Bill Cara’s Blog for Feb 1, 2012

CTA Trading Desk Morning Report

[9:00am ET] Good morning, Geoff here.

Green, green everywhere. Markets rallied overnight on positive news from China and were then supported by more good news from the euro-zone.

Manufacturing activity rose in China, France, Germany and the UK. We need to watch the US ISM Manufacturing Index (being released this morning), because a good number will do a lot towards easing worries about the economy caused by the recent drop in the Baltic Dry Index – something that we have been writing and wondering about here.

The UK Manufacturing Purchasing Managers index rose to 52.1 in January from an upwardly revised 49.7 in December. A number over 50 indicates expansion and this is the fastest expansion rate since last May.

Greek Finance Minister Evangelos Venizelos stated that the talks between Greece and its private creditors were going well. He said that they were “one formal step away” from inking a deal that would avoid a Greek default.

Those reports are leading to a rally in the Euro as traders take off their long US Dollar trades. It is “risk-on” overseas.

Here in the States, earnings continue to be mixed with roughly 60% of companies that have already reported beating estimates. That sounds positive for the markets, but it is actually less than in recent quarters and could be viewed as negative should other data support the slowing economy view.

Amazon (AMZN) fell 9% after posting a large drop in 4th quarter profits and warning of a possible 1st quarter loss.

Aetna (AET) posted much higher quarterly profit that was in line with Wall Street expectations and is rallying this morning. (FD; we are long AET).

This morning, ADP released its payroll numbers. January ADP private payrolls added 170,000 jobs vs. the estimated 182,000. This could be seen as disappointing, but I think eyes are on manufacturing today so pay attention to that ISM number.

I read an article over at Zero Hedge regarding California running out of money. The state Controller sent a letter to lawmakers that warned of California running out of cash by early March if they are not able to raise $3.3 billion. Over a year ago, we were writing about this possibility as being supportive to further liquidity injections in the form of QE from the Federal government. Not much has changed, has it?

If following daily US troop movement into the Middle East is not part of your daily reading, I’ll let you in on something…the US is sending a third Aircraft Carrier group to the Middle East and has been building up its presence in the area for some time. Of course, so have the other world powers. This troop activity is leading many to think that the question of an Iranian conflict is not “if”, but “when”. My question is; “why”? I have never met another person, in any country, who wants to send their kids to die, never.

The S&P 500 has not moved in 2 weeks and our stance has not changed; we are cautiously bullish.

Have a great trading day!


Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.

Symbol Name Last Trade Change Related Info
^ATX ATX 2,110.00 5:20AM EST Up 30.20 (1.45%) Components, Chart, More
^BFX BEL-20 2,245.66 6:56AM EST Up 38.86 (1.76%) Components, Chart, More
^FCHI CAC 40 3,351.69 6:56AM EST Up 53.14 (1.61%) Components, Chart, More
^GDAXI DAX 6,580.39 6:34AM EST Up 121.48 (1.88%) Components, Chart, More
^AEX AEX General 323.19 6:34AM EST Up 4.72 (1.48%) Components, Chart, More
^OSEAX OSE All Share 456.09 6:34AM EST Up 4.04 (0.89%) Components, Chart, More
^OMXSPI Stockholm General 329.92 6:59AM EST Up 4.60 (1.41%) Components, Chart, More
^SSMI Swiss Market 6,039.85 6:43AM EST Up 69.36 (1.16%) Components, Chart, More
^FTSE FTSE 100 5,758.36 6:34AM EST Up 76.75 (1.35%) Components, Chart, More
FPXAA.PR PX Index 974.80 6:55AM EST Up 3.50 (0.36%) Chart, More
ESI500000000.MA IGBM 868.82 6:40AM EST Up 13.65 (1.60%) Components, Chart, More
MICEXINDEXCF.ME MICEX Index 1,535.71 7:43AM EST Up 24.80 (1.64%) Chart, More
GD.AT Athex Composite Share Price Index 821.12 6:42AM EST Up 25.10 (3.15%) Chart, More

http://finviz.com/futures.ashx

http://finviz.com/fut_chart.ashx?p=m5&t=ES

http://finviz.com/fut_chart.ashx?p=m5&t=ZB

http://finviz.com/fut_chart.ashx?p=m5&t=DX

http://finviz.com/fut_chart.ashx?p=m5&t=GC

http://finviz.com/fut_chart.ashx?p=m5&t=SI

http://finviz.com/fut_chart.ashx?p=m5&t=CL

The team will check in during the day, reporting in the Discourse when there is a new entry.

