ECB President Mario Draghi said they "stand ready to do whatever it takes to save the Euro."
That was enough to send the Dow Futures flying up 200 points at 6am (where we shorted them at 12,800 along with S&P at 1,350, RUT at 780 and Oil at $90) because no one cared that he also said "within our mandate" nor do the bulls seem to realize that this is already year 3 of the ECB doing "whatever it takes" to save the Euro and, apparently, it takes a HELL OF A LOT MORE than what they've already done.
We were silly, we should have flipped more bullish last night as Spain's 10-year yields hit 7.75% – new highs on Spain and Italy's 10-year have been pretty reliable BS triggers for more happy talk from the ECB, because "whatever it takes" is lying to investors and posturing and bluffing – WHATEVER IT TAKES to stop these rates from heading to double digits, which necessitated a $500Bn bailout for Greece and would mean TRILLIONS for Spain and EVEN MORE TRILLIONS for Italy.
If you don't think there's a limit to "whatever it takes" – see how fast the EU comes up with one Trillion – let alone five it would take for Spain and Italy (as if it would stop there). I have, sadly, seen hospitals do "whatever it takes" to keep terminal patients alive – they do a lot but, in the end, the patient still dies.
Of course, our motto at PSW is "We don't care IF the markets are manipulated as long as we can figure out HOW the markets are manipulated and place our bets accordingly" so, early this morning, I put a note up for our Members, indicating how ridiculous the move was and indicating the shorting targets on the Futures. Just yesterday, right in the morning post, I mentioned our shorting target for the Dow Futures (/YM) was 12,650 and we hit it 2 times after the open with 2 drops below 12,600 where we stopped out with $500 per contract gains. Those are just the free ideas folks!
Every quarter, during earnings month, we like to show off with a few free trade ideas to give non-Members a chance to have some fun. We've been nailing it this month but July is almost over and so are the free trade ideas – just a heads up with 2 days left!
Already this morning (8:20) we picked up another $500 per contract on the Dow and $500 on Oil ($89.50) and that's enough to pay for the Egg McMuffins this morning so we're done and waiting now for the Durable Goods Report (which I expect will disappoint) as well as the usual 360,000 jobless claims. Later today we get Consumer Confidence (or lack thereof), Pending Home Sales, the KC Fed and a $29Bn 7-year note auction so busy, busy with the data today.
8:30 Update: Durable Goods up 1.6% for June – that's way better than expected but it's all Transports. Ex-Transportation and we're down 0.1% so the headline number gives us a nice re-entry on our short plays but that's about it. "Only" 353,000 people lost their jobs last week – isn't that nice? On closer look, even the Transport numbers in Durable Goods were not autos – just aircraft – which must be why we're long on BA…
Of course we've got plenty of bullish plays – our Income Portfolio is full of Long-Term Bullish positions as we do believe that inflation is the only viable solution to the Global Debt Crisis. I wrote "Inflation Nation" years ago and the Los Angeles Times informed us yesterday that leading economists are finally catching on my program as the Milken Review has now concluded (obviously, one would think) that debt is almost always denominated at fixed interest rates, so as prices and wages rise, the relative debt load falls. To set up world economies for more growth, the report states: "The important thing is to shrink the size of debt contracts."
Up to now, European countries have been trying to do that through austerity — cutting government spending and services, forcing down employment and wages. "You see people trying to grind their way to balanced budgets and hence stabilize debt levels," Economist Menzie Chinn says, "and it's excruciatingly hard. Because of the political difficulties in taking austerity measures over the long term, you have to ask yourself if it's feasible."
American policymakers seem to have bought into the same strategy, which is why job cuts at the state and local government level have almost outweighed gains in the private sector, producing crummy employment growth overall. Sooner or later, American politicians may discover, as have some of their European colleagues, that imposing austerity on one segment of the population (the working class), while exempting another (the debt-holding class), is a good way to lose your job.
Chinn and Frieden, along with such other inflation doves as Charles L. Evans,, president of the Federal Reserve Bank of Chicago, aren't talking about letting inflation go nuts. They're talking about a temporary rise to 4% to 6% from today's benchmark of 2%. (Evans proposes allowing inflation to rise to 3%.). Inflation hasn't always been regarded as the fearsome gargoyle it is now. In fact, it's more commonly been treated as a useful policymaker's tool in times of economic crisis. It was the principle underlying the Democratic Party's attack on the gold standard in 1896 — that's what William Jennings Bryan's "Cross of Gold" speech was all about.
Wage-earners love inflation – they earn more money. The only people who hate inflation are the people who lend money to you at fixed rates. They don't want to get paid back in Dollars that are worth less than the ones they lent to you and they really don't want you to live in a home that INFLATES in value and leaves you with enough equity that maybe next time you won't need a home loan where the Banksters can get you to pay over $430,000 in payments for a $200,000 loan (true fact at 6%).
