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Technical Investing Themes: MacroTrends, USDX, Oil, Gold, S&P500, etc.

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March 27, 2009 – Comments (61)

I will try to tackle a broad market sweep of all of the sectors that I usually look at. I tend to be a sector investor and not so much a stock investor. Obviously this is an ambitious post. I will not be covering everything nor will I be doing any sector justice from an analysis viewpoint. I make no claims about being an expert, just an interested (and perhaps enthusiastic) investor/trader who is trying to make sense of the complicated workings in the market.

I very much like to look at weekly charts for trending purposes, daily charts for (general) timing, and then 30-min / 5-min charts for very specific timing. For this post I will stick with weekly and daily charts.

Treasuries and the US Dollar:

We cannot begin a discussion about US markets or assets denominated in Federal Reserve Notes (a.k.a the US Dollar) without discussing US monetary policy.  Obviously the big news recently is that the Fed has announced a [sarcasm](public)[/sarcasm] Quantitative Easing (QE) policy. This basically boils down to the Fed creating money out of thin air to buy Treasury bonds (vs. the Treasury selling bonds to foreign entities, which of course it is still doing). This gives the Treasury new funds to spawn new programs to buy toxic assets from banks, gives the Fed the ability to buy Fannie/Freddie toxic assets directly, etc. Whether or not this is “good” or “bad” will not be discussed here. What will be discussed is the impact of this newly created money.

BTW, if you would like to read a humorous description of QE and how it is being implemented, check out this post: Quantitative Easing Explained.

There are many gears in the “Inflation Transmission” and the Fed just kicked it into a higher one. I have very little doubt that this is the beginning of many similar actions. Now does this mean inflation happens automatically and immediately? No. There are still short term deflationary forces at work. But I have become convinced for a long time that this is a Deflation Scare. And we have to be very careful about how inflation and deflation is defined. Please see several of my recent posts (as binv271828) about both inflation and deflation:

- Steve Saville: Market Value, Money and Credit
- John Mauldin: The Endgame

My opinion (obviously all of this is) is that behind the backdrop of declining asset prices (what almost everybody calls deflation, even though in and of itself, it is not) money supply has been growing substantially. It is in fact politically desirable to spur inflation to fight "deflation". It is desirable for Congress, the Treasury and the Fed to be seen as doing "something / anything". Inflation just got kicked into a higher gear, but based on Saville’s arguments and historical correlation, there is a lag between the increase in True Money Supply and everyday asset prices. So by the time that increase is actually felt by the public the Fed and Treasury will have already massively overcorrected. Essentially this next leg of inflation (as experienced through rising consumer prices) will be largely hidden from the public. But this expansion will eventually lead to higher prices (at least it always has historically).

What does this mean for treasuries?



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Obviously treasury prices jumped on the “rumor” and as the “news” culminated in a less-than-stellar auction the price quickly dropped back into family.  30-year bond prices are shown above but 7-year bond prices reacted similarly.

Treasury Bond Bubble:

I personally believe we are in a Bond Bubble. If you look at a chart of long bond prices for the last 28 years (since 1981) the prices have been in a rising channel. This means (average) yields have also been dropping for 28 years. In December 30-year bond yield dropped to 2.6% (it is currently back up to 3.6%). So do I think long term bond investors will settle for these yields with the biggest inflation gun unleashed by the Fed to date? No …

…, But the answer is yes for now. I do not think the bond bubble will burst yet because the Fed is essentially putting a floor under the prices. Now this is good for short term bond prices, but this is very bad long term. This action is not stimulating aggregate demand from investors. This is sending an artificial signal to the market. At the same time, this will allow the Chinese and Japanese to sell back long term dated Treasuries (essentially to the Fed) and exchange them for commodities (which they are stockpiling). So while the Fed is pegging the yields artificially low (trying to keep interest rates low for the rest of the economy to try and spur consumer spending) I think there are many investors over the next several months / year who will unload.  This bubble will stay inflated, probably longer than most will suspect. Bond prices may even rise once more. But once these highly inflationary actions (creating money out of think air to buy Treasuries and maintain low yields) are seen for what they are and the inflation works its way into the system in terms of rising prices (for goods and services), I think bond prices will collapse and yields go the only way they can: up. Because US government debt is NOT low-risk and at some point bond investors will demand higher interest to hold it.

Timeframe for bond bubble bursting: ???. I am watching for “deflation” signs to reach a crisis. Inflation discussions are still in the noise. After the Fed announces several more Treasury purchases, and inflation becomes more discussed, then I think conditions will be ripe for a bond bubble collapse. Maybe 1-2 years.

US Dollar (via the USDX):

Also on the same news talked about above, the dollar has been tanking recently. However, based on the fact that currency devaluation wars are happening among all the central banks (Bank of England revving its engine after the Fed kicked it up a gear, ECB not far behind) I don’t think the drop will be an “orderly” one, nor do I think it will drop like a rock.  But I think the general uptrend (bear market rally) is over. The dollar rally was fundamentally driven by hedge fund deleveraging, and the fact that overseas dollar investments / yen carry trade investments must be repatriated into dollars.

But the new QE policy by the Fed by definition is reducing the value of every other dollar already in existence. And I also believe this first QE installment will NOT be the last. So like I said above, while the USD may not drop to new lows immediately, I believe it has been dealt a deathblow.



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See the weekly chart for the general trend (and what I am identifying as a blow-off top). The daily chart is showing a rally off of oversold conditions. I think this “rally” has the look of a bearish pennant. I think the USDX will eventually make a last gasp rally, but if it does, it will probably originate from a bounce off of the 200 day MA, and not from current levels.

However, I think the weaker dollar is one of the contributing factors to the current stock market rally we find ourselves in, and this current bear decline in the dollar is generally conducive to perpetuating the current rally.  More on that later. If you wanted to play on the direction of the dollar directly, you could buy UUP or UDN, depending on your preference/opinion.

However, a weak dollar also makes other assets prices in USD rise, namely Gold and Commodities.

Gold:

I will not go on a spiel about why gold is the most important monetary protection against fiat currency devaluation, or why gold is a currency and not a commodity, or that there is manipulation in the gold market (TMFSinchiruna has a great post here). These are my opinions and they have been documented and debated elsewhere. But what is factual is that gold does trade ‘like a currency’ and often moves in an inverse relationship to the US Dollar.

So lets look at some gold charts:



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First we need to look at the long term picture (several year horizon):

Gold is still in a secular bull market. There are many arguments that gold is overvalued (based on Gold/Silver ratio and Gold/Oil ratio, etc.). I have heard them and I don’t buy them, especially based on the Gold/Oil ratio (argument). The GOR is high because the denominator (Oil) has gone AWOL (to paraphrase Menicious Moldbug). $35 oil is about as realistic as the $147 was 6 months ago (read: not very). So of course the GOR is skewed. GOR ($920 gold/$54 oil) now is 17 (vs. 25 at the peak last year, and vs. a mean value of ~10 during the last 30 years). Oil is in the midst of a serious correction. What is the “fair value”? Tough to say. But I would tend to think that it is much higher that its current price of $54/bbl and much higher still once all of this new inflation filters down. So whether you consider gold overvalued or not is based on common ratios, realize that these ratios are currently skewed based on the current economic crisis. Coming up with a long term “fair value” is not easy.

Shorter horizon (months – couple of years):

Okay, so lets look at some charts to see if they give us any indication of what is happening in the near term.

Bullish:
- Last year, underwent a test of the bull market support line and bounced off convincingly
- Responded convincingly higher to QE announcement

Bearish:
- Lots of bad economic data and it has not topped previous high last year
- Possible head and shoulders formation on daily chart

My take/recommendation (for what its worth):
Gold is an early and direct responder to inflation. The Fed has stated it will fight deflation at any cost (read: massive inflation). Gold responded directly to the recent Fed QE announcement. My supposition is that there will be many such announcements in the coming months / years.

For my long term account: I am buying gold (and silver) on all pullbacks (mostly through CEF).  I have a lot of Gold and Silver Miner (GSM) long positions.
For my trading account: I current have no GSM or Precious Metal (PM) positions.

If you are long gold as silver but you think there will be a pullback: hedge with a small short position
If you are bearish on gold and silver: Stay out of the GSM and PM market. But I would really urge you not to go naked short. I know that everyone has their own timeframes and risk tolerance. But I believe that gold is the one (or at least the main) legitimate bull market that exists right now, and I think as inflation hits the system gold will go much higher and do so quickly and unexpectedly. I am not trying to scare or be the crazy guy with the tin foil (or gold foil as the case may be) hat, I am just communicating my opinions.

Oil:

I believe that oil has bottomed and is now in a new uptrend. I have written several posts on the subject: Update on Oil, Gold and the USDX, Short Term Oil - Update 2 (Intraday), Short Term Oil – Update, and Short Term Oil. There is a lot of good discussion in the comments of these posts.



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Oil has definitely formed a bottom (at least of for this cycle of monthly declines and retracements) and is in a new uptrend. The long term historical support that was identified has held. Oil has been on a new uptrend that is several weeks strong at this point. The weekly MACD has triggered up, but it is not in positive territory yet. However it looks very strong to me.

The daily chart looks overbought and oil is running into its first real resistance zone around $50-55. I bet we will get some kind of pullback from this level. I am waiting to time my next oil purchase until I see how far we pullback. I will write another post as the pullback occurs to evaluate its progress.

So what are some reasonable targets for oil in the coming weeks and months? Now that the bottom has been established (at least of for this cycle of monthly declines and retracements), lets looks at where we were. Oil topped out at ~147 and bottomed ~35. Doing just a 38% retracement (which I think is very possible) puts oil around $77/bbl. That is what I am targeting and where I plan to start selling. All kinds of things can happen between now ($50) and then ($77), but that is a loose gameplan and I will adjust mine as the chart unfolds.

What are my real life oil picks? For the short-term (weeks/couple of months) are: USO, USL, DXO, and UCO. Right now I am very bullish on the commodity and I am neutral/bearish on the producers. In the previous 4 oil posts mentioned above, several of us have been having discussions on oil supply and how profitable oil companies are with oil in the: $35-50 range, $50-75 range, >$75 range.

