Morning Audibles

Where do we go from here?


Trading in Capital Markets whereby the large bulk of trading happens between algos that are flooded almost daily by what might as well be described as "free cash" can pretty much do damage to any models that even the most experienced trader might have cobbled during a lifetime of observation...

It is still true, however, that machines & policy are ultimately things that are the stuff of human minds... As such, maybe there still exist some faint echoes of past patterns & behaviors...

Here's one that I dug up and put in the April 16th, 2010 thread... (10 days before the 2010 highs that were hit on April 26th)...


With respect to that chart, here's what the SPX looks like in the past 50 days...


In the land of Milk & Honey... You must put them on the table...


 

277 comments:

«Oldest   ‹Older   1 – 200 of 277   Newer›   Newest»
Leftback said...

Yeah.

Smells like we are due for a rollover after we retest the April highs. What's the trigger going to be? Keep an eye on the European bond spreads again.

call me ahab said...

all hail the Fed- price manipulator and protector of asset values-

something just doesn't seem right about this- treasuries sold to the Fed which creates money to hand to the banks-

who then invest in stocks-

what am I missing?

call me ahab said...

. . .and devaluation of the dollar-

I am sure the ROW appreciates that-

didn't BB say in congressional testimony that the Fed would not monetize the debt?

I guess that was a fib

McFearless said...

looks like it's time to start talking QE3 what with that jobs number this morning, unexpected as it was.

CV said...

This is the world we live in...

Geithner Visited Jon Stewart in April, Though Not for Laughs

http://www.bloomberg.com/news/2010-11-04/geithner-visited-jon-stewart-last-april-to-talk-about-economy-not-comedy.html

Numbnuts of a president we have has to send a little midget to a comedian to help EXPLAIN economic policy to Americans...

Yeah - I get the "message"... You're all a bunch of idiots...

CV said...

Obama must have been busy on "THE VIEW" that day explaining policy to the rest of Americans...

Bruce in Tennessee said...

Tepper interview CNBC September 24, 2010...Dow 10,860.

Yesterday: Dow 11,215.

Difference: 355.

355/10860= 3.27% in 6 weeks.

Number of 6 week periods in 52 weeks= 8.66

8.66 x 3.27%= 28.30% 52 week return.

And what has changed? The Fed says we are committed to ZIRP on steroids.....yesterday.


....Just sayin'

CV said...

@Bruce

Yeah... I calculated yesterday that all Teppers stocks would be worth ZERO in January 2013...

When UUP hits zero...

call me ahab said...

the Fed will continue doing this as long as it keeps getting away with it-

stock prices up and values of the dollar down-

exactly what it wants-

but I guess my question is- what should be the values of stocks-

the 2007 high? so in reality they are creating yet another bubble- akin to the housing bubble to bring about the illusion of wealth-

and I am surprised no one calls them on this-

all so fake and phony- and yet people who should know better all play along

Bruce in Tennessee said...

CV:

I have joined the lemmings...but I WILL keep my eyes open for the cliff...

CV said...

@Bruce

Go for it...

I, frankly, don't see the point... What you're talking here is a virtual tick for tick correlation with a declining dollar (which, upon redemption, you will be TAXED for)...

I'm pulling everything out of this circus and just holding cash...

I'll but more PHYSICAL commodities (gold, silver, gasoline, natty, lumber, cotton, copper) as the eventual price troughs occur...

Sure... I'm joking that the dollar will go straight to zero...

But the upshot of this ENTIRE charade is that there is nothing telling me that I should own any paper assets (of any kind) going decades into the future...

It takes awhile to accumulate enough raw materials to function in a "fiat-less" world...

I've been at it for more than 5 years now (and still feel like I've hardly made a dent)...

Think about it...

AmenRa said...

Holy s&*t! Gold futures up over $40.

gristle said...

Why did KD have to post that video?

AmenRa said...

EURUSD 1.42 and climbing...
Oil 86 and rising...
Silver 25.50 and rising...
DXY quickly approaching 2009 lows...

CV said...

@Bruce

I'll also say that it's going to take AN EXTRAORDINARY MINDSET SHIFT for 99.9% of Americans to realize that their so-called "savings nest egg" isn't really worth anything transactionable...

They'll be taken quite by surprise...

I rant and rave about it all the time, and have yet to achieve even one convert (except those who smile and say I present a fancy 'theoretical' argument)...

Leftback said...

The Fed is on a "very dangerous path," says Axel Merk, president of Merk Mutual Funds. "The best case we can get is inflationary growth, but the downside risks are very high. [Bernanke] thinks a weaker dollar is going to stimulate the economy. Let's hope it's only a gradual decline, not a crash. "

The dollar hit a 9-month low vs. the euro in reaction to the Fed announcement but did rally vs. the Japanese yen.

Officially, the Fed's goal with QE2 is "to promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate."

Truth & Consequences

In Ben Bernanke's ideal scenario, QE2 will help keep rates low - which is presumably good for housing and corporate balance sheets - and spur further gains in the stock market and other "risk" assets, which presumably helps confidence, leading to increased business investment and hiring, a.k.a. "real" economic activity.

Merk says there's little-to-no chance QE2 will have any more success on that front than previous Fed efforts to date. "Ultimately people want to deleverage [so] this money is going to go where you have monetary sensitivity" including commodity prices, the Australian dollar and other speculative vehicles.

Meanwhile, market watchers noted the Fed's plan is to focus its QE2 purchasing power on the middle of the Treasury curve, i.e. securities from 2.5 years to 10 years. As a result, prices of shorter-term bonds rose while the price of the 30-year bond tumbled, sending its yield sharply higher.

So the real result of the Fed's action today is a steepening of the yield curve, which most benefits (wait for it)...the banks. The ability to borrow from the Fed at effectively zero and then reinvest in "risk-free" Treasury securities at a higher yield is a huge reason why bank profits rebounded so quickly from the depths of the 2008-09 crisis.

