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Random Rants and Market Ideas
- Thread starter Brandonf
- Start date
China poked us in the eye today. Our politicians aligator mouths got their tadpole asses into some trouble with regard to the Yuan. For a long time the US Government has been pressuring the Chinese to adjust the peg. They did us one better and are no longer pegged to the dollar, but to a global basket of currencies. The fallout of this will be, IMHO, felt for some time to come. http://www.brandonfredrickson.com/videos/yuan.html
Brandon
Brandon
I made a mistake in how I handled my LU trade. In this video I discuss it. http://www.brandonfredrickson.com/videos/lu3.html
Brandon
Brandon
Money Managment and risk control is the single most important aspect of your trading plan. Today in the Swingtrading Channel I did a presentation on many of the specifics of money managment. You can watch it at the following URL: http://www.brandonfredrickson.com/videos/money.html
On Monday stronger than expected profits and economic strength could not compete with the negative implications of higher oil prices. The official reason for higher oil prices was uncertainty over King Fahdâs death, though I do not know what the uncertainty could be because the Crown Prince has been the de facto ruler for nearly ten years. The thing I would worry more about is BOND prices falling. The market is going to have a heck of a time moving higher in the face of higher rates. My brother used to always tell me âYour alligator mouth is going to get your tadpole butt kicked as soon as mom and dad leaveâ and our politicians did the same thing with the Chinese in relation to the Yuan which is being taken off the dollar standard. This is going to FORCE long term rates higher, which will not be good for the markets our the new bubble. STOP FLIPPING CONDOâs the music is slowing down. Keep watching Utilities closely as they will be the best gauge of what is going to happen to long term rates. Utilities are HUGE borrowers of money and when rates go up they get hurt, so watch them closely.
In the broader market we saw the DOW Jones lose 17.76 to close at 10,623.15, the S&P500 was up 1.17 points to 1235.35 and the Nasdaq Composite was up 10.55 points to close at 2195.38. Most of the Nasdaq strength was in Biotech. Volume on the NYSE decreased 4% to 1.74 billion shares while on the Nasdaq volume was off 7% to 1.51 billion shares. Advancers led decliners on the NYSE and trailed them on the Nasdaq.
Iâm starting to be a bit concerned about this market. The DOW continues to struggle like a 70 year old smoker trying to run a marathon. The financials are also having a hard time, names such as C, JPM, GE are all acting poorly. A number of stocks have large gapâs to the downside which they are holding. Examples include YHOO, FFIV, VRSN, IMH etc. I would not have a lot of exposure to the long side at this point. It is more of a time to kick back and enjoy the fact that as a trader cash is a position. There are a few stocks acting well such as AMGN, AMZN, BP, CDWC, CHRS, CRM, CYMI, HUBG, MAN, and NWL. Even though this list of longs has more stocks on it, which is usually a great sign, please be careful at this juncture in the market.
Brandon
In the broader market we saw the DOW Jones lose 17.76 to close at 10,623.15, the S&P500 was up 1.17 points to 1235.35 and the Nasdaq Composite was up 10.55 points to close at 2195.38. Most of the Nasdaq strength was in Biotech. Volume on the NYSE decreased 4% to 1.74 billion shares while on the Nasdaq volume was off 7% to 1.51 billion shares. Advancers led decliners on the NYSE and trailed them on the Nasdaq.
Iâm starting to be a bit concerned about this market. The DOW continues to struggle like a 70 year old smoker trying to run a marathon. The financials are also having a hard time, names such as C, JPM, GE are all acting poorly. A number of stocks have large gapâs to the downside which they are holding. Examples include YHOO, FFIV, VRSN, IMH etc. I would not have a lot of exposure to the long side at this point. It is more of a time to kick back and enjoy the fact that as a trader cash is a position. There are a few stocks acting well such as AMGN, AMZN, BP, CDWC, CHRS, CRM, CYMI, HUBG, MAN, and NWL. Even though this list of longs has more stocks on it, which is usually a great sign, please be careful at this juncture in the market.
Brandon
If I could have anything I wanted from the market, I would ask for about ten or so more days just like yesterday. Why? Because days like yesterday allow the entire market to rest, and this market defiantly needs to rest. After moving nearly straight up since Mid April it would be nice to see some congestion and pulling back in the market. Earnings have continued to come out strong and stocks have reacted well to that which is even more important than the fact that the earnings have been strong. A nice pullback would allow us to isolate new leadership and pick up some current leaders at a spot that has less risk.
Picking your sector is one of the most important things to your ultimate success as an investor. You can be wrong about most things, but if your in the right sector you will be making money. You can be right about almost everything, and if your in a group that is out of favor your going to be losing money. To stay on top of the sectors requires a lot of reading and chart watching, but its well worth it. Right now I think GOLD looks to be emerging as a leader. Keep an eye on the best stocks in the group: GG, ABX, MDG, RGLD etc. You want to find the names that hold up when the others do not and that have good numbers...though with gold this is less important than with other groups.
