Well I will first start by saying, there is no way reading this blog you should not be making money. I have been dead on with which stocks to play the next day as 10 am set ups and most have been monsters. Yesterday GOOG and POT mentions got awesome moves today.
I think financials are at a top here. I am sticking my head out here but I think it is a good play. GS at $190 is just too expensive here and although the market can be irrational for along time, I think financials are very toppy here. Also I don't believe the sell off in agros will last. I think these stocks will be the big movers this year. I am currently long IPI the ipo from last week and although I am down on it I am not worried as I think this will have strong support when the agros start to rebound.
Tomorrow I will be looking at those two sectors for some plays along with the big techs, the usual GOOG, BIDU, RIMM and AAPL.
Some of these tech stocks have run up alot in the past few weeks and the trade is getting very crowded so be careful and fast if you take them long as the risk reward will soon be on the short side, especially for AAPL and BIDU.
Have a good May and trading day tomorrow
Wednesday, April 30, 2008
GOOG and POT
WOW called those 2 dead on last night. POT +$6 here and GOOG +$25 that's surely heading to $600.
POT
POT got a deep sell off due to commodities sell off. I still think this stock goes higher.
Watch it till the end of the week and I might make a trade call for it long. $150 area should prove to be very strong support.
Watch it till the end of the week and I might make a trade call for it long. $150 area should prove to be very strong support.
BIDU and GOOG
These two stocks seem like they want higher.
BIDU looks like it wants an all time high near that $430 area.
GOOG looks like $600 is a magnet on the charts.
Keep an eye out on these two stocks for 10 am high plays.
BIDU looks like it wants an all time high near that $430 area.
GOOG looks like $600 is a magnet on the charts.
Keep an eye out on these two stocks for 10 am high plays.
Today is FOMC day
FOMC announcement is today. Many believe we will get 25 basis point cut but some like me believe they will do nothing. I think no matter what they say, initially we get a sell off and then bounce again. Tech is very strong here and when we bounce I would be buying GOOG, BIDU and AAPL, these stock are on complete fire.
Commodities are pullback here and I think they have more to go. I would not be surprised to see gold at $825 area and Oil @ $105 in a jiffy. Also wtahc china stocks here like EJ which seem to be getting some interest along with SOHU.
Commodities are pullback here and I think they have more to go. I would not be surprised to see gold at $825 area and Oil @ $105 in a jiffy. Also wtahc china stocks here like EJ which seem to be getting some interest along with SOHU.
Tuesday, April 29, 2008
Citibank
Some of you might think i am obsessed with Citibank and Fannie Mae. YES I am because they wont tell you the truth.
Let me ask one question, why did Citibank just offer out $3 Billion in additional stock after hours, essentially diluting the amount of shares outstanding, why? If they dont need more monies as the talking heads keep on saying why>? Stock is currently down 4% after 4pm, we will see how this will play out in the next few days.
Citibank is a $15 at its best. Don't believe the street.
Financials are no where near a bottom, this is just a bounce in a bear market sector for them.
Let me ask one question, why did Citibank just offer out $3 Billion in additional stock after hours, essentially diluting the amount of shares outstanding, why? If they dont need more monies as the talking heads keep on saying why>? Stock is currently down 4% after 4pm, we will see how this will play out in the next few days.
Citibank is a $15 at its best. Don't believe the street.
Financials are no where near a bottom, this is just a bounce in a bear market sector for them.
Oil and Gold
Oil and gold on the retreat as the dollar strengths here. Oil down $3.60, Gold down $20
Hope those of you who trade FOREX shorted the Euros on the weekend blog note..
Hope those of you who trade FOREX shorted the Euros on the weekend blog note..
US Dollar and commodities
As noted over the weekend, I thought traders would buy up the dollar and consequently sell the oil and gold as they are in priced in US dollars.
This is expected but it wont last, will be very interested to see how the market reacts tomorrow after the announcement.
This is expected but it wont last, will be very interested to see how the market reacts tomorrow after the announcement.
Software down
No trading today my broker is having problems with data and charts.
Talk to you tomorrow
Talk to you tomorrow
Monday, April 28, 2008
Key to being successful trader
'For every style of trading there will be a "perfect" market environment. When the market is aligned to the strategy that you are trading, every trade will work itself out smoothly, losses will be far and few between, and you will feel on top of the world as you watch your profits accumulate! ......Sooner or later the market environment will shift, if ever so slightly, and losses will once again begin to appear.....This constant cycle from "zero" to "hero" and back to "zero" is why i believe speculation as a business has such a high failure rate.'
The trader's ability to adapt very quickly to an ever changing market environment. Traders who flourish in a momentum market who take overnight positions in high shorted stocks and ride the squeezes and bank easy money will feel unbeatable, but once this environment that was conducive to use this aggressive strategy starts to fade, this same strategy will be responsible in taking back most of the trader's gain as he failed to recognize a market shift as the markets ebbed and flowed from momentum to choppy to correction etc etc.
As traders who wanna survive and be very good at this game, it is vital that we analyze and recognize quickly what type of market we are in. We need to be ahead of the 8 ball and never behind. The quicker you recognize the shift, the more money you will keep and make.
With that said tomorrow is the start of the 2 day FED meeting. I expect trading to be light after the first 2 hours. Don't push it!!! if you don't find a set up in the first two hours call it quits. Go cut your lawn, go some laundry, or listen to the talking heads on CNBC. After Wednesday's announcement we will have tons of opportunity
The trader's ability to adapt very quickly to an ever changing market environment. Traders who flourish in a momentum market who take overnight positions in high shorted stocks and ride the squeezes and bank easy money will feel unbeatable, but once this environment that was conducive to use this aggressive strategy starts to fade, this same strategy will be responsible in taking back most of the trader's gain as he failed to recognize a market shift as the markets ebbed and flowed from momentum to choppy to correction etc etc.
As traders who wanna survive and be very good at this game, it is vital that we analyze and recognize quickly what type of market we are in. We need to be ahead of the 8 ball and never behind. The quicker you recognize the shift, the more money you will keep and make.
With that said tomorrow is the start of the 2 day FED meeting. I expect trading to be light after the first 2 hours. Don't push it!!! if you don't find a set up in the first two hours call it quits. Go cut your lawn, go some laundry, or listen to the talking heads on CNBC. After Wednesday's announcement we will have tons of opportunity
Sunday, April 27, 2008
Traders who trade FOREX
For some of you who trade FOREX, I have a little advice here on the EURO and Dollar.
Here are my thoughts with the FED meeting on Wednesday. The consensus is that the Fed will cut another 25 basis point. I think the Fed now is interested in strengthening the dollar to curb commodities uptrend prices and to do that they need to stop making cuts. They could cut 25 bp and say no more, or they could pause now and that will surely make the dollar fly short term. I think there's a good shot they do not cut at all. Here is how I would play this week if I were a FOREX trader. I would short the Euro Monday and have a tight stop into the FOMC so that I can't get hurt if they do cut. I think the risk/reward is good because if they don't cut then the dollar should FLY!
Good luck
Here are my thoughts with the FED meeting on Wednesday. The consensus is that the Fed will cut another 25 basis point. I think the Fed now is interested in strengthening the dollar to curb commodities uptrend prices and to do that they need to stop making cuts. They could cut 25 bp and say no more, or they could pause now and that will surely make the dollar fly short term. I think there's a good shot they do not cut at all. Here is how I would play this week if I were a FOREX trader. I would short the Euro Monday and have a tight stop into the FOMC so that I can't get hurt if they do cut. I think the risk/reward is good because if they don't cut then the dollar should FLY!
Good luck
Trade Update:IPI
I am holding my 1/2 share left on my IPI long. I believe this sock can run to $80, we will see soon enough.
Only winners here period.
Only winners here period.
Saturday, April 26, 2008
Market Stands
A couple very choppy days in the market but never the less they have been up. One thing you should always remember earnings season always has a bullish sentiment to it as trader anticipate earnings and drive up stocks. Yes they have been one or two earnings season that didn't rally but with earnings estimates expectations lowered in the last few months because of weaker economy I was 100% sure we would rally off these lower expectation.
Don't get tricked here and invest !!! It is a traders market and the reason we are heading up is earnings and nothing else. Next week we have the FED meeting and that also usually ramp up stocks. We are coming close to the end of earnings seasons but I expect another push up especially with the FED meeting next week.
How much higher??? I expect we have about another 300 or so points higher. The financials are being bought here but I dont believe this is the bottom. I have started to accumulate some SKF here slowly. I will add some more I think on FED meeting day and hold with the few I had bought on Wednesday. This will be another golden opportunity to short the financials.
On a note with the US dollar and the FED. I think the FED will soon stop I am not sure if this meeting but inflation in everywhere to be seen, especially in gas and food. FED first priority is to fight inflation and a weak dollar is helping commodities scream higher. If the FED says no more cuts I would expect the Dollar to seriously rally and a sell off in Euros and in the commodities market. Expect Oil and Gold especially to take a hit if the FED even hit at a slowing or end of rate cuts.
Have a great weekend folks
Don't get tricked here and invest !!! It is a traders market and the reason we are heading up is earnings and nothing else. Next week we have the FED meeting and that also usually ramp up stocks. We are coming close to the end of earnings seasons but I expect another push up especially with the FED meeting next week.
How much higher??? I expect we have about another 300 or so points higher. The financials are being bought here but I dont believe this is the bottom. I have started to accumulate some SKF here slowly. I will add some more I think on FED meeting day and hold with the few I had bought on Wednesday. This will be another golden opportunity to short the financials.
On a note with the US dollar and the FED. I think the FED will soon stop I am not sure if this meeting but inflation in everywhere to be seen, especially in gas and food. FED first priority is to fight inflation and a weak dollar is helping commodities scream higher. If the FED says no more cuts I would expect the Dollar to seriously rally and a sell off in Euros and in the commodities market. Expect Oil and Gold especially to take a hit if the FED even hit at a slowing or end of rate cuts.
Have a great weekend folks
Friday, April 25, 2008
Choppy
Very choppy day but as predicted the agros are on fire and bouncing from the last two days of selling. I am very afriad to say this but oil looks like it doesn't want to pull back. The big tech stocks are flat to weak today, we need to monitor this group next week as they are now in overbought territory and might be good short candidates.
Today very choppy with light volume, my best guess it that next week, since it is end of month we should get some good movement.
FNM approaching $30 again. Watch for that on the short side again..
Today very choppy with light volume, my best guess it that next week, since it is end of month we should get some good movement.
FNM approaching $30 again. Watch for that on the short side again..
POT
POT (Potash) has been on a bullish trend and this morning JP Morgan has raised EPS to $18.50 from $11.75. I can't recall ever a firm raising target 50% on a stock and this must be seen as extremely bullish.
The stock has pullback the last two days but I expect POT to see all time high next week on this news. Also watchfor the other agros like, MON, MOS, AGU of the world to have a good day and test their highs.
Lets see if we can push higher today again into the 1400 level and see if we reject it again. If we do that would been a second failure for the bulls to push us over the edge higher.
Watch MA and V today, after AXP good earnings yesterday evening these might get some buying.
The stock has pullback the last two days but I expect POT to see all time high next week on this news. Also watchfor the other agros like, MON, MOS, AGU of the world to have a good day and test their highs.
Lets see if we can push higher today again into the 1400 level and see if we reject it again. If we do that would been a second failure for the bulls to push us over the edge higher.
