Bill Cara’s Blog for Jan 8, 2013

CTA Trading Desk Morning Report

[7:00am ET] Good morning.

Last evening in Miami the American college football championship game was played. The #2 ranked team Alabama beat the #1 ranked team Notre Dame for their third national championship in four years. The score ended 42-14. Alabama was leading 35-0 before they let up late in the third quarter.

Let this be a lesson to you all.

Before the game started last evening, Pat asked me who I thought was going to win. My reply was unequivocal: “Not the Pope, nor all the priests and nuns in America, nor Rudy, will be able to help poor Notre Dame. They are going to get smashed.”

Alabama is a winning machine. When I have the time for TV, I watch, as some of you may know, only two teams: Alabama and LSU, and a year ago those two played for the national championship. I’m keen to see the best.

But America loves its stories. I think you know what I mean so I’ll leave it there, except to say that Alabama this year crushed a couple teams that would have beaten Notre Dame by 10 points or more. The latter should not have been ranked #1, but the storyline played well in the dreams of many.

For those who bet money on such things, this game was the biggest set-up of the year.

Now, having said all that, I will be doing all I can to get Caitlin enrolled at Notre Dame in 15 years. I want for her the best education possible.

Have a great day.


Good morning, Geoff here.

The stock market appears to be working off its short-term overbought condition by consolidating at a high level.

Yesterday, I posted a number of charts but I’d like to review a particular one this morning – the Weekly Techie.

I first posted the target chart on November 26th for the week ending November 23rd which happened to be Black Friday – the day after Thanksgiving and the traditional start of the Christmas shopping season. Here is the original chart along with the Wall Street Allocation chart that I posted on November 23rd:

Weekly Techie:

ggimage06_112612.png

Wall Street Allocation (courtesy of sentimentrader.com):

ggimage11_010813.gif

At that time, the Four Pillars Solution was on BUY and I was thinking that Washington would get its act together before the end of the year so it was time to fade the fear driven news cycle and buy stocks. As you can see, Wall Street Strategists had the lowest allocation to stocks in the 15 years shown, so it made sense that the extremely low allocation that Wall Street Strategists had at the time would grow, pushing stocks to either the recent highs or the top of the triangle by mid January.

We are approaching mid January so here is the updated chart:

ggimage10_010813.png

This is where it gets tricky. The November low was much easier to trade because we bought stocks and simply set sell-stops at clearly defined levels which fortunately were not needed. Now, the Weekly Techie chart is approaching a sell area but Time Cycles are saying that stocks could run much higher so we have to be aware of that. Tops are more difficult to trade than bottoms because they end up being a process not an event. Shorts start to build and then get squeezed which pulls the market higher and if Wall Street Strategists start to recommend higher levels of stocks, the market can move much higher.

What we may see is; the market moves to new highs, talking heads talk about it, retail traders buy more stocks, Wall Street Strategists recommend a higher stock allocation and we start to hear the statement; “the market can stay irrational longer than you can stay solvent” as shorts complain about the fundamentals not supporting the market.

So, as we have been saying for weeks; global QE will drive risk assets higher so stay long and buy the dips as long as the trend remains up. But, don’t get too caught up thinking that the run will never end because eventually it will.

I will leave you with one last item from sentimentrader.com. Look at how many sectors are too bullish right now. All the sectors may get to that point, even Gold Stocks which haven’t caught on yet but that should make you cautious.

