[8:31am ET] The world has now heard pundits like Laszlo Biryini, Dennis Gartman and others tell them that the market is in a brand new Bull. Among the disbelievers is former Merrill Lynch chief North American economist David Rosenberg. Today on Bloomberg, David, who has long been one of our favorites, expressed the opposite view. He said he was amazed to hear these ‘green shoot’ theories because life now has changed to a paradigm of consumer debt pay-down, one where business managers would not rebuild inventory until they were absolutely sure the recessive economy had turned stronger.
Rosenberg believes that much of the trillions of cash we hear are on the sidelines of the capital markets are actually going to be used to reduce consumer and corporate debt. In that case, the banks would not be a good long-term investment bet.
In any case, I hope we continue to hear from David, who recently returned to his homeland to work with stock-picking wealth manager Gluskin Sheff + Associates in Toronto.
http://www.gluskinsheff.com/
Comments
sidelined cash reducing debt.
RE:> Rosenberg believes that much of the trillions of cash we hear are on the sidelines of the capital markets are actually going to be used to reduce consumer and corporate debt.
How does that work?
sidelined cash reducing debt
I think John Hussman's column addresses this question:
http://www.hussmanfunds.com/wmc/wmc090518.htm
I got lost in it, but I got the gist of it.
RF Down 18% Pre-Market
NEW YORK (MarketWatch) -- Shares of Alabama-based Regions fell 18% on heavy volume in pre-open trade Thursday as investors worried about a dilutive new share offering that sold at a steep discount to Wednesday's close. Late Wednesday, Regions priced a public offering of 400 million shares of its common stock at $4 per share. The stock had closed Wednesday at $4.89 a share.
glad I dumped all my financials after the pump.
vb
As Forecasted: A 12-Year Retrospective
In a landmark report we wrote in July 1997, entitled “The Case for the Third Supercycle Bear Market Period of This Century,” we summarized our stock-market outlook and detailed a large number of factors from our forecasting models supporting it. We warned that during the coming Supercycle Bear Market Period, we could expect bruising bear-market declines, vastly
increased market volatility, and overall stock-market returns that would underperform no-risk money market instruments, like U.S. Treasury bills.
http://www.financialsense.com/editorials/bronson/0...
edit:
Our analysis strongly points to a substantial further decline in the stock market, for which those following our advice are positioned to continue to profit. Further, we are prepared for the decline to end in a MCHVIE. We described a MCHVIE and how and why it develops in some detail in our March 2001 commentary.
In short, it is an extraordinarily savage sell-off, in which virtually all investment strategies become unprofitable, almost all asset classes decline sharply, and it all happens simultaneously across multiple capital markets. Its devastation is wreaked by the herding effect of massive numbers of panicked investors ultimately bailing out of any and all investments at any price en masse in rapidly declining markets. It is the ultimate selling panic that ends major bear markets.
hmmm, trading leveraged ETF's at the point of MCHVIE could get really interesting :)
FAZ n TZA
My FAZ sold@5.48 while I was away yesterday, made some on that. I guessed the down day right and should have held my TZA (loss here), but the mkt (aka casino) looked too strong at the open. Alas, todays another day.
Cara 100 Update
BHP - Dahlman Rose Initiates Coverage with a Buy. Price Target = $64.50
TGT - Price Target Raised from $50 to $52 @ Jefferies & Co. Buy
Gold's Moonshot Scenario
Chuck Cohen recalls the tech boom and speculates an even bigger one in gold/silver shares...
At this moment, a once-in-history rise is revving up. It is coming in gold, specifically in the gold mining shares. The fundamentals are in place for the rise–unlimited creation of paper currencies out of every central bank in the world, the exploding claims upon the U.S. dollar, declining mining gold production, a dearth of large discoveries in recent years, a virtual cessation of central bank selling and a world-wide manipulation of the metal, particularly over the past eight years, that has produced an incalculable naked short position in the metal. As a friend of mine who knows the metals world has maintained: “The central financial issue of our time will be ‘what is money?’ ”
I believe that the impending move in gold, and even more so in the gold mining shares, will be the greatest and most speculative cycle in the history of markets. As I mentioned above, the fundamentals are firmly in place. Over the past couple of years the world has undergone a radical shift. Many nations have turned from holding paper currency and debt and have turned more and more to gold. It is happening in nations such as China, Russia, India and those in the Middle East. In the midst of increasing uncertainty, the price of the metal is now resting on the launching pad, and the shares of the junior exploration companies are sitting awaiting for lift off.
How do you play this historic move to maximize the move here? Obviously, the physical metal is the safest way to own gold, but in this article I want to point out the way that has the greatest potential for you. It is the equivalent of owning some of those high tech companies that went up 100 to 1000 times in the 1990s. These are the junior or exploration companies. Right now there is a deficit of gold being mined while the world-wide bailouts have infused many trillions of dollars, with very likely much, much more on the way. As the price of bullion shoots up here, because of their market capitalization relative to its reserves and because their cost structure is declining sharply, many of these companies will have unbelievable runs.
http://tinyurl.com/of58pb
Dollar not plummeting
at the moment. Anyone want to step up and buy Evergreen Solar at a buck eighty? Hey 2nd...that's kind of like 18....just move the decimal point.
Re: Dollar not plummeting
Ah, if only I had done that in my email.
Re: RF Down 18% Pre-Market
Hah. The same just happened with Evergreen Solar (ESLR), which closed yesterday at $2.23 and will open this morning at $1.80 or below as they priced an offering of 37M shares at $1.80. A 20% drop on an offering that is 20% dilutive.
What a joy it is to be a shareholder in this company.
Looks like the pig men on Wall Street still know how to play the game.
Re: SRS @ 21.70/ off @ 22.72
...
AA of @ 9.20...5.5% gain
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Re: sidelined cash reducing debt
great Hussman article as usual.
Hussman is the mad scientist of market analysis.
finally someone cogently dispells the "cash on the sidelines" nonesense.
i put that theory in line with the "china is buying gold" foolishness,
china's holding of gold as a % of their total FOREX portfolio has actually gone down the past few years because they are amassing cash and t-bills faster than they are buying gold. to suggest China has turned to gold is simply wrong.
my feeling this morning is the mining shares jump up quick then sink the rest of the day unless gold cracks well above $940.
Trying to make us forget
Short and to the point.
http://tinyurl.com/ofuwmt
Re: Gold's Moonshot Scenario
re: "...the equivalent of owning some of those high tech companies that went up 100 to 1000 times in the 1990s. These are the junior or exploration companies."
Two points,
The US Admin was not against the moonshot in high-tech companies, but are dead-set against one in gold, so we're looking at totally different markets.
Yes, there are always solid price run-ups in the mining prospectors, but many of the junior exploration companies you refer to are (i) presently out of cash, and (ii) always negative cash flow companies. As the gold and silver price rallies, the promoters of most of these shell companies will be hyping their prospects beyond all common sense, and then they'll arrange private placements with people who ought to know better or who are (unfortunately) managing the wealth of others.
In every boom cycle, there are promoters who pay illegal bribes to financial advisors and wealth managers. After every boom, there is a bust where most of these stocks fall -90% or more. So, caveat emptor.
Posture
I have no 'qualms' with Wall Street's efforts to 'disadvantage' the unsophisticated (retail) trader. Get 'em to hop on the bandwagon at the top and sell at the bottom.
The problem is the hubris that marks the game. All of which makes sites like this, Minyanville, and the writings of the Hussmans and Sauts so valuable.
How is this different from Vegas? Harder to leverage in Vegas.
SRS- back in @ 21.75
...
Back into SBB @ 53.02
Hopefully for the long haul this time.
Re: SRS- back in @ 21.75
nice price. following at 22.08. small trade to build upon if the drop continues.
Cara 100 Update (Final)
TGT - upgraded at UBS from Neutral to Buy. $45 price target. Estimates also increased, as the company has low inventories and could see better back-to-school sales.
---------------------
Where Are They Now Department:
For those of you still following the Cara Oldies But Goodies.....NTES received two upgrades this morning.
AUY adding @ 9.68
...
short squeeze happening in SLM
...
Re: As Forecasted: A 12-Year Retrospective
Les, no disrespect to you at all, but this guy's got to be kidding! It's an interesting perspective and interpretation, but he completely lost me when he took credit for his 1997 call of 12 years of no gains for the stockmarket. Seriously?!? He's suggesting that people should have parked their money in 1997, missing out on the huge run up to 2001 and the next huge run up to 2007?!?! He may be right about another massive sell-off, (how would I know any better?), but that 12-yr. position was hardly useful.
Re: As Forecasted: A 12-Year Retrospective
ah sorry for lack of clarity man (but you need to read his report), but he was dissing the buy and hold fraternity that held sway in the industry these last twenty years.
S&P lowers britain's outlook
http://www.nytimes.com/2009/05/22/business/global/...
GERN
Gern is going up.
Heavier volume than normal?
http://tinyurl.com/oyokvk
vb
Re: SRS- back in @ 21.75
Hedging a little @ 21.84
Thurs feels like Fri
And stocks don't have a whole lot of "up" in 'em.