Enjoy your day.


Cara on Trends & Cycles


Vad’s Catch of the Day


Kaimu’s Sound Money


CTA Trading Desk Mid-Day Report


CTA Trading Desk Post-Close Report


  1. [No set time] Motor Vehicle Sales 7:00 AM ET MBA... [#104412]
    By: davefairtex (5215 comments) Go to top ↑
    • [No set time] Motor Vehicle Sales
    • 7:00 AM ET MBA Purchase Applications
    • 7:30 AM ET Challenger Job-Cut Report
    • 8:15 AM ET ADP Employment Report
    • 10:00 AM ET ISM Mfg Index
    • 10:00 AM ET Construction Spending
    • 10:30 AM ET EIA Petroleum Status Report
  2. 3 in Distribution Zone 3 in Sell alert Accumulation... [#104413]
    By: davefairtex (5215 comments) Go to top ↑
    • 3 in Distribution Zone
    • 3 in Sell alert

    Accumulation Zone: Monthly 5, Weekly 0, Daily 7
    Distribution Zone: Monthly 10, Weekly 19, Daily 21

  3. NATIONWIDE HOUSING PRICES N.S.A (YOY) UK for Jan Actual:... [#104414]
    By: Les (7233 comments) Go to top ↑

    NATIONWIDE HOUSING PRICES N.S.A (YOY) UK for Jan
    Actual: 0.6% Cons.: 1.2% Previous: 1.0%

    ————————

    SVME – PURCHASING MANAGERS’ INDEX Switzerland for Jan
    Actual: 47.3 Cons.: 51.0 Previous: 49.1 Revised from 50.7

    [I'm guessing that the Swiss Franc strength is weighing on PMI relative to Europe - Les]

    PURCHASING MANAGER INDEX MANUFACTURING Germany for Jan
    Actual: 51.0 Cons.: 50.9 Previous: 49.7 Revised from 48.4

    PURCHASING MANAGER INDEX MANUFACTURING EMU for Jan
    Actual: 48.8 Cons.: 48.7 Previous: 46.9

    PURCHASING MANAGER INDEX MANUFACTURING UK for Jan
    Actual: 52.1 Cons.: 49.8 Previous: 49.7 Revised from 49.6

    ———————–

    CONSUMER PRICE INDEX (YOY) EMU for Jan provisional
    Actual: 2.7% Cons.: 2.7% Previous: 2.7%

    http://www.fx360.com/calendar/

  4. http://www.telegraph.co.uk/technology/facebook/905... Do I... [#104415]
    By: Les (7233 comments) Go to top ↑

    http://www.telegraph.co.uk/technology/facebook/905

    Do I understand this correctly? FB being pumped out today? Or is it just the paperwork being filed with the SEC? That would be reason enough for the market to hold on here a little bit longer. I appreciated John Thomas’s question of where $100B for such a monstrous IPO was coming from? Fresh cash? Not likely.

    http://www.madhedgefundtrader.com/will-facebook-ma

    • My take from what I read it was $5B being put up for sale... [#104417]
      By: westcoaster (1130 comments) Go to top ↑

      My take from what I read it was $5B being put up for sale, priced at
      $75-100B Mcap if you buy that. I’ve seen opinion that it will settle in trading at $125-150B. Paying up for eyeballs. The reason they have to go public is they have 500 shareholders so have to start publishing financials. Li Ka Shing and other illuminata have all made private placements. The actual IPO will go in a few months after all approvals from SEC etc.

  5. Good morning. 07:00 MBA Mortgage Index (-2.9%) 08:15 ADP... [#104416]
    By: Bull Hunter (3552 comments) Go to top ↑

    Good morning.

    07:00 MBA Mortgage Index (-2.9%)
    08:15 ADP Employment Change
    10:00 ISM Index
    10:00 Construction Spending
    10:30 Crude Inventories
    14:00 Auto/Truck Sales

    ——

    AMZN – PT Lowered from $255 to $234 @ Oppenheimer. Outperform

    BRCM – Broadcom downgraded to Hold from Buy at Auriga.

