Friday, March 09, 2007
Finding the Bottom: Low Risk Entries Using the MACD and ATR.
I came home from work Tuesday evening to find my azaleas mulched, my leaves raked, my daffodils fluffed, and my monkey grass trimmed. It seems that your positive comments last weekend were enough to earn me an afternoon of yard services from The Fly's "illegal Mexicans." Left on my front porch was a case of beverages. I was sure it would be Monster. Much to my disappointment, the beverages turned out to be some kind of green tea...and diet, at that. See, that is The Fly's way of saying, "Good job. Now get the fuck over it."
In the first chart, AIG completed a Head and Shoulders pattern, and has since persisted in a 3 month downtrend. The picture seems to be bleak for AIG. However, the MACD and the ATR are not confirming the price movement. As the price continues to make new lows, the MACD crosses over into bullish territory. On the day of the new low, the MACD crosses back into negative territory. However, the bears are unable to drive the MACD to make a new low. Instead, the indicator can barely be pushed below the trigger line.
The third chart is of GLBL. Note the price making new lows without confirmation from the MACD. The ATR smooths out and shows volatility consolidating while the price moves down.
The final chart shows GLBL confirm the MACD crossover and gain 30% in 2 months.
For this weekend's installment, I want to take a look at a technique for locating low risk entries in stocks making new lows. This technique uses 2 indicators: The MACD and the Average True Range (ATR).
In the first chart, AIG completed a Head and Shoulders pattern, and has since persisted in a 3 month downtrend. The picture seems to be bleak for AIG. However, the MACD and the ATR are not confirming the price movement. As the price continues to make new lows, the MACD crosses over into bullish territory. On the day of the new low, the MACD crosses back into negative territory. However, the bears are unable to drive the MACD to make a new low. Instead, the indicator can barely be pushed below the trigger line.The ATR is telling the trader that volatility is at relative lows, and while the price continues to move down, volatility has been consolidating for two weeks.
The second chart shows the MACD continue making higher highs above the trigger line while the ATR shows the volatility increase and then continue the primary downtrend. AIG goes on to make 10 points in 2.5 months.
The third chart is of GLBL. Note the price making new lows without confirmation from the MACD. The ATR smooths out and shows volatility consolidating while the price moves down.
The key to using these indicators when screening for stocks at new lows is understanding what they are saying. The MACD is measuring the strength of the trend. As the movement of the MACD diverges from the movement of the price, the astute trader observes the bears losing strength. The ATR can be understood as a proxy for a measurement of fear. The decrease and subsequent stabilization of volatility (fear) as measured by the ATR suggests that as fear decreases, buyers are likely to be emboldened to step in and buy.
Traders may want to imagine the MACD anticipating the arrival of support; hence, it begins to trend in positive territory. Similarly, fear decreases as the stock stabilizes and support is anticipated.
This technique for identifying bottoms can also be used with 2 or 3 year weekly charts. On charts representing longer-terms, the trend changes may be even more powerful and last even longer than the intermediate-term trends illustrated in the charts above.
Dr. Dre: Nuthin' But A G Thang
Closing Comments
I am in a bit of a rush, so I'll make this brief.
The market is fine. I am mincing the MVIS doubters. And, life is fucking golden at "The Fly's" office. I was up another 1.1% today.
I covered a few shorts, but still hold many inverse ETF's.
Next week, I intend on buying more MVIS, ADY, CENX and HANS.
NOTE: Make sure to visit this weekend. Woodshedder is likely to bust out his fucking charts, and stuff.
The market is fine. I am mincing the MVIS doubters. And, life is fucking golden at "The Fly's" office. I was up another 1.1% today.
I covered a few shorts, but still hold many inverse ETF's.
Next week, I intend on buying more MVIS, ADY, CENX and HANS.
NOTE: Make sure to visit this weekend. Woodshedder is likely to bust out his fucking charts, and stuff.
Late Day Thought
Via CNBC, Cramer doesn't mind supporting genocide, providing it makes him money.
Boo-ya!
Boo-ya!
Fly Buy: ATHR
I covered some of my ATHR short, buying 6,500 @ $25.10.
Fly Buy: AMKR
I covered my AMKR short, buying 5,000 @ $12.
Fly Buy: HANS
I bought 2,000 HANS @ $34.55.
Disclaimer: If you buy HANS because of this post, the Yen carry trade will unravel, effectively forcing you to pay back the 10 billion Yen you borrowed, in order to buy U.S. treasuries. Bummer, I know. And, you may lose money.
Disclaimer: If you buy HANS because of this post, the Yen carry trade will unravel, effectively forcing you to pay back the 10 billion Yen you borrowed, in order to buy U.S. treasuries. Bummer, I know. And, you may lose money.
Position Updates: MVIS, LOCM
Sellers of the two stocks featured above are about to get their legs snapped-- like pretzels.
Sector Spotlight: Semiconductors
It doesn't make any sense to bet against this market. The bears are bumbling idiots. I have always said, the sellers are too old and dumb to take seriously.
With regards to the market, I am sure the sellers will try to press today, considering they have been thrown down a flight of stairs-- while sitting in their fucking wheel chairs.