I didn't make any trades today, but check out what I wish I'd done...Namely, bought TLB (the talbots) on it's crash to the gap. A textbook investor-enema administered by pro's on behalf of the Ferrari company.
Re: As Forecasted: A 12-Year Retrospective
Indeed, I was reading it, Les - and with interest. It was just that boast that completely threw me. But, I won't argue that "buy and hold" is a pretty poor strategy. That fraternity of mutual fund salesmen is clearly giving advice that suits them, not their customers.
Cheers.
Re: Thurs feels like Fri
Thursday is the new Friday, (especially before a holiday weekend), isn't it? ;)
Re: AUY adding @ 9.68
Followed you in...along with SRS.
Re: As Forecasted: A 12-Year Retrospective
yeh you're right, he's certainly marketing himself. I'm not about to become a groupie of this guy, but his prescient macro call is interesting enough to make me pay attention to how the end will come. Thus my interest in what he perceives will be a devastating crash. I might reappraise the written puts I have given his bearish call.
shaking out in miners
Wow there's some shaking out going on here! Gold is off 40 cents and GG is down perhaps 2.5%??
And the volume is not too shabby either.
Re- EDZ @ 16.10/ off @ 16.58
...
True nature
Of todays action is revealing itself. I will be taking tomorrow off.
Hey...Obama's security director is name Jim Jones.....I wonder if he's expecting us to drink the Kool-Aid?
Have an awesome day folks....And fer pete's sake....Don't go long, ok:)!
Re: Gold's Moonshot Scenario
i dont have any objective evidence to support that jr. miners will do well in the coming years as gold rises.
sorry but when you look at the action of the miners the past 3 years, a time when gold almost doubled, most failed to keep pace w/ the gold price before it collapsed in mid-2008, and utterly collapsed afterwards.
the jr. gold market has fallen so far many investors dont appreciate the extent of the damage simply because it doesnt seem so bad when a $1 stock falls to $.15 compared to a $100 stock falling to $15.
the reasons used to justify the emergence of jr. stocks hasnt proven true the past few years when gold prices increased. i dont think it will prove true as they run from here.
i think at the end of the day the jr. market is by and large overrun with frauds who spoil it for the rest of the few good ones. and even among the good ones, projects dont always work out, or they are preyed up by shifty shorts.
cost over runs and non-stop problems, coupled with ever rising costs will criple the jr. miners for years to come. all the consolidation of jr's being bought up by majors at cheap prices practically never happened because most major's realize that most jr's are not worth the paper the shares are printed on.
face the facts, there are far too many of us who have held and will continue to hold badly beaten jr.'s under this ill-fated hope they will for some reason bounce back once gold goes over $1000. sure they might have a run, but look at a non-logorithmic chart of the Canadian Venture Exchange and tell me how exactly a %10-%15 rise in teh gold price will even remotely bring us back to anything resembling share prices from 2 years ago.
the jr.s are by and large a sinking ship, with a few solid companies who will break out from the masses, investing in them enmass has proven abysmal.
dont believe the hype, the large cap miners are bad enough, the jr.s are not going to lead any sort of recovery save a few moonshoot blow offs.
we have been reading about the re-emergence of jr.s for 3 years... wake up gang.
Re: sidelined cash reducing debt.
Les,
Here's a simple example.
In the past 6 months I have removed over 50K from my cash account at my on-line broker and paid down a mortgage on a rental property. The way I see it, the interest I don't pay the banker who provided this mortgage is a tax-free return on this money. I intend to be debt-free by Jan 30, 2010. Now, I'm just a speck on a flea on an elephant's back - but replicate this action as a trend and you can see why sidelined cash cannot be counted on as returnable to the market in the near-term. Bankers are being denied the interest on which they must derive much of their profit when they get back to doing business the old way. Hence, a rough time ahead for lenders of capital.
UNG- adding @ 14.56
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Re: UNG- adding @ 14.56
14.47...Edit and 14.50...edit and 14.25, that's it for now.
Re: shaking out in miners
good stuff. Sold off what I had yesterday before heading out. Happy to see that the POG complied and stayed put.
Stupid IB. Accidently sold of my UXG in three waves, having purchased it prior to yesterday, yet it treated it like a day trade. go figure. Happily I was only banned from trading yesterday and am back in action today. I would've gone nuts otherwise.
Averaging down into UXG today.
HNU.to @ $USD 5.78
...
Record Volume for BAC
Interesting to see record volume in BAC yesterday, yet the price hardly moved, while weekly MACD is topping. Looks like distribution to me. http://stockcharts.com/charts/gallery.html?BAC
Contrast that with inverse Cdn financials ETF HFD.to (I only trade CDN stocks, but bank stocks usually track well on both sides of the US-CAN border). Similar high volume, while weekly MACD poised for a nice upwards bullish cross. Looks like accumulation to me. http://stockcharts.com/charts/gallery.html?HFD.to
Disclosure: short banks.
Re: sidelined cash reducing debt.
thanks terryC. I was wondering how institutional money was going to pay down debt, but redemptions can do the same thing.
That speaks to me of fear and caution in investors. Doesn't sound good for the market overall.
UUP/$USD
A bit stronger today, sold UNG at the close yesterday.
Standing aside on $USD strength for now.
Nice day for a car wash. Better than cleaning me out....
Re: UNG- adding @ 14.56
thanks for the tipoff - 14.44
Re: Thurs feels like Fri
Perhaps the plan is to run it up into the close tomorrow so everyone can beam over the market during the weekend.
Why?
Are you guys buying UNG?
Re: sidelined cash reducing debt.
Institutional money? What is that? The "institutions" are for crazy people....they have no money of their own, they USE OUR MONEY.
When we pull out our money, they don't have anything.
When we pull our money and pay them back our own money we borrowed from them, they have no money and no income from our debts. Yay! Screw HB&B!
And they have no money to trade against us with....less "trading profits" which means less BS and smoke and mirrors to work with.
It's a no brainer. Pay off debt.
HNU.to - adding @ $USD 5.54
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Re: Re- EDZ @ 16.10/ off @ 16.58
In EDZ at $16.10 I do understand but what makes you choose $16.58 to get out?
I am long EDZ since late yesterday with cost in mid-$15s.
Re: Why?/ Jumpin' Jack Flash, It's a gas gas gas
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Re: sidelined cash reducing debt.
:) morning Craig.
I guess so. And since so many Americans have lost their 401k's then the market cannot count on that either. That was the institutional money I was thinking of.
Re: Gold's Moonshot Scenario
Gold's moonshot - Where's the beef? I still think the FED/Treasury are capable of more than we can imagine. Unless the currency were to default. kaimu's been monitoring the defaultometer.
Re: Why?
7 day RSI stands at 35.18 with UNG at present prices.
yank dollar down. Gas up. dollar just holding. Unless the Fed engineers something, I give the greenback the thumbs down.
Nat Gas
Gas storage numbers were up 103 bcf last week versus an expected 93bcf.
Not a huge difference but fundamentally still in the wrong direction.
Gas storage numbers are at the high end of the 5 year band.
From INO:
from ino.com "Natural gas in storage in the U.S. rose more than expected last week and is 22.4 percent above the five-year average for this time of year, a government report said Thursday"
Re: sidelined cash reducing debt.
Good morning to You Les!
If I'm an example, I have a few hundred thousand $ that I'm sitting on waiting to put to work....at the right time. I have no intention of it getting anywhere close to the crack addicts running wall street right now. I may as well light it on fire.
Re: sidelined cash reducing debt.
"It's a no brainer. Pay off debt."
It can't be done to an extent that will kill HB&B, the taxpayer is their permanent slave until default. So upon default, the Congress makes good on behalf of the slave by taking from his future.
There must be a crack somewhere in the armor but where, gold? Maybe that one's too obvious....
VIX
In case you missed it, VIX back over 30. Bill's RSI system is so cool.
Re: Why?/ Jumpin' Jack Flash, It's a gas gas gas
2nd- That's much more accurate than this...
Shark- I was playing a over reaction the the expected inventory build, AND I am a committed LT NatGas bull. Obviously early on the first point, but I doubt I'm wrong on the second.
Re: sidelined cash reducing debt.
sideline cash myth:
most americans are in debt up to their eyeballs,
any cash they have is simply cash borrowed or saved while they incurred much larger debt.
its like suggesting theres actually 2x sideline cash if people were to put that $$ to work in double leveraged ETF's.
wake up gang, the only sidelines are those still in stocks hoping someone will be the greater fool and bid things up so they can sell.
"It's a no brainer. Pay off debt."
Why pay off debt when you can borrow it at 5% or lower, with the tax deduction at your highest tax rate, the money you would have used to pay the debt can be taxed at 15% (dividend, cap gain rates) instead of your income tax rate?
re sidelined cash
Well... it's not mom & pop who hold most of the dough, it's the trillions held in reserve by hedge funds & institutions.
no?
Re: sidelined cash reducing debt.
Cash on the sidelines.
I heard that one in 1974 with ERISA. Didn't work to well for the subsequent 8 years.
TBT...interesting to see it green today.
...
Re: sidelined cash reducing debt.
ERISA - Now there's one you don't hear everyday...