    XOM – Exxon Mobil downgraded to Hold from Buy at Argus based on a less favorable production mix towards gas.

    ——

    Other stocks of possible interest:

    NEM – Downgraded to Hold @ Stifel Nicolaus based on reduced growth prospects.

    ——

    “There is no worse tyranny than to force a man to pay for what he does not want merely because you think it would be good for him.” ~ Robert Heinlein

  6. NBS MANUFACTURING PMI for Jan Actual: 50.5 Cons.: 49.6... [#104418]
    By: Les (7233 comments) Go to top ↑

    NBS MANUFACTURING PMI for Jan
    Actual: 50.5 Cons.: 49.6 Previous: 50.3

    HSBC MANUFACTURING PMI for Jan
    Actual: 48.8 Cons.: Previous: 48.7

    Cullen Roche has more to say. http://pragcap.com/chinese-pmi-comes-in-mixed

    http://www.fx360.com/calendar/

  7. ... [#104423]
    By: Doug2 (14 comments) Go to top ↑
  8. AMZN - numbers reduced at Goldman. Shares of AMZN now seen... [#104424]
    By: Bull Hunter (3552 comments) Go to top ↑

    AMZN – numbers reduced at Goldman. Shares of AMZN now seen reaching $182, according to Goldman Sachs. Estimates also cut, as the company is realizing lower sales and higher costs. Neutral rating.

  9. You don't have to like him, nor do you have to love... [#104422]
    By: bigwad1 (768 comments) Go to top ↑

    You don’t have to like him, nor do you have to love him.
    At the end of the day Romney will be your next President.
    Those touch-screens are being calibrated to vote “Romney” as of today.

    http://www.nytimes.com/2012/02/01/us/politics/romn

    • I'm not surprised. He's 5th on my list of republican... [#104429]
      By: ea32da32 (2362 comments) Go to top ↑

      I’m not surprised. He’s 5th on my list of republican candidates I’d vote for today. He’s a flip/flop fool lier and I have 0 respect for him on a scale of 1 to 10 and far away from someone like Santorum or Ron Paul, both of which I donated to. But he can’t even compare to the deception by obama so I’ll be stuck voting for someone I have to hold my nose for like last time. Same old same old… Picking up some SDS calls about right now.
      regard,
      Earl

      • One would think that Florida, which was absolutely ravaged... [#104432]
        By: Bull Hunter (3552 comments) Go to top ↑

        One would think that Florida, which was absolutely ravaged by the housing bubble burst, would have more sense than to send their delegates to vote for the HB&B poster boy, Mitt Romney, who also praises Ben Bernanke and the Fed.

        Do Florida Oranges have a higher IQ than Florida GOP Voters?

        http://is.gd/uIQclZ

        • Money invested in TV ads clearly delivered. Now, get this:... [#104435]
          By: jack black (2306 comments) Go to top ↑

          Money invested in TV ads clearly delivered.

          Now, get this: NPR reported this AM that Obama raised more money than all GOP candidates combined. And he is on target to have 1 billion $ total.

          Super Pac nation!

          I’m reconsidering my prediction that Obama loses this year.

  10. Yesterday I reported on progress of USLV 3X to PSLV. This... [#104425]
    By: California Kid (278 comments) Go to top ↑

    Yesterday I reported on progress of USLV 3X to PSLV. This Morning it is USLV 6% and PSLV 1.9%.

    http://stockcharts.com/freecharts/perf.html?uslv%2

    REASONING ON THE OTHER HAND requires the observer to gather details which produce the conclusion and for the sublime it must mimic nature. Kant

  11. AMZN - Amazon.com target lowered at Jefferies. Shares of... [#104428]
    By: Bull Hunter (3552 comments) Go to top ↑

    AMZN – Amazon.com target lowered at Jefferies. Shares of AMZN now seen reaching $225, Jefferies said. Estimates also lowered on poor earnings result. Buy rating.

