Click chart to enlarge
We haven't posted in a while because there hasn't been much going on. Just holding POT, MOS, CF, AGU, MTL and a little SMN. Cramer, are we diversified?
If MTL spikes higher on Monday, we'll sell some of it (see chart above)
Of greater interest right now are the indexes themselves. Both the Dow and the S&P are just below their 200dma's. We think they will very likely break through them strongly very soon. Why? Mostly because the Nasdaq has already broken its 200dma, and the market's current momentum is to the upside. While we think the market will head higher over the short term, we are only 50% invested because the American economy is a complete disaster.
The market can shrug it off... until it can't. This is the same feeling we had last Fall, when the market was surging higher despite rampant foreclosures and ever growing concerns about the spread of the subprime crisis. The market did a great job of ignoring all of the economy's underlying problems until finally reality hit hard.
Same thing now, only it's oil and food prices that are weighing on the economy. Oil hit new highs today. The catalyst for the next drop in the market will likely be a combination of two things. First, an overbought market. It's our opinion that anything above the 200dma is a bubble, given the weakened state of consumer confidence and an unprecedented inflation rate. Second, earnings shortfalls. Expectations were lowered for the first half of 2008, but still anticipate a second half rebound. If that second half rebound doesn't happen, then many expectations will have to be revised lower.
We're looking to get the other 50% of our capital into the market, but are looking for "bottom of channel" prices. Patience is a virtue.
20 comments:
What is your opinion on VLO for a complicated energy play. It has been beaten down, since Valero is mostly a refiner. But at this point if oil keeps going up, it may do ok on crack margins. However, if oil ever goes down, it ought to go ballistic. More seriously, for a bottom to mid-channel equity, what about IFN?
Nice to see a "magic chart" again.
Some thoughts:
<<< The market has shrugged off negative news lately. That points to an enormous relative strength. The slow rise of the market does not fit to the general mood.
<<< Here in GER, we register a huge amount of scepticism - people think that "things are different this time", a lot of investors still expect a financial meltdown. They don't trust the banks and think that they hid further poisonous debt (credit cards, credit default swaps, super-seniors etc.).
<<< Ergo: Lots of money is waiting on the sidelines.
<<< Now, two smaller solars - CSIQ and SOLF - have thundered out of their side-movement. Looks like the first sign of new optimism to me.
<<< If there are no major disappointments (earnings, economics, wars), investors might believe, that we are back to 'business as usual': in a crisis, the Fed and the state intervene and flood the market with cheap money (actually, something DID change at Easter: The Fed basically executed Bear Stearns - accept the low JPM-offer or die - and opened the money gates with easier lending facilities - that was a strong signal that they will intervene).
<<< We should see a major wave of funds flowing into the market.
<<< I expect a sector rotation: out of ags and commodities into techs and solar. And yes, maybe into financials.
<<< Judging from charts, MER seems to crawl up on the 30 dma.
Happy to read your comments.
newfrankyboy
Snotwheel,
what do you think about ACH. Looks like it is approaching to the apex of sym triangle. Ready to break up or down very soon... If it happens it could be real hi flyer (according to its history).
I don't think the short term trend is up. I strongly believe this market is done going up here. The leaders AAPL, RIMM, GS , etc. are all showing weakness. My opinion is probably another 10-15 points on the SPX atmost on an oil induced pullback. But essentially 50d looks inevitable in the short term of 1-2 weeks.
--clarke
I'm guessing, Clarke, that you are correct. I sold over half my holdings in the rallies last week, so that I'm now partially in cash, waiting to see which way it goes. Some of my money is in the DOW, rather than the S&P or Nasdaq. I'm guessing that the DOW will drop less if the market drops, in part because some of its largest components are CVX and XOM. If oil pulls back CVX and XOM will suffer but the rest of the DOW will do well on a pullback in oil. Otherwise I'm in foreign and ADRs (LDK which has been good to me lately). If the market would mostly go sideways the rest of the year, that would suit me ok (buy the dips and sell rallies and try to make 2% a week; as Snot said, consistency is more important than a big win).