However, I doubt the market will close red. As a matter of fact, I feel there is a very good chance we will close significantly higher-- than the 20+ points we are up now.
Within the market, I am most impressed with the Semi's, despite being short the sector. Furthermore, because of this strength, I will likely cover my ATHR and BRCM shorts. Fuckers.
Finally, "The Fly" is well on his way to win the CNBC jackpot, being long MIDD, +10 today (I keep some stocks secret, hatfuckers).
As promised, when I win, the proceeds will go towards ad space in Times Square, which will read: "CNBC sucks balls."
With regards to the market, I am sure the sellers will try to press today, considering they have been thrown down a flight of stairs-- while sitting in their fucking wheel chairs.
However, I doubt the market will close red. As a matter of fact, I feel there is a very good chance we will close significantly higher-- than the 20+ points we are up now.
Within the market, I am most impressed with the Semi's, despite being short the sector. Furthermore, because of this strength, I will likely cover my ATHR and BRCM shorts. Fuckers.
Finally, "The Fly" is well on his way to win the CNBC jackpot, being long MIDD, +10 today (I keep some stocks secret, hatfuckers).
As promised, when I win, the proceeds will go towards ad space in Times Square, which will read: "CNBC sucks balls."
Asshat of the Week Award: Tom Brown
Without a doubt, this week's "Asshat of the Week Award" goes to Tom Brown from Second Curve Capital, who also writes tons of fucktarded "bank-tardedness" at Bankstocks.com.I know Cramer likes to polish this guys knob every chance he gets, but he is a one man wrecking ball-- with regards to his fund. Tom has been uber bullish on the sub-prime lenders, recommending and owning shares of NEW and LEND, amongst others. In addition to the sub-prime death spirals, Tom is a big fan of high risk financial stocks, such as CCRT, FMD, NTBK, ECPG etc. Furthermore, he owns the fuckers in size.
On 2/28/2007, Tom recommended, with two pumped fists, LEND, exclaiming:
"Given the level of investor panic surrounding the sub-prime borrower lately, I’m feeling very greedy regarding sub-prime lenders these days, and am especially greedy over sub-prime mortgage lenders in particular. (One company among them stands out; I’ll get to it in a minute.) This is one of those times in investing, I believe, when it will pay to be very, very aggressive."Clearly,Tom has let old age deteriorate his brain, to the point where fucked up bank stocks "appear" to be good investments.
Also, it's worth noting, his 800 million dollar hedge fund may be in jeopardy, providing his positions stay down.
I am not aware of his funds agreements, with regards to redemptions. However, I will say, if his partners are permitted to withdraw funds on a quarterly basis, Tom's 800 million will be substantially less-- come March 31st.
Trust me, people smell blood out there and will short the fuck out of his positions, if they knew Second Curve needed to liquidate, in order to meet redemptions.
It has been reported, due to Tom's asshattery, that Second Curve lost over 8% in January alone and more than 18% in smaller funds. Moreover, according to some of the numbers I crunched, he may be down a staggering 16%+ (not including NEW!), inside two short months of the new year.
To clarify the mess, I had a spreadsheet with Tom's positions, compiled. However, I do not know how many shares of NEW his fund owns.Considering the current state of NEW, I doubt Second Curve will release that information.
Click here for asshattery.
(spreadsheet of Second Curve's positions)
Thursday, March 08, 2007
Collie Buddz: Come Around
Closing Comments
Despite the fucktards at CNBC circulating rumors on NEW, the market did nicely. Even though my inverse ETF's poleaxed me, I still managed to gain 1.24% today.
If a machine gun were put to my head, in order to extract a stock pick, I'd say "go long CENX."
I have concluded, the market is not nearly as vulnerable as the hatfuckers on the tube want us to believe.
Frankly, I should have seen this misdirection/propaganda campaign-- from the beginning. Since when do the retarded Asian markets move our stocks-- like they did?
Also, why have there been so many fucking rumors-- all being negative? From carry trade to slowing growth to recession to "global bear market"-- all of the fucktards have been wearing their finest asshats, while espousing such negative commentary.
Hence, my "calculator brain" surmises, the events of the past two weeks, to be nothing more than paranoia, coupled with a sophisticated bear raid on the indices. Which is ironic, since my own paranoia is leading me to believe the bears are really that smart.
So, sometime soon, I will remove my hedges and proceed to kick old people down stairs or empty elevator shafts. Also, I will "nibble" at ADY, MVIS, CENX, BWLD, ITRI, GMXR and maybe SDXC.
NOTE: After the close, NSM reported a good number. The Semi's should move higher, as a result.
NOTE II: This is fucking hilarious.
If a machine gun were put to my head, in order to extract a stock pick, I'd say "go long CENX."
I have concluded, the market is not nearly as vulnerable as the hatfuckers on the tube want us to believe.
Frankly, I should have seen this misdirection/propaganda campaign-- from the beginning. Since when do the retarded Asian markets move our stocks-- like they did?
Also, why have there been so many fucking rumors-- all being negative? From carry trade to slowing growth to recession to "global bear market"-- all of the fucktards have been wearing their finest asshats, while espousing such negative commentary.
