Quoted: "The reason why stocks produce better returns is because stocks are risky"
My comment: MORONS catering to morons.
My version: "In order to justify elevated risk of investing in stocks one shall expect to produce better returns, otherwise risk is NOT justified and plain financially suicidal and one shall seek alternate investment instruments"
Thursday, August 30, 2007
Wednesday, August 29, 2007
Slowly getting back to market
My semi-forced extra extended vacation might be coming to an end soon, meanwhile I'll be watching two long ideas (AATI) and (ECIL).
This kind of market volatility makes swing trades nerve wreckening.
But...market IS trying to find a solid bottom and I think it is going to charge UP just like in 1998/1999 - Feds will not let "TOP" and "BOTTOMS" down, and as always "MIDDLE (class)" will pay the bill.
This kind of market volatility makes swing trades nerve wreckening.
But...market IS trying to find a solid bottom and I think it is going to charge UP just like in 1998/1999 - Feds will not let "TOP" and "BOTTOMS" down, and as always "MIDDLE (class)" will pay the bill.
Wednesday, August 22, 2007
Some trading ideas I look into
All of the ideas I can force myself to look into on a long side now are for day trades or quick overnight shots:
for today long watch those are: (GAIA), (KNDL), (MEH), (PTMK),(WMGI)
All (most) of the above are low volume stocks, so I will ( IF) put really small positions, just to keep myself in touch with the market, I don't want to stay away right now and don't want to commit too much capital, I think market is not done going down ( not even close to that), but short term I am taking no part in the rat race.
At the same time, I will be gradually building (SKF) (inverse financial ETF ) position on every bounce in financial stocks.
I am watching big insurance companies, in spite common belief that those are well positioned to make money ( by grabbing AAA rated papers for "nothing" ) - I think at the certain point they might roll over as well.
for today long watch those are: (GAIA), (KNDL), (MEH), (PTMK),(WMGI)
All (most) of the above are low volume stocks, so I will ( IF) put really small positions, just to keep myself in touch with the market, I don't want to stay away right now and don't want to commit too much capital, I think market is not done going down ( not even close to that), but short term I am taking no part in the rat race.
At the same time, I will be gradually building (SKF) (inverse financial ETF ) position on every bounce in financial stocks.
I am watching big insurance companies, in spite common belief that those are well positioned to make money ( by grabbing AAA rated papers for "nothing" ) - I think at the certain point they might roll over as well.
Sunday, August 19, 2007
Sector watch
Gold shows some strength (GLD)
Nasdaq Biotech (IBB) strong ( not counting (AMGN) "surprise")
Russell 2000 devastated last month looks about to rebounce
Clean Energy (PBW) seems to be at the low risk "buy" point
HomeBuilders (XHB) after first pop amplified by some short squeeze (Got that one right on August 3rd post) seems to be trying to stabilize - will be watching it, everyone is so bearish, long term bearish, that it is about time for surprise.
Most of other sectors look like they might go up some, but only to create short setups.
Market will tell.
Nasdaq Biotech (IBB) strong ( not counting (AMGN) "surprise")
Russell 2000 devastated last month looks about to rebounce
Clean Energy (PBW) seems to be at the low risk "buy" point
HomeBuilders (XHB) after first pop amplified by some short squeeze (Got that one right on August 3rd post) seems to be trying to stabilize - will be watching it, everyone is so bearish, long term bearish, that it is about time for surprise.
Most of other sectors look like they might go up some, but only to create short setups.
Market will tell.
Thursday, August 16, 2007
$1,000,000.00 question
Fedspeak: "If I seem unduly clear to you, you must have misunderstood what I said."
Interesting conversation started today at my "day time hangout place" - TradeGuild Blog.