Now that the Banksters control our Government and the MSM, they have done all they can to convince the bottom 99% that inflation is evil and must be fought at all costs. So far, the costs have been our nation's middle class, who have seen wages decline over the past 30 years while the incomes of the top 1% (who lend them the money they need because their pay keeps going down) have almost doubled.
When did America turn into a school playground, where the rich bullies steal your lunch money every day?
AMZN/rustle – I have a long list of fairy eclectic (and maybe eccentric) trading rules that I follow. For example, I never buy an airline. One other rule is that I always have ONE stock that I'm not allowed to short. For quite some time that stock has been AMZN. I did buy one put today (heavy hitter, huh?) just to get in the game and to purge the need to violate my rule, so no harm done. But… the one stock on my don't short "list" is the Bezos. I know trees don't grow to the sky, but they can go far, far higher than my modest ability to hold on. Phil is absolutely right about this one – the valuation is crazy. But crazy is as crazy does.
rustle – suppose the general belief is people think AMZN is basically displacing WMT (?) Maybe then the one-time infrastructure costs are viewed positively. They've got $250B in market cap to potentially gobble up. Granted they have to grow by 8.6 times to reach WMT's top line revenue number, but how else can you explain?
Trading Businesses/dawg – Great trading plan.
Your #2 business is to trade the TNA/TZA themselves and not the options, right? I know stops are an art form, but how much room do you "typically" give yourself? 3R exits, what do you use for entries? ST & LT EMA cross-overs? Channel extremes? MACD convergence/divergence? RSI? Other? Thanks!
Betcha a buck Big River is down Friday.
phil, and the rest of you on this board–thanks for providing the community on this site. happy to report a profitable earnings season. bets on CMG, AAPL, FB and AMZN have all been profitable for me.
FB: $30 short calls should expire worthless tomorrow. also, just bought FB in AH at 23.85. looking for a bounce to 25 in the am.
AMZN: 235/245 bear call spreads should be profitable in the morning. i had already closed out the 185 puts. also. just opened small AMZN short position at 222 in AH, looking for decay back to ~200 in next couple of weeks.
Does this fact upset you?
To recap: 97 percent of climate experts agree humans are causing global warming, but 97 percent of GOP Senate candidates disagree.
AMZN – it's no wonder trading is so hard, the 'experts' speak in riddles — check out these side by side headlines on Yahoo! finance right now:
"Amazon's profit margin rises as new businesses grow"
"Amazon Profit Margins Evaporate"
basically i keep it really really simple and try not to over analyze things. Thats why i joined here!.
yes just the stock, not options as i tend to blow myself up with those intraday.
I gauge the mood of the market first (phil, usd, vix, tlt, europe ect…) in relation to what has happened in the last week on the RUT.
Then, i wait for the first 30 minutes of trading and gauge if i believe the spike up or down; again in relation to key levels from philstockworld and basic common sense. For example, a 6% day on TNA is hitting it out of the park and is a dangerous long at this point. for me its almost an automatic short. Or a overly powerful move in one direction or the other is a good point to start questioning direction. Example 30% of my profit today came from shorting….
For a TNA trade i basically wait for the 8 day EMA to turn up, ideally at a pivot point like S1 or S2 and14 day RSI to cross the 30 line upwards, if i'm feeling aggressive i'll take a 1/3 trade at this time and set stop loss accordingly.
I use heikin ashi candle stick charts set to 5 minutes. When the second white confirmation candle closes above the 8 EMA i'll take a full position or another 1/3 if entered earlier. Then hopefully or at the same time RSI crosses the 50 line and i'll buy the last 1/3 or monitor the full trade. At this point the stop loss goes in just below the low of the last candlestick or at my predetermined stopp loss. This is the tricky part as you don't want to get whipped out of the trade, i've noticed the lowest low of the previous 30 minutes is pretty good too….
Then i monitor the IWM and RUT along with the onther indexes and try and feel out the interday trading ranges. phil's commentary is very helpful on this front along with futures.
IF A PROFIT FLASHES I TAKE IT. \it is ok to make $600 bucks in 5 minutes and go play golf! You could also set a trailing sell order but if you monitor the trade you may benifit from a powerful move up and capture a better profit.
If the trade languishes i watch RSI and if it dips below 50 i am out. The stop loss is more for the sudden spike downs, not an absolute, expecially if all the indexes are point down in that time frame.
3R is basically if i risk $200 i aim for a batting average of 600 profit. Letting winner ride is key.
Another good metric is to measure how much of the intraday move you captured. For example if TNA ranges $2 in a day and you got .50 cents in profit for a day trade you bat 25%. Aim for 40% plus.
I really try not to look at the trade after i sold it or lost it. i hate that game. Be happy to trade a consistent plan.
