3SOF

Quote from: BigSully1 on March 13, 2008, 03:52:40 PM

Quote from: kslifka on March 13, 2008, 03:14:48 PM
I must say I like today's market action for the first time this year.  Seems like some "real" buying going on....and not just short covering.

You might be right Kslifka, but IBD says a follow through day should come no sooner than 4 days after a rally attempt in order to discount short covering. Tommorrow will be the 4th day. Also options expiry tommorrow.

We could see a nice rally for days .


BigSully1 we still have 9 days left for march option expiration

Quote from: Garoh on March 13, 2008, 05:03:59 PM

Quote from: BigSully1 on March 13, 2008, 03:52:40 PM

Quote from: kslifka on March 13, 2008, 03:14:48 PM
I must say I like today's market action for the first time this year.  Seems like some "real" buying going on....and not just short covering.

You might be right Kslifka, but IBD says a follow through day should come no sooner than 4 days after a rally attempt in order to discount short covering. Tommorrow will be the 4th day. Also options expiry tommorrow.

We could see a nice rally for days .


BigSully1 we still have 9 days left for march option expiration

You're right on the options exp. Next week. My bad.

Will the Saudis and OPEC cooperate this time? If they do, they will likely make multi $B's on the downside also. The fed is REALLY caught between a rock and a really hard place now. Can they  continue to make large IR cuts with commodities so high and the dollar so low? Something has to give, one way or another. I'm now leaning toward a bounce in the dollar and a fall in oil prices, at least temporarily.

Bush hopes Cheney's Mideast visit will rein in oil prices
By Brian Knowlton Published: March 10, 2008


WASHINGTON: With oil soaring to a record $108 a barrel amid mounting signs of U.S. economic turbulence, President George W. Bush said Monday that he was sending Vice President Dick Cheney to the Middle East to raise concerns about oil prices and to press Israeli and Palestinian leaders to move toward peace.

Cheney, who leaves Sunday, will meet with King Abdullah in Saudi Arabia, the world's biggest oil producer and the de facto leader of OPEC.

"Obviously, we want to see an increase in production," said Dana Perino, an administration spokeswoman. "The president does want OPEC to take into consideration that its biggest customer, the United States - our economy has weakened and part of the reason is because of higher oil prices. We think that more supply would help, and I don't anticipate that the vice president would have any other message than that one."

The Bush administration is struggling to revive an American economy that is sagging under the weight of a housing slump, rising prices and a credit crisis, and it has had little luck persuading OPEC to increase production levels.

At a meeting Wednesday in Vienna, OPEC rebuffed a Bush statement two days earlier calling for increased output.

OPEC said speculators and what it called the "mismanagement" of the U.S. economy were to blame for high oil prices. The cartel left its production levels unchanged, saying that the market did not need more oil.

Cheney will meet in Israel with Prime Minister Ehud Olmert and on the West Bank with Mahmoud Abbas, the Palestinian leader, to urge both to "uphold their obligations" to move toward a peace settlement a stated priority for Bush in his waning months in office.

Bush sent Secretary of State Condoleezza Rice to the area recently to persuade Palestinian leaders to resume peace talks with Israel after a deadly Israeli military incursion into Gaza. Hopes for a peace settlement were further shaken Thursday when a Palestinian gunman attacked a seminary in Israel, killing eight students.

A reporter asked Perino on Monday whether Cheney was on a "rescue mission" because Rice had failed to achieve what Bush wanted. Perino called that "a little bit outrageous" and praised Rice for being able to pull the parties "back from the brink and have them recommit to having discussions."

Cheney will also visit Oman, a significant non-OPEC oil producer, and hold talks with its leader, Sultan Qaboos, a respected intermediary between oil-producing and oil-consuming countries.

Cheney will also confer with Turkish leaders in Ankara.

At a time when some OPEC producers are skeptical of the U.S. role in Iraq and the region and others, like Venezuela, are frankly hostile, it was unclear what enticements Cheney might have to offer.

With the U.S. economy slowing, investors have been fleeing stocks in favor of commodities like oil. But oil is sold in dollars, and with the value of the dollar falling, oil exporters have to sell more to maintain their earnings levels.

