Category: stocks

Market Update: Why I Closed My March Longs

Just time for a quick market update (here’s my prior update) and explanation of my May 6th tweet (the time stamp says 9:46 PM because I’m in Sweden, six hours ahead of USA ET, where it was 3:46 PM):

Just closed out all stock positions (long) I put on in the beginning of March: http://bit.ly/3299rF. Biggest gain: RIMM 89%; loss INTU -8%.

Comments on the chart below:

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Quick Market Update: High and Tight

This chart (taken intraday today), shows some very tight, low-volume action above a moving average that has not held for a long time. This comes after the gap up of a few days ago, which is also still holding.

We really could break either way here, but this action, combined with multiple other signs of decreased fear and flight-to-quality (risk assets and gold are up, spreads are down) and ability to hold on “bad news” (Jobless claims jump to 573,000, a 26-year high), is interesting.  The Fed is printing massive amounts of money.  It’s going to go somewhere (eventually).  Cheers!

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Rally Attempt Ends, NBER Makes It Official

Just a quick post to note the end of the rally attempt (its start was noted here: Market Update: Good News/Bad News).

Here is the Yahoo Finance arket summary and here are the volume leaders. As you can see, it was a 90% downside day and not a single stock was up on the volume leaders list (except a short ETF).

Also of note is today’s National Bureau of Economic Research (NBER) “news”: “The economy’s yearlong downturn, officially declared a recession.” I put “news” in quotes because their “economic indicator” (or whatever you prefer to call it) is backward looking, just like all non-market based economic indicators are.  Here is an LA Times article and here is the official NBER release.  Here is a blog I published over a year ago (in November 2007) saying the U.S. was likely already in a recession and why (includes annotated chart).

The only forward looking indicators, of course, are market-based ones, such as the stock markets and bond markets themselves, which discount things around 6-12 months in advance, which means (as always), that the bear market low will occur 6-12 months before the recession ends.

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Market Update: Good News/Bad News

Just time for a quick post before a busy afternoon of prep work for our Thanksgiving dinner party tomorrow night (we’re in Sweden, so the Saturday before the official Thanksgiving Day is when we do it).

Ok, the post got a little long when I used Fred Wilson’s tweets  (links below) to launch into some of my investment philosophy.  I like Fred a lot, and his tweets and blog, it’s just that I’ve been watching him buy Google from above $400 down into the $200s.  It’s been painful, but he will eventually catch that oh so sweet bottom!  More below.

Bonus! At the end I tagged on two great pieces by Michael Lewis, the author of Liar’s Poker: Rising Through the Wreckage on Wall Street.

First, some market stats:

  • Thursday: Summary and volume leaders. Look at that volume! Over 10 billion shares on the NYSE and 3 billion on the Naz. That is people saying “I can’t take the pain any longer, get me out, I don’t care about the price, just make the pain stop!” Margin calls, mutual and hedge fund redemptions, portfolio insurance (see The Anatomy of a Crash), and delta hedging by put sellers, like Warren Buffett, have forced a lot of sales, of course. Call it a perfect storm, a rare glimpse at the naked and ugly side of human emotions, greed into panic. The story never changes, just the names, faces, and dates.  Of course, great opportunities also come at times of extreme emotions.  That will be the same this time, as well.

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U.S. Homeownership and Stock Market Participation Rates

Just a quick post of some interesting date from the U.S. Census Bureau. As shown on the chart above (click for larger image), the percentage of Americans who own their own homes is declining. No surprise there, but it does beg a few questions, such as:

What (and when) was the peak and how far (and how long) will the rate fall?

To consider these questions, I hopped over to this page at U.S. Census Bureau website,  downloaded this spreadsheet and quickly crunched a few numbers in this spreadsheet.

What I found was that…

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Article: Europe on Brink of Currency Crisis Meltdown

Ok, this answers my question from a few weeks ago about “what about the ROW (‘rest of world’) subprime mess? Where is it?? It’s not mortgages, it’s this (see article). And it’s [probably] going to make USA subprime look like a walk in the park:

Europe on the brink of currency crisis meltdown
The crisis in Hungary recalls the heady days of the UK’s expulsion from the ERM.

By Ambrose Evans-Pritchard
2008-10-26
telegraph.co.uk

The financial crisis spreading like wildfire across the former Soviet bloc threatens to set off a second and more dangerous banking crisis in Western Europe, tipping the whole Continent into a fully-fledged economic slump.