Hence, my "calculator brain" surmises, the events of the past two weeks, to be nothing more than paranoia, coupled with a sophisticated bear raid on the indices. Which is ironic, since my own paranoia is leading me to believe the bears are really that smart.
So, sometime soon, I will remove my hedges and proceed to kick old people down stairs or empty elevator shafts. Also, I will "nibble" at ADY, MVIS, CENX, BWLD, ITRI, GMXR and maybe SDXC.
NOTE: After the close, NSM reported a good number. The Semi's should move higher, as a result.
NOTE II: This is fucking hilarious.
Late Day Thought
MVIS shorts will have their livers eaten for them, sometime in the near future.
Quick Alert: Sub-Prime Lenders Fuck the Rally
Via CNBC, NEW is rumored to be fucked, via bankruptcy.
Should these rumors turn out to be false, I propose demolishing the building CNBC broadcasts out of.
Keep holding your shorts. They may come in handy.
Should these rumors turn out to be false, I propose demolishing the building CNBC broadcasts out of.
Keep holding your shorts. They may come in handy.
Quick Alert: Fly's Analyst Pounds HANS Short Seller
Fly Buy: MVIS
I bought 5,000 MVIS @ $3.42.
Disclaimer: If you buy MVIS because of this post, the "global bear market" will be upon us. And, you may lose money.
UPDATE: Click here to view MVIS technology.
Disclaimer: If you buy MVIS because of this post, the "global bear market" will be upon us. And, you may lose money.
UPDATE: Click here to view MVIS technology.
Fly Buy: CENX
I bought 3,000 CENX @ $43.99.
Disclaimer: If you buy CENX because of this post, your wife will start wearing Cold Water Creek vests. And, you may lose money.
Disclaimer: If you buy CENX because of this post, your wife will start wearing Cold Water Creek vests. And, you may lose money.
Sector Spotlight: Metals
Barring a key reversal, the market should do well today. Every sector is kicking ass, with slight weakness in the Semi's. Fuck the Semi's (I am short).
Anyway, I am starting to believe the "global bear market" we are supposed to be entering is utter bullshit. Additionally, I am starting to think the bull market is back-- and anyone betting against will get his jaw punched loose.
Today, the Metals are exploding to the upside. If the Asian markets do not melt away, I like CENX, NUE, X, TIE and AL. And, if you are a gambling idiot, maybe ERS and IIIN are worth a dice roll.
Bottom line: I am not having fun, because of my hedges. I have somehow morphed from a caffeinated-crazed stock jockey into a staid-conservative goat-fucker.
I may have to rethink my market positions.
Until then, I'll aimlessly wander around NYC--while littering the streets with my empty Monster Energy Soda cans.
Anyway, I am starting to believe the "global bear market" we are supposed to be entering is utter bullshit. Additionally, I am starting to think the bull market is back-- and anyone betting against will get his jaw punched loose.
Today, the Metals are exploding to the upside. If the Asian markets do not melt away, I like CENX, NUE, X, TIE and AL. And, if you are a gambling idiot, maybe ERS and IIIN are worth a dice roll.
Bottom line: I am not having fun, because of my hedges. I have somehow morphed from a caffeinated-crazed stock jockey into a staid-conservative goat-fucker.
I may have to rethink my market positions.
Until then, I'll aimlessly wander around NYC--while littering the streets with my empty Monster Energy Soda cans.
Fly Reminder
If you buy CWTR today, because of their "impressive" numbers, you are an asshat.I don't care what the numbers say, no one buys clothes at Cold Water Creek. No one.
If my wife ever wore the dress featured above, I'd divorce her, move out of the state and have a restraining order put against her.
I spit on CWTR, makers of the "ugliest clothes on Earth."
UPDATE: Apparently, the hideous floral dress I had posted was too fucking pretty for certain asshats-- in the comments section. In order to provide clarity, I have posted a vest, made by CWTR, that is so ugly-- it should be illegal.
If my wife ever wore that vest, I'd have her arrested.
Wednesday, March 07, 2007
Dave Matthews Band: Crash Into Me
Closing Comments
First, I would like to dedicate this post to the CEO of DHI, who had the audacity to tell Wall Street his business will "suck" in 2007. How dare he!
I was up .14% today. Basically, I have reduced myself to a fucking hamster on a wheel, running in place-- taking occasional Monster Energy Soda breaks.
Bottom line: This market "sucks" and is likely to leg down, faster than I consume my leg of lamb tonight. I know, bad joke. Fuck you.
The only sector that pleased my analyst today was Energy. Everything else was for the goat-fuckers.
With my money, I will continue to "invest" in lottery tickets, with fanatical persistence.
Oh, almost forgot, MVIS kicks ass.
I was up .14% today. Basically, I have reduced myself to a fucking hamster on a wheel, running in place-- taking occasional Monster Energy Soda breaks.
Bottom line: This market "sucks" and is likely to leg down, faster than I consume my leg of lamb tonight. I know, bad joke. Fuck you.
The only sector that pleased my analyst today was Energy. Everything else was for the goat-fuckers.
