Bill Cara’s Blog for Feb 24, 2012
CTA Trading Desk Morning Report
[7:00am ET] Good morning. The Shanghai Fly checked in today:
A few interesting developments in the Chinese markets.
(1) Property stocks are rallying steadily
(2) P/Es of new issues are at very low levels. IPO for China Communications Construction, which is a major market focus, will have a P/E of around 10 or lower. Though this means little in itself, it is a sign that Chinese investors are quite cautious and perhaps even too cautious. There is not that much bubble mentality in market participants, and that is a basis for a rally
(3) Recent reduction in reserve requirement ratio, which may be a sign of monetary easing
(4) Poor economic figures over the last month, but stocks just keep rallying.
May be worthwhile for you and community members to follow up.
Have a good day. Mine will be spent in Miami, Naples and back to Ft Lauderdale. The weather’s terrific.
Good morning, Geoff here.
Our “stop execution strategy” rolls on with excellent results. There are no perfect trading strategies, but when the market is in a slow grind higher, mechanical tactics remove over thinking and keep you on trend. However, as usual, we have made some mistakes along the way.
We sold AAPL on the February 15th bar. That bar was just too ugly to ignore so maybe I shouldn’t call it a “mistake”. When you have huge gains in a stock you need to avoid greed and make prudent decisions. The plan in a trade like that is to take your gains, which we did, and then buy it back if it makes new highs. Normally, if that tactic works you will give up a couple of percent in the total gains but if you bought on the initial buy signal, you are so far ahead of the game that it doesn’t matter. Unfortunately, that bar in AAPL had a $30 range so if you sold at $500 and end up buying it back at new highs you will have given up over 5% in gains. Well, we shall see what happens down the road in that stock but for now we have no position.
A stock that I am kicking myself for not being long is Suncor SU. Six days ago it bounced off of the 200 dma which was bullish. We are bullish oil/energy stocks and the earning estimate strength for SU is one of the strongest in the energy group so it popped up on the radar for a long candidate. At the time, we were very long energy, materials and precious metal names and we already had buy stops in place for other energy stocks, so I set a resting order below the market. The order came very close to being hit but we didn’t get our price. Now, we sit here and watch the stock move to over bought with no position.
I guess trading is a lot like golf. You have some great shots and some bad shots but your overall score is all that matters in the end. Fortunately, we are shooting under par right now so there is nothing to complain about.
As far as the current conditions go, our stance has not changed. Unless the dollar bounces right here, we see a lower dollar and higher stocks and commodities. As a matter of fact, I don’t see anything to keep gold from hitting its all time highs as early as in a few weeks.
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|
||56.17 (2.59%)||Components, Chart, More|
||9.10 (0.40%)||Components, Chart, More|
||16.81 (0.49%)||Components, Chart, More|
||58.35 (0.86%)||Components, Chart, More|
||0.52 (0.16%)||Components, Chart, More|
|^OSEAX||OSE All Share||483.84
||4.27 (0.89%)||Components, Chart, More|
||0.77 (0.22%)||Components, Chart, More|
||23.23 (0.37%)||Components, Chart, More|
||6.00 (0.10%)||Components, Chart, More|
||15.90 (1.60%)||Chart, More|
||0.05 (0.01%)||Chart, More|
||41.85 (2.72%)||Chart, More|
|GD.AT||Athex Composite Share Price Index||750.05
||3.52 (0.47%)||Chart, More|
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
Jeff Borsato’s Hidden Truth
PDAC shout out
The Cara Team will be attending the PDAC, March 4th to 7th, 2012 at the Toronto Convention Center.
Athan and I will be there camera in hand to capture some moments and interviews with exhibitors.
Email or post any companies you are looking for coverage on.
We hope to arrange a meet up with Bill, time and date TBD.