ggimage01_010813.png

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 2,482.78 6:43AM EST Down 1.23 (0.05%) Components, Chart, More
^BFX BEL-20 2,498.30 Jan 7 Down 13.70 (0.55%) Components, Chart, More
^FCHI CAC 40 3,729.31 6:58AM EST Up 24.67 (0.67%) Components, Chart, More
^GDAXI DAX 7,748.82 6:44AM EST Up 16.16 (0.21%) Components, Chart, More
AEX.AS AEX General 351.30 6:44AM EST Up 0.06 (0.02%) Components, Chart, More
^OSEAX OSE All Share 503.75 6:43AM EST Up 1.93 (0.38%) Components, Chart, More
^OMXSPI Stockholm General 352.32 6:59AM EST Up 0.53 (0.15%) Components, Chart, More
^SSMI Swiss Market 7,073.43 6:00AM EST Up 24.13 (0.34%) Components, Chart, More
^FTSE FTSE 100 6,079.08 6:44AM EST Up 14.50 (0.24%) Components, Chart, More
FPXAA.PR PX Index 1,058.69 6:57AM EST Up 4.09 (0.39%) Chart, More
MICEXINDEXCF.ME MICEX Index 1,517.32 7:58AM EST Up 39.45 (2.67%) Chart, More
GD.AT Athex Composite Share Price Index 984.23 6:00AM EST Up 14.80 (1.53%) 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.

To learn how to trade stocks using the proven trading system discussed in today’s technical trading commentary, check out our comprehensive online trading course. On that page, you can view an entire, 45-minute class module on “Buy Setups,” which gives you an idea of the quality of the material. You won’t be disappointed.


Point and Figure on Canada


OptionOracle


Harp’s Roadmap


Cara on the Metalminers


Cara on the International Markets


CTA Trading Desk Mid-Day Report


CTA Trading Desk Post-Close Report


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  1. 7:30 AM ET NFIB Small Business Optimism Index 7:45 AM ET... [#116571]
    By: davefairtex (5215 comments) Go to top ↑
    • 7:30 AM ET NFIB Small Business Optimism Index
    • 7:45 AM ET ICSC-Goldman Store Sales
    • 8:55 AM ET Redbook
    • 11:30 AM ET 4-Week Bill Auction
    • 11:30 AM ET 52-Week Bill Auction
    • 1:00 PM ET 3-Yr Note Auction
    • 3:00 PM ET Consumer Credit
  2. 2 in Accumulation Zone 2 in Buy alert 3 in Distribution... [#116572]
    By: davefairtex (5215 comments) Go to top ↑
    • 2 in Accumulation Zone
    • 2 in Buy alert
    • 3 in Distribution Zone
    • 4 in Sell alert

    Accumulation Zone (4%): Monthly 4, Weekly 5, Daily 4
    Distribution Zone (17%): Monthly 12, Weekly 22, Daily 19

  3. Good morning. 15:00 Consumer Credit ------ BA - Boeing... [#116573]
    By: Bull Hunter (3552 comments) Go to top ↑

    Good morning.

    15:00 Consumer Credit

    ——

    BA – Boeing downgraded to Hold from Buy at BB&T.

    BBBY – PT Lifted from $72 to $74 @ Canaccord. Buy

    CELG – PT Lifted from $89 to $99 @ WallachBeth. Buy

    CELG – Celgene upgraded to Outperform from Sector Perform at RBC Capital citing the company’s long-term growth guidance and upcoming pipeline catalysts. RBC raised its price target for shares to $100 from $90. Note Celgene shares were also upgraded this morning at Piper Jaffray.

    CELG – Celgene upgraded to Overweight from Neutral at Piper Jaffray citing positive data from the Apremilast Phase III psoriasis studies and the company’s new 2017 guidance which implies 25% annual earnings growth. The firm raised its price target for shares to $111 from $86.

    EMC – EMC downgraded to Market Perform from Outperform at William Blair citing reduced confidence in the company’s ability to meet 2013 consensus estimates and storage industry growth headwinds.

    ERJ – Embraer downgraded to Underweight from Neutral at JPMorgan citing expectations for a decline in commercial deliveries. The firm lowered its price target for shares to $25 from $31.

    JOY – Joy Global upgraded to Overweight from Neutral at Piper Jaffray on expectations coal demand in China will see a revival. Piper said it has increased confidence that FY13 will mark a trough in orders after meeting with Joy and two other companies in China’s coal industry. The firm raised its price target for shares to $84 from $63.

