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Our Performance
June 1, 2008: 32.25
June 1, 2012: 36.25
Our performance since inception: + 12.40%
Performance of S&P since inception: - 8.71%
June 1, 2012: 36.25
Our performance since inception: + 12.40%
Performance of S&P since inception: - 8.71%
Blog Archive
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2008
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October
(26)
- This rally has legs?
- Maintaining Sanity
- SPY
- EEV and FXP
- DDM's triangle
- Next Week
- DDM descending triangle?
- DDM - Channel intact?
- Descending Triangles
- DDM Breakout
- DDM 2 minute chart
- MOS - Headed Lower?
- Back In The Black
- The Channel Holds
- DDM's next move?
- FXI and FXP
- The Dow Rally
- Weekly Dow Chart
- MTL - Nostalgia
- The Crash of '08
- The Dow... again
- GE
- The Dow's Channel
- MOS - the aftermath
- Mosaic headed to $0
- LDK Solar
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October
(26)
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Information contained in this blog is not intended as investment advice. Posts do not constitute an endorsement, recommendation, or sponsorship of any company, security, or fund. No representation or warranty, expressed or implied is made as to their accuracy, completeness or correctness.
Author may have open positions in the securities and funds mentioned.
Author may have open positions in the securities and funds mentioned.
54 comments:
Is this the capitulation people were looking for?
I think this goes beyond capitulation. Aye Carumba!
Depending on who you listen to, this isn't capitulation because it isn't panic selling. It's the absence of buying causing this. No one wants to own stock because everything is going out of business. It's a complete loss of faith in the entire system. Sounds like a bottom, doesn't it? Of course we don't know where the bottom is, but we're confident that we're past the point of no return. That's the point in a journey where it's easier to continue to the end than it is to turn around and go back. If you're in for the long term, you may as well stay in at this point. Unless you're invested in an individual company, in which case you should sell because whatever it is, it's going out of business:)
I really don't know about this market anymore. All chart and techninal is fall of the cliff. It come to the point I think the market will go to ZERO at some point...=:(. It only take another 10 trading day!
I called for DDM 35 or lower by DEC. couple of days ago. But this is brutal death. Here my another call for DOW trade from 11/03/08 to 12/25/08. will be between 6000-6500. Could go lower. MARK MY WORD HERE!
Note: I am staying sideline. NO short or long. But I will watch to jump in for short term bounce only.
I am looking to nip at DDM sub 30's tomorrow AM...
why don't you wait 'till DOW hit 6500 then DDM is around 15 then a good buy!
Snot,
What do you think of ABK? You had said in the past it should be in the teens.
Individual companies make up the Dow -- only 30 of them. A lot of crappy financials and other cyclical industrials as well. So much yes, it's an index, but not a very big one, and it's certainly not moving towards its moving average like moths to light. The only thing you need to know now is this -- the top to bottom in both the 1987 and 2000 bear markets was a 50% decrease. The fundamentals of this bear is much worse than either, so it's safe to say that Dow 7000 is a given. And the way information is now distributed, I'd say that it's happening sooner rather than later.
I wish I had memmories from 1987...If it was like that.. If so..then we all know that in the end of the tunel we will have sometime a light.. Or.. if it is not.. in the end of the tunel we will have a new world order as we have never seen before..A new system? State capitalism was the soviet model, capital statism is the new one?
just a thought
Griego
A second though and take me as a lunatic..after that financial and economical mess, that I belive it was on purpose done, with a world in fear and in panic, when all together the goverments, who planted the seed of every common person financial destraction (get loans.. get loans.. buy and buy and buy, fill your life with huge credit obligations..).. that "globalization" will ask "almost" by itself for a global goverment. Since financial values now stand over political values and principles..That decade.. the main question was.. will you give up some of your liberties.. for a safer life (the war against terrorism) the comming decade will be .. give your liberties so you will not starve...
Look at a chart for DOW 1929. This is repeat history. Mark my word here. Do not buy until S&P get to support level of 780 which is about 50% down and DOW get to 6700 but 5000 looks likely this time. This market is dead. MS will will not be here and also be in history. I am staying on sideline. This time, there are a lot of people got hurt big time more than the crash of 2000 and 1987. Multiple compression.
LOVING all this doom and gloom!! I'll keep adding SSO all the way down to zero!
Capitulate you pussies and sellsellsell!!!!
If you believe that the economy has contracted back to 1991-1994 levels, then the S&P should fall to about 400. I know the housing and auto market has contracted that far, but oil consumption is still much higher, and probably will remain so.