With my money, I will continue to "invest" in lottery tickets, with fanatical persistence.
Oh, almost forgot, MVIS kicks ass.
Quick Alert: Oil Stocks on Fire
If you recall, about a week ago I mentioned how well the Energy sector performs in March. Based upon historical seasonal data, Oil stocks break the fuck out in March.
Now here we are, one week into March, and the sector is busting loose.
With my money, I am long VLO, SU, UPL and GMXR.
Although I hate the gyrations of the sector, they are likely to trade up-- as the driving season approaches.
Now here we are, one week into March, and the sector is busting loose.
With my money, I am long VLO, SU, UPL and GMXR.
Although I hate the gyrations of the sector, they are likely to trade up-- as the driving season approaches.
Fly Buy: GMXR
I bought 4,000 GMXR @ $30.73.
UPDATE: I bought 4,000 GMXR @ $30.83.
Disclaimer: If you buy GMXR because of this post, termites will eat your patio this spring. And, you may lose money.
UPDATE: I bought 4,000 GMXR @ $30.83.
Disclaimer: If you buy GMXR because of this post, termites will eat your patio this spring. And, you may lose money.
Fly Buy: FXY
I bought 2,000 FXY @ $86.10.
Disclaimer: If you buy FXY because of this post, your car keys may fall down a sewer, effectively locking you out of your car, indefinitely. And, you may lose money.
Disclaimer: If you buy FXY because of this post, your car keys may fall down a sewer, effectively locking you out of your car, indefinitely. And, you may lose money.
Sector Spotlight: Retail
If you are a net bear, you have to be a little nervous. We all know how resilient this market is, embodied by the care free attitude of the asshole dip buyer.
Take a look at the Retailers, they're on fire. So far, the buyers are bidding up shares of CHS, SKS, ODP, CROX and GME. Considering the huge short positions in the Retailers, I'd be very scared to be short-- into this rally.
Even though I believe the market is due for another leg down, that doesn't mean the fuckers have to go down today. If you are properly hedged, it doesn't matter what the market does-- because you will be flat in an up 500 or down 500 tape. However, if you are sticking your flag in the ground, bullish or bearish, you have bigger balls than me and risk too much.
See, fucktards like you get wiped out everyday. The type who wear their emotions on their buy tickets, like little whining bitches. Pardon me for ranting, but I deal will asshats like you all day.
If you want to stay in the game, and not serve as fodder for the bears or bulls, get flat.
Finally, I suspect the market will trade lower today, but squeeze a few overzealous bears out in the volatile process. Also, I know it sounds fucking nuts, but I want to go long MVIS. Next week, the company will be visiting several funds and retail outfits, in an effort to keep the story fresh. Also, I understand, the company may unveil its "stand alone projector" for the Picop.
Take a look at the Retailers, they're on fire. So far, the buyers are bidding up shares of CHS, SKS, ODP, CROX and GME. Considering the huge short positions in the Retailers, I'd be very scared to be short-- into this rally.
Even though I believe the market is due for another leg down, that doesn't mean the fuckers have to go down today. If you are properly hedged, it doesn't matter what the market does-- because you will be flat in an up 500 or down 500 tape. However, if you are sticking your flag in the ground, bullish or bearish, you have bigger balls than me and risk too much.
See, fucktards like you get wiped out everyday. The type who wear their emotions on their buy tickets, like little whining bitches. Pardon me for ranting, but I deal will asshats like you all day.
If you want to stay in the game, and not serve as fodder for the bears or bulls, get flat.
Finally, I suspect the market will trade lower today, but squeeze a few overzealous bears out in the volatile process. Also, I know it sounds fucking nuts, but I want to go long MVIS. Next week, the company will be visiting several funds and retail outfits, in an effort to keep the story fresh. Also, I understand, the company may unveil its "stand alone projector" for the Picop.
Tuesday, March 06, 2007
Cicada: The Things You Say
Closing Comments
Holy shit, that was fun.
Even though I underperformed the market today, up .86%, I had fun watching all the crazy people chase stocks.
Every sector was on fucking fire, with oversized gains in Internet, Semi, Networker and Financial stocks.
Exchange related stocks were up big and will continue to lead the market higher, providing the market does indeed go to new highs.
Also, via CNBC, the recent correction is now over, as all of the sellers and economic worries are fucking history. Additionally, it is now safe to assume the Yen will stop appreciating versus the dollar, since the bulls like free money and do not want to pay back their fucking loans to the Japanese.
Finally, in all seriousness, I am going to win the NYC "Megamillions" tonight. The jackpot is for 370 million. Upon winning, I promise to start a private equity fund, buy CNBC from GE, then systematically fire Bob Pasani, Maria Bartiromo, Erin Burnett and Charlie Gasparino for being asshats.
Even though I underperformed the market today, up .86%, I had fun watching all the crazy people chase stocks.
Every sector was on fucking fire, with oversized gains in Internet, Semi, Networker and Financial stocks.
Exchange related stocks were up big and will continue to lead the market higher, providing the market does indeed go to new highs.