Despite loads of evidence to the contrary (and very little lending) the Fed is effectively doubling down on its bet that boosting the banks' balance sheets is the best way to revive the economy.

Leftback said...

I thought that was well stated so posted the whole thing, since the market is not open yet.

LB is OUT of his silver and euro shorts, silver was a break even yesterday. We will try the Euro short again in due course, you can see where we are today. LB is going to join the sit and watch crowd for a while.

Leftback said...

A nasty commodity spike into the holidays that slows down US consumer activity would serve to teach BB a lesson, eh? Not saying it will happen, but it could, if Lispy Lloyd and his mates want to make a few bucks...

CV said...

@LB

All it does is INFLATE ASSET PRICES... Period!

The beneficiaries of inflated asset prices (who are few and far between)... THEN... gamble and speculate with those winnings...

Then they add LEVERAGE to those winning when the returns start to dwindle...

The only logical place for SPECULATION as to this notion are in raw commodity prices... Which, in the end, makes J6P a loser...

Which pushes him further down the ladder and eventually causes hime to revolt...

We all know where this is going...

karen said...

Morning! great post and comments.. today will be interesting.. QE might not be what people think..

Bruce in Tennessee said...

Guys:

You know I agree with all of this. Yes, I think the fed should be getting out of the treasury market and not getting in deeper, but you have to trade what you see.

I think Bernanke will pay for this, just as Greenspan did, and of course that means Joe Leftback will pay the real cost.

It does seem we have managed yesterday to put every other central bank in the world overtly against us...

...just trying to increase my supply of worthless fiats...

72bat said...

just catching up on yesterday and last evening. been down and out of it with g.i. "disturbance"

ben -
re HR transaction tax bill, there has been a bill for several sessions of congress, just not supported by anyone. see snopes

CV said...

@Bruce

When it comes time for the need to burn them in your stove to heat your house...

Your time would have been better spent collecting
dead firewood in the forest...

At least when you scavenge for wood, you don't get TAXED on it (but I'm sure Obama is working on a way for it to happen)...

mcHAPPY said...

EWI is looking like absolute morons. Not because they messed up a count, anyone can do that, but they would not even discuss alternate counts for a couple of months now. They pride themselves on objectivity, supposedly, but they have been so un-objective and forcing their count.... ugh.

karen said...

21.52 was 2007 uup low.

CV said...

@karen

I'm sure Trichet is sh**ting bricks watching EURUSD right now...

karen said...

70.70 was $usd low during 2008 crash.. uup held 21.77 then.. unprecedented times bred unprecedented measures.

AmenRa said...

Ok. It's obvious a test of the Apr highs are in the works and possibly a push to 1228 (61.8% retrace). Are they going to try and force a short squeeze of an insane magnitude to guarantee these levels are taken out?

Leftback said...

SPX shooting for April highs of 1217.
GREAT POST at Macro Man on PIGS bond spreads and US GSEs.

McFearless said...

weeeeeeeeee!
qeeeeeeeeee!

McFearless said...

McHappy, 9:37

the attempt to label this as a wave 2 was incorrect since inception, it was never 5 down off the april highs, but hey, enjoy the new EWFF tomorrrow.

CV said...

Welcome to BEN BERNANKES World... (Dollar down 0.9%) - So most of this stuff is "beta-ing" at bwtween a (4-1) & (1.5 - 1) correlation...

I HOPE YOU ENJOY YOUR CATFOOD GRANDMA! (They ought to put "Bernankrupt's" foto on the label of Little Friskies cans...

http://finviz.com/futures.ashx

Sugar - 4.1%
Palladium - 3.7%
Coffee - 3.3%
Platinum - 2.9%
Silver - 2.6%
Cotton - 2.5%
Oats - 2.1%
Gold - 2.1%
Soybean Oil - 1.9%
Rough Rice - 1.7%
Heating Oil 1.5%
Cocoa - 1.5%
Lumber - 1.4%
Soybeans - 1.4%
Crude Oil - 1.4%

McFearless said...

@72,

thanks for that.

mcHAPPY said...

Ben,

Seriously. Kicking and screaming all the way to the curb where the market did a American History X to them. Again, nothing wrong with a wrong count but when an amateur like myself even realized 4-5 weeks ago this wasn't right.... C'mon, man.

McFearless said...

how, pray tell, is a weak dollar part of the dual mandate?

anyone?

McFearless said...

McHappy,

I don't claim to be on the same level as EWI when it comes to counting or TA, but I've been saying since early summer it wasn't a 5 down, so was Andy. It's bs what those guys have done, total bs.

karen said...

The intra-day April high was 1219.80. I will not post that again.

Leftback said...

Thanks Karen, I posted the closing high from BBG.

CV said...

Headlines From 2008: "Zimbabwe Stock Exchange Soars As Others Crash"

http://www.zerohedge.com/article/headlines-2008-zimbabwe-stock-exchange-soars-others-crash

"While markets across the world have been crashing, the Zimbabwe Stock Exchange has being seeing record gains as citizens turn to equities to protect their money from the country's hyperinflation. The benchmark Industrial Index soared 257 percent on Tuesday up from a previous one day record of 241 percent on Monday with some companies seeing share prices increase by up to 3,500 percent. But before Wall Street traders start packing their bags and heading south, they should bear in mind that these figures are just another representation of Zimbabwe's collapsing economy and are almost meaningless in real terms. Zimbabwe, once a regional breadbasket, is staggering amid the world's worst inflation, a looming humanitarian emergency and worsening shortages of food, gasoline and most basic goods."

McFearless said...

we are going above those April highs, come on guys, time to admit it, I'm thinking at least 1240's at this point, we could certainly correct first but I find it highly unlikely we stop at the April highs or only slightly above, there is too much conviction now, look around, retail is re-entering stocks.

karen said...

the percentage ups are incredibly tight this morning.. i'll try not to post that again either. and twitter is over-capacity constantly this morning.. so i probably won't be posting much!