Currency pegs are being tested to destruction on the fringes of Europe’s monetary union in a traumatic upheaval that recalls the collapse of the Exchange Rate Mechanism in 1992.

“This is the biggest currency crisis the world has ever seen,” said Neil Mellor, a strategist at Bank of New York Mellon.

Experts fear the mayhem may soon trigger a chain reaction within the eurozone itself. The risk is a surge in capital flight from Austria – the country, as it happens, that set off the global banking collapse of May 1931 when Credit-Anstalt went down – and from a string of Club Med countries that rely on foreign funding to cover huge current account deficits.

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Web 2.0 Expo Next Week, First Doing Market Update

Susanne and I just got back from a great 4-day trip to Berlin for the Web 2.0 Expo. Met a lot of interesting people and startups there and will report on it next week. First, however, a quick market update.

The reprieve rally I blogged about here is over, with new lows being set Thursday. See the 18 comments I added to that blog post for a number of interesting articles. Also see Nouriel Roubini’s video from yesterday in London: “It’s going to be a financial and economic wreak.”

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The Reprieve Rally Continues

2008-10-14 UPDATE: See comments section for article excerpts, links, and comments.

Why do I say continue, because as noted in Friday’s blog, it started from Friday morning’s low. From there to Friday’s high the DJIA rallied 12.9%. It is now up 25.4% from Friday’s low and 11.1% from Friday’s close.

Compare and contrast the front-page of today’s MarketWatch.com (above) and Friday’s (below):

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Sentiment Extremes Everywhere + Biggest Weekly Drop Ever & Biggest Daily Range


Just a quick post to cap the week. Sentiment extremes where everywhere you looked, even on Twitter.  Images and a few comments below.  Also some links to outside articles.

Bottom line:

  1. A rally is imminent: All but one of the elements were in place by Friday morning (2008-10-10) and Friday’s intraday reversal might have been that last element. We won’t know until next week, but I did buy late in the day.
  2. Regardless of when the tradable rally develops, based on current information and thinking, we are likely at least halfway to the bear market low (in terms of time and price), but less than halfway through the recession.
  3. While sentiment reached an extreme Friday morning, it doesn’t mean it reached the extreme of this cycle.

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The Dog That Didn’t Bark

Just quick post to note the failure of the rally attempt that started intraday yesterday.  See yesterday’s blog and last week’s “Bailout “Hope Rally” = Eye of the Storm.”

Volume declined, too, which indicates that some people are still holding on (the masochists!).  A sustainable rally attempt is not likely until the pain becomes too great and they give up.  That will show up in both the price and volume.  Government action or other “big news” could also spark something (“October surprise,” anyone?!).

Regarding my personal trades (see yesterday’s blog): Within five minutes of today’s open, I closed out all of the positions I put on yesterday (GOOG and QQQQ), as the lack of a big up open was “the dog that didn’t bark.”  Those are often gives the best signals, certainly some of my favorites, because they are subtle, in fact invisible to most people, who don’t know that a dog should be barking but isn’t.

Overall, I’ve been out (i.e. not long) since this blog post in the beginning of August, when the July mini-rally was showing fatigue (and I was going on vacation to Gotland).  Only very quick hits ventures to the long side in a bear market.  Of course, it is generally best to be sidelines or short bear-market rally failures.

PS: Here are today’s market summary stats from Yahoo Finance.

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Quick Market Update – Intraday Reversal – Day 1 Rally Attempt

Just a quick post to note today’s big reversal, which formed a hammer candle, which is the most classic reversal candle. Volume appears to be a question mark, but I’ve not had time to do a thorough analysis of that yet and maybe this chart of the NASDAQ 100 Index ETF is an anomaly.

As I noted on Twitter (original tweet here, copied below), I opened a small long position during the day (a little before noon NYC time):

Some panicy tweet crossing the wires… VIX over 50… Etrade fail whale: http://twitpic.com/evcz. Was enough for me to take a nibble.

I’m generally more of an end-of-day trader, but was away for the close so did not get a chance to buy more. VIX spiked to 58 intraday, which is extreme panic, then reversed (see chart, below).

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Market Update – The Day After

Just a quick follow up to yesterday’s events (blog here).

Today did see buying come in, but as shown on the Google chart above, and on the market stats links that follow, there was an intaday reversal.  Notice how GOOG peaked around $425 and closed around $400.  See the shape of that candle?  Gap up open, rally to new high, then close back down near the open?  That’s a warning.

Updated charts of the securities I showed yesterday are displayed below.

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