  12. ... [#104431]
    By: ea32da32 (2362 comments) Go to top ↑
    • Don't confuse Iranian regime with Iranian people. There is... [#104438]
      By: westcoaster (1130 comments) Go to top ↑

      Don’t confuse Iranian regime with Iranian people. There is a strong expat community here in Vancouver that goes back to the Shah’s overthrow, but growth in numbers seems to have accelerated recently. I stumbled into their enclave in North Van recently and got a very good feel from the people I dealt with there: entrepreneurial, educated, industrious, no nonsense, personable, great food, community spirited.

  13. MSFT's "pot" is calling GOOG's "kettle" is... [#104433]
    By: jock (1011 comments) Go to top ↑

    MSFT’s “pot” is calling GOOG’s “kettle” is BLACK:

    wapo.st/zRH9IW

  14. for posting the great links last night. That agrees with my... [#104434]
    By: jack black (2306 comments) Go to top ↑

    for posting the great links last night. That agrees with my own assessment. My sentiment readings also show a huge and unexplained drop in dollar and bonds sentiments. I said unexplained since we don’t see a corresponding weakness in both those assets. That usually primes the markets for another for big move up. Combine it with the very unusual complacency in equities, the move could be quite large.

    I’m obviously nonplussed with the gap up this AM, but my shorts are holding OK and not stopped out yet. My leveraged short is in XLY, and this one is actually doing OK, as XLY is failing to make higher highs for a while now.

    • how quickly the game changes JB. When I wrote that $USD was... [#104442]
      By: Les (7233 comments) Go to top ↑

      how quickly the game changes JB. When I wrote that $USD was 79.50. I see currency breakouts in CAD, AUD, NZD and the 1.3234 high looks like being taken out pretty quick. Let’s see if this advance sticks.

  15. Should close over $10/share today. CNBC has a blurb from... [#104436]
    By: nebish (297 comments) Go to top ↑

    Should close over $10/share today. CNBC has a blurb from Seeking Alpha reporting that George Soros has purchased a large stake in GGB around $8.57/share.

    GGB could be a big winner in 2012. It’s been a dog’s breakfast for quite a while.

    FD: Own Jan 2013 $12.50 strike calls.

  16. ... [#104439]
    By: jack black (2306 comments) Go to top ↑
  17. Maybe I'm old fashioned, but the development of law and law... [#104440]
    By: Ron Sen (975 comments) Go to top ↑

    Maybe I’m old fashioned, but the development of law and law enforcement paralleled property rights.

    Contemporary ‘justice’ re: MF Global seems separate in its entirety, as a former I-banker and Senator walks free after ‘vaporized’ money.

    This fails the sniff test to high heaven, and it could happen to any of us with any brokerage.

    I’m writing my representatives and requesting action. Forensic accounting can find who stole the money and where it resides.

    N.b. not an MF Global customer

  18. ... [#104441]
    By: pulse (324 comments) Go to top ↑
  19. ... [#104444]
    By: bigwad1 (768 comments) Go to top ↑
  20. Into a SBUX put at... [#104446]
    By: leftthread (22 comments) Go to top ↑

    Into a SBUX put at 47:

  21. ... [#104447]
    By: pulse (324 comments) Go to top ↑
  22. Hong Kong to get first yuan-denominated gold ETF HONG KONG... [#104450]
    By: Vadym Graifer (4341 comments) Go to top ↑

    Hong Kong to get first yuan-denominated gold ETF

    HONG KONG (MarketWatch) — Hong Kong’s stock market plans to host its first yuan-denominated exchange-traded fund tracking bullion prices next month, the second yuan-denominated security to trade on the city’s bourse. The ETF, to be listed on Feb. 14 under the stock code 83168, will track the London gold fixing price. Providers of the fund, Hang Seng Bank Ltd. said it launched the product with the idea of tapping demand for wealth-management products amid fast-growing deposits of the Chinese currency within the Hong Kong’s banking system.

    http://goo.gl/Z5zaF

  23. After testifying before Congress, where has Mr Corzine... [#104451]
    By: MoKat (531 comments) Go to top ↑

    After testifying before Congress, where has Mr Corzine gone? Hiding out in NYC/NJ or sipping pina coladas on some Caribbean island? Or perhaps a Brazilian beach that has no extradition agreement with the US. Can’t believe he’s not wearing an orange jumpsuit.

    Louis Freeh having conflicts with the other trustee Gidden in the search for the money and who sent it.