McFearless said...

there are a lot of reasons we are nothing like Zimbabwe....not saying we can't "go there" but I don't find that to be a realistic comparison on several levels.

CV said...

@McF

I'll agree with you of the idea that this kind of move is, remarkably, pulling RETAIL back in...

I know you've had client calls... And I've had the same discussions with friends of mine...

I am totally OUT of this thing now... I could care less if the DOW goes to 36,000...

It's time to RE-DOUBLE my efforts to procure raw good & materials...

Checklist time...

Bruce in Tennessee said...

Yes,

Zimbabwe doesn't have Ben Bernanke. They may finally emerge from their mess!

karen said...

http://finance.yahoo.com/tech-ticker/what-the-fed's-600-billion-plan-really-means-535568.html

Mustafa Urwonga said...

Please buy Mugabe Bonds. 10% a day, my friends...!!

CV said...

@McF

There are also a lot of reasons why we may be WORSE than "Z"...

Don't get me started on that (because my argument ISN'T what you think it is)...

The ERROR that people make is in thinking of the mathematics of the TRAJECTORY of inflation...

I'd agree with what I'm guessing is your premise that we never go there...

I'm talking instead about QUALITY OF LIFE issues...

Even a TINY amount of marginal inflation (in this country) would send a lot of people over the edge...

The wizards haven't figured that out yet...

You don't need Zimbabwe numbers to cause chaos in this country...

Another 25% ought to do it...

Bruce in Tennessee said...

http://www.cnbc.com/id/40005824

Victories in Hand, Governors Face Vast Deficits


...there is nothing here about expecting money from Washington in any of the states covered by the article. As expected, this election has put the onus of a balanced budget back in the court of the individual state. I would assume this will decrease government employment over the next 12 months...

CV said...

@McF

Read and understand that VERY CLOSELY what I said, (10:06)

"Another 25% ought to do it"...

Matthew said...

I can't believe none of you have mentioned the Bernanke Op-Ed in the WAPost:

"What the Fed did and why: supporting the recovery and sustaining price stability"
http://www.washingtonpost.com/wp-dyn/content/article/2010/11/03/AR2010110307372.html

"And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion."

No more implicit Bernanke Put--it's explicit (like the Fannie and Freddie government backing)

McFearless said...

C,

ok, fair enough if that's the argument, I won't get into our quality of life vs. Zimbabwe, I dont' know what it's really like over there.


As for client's, it's like this, I'm buying stocks for people, or SPY. I've spent over 3 years telling people about what I think is going on, I'm patient, but only to a point, if they want to buy I'm no longer going to argue with them or try and state my case, it's a waste of my time and theirs, I simply place the unsolicited orders they tell me to, it's not a lot of people doing this, but enough. My client that thinks VZ is going to bankrupt GOOG and T, he doubled down yesterday, and look at that smartie despite not having done one minute of analysis, he just had an idea, up .30 today.

Leftback said...

So explicit it is almost pornographic...

McFearless said...

Matthew,

DL linked that last night, I made comment on yesterday's thread, it's laughable, but everyone believes it, so it's "real"

McFearless said...

CV,

do you at all find it interesting, as I do, that the buzz has once again turned to inflation, realize that the Fed is doing more QE because they are in fact worried about DEflation.

Bruce in Tennessee said...

Matthew:

I don't think any of the regulars here would say that what was done yesterday will ultimately result in a "virtous cycle"...

Bruce in Tennessee said...

or virtuous, if you are into spelling...(like who is!?)

McFearless said...

where are the bond vigilanties?

spoonman said...

"where are the bond vigilanties?"

My understanding was they are running QE...

Bruce in Tennessee said...

Ben,

This massive manipulation (and it is massive) renders what all of us patient investors take for granted as rules of investing as suspended for the time being. It isn't fair to the elderly, and goodness knows, I have seen my share of older people in the mine who have really been stung by these ridiculous rates...

...It is just the new reality. Bernanke and the Fed members have sooooo much power to influence world markets...even if you consider it very wrong, you have to admit it is fascinating to watch it play out...

Leftback said...

Bond vigilantes are over in Greece and Ireland again, chaps.

AmenRa said...

BB: Market up enough before POMO?
BS: Check.
BB: Now get out there and squeeze the living mess out of those damn shorts.
BS: Your will is my command O Most Noble and Worthy Master.
BB: Tell JD and LB to play along or else.

McFearless said...

CV,

I have a question going back to your 10:06.

Regarding this statement:

"The ERROR that people make is in thinking of the mathematics of the TRAJECTORY of inflation"

http://traders-anonymous.blogspot.com/2010/11/amenras-corner_03.html?showComment=1288834231870#c6395919102094940261

Now I realize those weren't your thoughts, but that same type of math is all based on inflation expectations isn't it? Just curious if you felt the same way about those thoughts as you do in the 10:06 with my claim that we aren't anywhere even in the ballpark of hyperinflation Z-style.

McFearless said...

to clarify, those weren't your thoughts in the comment I linked from yesterday.

McFearless said...

well, here's the thing about squeezing the shorts, it'd mean commercials squeezed themselves, either that or COT data is all a lie.

Matthew said...

DUDE, this pop is making me feel so rich. I am totally going to the mall to spend money so that the economy recovers and personal incomes improve.

karen said...

well, the indices are all well above where they were when the economy was humming along in 2004-2005 and people had jobs.. and their homes were dbling in price in some places..

Helicopter Ben said...

You see? It works !

karen said...

aapl and goog at new highs..

karen said...

which my little gold/copper miner was making new highs!