Watch MA and V today, after AXP good earnings yesterday evening these might get some buying.
Thursday, April 24, 2008
FNM and Citibank
Both went higher today. Citibank @$27.50 is a golden short in my opinion. I will watch it the next few sessions. FNM $30 would be my ideal spot again to enter short.
Keep these on your watch list for 10 am lows.
Keep these on your watch list for 10 am lows.
1396, 1396
Those were the numbers I have been focused on and I have posted it here for people to do the same. We hit it this evening and just rejected it. That's strong strong resistance here. If the bulls want make a firm stand they need to get over that level in the next few sessions with conviction.
SKF already +$1. I am riding this again!!!
Microsoft will report in 5 minutes.
SKF already +$1. I am riding this again!!!
Microsoft will report in 5 minutes.
TRADE CALL : SKF
Yes playing this again. No way we out of the wood in the financials and new home starts at its lowest level in 16 years, where are banks going to make their monies. I will take the counter trend trade here.
SKF long 100.68
SKF long 100.68
WOW
Wow I was so correct here guys. Wrote last night that I think we can push higher and bam we are a couple of points away from 13000. Geez I was outside doing yard work I could have made the kachingos mega today, oh well, you can't get them all. Alot of stuff are running higher here and this is great, this is going to set up some wonderful plays.
SOV is now below $7, what a call is that geez!.
With this amazing move stocks like Bidu is flat, FSLR is down, agros weak, which tells me rotation is going on in this rally as I mentioned last week. Last week I said watch out for rotation as the high flyers are getting stretched and people will move out of them into the beaten down financials and tech etc. That's how you play the market folks, I have no special powers I just know the movements which are obvious to most.
Now I will tell you this after earnings season we will rack up especially in the summer with some short side plays, just watch and see. I notice the rotation into financials here, it is just that and nothing else, big money aint investing in them here. FNM at $30 is another free money play on the short side and Citibank.
SOV is now below $7, what a call is that geez!.
With this amazing move stocks like Bidu is flat, FSLR is down, agros weak, which tells me rotation is going on in this rally as I mentioned last week. Last week I said watch out for rotation as the high flyers are getting stretched and people will move out of them into the beaten down financials and tech etc. That's how you play the market folks, I have no special powers I just know the movements which are obvious to most.
Now I will tell you this after earnings season we will rack up especially in the summer with some short side plays, just watch and see. I notice the rotation into financials here, it is just that and nothing else, big money aint investing in them here. FNM at $30 is another free money play on the short side and Citibank.
Trade Update: SOV
SOV I dont know how many of you are still holding but this one is going to $4. I gave this out short from $12 area calling it to $5, now trading premarket $7.50 awesome call.
Only winners here
Only winners here
Wednesday, April 23, 2008
Where I think we go next
Here it goes! Some people been asking where I think the market will go in the near term. I think we can really push a little higher here but longer term we will go below those lows seen in March. Today was one of the crappiest days I have had in awhile intra day, most of the trades just s/o but lucky for me I was playing smaller size lots because I wasn't feel to good health wise with my sinuses.
I think there is a good shot we go to 13100 area int he next few weeks. It would not be out of the question for a company like Microsoft to blow out earnings and send us high by 300 point from here. The great thing about that is that earnings season will soon come to an end and if we make that target while in earnings season that would be a good high probability short.
We are coming up here to first real test on the upside for the markets. S&P 1396, which is just 17 points away should provide some heavy resistance.
I think China will get hot again as we come closer to the olympics and the government does everything to make China the new world power to the world.
I have been asked about gold by a few people. Personally I think the gold trade need to rest and I wouldn't be surprised to see gold pull back especially if the market grinds higher. Also Oil has been up 15 out of the last 16 trading days and it is in a parabolic move here which requires a pullback. I would love to see oil pullback to a $109 area.
Lets see the effect of the Apple earnings tomorrow they weren't that spectacular and I expect Apple to trade back to the $140 level in weeks...
See you tomorrow
I think there is a good shot we go to 13100 area int he next few weeks. It would not be out of the question for a company like Microsoft to blow out earnings and send us high by 300 point from here. The great thing about that is that earnings season will soon come to an end and if we make that target while in earnings season that would be a good high probability short.
We are coming up here to first real test on the upside for the markets. S&P 1396, which is just 17 points away should provide some heavy resistance.
I think China will get hot again as we come closer to the olympics and the government does everything to make China the new world power to the world.
I have been asked about gold by a few people. Personally I think the gold trade need to rest and I wouldn't be surprised to see gold pull back especially if the market grinds higher. Also Oil has been up 15 out of the last 16 trading days and it is in a parabolic move here which requires a pullback. I would love to see oil pullback to a $109 area.
Lets see the effect of the Apple earnings tomorrow they weren't that spectacular and I expect Apple to trade back to the $140 level in weeks...
See you tomorrow
trade update- IPI
IPI trading up nice premarket +$2 for a overnight hold. I just sold 1/2 + $1.80 pre market, will ride the rest
Update-SOV, C
Someone asked me yesterday about my amazing short on SOV. Yes I am still short from $12 area and I think this one goes to $4. We will see soon enough.
Also I still like Citibank to $10 believe it or not. Last night I read an article by a hedge fund manager citing Citibank problems and he shorted last week at $26.30. I think shorting here with a $30 stop is safe, this think will be a teenager stock very very soon.
Also I still like Citibank to $10 believe it or not. Last night I read an article by a hedge fund manager citing Citibank problems and he shorted last week at $26.30. I think shorting here with a $30 stop is safe, this think will be a teenager stock very very soon.
Two stocks for the long haul -SHORT
Here are two stock I believe will go down substantially in the next year.
OEH, Orient Express Hotels(41.35) and
CMO, Capstead Mortgage. (13.36).
OEH, Orient Express Hotels(41.35) and
CMO, Capstead Mortgage. (13.36).
Tuesday, April 22, 2008
Rethinking US problem
Ok folks I am going to vent here as I hear these politicians, financial reporters and analyst make claim of how we should do things to get us in a better place. First question I will ask them, how the heck did we get here, we got here listening and putting trust in these idiots in the first place.
I constantly hear politicians talking about corn producing ethanol to drive off our use of oil from the middle east countries who they lie in bed with. This is CRAP!!!! Does anyone see what is happening in the world? People are fighting for food, two governments have already toppled because of high food prices, today Costco announced that people are buying huge amount of flour and rice, which obvious leads me to the conclusion people are starting to hoard these items because of fear of high prices or lack of availability. How can politicians tell us to producing ethanol when people are starving!!! it is insane. Farmers are selling the corn crop to produce ethanol because of government is giving them incentives to do so, while people are starving, something is wrong. We need corn to produce food not oil to drive 5.8 litre SUV's!!!!!!
We need to stop buying gas guzzlers, invest more in research of agro technology because it is obvious that at the current population growth rate the earth may not be able to produce food fast enough to feed us in years to come. These politicians are a bunch of morons who seem to say anything to get elected and I am sorry to say we are bigger morons because we allow them to get elected. People are starving, people are losing their homes, retirees have to choose between medicine and food I can't believe this is happening in America. When will we stop being selfish to our neighbors, communities, state and country before we realize we all live on the same earth and the decisions we make affects not one but all.
We have to think about others we are just too selfish, we need to think about the environment, it disturbs me to see trees over 50 years old being cut down to build homes then they landscape around the homes with some 2 feet trees, do we know what are the consequences to the environment of this. Yes we need homes to live but we dont need to destroy our environment to do so.
Just take a deeper look when you drive out tomorrow to work and think about these things.
I constantly hear politicians talking about corn producing ethanol to drive off our use of oil from the middle east countries who they lie in bed with. This is CRAP!!!! Does anyone see what is happening in the world? People are fighting for food, two governments have already toppled because of high food prices, today Costco announced that people are buying huge amount of flour and rice, which obvious leads me to the conclusion people are starting to hoard these items because of fear of high prices or lack of availability. How can politicians tell us to producing ethanol when people are starving!!! it is insane. Farmers are selling the corn crop to produce ethanol because of government is giving them incentives to do so, while people are starving, something is wrong. We need corn to produce food not oil to drive 5.8 litre SUV's!!!!!!
We need to stop buying gas guzzlers, invest more in research of agro technology because it is obvious that at the current population growth rate the earth may not be able to produce food fast enough to feed us in years to come. These politicians are a bunch of morons who seem to say anything to get elected and I am sorry to say we are bigger morons because we allow them to get elected. People are starving, people are losing their homes, retirees have to choose between medicine and food I can't believe this is happening in America. When will we stop being selfish to our neighbors, communities, state and country before we realize we all live on the same earth and the decisions we make affects not one but all.
We have to think about others we are just too selfish, we need to think about the environment, it disturbs me to see trees over 50 years old being cut down to build homes then they landscape around the homes with some 2 feet trees, do we know what are the consequences to the environment of this. Yes we need homes to live but we dont need to destroy our environment to do so.
Just take a deeper look when you drive out tomorrow to work and think about these things.
IPI -
IPO ed today taking a few shares long into tomorrow. Very good chance it gaps up, we will see.
Long @50.22
Long @50.22
AAPL weak
Apple and retailers here weak on news that banks are cutting off financing to a number of retailers. Retailer use these line of credit to buy stock of goods. If that's not something to worry about I dont know what is.
OIL $119.40 here
Wow just blew past my resistance on the chart at $117. Not even a breather at the $117 level, next level to watch on the upside is $123 if we get thru $120.
Get ready for $5 a gal at the pumps
Get ready for $5 a gal at the pumps
Euros hit 1.60
Said it for you Forex guys a few week ago that it would head into that 1.60, 1.61 area. I will look at the volume later to see if it can push through it.
Monday, April 21, 2008
Stocks to watch
BIDU- yes BIDU the chinese google has been on fire lately. Looking at the charts this thing looks like the next resistance is 380 but after that it is all time highs. Just a stock to look at if you can get long if you are an active trader. I also think they have earnings soon but will check and verify that information.
MOS- this agro stock ended today at an all time high and with the momentum on these stocks I am sure it should go higher here. The charts on these agro stocks are amazingly overbought but I would buy on a pullback if it comes.
AGU- Same deal as MOS.....
I am not going all out here as I think the earnings reports this week will push us around.
Good Luck tomorrow
MOS- this agro stock ended today at an all time high and with the momentum on these stocks I am sure it should go higher here. The charts on these agro stocks are amazingly overbought but I would buy on a pullback if it comes.
AGU- Same deal as MOS.....
I am not going all out here as I think the earnings reports this week will push us around.
Good Luck tomorrow
Tuesday Plan
With today's narrow range day I expect a move out of the range tomorrow. More than likely we will get a push down initial and we will play off that. Perfect set up would be for us to gap down and find support at the 1374 S&P area and bounce.
Couple stocks to watch if we bounce tomorrow or wednesday are POT, AMZN, AAPL, VMW.
Couple stocks to watch if we bounce tomorrow or wednesday are POT, AMZN, AAPL, VMW.
Be careful
Although the market is red most of the strong stock are acting very strong today. The agro stocks, RIMM, AAPL etc I would not be short them here, momentum is on their side to the upside. Only thing I am willing to be short here is financials.