    Gidden: He has not said how far his investigation has come. He has deployed a team of 60 lawyers and hired 100 consultants from Deloitte and 60 forensic accountants from Ernst & Young to help sift through some $327 billion in wire transfers in and out of MF Global the month before its collapse. Wonder what that costs per day?

    Here’s some info on the latest developments.

    http://tinyurl.com/7q2httu

  24. Harkin and McCain introducing legislation to kill off the... [#104452]
    By: tradylady (205 comments) Go to top ↑

    Harkin and McCain introducing legislation to kill off the dollar bill in favor of dollar coins… says it will save money. Really!?! is that all they can come up with in order to save money. These guys are a pathetic representation of the what’s wrong with gov’t. I can barely stand to read it anymore.

    Yes, I can’t wait to see you guys walking around with one hundred dollars worth of coins in your pockets. McCain and Harkin… RETIRE

    http://blogs.wsj.com/economics/2012/01/31/senators

    RE: Meet your new President, I’m with you Earl. He was the anointed one a long time ago. The press will be certain to make him the candidate. In many ways he’s not much better than what we have had for many years.

  25. Romney has 0% chance of winning an election against Obama... [#104453]
    By: nebish (297 comments) Go to top ↑

    Romney has 0% chance of winning an election against Obama in November.

    Romney can not win California, Illinois, NY or NJ, so Obama’s already 118 votes in (270 needed).

    So, unless you really think Romney can sweep the South, the Midwest and some of New England, the numbers just don’t add up.

    Again, not trying to aggravate anyone here, but let’s please stay in reality, folks. I don’t see how this country can elect the founder of Bain Capital on the heels of the financial disaster of 2008. If you were concerned about income inequality (occupy wall street?) during the last 4 years, you ain’t seen nothing yet if your for Mitt!!!

    • it doesn't matter who wins, we all still lose if we depend... [#104454]
      By: NYUGrad (4750 comments) Go to top ↑

      it doesn’t matter who wins, we all still lose if we depend on an elected official.

      • Well, last time I checked, the USA is a capitalist based... [#104459]
        By: nebish (297 comments) Go to top ↑

        Well, last time I checked, the USA is a capitalist based democracy. If we all still lose if we depend on an elected official, what alternative do you propose?

        Maybe we just need better elected officials. Maybe we need to encourage the right people to run in the first place.

        To wit…here’s a republican who could crush Obama and win the White House easily: Colin Powell. Too bad he won’t run, eh? Worse still, I believe he has already come out in support of Obama. The point being that the good and honorable people in public service can only stand it for so long and get out. We’re left with careerists and feather nesters like Pelosi (Left) and Eric Cantor (Right). They are just 2 sides of the same bad coin, IMO. Their own agendas will always be far ahead of the peoples.

        Going back under my rock now. Peace, all.

  26. The summary first; "A nation can survive its fools and... [#104456]
    By: pulse (324 comments) Go to top ↑

    The summary first;

    “A nation can survive its fools and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and he carries his banners openly against the city. But the traitor moves among those within the gates freely, his sly whispers rustling through all alleys, heard in the very halls of government itself. For the traitor appears no traitor; he speaks in the accents familiar to his victim, and he wears their face and their garments and he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation; he works secretly and unknown in the night to undermine the pillars of a city; he infects the body politic so that it can no longer resist. A murderer is less to be feared. The traitor is the plague.”

    http://news.goldseek.com/GoldSeek/1328037291.php

  27. ... [#104457]
    By: fireworks (256 comments) Go to top ↑
    • fireworks, I am a novice for sure. However, comments like... [#104458]
      By: dberryclan (687 comments) Go to top ↑

      fireworks,

      I am a novice for sure. However, comments like ( this year or certainly in the next 18 months) from an “expert”, in my humble opinion are irresponsible or just silly. Now, I don’t know this individual and don’t read his stuff, buy I’m just say’n….

      DB

    • Gold $4500 this year? I am betting against it, any amount... [#104461]
      By: Vadym Graifer (4341 comments) Go to top ↑

      Gold $4500 this year? I am betting against it, any amount. The more the merrier, that’s my early retirement chance. Anyone?