McFearless said...

what works? did jobs just get created? Is DuPont on a hiring blitz because of QE? Did homes become more affordable? did everyone else that hasn't already refi'd and therefore stopped the foreclosures? did banks embark on a massive lending blitz? and, did consumers run out and buy today in anticipation of higher prices, or are they still waiting for better deals?

the number is $1 quadrillion Benny, that's what you need to monetize, good luck, a lot of people are very interested in your celebrity status, don't eff it up.

McFearless said...

googs going under, VZ takin em down.

mcHAPPY said...

Can anyone explain to a simpleton like me why the T's yields are plummeting?

McFearless said...

the prices are going up :)

McFearless said...

sorry guys, I'm in a smart ass move today, I'm surrounded by a GIB you know.

McFearless said...

mood, that is.

AmenRa said...

mcHAPPY

My guess would be that the yields plummet on the T's that the Fed intends to buy and rises on all other T's.

Leftback said...

Karen

You could make LB reach new highs !

karen said...

overlay spx on jjc on a ten min candle chart.. yeah.. copper up on chinese demand.. LOL !!

Leftback said...

ONE TRADE.

CV said...

@McF

Sorry... I stepped out for a minute...

To address your questions...

---

You (or whoever)... Has to "disengage" any thoughts that I have on SILVER versus any INFLATION arguments I mention...

You almost have to "disengage" your thoughts in what about I say about INFLATION versus INFLATION itself...

I know that sounds idiotic (but it's quite hard to express across the blogspace)...

Let me just boil it down to a few thoughts (and then anybody can go from there (if interested)...

- INFLATION (or DEFLATION), to me (CV)... Is NOT a monetary of "price" phenomenon (as it is to most other people...

- Economists & Central bankers always endeavor to make it a "theoretical" phenomenon (but you can't put THEORY on your table and EAT IT, you can't put it in your gas tank and DRIVE ANYWHERE with it, you can't BURN IT to heat your home, you can't DRINK it [to get drunk and forget youer problems], you can't build SHELTER with it, and you can't TRADE or BARTER with your neighbors with it to procure other goods...

- Before "fractional reserve banking", what I described above was the way of living, and the way of transacting... So, INFLATION (as economists see it) only has really existed after the onset of fiat currencies in market enonomies, whereby the "transaction mechanism" [the fiat currency in question] produced the illusion of INFLATION or DEFLATION...

- Before that, it was simple "supply and demand"... Your willingness (or reluctance) to part with your own produced goods for something else of "perceived value" (mostly - YOU ALONE - were the decider of last resort - If you wanted an hour with a "hooker" for your prized bull and were willing to part with it, so be it)

- The problem is, we don't TRANSACT that way anymore (nor do most people PRODUCE anything of value)... We shuffle all of what WE THINK we're earning (the fruits of our labors) into a central market that DETERMINES FOR US the so-called" VALUE of goods & services...

- In times of abundance... GOODS are cheap... When times get TOUGH, goods become either MORE EXPENSIVE (either artificially, via price speculation, or marginal increases to keep pace with complex input cost systems)... Or, they become LESS EXPENSIVE (in which case, they are usually marshalled out of existence - because nobody wants to produce something they can't make a profit off of)...

- Food, fuel, & shelter are three things, though, that can NEVER be marshalled out of existence (for basic survival means)...

karen said...

now what? what happens next?? how much higher can we go?

CV said...

So what I'm getting at (when I talk about QUALITY OF LIFE), is that Americans have had the luxury of LOW COSTS for several generations now (for basic goods)...

At the same time, on their personal balance sheets, they have worked themselves into a position that they can barely afford all the different things that they THINK they need...

- Rent or Mortgage
- Entertainment
- Basic Utilities
- etc.

So even a MARGINAL increase in food & fuel costs, makes them fall short of their "monthly nut"...

This little experiment that BB is doing is FORCING the extra cash EXACTLY where it is most dangerous (raw commodities)... Look at the BETAS that I mentioned earlier, and see for yourself...

If the price of the iPhone went up 25%, you'd probably just have a few disgruntled buyers... Moreover, a new iPhone is only something that you might buy every couple of years...

If your cable bill goes up, you might switch providers (who compete against each other)...

But if your food bill goes up 25%, what do you do? switch to cat food?

Do you shiver during the winter if your heating bills goes up 25%

Do you stay at home if gasoline goes up 25%

THAT'S QUALITY OF LIFE (and that's what 'pisses people off')...

The ERROR is in thinking that if you're someone who makes big bucks (like Ritzy)... It is, perhaps, one LESS night out a month eating a $300 steak dinner...

For MOST AMERICANS... it's their whole life... Maybe the're already down to macaroni & cheese, but take away a few helpings of that and they're going to let you hear about after awhile...

McFearless said...

Richard Russell likely floating in the air today, lol.

McFearless said...

"now what? what happens next?? how much higher can we go?"

I'm going to say, at least infinity, buy maybe more in 2011. It all depends on the Fed.

spoonman said...

sounds like you have kool-aid poisoning, Ben...

wunsacon said...

>> Is DuPont on a hiring blitz because of QE?

Maybe DuPont makes the ink!

"Hey, Charlie, we just landed a huge order for ink. We're going to have to hire a 3rd shift."

McFearless said...

CV,

ok, out of both those posts, lets talk about the iPhone.

anyone here have an iPhone?

You going to switch over to VZ if/when they offer one?

Do you want to pay for a new phone just to get to VZ? You going to do that if you are on Family Talk Plan? with taxes included it would seem a family of four on this plan will pay around $2,000 to switch if they pay an early termination fee on their T contract. Seem like a reasonable expense to anyone? You going to do that if you are grandfathered into unliminted data usage at T? Anyone?

CV said...

I'm just REALLY glad I have the farm...

McFearless said...

spoon,

don't tell me you don't believe.

how dare you. have you not heard of the all powerful?

spoonman said...

I don't believe, I just happen to like dancing...

CV said...

@McF

I'm not burdened by needs for phones...

I'm not being facetious there, just saying... I find these phones to be a frivolous expense...