Sunday, April 20, 2008
Trading Questions
I often get asked when I tell people I am a trader is wow how exciting so you are a daytrader? Daytrading and/or day trader got known variety back in the 1999 internet timelime. Daytrading was something done back then just like in recent years people would acclaimed themselves professional flippers/ investors in the housing market. I am not a day trader I always reply I am an active trader. None of my fellow trading colleagues would consider themselves day traders no matter which instrument they trade but we will all admit be are active traders and very often yes we are in and out of a trade in a couple seconds to minutes but we dont only trade intraday.
Market conditions usually stipulates what we do in terms of trade duration, size and profit targets. We as trader often have knowledge of trading multiple instruments but usually focus only on our individual strengths when markets are in our ideal environment.
Most of the time I trade stocks ranging from intra day trades to multi day swing trades. When the market is not stock friendly I switch over to Futures intra day trading. Right now I am studying forex which is very very dangerous territory for most trades. Forex is highly leveraged so a high leverage of risk reward should be taken.
I will tell readers this, actively trading most of the times is not about how much money you can make but preserving capital and over the years I have implemented a risk reward system which has worked great for me and I will share it will you.
Here it goes.
I based all my trades on risk and reward but no trade should cost me more than 1-2% of my portfolio. Therefore if you are 200k trading you should not lose more than 1-2k on that single trade. I will show an example: Say I am looking at RIMM chart and I see it is forming a bull flag, so I want to jump on this is what I do. I analyze the bull flag and note where the stop should be on a failure of the flag. Analysis tells me entry on the bull flag is 105 and bottom of the flag is $102, so I therefore need a $3 stop. If I am using a $3 stop I therefore can only trade maximum up to 660 shares based on a 200k portfolio with maximum 1-2% loss per trade. Playing like this will ensure you will not get blown out on any one trade. I must never never lose more than 2% on a trade.
I hear many traders losing 30% of their port in a day because they go all in on one trade and then they are wrong. It is very sad but it happens every single day.
Human beings are naturally driven by greed but we must learn how to control it. If you are a active trader set a target whether it be daily, weekly or monthly on your portfolio. Since I do this professional as an career I personally have daily target and weekly targets. Many times I achieve my daily target in the first 5 minutes of trading and then I go into profit protection mode (this is where I scale my loss parameter to .05% instead of the 1-2% per trade). If I have 3 straight losses for the day I call it quits for the day.
I am just sharing some of the things which are beneficial to my trading and want to share them with all.
Market conditions usually stipulates what we do in terms of trade duration, size and profit targets. We as trader often have knowledge of trading multiple instruments but usually focus only on our individual strengths when markets are in our ideal environment.
Most of the time I trade stocks ranging from intra day trades to multi day swing trades. When the market is not stock friendly I switch over to Futures intra day trading. Right now I am studying forex which is very very dangerous territory for most trades. Forex is highly leveraged so a high leverage of risk reward should be taken.
I will tell readers this, actively trading most of the times is not about how much money you can make but preserving capital and over the years I have implemented a risk reward system which has worked great for me and I will share it will you.
Here it goes.
I based all my trades on risk and reward but no trade should cost me more than 1-2% of my portfolio. Therefore if you are 200k trading you should not lose more than 1-2k on that single trade. I will show an example: Say I am looking at RIMM chart and I see it is forming a bull flag, so I want to jump on this is what I do. I analyze the bull flag and note where the stop should be on a failure of the flag. Analysis tells me entry on the bull flag is 105 and bottom of the flag is $102, so I therefore need a $3 stop. If I am using a $3 stop I therefore can only trade maximum up to 660 shares based on a 200k portfolio with maximum 1-2% loss per trade. Playing like this will ensure you will not get blown out on any one trade. I must never never lose more than 2% on a trade.
I hear many traders losing 30% of their port in a day because they go all in on one trade and then they are wrong. It is very sad but it happens every single day.
Human beings are naturally driven by greed but we must learn how to control it. If you are a active trader set a target whether it be daily, weekly or monthly on your portfolio. Since I do this professional as an career I personally have daily target and weekly targets. Many times I achieve my daily target in the first 5 minutes of trading and then I go into profit protection mode (this is where I scale my loss parameter to .05% instead of the 1-2% per trade). If I have 3 straight losses for the day I call it quits for the day.
I am just sharing some of the things which are beneficial to my trading and want to share them with all.
Saturday, April 19, 2008
Friday, April 18, 2008
Simply Amazing
How can you buy a stock with no earnings. Citibank is been bidding up pre market after they posted a bigger than expected loss. Can these eople add or subtract. Oh well maybe they can and I am wrong since they earns millions while making their clients lose.
Watch for the ags and oil stock here carefully, if and I say 'IF' market believes financials and tech have bottomed then there will be rotation out of the Oil and agro stocks which have been on fire.
Stay nimple here and play option if you can so you have a defined risk.
Yahoo calls I will be rolling out of the April $25 at basically even at the open and purchasing the May $25 as I still believe Microsoft will pay up for Yahoo. The thing with these plays you have to be patient.
Watch for the ags and oil stock here carefully, if and I say 'IF' market believes financials and tech have bottomed then there will be rotation out of the Oil and agro stocks which have been on fire.
Stay nimple here and play option if you can so you have a defined risk.
Yahoo calls I will be rolling out of the April $25 at basically even at the open and purchasing the May $25 as I still believe Microsoft will pay up for Yahoo. The thing with these plays you have to be patient.
HIGHER HERE
Well as I been saying I expect a bounce as we are in Earnings seasons and now we will get it for sure. This morning we have overnight earnings from Google for the tech and for this motning we have Caterpillar which also beat along with Honeywell. Even expect the laggards as financial to at least get a bounce into the brokers earnings next week. Yes yes yes you will here everyone say the bottom is in etc but it is just a bounce here because of earnings. Lets see how far this bounce takes us and I will be looking at some laggards to play long.
Thursday, April 17, 2008
GOOGLEISHOUS
Wow a blow out for Google. This will definitely give the market the lift it needs to get going as I told you. IBM didn't really do it for us today but GOOGLE I am 100% sure with option expiration tomorrow should be a great day. Today was fun all my daytrades scored as targeted and that reinforces what I said last night that the days after trend days are usually great trading days.
I expect us to keep the bullish bias till earnings are over, after that who knows but I will be short the heck out of this run up after earnings and into any kind of technical resistance.
Today should be great day to trade look for GOOG, BIDU, YHOO, and the Brokers for the first hour's high to go long.
I expect us to keep the bullish bias till earnings are over, after that who knows but I will be short the heck out of this run up after earnings and into any kind of technical resistance.
Today should be great day to trade look for GOOG, BIDU, YHOO, and the Brokers for the first hour's high to go long.
If it was always this easy
Wow days after trend days are always very profitable for me, can't get any easier than these days.
Sweet sweet sweet. I hope you longs are ok today because all my money today I made on the short. Who knows where this market really goes and who cares aslong as you make money up and down I surely don't!!!!!
Apple looks week here but since tomorrow is option expiration more than likely the crooks will pin it tomorrow @$150 or $155. Tonight I will be watching GOOGLE earnings. I am like a kid in a candy store for that one tonight.
Yahoo deal seem like it is a dud for the options I have for tomorrow but it was 100% risk, good that I purchased in the money options so at least the are worth something.
Sweet sweet sweet. I hope you longs are ok today because all my money today I made on the short. Who knows where this market really goes and who cares aslong as you make money up and down I surely don't!!!!!
Apple looks week here but since tomorrow is option expiration more than likely the crooks will pin it tomorrow @$150 or $155. Tonight I will be watching GOOGLE earnings. I am like a kid in a candy store for that one tonight.
Yahoo deal seem like it is a dud for the options I have for tomorrow but it was 100% risk, good that I purchased in the money options so at least the are worth something.
Wednesday, April 16, 2008
Should be be impressed
Nice rally but should be be impressed. Well I was wondering if I was going to bomb major on my call for some upside in earnings season which is what we usually do. The market can go anywhere as we can see as the GE and WB earnings a few days ago seem so far away as everyone is now bullish. I just can't believe analysts and Wall Street totally unbelievable, it is a traders market and it will remain so for a very very long time. Today was merely uneventful for me as I sat and rode some intraday calls but nothing to say an exciting day to say the least.
After the bell IBM beat and we should carry over the bullish sentiment of today and many will say tech is where you need to be. Let me tell you this if you buying tech here for more than a bounce you are crazy! Summer is the slowest time for tech and this year will be no exception, these stocks are merely moving higher on earnings expectation and nothing else so be careful.
Tomorrow, I will see what sets up but Trading was not the best if you aren't a seasoned traders for me to write what I deem playable tactics for many of you on the blog like a day like today.
I for one am not easily impressed maybe some of you are but I am playing this bounce into resistance especially on the S&P where i will be initiating what are technically high probability shorts.
FSLR is setting up sweet for a short into resistance above at $310-315 area, so keep that one your radar.
BIDU which is a monster here I will be watching closely as last earnings they disappointed so I am wary of this massive run up here. I am not ready to short it here as it is totally strong as I believe shorts are covering it just in case GOOGLE says stuff that are ultra positive but we will see tomorrow this time.
After the bell IBM beat and we should carry over the bullish sentiment of today and many will say tech is where you need to be. Let me tell you this if you buying tech here for more than a bounce you are crazy! Summer is the slowest time for tech and this year will be no exception, these stocks are merely moving higher on earnings expectation and nothing else so be careful.
Tomorrow, I will see what sets up but Trading was not the best if you aren't a seasoned traders for me to write what I deem playable tactics for many of you on the blog like a day like today.
I for one am not easily impressed maybe some of you are but I am playing this bounce into resistance especially on the S&P where i will be initiating what are technically high probability shorts.
FSLR is setting up sweet for a short into resistance above at $310-315 area, so keep that one your radar.
BIDU which is a monster here I will be watching closely as last earnings they disappointed so I am wary of this massive run up here. I am not ready to short it here as it is totally strong as I believe shorts are covering it just in case GOOGLE says stuff that are ultra positive but we will see tomorrow this time.
IBM beat
Well just as I said IBM would beat. IBM has been a monster with earnings for the past 3 years. Already up $4 after market so no way to play it here. Tomorrow I will definitely looking for a gap up into resistance to short after a 200+point day.
This is setting up to be a gift if we do head into those 200 moving averages for the indexes. Just alittle patience and we can rack up there. Tomorrow we should see more volume as friday is options expiration.
This is setting up to be a gift if we do head into those 200 moving averages for the indexes. Just alittle patience and we can rack up there. Tomorrow we should see more volume as friday is options expiration.
TRADE CALL: MELI $45 CALL selling here
Selling those calls from last week here @$4.00
60% profit on those..
60% profit on those..
We are very bullish today
We are very bullish today. Seem like the 200 ma's will be target on the upside if this push continues
Updates
MELI $45 CALL called last week @$2.50 now $3.50. I am riding them into friday or last tomorrow.
Yhoo calls basically flat .
Yhoo calls basically flat .
GOOG: Keep eye on it today
With the futures up huge on intel's earnings lets watch GOOG today for all those active traders for a trade. Yesterday Google showed relative weakness and if it show weakness today before 10:30 am we can play it on the short side. This is a heads up trade on stuff I look at and since some of you have been asking me for my trades ideas these are some of the set ups I look for on daytrades.
Also it will be interested if this is the turning point in earnings or we just sell into the strength today. These signals will tell us how the next few days might play out. If it is a turning point I will be looking for the markets to test their prospective 200 day moving averages above.