HIgh Volume is awesome and large long white candle sticks makes me very happy. Be careful after 3 long candle sticks and set tight stops as it can reverse quickly.
Reread JRW's stuff as well. Lots of better pointers in there.
I also try really hard not to place trades after a winning a trade. Seems i just give money back. I simply get up and leave.
in regards to stop losses, its a personal feel for things. if the market is boring i tighten them but won't scale in, if it is volatile i tighten them but scale in more often…..hope this made some sense!
So to recap\;
Where are we at with key support levels within TNA/TZA and RUT on a daily and weekly basis?
8 EMA moving up
5 min heikin ashi candle chart
RSI 14 and any other momo indicator u like
Confirmation when second candle closes above rising 8EMA and perferably RSi is near or moving close towards 50
Rapidly expanding prices and volume i will add to the trade too……
Try as you may, it's going to be very difficult to control gun distribution. A 3D printer has been used to make a working pistol. The guy claims to have fired 200 rounds from it. (And I think he made it using a fairly old printer.)
For those that don't know what these are, you download a blueprint from the internet, send it to a printer and out comes a real life 3d object of the blueprint, typically made of plastic. (Yikes!)
dawg – good exposition, thanks! The best part for me was "I also try really hard not to place trades after a winning a trade. Seems i just give money back. I simply get up and leave." I am still working on that one, to my detriment. I have been on a good roll lately with my Crazy Trades but if I make a quick $500 I invariably tinker with the winnings by making a few more trades that don't work out, hoping to double-down but then giving up when I have only $300 of the winnings left. "Get up and leave" is great advice…
And one final trading nugget from my (painful) experiences – I now let the market talk to me, rather than the media, which has completely turned around my trading. Reading the news, and Faber, and Talib, and ZH, etc. over Christmas just got me dour, so I shorted everything in January and kept doing it even while the market went up and up. Now, I ignore the macro, and the talking heads. So just find 20 stocks that interest you, read about only them each night, and watch their charts each day. When you know their personas, trade them quickly, then go to cash and sleep well.
Bird. Thanks great stuff.
God its hard to get up and walk away, especially when its early in the morning…..kind of feel like i have to work a bit more 🙂
I totally agree re: media. i stopped last year and haven't missed it. in fact, we only watch movies now on aapl itv and the odd tv show like Deadliest Catch cuz i like how those guys gamble! i think i was actually addicted to news media. Withdrawl and all. AND funny thing happened, my trading got better, i felt more positive and i don't have a bunch of useless facts running around my brain.
Really Phil spoon feeds us the best consolidated info anyone could ask for! And just to see if he actually reads these posts—Phil loves Cramer 🙂
Sorry. Meant Star.
If I didn't know better I would think that the pattern on the Dow and S&P were drawn by a machine. Oh wait!
Talk about be range-ish… They have drawn the perfect channel.
Looks like Mitt made himself some new friends in the UK…
Nice tweets under the #americanborat hashtag:
Funny stuff there!
Lionel mentioned Samsung earlier and they seem to be doing OK:
Sharing/dawg – Thank you very much! I really appreciate your taking the time to share with me/us. As one of my mentors told me one time, "Winners share."
Media/mrmocha – YES! Like most folks, I have many weaknesses, but I have identified a major strength that has served me well in a number of endeavors over time – I'm very good at creating effective signal to noise filters. That accomplishes a number of things: I don't have to that smart myself; I don't have to be that creative myself; and, probably most of all, I avoid GIGO. We're only a sum total of what we know, and what we know comes from our inputs. When it comes to the markets, believe it or not, there are only three in what I call my Inner Circle: our Phil and some in this group; Alexander Elder; and Dave Fry.
I do constantly gather data of course but I do so with the knowledge that as a stand-alone data set it's absolutely useless as countless folks know more than I do. Where I can perhaps value is by connecting the dots, by synthesizing the data set.
I constantly ask myself "Where is your edge on this trade?". And my answer is usually my strict discipline when it comes to money management. I always have hard stops as a money management tool. I do use discretion with both losing and winning exits, but I never change a stop to increase loss exposure. For me and my modest skills, it's more about money management than predicting the future. I continually strive to improve my won/loss percentage, but have done so only marginally. The key is that my winners are larger than my losers.
I agree about keeping it simple and I'm tempted to stay on my fat tire bike with training wheels (Scottrade) rather than go to TOS. It's easy to be seduced by the bells & whistles (literally!) but – if it ain't broke…
Thanks again. What a great group!
Pharm – Six Under the Radar Healthcare stocks from Briefing.com. Curious if any of these are interesting to you. This is a link to document on my google drive.
stardawg – awesome info – thank you.
