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Saturday, September 24, 2022

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Wall of Worry Wednesday – Insurmountable or Time to Climb?

Isn't this fun?

On Monday we drew our 50% retracement lines for the Dow (13,000), S&P (1,395), Nasdaq (3,075) NYSE (8,050) and Russell (815) as well as the other global indices that we expected to be tested this week but I cautioned:

"How many times will the bulls be sucked in by the same empty promises?  How many times will they reach into their pockets and BUYBUYBUY the snake oil valuations sold by the Reverend James Cramer?

Now I don't mean to pick on Cramer but it is truly incredible how many times people begin a conversations with me by saying "Cramer says.."  Yesterday Cramer said to ignore the experts and their annoying FACTS and just BUYBUYBUY:  “No one from the Fed said anything today, yet the market roared, so I imagine these people are stumped beyond belief,” Cramer said. “It must be so troubling for them to rationalize this rally.”  

JEFF GUNDLACH'S EPIC PRESENTATION: 'To QE3 Or Not To QE3, That Is The Question'See, Cramer is just a great summary of everything that is wrong with investing these days.  What a ridiculous over-simplification to act as if the Fed has to say something every day to move the markets – the complete and utter ignorance/disregard of World events is truly stunning on Cramer's show, CNBC and pretty much all of the MSM who won't tell you anything that can't be reduced to a Twitable sound-byte.

On the right, we have the anti-Cramer – a thoughtful presentation by Morningstar's Fixed Asset Manager of the Decade, Jeff Gundlach, who is the only bond fund manager to win the Standard & Poor’s/BusinessWeek Excellence in Fund Management five years in a row.  I urge you to run through Jeff's presentation as it contains a fantastic series of charts that gives a well-balanced view of the global macros.   One very notable chart was this one, showing the divergence between stocks and commodities as Operation Twist has had no stimulative effect on demand:  

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undefinedThat's not a healthy-looking divergence, is it?  While the bulls are betting that commodities will catch up to the hyper-inflated stock prices, we've been betting the hyper-inflated stock prices will eventually run into the demand reality that is already tanking the commodity markets.  

As we noted in Member Chat this morning, the Central Banks are pumping free money into the banks (that will eventually become a burden on the bottom 99% taxpayers and their children and their children's children…), who are not lending it to boost the economies but are turning around (or "twisting") to buy Sovereign Bonds that the top 1% have been stuck with.  

Aside from the feeding frenzy by our local Banksters at the expense of the Fed, Spanish and Italian banks have used LTRO and EFSF funds to load up on over $600Bn worth of Government debt – debt that may well be defaulted on in the same way Greece just did.  It's nothing more than a stealth bailout of the top 1%, who are cashing in their bonds at top dollar and moving back to cash ahead of the next market collapse.  

Even the bankers to Europe's Top 1% in Germany and France are CUTTING their holdings in the same bonds by 50% as the bad-debt burden is transferred to the debtor nations, who will later be blamed for making these bad investments as the situation that is clearly visible now will, in the future, be used to justify even harsher austerity measures for their poor neighbors.  

“The more banks stop cross-border lending, the more the ECB steps in to do the financing,” said Guntram Wolff, deputy director of Bruegel, a Brussels-based research institute. “So the exposure of the core countries to the periphery is shifting from the private to the public sector.”

Corruption DemotivatorWhat a scam!  A great example of the Dooh Nibor Economy, where the Global Kleptocracy continues to run policies in their puppet Governments that rob from the poor and give to the rich.  While French and German banks lost money on Greece’s restructuring last month, a delay of more than a year allowed a similar shift of risk to the public sector. When the exchange took place, the debt relief was capped at 59 Billion Euros because fewer bonds were held by the private sector, including banks outside the country. If Greece had defaulted in 2010, the reduction could have been as much as 232 Billion Euros.  

This amazing Global Ponzi scheme is bound to end badly – the only question is when?  The bull case (see Cramer) is that the Fed and other Central Baniksters are placing a floor under the market so you "can't lose" – no matter what idiotic valuation you pay for stocks (Gundlach believes 8-10 is the proper p/e for the S&P 500 – now 15).  Essentially, people buying the market under this premise are no different than people who invested with Bernie Madoff, knowing it was a scam but not caring as long as they got their 20% returns – it works until it doesn't.    