Also it will be interested if this is the turning point in earnings or we just sell into the strength today. These signals will tell us how the next few days might play out. If it is a turning point I will be looking for the markets to test their prospective 200 day moving averages above.
Tuesday, April 15, 2008
Intel beats
This could be the upside I have been waiting for but I will wait and see. Intel earnings seemed impressive but you never know how they shake and bake it tomorrow.
I think tomorrow we should gap up and the weak stock should be a great short set up while the strong stocks like FSLR and the agros should be playable as 10 am highs.
I think tomorrow we should gap up and the weak stock should be a great short set up while the strong stocks like FSLR and the agros should be playable as 10 am highs.
INTC
Intc earnings should be out in a few minutes. Lets see what they says and see the reaction on the Futures.
GOOGLE Update
As I said this morning watch Google. Now down $6 and at its lows of the day. One to definitely watch down if IBM report bad. IBM had excellent earnings last quarter so personally I dont know. I Think whichever way Google ill be one to play as a 10 am play along with Apple.
FSLR
Solars still on fire. I think FSLR will make a good short every soon. I think something like $315-$320 area for a short will carry very good risk reward level. So one to put on your screen. Right now it is screaming but getting very overbought but can remain overbought till that 315-320 area, so that would be a better entry
Google was up $9 at the open on some reports that internet clicks were possible up. Now the stock is just up 50 cents after an hour. I am no fortune teller but is might be an obvious sign of how the market is viewing Google before it earnings on thursday. I am not saying to go short because Google is a monster stock but it shows you how sentiment has changed.
My long term target on Google is still $275.
My long term target on Google is still $275.
Monday, April 14, 2008
C, Citibank
I was not able to catch Citibank short on this push higher but you all know what I think about citibank and Washington Mutual. Citibank definitely going to $15 area and WM geez is just dead money if you ask me. Market is very surprisingly slow today but i am hoping with fridays' options expiration and the tech weights as Intel, IBM, Ebay and Google reporting this week we will se some volume in here.
Not trying to stick my head out here too much as we get can whiplashed either way.
Not trying to stick my head out here too much as we get can whiplashed either way.
NICE
How you guys like SKF now up $16 from call.
How you like FNM in total death spiral now up $5+
How you like SOV. That short is making new lows ever single day, just print profits.
Folks dont invest here you will thank me later for the advice.
I am currently short SOV, FNM, GOOG, AAPL. I did miss a few and have been in and out of the financials short.
We can all think here is a bottom in the market but there is none. we are in a black hole with financials earnings and I dont think we will be out anytime soon. I still think we have a good shot to bounce in this earnings season but after bye bye we going down.
How you like FNM in total death spiral now up $5+
How you like SOV. That short is making new lows ever single day, just print profits.
Folks dont invest here you will thank me later for the advice.
I am currently short SOV, FNM, GOOG, AAPL. I did miss a few and have been in and out of the financials short.
We can all think here is a bottom in the market but there is none. we are in a black hole with financials earnings and I dont think we will be out anytime soon. I still think we have a good shot to bounce in this earnings season but after bye bye we going down.
Sunday, April 13, 2008
WOW-
People I have no inside information I just have he FORCE. Yesterday was saturday and I posted to the blog about Wachovia, well 5 minutes ago across the wires Wachovia has gotten a capital infusion at $23-$24 per share from outside investors. Two issues with this, 1) it is 15% less than the price of wachovia bank on friday and 2)Obviously the bank has issues if they had to seek out capital to continue smooth operations. Well will see how this goes tomorrow but geez I had to say that was scary I felt something was up and there was.
Have a great upcoming week
Have a great upcoming week
Saturday, April 12, 2008
Time to Face reality
Well it is Saturday and I am on my patio writing to my blog, geez I must love my readers. Well folks here is a very short and sweet story about the economy and the markets. It is a disaster. That's it I am done, plain and simple, the economy is now on sandy ground waiting for the enivitable to happen, nothing!!
Time for us to face the reality of what is happening in the Markets, friday GE came out and said things are bad reallly bad THE MISSED!!! In my 10 yrs at this I have never seen GE missed, they have always beaten by a penny and for GE to miss it speaks volumes of the situation at hand. I constantly listen to the talking heads on TV about bottom in the financials, geez please don't listen there is no bottom yet. The fact that GE sold of $5 tells me big money now believes we are in trouble believe me. Right now the big money is betting on lower prices and will leave the IRA, 401K holders holding the bag as usual. It is not a time to own stocks period and many of you will say oh but this stock went up $5 last week it is great. I say ok go ahead and buy and tell me what it is at next year this time!!! It is time to be an aggressive trader not an investor those days are long gone.
The reporters on CNBC believe they would be sitting nice and well 10 years ago when they signed on to salary deals mostly done in stock, Now that stock is cut in 1/2 and you can all write it down GE will never never see $60 in the next 10yrs, sorry to tell the truth but someone has to.
Financials are doomed here and I am now adding one more to my doom list WB (Wachovia). Something is up there I just dont know what it is but WB looks like it can see $15 in a rush if they start saying things are bad, which i believe they will very soon. Their exposure to mortgages might have the faith as SOV and FNM, yes it could get that bad for them. I dont know when and what will turn around the financials but it is not the current FED action.
Bernanke is an idiot simple and what he is doing is setting the economy in a black hole in order to save a couple of poorly run entities is just rediculous. The last time I check if you opened a business and make bad decision our business goes under, the bank wont say Mr Palmer you are a good person and we will not allow you to fail so here is more money. Wow if if was so I would have 500 businesses trying to make money doing anything because I would have no risk.
Time for us to realize we live in a world of many countries competing for the same limited resources to sustain our lives and based on that we should make decision for the Global community not just the few working at Wall Street and Washington D.C.
I hope next week give us some movement in either direction so we can hope on and take some sweet profits but please dont pick bottoms and start investing if you do you are crazy.
Have a great weekend
Time for us to face the reality of what is happening in the Markets, friday GE came out and said things are bad reallly bad THE MISSED!!! In my 10 yrs at this I have never seen GE missed, they have always beaten by a penny and for GE to miss it speaks volumes of the situation at hand. I constantly listen to the talking heads on TV about bottom in the financials, geez please don't listen there is no bottom yet. The fact that GE sold of $5 tells me big money now believes we are in trouble believe me. Right now the big money is betting on lower prices and will leave the IRA, 401K holders holding the bag as usual. It is not a time to own stocks period and many of you will say oh but this stock went up $5 last week it is great. I say ok go ahead and buy and tell me what it is at next year this time!!! It is time to be an aggressive trader not an investor those days are long gone.
The reporters on CNBC believe they would be sitting nice and well 10 years ago when they signed on to salary deals mostly done in stock, Now that stock is cut in 1/2 and you can all write it down GE will never never see $60 in the next 10yrs, sorry to tell the truth but someone has to.
Financials are doomed here and I am now adding one more to my doom list WB (Wachovia). Something is up there I just dont know what it is but WB looks like it can see $15 in a rush if they start saying things are bad, which i believe they will very soon. Their exposure to mortgages might have the faith as SOV and FNM, yes it could get that bad for them. I dont know when and what will turn around the financials but it is not the current FED action.
Bernanke is an idiot simple and what he is doing is setting the economy in a black hole in order to save a couple of poorly run entities is just rediculous. The last time I check if you opened a business and make bad decision our business goes under, the bank wont say Mr Palmer you are a good person and we will not allow you to fail so here is more money. Wow if if was so I would have 500 businesses trying to make money doing anything because I would have no risk.
Time for us to realize we live in a world of many countries competing for the same limited resources to sustain our lives and based on that we should make decision for the Global community not just the few working at Wall Street and Washington D.C.
I hope next week give us some movement in either direction so we can hope on and take some sweet profits but please dont pick bottoms and start investing if you do you are crazy.
Have a great weekend
Next Week
I am planning to give alot of options plays next week, so options player get your power dry for the winners
Friday, April 11, 2008
Not very exciting week
Well not a very exciting week but at least our positions are way in the money. How do you like SOV short, it made a 52 week low today and that's no joke, it is going lower. SKF up up and away. Oh and did you check out FNM, just printing money on that short.
FOLKS next week is key as all of the investment banks and top tech companies will be reporting earnings coupled with option expiration it should be one volatile week with some big profit potential.
About 3 years ago this same earnings week period my account went up 93% on playing some sweet options. Yes 93% in one week, but I dont expect people to bet the whole farm on plays, so step light till the market tips it hands.
Have a great weekend.
FOLKS next week is key as all of the investment banks and top tech companies will be reporting earnings coupled with option expiration it should be one volatile week with some big profit potential.
About 3 years ago this same earnings week period my account went up 93% on playing some sweet options. Yes 93% in one week, but I dont expect people to bet the whole farm on plays, so step light till the market tips it hands.
Have a great weekend.
JIM ROGERS INTERVIEW!!!
Jim Rogers: More Pain for the Greenback, and the Failure of the Federal Reserve
SINGAPORE - By bailing out Wall Street and applying "band-aids" to the economy, the U.S. Federal Reserve may well be causing its own downfall - even as it hastens the demise of the greenback as a viable global currency, investment guru Jim Rogers told Money Morning during an exclusive interview.
Because of such strategic missteps, U.S. consumers could be facing a long and painful economic malaise, similar to the "lost decade" of 1990s Japan, or the stagflation-riddled 1970s in the United States, Rogers said.
Make no mistake: If that happens, there are two clear culprits - current Fed Chairman Ben S. Bernanke, and his predecessor, Alan Greenspan.
Bernanke "and Greenspan together will probably bring [about] the end of the Federal Reserve," Rogers said during the interview in Singapore. "We’ve had two central banks in America that failed [and] this third central bank will probably fail, too, because of Bernanke and Greenspan. The Federal Reserve [just] put $200 billion more onto its balance sheet of mortgages. Now I don’t know how big they can expand their balance sheet, but if they keep doing it, there’s only so much - and they just bought Bear Stearns (BSC)."
Rogers first made a name for himself with The Quantum Fund, a hedge fund that’s often described as the first real global investment fund, which he and partner George Soros founded in 1970. Over the next decade, Quantum gained 4,200%, while the Standard & Poor’s 500 Index climbed about 50%.
It was after Rogers "retired" in 1980 that the investing masses got to see him in action. Rogers traveled the world (several times), and penned such bestsellers as "Investment Biker" and the just-released "Bull in China." And he made some historic market calls: Rogers predicted China’s meteoric growth a good decade before it became apparent and he subsequently foretold of the powerful updraft in global commodities prices that’s fueled a year-long bull market in the agriculture, energy and mining sectors.
Given Rogers’ prescience - not to mention all the uncertainty facing U.S. investors right now - we thought it was well worth a sit-down with the noted guru, even though it meant traveling all the way to Singapore, where he now lives with his family, to do so.
During that interview here in Singapore, Rogers also said that:
* Although the United States faces perhaps its most daunting economic challenges in at least a generation, "in America, most people do not understand that there is a problem."
* Because of these weak-dollar efforts - as well as the billion-dollar bailouts - "America is now the largest debtor the world has ever seen."
* Although the central bank seems intent on engineering a U.S. economic rebound by creating an ultra-weak dollar, no country in history has ever emerged from a serious financial crisis by "debasing its currency."
The bottom line: The strategies that the central bank is currently employing are nothing short of "outrageous," Rogers said.