My "forecasts" for oil are:

Short term (next couple of days to 2 weeks): Oil is overbought in daily terms. It is hitting a resistance zone between $50-55/bbl. I expect a pullback and the most likely test point will be the 50 day-MA

Intermediate term (2 weeks - 3 months): Oil on a weekly chart looks very strong, made a solid bottom, and is now in a new uptrend. 38% retracement from top (147) to bottom (35) is likely. Which means my target is $77 oil.

Mid/Long term (3 months - 2 years): ??? Who knows. This is anybodys guess. 

Very Long term (>2 years): Oil will be at much higher levels. Maybe 100/bbl, maybe higher. I think the inflation cat is way out of the bag. Oil (and all commodities) will trade much higher.

I think oil has a good shot of getting back up to $75 in the next few months. But will it stay up there for this year? I don't know. The state of the economy says no, inflationary pressures say maybe.

So this is why I am very bullish on oil as a commodity (since it is an inflation hedge) and much less so than the producers. Many of the rig operators are not making money with oil this low. And while I see oil going to $75 in the next few months, they supply/demand situation is too cloudy now to say whether it will stay there this year.

From a very long term standpoint I am bullish on COP and STO, not only because they are (reasonably) efficient producers but also because they are (partial) green/alternative energy plays (they have both made good green and alternative energy investments). BP is sort of in the same boat, (reasonably efficient, partial green). But rig operators, drillers and oil-sands projects I am not at all bullish on right now. I think several will go bankrupt in the next few years (all will probably drop in value). And when inflation starts to become front page news, I think a lot of the survivors will be priced very reasonably.

... Broad market Equities and conclusions in comments section ...

61 Comments – Post Your Own

#1) On March 27, 2009 at 12:28 AM, binve (< 20) wrote:

Broad Market Equities:

Now we get to equities. From a very long term perspective, I think the market is still too high. Based on valuations alone, we have not reached the traditional bottoms (PE of 8-10) the usually accompany the bottom. In fact based on the enormity of the credit problem, I will be not bullish on equities in general until we see PEs of 6.

But that is all fine and good for the very long term, but what about the short term? When I step back and look at the weekly charts it looks like the really good bear market rally is happening. GoodVibe4Ever has a good post and case for this call here. I thought that one was going to materialize in January, but instead we got lower lows in Feb/March. So I was turning bullish and then capitulated bearish. I should have looked at my own mindset as a contrarian indicator :)



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So based on the chart with the divergences and the strong bottom that I show above, I agree with GoodVibe. This looks like the bottom for a very strong bear market rally that will last many months.
Here are a few other pieces that support this theory:

- The market (despite the fact that the economy is in the toilet) is at a historically oversold extreme. Pessimism is extremely high, and this is simply unsustainable. A relief rally has to occur to balance this condition / burn off the oversold.

- The dollar is dropping, but based on the slight dollar rally the last several days, I think a lot of money is moving out of Treasuries and into Stocks.

- Financials have made an impressive rally (look at the Philadelphia Banking Index or XLF) and they have a high weighting in most of the indices. Financials (despite the fact they are also in the toilet. No wait, they are in the sewer… no, not deep enough … no how about the Earth’s core, except its filled with garbage … yeah, that will do it) are so completely oversold that they need to bounce back for awhile. Couple this with the fact that the Geither plan is giving them a boost. (My opinion, this is a very bad thing: abitare has a link on his blog to this video. Watch it. I can’t recommend this enough).

My "forecasts" for the S&P 500 are:

Short term (next couple of days to 2 weeks): This current rally is very overextended, and there needs to be a pullback

Intermediate term (2 weeks - 3 months): Rally will be impressive. From the peak (1570) to the bottom (667), I think a 38% retracement is a reasonable target, which would be ~1010.

Mid/Long term (3 months - 2 years): ??? Who knows. This is anybodys guess. 

Very Long term (>2 years): Based on current reasonable earnings estimates, the current PE is ~20. I don’t foresee earnings increasing over the next few years. My belief is that there will be lower lows in the future.

I hope this was useful to you. As always I would love to hear your comments!

The binv standard disclaimer: This in no way constitutes investing advice. All of these opinions are my own and I am simply sharing them. I am not trying to convince anybody to do anything with their money. I am simply offering up ideas for the sake of discussion. As always, everybody is expected to do their own due diligence and to ulimately be comfortable with their own investing decisions.

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#2) On March 27, 2009 at 1:29 AM, RussWild (< 20) wrote:

binve ~  My god man! You have out done yourself. I don't even know where to start. This is the problem that I have is that when things like this you have put together, reading the EWT book goes by the way-side...lol Let me read through this so I can comment, but I think you've grown if you don't mind me saying. Adding something new just ties into everything you know already and you know way more than me if you don't mind me saying. BTW, you are a teacher and your just as critical to the labs as me... or more!

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#3) On March 27, 2009 at 1:36 AM, uclayoda87 (29.31) wrote:

Well thought out arguments, which I mostly agree with.

I believe that energy producers and miners may have more potential for gains, but at a slighly higher risk, which I am willing to take.

I use GLD in place of a money market fund to store most of my cash reserves.  I keep some cash, but not much now as I am waiting to sell not buy.

I appreciate your work.  Thanks.

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#4) On March 27, 2009 at 2:13 AM, RussWild (< 20) wrote:

With my 401k is PIMCO PTRAX... and I don't mind riding the bubble up, but I don't understand bonds at all... your comments help me a ton!

I'm actually very curious on your positions at this point. You have a sum of money and you obviously have ideals or plans based on your konwledge. Withought knowing the details I'm curious of your investment strategy.

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#5) On March 27, 2009 at 2:17 AM, kaskoosek (36.28) wrote:

binve

Thanks very much for this post.

I think that you are a carbon copy of my thoughts, but you present it in a much better way.

 

I would just like to add that if in fact these measures are inflationary, then Americans will have an increase in purchasing power even for a short period of time. This will translate to an increase in demand. Recovery in the economy which will be fake.

 

This can cause the market to rally in nominal terms. I would also like to add that I find many industrial commodity companies to be attractive.

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#6) On March 27, 2009 at 2:18 AM, BradAllenton (31.57) wrote:

Nice post, thanks for sharing your thoughts/charts.

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#7) On March 27, 2009 at 6:53 AM, XMFSinchiruna (26.96) wrote:

An amazing post... thanks 'e'!!

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#8) On March 27, 2009 at 8:51 AM, GNUBEE (24.35) wrote:

e, It is always refreshing to see well constructed, well supported useful thoughts. Keep them coming. I stand in line with everyone else to tip my hat to you.

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#9) On March 27, 2009 at 8:55 AM, binve (< 20) wrote:

RussWild, Thanks man! I really appreciate that. BTW, Very nice work in the chart lab by you and Columbia1. I think it is very good to have an interpretation of the macroeconomic landscape (and that is exactly what it is: my interpretation. Is it right? Who knows, time will tell :) ). But I disagree that EWT falls by the wayside. EWT, more than anything else, and a measure of market psychology. This is why GV was able to call the bottom. My indicators alone certainly weren't doing so, other than to note that we were historically oversold. Just for myself, I need to do Fundemental Analysis (FA) along side Technical Analysis (TA), just because it is how I think. I give props to the many analysts like GV that can operate on TA alone. I think that is incredible.

As far as my positions and investing stance, I actually did write a post that describes it: I never met and 'e' I didn't like. But I will summarize it here.

The binve portfolio is going to be a more short-term/momentum based portfolio. Contrasting against binv271828, which is a much more long term and thesis-based portfolio (basically: Long term gold up, silver up, oil up, commodities up, alternative energy up, water infrastructure up, broad US equity market underperform, US dollar down, US Treasuries down). So a valid question is, am I giving up on those long term positions? The answer is an emphatic: NO! I have been thinking about my investing style a lot over the past year. There is a part of me that is still a thesis / long-term-buy-and-hold investor and then there is another part of me that responds to the "don't get married to your thesis" argument. The way I have resolved that conflict for myself and my investing style is two accounts.

So I do have two real life accounts, long term and trading:

Long term:
- Precious Metals: by far my biggest holding is CEF, some others
- Miners: AUY, SLW, RIO, PAL, etc.
- Oil Producers: COP, etc.
- CANROYS: BTE, PWE, etc.
some others but these types are my biggest weightings

Short term: (I recently moved stuff around)
- Oil: 10% (sold a lot at $54)
- Shorts ETFs: 30% (anticipating pullback)
- Long ETFs: 10% (hedge)
- Cash: 50%

Thanks for all of the comments and support!

uclayoda87, Thanks! I know what you mean. The producers are a tough call right now. They correlate both to the stock market and the price of oil and/or natural gas.

Short term: I think both oil and the market are overextended and will pull back. I suspect that most producers will pull back.

Intermediate term: But I have traded some producer ETFs the last couple of months and will probably do so again for the rally, when oil pushes toward $77 and the S&P pushes toward 1010. These will be strictly trades.

Mid/Long term: Unless you find a company that you really like, I would wait on the producers in general. I think the market will eventually move past the lows. When this happens I will be buying producers like crazy. Looking for well access, rig exposure, hedging (or lack thereof), and dividends.

Very long term: I think the survivng producers will be very good long term investments. I think most of them will be cheaper in the future. However, there are some that I bought before the commodity correction (such as COP) because I really like the company, so even I don't always follow my own advice :)

And this is great:

I use GLD in place of a money market fund to store most of my cash reserves.  I keep some cash, but not much now as I am waiting to sell not buy.

I think that is an excellent plan. I think gold and silver are much better inflation hedges than money markets. My only suggestion would be to switch to CEF. Better auditing, stored in Canada, smart management (very well-timed purchases). I think CEF is the best bullion proxy there is.

Thanks for the comments!

kaskoosek, Thanks, I really appreciate that! We definitely seem to be on the same page when it comes to inflation topics. I have read many of your posts (also as binv271828). I agree with everything you wrote above.

BradAllenton, Not a problem. I appreciate that. Thanks man!

TMFSinchiruna, Thanks man. I defintely know that you understand where I am coming from. I am very glad you stopped by to check this out. Thanks!