"ERISA was enacted to protect the interests of employee benefit plan participants and their beneficiaries by requiring the disclosure to them of financial and other information concerning the plan; by establishing standards of conduct for plan fiduciaries; and by providing for appropriate remedies and access to the federal courts."
Re: sidelined cash reducing debt.
There is another component of institutional money that has also been given attention from time to time on this blog - pension money. Not only are many large plans under-funded by employers because of loose "rules" ( I love that word! ) that govern employer contributions, but they are now faced with sharply rising payout demands because of the times we live in, and other demographic considerations. Now, of course these plans carry a large amount of cash or near-cash to meet immediate demands. However, most administrators have over-estimated the rates of return on investments in order to minimize employer contributions and keep the business. Weak markets mean they find themselves in need of selling investments to raise additional cash needed to pay the pensioners ( after paying themselves for managing the money ). This is a death spiral that is burning up this so-called sidelined capital. Ever wonder why senior management typically have their own separate pension plan? It's because they oversee the administration of theirs like hawks and make certain that it is fully funded. Pension Plans are right up there with Alt-A Mortgage as the disaster de jour on the 2009/10 menu.
Re: Dollar not plummeting
the volume is huge...
should I try my casino luck on this...
SRS off @ 22.14, just don't see it moving much more today.
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Re: Dollar not plummeting
ALOHA !!
The UK Pound was put on NEGATIVE credit watch by S&P ...
Please note part of the "currency dynamics" that I have been speaking to is this idea of "two currencies". Well, that did not just come out of thin air tin hat land, but rather the S&P itself. Anyone who dares even glance at the S&P website will find two prominent ratings. One is called "local currency" the other is called "foreign currency". Why two currency ratings for each country?
By the way the AUD is rated the same as the USD which is AAA STABLE.
So the USD is up because it is the lesser of the FIAT evils, essentially for one reason. The USD is KING PAPER of the FIAT WORLD! The Reserve Currency!
So, the exact reasons that the S&P states for the UK downgrade are in play with the USD as well. I have been reporting these reasons with the aid of the US TREASURY DAILY STATEMENT where I rate receipts vs outlays.
Go read the S&P reasons for putting the UK on NEGATIVE ...
Re: sidelined cash reducing debt.
"Pension Plans are right up there with Alt-A Mortgage as the disaster de jour on the 2009/10 menu."
Disaster for retirees yes, but for whom else? Not HB&B, except for the fact that a slow economy means fewer loans and lower prices?
Re: Dollar not plummeting
add some ESLR 1.77
gold stocks
are in green
Re: "It's a no brainer. Pay off debt."
I've been serving that Cool-ade for the past 25 years as a financial advisor so I know where you are coming from. The rental property has a mortgage that is higher than 5%. I've never seen a legitimate tax deduction that has made the taxpayer tax-negative. Yes, I can pay an attractive tax rate on gains and dividends but it doesn't work if your capital has shrunk because the dividend has been cut and the stock goes down, or simply because the stock goes down and not just up as we are led to expect. In today's economy, for me its all about capital preservation and maintaining net worth, or improving it by paying down debt. When prices have come to me and there is daylight on the economic horizon I'll be there with the cash to invest aggressively. In the meantime, I'll be guided by Bill and trade selectively.
Re: AUY adding @ 9.68
what's your target price?
have some at the cost of about 8..
it seems to climb faster than GG
Re: TBT...interesting to see it green today.
Mark - as I understand these things, it is MOST UNUSUAL for bonds to fall while stocks are falling also.
As far as I understand it, this says people are not only fleeing our equities, they are also fleeing our fixed income instruments as well.
Re: TBT...interesting to see it green today.
RE:>As far as I understand it, this says people are not only fleeing our equities, they are also fleeing our fixed income instruments as well.
Perhaps traders understand the implications of the next leg down?
Sounds good for POG. UXG is winding up like a spring again. slowly but surely awaiting a breakout in gold.
BlackRock Draws Scrutiny as U.S. Adviser
from Minyanville
http://www.minyanville.com/articles/blackrock-econ...
http://www.nytimes.com/2009/05/19/business/19black...
BlackRock Draws Scrutiny as U.S. Adviser
Saw this article from the New York Times on BlackRock (BLK) making the rounds today:
Ok, here's the deal. BlackRock's role as an adviser to the U.S. government and its profits
as a manager of troubled assets might be... now, sit down... it might... wait, just hold on, I know this is crazy-sounding... but there's a chance.... by that I mean it's theoretically possible... not a sure thing, mind you, but in theory, there is some small probability that the company that is simultaneously being paid by by the government to price and sell troubled assets while buying those same troubled assets for private clients faces an inherent conflict of interest.
I know, it's crazy talk. How could this possibly happen? Well according to the Times, "Without naming BlackRock, federal auditors have warned that any private parties that purchase distressed assets on the government’s behalf could use generous federal subsidies to overpay, artificially pushing up the price of similar assets that they manage for their own portfolios."
Poppycock!, you say. And at least one person, James R. Wilkinson, who served until January as the chief of staff to the former Treasury secretary, Henry M. Paulson Jr., would agree with you. According to the Times, Wilkinson described BlackRock’s co-founder and chief executive, Laurence D. Fink, as a “patriot.”
Oils
APA support @ 77
SLB support @ 52
Bill seems to think these are good longer term plays...if oil keeps going up, they will do well.
Re: TBT...interesting to see it green today.
"As far as I understand it, this says people are not only fleeing our equities, they are also fleeing our fixed income instruments as well."
There could be a treasury auction in progress, pushing rates higher (treasury prices lower)? I've heard corporate bonds have been the hot ticket recently, a migration from safety into risk.
I see that TBT trade has done well, maybe gold will follow suit?
TBT spike last hour
The spike in TBT has been really amazing. Big volume, huge price move, all in the last hour - starting at say 11:10 Eastern.
EDIT: that's the same time the spike in gold started, and a little after the time the miners started to rally. Something is afoot.
Re: sidelined cash reducing debt.
"Pension Plans are right up there with Alt-A Mortgage as the disaster de jour on the 2009/10 menu."
"Disaster for retirees yes, but for whom else? Not HB&B, except for the fact that a slow economy means fewer loans and lower prices?"
Disaster for the taxpayer if it is a city, county, state or federal pension plan...
bonds in free fall
Volume has now tripled. TBT +3.46%. I can't find any news on this!
Re: BlackRock Draws Scrutiny as U.S. Adviser
and the market reacts by buying BLK up 3%
Re: TBT...interesting to see it green today.
Agreed, Pook. I'd like to view it as less of "fleeing" and more just major "repositioning". We all knew there'd be some brutal resistance up here at these lofty levels (e.g. S&P 500 @925) after the Feb "suprise". I imagine there are quite a few who re-entered early Jan who are bailing now back near even. Shaking out those weak hands might be interesting.
Check out LINE. Seems some money is finally coming into this one in a big way.
Re: Why?/ Jumpin' Jack Flash, It's a gas gas gas
that really says it all.
Re: BlackRock Draws Scrutiny as U.S. Adviser
"and the market reacts by buying BLK up 3%"
These must be the same crazies buying GM in front of their BK.
Giddie-up!
Come on old Goldstar, let's get er' goin'...come on now...
Hey! Will somebody give my old horse Goldstar a slap on the ass to get er' goin?
Ol' goldstar is doing fine along side my old mare UNG....#14.33.
What a bunch of slow pokes!
TLT freefall
Must be due to Geithner's testimony today.
http://tinyurl.com/qwrpll
safe trading.
U.S. Treasuries
Bloomberg:
Yields on 10-year notes rose as the Treasury announced it would auction $101 billion in two-, five- and seven-year notes next week. The central bank bought 16 percent of the $45.694 billion in U.S. debt offered by dealers for consideration. At the last purchase of securities in the maturity range, the Fed bought 30 percent of the $23.388 billion offered....
...Kokusai Global Sovereign, Asia’s largest bond fund, reduced its bet on long-term Treasuries in March, while Nippon Life Insurance Co., Japan’s biggest life insurer, plans to focus its new purchases on yen-denominated debt, it said last month. Fukoku Mutual says it will buy yen bonds because a 10-year rally in U.S. debt will end this year.
Re: TBT...interesting to see it green today.
Mackinaw - I'd like to view it as less of "fleeing" and more just major "repositioning".
Hehe ok, so I'm using possibly overenthusiastic verbs in support of my book. :)
But seriously, a bond drop this large in such a short time - it's gotta be something fundamental that's happening. It started at 11:10, and it's affected POG as well. And the gold move is not one of those wacky white bars up like it is when the big guys decide they want gold to move up 10 points in 2 minutes. It's this steady accumulation, like you might do if you are really trying to maximize the gold you get for your buck.
We'll find out eventually, but right now I'm just dying of curiosity...should I sell my TBT? Or buy the breakout. The calls are quite cheap. You can get 2 points out of the money june calls (TBT trades for $52) for $1 each. IV is about 32.
FD: long TBT, long gold, short S&P, financials, home builders, retail.
Re: Giddie-up!
LOL, your posts are much more interesting when you let your hair down.
G.TO - What Gives?!