"You know, I’ve read the Federal Reserve Act," he said. "Nowhere does it say [the central bank is] supposed to bail out investment banks! Nowhere does it say you should bail out Wall Street. Their mandate was to have a sound currency, and then it was later expanded to have employment - to help employment. But nowhere does it say: ‘Bail out investment banks.’"
Let’s take a look at some of the highlights of the Money Morning interview with investor and author Jim Rogers.
Keith Fitz-Gerald (Q): There’s a confluence of money flowing into and around China. Do you believe that the U.S., with all its current problems, will get left out?
Jim Rogers: Absolutely.
The U.S. dollar is a terribly flawed currency. I’m trying to get all of my money out of U.S. dollars. I don’t know why anybody would put money into the U.S. dollar, and by extension into the U.S., as we stand here today. The U.S. is probably the largest debtor nation the world has ever seen!
The United States’ foreign debts are increasing at the rate of $1 trillion U.S. dollars every 15 months. U.S. foreign debt is over $13 trillion, and rising rapidly. It’s the official policy of the central bank to debase the currency. They’re trying to drive down the value of the dollar.
Q: The government has succeeded wildly, so far.
Rogers: You haven’t seen anything yet!
They’re trying to drive down the dollar. I’m trying to be patriotic. I’m trying to sell dollars. That’s what they want. I’m trying to help them drive down the value of the currency.
All Americans should. There are certainly probably good reasons to put some money in dollars. For instance, if you have to buy cotton, you have to have dollars.
But for the most part - I, anyway - am joining other people who’re trying to avoid the U.S. dollar, because Washington has sent a very clear signal: "We want the dollar to decline. We’re gonna do our best to make it decline."
Well, everybody has to make their own decision. I’m trying to do what the Federal Reserve wants me to do, and I’m selling dollars.
Q: My take is that former Fed Chair Alan Greenspan and current Fed Chairman Ben S. Bernanke may go down as the worst central bank chairmen in history. Do you see it differently?
Rogers: [Bernanke] and Greenspan together will probably bring [about] the end of the Federal Reserve. We’ve had two central banks in America that failed. This third central bank will probably fail, too, because of Bernanke and Greenspan.
The Federal Reserve last week put $200 billion more onto its balance sheet of mortgages. Now I don’t know how big they can expand their balance sheet, but if they keep doing it, there’s only so much - [and] they just bought Bear Stearns.
There’s just so much they can do. Maybe that balance sheet is infinite. I doubt it. And it can be said to be infinite; they just print money like Zimbabwe or someplace. But that has to come to an end, eventually.
Maybe Bernanke is going to get into his helicopter and fly around collecting rents now. Maybe when they repossess all the property, he’s going to be the rent collector. But then when they eventually take on all the car loans, I guess he’s going to be collecting car payments, too. And credit card debt, when they take over all the credit card payments, I guess he’ll be hauling us all out saying: "Your credit card’s overdue."
This is insanity.
Q: Is there a circumstance under which you could see the U.S. recovering, or do you think this country is doomed to be an economic also-ran?
Rogers: Historically, nations that have gotten themselves into this kind of situation have only gotten out following a crisis or a semi-crisis, or some gigantic stroke of luck.
The U.K. got out because they discovered the North Sea. Now you give me the largest oil field in the world, or one of the largest oil fields in the world, I’ll show you a good time, too.
So if you have a stroke of luck [you can escape these kinds of problems], but otherwise, nobody’s ever sorted out these problems without some kind of gigantic crisis or semi-crisis first.
In America, most people do not understand there is a problem! The few who know there’s something going on don’t understand what it is. Most of them who understand it actually think it’s good that the currency’s declining. America’s not going to do anything until things get very, very bad.
Others that offer the rejoinder to this - that the declining dollar makes America competitive - [that] has worked in the short term. But no country has ever restored itself by debasing its currency, not in the long term, not even the medium term.
Many places have tried to debase their currency as a solution. It’s never worked, other than maybe in the short-term, for a while.
Q: Are we looking at a Japanese-style lost economic decade?
Rogers: The Federal Reserve is making the same mistakes that the Japanese made. They’re trying to say: "We won’t let anybody fail. We’ll print a lot of money. We’ll drive interest rates to zero. And we don’t want anybody to fail. We’ll put on as many Band-Aids as we have to."
Well, putting Band-Aids on a cancer patient is not a good solution.
So whether it’s like the ’90s in Japan, or the ’70s in America, remains to be seen.
[One-time U.S. Federal Reserve Chairman] Arthur Burns, who headed the central bank in the ’70s, did exactly what Bernanke’s doing. He raced in and printed money and said: "Oh, everything’s gonna be OK."
But the economy never recovered, inflation went through the roof, and the dollar was under duress. Eventually they had to bring in Paul Volcker and interest rates went over 20%. And eventually they killed inflation and they solved the problem.
They’re making exactly the same mistakes that Burns made. For whatever reason, though, this problem is going to last longer than previous difficulties in America. And it’s probably going to be worse.
Because, now, America is a debtor nation. Now we’re the largest debtor nation in the world. At least in the ’70s, we were still a creditor nation. Japan could survive because they were the largest creditor in the world at the time. So they didn’t fall off the face of the earth.
America’s now the largest debtor the world has ever seen. What’s happening in the U.S. is not going to be fun.
Q: Should the Fed be stepping in like it has in recent months?
Rogers: It’s outrageous that Bernanke’s sitting there. You know, I’ve read the Federal Reserve Act. Nowhere does it say [the central bank is] supposed to bail out investment banks! Nowhere does it say you should bail out Wall Street. Their mandate was to have a sound currency, and then it was later expanded to have employment - to help employment. But nowhere does it say: ‘Bail out investment banks.’
Investment banks have been failing for centuries. The world hasn’t come to an end… even when investment banks have failed. They just caused a setback, and so what!
Recessions are usually good for the system. They clean out the excesses. And my God there’ve been excesses on Wall Street in the past 10 years. You don’t see a bunch of 29-year-old cotton farmers driving around in Maseratis and flying in private planes to exotic locations. Well, you see a lot of guys on Wall Street doing that.
And the idea that we’re now supposed to bail them out is ludicrous! I don’t see any of those guys sending their bonus checks back.
Huge amounts were made in the debt markets. We now know [that money was made] at least incorrectly, if not fraudulently, and yet, now we’re supposed to bail them out. It’s bad enough they get to keep their money. But the outrageous part is that it will cost more to try to prevent a recession than to have the recession.
We have safety nets in place, now. We did in the ’70s in America and the Japanese did in the ’90s. I think there’s good evidence that it will cost more to try to prevent the problems than to have the problems.
Q: That’s a very interesting thought that had not occurred to me before.
Rogers: Well, we’ll see if it’s right. In nature, there’s the natural phenomenon of forest fires. The forest fires are pretty terrible when they’re going on. But nature invented them to clean out the forest so that the forest could then come and grow from a new, sound foundation. That’s what recessions do, too. They’re a natural phenomenon.
Nobody likes it when we have them any more than anybody likes a forest fire. But in the end, everybody’s better off. Bernanke thinks he can stop this; he’s going to very well destroy the system by trying to save it.
Q: Could you see a segment of the financial system surviving this? Or do you think that there will be such catastrophic change that we won’t recognize it till several years from now?
Rogers: Ask me again in five years, 10 years. That was true after the ’30s, certainly. It was true even after the ’60s. Very few people went to Wall Street in the ’70s, very few. A whole generation ignored Wall Street in the ’30s and in the ’70s.
Will that happen again? Probably, because of things we’ve been discussing.
So there will be big changes, of course. If you’re in the field that deals with - and works out - bankruptcies, you’ve got a great future - on Wall Street, or in the legal profession. If you’re in commodities, you have a great future. Some sectors of the financial community are going to do well. Many others are going to disappear and/or do badly.
Q: How low could the dollar go?
Rogers: I have no idea. You just have to watch it as it evolves. Politicians and bureaucrats can do unbelievably stupid things, and have [done so] throughout history.
They will usually do things that are so stupid nobody can believe them, but it happens. You have to watch and see as it goes.
SINGAPORE - By bailing out Wall Street and applying "band-aids" to the economy, the U.S. Federal Reserve may well be causing its own downfall - even as it hastens the demise of the greenback as a viable global currency, investment guru Jim Rogers told Money Morning during an exclusive interview.
Because of such strategic missteps, U.S. consumers could be facing a long and painful economic malaise, similar to the "lost decade" of 1990s Japan, or the stagflation-riddled 1970s in the United States, Rogers said.
Make no mistake: If that happens, there are two clear culprits - current Fed Chairman Ben S. Bernanke, and his predecessor, Alan Greenspan.
Bernanke "and Greenspan together will probably bring [about] the end of the Federal Reserve," Rogers said during the interview in Singapore. "We’ve had two central banks in America that failed [and] this third central bank will probably fail, too, because of Bernanke and Greenspan. The Federal Reserve [just] put $200 billion more onto its balance sheet of mortgages. Now I don’t know how big they can expand their balance sheet, but if they keep doing it, there’s only so much - and they just bought Bear Stearns (BSC)."
Rogers first made a name for himself with The Quantum Fund, a hedge fund that’s often described as the first real global investment fund, which he and partner George Soros founded in 1970. Over the next decade, Quantum gained 4,200%, while the Standard & Poor’s 500 Index climbed about 50%.
It was after Rogers "retired" in 1980 that the investing masses got to see him in action. Rogers traveled the world (several times), and penned such bestsellers as "Investment Biker" and the just-released "Bull in China." And he made some historic market calls: Rogers predicted China’s meteoric growth a good decade before it became apparent and he subsequently foretold of the powerful updraft in global commodities prices that’s fueled a year-long bull market in the agriculture, energy and mining sectors.
Given Rogers’ prescience - not to mention all the uncertainty facing U.S. investors right now - we thought it was well worth a sit-down with the noted guru, even though it meant traveling all the way to Singapore, where he now lives with his family, to do so.
During that interview here in Singapore, Rogers also said that:
* Although the United States faces perhaps its most daunting economic challenges in at least a generation, "in America, most people do not understand that there is a problem."
* Because of these weak-dollar efforts - as well as the billion-dollar bailouts - "America is now the largest debtor the world has ever seen."
* Although the central bank seems intent on engineering a U.S. economic rebound by creating an ultra-weak dollar, no country in history has ever emerged from a serious financial crisis by "debasing its currency."
The bottom line: The strategies that the central bank is currently employing are nothing short of "outrageous," Rogers said.
"You know, I’ve read the Federal Reserve Act," he said. "Nowhere does it say [the central bank is] supposed to bail out investment banks! Nowhere does it say you should bail out Wall Street. Their mandate was to have a sound currency, and then it was later expanded to have employment - to help employment. But nowhere does it say: ‘Bail out investment banks.’"
Let’s take a look at some of the highlights of the Money Morning interview with investor and author Jim Rogers.
Keith Fitz-Gerald (Q): There’s a confluence of money flowing into and around China. Do you believe that the U.S., with all its current problems, will get left out?
Jim Rogers: Absolutely.
The U.S. dollar is a terribly flawed currency. I’m trying to get all of my money out of U.S. dollars. I don’t know why anybody would put money into the U.S. dollar, and by extension into the U.S., as we stand here today. The U.S. is probably the largest debtor nation the world has ever seen!