    ——

    “Justice without force is powerless; force without justice is tyrannical” ~ Blaise Pascal

  4. Great story about Bear Bryant (truncated): The newly... [#116574]
    By: Ron Sen (975 comments) Go to top ↑

    Great story about Bear Bryant (truncated):

    The newly minted Alabama coach went to the boondocks to recruit a player…stopping for lunch in a small restaurant. His was the only white face in the place. He introduced himself, asked to buy lunch and explained his purpose. The owner replied that he only had some soul food items and the coach answered that he was raised on that. The owner also asked if he had any pictures or Alabama memorabilia and the coach said that he didn’t but he would send it. Bryant went to see the player and wasn’t interested.

    Years later, he returned to the same area…and went to the same restaurant…which was much larger and also had the Alabama memorabilia he had sent. He had seen the player, who had told him he was going to Auburn. Bryant explained pleasantries with the owner, who remembered his kindness.

    Later that night, Bryant got a call from the recruit, who sheepishly asked if Alabama still wanted him. Bryant said sure and ask what changed his mind. He answered that the restaurant owner was his grandfather, who told him that he was going to play for Coach Bryant, a man of his word.

    Bryant told the story to teach his assistants that it doesn’t cost anything to be nice to people…and in the long run, that’s how to run your business.

    • Thanks Ron Sen, that is a great story. I strive to run my... [#116578]
      By: Bull Hunter (3552 comments) Go to top ↑

      Thanks Ron Sen, that is a great story. I strive to run my business the same way.

    • Great story and may indeed be basically true. However, Bear... [#116590]
      By: J D Wingert (27 comments) Go to top ↑

      Great story and may indeed be basically true. However, Bear went to Alabama in 1958 and didn’t recruit his first black palyer untill 1971- hardly a “the newly minted Alabama coach”. Sam Cunningham (USC running back) did much to integrate Alabama football in 1970. I have no idea if Bear was a racist or not but I damn well know that there was no way he could have had a black player at Alabama in the late ’50s even if he’d wanted.

      Man, did Alabama show the Fighting Irish the way to play the game – awsome!!!

      • Yes, J D, you do know your NCAA football history. That... [#116591]
        By: Ynot (234 comments) Go to top ↑

        Yes, J D, you do know your NCAA football history. That USC-Alabama game began the de-segregation of college football in the SEC. The year before, two undefeated teams, #1 ranked Texas and # 2 ranked Arkansas, played the so-called “Game of the Century” in to end the 1969 season. Both teams had no african-american players on the varsity squads, and was also nicknamed “Dixie’s last stand”. Some interesting politicos were in attendance (search the net for the game). LSU and Ole Miss were the last two schools in the SEC to open their football programs to blacks in 1972.

  5. ... [#116575]
    By: Les (7233 comments) Go to top ↑
  6. ABV - AmBev initiated with a Neutral at ISI Group. Target... [#116576]
    By: Bull Hunter (3552 comments) Go to top ↑

    ABV – AmBev initiated with a Neutral at ISI Group. Target $48

    CELG – PT Lifted from $88 to $95 @ Argus. Buy

    NE – Noble Corp. downgraded to Market Perform from Outperform at Raymond James due to near-term risk to Street estimates, difficulties with its jackup newbuild program, and valuation.

  7. TS - Barclays takes TS to Equal Weight from... [#116579]
    By: Bull Hunter (3552 comments) Go to top ↑

    TS – Barclays takes TS to Equal Weight from Overweight.

    VALE – Vale downgraded to Neutral from Overweight at HSBC based on valuation and lack of near-term catalysts.

  8. Bought some ABX feb32 calls for $2.09 this am, it's been... [#116581]
    By: ea32da32 (2362 comments) Go to top ↑

    Bought some ABX feb32 calls for $2.09 this am, it’s been consolidating here for a bit – just throwing it out there…
    regards,
    Earl

  9. QCOM - estimates, price target were raised at Credit... [#116582]
    By: Bull Hunter (3552 comments) Go to top ↑

    QCOM – estimates, price target were raised at Credit Suisse. Shares are now seen reaching $75. Estimates were also increased, as the company can expand its margins. Outperform rating.