 

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#10) On March 27, 2009 at 8:56 AM, binve (< 20) wrote:

GNUBEE, Hey my man. Thanks! I appreciate that!

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#11) On March 27, 2009 at 11:11 AM, isusan (< 20) wrote:

Binve, thanks for taking the time to put this all down!  I definitely need to read this a few more times...nice work.

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#12) On March 27, 2009 at 11:16 AM, binve (< 20) wrote:

isusan, Absolutely, my pleasure. Thanks for the compliment!

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#13) On March 27, 2009 at 11:33 AM, RussWild (< 20) wrote:

Binve~ thanks for the reply, I'm was saying my "study-time" for ETW falls by the way-side. I should read what I type before I post...hehe

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#14) On March 27, 2009 at 11:36 AM, binve (< 20) wrote:

RussWild, LOL! Yeah, that makes much more sense :).

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#15) On March 27, 2009 at 11:52 AM, columbia1 wrote:

Binve- I think CAPS ate my comment!!, Anyway, you have done a fantastic job on this blog, really out doing yourself. I can tell you have spent many hours coordinating charts, and commentary for this blog and the quality shows. I can also tell you enjoy the challenge of writing your own blogs. Something I am not comfortable about. My hat's off to you!!!

Russ, its your turn!!!   ;)

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#16) On March 27, 2009 at 12:10 PM, binve (< 20) wrote:

columbia1, I hate it when that happens :). Thanks, I really appreciate that! Yeah, I tend to be a big picture investor. I really like looking at the whole picture and seeing how the pieces fit together. This stuff is so complicated, no one person will ever get everything right. But that doesn't stop me from trying :). But I really appreciate the compliments, I really do try to take the time and put together quality posts. Thanks for noticing!

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#17) On March 27, 2009 at 3:55 PM, uclayoda87 (29.31) wrote:

Thanks, I'll look into CEF.

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#18) On March 27, 2009 at 4:57 PM, Tastylunch (29.33) wrote:

Binve if we break 1000 S&P I;d expect at least a 50% retracement rally then, 1000 is a huge huge huge psychological barrier. I highly doubt we just cross it and collapse but we'll see. After all every network in the world will have a head line story on it if it happens, the retail invetsors could pile back in (I missed the bottomz Oh Noes!)

The other powering this rally is IRA contributions imo, I'd be intreteted to see money flow numbers into mutual funds. I bet it's up.

Very nice post  dude, must have taken a lot of time.

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#19) On March 27, 2009 at 5:07 PM, binve (< 20) wrote:

Tastylunch, LOL! Yeah, you are right of course. I did the math quickly and it came out to 1010. But maybe we only get a 31% retracement or something because it just can't quite push past 1000. I will buy that as a realisitic possibility.

It will be interesting to see how this rally develops, if it tries to reach 950-1000 in one big gasp (in which case it will fail at 1000 guaranteed) or does it advance & consolidate / advance & consolidate, etc. so that it approaches from a position of strength.  Next few months might be very fun in the market :)

Yeah, that is a good call. Last minute IRA contributions before Apr 15th. Yep I think that might be a source too.

Thanks man, I appreciate that! Yeah, I literally just started playing with the oil charts, then I was looking at gold, then I was looking at the dollar. By that time I had already spent 2 hours making charts. So I said 'screw it' and spent another 2 hours writing the post :) My wife was yelling at me to come to bed at the end. Ah well, all for a good cause :)

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#20) On March 27, 2009 at 5:10 PM, binve (< 20) wrote:

What was nice though was that I was able to use some of the Oil and S&P 500 text from comments I had written on other blogs. Hey a good programmer always reuses good code, right? :)

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#21) On March 27, 2009 at 5:52 PM, Wharrgarbl (49.61) wrote:

Exceptional work.  Thank you for spending your time compiling this info together.

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#22) On March 27, 2009 at 6:21 PM, binve (< 20) wrote:

Wharrgarbl, Wow, thanks! My pleasure!

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#23) On March 27, 2009 at 6:53 PM, CoastalTrader (88.05) wrote:

binve

Good job man.  Aside from my long longs, the only thing I play with are crude oil and the S&P.  My novice TA evaluations say that you are right on the money on both of those counts.

Unfortunately, I am working offshore right now and the only plays I can make are high percentage swings IF the market decides to favor me with a good entry point on a day I have internet access.  I had to sell covered calls on my USL as a hedge and so I missed out on the big oil push after being bullish all year.  Oh well, a little gain is better than a loss any day.

I rec'ed and followed, and I too will be watching for pullbacks on both the S&P and crude.

CS

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#24) On March 27, 2009 at 7:34 PM, anibas (65.49) wrote:

Great post. Thanks for all the excellent charting and information.

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#25) On March 27, 2009 at 8:05 PM, anchak (99.87) wrote:

Holy Macaroli! I saw the post in the morning....just marked it and wanted to come back and do proper justice to it.

Binve....Take a bow! Outstanding...outstanding....ing,,,,ing post...

Also let me tell you...I'll re-read this again...just to ensure I absorb it properly....and maybe then I'll comeback with proper comments and follow-ups.

I will seriously try the madcow trick to see if the # of recs can go up magically :)

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#26) On March 27, 2009 at 11:10 PM, RussWild (< 20) wrote:

Binve~ Your post is like watching one of those movies I can watch over and over again and get more out of it each time…6th sense, comes to mind…. Anyways, your analysis really gives me pause for thought on many things I think I know, but maybe I don’t. You’re in a level of understanding the real moneymakers in the global economy such as the dollar, bonds, gold and oil.

 

If I may, managing IT professionals for the last 9 years, you are exactly what I’m used to. IT people have an affinity to making things into an equation. This is just freakish when programmers apply the logic to things. And freakish is not a bad term… not in the least.  My programmers are bent on disproving false ideals of “global warming” if its not that they are either designing a better “rebuilt Toyota Camery” with a battery engine… Not to mention they have spent 10k to re-design the water heater with solar panels to reduce costs of heating their home. Nonetheless, ROI is not in the vocabulary of our kind. It’s about proving/disproving things and that is what makes it so amazing.

 

I’m going to boost your ego here, but it is justified. As a programmer you understand EWT as second nature. Rules!!!! Are as a part of everything to development in a program as the variables that define it. Cycles within cycles are simply understood to the rules of any program. You think in a way that all exception can be put into probabilities and this entire EWT can be auto-explained of the variables and rules are defined.

 

My friend, I have tried to get my programmers to join this campaign because I know they have the brightest minds in any forum that I’ve ever seen. My intelligence is morphed by theirs and with my experience of achievements with them, I feel my right hand is cut off without their support. Programming logic at that level dwarfs my intelligence and I might be the EWT mascot, your logic supersedes mine by nature. You simply breathe this, where I struggle. One word of caution though, programmers are notorious for digging into the problem where they get lost in the tree’s and are completely lost in the forest. I think my warning is not warranted because you start with the larger picture and focus on detail.

 

The fact that you focus on the “bigger picture” where you are trying to identify any variable you can signifies that your stuck on the larger variables and the short-term variables are second to that is huge.

 Ok, so I’m really not into tax stuff tonight…………lol Report this comment
#27) On March 28, 2009 at 12:50 AM, TheGarcipian (34.44) wrote:

Excellent post,  binve!  I agree with all you've written about oil and gold (and excellent re-use of your other posts [or "code", as you wrote]), but I have a slight disagreement with you on equities, in particularly the financial sector. You wrote:

Intermediate term (2 weeks - 3 months): Rally will be impressive. From the peak (1570) to the bottom (667), I think a 38% retracement is a reasonable target, which would be ~1010.

First, where does the 38% magic number come from? You mentioned it in the Oil section too. Is there a secret handshake I missed while skipping TA class? :-)  Seriously, I'm curious where that comes from. 

Second, do you really think that financials are oversold right now (3/27/09)? I look at C and MS and see tops in the "overbought" range. I think they're likely to fall in the next 2-4 weeks. You certainly mentioned the impending pullback (and I agree, one is coming), but you're suggesting that the S&P500 will rise to ~1010 after that. Really? Wow, I just don't see that. Sure, people are buying into the belief that Geithner's Uber-Plan is going to work, but once videos like the one you linked to from abitare's blog (excellent video, BTW!) become more prevalent and they see it really as a sham to let the banks off the hook, I think that extreme pessimism is going to settle into this market, and we're going to plummet back to the 650 range, then continue sliding downward, oscillating our way down to 500 or so over the next 9 months, roughly.

When are people going to wake up to the fact that when Wall Street is happy, that's not always a good time for the individual investor to be happy? They're happy because they get to rob the US Taxpayers blind and in broad daylight!  What daring vampires they have become...

Well, at least I can use this bump to close out some of my losing longs (not gold or oil, though!) without losing as much.

Damn, it sure is getting cold preparing for this K-wave Winter...

--Gar

 

 

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#28) On March 28, 2009 at 2:09 AM, Tastylunch (29.33) wrote:

TheGarcipian

38% 50% 62% are Fibonacci retracement numbers

http://www.investopedia.com/terms/f/fibonacciretracement.asp

The gist of the idea  is it tells you how far a move may go when it reverses and can be applied over virtually any time frame (or so the hypothesis goes). Which is nice since it gives you some discipline on when to sell a winner.

So based on Oil's fall from 149 ish to 32 ish a 38% Fibonacci retracement would take it into the 70s, which would serve as resistance ntil you broke through it. Then the next target resiatnce would Fib 50% which would about 89 I think and thena potentially extremely powerful barrier at 62% barrier which would also be right around 100. And so on.

Binve applied the same to the S&P's move taking the top (1570) subtracting the bottom (1570-666) from it to get the size of the move (904) and then multiplying that by 38% (343.52) adding that number to the bottom (666+343.52) to get his target area (1009.52 ish)

I'm undecided on how well they actually work (personally I've yet to see a Fibonccai fan work at all but I've seen some retracements "work"), but they are easy to use. which is my favorite quality about them. It's my personal belief that TA is most likely to work if it's easy to use, for then the likelihood is greatest that a large number of people will trade in a way that may make it a self fufilling prophecy.

