http://video.cnbc.com/gallery/?play=1&video=3000214488 could someone give a brief explanation of what happens when the ten yr yld gets up to 2.8 .9 3 %
Global Macro Trading Journal
- Thread starter Daal
- Start date
http://www.businessinsider.com/hugh-hendry-turns-bullish-2013-11
Hendry turns bullish, this market is forcing shorts to stop shorting (I certainly did in listed stocks) and for fund managers to chase stocks in order to avoid getting fired. Could we see a significant santa claus rally plus a good january? Probably
I am just long stock indices and running a fairly tight stop. We just did a classic breakout, so the market should not fall back significantly if my interpretation is correct.
I suspect S&P upside by April/May (when it will be time to sell and go away) is to about 1950-2000. So, long ES with a relatively close stop (not so close that a mild down day would trigger it) is offering an attractive risk/reward setup right now.
I am considering options as well but I'd prefer to target those in specific names which might move up 50-100% rather than the 10% I expect in the US indices.
Another interesting play is the Nikkei, I think that has more upside than the S&P and most other western markets.
The Nikkei could be about to break through a major trendline:
there is no juice left especially considering that one does not know whether the total amount of single dip will be only the current 2.6b or up to maximum of 3.2b.
including into calculation all other factors (390M fully diluted AAMRQ shares, all employee comps, etc) that makes a difference of 2.01 in AAMRQ price!
for instance at 22.14 (LCC) the price of AAMRQ should be 9.99 or 12.00 assuming constant prices for upcoming 120 distribution days. (nb at LCC=24 the AAMRQ prices come out as 12.62/14.63)
given that AAMRQ trades around 10.70 and all the risk involved - with the tied up capital for protracted amount of time - it is better to sell LCC against buying LCC synthetically (e.g. April14 23 calls/puts) and collect over 1 buck for providing very expensive put protection to creditors...
in view of this it makes really zero sense to hold AAMRQ against short LCC because there the upside is now less (on the hedged 1:1.40 basis) and downside is possible as opposed to the other trade.
it is also interesting to compare e.g. DAL with the new AAL. AAL will have all metrics better or at least not worse (debt, revenues, margins). it will have less shares outstanding and it trades at 20% discount to DAL - go figure. therefore a longer term pair trade is also a possibility if you have enough LCC stock (and don't have to borrow or believe the borrowing costs will soon drop). btw the implied value of having LCC in store is easily visible in the borrowing costs - close to double digits recently...(!)
including into calculation all other factors (390M fully diluted AAMRQ shares, all employee comps, etc) that makes a difference of 2.01 in AAMRQ price!
for instance at 22.14 (LCC) the price of AAMRQ should be 9.99 or 12.00 assuming constant prices for upcoming 120 distribution days. (nb at LCC=24 the AAMRQ prices come out as 12.62/14.63)
given that AAMRQ trades around 10.70 and all the risk involved - with the tied up capital for protracted amount of time - it is better to sell LCC against buying LCC synthetically (e.g. April14 23 calls/puts) and collect over 1 buck for providing very expensive put protection to creditors...
in view of this it makes really zero sense to hold AAMRQ against short LCC because there the upside is now less (on the hedged 1:1.40 basis) and downside is possible as opposed to the other trade.
it is also interesting to compare e.g. DAL with the new AAL. AAL will have all metrics better or at least not worse (debt, revenues, margins). it will have less shares outstanding and it trades at 20% discount to DAL - go figure. therefore a longer term pair trade is also a possibility if you have enough LCC stock (and don't have to borrow or believe the borrowing costs will soon drop). btw the implied value of having LCC in store is easily visible in the borrowing costs - close to double digits recently...(!)
I agree with Cutten that the Nikkei has the potential to outperform Western markets.
The simple reason for this is JPY depreciation.
A chart of the Nikkei in 2013 is very similar to a chart of USD/JPY in 2013.
As residents of Zimbabwe and Venezuela know, if your currency is losing a significant amount of value, generally the stockmarket does well.
The simple reason for this is JPY depreciation.
A chart of the Nikkei in 2013 is very similar to a chart of USD/JPY in 2013.
As residents of Zimbabwe and Venezuela know, if your currency is losing a significant amount of value, generally the stockmarket does well.