The United States’ foreign debts are increasing at the rate of $1 trillion U.S. dollars every 15 months. U.S. foreign debt is over $13 trillion, and rising rapidly. It’s the official policy of the central bank to debase the currency. They’re trying to drive down the value of the dollar.
Q: The government has succeeded wildly, so far.
Rogers: You haven’t seen anything yet!
They’re trying to drive down the dollar. I’m trying to be patriotic. I’m trying to sell dollars. That’s what they want. I’m trying to help them drive down the value of the currency.
All Americans should. There are certainly probably good reasons to put some money in dollars. For instance, if you have to buy cotton, you have to have dollars.
But for the most part - I, anyway - am joining other people who’re trying to avoid the U.S. dollar, because Washington has sent a very clear signal: "We want the dollar to decline. We’re gonna do our best to make it decline."
Well, everybody has to make their own decision. I’m trying to do what the Federal Reserve wants me to do, and I’m selling dollars.
Q: My take is that former Fed Chair Alan Greenspan and current Fed Chairman Ben S. Bernanke may go down as the worst central bank chairmen in history. Do you see it differently?
Rogers: [Bernanke] and Greenspan together will probably bring [about] the end of the Federal Reserve. We’ve had two central banks in America that failed. This third central bank will probably fail, too, because of Bernanke and Greenspan.
The Federal Reserve last week put $200 billion more onto its balance sheet of mortgages. Now I don’t know how big they can expand their balance sheet, but if they keep doing it, there’s only so much - [and] they just bought Bear Stearns.
There’s just so much they can do. Maybe that balance sheet is infinite. I doubt it. And it can be said to be infinite; they just print money like Zimbabwe or someplace. But that has to come to an end, eventually.
Maybe Bernanke is going to get into his helicopter and fly around collecting rents now. Maybe when they repossess all the property, he’s going to be the rent collector. But then when they eventually take on all the car loans, I guess he’s going to be collecting car payments, too. And credit card debt, when they take over all the credit card payments, I guess he’ll be hauling us all out saying: "Your credit card’s overdue."
This is insanity.
Q: Is there a circumstance under which you could see the U.S. recovering, or do you think this country is doomed to be an economic also-ran?
Rogers: Historically, nations that have gotten themselves into this kind of situation have only gotten out following a crisis or a semi-crisis, or some gigantic stroke of luck.
The U.K. got out because they discovered the North Sea. Now you give me the largest oil field in the world, or one of the largest oil fields in the world, I’ll show you a good time, too.
So if you have a stroke of luck [you can escape these kinds of problems], but otherwise, nobody’s ever sorted out these problems without some kind of gigantic crisis or semi-crisis first.
In America, most people do not understand there is a problem! The few who know there’s something going on don’t understand what it is. Most of them who understand it actually think it’s good that the currency’s declining. America’s not going to do anything until things get very, very bad.
Others that offer the rejoinder to this - that the declining dollar makes America competitive - [that] has worked in the short term. But no country has ever restored itself by debasing its currency, not in the long term, not even the medium term.
Many places have tried to debase their currency as a solution. It’s never worked, other than maybe in the short-term, for a while.
Q: Are we looking at a Japanese-style lost economic decade?
Rogers: The Federal Reserve is making the same mistakes that the Japanese made. They’re trying to say: "We won’t let anybody fail. We’ll print a lot of money. We’ll drive interest rates to zero. And we don’t want anybody to fail. We’ll put on as many Band-Aids as we have to."
Well, putting Band-Aids on a cancer patient is not a good solution.
So whether it’s like the ’90s in Japan, or the ’70s in America, remains to be seen.
[One-time U.S. Federal Reserve Chairman] Arthur Burns, who headed the central bank in the ’70s, did exactly what Bernanke’s doing. He raced in and printed money and said: "Oh, everything’s gonna be OK."
But the economy never recovered, inflation went through the roof, and the dollar was under duress. Eventually they had to bring in Paul Volcker and interest rates went over 20%. And eventually they killed inflation and they solved the problem.
They’re making exactly the same mistakes that Burns made. For whatever reason, though, this problem is going to last longer than previous difficulties in America. And it’s probably going to be worse.
Because, now, America is a debtor nation. Now we’re the largest debtor nation in the world. At least in the ’70s, we were still a creditor nation. Japan could survive because they were the largest creditor in the world at the time. So they didn’t fall off the face of the earth.
America’s now the largest debtor the world has ever seen. What’s happening in the U.S. is not going to be fun.
Q: Should the Fed be stepping in like it has in recent months?
Rogers: It’s outrageous that Bernanke’s sitting there. You know, I’ve read the Federal Reserve Act. Nowhere does it say [the central bank is] supposed to bail out investment banks! Nowhere does it say you should bail out Wall Street. Their mandate was to have a sound currency, and then it was later expanded to have employment - to help employment. But nowhere does it say: ‘Bail out investment banks.’
Investment banks have been failing for centuries. The world hasn’t come to an end… even when investment banks have failed. They just caused a setback, and so what!
Recessions are usually good for the system. They clean out the excesses. And my God there’ve been excesses on Wall Street in the past 10 years. You don’t see a bunch of 29-year-old cotton farmers driving around in Maseratis and flying in private planes to exotic locations. Well, you see a lot of guys on Wall Street doing that.
And the idea that we’re now supposed to bail them out is ludicrous! I don’t see any of those guys sending their bonus checks back.
Huge amounts were made in the debt markets. We now know [that money was made] at least incorrectly, if not fraudulently, and yet, now we’re supposed to bail them out. It’s bad enough they get to keep their money. But the outrageous part is that it will cost more to try to prevent a recession than to have the recession.
We have safety nets in place, now. We did in the ’70s in America and the Japanese did in the ’90s. I think there’s good evidence that it will cost more to try to prevent the problems than to have the problems.
Q: That’s a very interesting thought that had not occurred to me before.
Rogers: Well, we’ll see if it’s right. In nature, there’s the natural phenomenon of forest fires. The forest fires are pretty terrible when they’re going on. But nature invented them to clean out the forest so that the forest could then come and grow from a new, sound foundation. That’s what recessions do, too. They’re a natural phenomenon.
Nobody likes it when we have them any more than anybody likes a forest fire. But in the end, everybody’s better off. Bernanke thinks he can stop this; he’s going to very well destroy the system by trying to save it.
Q: Could you see a segment of the financial system surviving this? Or do you think that there will be such catastrophic change that we won’t recognize it till several years from now?
Rogers: Ask me again in five years, 10 years. That was true after the ’30s, certainly. It was true even after the ’60s. Very few people went to Wall Street in the ’70s, very few. A whole generation ignored Wall Street in the ’30s and in the ’70s.
Will that happen again? Probably, because of things we’ve been discussing.
So there will be big changes, of course. If you’re in the field that deals with - and works out - bankruptcies, you’ve got a great future - on Wall Street, or in the legal profession. If you’re in commodities, you have a great future. Some sectors of the financial community are going to do well. Many others are going to disappear and/or do badly.
Q: How low could the dollar go?
Rogers: I have no idea. You just have to watch it as it evolves. Politicians and bureaucrats can do unbelievably stupid things, and have [done so] throughout history.
They will usually do things that are so stupid nobody can believe them, but it happens. You have to watch and see as it goes.
GE Misses Earnings
Futures are down heavy this morning as GE missed earnings estimates citing 50% decline in their financing division.
That will go well for our SKF and FNM .
Geez louise ONLY WINNERS!!!!!!!!!!!!!!!!!
That will go well for our SKF and FNM .
Geez louise ONLY WINNERS!!!!!!!!!!!!!!!!!
Thursday, April 10, 2008
Market Thoughts
Market is in LALA land right now. It doesn't know where it wants to go but I think we can still move higher with earnings season here. Don't worry as I think this will be last stand for the bulls and then we will fall. I would love to see the Nasdaq march towards 2500 area, that would be a no brainer to short. We will see how they want to push us next week as we have options expirations.
TRADE CALL: Citibank PUTS, Sept
Yes it is 11:18 PM and I am doing a trade call. I think something is brewing at Citibank and I think the stock goes lower. I am going to buy these tomorrow morning.
Think here the $25 September puts might be nice to play here. I wont risk alot since I expect to hold these long. Good shot Citibank goes back to $19 and maybe $17 area before September, If and If so those options should be a almost a 300% gainer "IF" I am right.
We will see soon enough.
Think here the $25 September puts might be nice to play here. I wont risk alot since I expect to hold these long. Good shot Citibank goes back to $19 and maybe $17 area before September, If and If so those options should be a almost a 300% gainer "IF" I am right.
We will see soon enough.
FOLKS -ONLY WINNERS HERE!!!!!!
SOV short from first week of March @$12.30 now $8.72. That's almost 50% profit here folks.
FNM Short last week at $30.80 now $26.53.
SKF up- As you should all be in anywhere near 100. Now $109. think we can get another $30 again on this.
MELI Options already +28% in like 2 hours.
Listen we only pick winners because I only call high probability trades for you all to grow your funds and show you how to trade. These trades were talked about many times on the blog and everyone should have profited.
This week has been rough. Volume is extremely light and I hope we will get some direction very soon. Just keep the power dry because you will get the big winners here.
FNM Short last week at $30.80 now $26.53.
SKF up- As you should all be in anywhere near 100. Now $109. think we can get another $30 again on this.
MELI Options already +28% in like 2 hours.
Listen we only pick winners because I only call high probability trades for you all to grow your funds and show you how to trade. These trades were talked about many times on the blog and everyone should have profited.
This week has been rough. Volume is extremely light and I hope we will get some direction very soon. Just keep the power dry because you will get the big winners here.
TRADE CALL: MELI CALLS $45
Risk is all - I am holding yahoo and Meli calls till next week based on all the hype of microsoft buying yahoo.
MELI $45 CALLS here @2.50
Risk is ALL
MELI $45 CALLS here @2.50
Risk is ALL
Not bad
Market is not trading bad here- I am still sticking m head out there saying we should trade higher into earnings but who knows. The resistance target numbers above are still the same ones I mentioned earlier this week. We will see soon enough
Wednesday, April 9, 2008
Did anyone listen
Did anyone listen to the hearings last week pertaining to the Bear Sterns bailout. Did anyone hear Bernanke and the head of the New York Fed state only bank they could have gone ot was JP Morgan!!!!!!!!!!!!
Do you understand the implications on this!!! Other than the conspiracy theory about JP Morgan and the FED, they are really saying only JP Morgan is the only financially sound institution in this economic climate. Geez SCARY!!!!!!!!!!!!!!!!!!!!
Do you understand the implications on this!!! Other than the conspiracy theory about JP Morgan and the FED, they are really saying only JP Morgan is the only financially sound institution in this economic climate. Geez SCARY!!!!!!!!!!!!!!!!!!!!
some predictions
I think Oil will hit the $116 area here on this push with $121 being the ultimate target. With the economy seeming fragile and traders not that enthusiastic about equities I think the commodities markets especially oil will get a push here. The Euro should also push on this also and from the charts it looks like 1.6150 area might be something to look for as initial all time high target if it clear the congestion in the 1.59 area.
Nothing has changed here people. short the banks and brokers and long commodities dont get your mind distracted from the talking heads on TV.
SKF long- Winner\
FNM short Winner.
SOV short kicking butt slowly but surely.
I purchased some GS puts here $180 today. I will see how those work.
I had a dream that I was trading GS at the $120 area. I think that dream will come true, we will see soon enough
Good luck with the rest of the week.