Inflation: I would only post this at night, because it has no immediate relevance to our trading, and quite arguably no economic relevance at all. But I was surprised, so here it is. I'm pretty sure that there is no perceptible inflation in the U.S. nor elsewhere, that I can determine. Arguably, there has been deflation — certainly in leveraged items like real estate — and historically low interest rates don't contradict this. And yet, I've run into quite an anomaly.
In 2002, I was stranded alone in my mountain house all summer, played a lot of guitar for lack of other stimulation beyond hiking and looking a deer graze, and took an interest in Ebay. In short, I bought about 15 guitars online,mostly Strats and Gibsons because it's what I've always played. I bought a '59 Strat, and custom color Strats from '61, '62, '64, and '65, among others. I paid between $5-$10k each for 'em, with one mint '65 Sonic Blue from George Gruhn for $15k. I stored them, moved overseas, and showed up occasionally for summer, but never returned to Ebay, which became a hotbed of counterfeits some years afterwards.
My point? I had them stored in a NV warehouse, and pulled them out last month. I just checked the Chicago Music Exchange and the Vintage Shop in LA at the Guitar Center. The prices are just off the charts. A semi-trashed [Good, not VG or better] Sonic Blue Strat is listed for $62k, and it's pale and homely next to mine – by any standard of comparison it would go for $75k, and if you looked at the respective photos you wouldn't doubt it. We are talking about 500% appreciation in ten years. And I have earlier custom color ones in much the same condition — '60s, '61s and '62s that are better instruments, with slab fretboards, that would arguably go for more. Maybe this is just an anomaly unrelated to inflation or any other economic datum, but maybe this is the tip of some Fear Iceberg that is floating just below the surface of our market economy. FWIW.
Missed the market all day!
had to fly myself to Wisconsin from So Cal….plus had market fatigue.
am glad they were up,today….something just seems not right with these markets…
Was looking over the Goldman Chart series and trying to find good reasons to be bullish but it's just not there – only this last chart – Fed Stimulus – explains where we are now and only the expectation of more Fed stimulus is bringing us back to this year's highs, even as the data continues to deteriorate.
Today we get the first look at Q2 GDP, which is expected to be 1.2% but I think miss, maybe below 1%. Is it possible that we'll get a number below 1 and that news will be so bad it's good? Yep, things are pretty insane out there.
Don't forget Europe's GDPs were already trending negative and they pumped in a lot more stimulus than we did last Q. All the consumption numbers we were getting in Q2 were lower than Q1 and, if anything is going to sustain the GDP, it's probably going to be a build in inventories – which is not something that's really a positive but it acts as one in the GDP numbers (as there's an assumption that all inventories will be sold). Inventories were huge contributors to GDP in Q1 and Q4 as we added $106.6Bn worth of crap to piles of things that weren't selling in warehouses – woo hoo!
They are still banging that Draghi drum this morning – it's a one-note ochestra so far…
Friday's economic calendar:
8:30 GDP Q2
9:55 Reuters/UofM Consumer Sentiment
4:30 AM EU shares are mixed as the Draghi effect begins to peter out, although not in Spain, where stocks are +0.5% and 10-year bond yields are -9 bps at 6.84%. Bastion's Adrian Slack injects a bit of realism into proceedings. "He's (Draghi) got to do it within the framework of the European Union, and it hasn't worked so far," Slack says. Euro STOXX 50 -0.1%, London -0.1%, Paris flat, Frankfurt-0.3%, Milan +0.5%.
6:00 AM Overseas: Japan +1.46%;. Hong Kong +2.02%. China+0.13%. India +1.30%. London +0.09%. Paris +0.46%. Frankfurt-0.23%.
NOK/IZega – Due to my experience with MOT, I can't be bullish on NOK – even though it seems logical. I could not believe MOT couldn't salvage something from their massive operation but the fact is they lost it and never got it back. I don't know if the same will happen to NOK but the circumstances are very similar so I'd stay away.
Good list Star.
AMZN/Dpast – It's all about the future. AMZN may be the first company this decade to be rewarded for investing in the future. I wouldn't count the chickens yet though because there will be a lot of meetings today where fund managers decide whether they are willing to wait that long.
Congrats Lunar and you are very welcome!
Right to print guns/Kwan – That's interesting but can it print bullets?
Good notes by Mr M too – I hope someone is saving these!
Cramer/Star – I make it a practice never to read these posts. Actually, I totally agree with what he said about Draghi this morning – which makes me worry I could be wrong about Draghi…
Big Chart – Our lines are still being obeyed and the Dow still has 5% to catch up to the S&P, which is over the Must Hold at 1,360 and earlier I put up a nice RUT bullish trade idea but we'll see what happens after GDP.
Mitt/StJ – Man they hate him over there. Funny reading British papers on him.
Inflation/ZZ – Well the guitars are kind of collectibles now – what about the value of the house they were kept in?
Not right/Maya – You said it!
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