I thought the stock price of Goldcorp was much more sensitive to the short term movement of bullion. Today it has not budged from 42 (on TSX). I wonder if investors see the stock as over-extended already? Good thing I'm back in WGI.
Maestro?
"Former Federal Reserve Chairman Alan Greenspan signaled that the financial crisis has yet to end even as borrowing costs tumble, warning that U.S. banks must raise “large” amounts of money.
“There is still a very large unfunded capital requirement in the commercial banking system in the United States and that’s got to be funded,” Greenspan said in an interview yesterday in Washington. He also said that “until the price of homes flattens out we still have a very serious potential mortgage crisis.”
They call him the Maestro. So he shows up on que and flicks his stick a few times and on the band plays. I was born at night. NOT LAST NIGHT.
There are no accidents.
Re: G.TO - What Gives?!
As a TSX trader, I struggle with the gold price versus gold shares paradox sometimes and have to remind myself that the US/Cdn exchange rate plays a significant role. Gold's up nicely in US$, but is it up in Cdn$, (which is what G.TO trades in)?
Re: Giddie-up!
I just slapped SOMEBODY'S rear end, only it wasn't your horse!
Gold on a serious tear, Yamana breaking out, Amero going down.
Debt Repayment
Overstating the obvious, I add that the 'value' in paying down debt comes with either low credit availability (higher cost to borrow new funds) or with deflation per se. Debt (e.g. one's college loans) is mitigated by inflation. Ergo the Fed's genetic predisposition to increase credit (without regard for credit quality) and have inflation nullify the debt.
Warburton's "Debt and Delusion" is a master treatise on this, and undoubtedly the Fed bookburning committee would incinerate ALL copies, lest the witches of sanity be allowed to practice their art.
Re: TBT...interesting to see it green today.
Treasury just announced 101B of supply for auction next week.
Re: sidelined cash reducing debt.
May 18, 2009
The Destructive Implications of the Bailout - Understanding Equilibrium
John P. Hussman, Ph.D.
"The analysts and financial news reporters who observe this enormous swamp of short-term money market securities, and talk about “cash on the sidelines” as if it is spendable in aggregate immediately reveal themselves to be unaware of the concept of equilibrium and of the nature of secondary markets (where there must be a buyer for every security sold, and a seller for every security bought)."
Re: TBT...interesting to see it green today.
Yeah, wow. Glad I bought back my SLW covered calls this morning at breakeven. :) Oops.
I think that gold shakeout was deliberate. Ya think?
FD: I got stopped out of my GC at the day low. Sigh.
gold
As the market goes down gold goes up, I think this is real positive now considering the higher volume for GLD. Maybe this is the point where people realize the USD is no longer a safe hideout. Governments around the world must not be too happy. I expect the IMF come out with a annoucement they'er selling 400 tons of gold any minute.
us treasury bonds going down
stock market going down
dollar taking a major hit yesterday
gold going up with a larger volume
Re: "It's a no brainer. Pay off debt."
Schleppy, spoken like a devotee of HB&B! Unfortunately this theory of borrowing (debt) to pay down debt is largely responsible for the run up in mortgages against sagging property values. In America today we have one foreclosure happening every eight SECONDS. While I have been party to such transactions in the past I am witnessing the results on unworkable 'refinance me out of this hell' scenarios right now. Only real debt reduction made with hard cold out of your own pocket is perceived with appropriate wince factor. Otherwise, a freed refi debtor tends to re-offend to max out their balances again. A slavish cycle invented by you guessed it-HB&B!
Re: sidelined cash reducing debt.
Potential disaster for regional and local banks that require maintaining the highest possible deposit base. Pensioners who find themselves in need of additional cash due to any shortfall or restructuring of pension payments will take cash from deposits or bank-related investments. Those in this food chain will also feel the pain.
"Gold spiking"
Skype messages:
[9:46:33 AM] Bill Cara: gold spiking
[1:28:17 PM] Bill Cara: ask me how I knew gold would spike an hour before it spiked!!
[1:28:32 PM] Bill Cara: I was a dowser in an earlier life.
[1:29:45 PM] Bill Cara: btw those are the people who hold a Y shaped stick or rod in front as they walk a property, able to sense water flowing underground
[1:30:12 PM] Geoff: that's what I thought, where is the crystal ball that Pat gave you years ago?
[1:30:40 PM] Bill Cara: in Toronto
[1:31:01 PM] Geoff: guess you don't need it anymore
[1:31:52 PM] Bill Cara: I have a silver plated horseshoe right beside it, and I guess I don't need that either. Touch wood.
Yes, in the 8:30am Conference Call, I had told the traders to expect a spike in gold this morning after a little pull-back to shake out some weak hands. Then at 9:46am ET I "sensed" the move.
PENSION PLAYS
ALOHA !!
The biggest pensioner in Los Angeles the former LAPD Police Chief, Bernanrd Parks, warns that LA could go broke thanks to people like him.
"As retired LAPD chief, Bernard Parks earns a $265,090 annual pension. As the City Council's budget chief, he collects a $178,789 salary and warns pension obligations could bankrupt the city."END
Okay so I looked up the nationwide cost for Police Chiefs and in the 90th percentile they make $104,996USD annually. With benefits added in the total annual salary rises to $127,955USD. The average salary is $99,980USD(not including benefits)...
Link to salary.com: http://tinyurl.com/oj72x4
This is what Bernard Parks says about his $265,090 annual pension ... "I don't discuss my salary or my pension and I earn both of them," Parks said in a brief phone conversation.
How does he earn it when he does no work yet gets paid over twice the national average in the 90th percentile range? Union mentality at its best!
More of the same TOO BIG TO FAIL mentality ... I say let them fail and I am glad to be out of California!
Gold Equities - The Breakout Downunder
Just doing some TA on gold equities, indicies and ETF's. Thought some on here might find it helpful.
All the best
Ad
Re: "Gold spiking"
Bill, you've nailed it earlier this week and today. Too bad I wrote some June 30 calls against 20% of my GG last week. Should have covered on Monday or Tuesday... Good thing I picked up a sizable position in KGC early yesterday.
BTW, anyone know why miners are not moving as "vertically" as gold is?
Re: PENSION PLAYS
Kaimu,
Is it indelicate to recommend a doughnut play?.....KKD perhaps?
GTU
GTU moving at last today Les, you can offload it now,thats if you still want to:)
Re: "Gold spiking"
Those of us who have money managed by CTAB will no doubt eagerly examine their daily trades to see just how much wealthier we are as a result of this astonishing prognostication ability. :)
Perhaps it will make up for my own silly decisions this morning.
EBAY CARRY TRADE
ALOHA !!
The average premium for a one ounce silver coin like a Maple Leaf or American Eagle was 39.44% on May 20th, yesterday.
The average EBay price for an American Silver Eagle one ounce coin is $21.47USD(52.16% premium). For a silver Maple Leaf it is $17.88USD(26.72% premium). Both were based on a POS Spot price of $14.11USD.
Buy in bulk at CNI and sell on EBay ... there's your EBay "carry trade"!
long treasuries are getting crushed
TLT now down -2.56% on big volume. This is so far the biggest move in long treasuries since Jan 1 2009. Gold +17, S&P -20. What an astonishing confluence of events. The only thing missing for me is a collapse in the financials.
TOG is working on steroids today.
sold some ESLR puts
It's a shame that ESLR, while closing at $2.23 yesterday, made an offering of shares at $1.80 today and saw its price collapse to $1.80. On the other hand, this share offering has significantly reduced the chance of the company going bankrupt because its cash stream would not be adequate to cover their expenses. So I think buying ESLR at a price smaller than $1.80 would be a good deal now. So I just bought some ESLR at $1.50. How did I do it? :) Well, I just sold September 09 $2.50 puts at $1.00.
Re: long treasuries are getting crushed
Most regionals getting crushed....FITB, KEY, HBAN and the like.
Re: gold
I would anticipate higher POG to correlate with higher equities prices, maybe I'm not comprehending something, would appreciate some opposing ideas on that...
SLW
SLW is acting really odd today. Silver is making a nice move, but SLW is - down on the day? I think I'll lighten up a bit.
EDIT: KGC also was not following POG - kind of a double top. Lightened up on that too.
CP, I think you're right. Miners should be following more than they are, unless there is some distribution holding them back, perhaps?
sold some UNG puts
UNG is coming back to us! I just sold June 09 $14 puts at $0.85 and also July 09 $14 puts at $1.20 (each lot covering about 3% of my portfolio). If UNG stays at the current levels, then my June puts will expire (giving me a 6.5% return in one month) and in one month I will sell them again (while still keeping the July puts open so as to actually buy UNG at $12.80 and keep it for a long term at this great entry price if UNG drops below $14 in July).
Silver Wheaton Special Meeting of Shareholders today 1400
Silver Wheaton SLW Annual and Special Meeting of Shareholders May 21, 2009
Scheduled to start Thu, May 21, 2009, 2:00 pm Eastern
-- this event is ongoing now--
Listen to the ongoing live event audio stream
After the event has finished, the audio will be available
from this page until Thu, May 20, 2010
Wonder if this has to do with the Silverstone Resources acquisition?