Also, via CNBC, the recent correction is now over, as all of the sellers and economic worries are fucking history. Additionally, it is now safe to assume the Yen will stop appreciating versus the dollar, since the bulls like free money and do not want to pay back their fucking loans to the Japanese.
Finally, in all seriousness, I am going to win the NYC "Megamillions" tonight. The jackpot is for 370 million. Upon winning, I promise to start a private equity fund, buy CNBC from GE, then systematically fire Bob Pasani, Maria Bartiromo, Erin Burnett and Charlie Gasparino for being asshats.
Quick Alert: Bazooka Gum
Breaking News: Maria Bartiromo "loves bazooka gum."
Carry on.
Carry on.
Fly's Analyst Threatens HANS Short Seller
Fly Sell: NYX
I sold 2,000 NYX @ $84.10.
Quick Alert: Market Ripping...
off the heads of the sellers.
Right now, I am not shorting or buying. Frankly, I am sort of deer in headlight-ish.
Nonetheless, I am up nicely today and will consider closing out short positions, once I am convinced the selling is over.
Although you bull-fuckers are ringing the cow bell, calling for new highs on the DOW; I am not convinced.
Let's see what happens tomorrow.
Until then, I'll stay hedged.
Right now, I am not shorting or buying. Frankly, I am sort of deer in headlight-ish.
Nonetheless, I am up nicely today and will consider closing out short positions, once I am convinced the selling is over.
Although you bull-fuckers are ringing the cow bell, calling for new highs on the DOW; I am not convinced.
Let's see what happens tomorrow.
Until then, I'll stay hedged.
Quick Alert: NYC is Iceberg Cold/ Pink Coffee Cups
I just got back from the bank, and I thought my fucking fingers were going to fall off. That's how cold it is in NYC. Please, don't leave fucktarded comments, such as "You think that is cold, you should come here to Alaska and play with the penguins."
Fuck you and the tundra you reside in.
Also, it's worth mentioning, I am drinking Dunkin' Donuts coffee. And, surprisingly, it's not half bad. Although, after buying the coffee, I felt ashamed of the pink cup--causing me to run in a paranoid frenzy to my car--in order to hide the cup. However, after further "analysis," Dunkin' Donuts coffee is 50 times better than the shit Starbucks is shoveling.
If only I could pour the Dunkin' Donuts coffee into a high society Starbucks cup, life would be perfect.
Until that day arrives, I will drink this superb java in the privacy of my car or office-- like a fucking asshat.
Developing...
Fuck you and the tundra you reside in.
Also, it's worth mentioning, I am drinking Dunkin' Donuts coffee. And, surprisingly, it's not half bad. Although, after buying the coffee, I felt ashamed of the pink cup--causing me to run in a paranoid frenzy to my car--in order to hide the cup. However, after further "analysis," Dunkin' Donuts coffee is 50 times better than the shit Starbucks is shoveling.
If only I could pour the Dunkin' Donuts coffee into a high society Starbucks cup, life would be perfect.
Until that day arrives, I will drink this superb java in the privacy of my car or office-- like a fucking asshat.
Developing...
Sector Spotlight: Financials
Finally, we get an up day.
Everything is ripping higher, as the bulls drop piano's on the heads of the sellers. Even the sub-prime lenders are up.
However, I will use this strength to lighten up and add to my shorts. I anticipate a mini short squeeze, followed by natural buying, via the dip buyers.
In short, I don't trust the fuckers who run this market and wish they'd be reassigned to run Iraq's stock market, instead of ours.
Within Financials, ISE, ICE, NDAQ, NMX and NYX look great. Basically, the exchanges have enjoyed record volume, as of late. If the market firms up, all of the exchange related stocks are going to fucking rip higher. The fear factor is the market vomiting on itself, effectively wiping out the piker investor (you). When the average Joe gets poleaxed, volume will dry up like old people in the sun.
Right now, the market is one big gamble. It's Vegas time.
Either we are correcting or in the beginning stages of a prolonged sell off. My money says the market will impale the sellers, but not yet. Before we get to throw sharp edged bottles at them, some of the weak buyers need to be wiped out. It's Mother market's way of "cleansing" the system.
To put it bluntly, I am not interested in making money now. All I want to do is preserve capital, until a clear direction is decided upon.
Finally, by midday, I will probably put down my third can of Monster and buy a little more SSG or QID. Or, maybe I will spend the rest of my day throwing phone handles at my trader/servant. Too early to predict.
The following Financials have mojo:
NEW +18.2%
NFI +8.9%
ISE +6.2%
OPBL +4.9%
DHIL +4.2%
IAAC +4.1%
Everything is ripping higher, as the bulls drop piano's on the heads of the sellers. Even the sub-prime lenders are up.
However, I will use this strength to lighten up and add to my shorts. I anticipate a mini short squeeze, followed by natural buying, via the dip buyers.
In short, I don't trust the fuckers who run this market and wish they'd be reassigned to run Iraq's stock market, instead of ours.
Within Financials, ISE, ICE, NDAQ, NMX and NYX look great. Basically, the exchanges have enjoyed record volume, as of late. If the market firms up, all of the exchange related stocks are going to fucking rip higher. The fear factor is the market vomiting on itself, effectively wiping out the piker investor (you). When the average Joe gets poleaxed, volume will dry up like old people in the sun.