OPEC members already are unhappy that the Bush administration has done little to prop up a weak dollar, something that makes oil more expensive but also bolsters U.S. exports.

Bush last week called it "a mistake" for OPEC to let prices reach levels where they slow the U.S. economy.

Still, oil prices have risen a further $4 a barrel since the OPEC meeting, hitting a record $108.21 a barrel on Monday on the New York Mercantile Exchange, after investors began buying oil futures to hedge against a depressed dollar and inflation.

Oil prices have risen more than 70 percent in the last year.

The record prices have sharpened tensions between OPEC and the United States, the world's largest oil consumer. An earlier plea by Bush, lodged in January during a trip to Saudi Arabia - during which he spent a night at King Abdullah's farm - also brought no result.

OPEC's 13 member countries produce about 40 percent of the world's oil exports.

The timing of Cheney's visit might be further complicated: Investors and analysts expect the Federal Reserve Board, meeting March 18 in Washington, to announce an interest-rate cut of perhaps 50 basis points, or a half-percentage point.

Lower rates can translate to a weaker dollar and thus higher oil prices, though the markets have largely taken the anticipated cut into account.

The U.S. economy is beset by a troubling combination of rising consumer prices and lagging growth, expected to remain anemic this year.

High oil prices, and the steady increase in U.S. gasoline prices to near-record levels, are problematic enough for the White House, but even more so in an election year.

Gas prices now average $3.23 a gallon nationwide, after rising 6 cents over the last week, the federal Energy Information Administration said Monday.

Bush, speaking to reporters Monday during a news conference with the visiting Polish prime minister, Donald Tusk, spoke at some length about his aspirations for a peaceful, two-state settlement involving Israel and the Palestinians.

He said he hoped that both the Israelis and Palestinians would re-engage in the peace talks and that he was still aiming for an agreement by January.

"But violence in the Gaza Strip and southern Israel has hampered the peace talks," Bush said.

Still, he said, "I'm optimistic that we'll be able to achieve a vision that shows a way forward, and I'm optimistic leaders will step forward and do the hard things necessary so people don't have to live in deprivation and fear."

Bush said that Cheney's goal in the region was "to reassure people that the United States is committed to a vision of peace in the Middle East," but also to call on Israelis and Palestinians to "uphold their obligations on the road map" plan for peace; and to talk about threats to the region, including Iran, while bolstering security relationships with friendly countries.

Quote from: BigSully1 on March 13, 2008, 03:52:40 PM

Quote from: kslifka on March 13, 2008, 03:14:48 PM
I must say I like today's market action for the first time this year.  Seems like some "real" buying going on....and not just short covering.

You might be right Kslifka, but IBD says a follow through day should come no sooner than 4 days after a rally attempt in order to discount short covering. Tommorrow will be the 4th day. Also options expiry tommorrow.

Whoops! Monday would be the fourth day and options exp next week.

Quote from: soxguy on March 13, 2008, 02:38:07 PM
I agree about buying DUG. I'm no expert,but don't you short what's been going up?

Shorting strategies are exactly inverse to going long. You either short strength (shares going up in your view too much = unsustainable and due for pullback). Or you short weakness (shares in a confirmed downtrend and breaking through areas of historical support). Both approaches are valid.

Right now the market has no direction and leadership it is gyrating up and down largely on the latest Fed intervention or news item relating to write downs, employment news, consumer spending news, credit news etc. This creates volatility and makes trading an extreme challenge.

Personally I think todays action was just more of the same skittish behaviour and sooner rather than later the S&P500 will be making new lows. 1270 area is muli touched and once breached will signal the next downleg.

I could say I hope I am wrong, but I won't, why? Because I will position my approach to take advantage of that scenario and follow the current trend (which is down). Better than trying to fight the trend and be going long only.

Quote from: kslifka on March 13, 2008, 03:14:48 PM
I must say I like today's market action for the first time this year.  Seems like some "real" buying going on....and not just short covering.