Can anybody provide insight?
Dowsing instruments
I'm imagining a pendulum along with a series of charts. Or perhaps a couple of brazing rods in lieu of a pendulum.
Re: UNG- So, uh, what's happening with those 31,700 calls
traded at the October 20 strike last Thursday? Weren't they purchased around $1.45?
Re: Maestro?
Craig,
this is the guy who said ARMs are the way to go :):)
Re: SRS- back in @ 21.75/ Off @ 22.75
...
Re: Maestro?
Greeny putting the brakes on tumbling treasury prices? Really, imprudent bank bailouts are favored over governmental stimulus deficit spending?
Nat Gas
As a follow up to my earlier post I've come across some additional proprietary work that indicates that assuming flat variables of LNG imports, hurricanes, weather, industrial demand etc., current natural gas production will have to fall by an average of about 5bcf/d over the next 6 months in order for nat gas storage not to reach effective capacity prior to the withdrawal season. That, is a lot of gas.
Any advice!
I haven’t posted much but have been following for a while. Anyone have good advice for a neurotic seller. I usually play options (buying calls and puts) for which I have made good predictions with help from this board. However, I tend to sell waaaaaaaaaaaaaaay too early. If I post my holding over the last two months especially the prices at which I purchased – it will make me sick (they included TCK, GG and SU calls and AMZN, JCP, FAS and BBBY puts). While I managed to make small profits I’m giving up incredible gains.
I was waiting for a sharp downturn – but now I think S&P will hold at this level (around 775) for another bounce. I believe financials will support levels at which they sold their offering - Buying FAS call options for a bounce. Long term I still think we go lower.
Covering Aug AEM puts
Just returning from trip downtown . . . see an open order filled.
Covered at $0.30 AEM AUG 35 puts previously sold at $2.40 ;)
Boys
With the major governments going under, may I suggest you stock up on PM's?
FAS/FAZ
Open order for FAZ not filled, shot too low, and couldn't keep my eye on the ball this mornin'... what, with the Grand Prix of Monte Carlo practice on TV.
Go Rubino!
I give up for the day.
Have a great weekend all, Z.
NSC - Cumpulsive Purchase
Bought NSC @$34.18
chart symbol for s & p 500
I am using ameritrades command center and wondered what symbol (if possible) to put in the window to display a real time chart of the s & p index.
thanks
Re: Boys
"may I suggest you stock up on PM's?"
I've got more than I can swim with, and feeling kind of selfish...
Re: UNG- So, uh, what's happening with those 31,700 calls
"traded at the October 20 strike last Thursday? Weren't they purchased around $1.45?"
No, they were SOLD at $1.45. :) It is the long-term bulls putting $1.45 in their pockets at the top of the expected initial bump in UNG. The same thing happened with the price of oil -- WTI had a nice run from $30.28 on December 23 to $48.56 on January 6, and then fell down to $34.67 on February 18 (notice that USO was 29.02 on December 23 and $22.86 on February 18 -- contango erosion!) before rising to $60+ recently. The same thing might very well happen with UNG, and so buying it near the previous low of $13 is a great long-term deal, I think, which you can get today by selling UNG $14 puts.
rimm
by the way, who let the air out of the tires on rimm? I have been selling calls against it all week and sold out to early this morning, but at a nice gain nevertheless. It seems like the market is drifting downward. I am thinking about selling puts under the current price anticipating a bounce.
Re: chart symbol for s & p 500
You could use SPY which is like an ETF proxy i think...
rimm
rimm just popped up for some reason, must have been the world reading my post.
(just cause you're paranoid doesn't mean they aren't out to get you)
Re: Nat Gas
alberio - "current natural gas production will have to fall by an average of about 5bcf/d over the next 6 months in order for nat gas storage not to reach effective capacity prior to the withdrawal season."
Thanks for the data. Do you believe this hasn't been priced into the market?
Re: Gold Equities - The Breakout Downunder
Thanks for the helpful charts. I am just learning some TA. I did not realize one could do so much with ETRADE, if these are from etrade. Are they?
If your hypothesis is true, my Roth will be happier for it. Please continue to let us know any price changes or trend changes you gather...thanks again!
Re: chart symbol for s & p 500
thanks, I can get it easy enough on their normal page, just didn't want to keep bouncing back and forth between the 2.
"Remain calm, all is well"
What passes for financial journalism really disappoints. They might as well show the Animal House clip with Kevin Bacon ineffectually saying "remain calm, all is well" 24/7. At least it would be funny...for awhile.
Re: rimm
"just cause you're paranoid doesn't mean they aren't out to get you"
Absolutely, I feel exactly the same way!!!
GG
missed the move in GG because I was a chicken. Better to give up a gain than take a loss, I guess. Time to learn from it and move on. How could I have doubted Bill.
Started reading his book last night and read several chapters. Wish I had read it last year. I was under the assumption that CNBC was actually a news program rather than a marketing entity. Also, I was operating under the assumption that our bankers were required to be honest and ethical.
Needless, to say, man, was I stupid. And I paid a huge price for these misplaced beliefs. Now, I am wondering what our society is going to look like in both the short term and long term.
UNG
Nice volume and move today in UNG. Sheesh. Wrote some UNG October 13's for $1.60...after I saw it bounce off what I hope is the bottom. :)
Re: Nat Gas
"current natural gas production will have to fall by an average of about 5bcf/d over the next 6 months in order for nat gas storage not to reach effective capacity prior to the withdrawal season."
alberio, I presume everyone knew one month ago that there is an abundance of the nat gas supply -- but then why did its price shoot up from $13 to $17.50 a few weeks ago? Maybe the storage situation has only a minor impact on the NG price?
rimm
rimm popped up at 3:30. (right after I raised my selling price on the put) was there some news that I missed?
repurchased SPY Jul 102 calls for 30% profit in 72hrs.
margin was all used up. Got too many calls out. I understand why Bill says you need money to play the options game.
The 108 call hedge took too much of this profit. I wanted to repurchase the calls with 75% profit or thereabouts. Still, unwinding this play has fixed the margin issue.
Think I'll bring more cash to bear on this account quicker than I anticipated. I like options.
volatility
What do you guys think of the +/- 100 pt moves on a daily basis (almost reminds of tech bubble days)? Is this here to stay for the next couple of years?
Re: Nat Gas
David
I can't argue the price action.
I could make something up like CNBC but...
I simply noticed the bullish sentiment on the blog, and since I'm in the business I thought I would share what "I think I know" about the current fundamentals from my on the ground perspective.
Take it or leave it as you wish.
My real point was to simply show that if storage reaches effective capacity then the price will have to drop dramatically and wells will have to be shut in in order to rebalance. THEN, I personally would be on board for a dramatic price move.
Re: GTU
typo
Re: GTU
RE:>GTU moving at last today Les, you can offload it now,thats if you still want to:)
I wanna see some green paid back in interest before I do. No, I'm hoping our neighbours in HK can bid the POG up some more overnight. That being the case it might be pertinent to let 50% go. Let's see tomorrow.
speaking of pertinent, I perhaps foolishly followed Dave into the UNG $16 put that albeit reduces the underlying to $15.54 if things continue like this. So went and bought another UNG $13 put. I either get the $16 put down to near $14 underlying or one hundred shares at $15.54 and another hundred at $12.54. Either way I'm comfortable with that.
presently averaged at $15.33
*please lord, just one more Russian sabotage of Ukrainian gas pipelines* :p
night all.
Re: Nat Gas
Chickenpookie, you know I'm just not sure yet.
Just because price goes from $13/mcf last year to $4 now doesn't mean it's cheap yet.
The best cure for low gas prices is low gas prices.
Having said that, the Feb/09 US production #'s didn't come off that much.
Let's see what happens over the next few months.
Unless production comes off really hard then storage fills and all bets are off. See my note to David: once that all shakes out I have no doubt prices will really take off but until then I remain very nervous. Remember this is a fundamental stuff not price action.
last note before beddy byes.
Alberio - Unless production comes off really hard then storage fills and all bets are off
I was reading from Bloomberg that drillers are on the way to setting a record for rig closures.
Prediction was for doubling of prices. When, is as you say, yet undetermined.
Re: As Forecasted: A 12-Year Retrospective
I used to subscribe to his emails, but stopped because he sounded like a permabear. I guess his bearishness was vindicated after all. He calls for a lower low. I thought we will get a higher low (due to inflation and dollar drop). We will see. The best thing is to follow the markets.
Berk's BB Sell Signal
Today's close gave a sell signal.
http://tinyurl.com/rbxxtl
Re: Nat Gas
Every coin has two flat sides, thanks for sharing your point of view from out in the field. Keep your eyes on the road and your hands upon the wheel!
Re: Nat Gas
alberio- I appreciate your posts on NGas. Kept me from chasing UNG after selling an (intraday) lot around 15.98 earlier this month. And not making any long-term plays here- positions are small, and if a bounce does not materialize Friday, will be out. Thanks.
FAZ---SKF
Nothing like holding up the train until HB@B has filled all the seats. The DOW loses 129pts, the nasq loses 32 pts and the S@P loses 15 pts and FAZ unchanged and SKF -.05.