I got rid of my mobile phone service (which was AT&T/I-Phone) in summer of 2008...

Since - I've saved (what was) over $100 a month in costs... That's about $3,000 (which I've used to buy raw goods - WHICH I DO USE)...

spoonman said...

Nobody wants to take a stab at the short side here in front of the April top? Bucky's not looking healthy...

CV said...

@wunsa (11:35)

lol - see? you're getting "cheeky" like CV...

CV said...

@spoon (11:41)

I'd be tempted...

But in the past year or so... the "pattern" seems to have become...

- it hits an important level
- you get about 1-2 more daily candles trying to break thru
- FAIL
- correction (more minor than major)
- makes it on the next try (sometime later)

McFearless said...

spoon,

pretty dangerous play here, internals are really strong, I certainly don't see a wave pattern that tells me the entire form is complete, we could certainly correct, but you'll have to be spot on with the entry and exit, it's a tough trade, good luck.

CV,

I have a free razr that I've had for years that basically needs to be on a charger for me to talk on it for more than 25 minutes. I'm not really down with the need to have a new phone movement. Really though, I'm curious just how many people are really going to switch over to VZ. I should ask Thor what he thinks, I'd actually like to hear his opinion on this.

spoonman said...

I'm sure we'll bust through overnight, but this is when you make the trade with defined risk, etc, etc - right? I think I'm going to offer a few little piggies to the sharks...

karen said...

i wonder if the indices will trade like C was.. in a narrow band.. spx at 1215 forever..

karen said...

it's as if the market stuck the whole wad of QE in its mouth at once.. even tho it hasn't been issued yet. kind of like counting your chickens before they have hatched..

Leftback said...

Let's wait for the currencies to turn, then the commodity stocks will lead us down. Don't jump the gun until the EURUSD is done finding a top and they notice the Greek and Irish problems again.

If anyone wants to see a bubble, look at small uranium and rare earth miners. UEC, GMO, REE, etc.. what a party that must have been....

Now that Bruce has gone long, I guess it's DOW 38,000 here we come.

McFearless said...

spoon, I"m looking to implement this strategy with several stocks through year end:

http://www.optionseducation.org/strategy/covered_call.jsp

using the "buy-write" strategy primarily.

Mr Market said...

That's a big wad of QE...

Where do we go from here? said...

If You Ain't Long
Well, You'd Be Wrong

Leftback said...

Remember, the banks are still weighing on this market. They will benefit from a steeper yield curve but their balance sheets are strictly X-rated.

karen said...

if this isn't the greater fool market, i don't know what is... who's gonna take the money and run first..

McFearless said...

left,

have you traded options much on any of the bond etf's?

Leftback said...

Nope, but I know a few guys here were killing it on TLT calls back there. I prefer to make directional trades on the 30y using UBT and TBT, now that I have become so well acquainted with that beast. It will be a while before I will want to own and hold USTs again, though.

spoonman said...

I've looked into options selling strategies and in the past have written some put spreads. I'm a little surprised you're attracted to the covered calls, only because the downside is unlimited there. My understanding is they're equivalent to writing puts. For me, I like options because I can only lose a defined amount. Writing put spreads(or "buying" a collar for a credit, I guess) seems more attractive. Although, I'm not the technical analysis wizard you are...Plus, if I sell the spreads in a company I would actually want to own, if it goes against me, I can let the put I sold exercise and I own the stock at slight premium. But I wanted to own it at a higher price anyway. Unfortunately, there's not much out there right now I can say that about, and I haven't had the time to do my homework on individual names lately.

**usual disclaimer about me being a complete novice just trying not to get hosed with my own money**

Leftback said...

K.,

LB has pretty much taken the money and run for this year, may take a few more shots at equities from the long side if we get a decent pull-back, but done for the year in Treasury bonds.

Bruce in Tennessee said...

I read your MM comments today LB...I take pleasure at being your sentiment weathervane...(I suspect it was me you were speaking about..)

CV said...

@where do we go from here...

I'd be WRONG?

Don't think so asshole... Since July... CV has seen a "tick for tick" correlation of US dollar devaluation versus S&P rally...

Your "dollars" in indexed share prices have NO MORE BUYING POWER NOW than they did back in the summer...

& if you sell right now (thinking you've caught a top)... You'll pay TAXES on your gains...

Instead... I used the CASH to buy commodities (physical ones - stupid stuff like lumber, liquor, diesel fuel, and other things I need around the farm)... Many have seen 25% price increases since (some, 30-40%)...

I NEED those commodities (and won't sell them), therefore I don't owe any taxes on what could be perceived in a VALUE increase...

Have fun with your stocks! (and the tax guy)...

Anonymous said...

Well, there is plenty of noise about the need for even more QE in the future. I'm sure many here have read today's ZH post about GS's call for at least $2T...and I am sure the FOMC's open-ended language is not lost on anyone here.

The one thing you can say about BB, he has been consistent. I mean, he has shown no sign of changing his philosophy, despite the criticism of the political right and other CB's.

Do you guys think there is a predictable end point to this nonsense? Or will a pissed off T-partier have to shoot him down like a dog in the street to make him stop?

STL

Where do we go from here? said...

Where do we go from here? ... with charts

1980-2000 - 20 years

then last 10 years

2000-present

CV said...

"The one thing you can say about BB, he has been consistent."

Dean Wormer said...

"Fat, drunk, & stupid is no way to go through life... son"

CV said...

@where do we go from here...

and HOW MUCH DEBT has been created to produce your pretty graphs?

can you show me a chart on that?

karen said...

neat charts.. a bit jagged those last ten years..

David Tepper said...

You guys are all idiots.

Anonymous said...

Fat, drunk, & stupid is no way to go through life...son

OK....So BB has not been consistent? I didn't say he was right but it certainly looks like this shit going to continue. Do you disagree?

STL

CV said...

@where do we go from here

I'll give you a hint... In dollar terms...