Quote from Brandonf:
You can be right about almost everything, and if your in a group that is out of favor your going to be losing money. To stay on top of the sectors requires a lot of reading and chart watching, but its well worth it.
You aint kidding......thus the reason i wanna get out of stocks.
Time to reward ratio not cutting it.
On Monday stocks sold off sharply again as oil cruised over $64 per barrel and the long bond moved lower (which means rates are rising). The S&P500 lost 3.29 points, closing at 10,536.93 while the NASDAQ Composite declined by 13.52 points ending the day at 2164.39. Advancing issues trailed declining issues by 12 to 20 on the NYSE and by 12 to 18 on the NASDAQ. Volume declined slightly on both exchanges, 1.8 billion shares on the NYSE and 1.5billion on the NASDAQ.
Investors seem to be showing a lot of caution over the last several days on worries about higher oil prices and todayâs Federal Reserve meeting. Oil closed at $64 yesterday and the wise old men at the Fed are expected to sink their heads in the sand and raise rates for the 10th consecutive time, bringing the overnight rate to 3.5%.
For the last several weeks I have been wanting a pullback, and that is what we are getting right now. You never get exactly what you want out of the stock market, and that is certainly the case here. We are getting the pullback I have longed for, but it is causing a lot of damage in leading groups, which is not what I would have hoped for.
Interest rate sensitive groups such as utility stocks, homebuilders, S&Lâs, REITs and lenders have all experienced sharp pullbacks on heavy volume, suggesting distribution. Most of the weak names in these groups are going to offer excellent shorting opportunities in the not too distant future. I would not short them now, but look for names that have clearly put in lower lows. Then, as the market rallies you will want to see that the rally in the stock and group does not take out the prior high and that it occurs on lower volume than the decline. If this happens this is going to be a great opportunity to pick up some stocks that have likely turned. Names to watch include JOE, TOL, PHM, RTH, FDX, NI. Each of these, with the exception of FDX which is already in a downtrend, have broken strong uptrends by making a lower low. For the picture to be completed they only need to make a lower high and then we are in business.
I have always found though out my career that there are 3 to 4 very good opportunities per year to make 10 to 15% in a short period of time, say a month or two. This opportunity occurs and you take advantage of it. As I said it tends to last 1 to 3 months, and then you go through a period where there is less to do and the idea is to not lose your money and be ready with capital and confidence for the next opportunity. I do think that the market is getting ready to offer one of those opportunities here.
On the long side I continue to like gold and Natural gas stocks, though the natural gas names need to rest. Gold stocks such as RGLD and ABX are very strong and look prepped to head higher. I also find HANS to be an attractive setup as it has pulled back to its 40 day moving average and is finding nice support there.
Today being Fed day will be very slow for me. I tend to not put on any major new positions and so the majority of my day will be spent on research, looking for strong charts, reading company reports and catching up on emails and the like.
Brandon
Investors seem to be showing a lot of caution over the last several days on worries about higher oil prices and todayâs Federal Reserve meeting. Oil closed at $64 yesterday and the wise old men at the Fed are expected to sink their heads in the sand and raise rates for the 10th consecutive time, bringing the overnight rate to 3.5%.
For the last several weeks I have been wanting a pullback, and that is what we are getting right now. You never get exactly what you want out of the stock market, and that is certainly the case here. We are getting the pullback I have longed for, but it is causing a lot of damage in leading groups, which is not what I would have hoped for.
Interest rate sensitive groups such as utility stocks, homebuilders, S&Lâs, REITs and lenders have all experienced sharp pullbacks on heavy volume, suggesting distribution. Most of the weak names in these groups are going to offer excellent shorting opportunities in the not too distant future. I would not short them now, but look for names that have clearly put in lower lows. Then, as the market rallies you will want to see that the rally in the stock and group does not take out the prior high and that it occurs on lower volume than the decline. If this happens this is going to be a great opportunity to pick up some stocks that have likely turned. Names to watch include JOE, TOL, PHM, RTH, FDX, NI. Each of these, with the exception of FDX which is already in a downtrend, have broken strong uptrends by making a lower low. For the picture to be completed they only need to make a lower high and then we are in business.
I have always found though out my career that there are 3 to 4 very good opportunities per year to make 10 to 15% in a short period of time, say a month or two. This opportunity occurs and you take advantage of it. As I said it tends to last 1 to 3 months, and then you go through a period where there is less to do and the idea is to not lose your money and be ready with capital and confidence for the next opportunity. I do think that the market is getting ready to offer one of those opportunities here.
On the long side I continue to like gold and Natural gas stocks, though the natural gas names need to rest. Gold stocks such as RGLD and ABX are very strong and look prepped to head higher. I also find HANS to be an attractive setup as it has pulled back to its 40 day moving average and is finding nice support there.
Today being Fed day will be very slow for me. I tend to not put on any major new positions and so the majority of my day will be spent on research, looking for strong charts, reading company reports and catching up on emails and the like.
Brandon