The also is a good story behind the Fibs which I think lends them an air of believability/credibilty (hey its based on the golden ratio!) which could lead to further crowd pyschological reinforcement.

Dont think many people on CAPS use'em D1david does I think. Goodvibe factors it in I believe. Maybe tenmiles. I guess binve does too :)

I've only tinkerd with them for about 13 months. But i haven't used them them really in CAPS.

 

 

 


 

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#29) On March 28, 2009 at 12:40 PM, binve (< 20) wrote:

CoastalTrader

Thanks! By the way I checked out and recced your most recent post about USO / USL. Nice post man! And I agree. I have been watching the contango situation for awhile and I think it is unsustainable. But like you I timed my USO purchases after the 20th just to get a good deal on the rollover :), because I thought oil was bottoming and heading higher. I appreciate you following this. And I agree, even small profits are always better that losses :)

anibas,

Thanks! I appreciate that!

anchak,

Hey my man! Thanks :) Man, I really appreciate the kudos from you. Yeah, I wanted to delve into all the subjects that we talk about and that I look at all the time. And it really just turned into a huge post. I actually had to edit out my sections on Natural Gas, Gold Miners (via the HUI) and Financials!! The post was just getting too long. Jeez. Man, when I get to talking I just don’t shut up :)

The madcow trick! LOL! He just loves messing with all of our heads :)

RussWild

Man, these compliments are so great. You really have no idea how much I appreciate them. As far as the level of understanding about the real macro trends and money flow, I am not there yet. I am definitely interested and my goal is to really understand how all the puzzle pieces fit together. But in my opinion, the puzzle is so big and complex, that no one person can have a fully objective understanding of everything, you end up having to make assumptions which are obviously affected by your viewpoint. It is tough for anybody to get everything. That is why I have been reading a lot by people whose opinions I tend to agree with and people whos opinions I tend not to agree with. The truth is always in the middle of any set of extremes.

I am very interested in your IT management experience. That is very cool. What types of systems do you work with? I also read you background on GV’s ‘Who we are’ post. And I like this quote a lot: My definition of success is "moving from one failure to another without losing enthusiasm.". Awesome!

You can tell from my statements that I am a bit of a programming nerd, but actually my main job and education is as a Mechanical Engineer. Got a BSME and (after being out of school for way too long) and about halfway though with my MSME (doing this one remotely and at my pace). I have 12 years of Engineering and IT experience, which include: Manufacturing Engineer for an HVAC company, IT tech, Network Administrator (both Windows and UNIX), Web Designer, and Mechanical Engineer for several Aerospace companies.

My current and most recent jobs for >8 years has been as either a Thermal Analyst or Structural Analyst for satellites and aerospace vehicles. I have also been co-owner of a (failed, but fun while it lasted) web design company. Have also done IT work and Network Administration for a couple of companies. And even HVAC engineering. Programming is awesome. I am proficient in: FORTRAN, C/C++, Visual Basic/VBA, FEMAP API, PHP, CFML (Cold Fusion), Java, JavaScript, HTML, Perl, Shell Scripting, PLC Programming (maybe rusty in some :) ). As an analyst in the aerospace industry I do a lot of programming, which I am happy about because it keeps my skills sharp.

But talking about the “big picture” for a minute, I was really surprised to find out being a Thermal Engineer for satellites has made me a better macro-investor. A satellite Thermal Engineer worth their salt has to look at the whole system: How sun moves around the spacecraft, not optimizing for any case but finding a balance between hot (EOL) and cold (BOL) cases, how the electrical design put power (heat) onto the satellite and how it changes over time/situations, more thickness in panels mean less thermal gradients but it also lowers a structures frequency, etc. There all kinds of effects that are cross-discipline that affects the overall thermal performance. And a successful thermal design (one that keeps all of the temperatures of the spacecraft within limits on-orbit over the entire mission life) must take into account all of these different effects.

Essentially it is a system. And all systems have influence from several factors. And all of these factors interact, sometimes in very unexpected ways. The economy is the same way. Even though it is big an complicated, it is still a system and will have system-like characteristics and behaviors. E.g. printing money to buy Treasury bonds will keep interest rates low, but the diluted value of the rest of the dollars will cause the cost of goods and services to rise. But there is not a strictly immediate relationship, because like all systems with “mass”, there is inertia.

…… Man, I am really starting to ramble. Sorry, I tend to do that. Please feel free to skip and I will understand and not feel at all offended. :) But this is a great topic and Tasty, anchak, madcow, Gar, TMFSinchiruna, and a lot of others have “waxed systematic” on the economy and systems in general before and they are really good reads:

Short Term Oil (start at comment #21)
BPHX-Phoenix? (start at comment #3)
Why e is the coolest number (The whole thing is good / fun)

Based on all of this system talk, I just want to mention something you wrote, and I want to be clear: This is not adversarial at all! You wrote … disproving false ideals of “global warming” …. I tend to be on the other side of the fence. I think that humans can and are affecting the climate. Mostly because of the system talk and observations above. The Earth is a system too, and even though it is robust, it does have sensitivities just like any system. I have spent many years looking at and studying systems, and I am NOT saying definitively that humans are causing global warming, but I am saying that complicated systems are by definition complicated. And nobody should have a definite opinion (one way or the other) until we have predictive models that describe climate change trends accurately (I also know a lot about both the advantages and limitations of modeling techniques). Healthy skepticism is a good thing, but absolute opinions are not. Please take this in the spirit in which it is written, just two guys interested in the economy and systems and having an interesting discussion :)

As far as EWT, I am on board. And the more I read the more on board I am. I have invested for many years, but not as a serious until about 2 years. Many years ago I day-traded for awhile (when it was new and all the rage). Because I was enamored with the “get-rich-quick” theme. I never could do more than break even, because I was not patient or I was too emotional. Then I stuck to index investing. Lost a lot in 2000-2001 but then started making it back in 2002-2007. I figured things were fine. Could really care less about the economy. But then I started to read, and eventually I started to care. I would watch CNBC (big mistake) or read financial website, but nothing jived with how I felt. That the economy was not as good as it “seemed”. Then about a year-and-half ago I found Caps. Filled with opinions and open exchanges (and a lot less poop-throwing than Yahoo). I lurked for awhile and then finally started my binv271828 portfolio. I was reading about ROIC, debt/equity, EV, etc. on the Fool and trying to make stock picks. But I really felt something was missing.

Then I read Sinchiruna’s blog (before he was TMFSinchiruna). And he opened my eyes. Before that I thought gold was stupid (you know: shiny rock, only used for jewelry, not money, etc.). But reading his blogs was like an education in not only gold, but monetary policy. How that policy has changed over the past several hundred years. Inflation. Currency Devaluation. etc. I was hooked. From there I read about bonds. Miners, commodites, forex, etc. I now read LOTS of stuff almost daily: Safehaven, Prudent Bear, HoweStreet, Steve Saville, Puru Saxena, John Mauldin. But all of the real life investments I was making based off this mindset are hedges against long term inflation. Most of these investments are in the red (because I bought before the commodity correction, even though I averaged down), which I am absolutely fine with because I believe long term inflation to be the biggest problem and I have little doubt that those investments will pay off (or at least keep their real value). But I more recently (in the last 6 months) wanted to brush up on my Technical Analysis skills again. I felt like I had become a much more calmer and patient person and I wanted to get back into swing trading (no time to do day trading :) ). I have been doing that since October with good returns and so I started this binve portfolio in December once I felt like I got my “mojo” back.

Then I read GoodVibes blog. Goodvibe is to my Technical Analysis mindset as what Sinchiruna was to my Fundamental Analysis mindset. I reading about Elliot Wave back when I was day trading years ago. But it was always referred to as “voodoo” or numerology or something else disparaging. So I ignored it. But thanks to Goodvibes presentation I am talking it seriously. And the funny thing is, it is the complete opposite of voodoo. It is literally market (human) psychology distilled down into sequences and ratios that repeat all the time and infinitely in nature. The market is a human created system, so it stands to reason that it not only exhibts system-like behavior but also behaves according to natural rhythms. It really is eye-opening.

……. Holy cow. I just read what I wrote. I am rambling AGAIN. Sorry. I will stop.

I just want to finish up and say Thanks. Your comments mean a lot. They are very obviously sincere and based on the generosity you have displayed in all of the other blogs, you are a very sincere person. And I really appreciate that.

TheGarcipian

Hey man, Tasty is right on about the Fibonacci numbers. Also GoodVibe shared a great video on the Fibonacci sequence here. I know that you know about Fibonacci numbers, even though I was just throwing the ratio in randomly. But watch this video. It is fascinating, and I know you will appreciate it.

Yeah man, let me clarify my position on financials

Enlarge

So I am on board with you 100%. On the 6 month daily chart above (right one) financial are overbought. XLF went from 6 to 9.5 (up 58%) in 2 weeks. I am expecting a pullback. In fact I am short financials right now in my trading account. But now look at the left chart. It is a 3 year weekly chart. Financials have fallen off of a cliff face. And my opinion is that they deserve to. Here is what I wrote above: Financials (despite the fact they are also in the toilet. No wait, they are in the sewer… no, not deep enough … no how about the Earth’s core, except its filled with garbage … yeah, that will do it). Yeah financials suck. But the weekly chart is a cliff face. It is so extremely oversold and pessimism is so high. They just need the merest hint of a floor from government intervention and I think they will put on a good rally. Do they deserve to? ABSOLUTELY NOT. But will they and do they deserve to are two completely different questions. And I think they will rally from here after this pullback.

Same thing with the S&P. Weekly technicals show divergence and the market is still historically oversold on weekly indicators. I think after this pullback within the next two weeks, the market looks poised for a big rally.

As far as your long term forecasts, you see that I am on board with you. S&P 500 at 500 hundred would not surprise me at all. Like I said above, I am looking for an ultimate broad market PE of about 6 before I get bullish long term and across the board on the stock market. In the meantime, I am sticking with commodities, and playing the bear market rallies both up and down.