Right now, the market is one big gamble. It's Vegas time.
Either we are correcting or in the beginning stages of a prolonged sell off. My money says the market will impale the sellers, but not yet. Before we get to throw sharp edged bottles at them, some of the weak buyers need to be wiped out. It's Mother market's way of "cleansing" the system.
To put it bluntly, I am not interested in making money now. All I want to do is preserve capital, until a clear direction is decided upon.
Finally, by midday, I will probably put down my third can of Monster and buy a little more SSG or QID. Or, maybe I will spend the rest of my day throwing phone handles at my trader/servant. Too early to predict.
The following Financials have mojo:
NEW +18.2%
NFI +8.9%
ISE +6.2%
OPBL +4.9%
DHIL +4.2%
IAAC +4.1%
Fly Buy: NYX
I bought 2,000 NYX @ $81.79.
Disclaimer: If you buy NYX because of this post, your neighbor's will spread rumors of your pending bankruptcy. And, you may lose money.
Disclaimer: If you buy NYX because of this post, your neighbor's will spread rumors of your pending bankruptcy. And, you may lose money.
Monday, March 05, 2007
Closing Comments
Lucky for you, I got back early from my business meeting. Hence, I will post closing comments.
First, let me say, those of you who took me up on my kidney for liver bet, I intend on collecting early next week. Don't worry, I have taken the liberty to find your location and will dispatch a team of surgeons to "collect" my winnings.
Before I left, I put buy orders in, via Trader slave, for SSG and DXD, both were filled. While there is a chance for a "turn around Tuesday," I still need more downside protection. Despite my increasing short positions, I lost .35% today.
Now, I know most of you out there are still holding on to longs-- and doing nothing to protect the downside. You figure: "well, it's already down so much, it's too late." Wrong.
That's like saying, after having a major artery cut, "No. Dr., don't give me stitches, I have already bled too much." Next thing you know is nothing-- because you're dead.
With the market closing at the lows of the session, I expect it to open weak tomorrow, then bounce. When we do bounce, I will add to my SSG, DXD, MZZ, ATHR and AMKR short plays.
Also, a great way to play the mortgage broker disaster is via SRS.
Finally, this website is intended to entertain myself, while throwing lunch meat at my trader/servant. However, I hate seeing so many of you getting punched in the cock. After all, once you lose all of your money and default on your "sub-prime" loan, I doubt you will come visit my blog--wasting all sorts of valuable time on the internets. That, sir, would be unacceptable.
First, let me say, those of you who took me up on my kidney for liver bet, I intend on collecting early next week. Don't worry, I have taken the liberty to find your location and will dispatch a team of surgeons to "collect" my winnings.
Before I left, I put buy orders in, via Trader slave, for SSG and DXD, both were filled. While there is a chance for a "turn around Tuesday," I still need more downside protection. Despite my increasing short positions, I lost .35% today.
Now, I know most of you out there are still holding on to longs-- and doing nothing to protect the downside. You figure: "well, it's already down so much, it's too late." Wrong.
That's like saying, after having a major artery cut, "No. Dr., don't give me stitches, I have already bled too much." Next thing you know is nothing-- because you're dead.
With the market closing at the lows of the session, I expect it to open weak tomorrow, then bounce. When we do bounce, I will add to my SSG, DXD, MZZ, ATHR and AMKR short plays.
Also, a great way to play the mortgage broker disaster is via SRS.
Finally, this website is intended to entertain myself, while throwing lunch meat at my trader/servant. However, I hate seeing so many of you getting punched in the cock. After all, once you lose all of your money and default on your "sub-prime" loan, I doubt you will come visit my blog--wasting all sorts of valuable time on the internets. That, sir, would be unacceptable.
Phil Collins: In The Air Tonight
CNBC Request: I Will Comply
I just heard Erin "The Hair Helmet" Burnett say, "come on folks, get some conviction."
How's this:
If you don't sell your stocks or hedge now, the big greasy bears are going to rip your arms and legs off, then use your torso as a fucking surf board.
How's this:
If you don't sell your stocks or hedge now, the big greasy bears are going to rip your arms and legs off, then use your torso as a fucking surf board.
Position Updates: AAPL, CORS
I own a nice chunk of AAPL and feel great that it is up today. However, I feel the analyst community is getting fucking desperate, with two upgrades in so many days.
In short, I am not selling, but would not chase the fucker here. Also, it is my experience that big blow-ups, like what's going on in the mortgage business, doesn't go away in a week. Don't bet the out house on a market bottom!
These mortgage fuckers will keep providing the market with bad news, for months to come.
With that being said, I own CORS and have been exactly wrong. I would not bottom fish it here, since the speculators are out and about looking for the next blow up. Many stocks will be taken down, whether they deserve it or not.
Bottom line: Because of this financial meltdown in the sub-prime market, all of the lenders will be discounted. Furthermore, sometime in the future, there will be incredible buying opportunities, but not yet.
Let them come down, then scale in-- as the selling abates.