Newfrankyboy, I couldn't disagree with your "few thoughts" or the erroneous conclusions you drew from them more.
Everyone out there remember, two weeks ago newfrankyboy didn't even know how MA & V make their money nor did he understand why they are so strong. This alone shows how much due diligence and research he does ahead of time. None.
Also, just two short weeks ago newfrankyboy was asking around for advice on a charting system- and now he's holding out a chart!! (MER, which looks horrible by the way). It's unclear what he was saying about MER, other than for the last seven sessions it's climbed up it's 30dma. So??
Anyone following newfrankyboy's "few thoughts" with their money are going to get what they deserve. Clobbered. He may think he means well, but obviously he's an "enthusiastic beginner" and this should be kept in mind when reading his posts.
GLTA, Gerald
i agree that SOLF is a joke of a company, and anyone thinking about rotating out of ag and into fins at this point is going to be wearing an @sshat!
but everyone is allowed to express their opinion and hopefully make up their own minds.
and isn't that what makes the market so great? it takes two people on opposite sides to make a trade, so gerald can sell newfrankyboy his SOLF, CSIQ and MER short and we'll see who's left standing.
nothing against you newfrankyboy, but gerald will probably be the one left standing, at least at the end of round 1.
have fun people, it's a great day to be alive!!
Discussion this morning on CNBC of the consumer price index. General opinion on the show was that there is no government oonspiracy, but that the model needs adjusting to better reflect the contemporary situation (e.g., higher oil). For a brief explanation of the index,
http://en.wikipedia.org/wiki/Consumer_price_index
So Snot, they don't think the government is hiding the news from anyone or lying.
Gerald,
you are a true Mr.-know-it-all.
I guess, you were shorting the market lately - then you've been losing money since Easter.
I stand to my prediction: Huge money is waiting on the sidelines, we will see sector rotation. Short to mid-term; maybe a bubble, maybe a bear-market rally.
But there will be some relief: the fears about a financial desaster and/or high oil prices are exaggerated. Just for you as a beginner, who probably hasn't travelled much: Our economy in Europe has run smoothly during the last years - and for gasoline, we pay 1,50 Euro PER LITRE. So quit whining about high energy prices.
I don't mind asking questions, I like to learn. I still think that V and MA are way too strong - especially since consume will suffer. And yes, I haven't found any convining chart programs yet - they all suck. So what?!
To sum it up: I appreciate a contrarian view; you haven't given any view. What's your prediction? Gheez, I wish I was as smart as you are...
Let's not have any bickering on here children, this isn't a Yahoo message board.
I added the FXP this morning. Take a look team!
I've been tempted by FXP as well recently, but FXI has the chart that looks like it's going to push higher over the next few sessions.
First let me say that I really hope that this blog will not turn into what the LDK board became. A lot of us followed Snot here to get away from the childishness that went on over there. Everyone should be free to post what they think, but let's try not to directly insult other peoples stratagy or thinking. Read what others think and value or dismiss it. Don't get into back and forth arguments about it. No one wants that.
Secondly yes I too bought a bit of FXP today. Unfortunately I have been a bit of a bag holder on that for a long while now. I just could not believe the market was going to move up. Lesson learned. Now I am just taking little bites when we seem to be at a low....by the way that is not working :)
Looks like so far the score is:
Mr. Know It All - 1
Newfrankyboy - 0
As I told you before, listening to an enthusiastic beginner is, and always will be dangerous. He was (and still is) so wrong in so many ways it's hilarious!!
Just goes to show that when you start out with false premises and then draw erroneous conclusions you'll lose every time. Anyone that followed his "few thoughts" with their money got exactly what I said they'd get. Clobbered.
A prime example of his closed-mindedness are his persistent "thoughts" on MA & V that a weak consumer is BAD for them. LOL! He couldn't be more wrong.
Go ahead- short them both newfrankyboy. You'll be out of the game in short order.