Man, I am so glad you mentioned K-Wave winter. I read a lot from Tim Wood. He is a very big cycles guy. But there two big cycles at work, the Kondratiev Wave and Long Valuation Waves. You are obviously familiar with K-Waves and they run about 40-45 years. Long Valuation Waves (LVW) run about 33 years each. What is interesting about the next few years is that these two cycle bottoms are happening in phase (which hasn’t happened for a long time). That is yet another reason why I am so pessimistic. Crappy economy, monthly and yearly technical indicators say more pain to come, PEs still to high, and long term cycles still haven’t bottomed yet.

Thanks for the comments and the thoughts man!

Tastylunch,

Yeah, I have been using Fib numbers for awhile, but I am now really using (and understanding) them. This is all very cool stuff :)

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#30) On March 28, 2009 at 4:57 PM, Tastylunch (29.33) wrote:

Looks like I was wrong, looks like money flowed out of equity fundS!

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=171857&t=02005121002740111480

That's bad news for the rally, very bad news.

Something is very wrong here.

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#31) On March 28, 2009 at 6:43 PM, binve (< 20) wrote:

Whaaaaa ????? That is really surprising. When you mentioned this, I thought you were calling it right on, because my bond theory was nothing more thatn a guess. Maybe not?

Remember what I wrote above. I thought that there was a lot of money coming out of bonds and into stocks. Maybe it is, maybe a lot of the holders were waiting for the QE announcement, sold on the rumor to unload low-yielding bonds and to buy stocks.

What are your thought on this? I am still not sophisticated enough to read the bond money flows and I haven't been paying as close attention to the CoT data (well, the equivalent for bonds) as I should be.

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#32) On March 28, 2009 at 11:44 PM, Tastylunch (29.33) wrote:

binve

hey I don't really know either but it does concern me about how strong the rally actually is.

Now I think about ti and based off what market bottom said, I'm thinking it means the hedgies and quants and maybe (hopefully not) the investment banks/private equity guys have relevered up to old norms

This could make a certain amount of sense a lot of smart money flowed out hedge funds into treasuries. I don't think retail investors were driving up treasuries most people I'm know were holding and hoping with the equities...

Many hedgies have reduced fees in response, that and QE I suppose could reverse flow back into stocks of the smart money especially foreign equity.

However teh "dumb money" ie. you and me still hears about calamity everyday on the news and is probably still dropping stocks. I think we could see a decade long dumping of stocks by baby boomers as they age . I really think stock prices will remain depressed for some time (if you look at from a 20 year perspective)

I don't know Binve the fundamentals and the odd artificial nature of this rally as well as the overbought conditions on many things suggest to me this is dangerous for longs. The Vix looks like's its dieing on the vine, $NYMO is around 100, the CBOE put call ratio is well below one all of these have signalled significant tops in the past 1.5 years. and now we know that money is leaving the market.

Usually money outflow  is bearish for rallies

hard to know  if that will hold true, the markets in the last 15 months are breaking all sorts of historicla norms. But it's hard for me to be bullish now (unlike when GV called the bottom)

Well that's my best guess/interpretation.

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#33) On March 29, 2009 at 12:17 AM, RussWild (< 20) wrote:

~Binve – don’t worry about the ramble I found it interesting. Ok a couple of quick answers for you. I’m a network engineer MCSE 4.0 as a background before managing took over and now I’m surpassed my by newer admin guys. (I never higher educated administrators.) I find the corporate world has corrupted the majority of them and lost the understanding of real work. I higher young kids…not that’s funny to say.. (23-27) range usually that have a passion for computers but never had an official “JOB” in the field. Just point them in the right direction for education and base knowledge and they are better admins than me within 1-2 years. I just love to watch people grow and passion for a trade when it’s new and exciting makes me relive the time when I was there. My company also pays under the average salary for network guys about 30%. So I hold on to them until they reach a level where they should leave to start their Admin career in a larger company making the 65-85k they deserve. Wash, rinse, repeat as GV says.. After 10 year at the same company this is the 4th cycle of Admins I’ve gone through and all of those who left to fly on their own I call my closest friends.

 

Programmers on the other hand make more than me..lol (my company politics are strange beyond words). I have 4 different groups (consultants/employees) that manage different systems. Main systems are in Clarion (I know…?????) and Foxpro…. (yes, crazy). The other is .NET. These gentlemen are 10-20 years my senior so it’s a completely different management style.

 

The global warming issue I am impartial to either argument, so it’s all good. They started getting crazy about it about 1 year ago when the temp machines that … NASA? I forget uses to monitor temp around the US and other places. The majority of them were planted next to asphalt or surrounded by buildings or other nonsense, which makes the data, messed up. From that point they just found anything they could to support the argument. I am a impartial person by nature or I like to live in the “grey” of life where they on the other hand have to make it true/false and believe in one. I don’t even consider a religious discussion with them…hehe Oh, they did show me something the other day that just made me laugh though. Someone made a bunch of snowmen 500 of them I think with signs “stop global warming” in some state outside of the capital of the state…funny stuff.

 

Ok, I’m rambling now, but I have one more point to address. I agree with you. I’ve been around CAPS for almost 2 years now and I’m amazed at the level of education/understand some posters have of things that I am unfamiliar with. The macro side of all of this is just amazing from the posters here. I almost feel guilty not giving them the praise that they deserve. And a lot of the posters here on your blog are some of them…. So thank you from the bottom of my heart for your desire to share and educate.

 

Ok.. consider this a P.S. …lol I also got started on the wrong foot. I was convinced that the equation of beating the market was financial understanding of a company. I remember I spent about 20-40 hours on making history of EPS growth, Book Value growth, Debt ratios etc etc on WAG vs. CVS…… I was convinced that WAG was the way to go and just watch my only and very small “etrade” money lose with WAG for years. Yeah, yahoo boards are just ugly and stupid….. I have always been pretty good with index trends so my 401k has done well considering, but it’s only until GV tied my already charting with SPX/Dow/Compq.. connected with the macro/micro understanding.

 

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#34) On March 29, 2009 at 9:52 AM, binve (< 20) wrote:

Tastylunch, You are saying what I am thinking:

Many hedgies have reduced fees in response, that and QE I suppose could reverse flow back into stocks of the smart money especially foreign equity.

If bond holders (i.e. very smart money) wanted to liquidate some of their low-yielding bond holdings into relatively-much-higher yielding dividend stocks then Bernanke gave them the gameplan months ago:

1. Fed made QE policy plans public knowledge in Dec-Jan
2. Stock market is tanking, bonds stay safe haven
3. Fed makes annoucement for a QE auction 2 weeks ago
4. (Interesting observation) if you look at the 30 year bond chart that I posted above where I identify "buy on rumor, sell on news", you see that bond prices are practically the same today as they were before the QE announcement. ...? Interesting. Not much higher and not much lower. It seems as if the Fed bought $300B in Treasuries and enities sold approx. $300B in Treasuries (so that the net supply and demand is about the same)

So my theory goes like this: If the Fed is telling you ahead of time that it will put a floor under bond prices, and as a bond holder you have been overweight bonds during this crises, why not liquidate some (not all) of your bond holdings now esentially penalty-free (courtesy of the Fed) to buy into oversold conditions in the stock market?

The more I think through this, I am starting to see this. Your observation on the "dumb money" (i.e. you, me, individuals) which are the people that drive the mutual fund flows hear the bad news and pull out.

But at the same time bond holder (smart money) hear a risk-free way to liquidate and what if they put their money into some now-much-lower-cost hedge funds (like you suggest above). The market is so oversold right now that even a slight net postive amount of money of smart money over dumb money will cause a rally.

Also consider this:

The smart money causes the rally at S&P 667. Meanwhile dumb money is exiting the markets. Now the rally is up >20%. We are going to see a pullback next week and CNBC will be screaming like a bunch of idiots that the economy is doing better and this is a buying opportunity. If the smart money can give the market one more push back up after the pullback, you know the dumb money will pile back in.

.... Man, I am making a whole lot of stuff up right now. But it certainly could be possible. :). Tasty, lets keep throwing out ideas and I think we will stumble on to the truth (or at least have fun trying right?) :) Thanks man.

RussWild , Cool man, thanks.

That is really cool that you are training new batches of Network Admins and able to give them the guidance and experience to the next level. That is really great man. And it is awesome that you are friends with all of them. 

Right on. Caps is simply the best. The diversity of opinion and experience here and the fact that all of the people with good opinions and experience are so open and helpful make this the one site that I come back to over and over again. And I am just so glad that I can give back a little to others when so many other people have given me so much more.

It is funny that so many people get started in one way in investing / economics and wind up somewhere completely different. That is the beauty of a place like Caps. You will find and gravitate toward people who are saying the things that you need to hear. And when that happens it almost resonates with you. Very cool stuff :)

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#35) On March 29, 2009 at 5:50 PM, Tastylunch (29.33) wrote:

You know I never know whether to call it smart & dumb money or big & small or Insider & outsider. No set contains a very comprehensive (or fair) picture...

If I recall correctly Binve most rallies start with mutual fund inflows so this unusual and it may signify that the bear market rally may be weaker than one might expect. hard to say.

However the dumb money might be giving us a lot of false signals for years to come now. With Unemployment rising, savings rate increasing, food increasing, home values and credit shrinking and most importantly boomers retiring we may see a generational outflow. Perhaps flows of negative x billion is the new positive x billion inflow. I.e. 2x billion outflow is the new outflow and 1x billion outflow is the new inflow...

Anyway you make a very good point about QE the biggest surprise about QE (we all knew it was coming but it was early) was how little bond action there was because of it. Even Libor has barely budged. That is very strange, but i think your explanation makes sense if we couple that with possible hedge fund inflows.

The other possibility is that investors are onto the scam that mutual funds are and have bought stocks directly! I don't believe Trimtabs measures that...The volatility ofthe markets has really revived the daytrading phenomenon perhaps this is partially to blame. But since daytraders love the dbl and triple etfs I would think would have caused ETFs to have show net inflows...