This actually looks like a repeat of the 1973-74 bear market, where the market lost almost exactly 50% before putting in a bottom. There was no crash in that bear run.
Oh Wow, really a 1,000+ drop.
This is the bottom. You know why? Because I am out of money and every day it drops lower will be a new margin call.....Please tell me this is the bottom.
Not yet! Take profit when you can but this market will be trading side way for at least 2 year
We are nearly there, probably around round hang in there. Clarke says on his blog, we could be very close.
I hope he is right. what is Clarke's blog address?
Clarke's blog address is:
http://maybeitsclarke.blogspot.com
C'mon, don't stop selling...I still wanna add more SSO @22 to my already massive position!!
Sellsellsell into the close you wussies!!!
Now Rick Santelli of CNBC is reporting that the traders he's been talking to are worried about being short over the weekend. Interesting.
Clarke will you marry me?
I just sold about 70% of my Citi Short position (longterm puts) which i have been holding for 6 months now. I am very tempted to hold on but i think the 3 days of the long weekend are just too much time for the govt to take sme additional action and cause a small bounce in the market. No doubt it will be temporary, but i think its safe to say that there will be a bounce of some sort after the week we have had..
I did keep some but i have hedged it with a very small $15 call for this month which should gain a lot faster than a $15 put for January and balance out the loss if it does bounce.
Sniper
Sniper
We'll have to read all of these comments later... just been a busy day around here. Bought more DDM at 30.70, tried to buy lower but Ameritrade was not working:(
Looks like a bottom was put in today, but who really knows anymore. The market is down roughly 50% or so from its 14000+ high, and we think that's enough damage to retirement accounts everywhere. At some point, we'll simultaneously sell some of our DDM and trade it in for SSO, so we're more diversified. Right now, however, it doesn't matter which index you're in, they're trading in tandem. The market has fallen so much, that you can actually reduce your break even price in half by investing about 60% of the capital it took to start the position. For every $5000 put into DDM last week, you can cut your average price in half for only $3000 more. For an additional investment of $5,000, you're break even price should come down into the 30's.
Ya, TD Ameritrade really froze up this morning for about the first 8-9 minutes. My buy for SSO @ 25.50 went in, but they said everything below 25.07 was "busted" so they didn't honor the 24.50 buy. Waaa! I bet the 28.05 low on DDM was false as well.
I think next week is going to be a lot of fun for those of us that have been buying allllllll the sickening way down this week!
Executed 10 buys of SSO this week for an average price of 32.62 so I can't complain too much, but I sure wish the selloff would've lasted longer than the first few minutes of this morning. I have buys in all the way down to 19.50 and I was hoping to ride it down to insane levels. Although with the VIX hitting 76.94 maybe we got there but are just too numb and battered to realize it yet.
Goddess bless the US Government for propping up the markets. I've been sitting on 88% cash for over a year now and it feels good to finally have a bunch of that put to good use.
Couldn't have been nearly as patient without your blog Snot so thanks!
My first three Guinness' hoisted tonight will be to toast "The Wheel", Hammerin' Hank and Uncle Ben!!
Cheers and here's looking forward to next week!
Well on a positive side look at the Gas prices. It feels good to see the prices under $3. Hopefully they stay this way. And the Government knows that. I believe we haven't see a bottom yet, the economy needs more time to recover. It will be too naive to think that a bottom has been reached and the only way is up.
Just my two cents.
I got out at 33.80 after I averaged down to 32.60.
It will be an interesting weekend tho.
Good luck to all
Not for long dude, oil is going to sky rocket.
Of course this thing will take time, and of course the only way isn't up. But at the very least we are seeing the setup of one hell of an oversold bounce, and I for one am looking forward to the ride.
Sure, I agree with you, everybody thinks/hopes for that oversold bounce but don't forget everybody knows that the bounce won't last.I believe that's why that bounce is not happening. Everybody knows that things are going to get worse. Its like buying a house for very very cheap ahead of a tornado. P/Es don't mean nothing right now. Look at DRYS.
And regarding the OIL comment, good luck with that. At least, in the auto industry, where I work, I know for sure that the future is not oil. Open your eyes and look in perspective, Alternative energy is the answer. The Oil long rally is over. It didn't do any good to this economy and country except the pursue of alternative energy. This economy can not handle more than $60 barrels.
haha, watch and learn oil. You have only heard demand destruction. Have you heard supply shut down?
Shutdown due to credit freeze?
That won't happen. Why? Cuz that would lead to world war 3.