MOM and DAD and JOE6Pack sure aren't buying finanicals in a down market.A few more banks haven't finished diluting there shares so HOLD THAT TRAIN until they are ready to short the banks for the ride down. Manipulation--NO--Total Control is the name of the game.
Re: FAZ---SKF
Eagleone,
would FAZ and SKF lack of movement reflect the recent decline in volatility?
Anyone?
Re: Nat Gas
David,
The EIA has considerable data and analyses on natural gas. Many people believe their guesses on future supply, demand, storage and prices are as good as most, and may even be better than some.
Scroll more than halfway down in the following linked page to get some insight into the EIA's thinking on NG:
http://www.eia.doe.gov/emeu/steo/pub/contents.html
Thanks, F57. David- Here's
Thanks, F57.
David- Here's the EIA paragraph:
"The Henry Hub spot price averaged $3.62 per Mcf in April, $0.46 per Mcf below the average spot price in March, as consumption has flagged amidst the drop in economic activity. No significant rise in average spot prices is expected until cooler temperatures increase the demand for space heating in the fall. While the seasonal boost in natural gas consumption is expected to add some strength to prices, robust storage levels are expected to limit any significant upward price movement through the winter. However, as the expected improvement in the economy contributes to demand recovery in 2010, sustained lower production levels could lead to higher prices in the latter part of the forecast period. The Henry Hub spot price is expected to average $4.06 per Mcf in 2009 and $5.21 per Mcf in 2010."
The higher odds play might be in August as we head into hurricane season.
Liddy stepping down at AIG today
I guess Blankfein and Paulson called in with the good word - "The heist is over and your work is done Liddy." I'm guessing the ink is currently drying on his new employment contract at Goldman. I am just dumbfounded that Goldman was able to parachute in their whole team to "clean up the mess" and welcomed in by the media like the conquistadors. Good grief.......
A.I.G. Chief, Brought in During Bailout, to Leave
The American International Group said that Edward M. Liddy was stepping down as chairman and chief executive of the troubled insurance conglomerate.
http://bit.ly/n16Jz
Re: Berk's BB Sell Signal
Bev, its interesting that those three candles show a reversal pattern all on their own, independent of the bollinger bands. I can't quote you the specific candle pattern, but it sure looks like a bullish reversal.
I know you have been educating others on the use of VIX as signals, but I was not paying attention. :) Is it the case that a reversal of a declining volatility trend near a period of market transition (i.e. a MACD rollover, etc) is a sign of a market top? Or is it always that a reversal of volatility pattern is a sell signal?
nat gas -
nat gas - commentary
http://zmansenergybrain.com/
Re: Nat Gas
At some point or time, I am guessing Nat Gas will make a big move upward because at this price, many small E&P companies will go under.
Rig count has dropped but so has demand. When we see small E&P Nat Gas companies go broke as they cannot make a profit at these prices then maybe we will have the bottom. Supply will not be able to meet demand.
Re: "Gold spiking"
I'm not sure the methods Bill uses...but take a gander at the U.S. dollar.
The U.S. $ Index (NYBOT:DX) around 9:30 ish this morning via the 1 day chart:
http://quotes.ino.com/chart/?s=NYBOT_DX&v=s
The dollar has fallen from the 84 level down to 80 in about 1 week...silver, gold, and energy have all risen during that time. Not sure how many of you are familiar with the connection.
From http://quotes.ino.com/chart/?s=NYMEX_GC.K09&v=i
"METALS: June gold futures closed up $16.20 at $953.60 today. Prices closed near the session high and hit a fresh two-month high again today. Prices were again supported by a weaker U.S. dollar again today, lower U.S. stocks, as well as on news that the U.K. had its debt ratings lower. Gold bulls have the solid near-term technical advantage and gained more upside momentum today."
Re: last note before beddy byes.
Les, the rig count IS coming off really hard.
More on the conventional side though than the horizontal shale plays. So be careful which numbers you are looking at.
It's the horizontal shale plays which really ramped up the production last year. These wells do have huge declines on them so the question is will they come off hard enough and fast enough before Nov 1 which is the start of withdrawal. (at least as far as gas goes :)).
Re: FAZ---SKF
"Nothing like holding up the train until HB@B has filled all the seats."
You can monitor the real time boarding and departure status here:
http://www.railroadradio.net/content/view/34/159/
Re: GTU
"speaking of pertinent, I perhaps foolishly followed Dave into the UNG $16 put that albeit reduces the underlying to $15.54 if things continue like this."
Les, are you referring to my sale of June $16 puts on UNG? I sold them at $1.45 on Tuesday, which gives me the entry at $14.55. When did you sell your $16 puts?
Re: last note before beddy byes
alberio -
You experts always get me worried! But I understand the feeling. I worked in tech, and since I knew how the sausage was made, I was always nervous about buying tech companies.
I'm just following the money here. I looked at the futures markets and saw that they had priced in a $6 natgas price by mid 2010. I'm not smart about natgas like you. I don't know too much about storage, or wells, or rig counts, etc. But I am basing my buy on "people smarter than me" that presumably did the math, and figured out that the UNG investment vehicle was a good buy at a certain price, given a natgas price recovery to $6 by mid next year.
As evidence to these "smart people", we saw volume start to build as they accumulated, even while the UNG descent continued, culminating in a double bottom at $12.75 on 27 and 30 April, followed by truly massive volume off the double bottom.
My put writes give me a $11.40 buy-in price in October 2009. Hopefully that's a good enough cushion. I'm also hoping the bad news today was more of a "shake out the weak hands" news release rather than a game-changing bit of information that invalidates the whole trade!
I probably also jumped in too early. It would be less aggressive to wait for tomorrow to see if the descent continues rather than trying to catch the bottom tick. But I figure, $11.40 gives me a nice cushion. Hopefully I won't have to use it all...
Re: UNG
"It's the horizontal shale plays which really ramped up the production last year. These wells do have huge declines on them..."
alberio, what do you mean "huge declines on them?"
Thanks for sharing your perspective "from the field."
What do you think is the average lifetime of a horizontal shale rig? What constant gas price over the lifetime of the rig would justify drilling and exploiting until the end a new horizontal rig? What about conventional rigs?
What fraction of current production do you think is coming from conventional rigs, from horizontal rigs and from LNG imports?
Re: last note before beddy byes
Dave, I'm not trying to question or second quess what anyone here is doing.
When I saw the UNG/Nat Gas comments I was just trying to add information I work with on a daily basis hoping it could help one way or another.
You are right about being too close sometimes, sometimes good and sometimes not so good.
Re: UNG
David
These wells are extremely prolific but the will produce between 40-60% of their reserves during the first year and so you can add large volumes but they also "run dry" very quickly".
I'm not actually in "the field", more like "from my office" :).
With respect to the last two questions, I'll need to dig some info out for you and I'm heading out for the day. let me see what I can find and I'll get a back to you tomorrow.
Re: last note before beddy byes
alberio - Dave, I'm not trying to question or second quess what anyone here is doing
You're just providing us with extra information. And when that information makes me nervous, I feel like I should go back over my trade rationale again so I can make sure I'm not doing something silly! :)
Like I said before, this blog is great because we have experts from everywhere on here...
Buy GS
A truly reputable company with a bright future in global banking.
If your going to invest in these markets, only trust GS with your fed printed IOU's!
There's a reason why the markets tumble day after day, and Goldman keeps going up and up and up.
Re: Buy GS
You have a point....
Few years back, I read an interview that GS encourages its top people to go to public service after a stint with GS. Now I understand why (its not public service, go to policy framing positions worldwide & lets continue the game). Its like their IP. So, maybe they are valued for their IP (aka connections).
If you hvnt read this story already, this is a good one
http://www.newsweek.com/id/197810
Gold
Anyone feel like selling here?
Re: Gold
Chicken,
Not me, the talking heads are on cnbc pumping gold plus another bank just went down:
WASHINGTON (AP) -- Regulators on Thursday shut down BankUnited FSB, a struggling Florida thrift whose closure is expected to cost the Federal Deposit Insurance Corp. $4.9 billion.
The failure of the Coral Gables, Fla.-based bank represents the second-largest hit to the FDIC's insurance fund so far -- the costliest was last year's seizure of California lender IndyMac, on which the FDIC is estimated to lose $10.7 billion
Re: Gold
Expert and others are calling for a $ collapse, Oil moving higher, Gross saying US to lose AAA.
Thant mean, I’d say we see a $ and Treasury rally quite soon, and oil and gold is going to sell off.
Hope all is well - what a crazy market
the action the last hours of today tells me that the short train is in fact being held at a private/unmarked train station for the Paulson Boys & Co.
www.tinyurl.com/nyugrad shows that the only real bull today were not financial and not tech. Unless we all believe that gold, oil, & bonds will create jobs and bring the world out of this recession, I still think we are moving toward a cliff at the end of this river.
I came across a 1 hour webcast today that discusses how money managers or "Brokers" have destroyed AUM and continue to shovel AUM into a pit of fire.
http://tinyurl.com/ooyxcr. It's a good program that if anything, should help investors who are bullish in equities now, at least think about hedging their stance.