Stil the probable waning of the mutual fund vehicle may also be obscuring the signals. I really think last year opened people's eyes to how bad they really are.

 of interest Doug Kass is suggesting cashing chips for now. Odd since he called "the bottom" right when Goodvibe did. In fact he went all out and said we will never break the Satan lows of 666. He thinks we pause for now then begin the next  ascent in June. I hate thestreet.com but his columns are usually pretty good (he has been notoriously short Berkshire Hathaway)

http://www.thestreet.com/story/10478509/1/kass-pushing-the-pause-button.html

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#36) On March 29, 2009 at 6:25 PM, Tastylunch (29.33) wrote:

also interesting net insitutuonal selling is still occurring

http://www.marketfolly.com/2009/03/follow-leader-or-get-trampled-herd.html

 

 

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#37) On March 29, 2009 at 7:08 PM, binve (< 20) wrote:

Tasty, man this is why our coversations are always so good! We always point out things that get the other thinking and we usually iterate on to what is actually going on.

... how little bond action there was because of it. Even Libor has barely budged....

Awesome point! I didn't even think about that. I was saying above that QE was going to send artificial signals, and now that I think about it, it will hide a lot of signals too. So if LIBOR is not moving and there is a net outflow of mutal fund money that could mean the following things:

a) QE is not affecting interbank rates. Which is interesting, I would have expected LIBOR rates to go up. I mean Fed QE is the starting gun and all other Central Banks are going to ramp up too, then it is a currency devaulation war (sort of a form of protectionism). LIBOR should show that banks especially foreign banks are less willing to lend to eachother. But it isn't, which mean the big players (Central Banks and Soverign Wealth Funds) are being intentionally chummy.

b) This really is a "Deflation Scare". If central banks and the big wealth players are indeed chummy, and the dumb money is running for the hills (because deflation is still the main headline), but the stock market puts on this spectacular rally so far, then the smart money already knows that inflation is the order of the day and is going to "force" a bottom to pick up assets on the cheap to get better return on their money instead of low bond yields. And the logic goes of course that when the market is bid up by the smart money and the dumb money piles back in (thanks to CNBC and the like) it will give the smart money a realtively low risk way to unload.

c) Central Banks are in cahoots with the big SWFs to make this happen. Chinese and Japanese have been complaining about the Feds dollar devaluation for months. Remember the headlines that we were discussing? That Japan wants new Japanese-bought-US-Treasury-debt to be denominated in yen instead of dollars. What if the Fed made the QE plan announcement in December to give a the big players a heads up. Sort of a "peace offering" as it were?

I know this is basicially what I said in comment #34, but I am now refining based on your observations.

And that is an excellent observation about the mutual funds

Stil the probable waning of the mutual fund vehicle may also be obscuring the signals. I really think last year opened people's eyes to how bad they really are.

The more I think of it, the more I am convinced that most mutual fund managers should be lumped in the "dumb money" or perhaps "outsider" category. Maybe even some of the smaller pension fund managers. I think your second link exemplifies that.

I know I am starting to get a bit on the "conspriacy theory" side, but really I am not. I am not labeling any of these actions as good or bad. I am just trying to understand them so that wer are more on the "smart money" vs. "dumb money" side of things :)

Seriously man, these discussions are awesome and they are really forcing me to think critically about this. Keep 'em coming!

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#38) On March 29, 2009 at 7:31 PM, CoastalTrader (88.05) wrote:

binve

You know, the guy on Seeking Alpha who has been writing extensively about the dangers of USO and contango has recently flip-flopped.  While contango exists and will continue to exist in a rising market, at least (for the time being) it's almost negligible now.

Back in January/February I think it was, it rolled from something like 40-42 to 46 and ate a lot of people's lunch.  I had to trade my a** off to get even on it.  And I didn't know jack about
TA.  I would just watch the chart and try to gauge the ebb and flow. I worked myself out of it and I learned a lot going on almost pure instinct.

Everything else aside though, I strong gift from God (Bernake) uptrend will cure just about anything.

I am now trying to calculate an auto-pilot trade for oil.  I'm thinking something like $27 for an entry on USL.  Any thoughts?

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#39) On March 29, 2009 at 9:18 PM, tahoestock (30.19) wrote:

binve…an excellent economic overview.  Somehow this blog should be recommended reading in addition to GV’s, if not first.  We’ve all done the “looking for a system” or searched for recommendations from others (like GV) for picking stocks, probably with minimal success.  It’s easy to assume others to be more intelligent about such matters…why do your own research if you can follow someone ‘smarter’ (hence the success of CNBC, et al)?  You have made basic FA a bit more accessible…I like that; start here and then TA becomes more sensible.  If this blog can continue to link fundamentally with what GV is doing technically (within the same time frame?)….well, that would be an awesome teaching resource.  Really well done!

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#40) On March 29, 2009 at 10:35 PM, binve (< 20) wrote:

CoastalTrader, Exactly! Yeah the whole contango issue was way overblown and only was an issue if you thought oil was going to be <$30 for the rest of 2009. Instead, it was a gift to buy oil on the cheap during each rollover. Vet67to82, had a great series of blogs on contago back in January: US EIA, Crude Supply, Shipping, and Contango, was the latest. Vet has lots of good posts and I would highly recommend adding him as a favoirte and following him.  amassafortune also. Both are very knowledgeable about the oil industry.

As far as USL, yeah I like it a lot at $27, but I doubt it will get that low. Oil has begun its pullback and all of the Oil ETFs and ETNs (USO, USL, DXO and UCO) are following suit. I think they will all retest their 50day MA and based on how long it took them to break through, I bet it will be strong support for all.

For USL I will begin buying at ~$29. I usually buy in 3 installments (25%, 50% and 25%).  I think the 50 day MA will be around $28 when it retests and that is where I will make my 50% purchase. If the pullback is really sharp, it may go down to $27 and I will execute my last trade there. But I am not going to count on that ahead of time (based on how strong the rally has been). I will make my last trade dependent on how the pullback performs. 

Thanks for the comments!

tahoestock

Thanks! I really appreciate that!

Somehow this blog should be recommended reading in addition to GV’s, if not first. 

This is possibly one of the best compliments I have ever received. Coming from a veteran trader / investor that really means a lot. And making FA accessible is exactly why I do these posts. Not because I am an expert. Far from it. But mostly because I consider myself to be reasonably intelligent and I am basically "writing out loud". And if my thought process helps others to see a new way of thinking about the economy, then the post did its job.

If this blog can continue to link fundamentally with what GV is doing technically (within the same time frame?)….well, that would be an awesome teaching resource.

Now that is a really interesting idea. I will have to think about that (maybe do FA reviews on stocks that we post in the chart lab?) That is really worth considering.

Thanks for the read and the comments!

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#41) On March 30, 2009 at 2:44 PM, OleDrippy (35.65) wrote:

Wow.. Wonderful post. I agree that inflation is coming, just not nearly as fast as most people would expect.

 "The market can stay irrational longer than you can stay solvent"

Quote is, and will continue to be, true!

Thanks!

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#42) On March 30, 2009 at 4:30 PM, binve (< 20) wrote:

OleDrippy, Thanks, I appreciate that! Actually I think inflation is still under most peoples radar, which is giving the Fed a lot more license (well, rather the Fed is taking a lot more license) to increase the money supply.

"The market can stay irrational longer than you can stay solvent"

There are very few more relevant sayings :) Thanks!

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#43) On March 30, 2009 at 11:50 PM, tonylogan1 (28.16) wrote:

Ok, you specifically asked me to comment on this, so here you go…

 

Summary:

Yes, your post is so long, I need a summary section for my comments… Good word man! Great post. I found very few flaws in your logic. I learned a few things, and here’s how I was feeling as I read it. your comments are in italics.

 

weekly charts for trending purposes, daily charts for (general) timing, and then 30-min / 5-min charts

 

I need to do more of this. I tend to bounce between one look at either monthly or yearly, keep constant look at daily and hone down to hourly only when I am considering making a trade. (I have never really used 5 mins, I will try now)

 

Deflation Scare

 

You need a Deflation Scare so that people do not get too angry about inflation. In fact, the scare makes the welcome inflation. Look back at times historically where they were about to print money and you will find they trot out the Deflation Scare first.

 

Saville

I think his points are valid, I agree with your points that using gold as your primary inflation indicator is foolish, since the market is so small and manipulatable.

 

Mauldin

I think that money velocity is ridiculous.

 

I am an engineer (chemical), so I understand things from a different view than economists, but my view (Austrian) is that money is just a vehicle used to facilitate transactions. I think people just say “money velocity” when they have no idea what they are talking about, since it is impossible to quantify. It’s like having an argument with a zealot that says “because God said so”… where do you go from there?

 

Velocity example: I make a loaf of bread and I sell it for $5, then use the $5 to buy 5 tomatoes, then the guy that sold the tomatoes buys $5 of shoelaces (2 of them). What we are really doing is indicating that 1 loaf of bread is equal to 5 tomatoes.

 

The total amount of money available (printed and credit) is what is going to determine the dollar denominated exchange rate. If the money and credit supply is doubled, it will not take long for the equilibrium price of all these goods to rise to $10. (But the bread to tomato ratio will not change due to the increase of printed money).

 

Does the speed with which we conduct these transactions affect the price of the shoelaces? No.

 

The only thing that might make it seem that way is that you have continuous inflation in the background, so the sooner you buy the shoelaces, the lower price you get because dollars are still being printed.

 

Moving on…

 

I think the real world timing of asset price changes is more important to get correct than any other factor. Should I buy a 40 acre plot in Colorado today for $150k or wait 2 years … well, depending on your answer to the asset price timing, I may be able to buy 160 acres for the same price two years from now, or I may end up only able to buy 20.

 

In real terms, my assessment of inflation’s real life impact timing is going to have a huge impact on my real wealth.

 

I advise friends, some who have a lot of money, that they should diversify themselves based on a variety of inflation timing. One has $5 million in real estate, and no more than $1 million outside of real estate. I warn him that he is in danger of being worth either $10 million buying power or 2.5million buying power, but he is risking too much by being in one asset class that will be so directly inflation effected (i.e. He has no physical metal assets, and little in foreign currencies, no assets located outside of the US, very little commodity exposure, nothing in artwork, etc.)

 

Which brings up a great point. _Nobody_ knows how this will all play out. Anybody who thinks that they do is delusional, a paid liar or both. That is why nobody should be 100% adamant / married to their postion.