Nothing has changed here people. short the banks and brokers and long commodities dont get your mind distracted from the talking heads on TV.
SKF long- Winner\
FNM short Winner.
SOV short kicking butt slowly but surely.
I purchased some GS puts here $180 today. I will see how those work.
I had a dream that I was trading GS at the $120 area. I think that dream will come true, we will see soon enough
Good luck with the rest of the week.
Oil projection--$121
I am now projecting oil to goto $121 per barrel based on wave analysis, more on this later
Current Trade
FNM short we up +$2 on the partial shares we in.
SKF+$5
man we rocking and rolling, too bad i said scale into them. I only have a few share
SKF+$5
man we rocking and rolling, too bad i said scale into them. I only have a few share
Another Bail out
The street must be crazy. One of my favorite short in the banks as you all know is WM. I think WM is worth $5 at most. Yesterday they got a $7 Billion bail out by some private equity but they have diluted their stock so much that even trading here at $12 it should be $8. My views haven't changed fundamentally on WM. WM is a piece of junk one of the worst run company out there.
Citibank also had news after the close about they sale of some of its portfolio. My thought on this is they need monies to keep up operations. Citibank has gotten a bounce because of the market but I believe Citibank is a $10 stock at best and you can all write that one down.
There are major problems in the banking system and it can't be fixed in 3 months, no shot in hell. In the meantime, the market is going to either really believe we are going to have a short lived recession and break out to yearly highs shortly, or we're going to break back down. This is, truly, make or break time in my opinion. I still think there is a decent shot they bust us higher. I always say that people would rather lose money than risk not making money. Most of us have that instinct, its part of human nature.
We should get a bounce. From there we'll see where they want to take us, but 12,500 should provide nice support. If we bust below that and hold below it then I think we retest 12,000 again shortly. If we can hold 12,500 then it should set up a higher high near term and perhaps get us that HOY move. I hope so, cause that should set up a very nice fall when we break the yearly LOWS.
It's all about keeping your eye on the bigger picture, folks! All about it.
See ya in the am, keep your focus and keep your powder dry. We're gearing up for a BIG move here...one way or the other!
Citibank also had news after the close about they sale of some of its portfolio. My thought on this is they need monies to keep up operations. Citibank has gotten a bounce because of the market but I believe Citibank is a $10 stock at best and you can all write that one down.
There are major problems in the banking system and it can't be fixed in 3 months, no shot in hell. In the meantime, the market is going to either really believe we are going to have a short lived recession and break out to yearly highs shortly, or we're going to break back down. This is, truly, make or break time in my opinion. I still think there is a decent shot they bust us higher. I always say that people would rather lose money than risk not making money. Most of us have that instinct, its part of human nature.
We should get a bounce. From there we'll see where they want to take us, but 12,500 should provide nice support. If we bust below that and hold below it then I think we retest 12,000 again shortly. If we can hold 12,500 then it should set up a higher high near term and perhaps get us that HOY move. I hope so, cause that should set up a very nice fall when we break the yearly LOWS.
It's all about keeping your eye on the bigger picture, folks! All about it.
See ya in the am, keep your focus and keep your powder dry. We're gearing up for a BIG move here...one way or the other!
Tuesday, April 8, 2008
PLEASE READ!!!!!!!!
By all economic measures, the United States is clearly in a state of marked weakness. Economic growth is at or near zero, unemployment is rising, the banking system is in critical condition, housing prices continue to decline, the US consumer is up to its ears in debt, the dollar continues to make new lows versus every major currency, inflation shows no signs of abating, and the Fed is running around like a headless chicken literally doing everything it can to prevent the entire system from collapsing. This is not a subjective assessment, it is our grave reality. So what now? Where do we go from here?
Well the obvious answer would be to fix everything that appears to be broken, clean up inefficient systems, attempt to reinvigorate the economy, and ultimately rebuild confidence in the US financial system over time. However, what I fear most is that in this time of distress we may no longer have the luxury of time. I believe it is possible that one of the many emerging superpowers may make a play for global dominance in the near future. Yes, I know this is a bold statement, but let me explain. Over the past several decades the United States has clearly been the world's superpower. It has been the steam engine driving the global economy as continuous wealth creation here has driven demand for foreign goods thereby creating wealth and GDP growth overseas. We are clearly the largest consuming nation in the world, and most of our foreign counterparties have done everything they can to see that growth here continues as incremental gains in US GDP inevitably trickle down to their own economies. However, it appears now that the global economy has approached the point where our significance in the global growth equation has diminished. It appears as if our emerging market counterparties have grown to a level where collectively they are able to maintain global growth without the neccessity of US demand. Where is the evidence of this? The commodities market. We have virtually every major commodity (Gold, Oil, Coal, Grains, Corn) at or near nominal highs, with many now approaching their inflation-adjusted highs. What is most notable however is that these commodities are making this move with the United States literally on the brink of recession! How is this possible? How is it possible that Oil is near $110 per barrel with such weak US demand? How is it possible with the US near recession that Oil demand is still greater than Oil supply with Oil being pumped at maximum capacity? It is because of decoupling. The world no longer relies on the US as the primary engine of global growth anymore. This position has been taken over by the likes of China, India, and Brazil. While the US has been toiling with credit crises, a housing slump, and increasing debt loads, the emerging economies have grown into such a dominant state of hypergrowth, that their only challenge is to make sure that growth does not get so excessive that it becomes unsustainable, and moreover that inflation remains contained. This dominant position, I'm afraid, may produce some sort of climatic consequence for the United States. Let me explain.
We as mere individuals, will never understand the desire to become a global superpower. This desire is something reserved for continents, nations, and unions as it is impossible for us as individuals to achieve such status. However, even though we may not have the capacity to understand this desire, we know that it exists. We know that every single day every sovereign nation is actively working or has the innate desire to become the strongest entity in the world. Why does this happen? What is the driving force behind this phenomenon? Well in my opinion it is driven by the underlying principle that the world lacks enough supply of natural resources to prolong the existence of every single nation over the long run. Over time, as the world begins to approach levels where natural resources are being fiercely competed over because of inadequate supplies and/or unusually high global demand at the margin, the strongest nations will attempt to force weaker nations into further weakness in the hope that this action may curtail overall demand and allow the strongest nations to accumulate necessary supplies at cheaper prices. It is Darwinism at its finest, and it is ultimately driven by the idea that while economic harmony may exist when the strongest parties are satisfied with the distribution of goods and resources, extreme competitive behavior will arise when those parties become dissatisfied with the allocation of resources, especially those resources necessary for independent survival. It is very much akin to the behavior of animals living in a jungle free from the so-called orders of society. When all animals including the strongest are fed and all so-called entities appear satisfied, harmony may exist because there is no need for competition as supplies of resources are adequate enough to meet the demands of all entities. However, if/when the strongest entities become dissatisfied with their levels of consumption, we will likely see an extreme uptick in competitive behavior as the the idea of the natural order for satisfaction dictates that the strongest must be first to be completely satisfied. If/when this natural order appears to be imbalanced in that the strongest are not receiving adequate supplies, the strongest entities will likely seek to eliminate those entities which they believe will not only restore natural balance but will be the easiest to eliminate. Make sense? Ok so what resource are we speaking of specifically when we speak of resources necessary for survival? We are speaking of crude Oil. Every single other commodity is secondary to crude oil in terms of necessity for survival. Gold, corn, wheat, coal, even steel are all secondary commodities. We don't need corn or even grain to survive, and coal and other fossil fuels are simply alternatives to the most important fossil fuel of all, crude oil. Without crude oil, factories would come to a stand still, refineries would be unable to produce gasoline, airplanes would be grounded, heating oil would be unable to be produced, and ultimately unemployment would skyrocket as productive inputs are unable to function and means of transportation become idle. This is the significance of crude oil. Its significance as the world's primary energy source produces wars, wreaks havoc within the economic supply chain, and has the capacity to bring entire nations to its knees.
Well the obvious answer would be to fix everything that appears to be broken, clean up inefficient systems, attempt to reinvigorate the economy, and ultimately rebuild confidence in the US financial system over time. However, what I fear most is that in this time of distress we may no longer have the luxury of time. I believe it is possible that one of the many emerging superpowers may make a play for global dominance in the near future. Yes, I know this is a bold statement, but let me explain. Over the past several decades the United States has clearly been the world's superpower. It has been the steam engine driving the global economy as continuous wealth creation here has driven demand for foreign goods thereby creating wealth and GDP growth overseas. We are clearly the largest consuming nation in the world, and most of our foreign counterparties have done everything they can to see that growth here continues as incremental gains in US GDP inevitably trickle down to their own economies. However, it appears now that the global economy has approached the point where our significance in the global growth equation has diminished. It appears as if our emerging market counterparties have grown to a level where collectively they are able to maintain global growth without the neccessity of US demand. Where is the evidence of this? The commodities market. We have virtually every major commodity (Gold, Oil, Coal, Grains, Corn) at or near nominal highs, with many now approaching their inflation-adjusted highs. What is most notable however is that these commodities are making this move with the United States literally on the brink of recession! How is this possible? How is it possible that Oil is near $110 per barrel with such weak US demand? How is it possible with the US near recession that Oil demand is still greater than Oil supply with Oil being pumped at maximum capacity? It is because of decoupling. The world no longer relies on the US as the primary engine of global growth anymore. This position has been taken over by the likes of China, India, and Brazil. While the US has been toiling with credit crises, a housing slump, and increasing debt loads, the emerging economies have grown into such a dominant state of hypergrowth, that their only challenge is to make sure that growth does not get so excessive that it becomes unsustainable, and moreover that inflation remains contained. This dominant position, I'm afraid, may produce some sort of climatic consequence for the United States. Let me explain.
We as mere individuals, will never understand the desire to become a global superpower. This desire is something reserved for continents, nations, and unions as it is impossible for us as individuals to achieve such status. However, even though we may not have the capacity to understand this desire, we know that it exists. We know that every single day every sovereign nation is actively working or has the innate desire to become the strongest entity in the world. Why does this happen? What is the driving force behind this phenomenon? Well in my opinion it is driven by the underlying principle that the world lacks enough supply of natural resources to prolong the existence of every single nation over the long run. Over time, as the world begins to approach levels where natural resources are being fiercely competed over because of inadequate supplies and/or unusually high global demand at the margin, the strongest nations will attempt to force weaker nations into further weakness in the hope that this action may curtail overall demand and allow the strongest nations to accumulate necessary supplies at cheaper prices. It is Darwinism at its finest, and it is ultimately driven by the idea that while economic harmony may exist when the strongest parties are satisfied with the distribution of goods and resources, extreme competitive behavior will arise when those parties become dissatisfied with the allocation of resources, especially those resources necessary for independent survival. It is very much akin to the behavior of animals living in a jungle free from the so-called orders of society. When all animals including the strongest are fed and all so-called entities appear satisfied, harmony may exist because there is no need for competition as supplies of resources are adequate enough to meet the demands of all entities. However, if/when the strongest entities become dissatisfied with their levels of consumption, we will likely see an extreme uptick in competitive behavior as the the idea of the natural order for satisfaction dictates that the strongest must be first to be completely satisfied. If/when this natural order appears to be imbalanced in that the strongest are not receiving adequate supplies, the strongest entities will likely seek to eliminate those entities which they believe will not only restore natural balance but will be the easiest to eliminate. Make sense? Ok so what resource are we speaking of specifically when we speak of resources necessary for survival? We are speaking of crude Oil. Every single other commodity is secondary to crude oil in terms of necessity for survival. Gold, corn, wheat, coal, even steel are all secondary commodities. We don't need corn or even grain to survive, and coal and other fossil fuels are simply alternatives to the most important fossil fuel of all, crude oil. Without crude oil, factories would come to a stand still, refineries would be unable to produce gasoline, airplanes would be grounded, heating oil would be unable to be produced, and ultimately unemployment would skyrocket as productive inputs are unable to function and means of transportation become idle. This is the significance of crude oil. Its significance as the world's primary energy source produces wars, wreaks havoc within the economic supply chain, and has the capacity to bring entire nations to its knees.