    TTM – Tata Motors upgraded to Outperform from Neutral at Credit Suisse.

  10. Started a few calls in AUQ and UNG, UNG at support area... [#116583]
    By: ea32da32 (2362 comments) Go to top ↑

    Started a few calls in AUQ and UNG,

    UNG at support area, if it fails then the bottom will probably drop out.

  11. That was a pretty significant divergence this morning with... [#116584]
    By: BillySundance (1355 comments) Go to top ↑

    That was a pretty significant divergence this morning with miners getting whacked, dragged down – I believe – by the Goldcorp forward production estimates, which seemed to have been painted as disappointing.

    Meanwhile, gold and silver prices held positive during the down swoon and now miners are playing catch up to the upside. This looks like a nice little mini-capitulation in miners.

    Will be interesting to see if we get any follow through this afternoon.

  12. http://goldenreignresources.com/s/Home.asp Golden Reign... [#116585]
    By: Johnny (1181 comments) Go to top ↑

    http://goldenreignresources.com/s/Home.asp
    Golden Reign (US Pink sheet) took a -0.0892 hit, -14.96%, presently 0.507 on release of its NI 43-101. I suspect investors expected more tonnage and a measured category, but only indicated and inferred categories are included, with more exploration proposed. A disappointing stock price drop but still a promising junior imho.

  13. Wow Kaimu! I wrote previously about some US domestic long... [#116587]
    By: worthcap (152 comments) Go to top ↑

    Wow Kaimu!
    I wrote previously about some US domestic long life oil & gas royalty trust http://www.mcdep.com/rtweek121213.pdf; actually McDep writes, I read and think. He is on to something with some of these IMO. We are long four (CRT, MTR, PBT, SJT). The group has declined over the past 12 months and have high nat gas & oil royalty distributions – yields range from 5.6 (SJT) to high 9′s for the others. PBT is primarily oil, rest favor ng. All are trading at deep discount under McDep analysis to NAV PV, partly due to the McD assumptions ($100 oil doesn’t seem remote, $6 ng fut is a stretch, and high discount value relative to zero rates). Charts are interesting, breakout, retest, volume light on the pullbacks. Have to watch yourself on these two – MTR and CRT are thin. These companies have no debt, the operating manager is COP for PBT & SJT, XOM for CRT, MTR is the old TB Pickens Mesa Pet which he spun off to a royalty trust.
    FD – CRT, MTR, PBT, SJT; about 16% portfolio weight

  14. Booked gains, and waiting for break out of $29.8x for... [#116588]
    By: NYUGrad (4750 comments) Go to top ↑

    Booked gains, and waiting for break out of $29.8x for re-entry. traveling so I didnt fade it.

  15. Stephen, Your Sound Money piece today is extraordinary. I... [#116592]
    By: anewbie (21 comments) Go to top ↑

    Stephen,

    Your Sound Money piece today is extraordinary. I learned a lot from it.
    Thanks for sharing your work with us.

  16. The Securities Arbitration Law Firm of Klayman & Toskes... [#116593]
    By: bigwad1 (768 comments) Go to top ↑

    The Securities Arbitration Law Firm of Klayman & Toskes Investigates Claims On Behalf of Citigroup Shareholders Who Maintained Large Concentrated Positions and Are Eligible to Participate In Settled Class Action Against Citigroup

    3:34 PM ET 1/8/13 | BusinessWire

    The Securities Arbitration Law Firm of Klayman & Toskes, P.A. (“K&T”) (http://www.nasd-law.com), representing numerous aggrieved investors throughout the nation, advises all Citigroup (NYSE: C) shareholders who are class members of the settled class action against Citigroup, In Re Citigroup, Inc. Securities Litigation, Case No. 07 Civ. 9901, that they should explore all of their legal options, including filing a securities arbitration claim against their full service brokerage firm. Class members who sustained substantial losses as a result of holding a large concentrated position in Citigroup stock with a full service brokerage firm, with the exception of Citigroup and its related parties, should consider whether they should file an individual securities arbitration claim in addition to participating in the class action. Investors who held concentrated positions in Citigroup stock may be able to recover investment losses through the arbitration forum established by the Financial Industry Regulatory Authority (“FINRA”). FINRA’s Arbitration Department is where investors, both retail and institutional, go to seek redress as a result of sales practice violations committed by their brokerage firm, including claims of over-concentration, misrepresentation and omission, unsuitable recommendations and failure to supervise.

