’ing dips (as well as making a great call on oil!):  

As noted by TradeBot, 82.50 is a significant point of resistance on IWM and that kept us short-term bearish ahead of the possible breakout.  We are also still expecting a capitulation move on the NYMEX, based on the barrel count we’ve been tracking on the March contracts which close next week.   With Monday a holiday, there should be a lot of pressure for the pump boys to get out of the front-month contracts ahead of the weekend.  That, we reason, should knock back XLE and OIH and that, then should knock the markets down a peg as well.  If that does not happen, then we are wrong and we have a lot of short-term flipping to do!  

With the NYSE being taken over by Germany, I reminded members not to mention the war and, of course, it’s not such a bad thing to have Germany take charge of such a vital part of the US economy.  Maybe they will actually regulate it for a change!  Meanwhile, as time is short, here is a quick rundown of the bad news that "just doesn’t matter" this morning:  

Does it matter?  No, of course, not!  As Art said, "they are circling the wagons" today to get us over the hump on the S&P so bad news will bounce right off the markets – until it doesn’t.   And who, you may ask, are "they"?  How about our friends at JP Morgan (JPM), one of our favorite financial holdings, who just reported that they did not lose money on a single trading day in the ENTIRE 2nd HALF of 2010, making $76 Million dollars per day on the average for all of 2010, when they did have 8 losing days in the first half that left their record at 252 wins and 8 losses for a 96.9% success rate.  Sure the odds are 3,768,943,762,399 to one against having that kind of winning percentage but hey – THAT’S WHY WE’RE LONG ON THEM! 

If the game is fixed – it is smart to be on the guy the game is fixed in favor of, right?  

 

193 COMMENTS

Subscribe
Notify of
193 Comments
Inline Feedbacks
View all comments

Sounds like a copy of your stuff Phil, yours are much more amusing…

Phil, I ask again.. do you expect the Fed to admit to what they are doing?  We need to see past this charade and prepare for the inevitable.  There is no political will in this country.  The Fed is all alone to work their evil magic.  This is all about a slow burn to keep the vigilantes at bay. 
 
When is the soonest you think a basket of currencies could be put together to replace the $ as the reserve currency?  I know you are  biased but please try and rise above~~

MORE PURPLE!!!   🙂

 Phil/Podcast – good! Its going to be longer, right? Btw, who is your audience for this?

Phil / pomo — pomo <– that almost looks like poRno on my screen, might as well be. Any thoughts on the reasoning or ramifications of front-loading the pomo schedule? Will they start QE3 early if need be? Next time I’m going to hop up on (or get hopped up on) a mushroom to read those notes and maybe put on some floyd

 At the risk of taking up too much space, here’s a take on the potential for QE3 – and why perma-bears should be careful.

QE policy is no longer about supporting the economy – its main purpose is to avert a massive sell-off in bond markets, says renowned fixed income manager Bruno Crastes.
Speaking at Citywire’s Paris forum, former Amundi fixed income CIO Crastes said that QE has become a ‘communications strategy’, and if the Fed gets it wrong the outcome would be worse than the bond rout of 1994.
‘There is a big issue in bond markets right now that we have never experienced,’ he said. ‘It’s the fact that there has been so much supply in the market especially in the five to 10 year area in US Treasuries, that many banks are very long this part of the curve.’
‘This is for good reasons, as this is what the Fed gave them in order to recapitalise them. The big problem is that when you start hiking rates, the part of the curve that is hurt most is the five to 10 year. This is where you have all the banks. So, as soon as the Fed gives a signal to the market that they will start hiking rates, the banks will start selling.’
‘If the sell-off comes, it could be worse than ’94. And if banks don’t sell, hedge funds will sell their equity.’
‘So there’s a big turnaround for the Fed – how do they get out of that? The best way to me, speaking as a market guy, is to create an investor who will remain long: the Fed. So my interpretation is that the Fed is doing QE not because they need to support the economy. It’s because they want to start buying treasuries in order to make the transition easier. 
He warned: ‘You cannot rule out a QE3 – not because they believe the economy is not doing well, but to prevent the market from plummeting in the face of signal about hiking rates.’ 
Crastes takes the view the US is further along the route to recovery than many investors realise. ‘The first thing that makes me very positive on the US economy is something I have been following for the last 20 years – and it always works. This is the yield curve.’ 
‘We said one year ago, to the bearish guys, you cannot see a double-dip with such a steep yield curve. It never happens.’  
‘This is the best indicator for future growth,’ he said. ‘As long as the curve remains steep, in spite of QE, in spite of the pension funds, in spite of the demography; it’s the best indicator, the one you have to rely on when it comes to defining your strategy about future growth. The curve is very steep, especially in the US, it is steeper than after the Enron crisis. So this is a strong indicator for strong growth going forward.’
 