If you "make the leap" that EVERY SINGLE SOLAR SYSTEM IN THE MILKY WAY GALAXY were to have just ONE PLANET (with a race of humans involved in fractional reserve banking)...

Then, to MAINTAIN this strata of asset prices valuations... EACH YEAR, from here on out... Americans would need about a pledge of $10 from each one of those planets in the entire galaxy...

Somebody call Jerry Lewis... QUICK

McFearless said...

spoon, I'll plan on owning the underlying here (yes, for real) so my obligation for the written call is covered by owning the stock, there's risk no doubt, I could lose on the option and the underlying, but if VIX picks up I'll pocket good premium. Also, this is a strategy that can allow a bear such as myself not to let the emotion of a winning long trade get to me, because this strategy forces a sell discipline. I'm just like everyone else, and I can get caught up in the idea of something will keep going up when it has gone up if I have money on the line.

anyway, something I'm planning out right now

Anonymous said...

Someone get the Lithium quick. O/W, I think we are going to have manic break on this blog sometime soon.

STL

Leftback said...

The stock market is an almost perfect dick counting mechanism....
Sorry, that should have been discounting.

Bruce in Tennessee said...

Ok...heard this this morning....

What do you get when you spell The and IRS?

theirs, silly...

Where do we go from here? said...

Just went outside to check if the sky was falling, (or those other planets you talk about) didn't see it... someone could just sit on their pile of money or make some bucks here and there, I'd choose make a few here and there...

How much debt was created between these next years?

1960-1980

then we got this...

1980-2000

So I'd say we still need a few more years of consolidation before we take off again. But for now I'm long and have been for a year +. Will get out soon, maybe after 1st or 2nd qtr 2011...

DL said...

50 reasons to euphoric about living in NY City:

http://bit.ly/dxKGiM

CV said...

@STL

Any display of "manic frustration" here has NOTHING TO DO with positions of asset prices...

It has to do with the stupidity of fellow human beings not realizing that they are being led to slaughter...

CV said...

@DL

I guess it depends on your POV...

That same list... to me... reads as "50 reasons I'm glad as hell I don't live in NYC, nor ever would want to"...

Bruce in Tennessee said...

50 reasons to be euphoric about receiving electroshock therapy...

50 reasons to be glad you were tasered today...

50 reasons to be euphoric that LB doesn't know Karen's address...

50 reasons that Ben Bernanke like to live "on the edge" (He is the most interesting man in the world, you know)

....I could do this all day, every day..

CV said...

@where do we go from here

Congrats, then...

I'm sure it all TASTES good on your plate (with a little tabasco & salt & pepper)...

But since you're such a great TRADING GURU... What the hell are you doing hanging out with the dregs of life on this blog...

Instead of having a basically ANONYMOUS handle... If I were you, I'd be shouting my name from the rooftops, hanging out a shingle to attract a "2&20" clientele, writing a book (like Ritzy), and selling my SECRET TO LIFE to the world...

Why keep all your WONDERFULNESS to yourself?

But thanks for sharing it with us anyway...

AmenRa said...

Spock: Captain we're approaching the neutral zone.

Kirk: No problem Spock. Steady as she goes.

Spock: Last time we were here we were ambushed by the shorts (a Ferengi offshoot).

Kirk: Engine room come in.

Scotty: Yes Captain.

Kirk: We need more QE.

Scotty: I'm giving it all she's got sir.

Kirk: We're not going to make it out of here safely Scotty. What else can you do?

Scotty: We can transfer power from the shields (401k's) but we'll be defenseless.

Kirk: Don't worry about it. Someone from the Federation (CB's) will help if needed.

Spock: It's not logical sir. They are light years (austerity) away. We'll be on our own for too long.

Kirk: So be it. Steady as she goes...

karen said...

mrtopstep

New Video: The Bernanke Put? http://mrtopstep.com/?p=114

Leftback said...

For those who are feeling euphoric about markets, especially the emerging variety, some very well organized thoughts on China, and Japan:

One Day China Will Admit It Told Porkies

AmenRa said...

Wow. The yield on the 5yr is below the 13wk yield.

CV said...

@WGWGFH

Lastly...

Just remember... Your "gains" are not really anything but numbers on a sheet of paper, or in an electronic balance somewhere until you've SOLD THEM, PAID TAXES ON THE PROFITS, CONVERTED THEM TO EXCHANGE...

Then, used them to purchase something that you can either enjoy, share with others, or otherwise use in a constructive manner to actually produce or create something...

karen said...

AR, loved your StarTrek dialogue : )

McFearless said...

McHappy,

this is from GN today, and I don't mind sharing because it's nothing specific, but this is legit work, what EWI is doing right now is not:

"Every few years, a major, unexpected news event jolts markets (and wave structure) causing unexpected price moves. With all 4 markets (S&P, Notes, Gold, Euro) experiencing violent, unanticipated price action the last 24 hours, it appears the Fed's unveiling of a $600 billion stimulus package created such a "jolt."

It is yet not certain what changes will be forced on to short- or intermediate-term wave structure or how that might impact future trends or potential. Generally speaking, if an event is "man made," its impact last only a few days (to a couple of weeks), then the markets adjust and get back to "normal, more predictable" behavior. For that reason, it is best we stay out of all markets until next week."

CV said...

@WGWGFH

Since you seem to be a reader of Zero Hedge (or, probably a troll, more likely)...

With respect you your above comment...

"So I'd say we still need a few more years of consolidation before we take off again. But for now I'm long and have been for a year +. Will get out soon, maybe after 1st or 2nd qtr 2011...


What do you think about this comment from a ZH regular (Mr. Market Timer)...?

---
by Cognitive Dissonance
on Thu, 11/04/2010 - 11:48
#699917



This will be infinitely worse than Japan. Which is why the last ditch to preserve the Ponzi will be unlike what anyone has ever seen before.