Below are few "cut/paste" from TradeGuild's Tagboard
( what started that conversation? I was looking at S&P chart and somehow it looked awfully familiar, gradually I come to realize that I saw similar chart before, I scrolled back and ... yes, summer of 1998 )
Start of quoted text
=======
DavidDT:
there is bad and some good of been old :) here is a link to what seems to be today's events, but it is dated 1998, PLEASE DO READ
THE S&P DIPS BELOW THE DOW: A BAD OMEN FOR THE MARKET?
DavidDT:
Neo - I never watch CNBC :) BTW - it is funny that I just compared s&p to 1998 summer and all in a sudden briefing.com talks about carry trade dollar/yen at the level of 1998
Sinsecato:
17/08/2007 01:02:26
David - Re: 1998, you may be right but as i understand it the reason the economy etc took off after that was the fed slashed rates, which contributed to the ever growing bubble that popped in 200/2001. The drastic lowering of rates that followed are what led to the current credit bubble, first in home buying, and also in leveraged buyouts. The question i have is, will the fed allow this bubble to grow even bigger by slashing rates again? Also, will emerging markets with surpluses continue to fund our deficit with such low interest rates as we have experienced currently? Otherwise longterm rates have to drastically increase to get enough people to buy T-Bonds
DavidDT:
Sinsecato - you are asking really complex question, answer will require bigger surface than this tagboard and better economic knowledge than I have, I will try to put a post together tonight, one thing I do want to say - FEDs primary objective as we know is to fight inflation, but not at expense of collapsing stocks market and getting economy into recession. I agree that FEDs caused housing/credit bubble on the first place ( http://trading-to-win.blogspot.com/2007/08/market-thoughts.html) ) see my post as of Aug 3rd.. Well, I really need a bigger "notepad"
==================
end of quoted text
As I truly admitted above my economic knowledge is on 101 level, I am not pretending that I know it all, just trying to use "common sense"
Q. will emerging markets with surpluses continue to fund our deficit with such low interest rates as we have experienced currently? Otherwise longterm rates have to drastically increase to get enough people to buy T-Bonds
A. "Emerging markets" ARE full of surprises, FEDs are aware of that better than a lot of average Joes, FEDs do know how corrupt and unregulated economies of emerging markets are and I truly do not believe that FEDs place their bets on that type of "solution" for American monetary system, not long term at least. Plus, I do hope that Japan's example 20 years ago taught them ( government ) a good lesson - you cannot rely with well been of US economy on anyone's else economy, but US.
Above is my "political" uneducated speculation, below is what Chairman Ben have said about China:
"Beijing couldn't damage the U.S. economy by selling bonds or boycotting Treasury auctions because "foreign holdings of U.S. Treasury securities represent only a small part of total U.S. credit-market debt outstanding."
Bernanke also said that the Fed could adjust interest rates."
So, if not foreign countries, then WHO will be "US bankers"?
Corporations.
With recent market turmoil "paper" (stocks) lost a lot of "buying power", so corporations will have to use cash where they would normally do a "stock deal" - will buying T-bills be their first priority?
Can government keep US economy stable without cutting rates? Even at the risk of sliding into recession? And I believe FEDs became very well aware of such possibility back in 2006 - they ARE economists, they do know that "inverse yield curve is followed by recession in about 12 months"
So far I believe new chairman has done remarkable job of keeping inflation in check ( Inflation as on the "big picture" level, not on Average Joe's level - Joe's level inflation stinks BIG TIME), economy is doing quite all right as well, and since FEDs understand that WAR cannot go on forever, they do care about "other than defense" economy. Are they?
Was "credit bubble" a target of FEDs? I guess - FEDs would not care less...
That was a normal event in free economy - buyers, flippers, mortgage companies, banks took their chances - some made money - the rest will and SHOULD be crashed ( how funny was the entire show - borrow the money knowing that it cannot be repaid, lend the money knowing that there is no way of getting it back. Puffffffff........)
People will suffer? Well, I have a friend who is smart, he was unable to justify paying 300% of the real price of the house he liked, so he RENTED apartment and patiently waited - who is laughing now?