VIX/cnar – you understand the original play, so the Feb 17  Ps were rolled to March 17 Ps for a 10c credit (at least that is what I received when I rolled).  Everyone should be within reason on that.  For the Feb 17/19 BCS, we rolled the 17s to the March 17s for a 1.55 debit, so total in for now is 2.20.  When we sell the Mar 19 Cs, we will reduce the costs and I will subtract out that total so instead of 2.20 it willl be 2.20 – 1.XX for the Mar 19 Cs..  Phil also posted this….

6 VIX March $17 calls at $2.20 ($1,560), now $1.95 – rolled from Feb $17 calls at $1.55.  Intention is to cover with vertical caller after Feb caller expires.

Hope that helps.

Another attempt to post strongest/weakest day of the week for SPY from 8/25/10 (beginig of the current trend). Works best for indexes less good for stocks. I am always buing/selling indexes using this table

Mostly I’d like to see if I can post a table 🙂 
<iframe title="An EditGrid spreadsheet created by user/chfut" longdesc="http://www.editgrid.com/user/chfut/UpDown" name="gridContainer" frameborder="0" src="http://www.editgrid.com/publish/html/user/chfut/91234526/A1:F8?plain_table_mode=1&bgcolor=%23ffffff&fgcolor=%23000000&version=2&frame_style=height%3A147px%3Bwidth%3A100%25" style="height:147px;width:100%">&nbsp;</iframe>

Looks like Thursday b’f close is the day to buy based upon that vic.

 What happened?  I can’t find a reason anywhere?

It is only two hudreed contracts. May be something is going to happen but not yet

 5:55 PM "We’re out there and very comfortable being bullish," Laszlo Birinyi tells CNBC, setting a range of 30%-60% upside for the S&P by 2013. "There was an extraordinary start to this bull market, and when you have starts similar to this, you end up with some very substantial moves," listing XOMBPTRLPCLN and CMI among his favorites

 The March Oil contracts are still trading around $85.00 on TOS. But the for some reason they have the April contract prices as the front month… Fat finger!

And that April contract is also the front month on my data provider. Someone is messing up somewhere at the exchanges! 

/CLH1 is March 2011 Oil futures. /CL is usually the front month, but it’s showing /CLJ1 which is April.

 So should we short the futures here right now?

I would not touch it until we figure out what happened… I wonder if it’s the same with all brokers. 

ROTFLMAO! Now I know where he gets the handle "Pharmboy"

Pharmboy
February 16th, 2011 at 4:20 pm | Permalink  
I need a drink after reading that.  Oh, and some uppers to counter the drink….red bull and vodka it is. 

 Phil: Fed
After reading those minutes and your review my question is, is that disconnect from reality typical?  I never used to pay attention other than to the MSM soundbites, "the fed today lowered/raised rates".  In any any case I can only say WTF.  Newspeak, bizarro world, are there no checks and balances on these guys.  As far as when they decide to start raising rates don’t the countries buying our debt have more influence on that?
Glad I was drinking with Pharmboy while I read that section 🙂 

Phil, they usually switch what contract the show on TOS and marketwatch a few days before the end of that months contract…. I was short oil the first time that happened to me, I almost sh!t myself…..

Another ridiculous silly crazy day, but hey, at least NFLX and CMG were down.
 
After Hours, AAPL is down on this
http://www.radaronline.com/exclusives/2011/02/exclusive-details-steve-jobs-receiving-treatment-cancer-clinic-where-patrick
 
I am sure we all wish Steve Jobs well …. 

Now they are doing a reverse split on UNG

 Phil:  Respond to your comment on 2/15 post, not to clog current thread.

 Libya, demonstration planned tomorrow. http://www.youtube.com/watch?v=hdNAsA-0sP8

Ravalos / SKX   Patience.  The 1st qtr will be a disaster, sales will be down almost 20% y/y, margins below 40% on domestic (tough comps vs L/Y fantastic Shape-up sales at full margin).  You’ll get a chance to buy this below $16 by the end of April.  The hedge funds will not hold this / buy this hoping for a recovery in 2012, they are too impatient and alpha driven.  Management have totally screwed up this inventory thing and have lost the support of the analyst community.  Downgrades are coming and half the analysts have stopped covering the company due to the lack of transparency, misleading guidance and arrogance shown to them by mgt.
2012 will probably be a recovery, but, lots of time to wait for a macro mkt correction (all retailers) to compound SKX micro correction.
Note: the sales beat in 4th qtr was due to giving away  excess Shape-up product to discounters like Costco at half the normal GM (which has alienated the core retailers), hence the 10% collapse in gross margins.