$60-80 barrel would make everybody happy for a while. Greed has never brought any good.
Reuters
10-October-2008
(Reuters) - NEW YORK, Oct 10 - A measure of future economic growth in the United States fell to a five-year low and its annualized growth rate fell to a 33-year low, hitting severe recession levels, a research group said on Friday.
The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index fell to 120.6 in the week to Oct. 3, down from 122.2 in the previous period. That's the lowest level since April 18, 2003, when it stood at 120.3.
Its annualized growth rate slid from minus 13.3 percent to negative 14.7 percent, its lowest since Feb. 14, 1975, when it was minus 15.8 percent, according to ECRI data.
"With weekly leading index growth plummeting to a new 33-year low, the U.S. recession is set to rapidly worsen," said Lakshman Achuthan, managing director at ECRI.
The index level ticked lower due to higher interest rates weaker stock prices and money supply growth, partly offset by lower jobless claims.
Thanks to everyone for participating on this blog, helping make it far more interesting than we ever could. Reading your comments helps us see how others view the current state of the market, and we appreciate that tremendously.
Sniper- very nice trade on Citi. We'd have been with you if we were allowed to short. Our short picks a few months back were C, MER, FRE and FNM. Most recently it's been GM, but now it's below $5, so there's no more shorting that.
We have a more optimistic view than most about the economy and the market. If you think about it, the market has just effectively priced in absolutely horrific earnings across the board. What if they aren't all that bad? What if this meltdown is more of a Wall Street thing than a Main Street thing? Activity may be a little slower where we live, but it sure doesn't feel like the end of the world as the market would have you believe.
We're looking for a recovery after the elections. Everyone is too close to the market right now to take a step back and see the forest for the trees. Is the economy really THAT bad? We simply don't think it is. We don't know anyone that's lost their house, or anyone who can't at least make the minimum payment on their credit card. Wall Street is in a shambles, granted. The poor souls in finance are hurting, but the rest of us are just going on about our lives. Fund managers think that just because Merrill Lynch didn't make it, then surely Macy's can't either. We just don't see the logic in that.
We continue to focus on adding to DDM and GE on the way down. GE is actually holding up very well considering. Kudos to Warren, we don't know enough about intrinsic value to have picked a stock that wouldn't be plunging now.
The theory with DDM is this:
The cost of averaging down is getting a lot cheaper. If it were to go to $20, which we can't imagine happening, you could bring your break even price down to $30 for a fairly small amount of capital relative to what it took to start the position. The lower it ticks, the cheaper it becomes to cut your break even price in half. At some point, the indexes will trade higher in the future. Probably much, much sooner than anyone is predicting right now.
Everything happens in a compressed time frame today. The 3 year bear markets have become 1 week:)
Why wouldn't the next bull start sooner, run up faster and crash faster, too? Dow 12,000 in November? Wouldn't suprise us in the least. If you are buying into an index now, and averaging down as we are, you must stay in and remain committed to adding all the way down. That's the only way this works. Remember, these index ETF's are not individual stocks subject to bankruptcy. They will come back. If they don't, they'll be the least of your problems at that point. So it's a "no lose" proposition. Just don't panic.
Noticed that the depression crash in the 20s had a huge drop like this than go sideways or slowly downward for many years. Never a V shape like what the CNBC guys are promoting.
I also don't know anyone loosing their houses or filing for bankruptcy. But isn't the foreclosure rate at a historical high? Unemployment doesn't seem outrageously high right now but I don't know the current number. Oil is down now below 80. And global cut of interest rate is better than just the US cutting.
what oil bubble are you talking about? Bubbles are when you have ratio skews, oil has fallen as much as any thing else, take stocks or whatever in the last month or so.
why is costly oil being equated to greed? I just think the credit squeeze is going to kill the oil producers who made capex plans in the last 2-3 years, when oil was rising. I will not be surprised if quite a few of these oil cos go bankrupt too. This would be bullish for oil
hk22 ith regards to alternative energy, if oil is at 50$ you can kiss alternative energy and obama's plan goodbye.
Hey Snot,
here is an interesting article regarding GE on CNN money.
The link is as follow:
http://money.cnn.com/2008/10/09/news/companies/colvin_ge.fortune/index.htm?postversion=2008101015
besides that, any thoughts regarding the G7 and G20 meetings that are going on this weekend, and how do you see the market reacting Monday.