The herding into the risk trade has accelerated. This is an "all in" FED bet with an unlimited supply of chips. I'm simply amazed how many people wish to believe the lunacy that it's all right to pig pile into EVERYTHING because they'll be able to see the top before everyone else.

As someone who worked in an insane asylum for a summer as an orderly, there is no describing how quickly a wave of hysteria sweeps through 50 lunatics gathered in one room. Breathtaking in speed and magnitude, what really surprised me when I witnessed it twice in three months was the effect it had on me, the supposedly sane one in the room.

We are witnessing the same thing in the world and the markets today. This could last another day or another month. But when the change happens, and it always happens, it will be swift and merciless and no one will see it coming. No one. You'll know it's coming at some point because it's obvious, but you won't actually see it until you're engulfed and gasping for air.

karen said...

Minyanville’s Todd Harrison and Josh Lipton discuss the market’s overwhelmingly positive reaction to the Fed’s $600 billion QE2 infusion. But how long will it last? And is there downside risk lurking in the future? Watch the video below to learn more:

http://www.minyanville.com/businessmarkets/articles/qe2-federal-reserve-fomc-announcment-quantitative/11/4/2010/id/30953

karen said...

Ben.. thanks for sharing that GN..
and CV, thanks for reposting that insane asylum anecdote.

CV said...

or this...

by AR
on Thu, 11/04/2010 - 11:55
#699951


CD / This is going to end extremely badly. We discuss weekly our amazement at the newbie-type money managers who have scant regard for history, or, for how easy it is to lose one's hard earned money.

Market psychology is reckless in our opinion. As posted earlier, 10 years ago, even a hint of government intentionally inflating or propping up prices would cause the S&P's to open locked limit down 50 handles. Today, it is all greeted with cheers. Just stunning.

McFearless said...

hey I just checked too, can't really see if the sky is falling though, it's raining here.

Leftback said...

Scotty (frowning): Cap'n', the engines will na' tak' it.... !!

Leftback said...

EVERYONE and their uncle and their dog are long today. Including me, but at least I am feeling extremely uneasy and making sure I know where the exits are...

Leftback said...

Anyone think there may have been a squeeze in gold today? Glad my nuts weren't caught in that vice. Gold is way up in EUR as well, perhaps a sign of impending issues in the European peripherals...?

Leftback said...

Scotty (protesting): It's most irregular, Cap'n' but we'll gi' it a try..!

WDWGFH said...

If ya would've went long here, you'd be doing well...


Do you still wish you were making money

Leftback said...

Scotty: We're almost out of dilithium crystals, Cap'n' Bernanke...

CV said...

@LB

CV is UP 500% today... Wanna know how?

---

I took a $10 roll of quarters to the bank...

40 quarters @.0559443 melt value = 22.37% of face value

...and exchanged it for 5 $2 rolls of nickels...

160 nickels @.0623235 melt value = 124.64% of face value...

5 bagger bitchez! (no taxes)

CV said...

sorry... 200 nickels...

TYPO BITCHEZ!

McFearless said...

I just had a thought, the easy button commercials, they should get David Tepper to do those ads.

McFearless said...

either that or the salt and tepper shakers bruce mentioned, which was hilarious, btw.

CV said...

...and what happens if I'm TOTALLY WRONG?

No inflation... The dollar rebounds and goes TO THE MOON...

I exchanged $10 for $10... tax free...

So I buy beer with nickels instead of quarters...

karen said...

http://jessescrossroadscafe.blogspot.com/2010/11/sprott-adds-65-million-ounces-of-silver.html

Leftback said...

In past examples of market euphoria, the quarterly Tops have often coincided with Peak Taunting and Maximal Trollery.

Just an observation.

EMs and PMs really look like blowoff tops, don't they?

CV said...

@karen

The only DRAWBACK on CV's silver argument is that for all intents and purposes... Moving to a SILVER BACKED currency will probably get you assassinated (like JFK)...

Leftback said...

Irish 10y at 7.7%. Begorrah....

CV said...

@LB (1:33)

Albert Edwards sees it that way... (EM)

http://www.zerohedge.com/article/albert-edwards-does-not-capitulate-sees-em-bubble-pop-triggering-60-decline-equity-prices

karen said...

http://finance.yahoo.com/tech-ticker/what%27s-bernanke-smoking-%22a-complete-mystery%22-how-qe2-helps-the-economy-galbraith-says-535571.html

karen said...

"Instead of additional stimulus that mainly weakens the dollar and helps the banks print money with the carry trade, as detailed here, Galbraith says the Fed should focus its regulatory powers on the problems of ‘Too Big to Fail' and "bank fraud that got us into the crisis and the foreclosure frauds the banks are using to try and get themselves out of it."

karen said...

I think I love that man : )

Leftback said...

Galbraith, Edwards, or.... LB?

:-)

McFearless said...

so what, 65-70% of the days gains happened in maybe 2 minutes?

gee, that's exciting.

Leftback said...

Actually it was dialed in before the market opened, as usual.
FX predicts the day's moves as always.

CV said...

@McF

Especially for you... SOCIOECONOMICS

http://dsc.discovery.com/videos/man-vs-wild-30-000-foot-freefall.html

McFearless said...

yeah, you are right, it all pretty much happened last night.....lame.

McFearless said...

C,

best thing about that video, that guys name is BEAR.

AmenRa said...

LB

Scotty: Cap'n the warp core is gonna blow (inflation). I need to kill the extra power to the core (QE) or that's all she wrote sir.

McFearless said...

I never trade off RSI, but shet.....

karen said...

Stocks Move Sideways Along Session Highs
Thu Nov 4 14:00:00 EDT 2010 | Briefing.com
The S&P 500 has been trading in a relatively tight band close to the 1215 line for most of the afternoon. The steady action marks a consolidation of sorts, now that stocks have put together their best gain in about two weeks and are headed for their fifteenth advance in 19 sessions.