PS- that MER chart was a really great example of the quality of your chart reading skills! LOLOLOLOLOL
Snot...I have about 1000 shares of MTL...do you think it is time to sell/hold?
Mr. Know-it-all - you are certainly a nerving little fly.
Here is why:
< The sector rotation has already begun - solars exploded, despite their "anemic" charts.
< sooner or later, other industries will follow. Financials might be interesting again pretty soon. That will depend on the diversification out of the US (US-banks might be leading the bank liberalisation in Russia or China) I would not count on the fact, that financials are dead - and I wasn't talking about days.
< I don't know, if the rally in AGS will last forever. We have an oligopoly with six major producers of potash or nitrogen fertilizer worldwide (POT, Intrepid Pot, MOS, K+S, Uralkali, etc.) - they are currently all gearing up output. Prices might fall.
< Why should I do some research on V and MA - I am not interested in these stocks. You think, people should look into these companies - just because you like them? Who do you think, you are?
< Instead on commenting on other peoples' opinions: What are your predictions? What do you recommend? Guess, you have no input. Maybe, you should get back to the LDK-board.
So, now I have better things to do than to play with you. And the other people here are certainly sick and tired of this stupid vendetta.
newfrankyboy
Oh newfrankyboy, you poor, sad, losing little retail "trader" (and I use the term 'trader' loosely). I really seemed to touch a nerve there, eh? Yet another tell that you're a newbie "trader"...getting emotional.
Once again you completely missed the point I was making about MA & V. I don't care if you don't do your own DD (which is obvious you don't) but then don't spout off like you know ANYTHING about them, or what will cause them to weaken (your US consumer comment).
Other than that, if you don't learn to open your mind and close your mouth you'll never progress past the enthusiastic beginner stage. You continue to make wrong assumptions and then draw false conclusions from them. Where's the "enormous underlying strength" that you were just touting on Monday? How's MER doing? And your solar picks REALLY foretold the "new optomism"!!
You were pretty much wrong 10 ways to Sunday. All I can do is laugh. LOLOLOLOLOLOL
reply to the last author (lololol):
i went thru this thread to learn more about mtl. also, i like to get some thoughts on the broader market.
newfrankyboy may be right or wrong - he offered some interesting facts and has an opinion. u dont.
he already asked you for your analysis. but except for arrogant sneering, you havent added anything at all.
thats not, what i want to read here. as squarepeg wrote: i really hope that this blog will not turn into what the ldk board became.
think about it, brad
Brad, couldn´t agree more with you. Wish we could put this guy lololol on ´ingore´.
Who knows, if financials will come back, as Franky said. Daring idea right now. Maybe, we´ll soon talk about a commodity and oil bubble. And run back into fins.
Btw: Even Snot is wrong sometimes. He called the exit at the top of Mechel´s channel. But he missed some huge profits in the solars.
Talking about Mechel: No idea, why she sold off. No news. Just a small investment of roundabout 1,7 $ in Russia. Probably profit taking. gl, Thomas
Brad, Thomas,
short reply to both of you.
MECHEL: Probably, there might just be some profit taking. But higher energy cost are becoming a negative factor for the steel producers. And there is talk that the Russian government will force cheap coal sales to end the perennial power outages in winter. Mechel also has huge - and cheap - coal supplies. Of course, these would be missing in the production process.
Apart from that, it could be that the market considers Mechel to be a peak story. On the one hand, there is still huge demand for tankers, the renovation of the Russian railway, pipelines and submersibles (Murmansk: Stockman gas field; NorthStream, SouthStream). On the other hand, the biggest wave of residential construction and the car boom has ended (the skies in Petersburg and Moscow are full of cranes; Russian cars have mostly disappeared from Russian streets). I would have to check, if the majority of sales is still domestic.
Plus, China is an issue: Steel production is much cheaper there.
RIFF RAFF: I completely agree with you about this guy Gerald. He sounds like he is on prozac. I guess, we will never read any of his godlike insights - it is easier to sit in the background and critizice. Just ignore him.
newfrankyboy
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