 

Great point. I try and tell friends that are thinking about buying a house (which they should not yet in any nice place to live in California), that they should list economic indicators that will allow them to buy a house, instead of trying to “pick the bottom”

 

Since no one knows the future, just instead, base your decisions on what eventually has to happen.

 

Example: I don’t know how bad unemployment will be, but you can construct some scenarios like “I will not buy a house until there are at least 3 consecutive months of improvement in California unemployment…” This will not guarantee success, but at least you have something to work from. If you get a few of these types of indicators “I will not buy until the vacancy rate in my desired city published by the DWP decreases for 3 straight months…” Note: this one is better because it is much less likely to be manipulated.

 

One of my inflation indicators I kept in my list was when the US would buy long treasuries. I assumed it would be 6 to 36 months away. I made a blog post or comment to that effect.. Then they did it like 36 hours later. This caused me to re-evaluate my position to feel that inflation would absolutely trump deflation in the long run (2 plus years), because the US cannot convince enough people to buy our treasuries at the rates we want, and we are unwilling to just let the rates rise. I’m not saying this is good or bad… just that the Fed taking the action as soon as they did caused me to re-evaluate.

 

 

I think this is why people like Roubini will be unlikely to call the bottom. They will likely not re-evaluate soon enough.

 

Gold

I think gold is going to keep rising. I shorted gold last time it touched $1000, and rode it down to $920 before exiting. Then, after this last Fed action, I will not short gold again (unless I am long Silver or something as a long-short pair)… hey, that sounds like a good trade!

 

My guess for gold is that eventually when it does go up, it is going to go up very far, very fast. Those that have the ability to manipulate gold are probably not going to let people sneak in with a $20 rise every day for 3 months. Instead, I’d guess we see $100 or more gains every day for a week or more straight, followed by either a drop that hurts Joe Retail that bought at the top, or it just stays stagnant for 2 years.

 

For this reason, I recommend just getting all the gold you can, when you can (no need to be a bug… I just mean, don’t think you’ll be able to easily buy it when you want to later as a hedge)

 

TBT

I agree, I hold it in real life, and wish I could have something unlevered to hold for the long term. I don’t like the Rydex mutual fund option that is available.

 

I think the bond market is so much smarter than the stock market, that I think you are right about the US government being successful at holding down yields for quite a while. If I had to guess, I’d say one year minimum. Call it the “Fed Call Option” where if you know the Fed is willing to over-pay to buy the bonds, then why would you sell them at a low price (and therefore at a Higher Yield)?

 

I guess the only reason would be if you had somewhere else you could put all that money, and I am sure the US government will work hard to make sure no other good options emerge…

 

I need to forward this on to one of my bond trading friends (he knows what is really happening instead of just guessing like me).

 

Oil

I have too much to worry about to track oil. I think it is going up, but I never liked the feeling in my mind like “a war in the middle east sure would be nice for my portfolio”…

 

The play I am going with is long natural gas via UNG. I think it will outperform oil (I really wish I actually already had the long short pair trade on, but I missed today’s oil drop) --- not to go back to gold, but I like silver better than gold. (I’d prefer to be 70-30 in silver to gold)

 

OMG your post is freaking long…

 

That video is great. Saw it before and couldn’t find where I saw it.

 

S&P forecasts

As a contrarian, I hate to agree too much, but I think you are pretty much right on. I am bullish for tomorrow (sold April SPY 82-75 put spreads over the last few days), but I plan on buying back either the whole spread, or at least the 82’s tomorrow and leaving the 75 puts open (switch from bullish to bearish) My logic was based on the idea of quarter end window dressing bringing up the SPY about as far as it can, while it may hurt XLF and others that people may not want to see in their financial statements. I’ll be fully out if bullish positions if we get a 100 point gap up in the AM, or within 75 minutes of market close. I may go all the way to bearish if market really packs it on in the last hour.

 

I think we get down to 700 before we see 850.

 

Comments section:

I don’t like TA, so I try to not use it, other than to get “the basics” of where general resistance lies. I think using your gut works better than TA, and it is easier to stick by what you feel in your gut. I suppose someone like GV knows his TA so well that he then feels it in his gut, but for rookies like me, I’d rather just read Geitner’s face when he answers a question and feel if I think he is lying and go from there. (It was easier with Paulson). My biggest fear with EWT is that the big-boy manipulators know EWT as well, and once they have gotten all of J6P’s money, they also know how to maximize taking EWT’ers money.

 

CEF is your PM holding? Are you Canadian? Do you fill out an IRS form 8621 to be sure taxes get handled correctly? Don’t you prefer to keep your gold near your ammo?

 

 

You had a section on Natural Gas edited out? Post it!

 

Your opinion on Global Warming is insightful and nuanced. This makes it very different from the typical GW pushers, which really just have an agenda. We can’t even accurately say what the weather is going to be in 7 days via our modeling, but some guy builds a model that says it will be warmer by 1 degree in 50 years and we take alarm?... Don’t get me started.

 

That is it.

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#44) On March 31, 2009 at 9:28 AM, binve (< 20) wrote:

tonylogan1, Hey man, thanks for all of the comments, they are great!

 OMG your post is freaking long… , .... :) Yeah, I tend to go on a bit, and like I was saying above, this was the edited verstion :)

You need a Deflation Scare so that people do not get too angry about inflation.

That seems to be the way of it. And it doesn't help that what the governments calls inflation (rising CPI) and deflation (falling CPI) intentionally obfuscates the problem for the general public, becuase that is not inflation/deflation at all.

Steve Saville is probably my favorite analyst (or at least the one I find I tend to agree with the most). I like John Mauldin because he is obviosly smart / well-written, but I read him mostly because I dont agree with him.

And yes, money velocity is a redundant concept that gets a lot of traction. Have your read Steve Savilles take on this: Inflation's New Upward Trend. Yeah, his opinions tend to be on the Austrian school side of things. I agree with your money velocity description above.

You are a chemical engineer? I am a mechanical engineer. Very cool and very interesting. I have talked with a lot of engineers / computer scientists on Caps and we all seem to have a different take on the economy than economists.

In real terms, my assessment of inflation’s real life impact timing is going to have a huge impact on my real wealth.

Ding, Ding, Ding!!!!  Man, this is what long-term-buy-and-hold without even considering price movements make no sense. For big purchases (like homes) especially. Yeah back in November/December it looked like deflation might actually be a problem (I was at least keeping and open mind) but then the Fed came out with ZIRP and QE policy plans. So instead I bought some more gold :)

Yep, I defnitely agree with your gold positions. This is how I tend to think of it. I buy what I can when I can. I try to time it technically, but having gold is more important than having it for the best possible price. Because inflation is going up. I can't think of a better inflation hedge.

Thanks for the thoughts on the bond bubble, I agree exactly with what you said. For the near tear, as long as the Fed puts in a floor, the bubble will not collapse. But that trick only works for so long (as the US Dollar continues to slide).    ...I need to forward this on to one of my bond trading friends (he knows what is really happening instead of just guessing like me)....   That would be awesome! I would love to get the feedback from a bond investor.

I think oil is going to go up regardless if there is a war (of course, a war will make it go up much higher, but I am not hoping or counting on that to happen). As long as OPEC exists, they will not allow supply to outpace demand, and with prices this low a huge number of the rigs are unprofitable (which will be causing a huge supply crunch in the coming months). Plus oil will go up simply because it is denominated in USD (which are being diluted).

.... I think we get down to 700 before we see 850 .... I think the pull back probably won't be that severe. Maybe 740-750 is my guess. Of course it could go back down to 700, but I will start selling my shorts and start buying longs at ~750.

Yeah, CEF is definitely my biggest holding (and I am not Canadian) :). It is a beautiful country though (I am originally from Michigan). I haven't sold any CEF yet (I am accumulating now), but yes I am pretty sure you have to fill out 8621.

Actually my natrual gas section was going to be taken from this post: Is Natural Gas Potentially Bottoming? and I was going to add some of the supply / demand discussions from the comments section and the linked articles.

Thanks for the props on the Global Warming discussion. I dislike when people jump to immediate conclusions based on little evidence, but I also dislike when people are unwilling to change their opinion when new evidence is found. And this is one issue important enough where absolutely everybody should be open-minded :) Also, this is a good read. Go to this post: Short Term Oil and read comments #39, #40, and #43. Just two engineers/scientists talking about modeling the Earth and Economy :)

Wow, seriously thanks for all of the comments. I really appreciate them. Based on these comments especially, I can tell we are very similiar-minded. I will keep an eye out for your new blog posts. Thanks!

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#45) On March 31, 2009 at 11:00 AM, tonylogan1 (28.16) wrote:

I can' t get the link to "short term oil" to work.

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#46) On March 31, 2009 at 11:10 AM, binve (< 20) wrote:

Doh! Try this: Short Term Oil. Sorry about that.

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#47) On March 31, 2009 at 1:35 PM, GVdrone (< 20) wrote:

hey binve,

I read your post on natural gas, but N.Gas just fell below 3.75, what is the next support/potential entry point?

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#48) On March 31, 2009 at 1:58 PM, tonylogan1 (28.16) wrote:

Alright, I’ll make this as quick as I can. Maybe I’ll do an actual blog on it later, but for now, I feel like I have to at least give a few points for you to take away…

 

You speak of the increased level of greenhouse gases, and this is one of the big fallacies of the GWA (Global Warming Agenda).

 

Carbon Dioxide is present in the atmosphere in extremely minute quantities, particularly compared to the biggest greenhouse gas, water vapor. No one discusses our need to reduce water vapor in the atmosphere, because there is nothing to gain politically from that agenda.

 

Human contribution to the amount of CO2 is not that great, aside from the fact that it really does not matter. TO use your analogy of the airline pilot overcorrecting, I’d say the contribution of humans adding CO2 to earth’s climate change is roughly like a blue-jay landing on the wing (go with me here), by comparison the sun’s effects are like the flaps moving.

 

I could really go point by point through all this, but it really does take too long, and I have to close a SPY position soon…

 

I would suggest you just spend some more time researching Global Warming, however do not do this by reading any news type media, or by reading works that are published by people with a GWA. These are identified as those that receive funding by giving the data the GWA wants to get. (i.e. How much research money are you going to give e if I tell you the sea level is going to change by 0.5 inches? How much more can I get if I can create a model that will ignore various important factors and say water levels will rise by 30 feet?