Hi kslifka

I'm not into "tic-tac" analysis (tic-tac meaning very short term technical analysis), but if I were I would consider two things:

1 - I would use the SPY chart instead of the $SPX chart. This is because the open on the $SPX isn't accurate, the first ticks are formed with just a few stocks counting and that distorts the opening value. An accurate opening value is important for a tool which I find somewhat valuable in tic-tac technical analysis, which is the Candlestick theory.

2 - Considering the candlestick theory, yesterday's white candle was bearish. It was an "In neck" pattern, which is a bearish continuation pattern:



Anyway, when tic-tacking one needs to be very flexible and this pattern needs confirmation. The SPY should open lower today and keep going lower. The pattern would be invalidated if the SPY were to close above Wednesday's midpoint, which is $132.05.

I didn't pay much attention to tic-tac yesterday and got an ugly day on the Main (because that hedge is very powerful, I made a small calculus mistake and went a bit further into margin than I wanted). Also the Russel 2000 was relatively strong yesterday, because it already touched its support level (the equivalent of $126 on the SPY). But I think it was just a one day phenomenon.

I agree with AussieTrader, ultimately the SPY will break down to new lows below $126. This thesis would be seriously compromised if the SPY were to close above $139.

Good luck

Quote from: David Randolph on March 14, 2008, 07:19:13 AM

Quote from: kslifka on March 13, 2008, 03:14:48 PM
I must say I like today's market action for the first time this year.  Seems like some "real" buying going on....and not just short covering.

Hi kslifka

I'm not into "tic-tac" analysis (tic-tac meaning very short term technical analysis), but if I were I would consider two things:

1 - I would use the SPY chart instead of the $SPX chart. This is because the open on the $SPX isn't accurate, the first ticks are formed with just a few stocks counting and that distorts the opening value. An accurate opening value is important for a tool which I find somewhat valuable in tic-tac technical analysis, which is the Candlestick theory.

2 - Considering the candlestick theory, yesterday's white candle was bearish. It was an "In neck" pattern, which is a bearish continuation pattern:



Anyway, when tic-tacking one needs to be very flexible and this pattern needs confirmation. The SPY should open lower today and keep going lower. The pattern would be invalidated if the SPY were to close above Wednesday's midpoint, which is $132.05.

I didn't pay much attention to tic-tac yesterday and got an ugly day on the Main (because that hedge is very powerful, I made a small calculus mistake and went a bit further into margin than I wanted). Also the Russel 2000 was relatively strong yesterday, because it already touched its support level (the equivalent of $126 on the SPY). But I think it was just a one day phenomenon.

I agree with AussieTrader, ultimately the SPY will break down to new lows below $126. This thesis would be seriously compromised if the SPY were to close above $139.

Good luck

You're right...I should of used the SPY  instead of the $SPX...I was just throwing up a chart for illustrative purposes. 

I do believe with you that the market will go lower eventually...but after the action yesterday...I felt we could get a few good days ahead of us and we may touch the descending trendline eventually. 

Anyway the market is responding positively pre-market to the CPI today...however I'm a little suspect of the "lagging" numbers going forward.

Well Bear Stearns just put a knife in decent CPI data this morning.

Citigroup is the next BSC, don't you think?

Quote from: kslifka on March 14, 2008, 09:54:46 AM
Well Bear Stearns just put a knife in decent CPI data this morning.

Indeed, very bad news coming out of BSC:

Bear Stearns gets help from Fed, J.P. Morgan
Broker admits its liquidity 'significantly deteriorated'; mulls alternative options

I always wondered how a firm like Bear Stearns, which was about $10 B market cap, had assets and liabilities approaching $400 B. It was weird for me how such "small" firm was moving so much capital, it had to have tremendous leverage. And Bear is not alone, most major brokerages are in this type of situation. The stock is down 48% as I write

With the selling volume that kicked in today I guess we'll have a long red candle on the chart below ... I guess we'll close around $127 on the SPY (continuing with the tic-tac analysis).

(note: the Main Portfolio is actually rising a bit today, but its calculation has some bug. I've called Ramsburg to fix the problem).

Volatility (Fear)  index really up today...not to say it may even go up more.

David, I do not think the market has much downside potential at this level. Compared with globalization, the current finance problem is just a blip.  Why do you change your mind at this point?? Is it because of TA or FA?