Also I found this interesting chart analysis dated Apr 19, 2007 and titled:
End of the Financial Markets Boom – Dow Jones Headed for 3000
here si the link:
http://www.marketoracle.co.uk/Article806.html
And last but not least:
Dated October 2006:
http://www.ltadvisors.net/Info/CreditExtremeEmotion.htm
Its worth quoting:
"Reports from Fannie Mae state that over $1 trillion dollars in mortgages will reset at higher rates in 2007. Many U.S. homeowners, whose savings rate is negative, will not be able to withstand this financial pressure. As they default, the third wave and credit crunch will begin."
Oct 2006.
Fannie knew their fate all along.
hk22, Thanks for the interesting links.
The GE article makes no sense in that they're reporting gloom and doom that never happened. The article is from Sept 30 when GE was trading at around $25 (when Buffett bought in). Today, the stock is at $21.50. When talking about the dramatic "plunge" in GE's share price, the article neglects to mention that over this period of time, the Dow lost over 2,300 points or 22%. When viewed in the proper context, GE actually did very well. The author must have forgotten about the broad market's action when spinning this particular piece. Interesting comments about GE Capital, though.
The chart of the Dow adjusted for inflation is interesting, but it's very hard to believe we're headed for 3,000. It could happen, but American life would be irrevocably changed. Name brands that are part of the fabric of Americana would no longer exist.
"Drove my Toyota to the levee, but the levee was dry, and them good ol' boys were drinking whiskey and rye..."
There's just something wrong with that. Let's hope this credit crisis doesn't come to that.
We had the initial crash and the bounce. Guess we're in the final downdraft if this is going to be anything like 1929. Charts repeat themselves primarily because human psychology (the psychology of greed and fear) is consistent over time. So there would be no suprise if the chart of this crash mimics the chart of the crash of the Great Depression. The only difference, though, should be the time frame. Everything today happens in lightspeed relative to anything that took place in 1929, unless of course it involves beauracracy. Today, a company can go through an entire business cycle in half the time. We must admit, though, that this crash makes it seem like the "party is over". The rebound will most likely be like the rebound following the internet stock bubble's crash. Many people will be slow to dip their toes back into the water. Many will never play in the market again, living out the rest of their lives thinking it's the most corrupt part of capitalism. It's certainly understandable that some people feel this way.
Good point regarding the time frame.
DOW at 3000 might not be the case But I believe that this (Current level) is still not the bottom . We are heading lower after the bounce that we might get this week if we get any at all. With the earning season kicking in I doubt it that we will see many or any good forecasts for next quarter and behind. With people loosing 40% this past months from their 401K or investment funds the spending will definitely cool off quite a bit making stocks even cheaper.
And I am talking for people with good credit that can get credit.
We still have no solution to this mess. Injecting equities to banks will only prolong the process. This is such a shortsighted solution yet very well needed.
Anyway On a side note you should definitely watch Lehman's Brothers CEO hearing. Is unbelievable how he spins off the answers for the questions addressed to him.
Good article on Bloomberg:
http://www.bloomberg.com/apps/news?pid=20601087&sid=a294aImYI_mw&refer=home
There is a bounce from way oversold but I think the market is setting for another leg down. Traders will get a chance to get out even then they be happy. Will have a lot of selling. I, myself will hope market go up I can get out but this is just BIG hope... Good luck to all.
Is anyone adding to DDM here?
Hi Snot, could you update Dow chart so that it will look more scaring? Thanks!
why DDM? why not SSO?
Awesome day to be in SSO/DDM!!! Yee haw!!
Ya Snot,
Your chart is suspect!
Come on Dude!
Ok, I need 3 more days just like that and I'll be in the green ;o)
Snot,
I've been reading your blog for a while. I bought FXP today with average around 97. Should I sell for a lost or hold.
Thanks,
Minnie
Today is what we were waiting for... a move towards the moving average. We should really be more in SSO than DDM, but today illustrates why it doesn't matter short term.
The market is down so far that these gains could easily be extended. Perhaps to 10,000 or so.
If tomorrow is another big up day, we'll sell some DDM, but we're keeping most of it. There is a chance that this entire selloff was just Wall Street's way of breaking up the monotony of things, and the next stop is 12,500 or 15,000. No one knows. We're content with sticking to trading only the indexes and avoiding individual stocks for the duration of this bear market. Only when a new wave of innovation sweeps the market and causes a new bull (uptrending indexes trading above uptrending moving averages) will we start looking at individual stocks. And yes, MOS is still headed to $0. Once a stock is out of the limelight, it goes to $0 regardless of how well the business performs... hence our love affair with the DDM's and SSO's of the world during bad times.
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