This is a discussion I have with our Conservative friends all the time – it DOES matter where you get your money from.  We (the top 1%) are currently extracting our wealth and income from the bottom 99% at a record pace.  

The gap between the rich and the poor in America has never been wider and AMERICA can't, CAN NOT, recover if our survival plan is to get what we can and put it into our 3M lifeboats while letting the other 297M people go down with the ship.  The austerity actions being taken now are essentially a justification of theft along the logical lines of "well, those 297M people are going to die anyway so robbing them isn't REALLY a crime, is it?"  

According to Romney and the rest of the GOP, it is MUCH more important that we preserve his comfort and his lifestyle than to waste our time helping those who are unable to help themselves.  This is the same attitude the Germans are developing regarding their poor European cousins – why should we save you from collapse if it might cause us discomfort?  

The more the Corporate Media manages to convince the top 10% (no one else matters) that the bottom 90% are unsaveable or "not worth" saving – the more they are able to justify greater and greater abuses heaped upon those down below.  Dehumanization of the enemy is an essential part of a propaganda war and make no mistake about it – class warfare is a war and it's not a war that the poor are waging against the rich (despite what their PR machine would have you believe) – it's a war that the rich have been waging against the poor for 40 years now.  

This is the way things work people – I apologize for the Micheal Moore clip, I know that he is considered to be the great Satan and most of you have been brain-washed to feel sick at the mere mention of his name or the sound of his voice because he….  er….  well, because he did whatever horrible things that you think you know have maybe been insinuated about him by the MSM, right?  That's good enough for us because WE'RE REAL AMERICANS, right?  

Government DemotivatorReal Americans don't put up with agitators, unless those agitators are from the Tea Party or unless they are anti-tax agitators or unless they want to reduce (not COMPLETELY destroy) our Government because, as we all know, Government is the problem and private enterprise is the solution!  

Of course, in this upcoming election we have 242 House Republicans that should be re-elected – it's the 190 Democratic bums that need to be thrown out and THEN you'll see some real action.  The Republicans have been hamstrung so far by their 32% advantage in Congressional seats and now we have an historic opportunity to extend the reign of a Congress that only managed to pass 80 Laws out of 945 votes taken (with 5,970 resolutions killed on the floor) in 2011 – a record that may only be broken by the same team in 2012 as they are 0 for 89 votes with 627 bills killed in Committee in the first quarter of this year – go team!!! 

These people are destroying our country folks.  Do you really believe the World's largest economy can afford to do NOTHING for 2 years?  Is this going to be the winning strategy we reward – hamstring a sitting President, let the country run straight downhill and then run for re-election on the premise that, as long as you approve of the guy the people elect to be in charge – you might be willing to play ball.  This is not politics – it's extortion!  

Let's contemplate that while we wait PATIENTLY for the markets to correct.  The point in going over these Global and Political macros is to get you to step back from the day to day BS that the MSM likes to keep you focused on and contemplate the bigger picture.  We discussed many of our recent short plays in yesterday's post and there was no change in yesterday's Member Chat as we took advantage of that very silly move up to add back some short positions after Monday's profit taking.  

Now that we've completed our 50% retrace of the month's drop, we'll be happy to take quick bear losses and go longer if we can accomplish 3 of 5 of our 50% lines (see above) but clearly we'll be exercising a HEALTHY degree of skepticism against any short-term market moves.  

Early this morning, we took advantage of the morning pop to short the oil Futures (/CL) at $104.50 and we're just testing $104 now at 9am – so the Egg McMuffins are paid for and we're ready to start our trading day!  

Kleptocracy by WilliamBanzi7.  

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France / Diamond – Looking at the latest polls, I don't see Sarkozy winning anymore. 3 months ago I could have been sold on a comeback, but now he is still more than 10 points behind in all the polls in the second round. Either we are going to see the biggest polling mistake ever or Sarkozy is a goner.

Now Hollande has said that he wants to review the European agreements negotiated over the last year or so and possibly renegotiate them. As with every world leader, he will be held hostage by the markets and will quickly realize that his power is limited. Looks at France's CDS today for example – a subtle message of things to come. A couple of meetings with Merkel and the ECB gang might also help convince him. You would hope that another pair of eyes could help soften the current ECB/Bundesbank austerity program though and that might still be a possibility. There might be a period of wavering when there is still no official position and Hollande looks to gain his footing and markets might show some weakness – there will be a couple of weeks between the presidential and congressional elections and Sarkozy's party still has a majority in the most important chamber which I am guessing they will fight to retain although I don't see that. 