One more thing - and no matter how paranoid it might sound:
No ruling party will end its term with economy in ruins - if they do, they can kiss presidency goodbye - "long time". Especially with wonderful approval rating Bush has even among republicans. ( At least Clinton's "escapades" were entertaining for general public )
Will FEDs sacrifice their integrity for political interests? My friend BT from TradeGuild said: "No way. He even called prior Chairman a person with "sterling" reputation and expressed firm belief that carefully selected follower (Ben Bernanke) will acquire the same kind of reputation and respect Chairman Greenspan had.
Cool with me. I just loosing my mind, I hear voices, I hear someone saying: "US economy is sound and stable, market does not exhibit any signs of weakness" - RIGHT BEFORE THE REALLY BIG CRASH of 1987.
Greenspan -- The Chairman...through the years
DavidDT
Interesting conversation started today at my "day time hangout place" - TradeGuild Blog.
Below are few "cut/paste" from TradeGuild's Tagboard
( what started that conversation? I was looking at S&P chart and somehow it looked awfully familiar, gradually I come to realize that I saw similar chart before, I scrolled back and ... yes, summer of 1998 )
Start of quoted text
=======
DavidDT:
there is bad and some good of been old :) here is a link to what seems to be today's events, but it is dated 1998, PLEASE DO READ
THE S&P DIPS BELOW THE DOW: A BAD OMEN FOR THE MARKET?
DavidDT:
Neo - I never watch CNBC :) BTW - it is funny that I just compared s&p to 1998 summer and all in a sudden briefing.com talks about carry trade dollar/yen at the level of 1998
Sinsecato:
17/08/2007 01:02:26
David - Re: 1998, you may be right but as i understand it the reason the economy etc took off after that was the fed slashed rates, which contributed to the ever growing bubble that popped in 200/2001. The drastic lowering of rates that followed are what led to the current credit bubble, first in home buying, and also in leveraged buyouts. The question i have is, will the fed allow this bubble to grow even bigger by slashing rates again? Also, will emerging markets with surpluses continue to fund our deficit with such low interest rates as we have experienced currently? Otherwise longterm rates have to drastically increase to get enough people to buy T-Bonds
DavidDT:
Sinsecato - you are asking really complex question, answer will require bigger surface than this tagboard and better economic knowledge than I have, I will try to put a post together tonight, one thing I do want to say - FEDs primary objective as we know is to fight inflation, but not at expense of collapsing stocks market and getting economy into recession. I agree that FEDs caused housing/credit bubble on the first place ( http://trading-to-win.blogspot.com/2007/08/market-thoughts.html) ) see my post as of Aug 3rd.. Well, I really need a bigger "notepad"
==================
end of quoted text
As I truly admitted above my economic knowledge is on 101 level, I am not pretending that I know it all, just trying to use "common sense"
Q. will emerging markets with surpluses continue to fund our deficit with such low interest rates as we have experienced currently? Otherwise longterm rates have to drastically increase to get enough people to buy T-Bonds
A. "Emerging markets" ARE full of surprises, FEDs are aware of that better than a lot of average Joes, FEDs do know how corrupt and unregulated economies of emerging markets are and I truly do not believe that FEDs place their bets on that type of "solution" for American monetary system, not long term at least. Plus, I do hope that Japan's example 20 years ago taught them ( government ) a good lesson - you cannot rely with well been of US economy on anyone's else economy, but US.
Above is my "political" uneducated speculation, below is what Chairman Ben have said about China:
"Beijing couldn't damage the U.S. economy by selling bonds or boycotting Treasury auctions because "foreign holdings of U.S. Treasury securities represent only a small part of total U.S. credit-market debt outstanding."
Bernanke also said that the Fed could adjust interest rates."
So, if not foreign countries, then WHO will be "US bankers"?
Corporations.
With recent market turmoil "paper" (stocks) lost a lot of "buying power", so corporations will have to use cash where they would normally do a "stock deal" - will buying T-bills be their first priority?