 Fed Bullshit makes me want to puke:
 
If we have a moderately strong recovery, with the Fed’s BS creating jobs, and inflation low (puke) and low risk for double dip recession, THEN
 
WHY IS THIS NECESSARY ??
 
In addition, the Committee reiterated its expectation that economic conditions were likely to warrant exceptionally low levels for the federal funds rate for an extended period.
 
Can’t standja Ben …..
 
 
Elliott …. good first try; need to jazz it up some; a bit too dry IMO.
 
Bruno Crastes; never heard of him.  He got some of it right, but I agree w/ Phil about the yield curve.
 
Seems to me the real idea of the Fed (or one of them) is to keep rates low b/c the government can’t afford to pay interest on the debt.
 
Imagine if Treasury rates were 200 or 300 or 400 bp higher.
What’s the cost of that on $15 Trillion in debt.
How much larger does Obama’s $1.7 Trillion budget deficit become ?
 
 
What is it about "economic conditions" that "warrant exceptionally low levels of fed funds rate for an EXTENDED PERIOD".
 
HEY FED, YOU MAKE NO SENSE — SOMEBODY IS LYING THRU THEIR TEETH.
 
What are these "economic conditions" ???

 Phil
Regarding ‘Rise of the Machines’ – not sure that anything too evil can come out of a computer named WATSON…
🙂

1020 Purple – OMG fantastic! love the mustic, can’t stop laughing with the singing!

1.  I’ve been away for a few days and  Holy Crap I find we’re now finally bullish.  Ah come on, Phil , now after 41/2 months .  Well, the new ‘bullish" plays better have a lot of old fashioned value to them. Sorry , but I’ll have to have a confirmation from matt1966
2.  I was watching the NBC nightly news yesterday and they ran a story about the rising cost of commodities.  They blamed the bad weather in Russia , China and Australia and rising demand from emerging markets for the rapid rise commodities, particularly food.  There was not one mention about the drop in the dollar as having any cause and effect in pricing or any mention that some of the problems could have been caused by our own policies.  I just cant believe how the MSM is trying to fool the people into thinking the government (Banksters) don’t have a hand in all of this.
3.  Phil-  Critique of the pod cast.  If its mostly for our members, try to keep the subtle selling to a minimum and focus on the day’s wrap up.  If you are trying to drive new eyes to our site , then it would be OK to ‘do the selling" like talking about the Secret Santa or Breakout defense plays, but I guess most members should know about those already.  The current members wouldn’t want to hear a rehash of the Stockworld Weekly.  Also,  Elliot has one of those  good deep broadcast type voices , so thats a thumbs up. Oh, and a great idea as well.  This site now has more reading that I can do a daily basis.  PS  I particularly like the All About Trends mid-day update found in the newsletter section of the paid members site.  You should mention that sometime.
4.  I told you guys about all of the Shape-ups I saw in the 50% off rack at DSW when we did the Holiday shopping survey posts before Christmas. Plus, cant you see Shape-ups are ugly but UGGS are kool.. I have avoided SKX since then , but agree with tuscadog that they will be a buy at $16-$17.

Phil/purple   That was cool – I saved that one for the kids!  –  See kids, Dad’s singing isn’t so bad….. 🙂

The NFLX action today really made me think the bots are messing with us specifically. Phil said to use the $240 line as an on/off line for protective covers for any short positions. I have TOS sending me an alert via Email on each cross. I received 15-20 alerts at least. My mailbox was full of them.

Well, Iran withdrew it’s request, was hoping oil would fall further….

Karaoke / Phil – "nothing can prepare you for the horror of a proper karaoke bar with drunken Japanese Businessmen mangling song after song.", Phil, that’s confucianism in action It’s not about the singing, it’s about the bonding. When I was in Korea in the early 70s, pre-karaoke, singing was an integral part of the evening at the bar. When we were first married and living in the US, my wife would turn down drinks at a party with the remark, "I get drunk easily and then I’ll start to sing." leading to much confusion amongst Americans.
 
On a much more frightening note, word from my friends in Korea with an ear to the ground is that indeed, the North is facing serious food shortages this spring, likely to the point of mass starvation and death. One friend points out, though, that most North Koreans likely have no awareness of Egypt’s existence, let alone of the revolutions.

Stay Connected

159,645FansLike
407,724FollowersFollow
2,130SubscribersSubscribe

Latest Articles

193
0
Would love your thoughts, please comment.x
()
x