      • Gold $2500 and Silver $60 sometime this year. Government... [#104464]
        By: rosevillebill (150 comments) Go to top ↑

        Gold $2500 and Silver $60 sometime this year. Government (especially USA) has not reigned in the deficits. Another trillion here another trillion there. I’m fully allocated in SVM and MUX. Bought Kinross on the dip. Added some PSLV the other day. Even bought GIX at .26. Hope to pull a Kaimu and hold it for a couple of years and then cash in.

      • Vadichka, I'll back your bet with the usual eighth... [#104466]
        By: Ilya (572 comments) Go to top ↑

        Vadichka,
        I’ll back your bet with the usual eighth over-ride.

        I’m going 100% short equities tomorrow on the open because a guy named Prechter has a target price for the DOW at 300. He has an unblimished record of calling for this target for over 35 years now and I truely believe that tomorrow is the beginning!!!

        I’m also shorting oil and all other commodities because Gary Shilling has been forecasting a severe deflation back to 1952 price levels, also for at least the last 35 years!!!

        When is it permissible to shoot people to put us out of their misery?

        Today there might be some modest deflation if you are a retiree of American Airlines. The taxpayer, AKA PBGC will tote another long term note. Other than that, the price of ground chuck is up over 20% from a year ago. Let’s eat…

      • Vad said "I am betting against it, any amount. The more the... [#104467]
        By: Les (7233 comments) Go to top ↑

        Vad said “I am betting against it, any amount. The more the merrier, that’s my early retirement chance. Anyone?”

        cue Doctor Evil: http://www.youtube.com/watch?v=jTmXHvGZiSY&feature

        I’ll up Doctor Evil and bet 100 trillion dollars… Zimbabwean of course.

        Point being, if equities are rallying off better than expected PMI data that suggests mild recession at best (at this point in time) and Uncle Sugar is price fixing money at these ridiculously low levels, then gold and silver should soon be running with the bulls in Pamplona so to speak.

        Of course, $4500 is pretty far fetched and I think we’re sufficiently hardened as a trading group so as not to get carried away with calls like that. I’ll settle for silver breaking $34 resistance.

        I do note that Armstrong commented on gold very recently, asserting that gold on “the 31st MUST close above 1755 to signal a possible rally into February. It did not, so I remain wary as to short-term outcomes.

        $silver:$gold appears to be resting. Equities are holding their gains so I want to see metals rejoin the rally at some point shortly. Note zero line support at ROC – this oscillator should shortly turn negative, indicating risk on for silver.

        http://tinyurl.com/7mgwqar

        Are we seeing a repeat of Autumn 2010 in the following chart? GDXJ:GDX illustrating one half of the gold bull cycle:

        http://stockcharts.com/h-sc/ui?s=GDXJ:GDX&p=W&b=5&…

        The other half – GDX:$GOLD – is flat on its back. It’s a stock pickers market I guess, unless money rotates into this group at some point to lift them up relative to the bullion:

        http://tinyurl.com/79ss5zl

    • Having a quick read of your link there I thought an author... [#104469]
      By: Les (7233 comments) Go to top ↑

      Having a quick read of your link there I thought an author whose work on political pundits and how we can determine their judgement worth sharing here:

      http://www.amazon.com/Expert-Political-Judgment-Go

      The description: Classifying thinking styles using Isaiah Berlin’s prototypes of the fox and the hedgehog, Tetlock contends that the fox–the thinker who knows many little things, draws from an eclectic array of traditions, and is better able to improvise in response to changing events–is more successful in predicting the future than the hedgehog, who knows one big thing, toils devotedly within one tradition, and imposes formulaic solutions on ill-defined problems.

      He notes a perversely inverse relationship between the best scientific indicators of good judgement and the qualities that the media most prizes in pundits–the single-minded determination required to prevail in ideological combat.

      I don’t know much about Elliot wave theorists, but I’ve gained the impression that they’re much like the hedgehog in their absolutes, unless they’re hedging their thoughts with downside possibilities as well. Armstrong had this to say on this particular book:

      Tetlock’s research did discover that there was one kind of expert turns
      out consistently more accurate forecasts than others. The most important factor he discovered was not how much education or experience the experts had but how they actually thought. The best forecasters were those who were self-critical, eclectic thinkers who were constantly updating their beliefs when faced with contrary evidence instead of clinging to dogma.