Overall, it will be tricky between now and June… I would not bet one way or the others on market reaction!

Someone is betting big on IMGN.  800 options moved:  April 13 Ps July 13 C/P.  Looks like they will take delivery of the stock this week, and then have a nice position hedged……

"Just closed a very nice deal so I'm in a very good mood"
Congrats Phil, may it lead you to many more!

futures : i have that link in my notes – but i didn't use it in a long time
http://www.cmegroup.com/market-data/data-suite.html

Hi Phil,
FSLR – initiated a spread, selling 6 Jun 25C for $2.36, buying 3 Jun 20C for about $5.02, for about $0.37 net (total $115) debit. Question, how to manage this trade?  It could get in trouble when FSLR jumps higher and I would like to buy additional calls or move to higher strikes if / when this happens.  Would like to know when to put on full cover, for such a trade?
I have sold some puts (2 x Jun 25P (sold for $3.8, currently $5.3) and 2 x Jun 35P (sold for 3.5, currently $12.9) so I am already down on puts sold.  I will need to roll the puts, but for now, it seems that the call spread may provide some balance, while I wait for FSLR to calm down around $25 (bottom-ish) ?  
I want to build a position on alt-energy stocks (have a position in WFR that you recommended) and would not mind bottom fishing in FSLR to create a long(er) term position.   
Thanks in advance. 

shadowfax — Open a TOS paper account. They say it's delayed but the carts aren't. The actual price at the top of the chart appears to be delayed but the bars on the charts are a live feed.

Stj / Hollande — I would think Hollande would have to be on the side of the Peripherals, given it's 9.7 unemployment rate in Feb. 2012, higher than Italy's [officially, in any case].  He may eventually side with Germany out of fear for French bond spreads, but since, longer-term, Germany's policy benefits Germany, largely at the expense of the Peripherals, I would think "austerity" a tough sell for a Socialist — particularly because there is no deficiency of economists willing to suggest that austerity is exactly what the EU doesn't need right now.
 
Soros said last week: "You can grow your way out of debt; you cannot shrink your way out of debt."    Indeed.

Hollande / Zero – That was my point exactly! He will only side with Germany under duress and you can be sure that enough pressure will be applied to make sure he does.

Speaking of austerity, did you read my post – http://www.philstockworld.com/2012/04/18/wall-of-worry-wednesday-insurmountable-or-time-to-climb/#comment-1933751. What is being imposed to Europe now is pure insanity!

And here is more – look at the Italian situation:

http://online.wsj.com/article/SB10001424052702303513404577351560527620108.html

 

The plan, which must be ratified by Parliament and sent to the European Commission in Brussels by the end of the month, forecasts that Italy's gross domestic product will contract by 1.2% this year, almost three times the forecast in December.

….Yet, Italy's fiscal policy is tightening, Deputy Economy Minister Vittorio Grilli said. Rome will post a budget surplus of 0.6% of GDP next year in structural, cyclically adjusted terms….The International Monetary Fund reached a similar conclusion, saying Tuesday that Italy won't balance its budget until 2017, but that next year it will achieve a structural balance—suggesting Italy wouldn't have a fiscal shortfall if the economy were performing at its full potential.

I suspect that many countries would not have budget deficits if their economies ran at full potential…

AHHH crap.  Phil,  I don't know how this happened but I can no longer see your comments!!  How can I fix this?  Also, How can I see your response, since I can't see your comments!

Phil – Congrats!
StJ – on a structural, cyclically adjusted terms?  So that means no real surplus, as in money in the bank…funny. 

craigzooka – Under the dialog box un-check box to ignore Phil. 🙂

thanks Diamond, I have no Idea how that got checked.

Phil
Was afraid the answer was tos, I have 3 acounts now that want my money, this second 100% cash, will they let me open a paper account and not bug me?

Well I missed 30% of the move in TNA, I think the EUR may be bout done not sure on the markets but you know what they say about the bird in the hand.