Can government keep US economy stable without cutting rates? Even at the risk of sliding into recession? And I believe FEDs became very well aware of such possibility back in 2006 - they ARE economists, they do know that "inverse yield curve is followed by recession in about 12 months"
So far I believe new chairman has done remarkable job of keeping inflation in check ( Inflation as on the "big picture" level, not on Average Joe's level - Joe's level inflation stinks BIG TIME), economy is doing quite all right as well, and since FEDs understand that WAR cannot go on forever, they do care about "other than defense" economy. Are they?
Was "credit bubble" a target of FEDs? I guess - FEDs would not care less...
That was a normal event in free economy - buyers, flippers, mortgage companies, banks took their chances - some made money - the rest will and SHOULD be crashed ( how funny was the entire show - borrow the money knowing that it cannot be repaid, lend the money knowing that there is no way of getting it back. Puffffffff........)
People will suffer? Well, I have a friend who is smart, he was unable to justify paying 300% of the real price of the house he liked, so he RENTED apartment and patiently waited - who is laughing now?
One more thing - and no matter how paranoid it might sound:
No ruling party will end its term with economy in ruins - if they do, they can kiss presidency goodbye - "long time". Especially with wonderful approval rating Bush has even among republicans. ( At least Clinton's "escapades" were entertaining for general public )
Will FEDs sacrifice their integrity for political interests? My friend BT from TradeGuild said: "No way. He even called prior Chairman a person with "sterling" reputation and expressed firm belief that carefully selected follower (Ben Bernanke) will acquire the same kind of reputation and respect Chairman Greenspan had.
Cool with me. I just loosing my mind, I hear voices, I hear someone saying: "US economy is sound and stable, market does not exhibit any signs of weakness" - RIGHT BEFORE THE REALLY BIG CRASH of 1987.
Greenspan -- The Chairman...through the years
DavidDT
Wednesday, August 08, 2007
NSTK trade
Readers of this blog have been fairly disappointed by absence of charts with explanations of technical details of the trades. I totally agree, for educational purposes ( one of the reasons why this blog exists on the first place ) it is a must to have. But here is my dilemma - I have been looking at the charts for so many years that most of the times it is intuitive for me and , if explained - will, most likely, severely disappoint pure technicians.
Still, here is one of my latest trades with explanation of why "decision to exit trade been made" ( why it was placed on the first place? cannot recall now - extra prove of "I like it for some reason" of trading decision :)
Opened long position on July 10th at 11.60. Why? Was not really confirmed breakout, but still move to new higher ground with supporting volume - my expectation was that NSTK is going to out perform the general market.
Decision to close trade: firstly - I do not like to gamble - earnings are gamble, I in most of the cases will be able to buy back stock even if it will pop on ER, if I miss - there going to be many other trades. If ER will be bad - I'll lose - still, after so many years on the market hate to loose.
Anyhow, August 8th after market close - earnings. That is "sell argument #1"
August 9th webcast, hmm.. Friday? well, I will survive if stock will double and I did not get it, what will hurt - if I loose about 30% profit I have in 1 month ( slow and steady does it )
I have to confess - I was so focused on my decision "to close the trade on August 8th" that I closed position even without looking at any sell sygnals.
But how it had to be done correctly?
Consolidation from 10:30 to 12:00 was orderly - not to worry.
At 12:20 new daily high was reached and all in a sudden buying interest just evaporated. ( first oval on pressure bars )
NSTK did not fell off trend channel and continued its climb. Why I always watch trend channel? Simple - I hate to sell with the crowd and when stock falls off - crowd sells and I would not be able to get a good price when hundreds of trailing/stop loss orders been fired at once.
As price was going up from 13:15 till 13:40 CMF ( Chaikin Money flow) was declining,
fast stochastic (main) took a dive at 13:30, and finally "pressure bars" ( bid/ask buying) was worsening really fast and finally at 13:50 at new daily high - there was only selling final call in my books if that would be a day trade.