I haven't traded much but I am still short the market. Gold looks strong, no position. I am watching general volume, effective volume, industries, and the action in the last hour (ppt). I am guessing the day we no longer see these last second saves, is the clue when the music will stop. However by then, there may be no chairs left for a single soul.
I also like the 'hold the train' analogy for FAZ made earlier today. It sure seems financials are being controlled in the low volumes to someone's benefit.
Good luck ladies and gents.
Re: Gold
"I’d say we see a $ and Treasury rally quite soon, and oil and gold is going to sell off."
Yes, another way of saying that is a dollar bounce. Treasury weakness today may have been a result of FED not absorbing enough from foreign central banks trying to unload in a panic.
So gold gets a boost, but the upward trend should continue after this brief commercial message....?
Re: Hope all is well - what a crazy market
Excerpt from the 1 hour webcast I mentioned above. More reason everyone here who does not have the time to manage their own accounts should seek out CTAB.
---------------------------------------
At the 21 min marker
"Wall Street's Aversion to Career Risk.
If you lose a fortune (client's) in a bear market, they'll claim "everyone else also lost a lot of money."
If they get you out of the market (in a bear), they're afraid they will lose their job and ruin their career."
---------------------------------------
Please use the webcast as entertainment and provoke thought. Not as investment advice. As i cannot vouch for those persons or companies in the webcast.
RSI
sorry, if this has been answered before. How to use the 7d, 7w, 7m RSI relationship. I see in the reports a) atleast one above 70(consider selling?) b) atleast one below 30(consider buying?).
I understand how RSI works. I am just wondering if the larger cycle reading takes precedence over the small cyle (7m over 7w etc).
How do you guys use it?
Re: Gold
CP,
I would watch the levels Bill mentioned (980 & 1000 for $gold). Thats probably the level where we should tighten stops. Besides all the gold miners stocks are running upto the jan high level (there will be some resistance there). I did sell GG some calls for profit today. Have some more GG, ABX, GDX, AUY calls
Re: Gold
Shiva - "I would watch the levels Bill mentioned (980 & 1000 for $gold)."
Fair enough, I would think a weaker dollar(longer term) predicates upward pressure on gold. I don't see why this also wouldn't mean a higher broad equities index.. Of course the GDX should rise with the tide and it's siamese twin, the yellow brick.
I just don't get the sentiment of shorting the index's, it seems contrary to dollar weakness.
Re: Gold
CP,
So far i am noticing commodity stocks going higher on dollar weakness this time (including copper). On weeklies, NDX & TRAN have rolled over (first time 2 red candles since march). INDU, SPY, SPX are still down only one week so far.
Re: Gold
"I’d say we see a $ and Treasury rally quite soon, and oil and gold is going to sell off."
Caught just a bit of CNBC today and saw the crawl message was about fear the US would lose its AAA rating. Moody's or S&P — rated all the toxic stuff AAA right? I think someone is loading the currency trade for a short term $ drop.
Then, I expect your view $ and Ts view may come around rather soon.
Re: Nat Gas
Most commodities are; priced in US dollars and weakness in dollar has impact on its price, but natural gas is a local commodity. We keep hearing about economic turnaround may not exactly be in place yet and The recession may have settled in for an extended stay. I think best time to buy UNG is around august. Expect it to hit 12.70 one more time.
Re: Nat Gas
I agree with Vinod. And chart wise, the macd is still in positive territory though it has crossed over bearish, rsi14,though falling is still @ 42. If it was sept, I might jump in but...its early yet.
peace from North Puget Sound
Re: RSI
Shiva - Have you seen the verbage that accompanies the RSI tool?
"While other factors must be considered, the most basic use of the RSI values is to determine the best times to buy and sell high-quality stocks (note that low-quality stocks may have a low RSI because they are heading towards bankruptcy, not because they are undervalued). RSI is an indicator of price motion -- a low RSI roughly means the stock has been declining in price while a high RSI roughly means the stock has been increasing in price.
When the daily, weekly, and monthly RSI values for a ticker go below 30, that represents an Accumulation Zone, where it may make sense to start buying that equity. When the daily rises above 30, that is considered a Buy Alert, as it is a sign that the equity in question was at a cyclical low and is starting to rise again. For the opposite reasons, when the daily, weekly, and monthly RSI values are above 70 it is considered to be in a Distribution Zone, and a Sell Alert is when the daily RSI drops back below 70.
A final note of advice from Bill Cara's webpage: "I use the following technical indicators every day, but in combination with fundamental and quantitative studies plus a healthy dose of intuition and common sense. I never rely on technical studies alone -- and neither should you." The point being that these RSI calculations can help inform your investing, but it would not be wise to blindly follow what they say.
Re: UNG
David, to follow up on your last two questions:
When you say "horizontal shale rig" I'll assume you mean how long do the wells produce economic gas for?
I partially answered the question before when I said these shale plays decline at 40-60%. What that is saying is lets say it's 50%, so after one year 50% of the gas is produced and after the end of the second year another 50% is produced so therefore only 25% of the original gas is left etc. etc.
This now implies 2 things, firstly, the current gas price or what you can hedge it for has to be high enough to drill the well today because all the value comes out of the ground very quickly. Secondly, this is why the rigs are currently being shut in because you can't lock in a high enough price today to make money.
With respect to constant gas price we think in terms of $6-7 gas in order to make money.
With respect to conventional gas you need a higher price because your money comes back to you slower and your fixed costs are higher relative to a lower production rate, however conventional production generally has a lower decline rate and therefore can withstand a longer price cycle.
Production from conventional versus shale horizontal? I can't remember exactly, when I come across that info I'll post it for you. Suffice to say though that the horizontal production will continue to grow versus the conventional. I vaguely remember a number in the order of 20% currently going to 30-40% over the next 5 years but again I will try to confirm for you.
Hope this helps.
Re: Gold
Vanillabean, if cnbc is pumping gold maybe a correction is in order? :)
Re: UNG
alberio - Good info. I'm assuming that a horizontal well when capped retains a majority of it's value?
Re: RSI
CP - thank you, somehow my eyes missed that show more information link. Now I have a fair idea of how I can use it combined with chart reading, MACD etc
Re: UNG
Wow!...To get back to the office and see so much valuable info on NG is really amazing. Thanks to everyone.
Alberio- Your contributions are greatly appreciated. I'm sure my trade has some people scratching their head, but they were also when I opened my first NG position @ 13.80 adding down finally @ 13.08. I sold 2/3 at an average of about 16.80 ( roughly). I plan to add down again, if it plays that way, to rebuild my position back to 100%. ( Currently 60% ). I'm now using 50% of the houses money and am very comfortable waiting to August if it comes to that, though I doubt it will. This is a longer term trade than I generally make, but it seems we all agree the LT move is up.
2nd/Dave/David/VB/Shiva/CP etc....If would be fair to say that after meeting with my oil guy yesterday and today, he would approve of my trading theme.
Looking back over the tape for the day, man, what a great day to be a day trader.
Re: SRS- back in @ 21.75/ Off @ 22.75
2nd- You bad dog! The double dip...absolutely beautiful.
Re: Gold
CP- "Anyone feel like selling here?". I've had a mental exit for AUY/KGC when POG hits 960. I need to be careful here because these positions have gotten to about 150% each. So to answer you question...Constantly!!
Bank United
Well, I guess it is more civilized than out right robbery. http://tinyurl.com/pvo7xy
Re: UNG
you mean its been drilled but hasn't produced yet?
Yes, other than time value of money.
Re: UNG
The BTU ratio of NG/Oil is today .42, much less than a historical av near .7 and close to the yearly low of around .4 or a bit less. Gas seems like a freaking bargain but then I am a retired engineer who has never been in the energy business. Anyone want to know who (used to) make the best rotary wing aircraft? I thought not.
Re: UNG
Illini- Could you pls. explain how you set up that ratio? I think I get it, but not sure how you factored in price.
Re: UNG
"Looking back over the tape for the day, man, what a great day to be a day trader."
Now this is the part I'm trying to understand.
I've been following Vad's blog and trying to learn his set ups but don't know where to learn/find set ups for longer term trades. An example from today would be greatly appreciated, or perhaps what made you decide on your original UNG trade.
Re: UNG
Mark, just one more thing.
"Your contributions are greatly appreciated"
I learned from our host.
Re: UNG
Illini, since I seem to be on a roll today....
The historical oil/gas price ratio has been about 6 to 1.
So with $60 oil and $4 gas it's currently 15 to 1.
Anything over 13 to 1 has historically produced a rally in gas.
I however, do not believe there is much to this because nat gas is a captured north american play (except now LNG).
There are many who would disagree on this with me.
BTU
Interesting commentary on coal's potentially superior status to oil linked below. I'm using BTU as a diversifier to the PM play with Australian production/exports of this leading coal producer able to exploit a weaker dollar.
"Coal likes a swampy, stagflationary landscape. One where growth has trouble getting off the floor, but where the world’s 6.7 billion people still need heating and basic power generation."
http://gregor.us/coal/coal-conditions-coming/
Thoughts?
Pensions
http://www.contracostatimes.com/ci_12265599?source...