Take a look at the horrific action in the lenders here.
In short, I am not selling, but would not chase the fucker here. Also, it is my experience that big blow-ups, like what's going on in the mortgage business, doesn't go away in a week. Don't bet the out house on a market bottom!
These mortgage fuckers will keep providing the market with bad news, for months to come.
With that being said, I own CORS and have been exactly wrong. I would not bottom fish it here, since the speculators are out and about looking for the next blow up. Many stocks will be taken down, whether they deserve it or not.
Bottom line: Because of this financial meltdown in the sub-prime market, all of the lenders will be discounted. Furthermore, sometime in the future, there will be incredible buying opportunities, but not yet.
Let them come down, then scale in-- as the selling abates.
Take a look at the horrific action in the lenders here.
Quick Alert: Fly's Analyst Irate at BWLD Short Seller
Apparently, the BWLD short seller tried to shake my analyst's hand, saying "don't take it personal, the market is weak."
Needless to say, my analyst didn't appreciate the gesture.
NOTE: See the HANS short seller in the yellow trunks?
Sector Spotlight: Semiconductors
Over the weekend, I was thinking how non-productive lunch breaks are, and how someone like myself might solve this "problem." For example, my trader/servant takes lunch breaks everyday. He feels eating food will make him a better worker. So, I came up with a great invention idea.
How about strapping a bag around ones head, so that he may work without the inconvenience of taking a break and fucking up productivity? You know, you can fill it up with oatmeal or something, strap it on his head and send him back to work. I think its a great idea.
I'll call it the "Food Bag."
As for today's trading:
Following Asia's and Europe's terrible sessions, U.S. equities opened down, mildly. In my opinion, this a worst case scenario. While it's true, getting punched in the cock, first thing in the morning, is not fun-- but probably necessary. If the market rallies today, I want to own NKZ' or NKI'-- for a bounce in Japan tonight. However, I do feel there is more downside to this market.
Be careful.
The Semi's are fucking running here, as the asshole dip buyer tries to assert himself. Really, today's open was very predictable, as everyone seems to want to time the bottom. Breaking News: It's not that easy, fucktards.
This rally should be faded.
Also, the Yen is gapping higher (FXY), as the "carry trade" unravels.
In short, use this rally for a trade and try to lighten up on retarded positions. Also, consider initiating a protective position in QID, SSG or DUG.
NOTE: The mortgage brokers are getting annihilated: NEW, LEND, NFI, FMT, etc.
NOTE II: Please take the new "Fly Survey." Are you bullish or bearish on the markets?
How about strapping a bag around ones head, so that he may work without the inconvenience of taking a break and fucking up productivity? You know, you can fill it up with oatmeal or something, strap it on his head and send him back to work. I think its a great idea.
I'll call it the "Food Bag."
As for today's trading:
Following Asia's and Europe's terrible sessions, U.S. equities opened down, mildly. In my opinion, this a worst case scenario. While it's true, getting punched in the cock, first thing in the morning, is not fun-- but probably necessary. If the market rallies today, I want to own NKZ' or NKI'-- for a bounce in Japan tonight. However, I do feel there is more downside to this market.
Be careful.
The Semi's are fucking running here, as the asshole dip buyer tries to assert himself. Really, today's open was very predictable, as everyone seems to want to time the bottom. Breaking News: It's not that easy, fucktards.
This rally should be faded.
Also, the Yen is gapping higher (FXY), as the "carry trade" unravels.
In short, use this rally for a trade and try to lighten up on retarded positions. Also, consider initiating a protective position in QID, SSG or DUG.
NOTE: The mortgage brokers are getting annihilated: NEW, LEND, NFI, FMT, etc.
NOTE II: Please take the new "Fly Survey." Are you bullish or bearish on the markets?
Godzilla Ate Japan
First, I want to thank Woodshedder for his weekend posting. Great job. Visit him and bookmark Tradewhileworking, that's an order.
My only request is for you (readers) to stop complimenting him. Next thing you know, he will start thinking crazy and ask me for a raise or some shit. I'll have you know, I pay him the ancient Roman "minimum wage."
Anyway, watching CNBC Asia last night, I couldn't help laughing out loud at the poor Japanese fuckers, losing 575 NIKKEI points for no-fucking-reason. It's almost as if Godzilla emerged and started knocking over their buildings and stepping on their stock brokers. Truly, a funny thought-- for me at least.
Then, I got to see the greedy little Europeans smash themselves into oblivion, losing on average-- 1.5%.
However, then it dawned on me, I am next on Mr. Godzilla's menu, as S&P futures indicate a less-than-stellar open.
"Oh, no," I exclaimed to myself, as the worried faces on CNBC America tried to talk up the futures. But then I remembered, I have shorts coming out of my ears and OEX puts spilling out of my nose (truly, a disgusting metaphor).
So then, I sat down and wrote this retarded post, that all of you just wasted your time reading.
More on this later.
Developing...
My only request is for you (readers) to stop complimenting him. Next thing you know, he will start thinking crazy and ask me for a raise or some shit. I'll have you know, I pay him the ancient Roman "minimum wage."