 

This is where the biggest problem in the GWA stems. You cannot treat the likely results of climate change, because the research pre-decides the outcomes.

 

I would also contend that if we were to actually fund research properly, and determine that the earth is going to get warmer (or colder), we should take action to mitigate the impact of the change, rather than focusing on preventing the change.

 

Bottom line is that we cannot change the temperature of the earth significantly. However, if we know that the earth will warm, we know malaria will be worse, therefore we could just spend money now on dealing with malaria.

 

If we know the earth is cooling, we know now that crop production is going to drop, and we should spend money on improving crop resistance to cold, etc.

 

The GWA would have you believe that the problem is as simple as just stop driving cars. Well, that is agenda driven. Why do you think they do not focus on changing the colors of peoples roof’s to reflect or retain more heat? Why not outfit all tankers to seed the ocean with iron shavings to stimulate plankton growth, resulting in increased O2 production (and CO2 reduction?)… and plenty of more ideas that have nothing to do with reducing oil consumption…

 

Well the GWA is bigger than I can cover right now, so I will just leave you with that for now.

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#49) On March 31, 2009 at 3:06 PM, tonylogan1 (28.16) wrote:

I think I may have just executed one of my best trades ever...Just switched from Bullish to Bear.

We will see. I stuck with my plan of selling with 75 minutes to go, bought back the April SPY 82 puts at 3.20 and 3.25...   I caught the absolute low trade of the day so far...

I left the 75 puts open, and I have not decided if I will close them at end of the day or let them ride til tomorrow... 

I chalk it up to this blog, becuase actually typing out my plan ahead of time made it hard for me to make a dumb mistake today.

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#50) On March 31, 2009 at 3:25 PM, binve (< 20) wrote:

GVdrone, Hey. In my post, I was pointing out there was a support zone around $3.75 to $4.25. I think the bottom support line is "squishy", I don't believe there is anything hard about $3.75.

This is why I am not investing in Natural Gas yet. Becuase there have been so many fake out in the past couple of months. I just checked the Henry Hub futures and it is at $3.75. A couple of days ago it went below $3.75 but finished above.

So it looks like it is trying to carve out support here. That is not good enough for me to put my money in though. I want to see good basing for several weeks and then an uptrend start to show up on a weekly chart. Just like with oil, there was enormous downward selling pressure and it took awhile to carve out a bottom. 

tonylogan1, Hey man. Thanks! This is a great conversation!

I will agree with you 100% on the fact that the conversation needs to move away from political talking points and move toward facts and analyzing the atmosphere as a system.

All your points are good, let me comment:

Carbon Dioxide is present in the atmosphere in extremely minute quantities, particularly compared to the biggest greenhouse gas, water vapor.

This is very salient point and one that I have a bit of background in.  Yes C02 is in much lower concentrations but as a greenhouse gas, traps in signifcantly more heat (per unit volume of gas). But here is the interesting thing about water vapor: We don't understand what it is doing in the atmosphere above ~75 km.

I worked on a scientific satellite whose main payload was a UV telescope that points at the limb of the Earth to measure and chart water vapor in the upper atmosphere (actually it measured OH- as a proxy for water vapor). There are actually a couple different missions up there right now running similar observations.

The reason: All of our atmospheric water vapor models break down around 75 km. There is a mystery as to the water vapor transport phenomena at certain altitudes.

I talked to the scientists on the team, because I was interested in the subject. They are all adamantly agnostic on global warming. But these are some of the smartest minds in the field talking about how much we don't know about water vapor in the upper atmosphere, which is the biggest greenhouse contributor. 

We don't know the interation with CO2 at these altitudes, we don't have models that work.

I am a thermal analyst for satelllites, and this would be equivalent to someone asking me for on-orbit temperature predictions but not letting me know the thermal conductivity of the panels. The models are incomplete.

That is why I tend to be on the cautionary side of things. Because we don't know. I am open to all opinions and arguments (provided they aren't politically charged). But until we have good, accurate models that take into account all parts of the atmospheric system, nobody should be 100% adamant the global warming either does or does not exist.

When you put your global warming post together, let me know. I would love to check it out. Thanks man!

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#51) On March 31, 2009 at 3:30 PM, binve (< 20) wrote:

tonylogan1, Hey man that's hilarious.I was thinking the same thing:

I think I may have just executed one of my best trades ever...Just switched from Bullish to Bear.

We will see. I stuck with my plan of selling with 75 minutes to go, bought back the April SPY 82 puts at 3.20 and 3.25...   I caught the absolute low trade of the day so far...

I had about 30% of my cash in short ETFs and 10% as long hedges. At S&P 810, I sold my long hedges and put them into shorts (now 40%). Yeah, I think we will see ~750 on the S&P. I will lighten up there on my shorts and probably start going long again there as well.

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#52) On March 31, 2009 at 3:33 PM, GoodVibe4Ever (< 20) wrote:

Sorry being late to the party but promise is a promise! You know the drill going on my blog. :)

Man! That was a quite a long read as usual in your blogs. A lot of smart people and mind stimulating conversation.

But wait a second, what's the wrong with you? I can't find a single comment that attacks you? Why is that? :) I thought all TA guys are the punching pillows. I guess I need to go back to my meditation and lock myself in to see what the wrong with me. :)

Your post is a must read by every man, woman, child in the investing world. Thanks for the effort and time to put things together. I bet it took you forever.

There's not much I disagree with you. Maybe minor TA things, but you know we never completely agree about everything. You're aware of my position regarding oil, G.S.M, as well as bonds and US dollar so I will not beat a dead horse here. Keep it up, 'e'! You are a great asset to Caps. And thanks for all the kind words

GoodVibe

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#53) On March 31, 2009 at 4:10 PM, binve (< 20) wrote:

GoodVibe4Ever, LOL, No worries man! You are welcome whenever! And based on your last post (which is a beauty, I am formulating questions for the post now) that is perfectly understandable.

But wait a second, what's the wrong with you? I can't find a single comment that attacks you? Why is that? :) I thought all TA guys are the punching pillows.

I think I paid enough people off on Caps to get a free pass ... :) just kidding. I have no idea. It is weird, you seem to draw a lot of animosity, so does camistocks. Which makes no sense, you guys are both so nice. Maybe it is because I approach things from and FA point of view and then add TA to it? Maybe that make people more comfortable?

I don't know. But I have been around on the site for a while now (as binv271828), so I figure my long time friends (Tasty, madcow, anchak, Gar, Sinch, etc.) are helping to keep the conversation friendly.  :)

Your post is a must read by every man, woman, child in the investing world. Thanks for the effort and time to put things together. I bet it took you forever.

Thanks! Man that is a great compliment, I really appreciate that especially coming from you. 

There's not much I disagree with you. Maybe minor TA things, but you know we never completely agree about everything.

Exactly. If there was 100% agreement, the world would be a very boring place (or the stock market would be at the very least) :)

Thanks for the comments! And I really meant all the compliments about you that I put in my reply to RussWild. Your generosity and patience is incredible and there are a lot of people (including me) who try to emulate that quality about you. Thanks!

 

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#54) On March 31, 2009 at 4:59 PM, tonylogan1 (28.16) wrote:

ok last comment for the day, and we'll have to see about the GWA blog post. 

GWA

I started typing some info, but this link pretty well sums up my thoughts.

http://www.nov55.com/wat.html

Stocks

I ended up closing 2/3 of the 75 puts, and I didn't get the best possible price, but I feel good becuase I am now net neutral overall going into tomorrow.

I feel like market is going down, but I have read too many opinions of people I think are credible that think we keep going up, so I just have long short pairs still going (plus long TBT, UNG, RJI)

I will wait for at least the first 30 minutes (what patience) and see how I feel.

 

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#55) On March 31, 2009 at 5:06 PM, binve (< 20) wrote:

tonylogan1 , Thanks man, I will check out the link. As far as the stocks, yes I think the market is going up (and up a lot before the rally is really over), just not from here. We are very overbought, and the fact that the S&P couldn't break back through 810 is weak and how it ended the day is really weak. I think we are headed down for several days before we head back up again.

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#56) On March 31, 2009 at 9:13 PM, soycapital (< 20) wrote:

This is some good (learning type) conversation going on here. Being new to CAPS and my own investing, enjoy the back and forth about where the market, oil, gold, etc. may be going. Good luck, I'm sitting out in real life until I get the word and feel it in my gut. I am especially gun shy of gold since I've lost so much $$$$$$$$$$ in the past. It has floundered along for years sometimes. Then again this isn't the past. Oil I could do, the oil producers aren't going to set for oil around 50. Could well bring unrest and war.

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#57) On March 31, 2009 at 9:16 PM, binve (< 20) wrote:

soycapital , Thanks for the comments! Yeah, about the only thing that everybody can agree on is that 2009 is going to be a volatile year :)

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#58) On April 01, 2009 at 12:13 AM, GVdrone (< 20) wrote:

lol squishy support, thanks btw, I'll continue to check back for updates

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#59) On April 02, 2009 at 11:08 PM, nuf2bdangrus (< 20) wrote:

Excellent post....a lot of work and thought went into that.  I agree, and am just looking for a good entry point for oil.  I believe NG, still bottoming, provides some very good opportunities.

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#60) On April 03, 2009 at 8:25 AM, binve (< 20) wrote:

nuf2bdangrus, Thanks man, I appreciate that! Yeah, I am waiting for the next oil correction to finish and then I am buying more oil. Right now I have no Natural Gas positions, but I am waiting. I think we will see a weekly trend change (bottoming and then upturn) within April, but right now just watching and waiting. Thanks!

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#61) On April 03, 2009 at 8:44 AM, ralphmachio (27.53) wrote:

I too cannot wait for the next bottom in oil( i mean I'm gonna...) I just watched BEXP almost double off a 20% rally!  I like TUWLF  ROXIF  AFRNF   HTGLF  BEXP  DXO  TS.  Some of these are high risk/reward stocks in volatile areas of the earth, which could be either really good, or bad.  

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