Is Wall Street Close to a Bottom?
Saturday March 15, 4:49 am ET
By Eileen Aj Connelly, AP Business Writer 
The Stock Market Will Remain Volatile, but Some Analysts See Signs That the Bottom May Be Near


NEW YORK (AP) -- Investors nursing whiplash symptoms after watching the market's recent wild swings may find that Wall Street will deliver some relief in the coming weeks.
While volatility isn't going to disappear overnight, some experts suggest the market may be near the beginning of a recovery.

ADVERTISEMENT


"I think we've seen a bottom," said Alfred E. Goldman, chief market strategist at A.G. Edwards & Sons Inc., a division of Wachovia. "It's probably not 'the' bottom," he said, "I think it would be presumptuous to call it 'the' bottom."

Some might consider any positive view contrarian, especially given the shock caused Friday by news of a bailout needed by investment bank Bear Stearns Cos., but Goldman said he thinks long-term investors have reason to start expecting some relief ahead.

"I think what we have is a Bear Stearns crisis, not a stock market crisis," he said of the Wall Street bank's liquidity problems, which stemmed from investors, customers and lenders withdrawing their business and pulling back on credit lines. "Right now, I'm not aware of any other major brokerage firms or banks that have this type of solvency problem."

Still, Goldman said, such news can generate further negative feelings. "The level of pessimism, the calls I'm getting, are it's like the end of the Western world."

"The market is very nervous."

Those nerves were reflected in the market's moves this past week, as stocks on Monday sold off for the third straight day, then bounced back Tuesday after the Federal Reserve said it would put up cash to help loosen tight credit market. After a modest decline Wednesday, it got a lift Thursday from Standard & Poor's prediction of an end to massive write-downs of mortgage-backed securities, then dropped sharply Friday following Bear Stearns' revelation.

For the year, the Dow Jones industrial average is down about 10 percent, and off nearly 16 percent since its October high. The S&P 500 index has slipped 12 percent since the start of the year, and about 18 percent since October. The Nasdaq composite index is down about 16 percent for 2007, and off more than 22 percent since its October high -- officially within "bear market" territory.

David Wyss, chief economist for Standard & Poor's said he thinks several factors will likely mean the markets should hit their low point soon. "I think the economy is going to hit bottom in the summer," he said. "Normally, the market leads the economy by about three months," which would put the bottom sometime near the end of March, he suggested.

While there's still plenty in the economy to be worried about, Wyss said, he thinks that signs of a recovery in the market will be helpful in easing investor fears.

"I think people are going to have a little more confidence," he said, adding, however, "It doesn't mean they're going to be back to normal."

The coming week could bring some news that helps. Along with the Federal Reserve meeting that is expected to deliver another big interest rate cut, several major investment banks, including Bear Stearns, are slated to report their first-quarter financial results. Most major corporations will follow starting next month.

Global investment strategist Subodh Kumar expects the earnings reports will produce some difficult numbers, but that could help in the long run.

"I think there's one more leg of earnings reductions that the analysts haven't taken yet," he said. "What I'm anticipating is that as the first-quarter earnings are reported, (analysts) will cut their second quarter estimates and that will help us find a bottom."

"In terms of the market drop, I think most of that has already been done," he said. "In terms of expectations, in terms of earnings, I think there's more to come."

Brett Hammond, chief investment strategist at TIAA-CREF Asset Management, agreed that first-quarter results are not likely to be pretty. "Overall, I think we can expect some fairly negative news on the corporate front," he said, noting that, among other factors, financial companies are probably not done writing down the value of certain holdings.

He also said the credit crisis must also play itself out before market turns.

"The story over the last quarter or so is the 'sound of credit crunching' can be heard everywhere, and I think that's what driving both reality and perception," he said. "You have to talk about both reality and perception when you're talking about turn."

Still, Hammond said, while it might take a few more quarters before the markets show signs of real strength, "the chances of there being a much further downturn from here are less than there's going to be an upturn."