Anyway, watching CNBC Asia last night, I couldn't help laughing out loud at the poor Japanese fuckers, losing 575 NIKKEI points for no-fucking-reason. It's almost as if Godzilla emerged and started knocking over their buildings and stepping on their stock brokers. Truly, a funny thought-- for me at least.
Then, I got to see the greedy little Europeans smash themselves into oblivion, losing on average-- 1.5%.
However, then it dawned on me, I am next on Mr. Godzilla's menu, as S&P futures indicate a less-than-stellar open.
"Oh, no," I exclaimed to myself, as the worried faces on CNBC America tried to talk up the futures. But then I remembered, I have shorts coming out of my ears and OEX puts spilling out of my nose (truly, a disgusting metaphor).
So then, I sat down and wrote this retarded post, that all of you just wasted your time reading.
Developing...
Sunday, March 04, 2007
The Yen Carry Trade- A Technical Perspective
The "Yen Carry Trade" and talk of its unwinding has dominated the past week's headlines. Lets explore what the Carry Trade is and look at some charts to see what the technicals are saying about any possible unwinding.
Executing a Yen Carry Trade involves selling the Yen and using the proceeds from the sale to invest in Treasuries or equities which return a higher rate of interest. This is in effect the same as shorting the Yen. The reason this transaction is profitable is because it costs very little in interest to borrow the Yen- just 0.5%
If the Yen is then coverted to Dollars, the money can be used to purchase U.S. Treasuries which yield ~4.5%. Anyone who executes this carry trade has just made 4%. If one has a higher risk tolerance, the proceeds from converting Yen to Dollars can be used to buy stocks.
It is easy to see why this is a popular trade. No one is sure exactly how much global equity is involved in this trade, but estimates typically start at one trillion dollars.
Why Would This Trade Unwind?
Several factors could cause this trade to unwind.
Executing a Yen Carry Trade involves selling the Yen and using the proceeds from the sale to invest in Treasuries or equities which return a higher rate of interest. This is in effect the same as shorting the Yen. The reason this transaction is profitable is because it costs very little in interest to borrow the Yen- just 0.5%
If the Yen is then coverted to Dollars, the money can be used to purchase U.S. Treasuries which yield ~4.5%. Anyone who executes this carry trade has just made 4%. If one has a higher risk tolerance, the proceeds from converting Yen to Dollars can be used to buy stocks.
It is easy to see why this is a popular trade. No one is sure exactly how much global equity is involved in this trade, but estimates typically start at one trillion dollars.
Why Would This Trade Unwind?
Several factors could cause this trade to unwind.
- The cost to borrow the Yen could increase. In fact, on Wednesday, February 21st 2007, the Bank of Japan raised its main interest rate .25%, to 0.5%. This effectively doubles the cost to borrow the Yen and raises the rate to the highest it is has been in more than a decade. (Read the article). Any raise in interest rates from the BOJ lowers the profit of the trade.
- The U.S. economy could move towards a recession, causing the U.S. to lower interest rates, which in turns lowers the return from U.S. Treasury Bonds. (Remember U.S. Treasury Bonds are a popular place to park the converted Yen to earn a fixed rate.) When this happens, the value of a USD falls.
- The value of the USD could fall, and the Yen could rise.
If the trade were to unwind, we would expect to see a large-scale dump of U.S. bonds and stocks, as each is sold to free up the Dollar to be converted back to Yens, effectively closing out the carry-trade. The USD would fall in value, and the Yen would rise.
What Do The Charts Say?
Unfortunately, Blogger will not let me move the charts down to this area of the article. Well, I can move them down here, but then they will not enlarge when clicked upon. My apologies for this inconvenience.
Lets look at charts of the USD/JPY. The Yen Carry Trade hinges upon this currency pair.
The first chart is an 18 year, monthly chart. We can see that the USD/JPY has created a coiled spring pattern or a symmetrical triangle. It is very important to notice that the Bollinger Bands are tighter now than they have been in over 18 years. This is crucial. The Bollinger Bands are telling us that volatility is coming. In general, this chart is showing us how the volatility of the USD/JPY has drawn within an ever-tightening range.
The second chart is weekly in period and covers 5 years. This charts shows that the Dollar hit 5 year resistance at ~122.00 and is headed back down towards its rising trend line.
The third chart is a daily chart covering 1 year. It shows the USD/JPY trading within a rising channel. On Friday, it closed at the very bottom of the channel. If this channel is breached to the downside, look for the USD/JPY to find support at the trendline indicated on the weekly chart.
Conclusions
The U.S. economy does appear to be slowing. The Japanese economy is heating up. The Yen is at 4 year lows compared to the Dollar, and the Dollar may continue softening from the dilutive effect of adding billions of treasury debt each week. With the U.S. stock market in a correctional phase, converted Yen which was used to buy U.S. debt and equity may go back home to roost. This will result in more buying of the Yen, and selling of the Dollar. While the technicals do not give a clear indication of any sort of catastrophic unwinding, they do point to the USD/JPY declining to long-term trendlines. This creates a mildly bullish technical picture for the Yen.
If you decide you want to be bullish on the Yen, you can get long it via FXY.