    Since 2000, K&T has pioneered the representation of High Net Worth (“HNW”) and Ultra-HNW clients who sustained investment losses as a result of holding concentrated positions in a single security or sector, in a full-service brokerage account. The clients we represented and continue to represent include founders of public companies and key employees from virtually every industry who received large grants of stock, Rule 144 restricted stock and stock options. The claims focus on the mismanagement of the clients’ portfolios given the fact that there were risk management strategies that would have protected the value of the concentrated portfolio. Such risk management strategies include stop loss and limit orders, protective puts and collars. Stop loss orders, limit orders and protective puts provide an account with downside protection and an exit strategy should the stock decline in value. A hedge strategy, known as a “zero cost” collar, would have created a range of value that the portfolio would have maintained irrespective of the fluctuation and direction of the underlining stock price. The failure to use risk management strategies as well as the failure to “hedge” the value of a concentrated portfolio directly exposes an investor’s concentrated position to the fluctuations in the volatile securities markets.

    Citigroup agreed to pay $590 million to settle the class action lawsuit which alleged that shareholders had been misled about the bank’s exposure to subprime mortgage debt just before the financial crisis.

    If you wish to discuss this announcement or sustained losses of $750,000 or more as a result of holding a large concentrated position in Citigroup stock, please contact Steven D. Toskes, Esquire or Jahan K. Manasseh, Esquire of Klayman & Toskes, P.A., at 888-997-9956, or visit us on the web at http://www.nasd-law.com

    SOURCE: Klayman & Toskes, P.A.

    • Hi Big W - Not would be right, but recall its just another... [#116594]
      By: Luggie (639 comments) Go to top ↑

      Hi Big W – Not would be right, but recall its just another arm of the federal reserve. Problem is these meaningless actions proliferate under the progressive machine not to correct a right, but to garner profit for the primary litigants and divert attention from the underlying problems so aptly pointed out here by the host, Kaimu and many others. Happy Trading

  17. Hi All - Caught a nice write up about Charles Jeannes at... [#116595]
    By: Luggie (639 comments) Go to top ↑

    Hi All – Caught a nice write up about Charles Jeannes at Goldcorp redefining how the company will expand reporting of costs in the future. Something about an $1100/ounce “all in sustaining cash cost” vs. the industry standard definition of $645/ounce “cash costs” in Goldcorp’s case. We need some more of this clarity across governments, corporations etc. No doubt he will be pilloried. Happy Trading

  18. ALOHA!! AIG may join bailout lawsuit against U.S... [#116596]
    By: kaimu (3289 comments) Go to top ↑

    ALOHA!!

    AIG may join bailout lawsuit against U.S. government

    AIG COMMERCIALS

    AIG BEFORE BAILOUT
    LINK: http://www.youtube.com/watch?v=9VvGW98D3XA

    AIG AFTER BAILOUT
    LINK: http://www.youtube.com/watch?v=GiW9n6C_2Fo

    THANK YOU AIG
    LINK: http://www.youtube.com/watch?v=xJREcukIJJo

    Greenberg, whose Starr International owned 12 percent of AIG before its near-collapse, has accused the New York Fed of using the rescue to bail out Wall Street banks at the expense of AIG shareholders. He has also called the NY Fed a “loan shark” for charging the “exorbitant” interest of 14.5 percent on its initial loan to AIG.

    One question …
    Who forced AIG into derivatives?