Pathetic range
One of those days you take off- Today was worst than yesterday will ES only having a 10 point range. The expansion should come soon as we have been coiling for 5 days now
Monday, April 7, 2008
For Tuesday : Trade Idea
This is just a heads up for tomorrow. I just spotted SCHW is having earnings in 2 weeks. I might buy some $17.50 April calls to play into earnings.
After Market
After market the first DOW stock to report AA (Alcoa) disappointed. I wont put much weight on this as Alcoa have been reporting weak earnings for a couple of quarters. Today already we were up 100 point then to only finish even I am still looking for the bulls to take us higher as today volume was weak.
Tomorrow if we open down I will be buying the gap down. I will be looking at the strong strong like AAPL, GS, CSX and RIMM. I have a strong feeling this week we will get a good playable day to rack up alot of profits.
Upside numbers to watch for are 2448 on the NASDAQ and 1415 on the S&P.
Tomorrow if we open down I will be buying the gap down. I will be looking at the strong strong like AAPL, GS, CSX and RIMM. I have a strong feeling this week we will get a good playable day to rack up alot of profits.
Upside numbers to watch for are 2448 on the NASDAQ and 1415 on the S&P.
BORING day
Wow what a boring day. seem like the commodities stocks are losing steam and I wouldn't be surprised if many of them report not so stellar earnings. Today FNM fell and I think this has major downside to come. I did pick up some QQQQ $45 puts at 48 cents as a small play to see what happens. I still think the market could trend higher but after 2 big days last week we might be due for a restful pulback.
Keep it light I think we will expand this week and the market will tip its hands..
FNM down-
Only winners here .....
Keep it light I think we will expand this week and the market will tip its hands..
FNM down-
Only winners here .....
This week
Although this week I am looking for some upward bias as we approach earnings season, we should still be cautious as we are overbought here in the short term.
Above resistance on the Nasdaq is 2448, S &P is 1415 and the Russell is 744. These level would make very high probability shorts on the overbought charts.
Watch for continued strength in the brokers and solars.
Good luck this week
Above resistance on the Nasdaq is 2448, S &P is 1415 and the Russell is 744. These level would make very high probability shorts on the overbought charts.
Watch for continued strength in the brokers and solars.
Good luck this week
Friday, April 4, 2008
Job Numbers brutal
Wow for all those who think we aren't in or going in a significant downturn this number should put them on the sidelines. These jobs numbers are terrible and they dont include the recent cuts in the banks and manufacturing sectors, this is not good.
Lets see what they ultimately do but geez louise this is bad.
Lets see what they ultimately do but geez louise this is bad.
Thursday, April 3, 2008
Friday's Plan
Tomorrow should set the pace for the next few days. Traders have been waiting for the job numbers for weeks and I think they will be bad. How we react to the number is key! If numbers are terrible and we rally that will give the bulls ammunition that the market is ready for a sustainable rally as it has discounted all the bad news. Conversely if we drop on the numbers the bears will have the fuel to push us down, saying the recession is taking full hold on the economy and there is more to come. Whichever way it comes we will play it, as we are traders. Right now I am only have a few options and 2 very small positions I am currently building.
We must take is slow and easy here as the market will take you out if you are wrong.
Don't worry we only call winners here. PERIOD.
We must take is slow and easy here as the market will take you out if you are wrong.
Don't worry we only call winners here. PERIOD.
Building up a position
I might be early on this but I have started building up positions in the following slowly and will manage them as I think they will prove profitable. Why I am also playing the stocks than the options on these? Well the option pricing is just way too expensive.
Again I have just started to scale into these 2 positions today.
1) FNM -short. What can I say. The housing crisis has just started and FNM and Freddie mac will be teenager stocks before it is all done. I think 100% it could be $12 this year in my opinion. Started to short today @30.80 and will add short to this position if it climbs.
2)SKF -long. Readers know I love this badly. I mean really love this play. I purchased a small bit today at 100.6 and will add over the next few weeks if it goes lower. I think the dust is far from being settled with the banks and brokers. I might be wrong but I will take it here.
Again I have just started to scale into these 2 positions today.
1) FNM -short. What can I say. The housing crisis has just started and FNM and Freddie mac will be teenager stocks before it is all done. I think 100% it could be $12 this year in my opinion. Started to short today @30.80 and will add short to this position if it climbs.
2)SKF -long. Readers know I love this badly. I mean really love this play. I purchased a small bit today at 100.6 and will add over the next few weeks if it goes lower. I think the dust is far from being settled with the banks and brokers. I might be wrong but I will take it here.
SKF
I firmly believes this sees new highs this YEAR. We aren't out of the wood my any stretch of the imagination. Bumpy road ahead and path of least resistance will be down. I am building short positions here as I still think the bulls will try to push us higher
Job Numbers
Job Numbers just came out and they were terrible. Jobless claims are over 400k and with the upcoming wall street and banking layoff scheduled the number will continue to rise. This is bad and have to be looked at carefully as it seems unemployment is on the rise
Wednesday, April 2, 2008
GOLD
Someone asked me about where I see gold yesterday. I think GOLD has support at $867 area so be careful if you are short as it approaches that area.
Also OIL has support around 99.80
Also OIL has support around 99.80
Thoughts
Thoughts about yesterday vary in my mind. News of record money on the sidelines had to go to work for the new quarter. As I mentioned the first few days of the quarter usually has a upward bias as funds have to put money to work in the market. Now yesterday rally has to be respected because it came on very impressive volume in deed but we have seen this before were we just ring up a huge day then die again so we must be careful here. Note I am absolutely bearish long term but right here we might be in a bullish consolidation if it is confirmed.
If we are in a bullish consolidation mode today I look for a target on the S&P first to come in at 1388.5 then 1425 which is suggested by the 78.6% rule. We also have a target on the Nasdaq to watch higher at 2383 and this should be watched carefully as this could act as main resistance on the upside. If we go go down in the next two days look for a support around the 1355 area.
Lets see where we are I started to accumulate some shorts through buying SKF long.
Long SKF $104 (1/4 share) for now
If we are in a bullish consolidation mode today I look for a target on the S&P first to come in at 1388.5 then 1425 which is suggested by the 78.6% rule. We also have a target on the Nasdaq to watch higher at 2383 and this should be watched carefully as this could act as main resistance on the upside. If we go go down in the next two days look for a support around the 1355 area.
Lets see where we are I started to accumulate some shorts through buying SKF long.
Long SKF $104 (1/4 share) for now
Tuesday, April 1, 2008
TRADE CALL: Update GE calls
GE calls purchased @$2.50 now at $3.30. I am holding still as i think it goes higher in to earnings.
Market zooming
Love this market is going higher and very strong with momentum. Remember the bias is to the upside at the start of each quarter.
Commodities
Commodities are in full unwinding down here this morning. OIL is below $100, gold below $900 finally and grains are getting cracked. Been saying this for a few weeks that the commodity space is just crowded with too many traders and this I believe will get a more substantial push down.
Just one of my analysis from trading over the years I will note here. We are beginning a new quarter and usually this has an upward bias as fund managers need to allocate for the new period. I do expect the beaten down first quarter sectors as financials to at least get a bounce here, which would be great as it would set up some nice nice shorts.
In the mean time lets see how far they want to push down these commodities
Just one of my analysis from trading over the years I will note here. We are beginning a new quarter and usually this has an upward bias as fund managers need to allocate for the new period. I do expect the beaten down first quarter sectors as financials to at least get a bounce here, which would be great as it would set up some nice nice shorts.
In the mean time lets see how far they want to push down these commodities
April is here
Well FED just announced that they will bail out all homeowners who can't pay their mortgage! NOT! April fools :)
Although that's a joke it seems that the FED and Government might be looking at something almost as close to it as possible. This is just getting crazy for me I have to laugh out loud. Anyways last night after the market closed Lehman brothers issued $3 billion in convertible notes to raise capital, I mean I thought they said everything was ok with them why would they have to raise money in a secondary, oh I guess I should goto the doctor and ask for an operation that I dont need. People right now is the time to be smart to what is happening on Wall Street because it affects us all. These guys will never tell they truth as they ONLY care about their pockets.
Saying that I am recommending two stocks in the financials again which i think will be much lower this year. I want you to understand I hope we get a bounce so these plays are not to just be jumped on now but Legged in over the next few days/weeks as your account enable you.
Since many of you have retirement account and can't short I will play it using an ultrashort which you can buy thus shorting the market. My pick for those who can't short is SKF!!!
Last time I played SKF i racked up $30 gain in about 4 days, if you had 100 shares that would have been $3000 a pretty nice gain for 4 days. Yesterday SKF closed at 117 but I expect SKF to trade to new highs as the financials goto their death during the year.
I think SKF can goto $185. yes $185.
If you are a trader everyone now I like Citibank, MER, LEH, SOV, FNM short. I believe these shocks will be alot lower some time this year.
As I am writing this some minutes to 7 in the morning UBS just announced $19 Billion in write offs and expect to lose $4B for the first quarter due to subprime crisis. People this crisis hasn't even started believe me dont listen to the talking heads, please dont buy stocks here for more than a bounce or you will get wiped out.
Although that's a joke it seems that the FED and Government might be looking at something almost as close to it as possible. This is just getting crazy for me I have to laugh out loud. Anyways last night after the market closed Lehman brothers issued $3 billion in convertible notes to raise capital, I mean I thought they said everything was ok with them why would they have to raise money in a secondary, oh I guess I should goto the doctor and ask for an operation that I dont need. People right now is the time to be smart to what is happening on Wall Street because it affects us all. These guys will never tell they truth as they ONLY care about their pockets.
Saying that I am recommending two stocks in the financials again which i think will be much lower this year. I want you to understand I hope we get a bounce so these plays are not to just be jumped on now but Legged in over the next few days/weeks as your account enable you.
Since many of you have retirement account and can't short I will play it using an ultrashort which you can buy thus shorting the market. My pick for those who can't short is SKF!!!
Last time I played SKF i racked up $30 gain in about 4 days, if you had 100 shares that would have been $3000 a pretty nice gain for 4 days. Yesterday SKF closed at 117 but I expect SKF to trade to new highs as the financials goto their death during the year.
I think SKF can goto $185. yes $185.
If you are a trader everyone now I like Citibank, MER, LEH, SOV, FNM short. I believe these shocks will be alot lower some time this year.
As I am writing this some minutes to 7 in the morning UBS just announced $19 Billion in write offs and expect to lose $4B for the first quarter due to subprime crisis. People this crisis hasn't even started believe me dont listen to the talking heads, please dont buy stocks here for more than a bounce or you will get wiped out.
Subscribe to:
Posts (Atom)