      He found the best were suspicious of grand schemes and conspiracies and were more practical about their predictive ability. The less successful forecasters clung to the same ideas never wavering pushing the idea to the breaking point of absurdity. These types of people were more often embraced by the media because they loved to articulate and persuade as to why their idea explained absolutely everything.

      Hey, perhaps he’ll get it right, who knows? But when I see the words “will” then I try to maintain a distance to such thinking. Like Armstrong who said gold “must” do this before the 31st – it didn’t, but I ain’t about to run out and sell everything because of it, even as I respect his analysis.

      It’s cognitive bias and god knows I have one too. But I am trying to break free of this bias. See TNA in the 1 min. time frame yesterday as an example. I’m looking at TZA closing in on a double bottom at 1pm. Then it occurred to me, why does it have to be a double bottom? What is the likelihood that given the strong trend during the day, the bottom is here? Why am I trying to call the bottom? So I change over to TNA and take the 58.20 break of the ascending triangle and resistance at 1pm, and it works.

      I should be back in Vad’s room next week. I need to earn a salary, but more so than that I want to break free of my own conceived ideas of the way the world and this market should work. I butted heads with Geoff and Bill thinking the market’s topped out here in recent days, but yesterday’s break left me under no illusions.

      Still, the dollar is sticking to 79 and that 1.3234 high in EURUSD is not broken. I continue to watch these two.

  28. To: davefairtex. Appreciate your post # 104362 analysis of... [#104460]
    By: dnfrm (88 comments) Go to top ↑

    To: davefairtex. Appreciate your post # 104362 analysis of VFIIX re the info available at the Vanguard site. I comprehend the formula you applied and the resultant outcomes but I note the assumption of a constant average yield ( of 2.87% ) for each example. My query is whether such assumption is accurate. That is… if the 7 year rate increases then would the yield not also increase, thus additionally buffering the overall decline in return? And vice-versa?
    It doesn’t appear that Vanguard’s site provides much, if anything, re long-term performance so what I’m looking at is the Yahoo ” Performance Overview ” section for VFIIX which includes a table of annual total return %s dating back to 1981. That reflects that only for 1994 was there a negative total return.
    To reiterate, am not focused on VFIIX as a long-term vehicle for income generation ( altho the 6.82% 5-yr average is nothing to sneeze at these days ) but, rather as an alternative parking place for a substantial portion of cash allocation which would otherwise sit in a money fund.
    Anyhow, thnx again for the interest and still trying to get my head around this.

    • dnfrm - you're welcome. One of the reasons VFIIX has had... [#104463]
      By: davefairtex (5215 comments) Go to top ↑

      dnfrm – you’re welcome.

      One of the reasons VFIIX has had so few negative years is because if you look at a yearly chart, the bond market has pretty much gone up for most of the past 30 years – which means rates have fallen most of the time. I guess 1994 was an exception. Yet as with all bull markets, at some point, this massive 30 year bull market will end. I keep thinking “this year for sure – how can rates get lower than 4%?” And then they get lower. Vad’s rule. Overbought gets overboughter. In this case, for 30 years!

      My equation did assume a constant yield of 2.87%. I’m not sure rising rates would end up helping much over the 1 year period. WIth a 6 year duration, only 16% of the bonds mature every year.

      Your 6.82% 5-year average return is about half capital gains – gains from declining interest rates. If rates remain flat, you’ll get 2.87%. Its still better than 0%, but 7 years is a long duration.

      Last point. Look at the weekly $UST7Y chart on stockcharts. You’re buying the (yield) at an all-time low in the 7Y treasury yield. Of course, it could break down and go even lower still, which would be good for VFIIX. But just realize when you are buying – the all time low in rates (translating into the all time high for the 7 year treasury).

      Of course, overbought can get overboughter. So who really knows how it will turn out.

  29. More positive initial reaction to earnings news. Are we... [#104462]
    By: westcoaster (1130 comments) Go to top ↑

    More positive initial reaction to earnings news. Are we moving to euphoria? or is this still early in the realm of uncovering undervalued stocks. JDSU traded almost 100% higher from here a year ago.

  30. http://sentimentrader.com/blog/archives/131 Interesting... [#104470]
    By: Les (7233 comments) Go to top ↑

    http://sentimentrader.com/blog/archives/131

    Interesting chart – food for thought.