"CRAIG BOWEN'S SALARY during his final year as chief of the San Ramon Valley Fire Protection District was about $221,000 a year. So how did he end up retiring in December with a tax-advantaged annual pension of $284,000?"
I'm not sure why I'm writing so much about public pensions - I know I feel that I should contribute, but don't really feel qualified to offer trading advice. I also like to offer on subjects that others aren't covering.
And I guess I am upset about the pensions given to the public sector. Most of the rest of us don't receive them, and a lot of people don't even have 401ks. The teachers in Boulder, Colorado have been having a sick-in this week because they aren't being offered enough of a raise next year, but they have true job security.
It's such a quandary. Unions have been so beneficial for the average worker, but...
Re: UNG
I factored in price simply by dividing the stock price of UNG divided by USO. I found that ratio to be consistent with a WSJ article last summer when they pointed out that NG was under priced over a 5 yr av in relation to oil on a British Thermal Unit (BTU) basis. The ratio UNG/USO seems to reflect that same BTU ratio, probably due to the original set-up of the indices underlying those commodities.
Put in UNG:USO on StockCharts to see the oscillation over a weekly period.
Re: UNG
Mark,
A quick way to track the oil/natural gas ratio is to plug $wtic:$natgas as a symbol into stockcharts.com.
Edit: note this is the inverse to Illini's post immediately above, but displays the same concept.
Re: UNG
Whatever way you look at it, I suppose it shows under valuation of gas relative to oil. I also think a few more utilities will be using NG this summer but then again there was a similar situation last summer.
Could this rel price ratio be a boon to Picken's company CLNE if it stays the same? Or is it a case for buy UNG and sell USO?
"Healthy" correction?
A number of people are sensitive to a potential big drop.
Looking through some other viewpoints. Here are some daily summarized thoughts from a commentary that came my way this evening.
Although 75% of the thin volume on both NYSE and Nasdaq was on the downside, financials were steady for the most part. Energy and materials led today's decline. Financials holding steady today may be a sign the market is in a "healthy" correction and unlikely to collapse like it did late Feb and early March.
Re: UNG
Illini, F57- Thanks, the BTU reference threw me off.
Albierto- I'll try to answer you question, but I caution you, I've only been actively trading my account for a year now. There are some very savvy players here and I listen to what they say.
OK... Nothing moves in a straight line. NG had been on a steady downward trend for a long time. The futures were positioned significantly higher than the spot price. As you point out, correctly, the historical ratio with crude is 6/1. As is happening again, crude was diverging further away from NG. Again, as you point out, rig counts were/are getting hammered, small players can't survive at these price levels. I also have had input from a client, as I said, that is in the energy game. This was a big trade for me ( size) and all of the pieces seem to fall into place. Am I taking a second trip to a dry well, I doubt it, but working with the houses money makes it a lot easier.
FD- My reference today about day trading...I was commenting on the volatility. Look at 2nds trade of SRS today. Twice, he was able to pick up $1 moves. (about 10% profit I guess.) I can't do that as I have to work, so I look for more swing trades that give me some more time. Good luck, if you hear anything on NG that is a game changer I'd love to know.
OH NO!!! I just got an e-mail from a friend who is playing NG and he said Crammer is pumping it. I can't believe it...
Re: Gold
hi alberio,
okay, thanks for the heads up, and I agree, cnbc pumping could be a sign of a a sheep fleecing. I will be ready to dump my WGW and KGC without a whimper or sniffle.
I don't want to be the last one standing without the chair!! :O
SPENDY
ALOHA!!
According to the May 20, 2009 US TREASURY DAILY STATEMENT the OBAMA administration has spent $24,939.25 per person in the USA! Every man, woman, child, baby, grandma, grandpa, sister, brother, uncle, aunt, cousin, nephew, friend, enemy, hooker and boss.
Total spent so far during FY 2009 is $7,631,410MIL USD($7.613TRIL) divided by 306million people in the USA ...
How do you feel, so, have you got your money's worth? By time OBAMA is done spending for FY 2009 he will have spent more than 80% of Americans make this year. It would have been easier to just send us all checks and tell us to quit working and just go shopping!
MAY 20, 2009 SPEND RATE = $5.78USD
For May 20th, for every dollar of revenue OBAMA has spent $5.78USD.
That's a lot of spending and there is another four months left to go until FY 2009 ends.
So someone has to show me some CHANGE I CAN BELIEVE IN! Otherwise all I have seen is the same old lame "dog and pony show" that Bush had going!
In one word SPENDY!
Re: Gold
VB- Just make sure they don't shake you out too soon. Remember, they might just want your shares. The more I think about this, it could truly be an inflection point....Stay frosty my friend.
"committed"
OK, what's wrong with everyone! I used "committed" in my UNG trade as a teaser and no snide comments?? I have 100 in my head...
Re: "committed"
mark,
I was too busy laughing about your remark on cramer, yes it is true, I just watched him on tv pumping up natural gas like a crazy man.
Re: Gold
VB, I'm sure there will be a chair. Longer term I have no doubt gold is going much higher.
With daily rsi7 over 70 etc I'm hoping for another pullback to add positions but I tend to think long term and worry short term.
mortgage story
long read but pretty much describes what happened
http://www.nytimes.com/2009/05/17/magazine/17forec...
Re: UNG
Illini (and others): USO is a VERY BAD proxy for the long-term oil trends, so I suggest you use $wtic in stockcharts instead in order to get the current ratio of oil to gas.
According to http://tonto.eia.doe.gov/dnav/pet/hist/rwtcd.htm, WTI closed at 59.52 on May 19, and USO closed $32.79. WTI closed at $59.38 on Nov 11, 2008, and USO closed at $48.11 on that day. This is the contango erosion of USO that people wrote about previously on this blog!
Chart of the day - S&P PE valuation
hmmm what were pundits calling stock prices recently - reasonable?
http://www.chartoftheday.com/20090522.htm?T
Another crash in prices, stagnation in PE values, or both to carry us out of this mess?
Damn, just thinking about how expensive the S&P is, prices will have to come down A LOT to resemble anything remotely reasonable, even 18 - 20 times earnings, which is still expensive.
Think I'll take back some written puts. They may not be exceptional value and I don't want the risk for such small gains today.
Re: Chart of the day - S&P PE valuation
Les, I wouldn't worry much about the S&P valuation now. The situation there is more complicated than chartoftheday reports. Some people look at trailing earnings and some people look at the forward earnings. Some people look at "as reported" earnings and some people look at the operating earnings. Most importantly, the situation with the low S&P earnings was known back in March, and despite this situation S&P rallied 41% in 2 months. So it is best to always stop yourself when you want to act after reading/hearing something that was already known to the market for some time, however scary or exciting it seems -- it is most likely already priced in.
If you want to figure out where the market is headed, think what most people are expecting now and prepare for the opposite. A few smart people have observed that the market now seems to price in the economic recovery in 4Q2009 at 100%. So if we do not get that recovery (and I don't think we will), a major sell-off will result. But that will be the sell-off in S&P. Some commodities like nat gas may get only a minor pullback, as it has its own dynamics. Gold is hard to predict, since gold has been used by some market participants as an insurance against a financial collapse and by others as an inverse play on the $USD (and $USD will rise during a market sell-off). So make your pick. :)
Re: Chart of the day - S&P PE valuation
thanks David,
I got round to reading the Hussman link and he is neutral on the S&P's valuation as of May 18:
"As of last week, the Market Climate for stocks remained characterized by mixed valuations – modestly overvalued on the basis of most fundamental measures except those that assume a sustained return to the record profit margins of 2007, and slightly undervalued if one assumes that a return to those profit margins is a given."
Still, as you suggest, equities that are not inflation busters like commodities are looking for a decent, if not hard drop. Gold and miners I don't fear in 2H09. Will scrutinise everything else I'm holding - few underlyings at the moment but significantly more options expiring in 2 - 6 months.
Re: Chart of the day - S&P PE valuation
Les, I wrote recently about our switching strategies from (bullish) put writes, which we were closing, to (net bearish) selling call spreads, and soon to (bearish) buying puts.
Re: Chart of the day - S&P PE valuation
Thanks and good morning Bill.
I recall you writing that but funnily enough, in just two lines here you've made crystal clear the way to trade going forward.
I, on the other hand, have a few written puts averaging out to about 4 months. CAT, TCK, KGC being the notables.
As the excellent discussions evolve here on a weekly basis I'll reappraise what I could be doing.
Bearish put buying will surely be added as an additional tool in the trading box and will give me flexibility from the margin constraints imposed by IB.
Re: UNG----OFFTOPIC
Hey, I'll bite.Who do you think made the best rotary wing aircraft?I'm
patial to Boeing and Bell myself.I'M going to have breakfast with 5-6 helo pilots so will put that ? to them.
later
CE
SRS- (re-)starting a position @ 21.10
...
Re: UNG----OFFTOPIC
Well I was going to say Sikorsky, since he was the man who started the industry in America, if I remember correctly. Although I suspect the answer to this question depends on the age of the engineer.
Bell was designing the first turbine equipped helo's for the military by the mid 1950's and putting the ubiquitous UH-1 into service by the early 1960's.