So David used leverage to make his portfolio "net short". I suspect most of his followers don't even have margin accounts to follow his actions and that may be a good thing. Most of, and maybe even all of his "low priced" holdings are non-marginable securities (meaning they are considered risky or volatile and cannot be used as collateral against the short borrow). That would depend on the particular brokerage, but none of them under $5 would be marginable. Also the maintenance margin will vary from broker to broker, but usually 40% for most. I would normally say that their is very little risk to using margin to hedge, even if all cash is fully invested in marginable long positions, but in this case I think there could be some small risk of a maintenance call if the short position goes against him very far. If that would happen, he could be forced to either add more cash to the portfolio, sell some long holdings to raise cash, cover the short position, or the brokerage could even decide this for him. It certainly wouldn't be catastrophic ,by any means, but it could cause some liquidation at inopportune times.

If you insist on the comfort of a hedge now when there seems to be so many great values out there currently, I still reccomend buying the Ultrashort ETF's. If you have cash you can buy these and gain leverage without using margin and also use to hedge your IRA's. Or if you are already fully invested, but have plenty of margin buying power you could also use it with  liitle risk, as long as not overdoing it.

Th ultrashort etf's are approved by regulators and unlike David I don't believe they can ever go to zero or negative. I don't fully understand exactly how they work and neither does David, but I don't really care. I would never think of them (or any short, for that matter) as an investment anyway.

I don't really know how David is tracking his portfolio performance now using margin and leverage, but frankly I am rather surprised that it "only" shows a 23% loss with so many 40-70% individual losses.

I have probaly sold 85% or so of my hedges now, including metals and precious metals. If there is more downside to the markets now, I consider the risk  very acceptable, but that is only my situation, to each his own. At some point I will be actively hedging again, but not now.

Interest rate cuts will very soon be coming to a halt, and if there is indication of that next week  or if they cut less than most expect ( I think less),  it could cause a  flush of weak hands and hedging may pay off, but probably not in gold or oil in the ST.

Good Luck and Happy Trading or investing.

Quote from: BigSully1 on March 15, 2008, 02:32:12 PM
So David used leverage to make his portfolio "net short". I suspect most of his followers don't even have margin accounts to follow his actions and that may be a good thing. Most of, and maybe even all of his "low priced" holdings are non-marginable securities (meaning they are considered risky or volatile and cannot be used as collateral against the short borrow). That would depend on the particular brokerage, but none of them under $5 would be marginable. Also the maintenance margin will vary from broker to broker, but usually 40% for most. I would normally say that their is very little risk to using margin to hedge, even if all cash is fully invested in marginable long positions, but in this case I think there could be some small risk of a maintenance call if the short position goes against him very far. If that would happen, he could be forced to either add more cash to the portfolio, sell some long holdings to raise cash, cover the short position, or the brokerage could even decide this for him. It certainly wouldn't be catastrophic ,by any means, but it could cause some liquidation at inopportune times.

If you insist on the comfort of a hedge now when there seems to be so many great values out there currently, I still reccomend buying the Ultrashort ETF's. If you have cash you can buy these and gain leverage without using margin and also use to hedge your IRA's. Or if you are already fully invested, but have plenty of margin buying power you could also use it with  liitle risk, as long as not overdoing it.

Th ultrashort etf's are approved by regulators and unlike David I don't believe they can ever go to zero or negative. I don't fully understand exactly how they work and neither does David, but I don't really care. I would never think of them (or any short, for that matter) as an investment anyway.

I don't really know how David is tracking his portfolio performance now using margin and leverage, but frankly I am rather surprised that it "only" shows a 23% loss with so many 40-70% individual losses.

I have probaly sold 85% or so of my hedges now, including metals and precious metals. If there is more downside to the markets now, I consider the risk  very acceptable, but that is only my situation, to each his own. At some point I will be actively hedging again, but not now.

Interest rate cuts will very soon be coming to a halt, and if there is indication of that next week  or if they cut less than most expect ( I think less),  it could cause a  flush of weak hands and hedging may pay off, but probably not in gold or oil in the ST.

Good Luck and Happy Trading or investing.

I should clarify that when I said you can use hedging and margin with very little risk, instead I should have said with very little overall portfolio risk or risk of margin calls if used properly. . hedging should get you through difficult periods with comfort and without losing your positions, but at some point you have to decide which way to go, or you will never get very far.