Bill Cara’s Blog for Oct 4, 2011
CTA Trading Desk Morning Report
[10:00am ET] Good morning. Geoff here.
A few interesting levels are being hit. The Russell 2000 index is trading roughly around 605. That is around the 50% retracement from the 2009 low which is close to the round number of 600 and close to where it found support last summer. We are oversold and approaching multiple support levels with negative sentiment. That would normally be a sign for me to be looking for buy signals in Cara 100 stocks.
However, the S&P 500 has broken below the August support, which is bearish. If we don’t get a throwover, meaning that the S&P 500 falls below support hitting sell stops then rallies back above the support, then the next target should be down around 1000 – 1010 area which would be an area to add longs.
Our hedge is up over 10%, so I may start taking some of it off, most definitely if we rally back above the support level. It depends on how the market is trading.
The sentiment for gold miners is as negative as it has been in years. The public hates the space! The interesting thing is that as the public and small speculators are not bullish gold, the COT data shows that the large players are at the least bearish in years. The miners will be the place to be soon enough.
The CME raised margin requirements on Copper and Platinum this morning and those metals got slammed from already oversold conditions. Freeport Mcmoran Copper is approaching last summer’s low of $28.36. The dividend will be around 3.5% and with all of the money they are making, don’t be surprised to see them increase the dividend to a level that, at the depressed levels that the stock is approaching, will be close to 4% yield – that is just speculation of course, but I think the chances are pretty good of that happening sometime in the future.
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|
||45.50 (2.43%)||Components, Chart, More|
||64.09 (3.06%)||Components, Chart, More|
||86.30 (2.95%)||Components, Chart, More|
||158.72 (2.95%)||Components, Chart, More|
||5.69 (2.06%)||Components, Chart, More|
|^OSEAX||OSE All Share||379.26
||4.79 (1.25%)||Components, Chart, More|
||7.03 (2.50%)||Components, Chart, More|
||67.30 (1.22%)||Components, Chart, More|
||113.33 (2.23%)||Components, Chart, More|
||24.90 (2.71%)||Chart, More|
||15.74 (1.87%)||Components, Chart, More|
||46.74 (3.48%)||Chart, More|
|GD.AT||Athex Composite Share Price Index||741.65
||37.64 (4.83%)||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
Reality and Fact’s: Natural Gas
Citizen Kane, a rap group from Toronto penned a hot track about 10 years ago called “Reality and facts” (You tube link embedded, foul language warning!). The song was a banger to me but most folks didn’t pay much attention, they were too busy looking for the next Jay Z and Biggie Smalls. Nah, the true fans go deep and dirty for their hip hop.
“Reality and Facts” wasn’t just a great song, it was a stroke of genius. “Reality” and “Facts” aren’t always one in the same simply because our “reality” is very often a myopic version of the “facts”. There would be no distinction between the concept of reality and of fact if we viewed them as equals.
Traders often face what appear to be facts but are in reality distortions. We repeat what we believe to be facts enough times that they become our reality. Losses and gains are reality realized. Which side was I on for the multi year bear market in Natural Gas? The wrong one because reality did not match what I thought were “facts”.
A 20 year Nat Gas chart is reality. The facts were realized some time later, as stories of declining reserves, no new stores of gas and shale were coming on line and a supposed “energy crisis” was to mark the coming decades. For Urban Europeans more than North Americans, Natural Gas was a bigger monthly expense as prices were already elevated in that continent, and daily cooking heating was gas, while car driving was much lower then North Americans.
As the price failed to keep its spike highs and drifted aimlessly downwards year after year, did reality set in that price, and only price is the reality we as traders must deal with? For all the failed predictions, price manipulations, bluster and false prophets, gas remains around the same price it was 10 years ago. That’s the same price, not adjusted for inflation; Natural Gas has gone down in price 10 years on while we hear nothing but talk of diminishing supplies, dwindling reserves and skyrocketing demand.
As coal prices continue to collapse, we face the reality of what we once believed to be facts about China’s growth and along with it the demand for coal. These facts as presented are not facts at all, but speculations by men in fine suits, paid for by people like us who believe them, and exalt their opinions.
I agree with Bill’s idea that every fund manager should have their 5 years records posted in captions next to their faces while they issue opinions disguised as facts. As I have posted before, Sprott and company have yet to make a profit on their flagship IPO some 3 years after issuing and yet their reports and statements about the gold market are met with giddy enthusiasm by traders and observers alike.
People can and will be wrong. This is not an indictment against them as failure is the foundation of eventual success. How one handles failure is what builds character. My hope is that future financial media better focus their efforts not on soothsayers or gurus but on real traders, both long and short term because that represents us, the public. Bill faces the music each and every day with short, medium and long term predictions. This site has been constructed deliberately to unmask the kinds of obfuscation that are far too common elsewhere in the media. This community has flourished, and I suspect more would be eager to hear what comes out of this collective discourse each day.
It’s been about 4 years for me and I still read what you guys have to say every day. We are in the midst of a possible bear market, maybe even a full scale commodity collapse. But I am here posting away my thoughts, they are neither reality nor facts.
Don’t discount the truth that Rap music contains, for the older folks of different taste it might just be noise, but one man’s junk is another man’s treasure. Dig deep for reality, the facts are there.