Participation this session has been strong. That has lifted share volume on the NYSE. Whether that is a sign that investors are now willing to move off of the sidelines will only be seen in time.

karen said...

http://online.wsj.com/article/SB10001424052748703805704575594523057172804.html

KO launches

"its largest-ever bond sale: a four-part, $4.5 billion debt offering.

The offering consists of a $1.25 billion tranche of floating-rate notes and three tranches of fixed-rate notes: $1.25 billion of three-year notes, $1 billion of five-year notes and $1 billion of 10-year securities.

The company's second-largest and most recent issue was for $2.25 billion in five- and 10-year bonds in March 2009, according to data provider Dealogic."

karen said...

Ben, perhaps of interest to you:

http://blogs.wsj.com/financial-adviser/2010/11/04/the-subversion-of-suitability/

CV said...

@karen

Stocks Move Sideways Along Session Highs
Thu Nov 4 14:00:00 EDT 2010 | Briefing.com


well... at least the "explanation" didn't revolve on...

Stocks move higher on hopes for THE ECONOMY...

CV said...

I'd say that Bernankrupt is doing a "SOOT-able" job as Fed Chair...

McFearless said...

10 day p/c is now about where it was in april, this means retailers are very likely long calls, lots of em. At the time in April of this year this was the lowest p/c ratio in nearly a decade.

Leftback said...

JOHN E is ripe for a rinsing....

karen said...

http://www.zerohedge.com/article/fitch-puts-entire-us-residential-mortgage-servicer-space-negative-outlook-over-fraudclosure-

karen said...

popped stops: http://blog.afraidtotrade.com/market-shattering-resistance-triggers-popped-stops/

McFearless said...

Karen,
re: suitability

easy forecast for you right now:

lots of advisors will go out of business as a result of lawsuits over the next 5 years.

looking at charts of arbitration cases, guess when they all happen....in bear markets! (not all, but I'd guess 95% of them, "advisor never told me the risk")

within the new finreg bill there is proposal that cases no longer have to be settled by arbitration but can be subject to a ruling by jury.

so that's where it's headed, lots of lawsuits, lots of fines and penalties, lots of advisors that go bust, lots of people that will lie to try to scrape money back through the courts claiming the advisor screwed them when they knew full well what was going on once they realize the game you can play here.

karen said...

i am fascinated with fxe:uup chart going back to 2007.. is that a giant H&S.. or does fxe continue its ascent..

karen said...

FRE, FNM overhall could cost $580B... wait wait wait.. that number seems so close to 600B

http://online.wsj.com/article/SB10001424052748703805704575594300330039336.html

AmenRa said...

I wish TRIN & PC Ratio would get closer to 1.0 for a little safety going short. Plus Net $ Vol on the NYSE and SPX is still close to its daily highs.

Bruce in Tennessee said...

Well, today has turned out pretty good for me. You guys are much smarter than me, but I bought 450k of upro yesterday after the Fed and I am up >20 today.

I don't have the trading savvy of any of you regulars. But I don't let my thoughts about the market get in the way of trading....

Equities are always risky...but the Tepper video was a gift. And it still is....

back to the mine...

karen said...

I guess the GM IPO is another reason to reflate the market:

http://www.reuters.com/article/idUSTRE6A34WA20101104

karen said...

I saw this somewhere else but it is depicted better here:

http://www.ritholtz.com/blog/2010/11/world-rally-day/

karen said...

BloombergNow
U.S. Banks Face $31 Billion in Loan-Buyback Losses, S&P Says http://ow.ly/34xY4

McFearless said...

Bruce,

did you sell? if not, I often to point out to my clients, your gain is still at $0 until you realize it.

nice going btw.

karen said...

jamie with volatility sonar

http://www.optionmonster.com/drj_blog/article.jsp?page=drj_blog/more_put_buying_in_vix_who_knew_50674.html

Bruce in Tennessee said...

No, Ben, my inclination is always to sell these type of risky investment. However, I am going to hold this tonight.

I do realize this is Bizzaro world, and I haven't lost my tiny mind, ....yet.

Ritholtz said...

I've been 200% long since August 27th

Leftback said...

FRE, FNM overhall could cost $580B... wait wait wait.. that number seems so close to 600B

good eye, Karen...

Leftback said...

Ben

LB's gains are smaller but they have already been realized....

Hairy Wanker said...

I've been long every day except when the market has gone down when I have been short.

DL said...

B in T

"But I don't let my thoughts about the market get in the way of..."

^^^^^^^^^^^^^^^^^^

If I were one of your patients "under the knife", I wouldn't want you thinking about the market at all.

McFearless said...

doesn't really seem to jive with the 40% cash posts....ritholtz, but I'm sure you were.

gl bruce, bizzaro world indeed, I see you are trying to make money rather than be right. :)

McFearless said...

"If I were one of your patients "under the knife", I wouldn't want you thinking about the market at all."

Indeed, cutting people in the shape of the UPRO chart might leave a nasty scar.

Bruce in Tennessee said...

Ben,

I think you know how conservative I am, though...but this just seemed like it would work today...

This from the guy who has been in CD's for the last several years...

CV said...

@karen

FRE, FNM overhall could cost $580B... wait wait wait.. that number seems so close to 600B

Don't get QE3 confused with QE2

McFearless said...

Bruce,

I'm happy for you man, you made a good trade, I missed it! I'm sitting on a pile of cash, which is now worth less than it was yesterday.

POS dollar.

Leftback said...

B in T

LB would be tempted to take that nice big 3 x levered gain back to the homestead. Then again, LB doesn't have one....

Don't be LAST MAN IN.

Leftback said...

Rather have a small bag of USD I can spend, Ben,

- than a HINDENBURG full of hot air.

karen said...

Hey, i'm excited to be getting Buzz & Banter free now thru e*trade... dumb me had my pop up blocker on..

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