SGEN options are very wide right now out in time.  I am selling the 17.5 May Puts.70 or better.

shadowfax – The TOS paper account will only be valid for 60 days if you do not open a $$$ account with them. However, if you have multiple e-mail addresses, then every 60 days you can open a new paper account! 😉

The IMF is saying that EU banks will have to sell $2-$3T in assets?  Didn't they already pledge most[all] money-good assets to the ECB for the LTRO funds?  I assume that much like we will probably have to mortgage out the Grand Canyon, they'll have to start mortgaging out the Eiffel Tower, London Bridge, etc…

Oil question Phil – so the May $39s are 1/2 out I assume…..would rolling down be wise to protect the profits, or just get out due to the summer driving (Memorial Day bump)?  Thanks.

xilai's wife magically has bone cancer now

Probably driven by the options market, but looking at an AAPL intraday chart, the 10's lines are really acting like magnet almost every day. You could draw S/R lines every $10 and probably do well playing of these!

 hahahaha..his is great!….right when the bottom felt like it was about to fall out….big aapl block buying…and entire market stops on a dime and starts lifting…the manipulators must be in awe at how easy their job is.

http://www.businessinsider.com/peter-van-buren-says-there-is-video-of-a-state-department-official-getting-a-bj-from-another-on-the-republican-palace-2012-4

AAPL flat and PCLN up 20… CMG up 6+
 
WTF???

There seems to be a new rule Jabo – if the market is open, PCLN and CMG will be up. When the market is closed, there is a change they will be down. It has not been observed yet though…

Is there a trade buried somewhere in the YPF fiasco?  I'm always willing to bet on political outcomes.  Which this will have, not that I've sorted it out yet.  It's a bit early to tell.

Verry bad indicator!
NY broker called yesterday with a screaming loosing deal for only me and a select few. I have had 100% cash in that account since Feb 11 when he changed clearing houses. My last try a month ago was buy stock sell puts and calls. Answer, no naked !

My 20 day osscilator says tomorrow will be flat to down. FWIW

Different close today, no IWM sell at close orders??????????

Phil
Bet they don't ave an appointment at the hospital on the 25th!!!!!!!!!!!!!!!!!!!!!!!!!!!!!11

qcom lowered guidance getting railed

Doesn't AAPL use QCOM chips?

2 things… 
 
1. Anyone else seeing a bear flag in the NYSE and the RUT?
 
2.  FCX is having a nice day… any reason?  That seems bullish to me.  So, I'm nowhere.

Phil – Avert your eyes (Pink Sheet stock) …
 
Liquidmetal Technologies (LQMT)
 
The iPhone 5 is rumored to be shifting from Glass to Liquidmetal – Patently Apple

StJ and Lflan – what ever happened to the 10K Momo portfolio?  Nixed by the boss or still happening?

Portfolio / Jerconn – lflan is off this week…. Not rushing into it!

That was one heck of a gap up at the open in Spain… Definitely a fade though! I would had starting shorting the gap around 10,000 and taken a profit at 7500.

Would have been good for $125K per contract!

On the earning side, bad guidance from QCOM is hitting the stock… They are down over $2 in AH trading. Maybe a good entry point as the problem seems to be shortage of supplies, not demand!

FFIV beat and they are up almost 5% AH. These guys are really volatile!

AXP beat as well, but no real reaction AH. They say that the extra day in February helped a little bit – LOL!

EBAY is looking good and making good money on PayPal – they are also up about 5% AH.

YUM beat but they are down AH. They did mention margin pressure in China due to commodities and wage inflation. Ya think!

VMW beat on earnings and revenues and are up over 2% AH.

That's it from earning central!

ICI showing that investors pulled another $1.5B from domestic equity mutual funds for the week ending 4/11/12 as reported by ZH.  Looks like money is flowing into bonds.

PCLN puts never got close to $7.50. I had an order in to buy at $7.90 for several hours, and nothing.
 
I was in GNW for a couple of one month plays, and glad they are done. I am short CHK puts, and boy has that hurt the paper value of the port. Play individual stocks, and you can get blindsided, like I was with CCJ last March, when a FREAKING TSUNAMI cost me 50% of my position.
 
I am done listening to stock picks on this board. I have made quite a bit on the good ones, and lost it all back on the bad ones. I'm returning to my SPX strangles and a handful of other things.
 
I value the commentary, but I am not listening to individual stocks any more.

And, higher taxes are not the answer to anything. You heard it here first (or again, maybe)

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