Now I have to read this mambo-jumbo I wrote... but first I need a drink
Still, here is one of my latest trades with explanation of why "decision to exit trade been made" ( why it was placed on the first place? cannot recall now - extra prove of "I like it for some reason" of trading decision :)
Opened long position on July 10th at 11.60. Why? Was not really confirmed breakout, but still move to new higher ground with supporting volume - my expectation was that NSTK is going to out perform the general market.
Decision to close trade: firstly - I do not like to gamble - earnings are gamble, I in most of the cases will be able to buy back stock even if it will pop on ER, if I miss - there going to be many other trades. If ER will be bad - I'll lose - still, after so many years on the market hate to loose.
Anyhow, August 8th after market close - earnings. That is "sell argument #1"
August 9th webcast, hmm.. Friday? well, I will survive if stock will double and I did not get it, what will hurt - if I loose about 30% profit I have in 1 month ( slow and steady does it )
I have to confess - I was so focused on my decision "to close the trade on August 8th" that I closed position even without looking at any sell sygnals.
But how it had to be done correctly?
Consolidation from 10:30 to 12:00 was orderly - not to worry.
At 12:20 new daily high was reached and all in a sudden buying interest just evaporated. ( first oval on pressure bars )
NSTK did not fell off trend channel and continued its climb. Why I always watch trend channel? Simple - I hate to sell with the crowd and when stock falls off - crowd sells and I would not be able to get a good price when hundreds of trailing/stop loss orders been fired at once.
As price was going up from 13:15 till 13:40 CMF ( Chaikin Money flow) was declining,
fast stochastic (main) took a dive at 13:30, and finally "pressure bars" ( bid/ask buying) was worsening really fast and finally at 13:50 at new daily high - there was only selling final call in my books if that would be a day trade.
Now I have to read this mambo-jumbo I wrote... but first I need a drink
Tuesday, August 07, 2007
Friday, August 03, 2007
Market Thoughts
As you noticed I’ve been mostly staying away from markets for a while now, the name of my game at the moment is “preservation of capital” – I am a perpetual bull, shorting is the last resort for me.
Forced myself into looking at the whole 9 yards of market/credit story - here what I think.
I don't think FEDs will cut rates just yet, what they will do they will change phrasing,
Admit seriousness of credit crunch (they brought rates too much down on the first place and that caused all bad credits not backed up by any meaningful collateral). Market will run first,
then, as my friend Chelobes from TradeGuild noted, will trade sideways for a while with 1999 year end kind of rally.
Meanwhile, the most promising sectors
to play on the long side are:
biotech ( not all of it, but mostly research substance makers such as: AKRX, GLGC, MGRM, MZT, SNUS),
defense contractors ( such as LMIA, LMT, KRSL, RTN last one run up on Cramer comments),
office supplies ( OMX ),
and - laugh all you want - homebuilders ( such as LEN, KBH - will keep my fingers crossed)
And here are few of my current positions: MOH, HNSN, OSUR, PAET and HINT (will, most likely close on Monday), ABBI and RMKR ( opened today),
Forced myself into looking at the whole 9 yards of market/credit story - here what I think.
I don't think FEDs will cut rates just yet, what they will do they will change phrasing,
Admit seriousness of credit crunch (they brought rates too much down on the first place and that caused all bad credits not backed up by any meaningful collateral). Market will run first,
then, as my friend Chelobes from TradeGuild noted, will trade sideways for a while with 1999 year end kind of rally.
Meanwhile, the most promising sectors
to play on the long side are:
biotech ( not all of it, but mostly research substance makers such as: AKRX, GLGC, MGRM, MZT, SNUS),
defense contractors ( such as LMIA, LMT, KRSL, RTN last one run up on Cramer comments),
office supplies ( OMX ),
and - laugh all you want - homebuilders ( such as LEN, KBH - will keep my fingers crossed)
And here are few of my current positions: MOH, HNSN, OSUR, PAET and HINT (will, most likely close on Monday), ABBI and RMKR ( opened today),
