Friday, April 30, 2010
And no, don't even think of this as a reco, because I sure as hell am not buying at these lofty (relative to when it was being given away) valuations. Just holding remaining shares in the same quality bag as things like KGN (.50 to $6+) and a few others.
She cares so much about perfection that she burst out crying in the dugout. Other girls consoled and we won the game, but when we talked later she agreed with me about what a good learning experience this was. She knows how to pitch, but just maybe now she has taken a big step toward knowing how to pitch against a live batter in a live game; all the energy that exists around you when you are IT, and under the spotlight. A weird feeling that I am sure she will come to love if she learns and hangs in there with diligence and a sense of purpose.
We, as market players had better be learning all the time as well. You set it and forget it and you will be trashed. Fail to evaluate your assumptions on regular basis and you could overlook a fatal flaw. The markets are not a game; they are a war. At least that is how you have to look at it if you want to win. There is a place for passion, for emotion. Lord knows I have enough of that stuff pulling on me at any given time. But the advice to 'settle it down... slow it down' applies here as well.
Many people do not have the stamina or the availability of free time to apply the endurance required in maintaining perspective over the various cycles. I think a good chunk of the 'dumb money' is really just smart people without the resources or capability of doing the work required, maintaining the continuum required to keep a sensible and organic learning process moving forward.
Just a stream of consciousness ramble on a fine Friday morning.
Thursday, April 29, 2010
Getting interesting; the whole sector. The only thing that could put a hitch in the works is the deflation impulse scenario. But this sector is cranking itself back up technically in relation to most of the stuff that has been go-go for the last year.
Protesters enter NYC bank buildings before rally
By all accounts, not much is getting better out there on Main St., although it is getting better in the corporate boardrooms. Why is it that the regular folk are still pissed off? With the stock market rising, won't the good fortune trickle down? After all, the troubadours on Wall Street, their friends at Fed and Treasury and now a speculative circus have joined together to keep the pig afloat.
Oh yeh, I forgot... what's good for the corporate and investor classes has no real positive bearing on regular people, now does it?
"MACD and volume tell me that it very possibly is complete. Also, the Dow reached the resistance zone noted and has retraced a full 62% of the crash. So everything is in place for this to be a top. But, that is a lot different than stating definitively that the top is definitely in.
The Dow has some support here around 11,000 and we can begin to plot downside if and when it loses the 10,750 level, which has more important support."
SPX chart is shown here with it having held the equivalent support to Dow 11,000. The measly little red resistance line is probably all that separates the short term bear case from extinction as the market has not even taken a whiff at the more important support below.
Fed to the rescue... Greece fears (and positive 'relief' reactions)... earnings... and a world of traders hopped up and ready to speculate. One thing I think has a good shot though; the precious metals sector is setting up to be a leader once again.
[Side note: Has anyone seen 'America: The Story of US' on the history channel? I could not take my eyes off it last night as it dramatically illustrated the revolution against British tyranny from start to finish. I couldn't help being struck by how far off the track modern America is now, becoming some might argue the antithesis of what the colonists fought for.]
Meanwhile, there is the debt; always the debt. Nouriel Roubini explains here:
“Eventually, the fiscal problems of the U.S. will also come to the fore,” Roubini said during the panel discussion. “The risk of something serious happening in the U.S. in the next two or three years is going to be significant” because there’s “no willingness in Washington to do anything” unless forced by the bond markets.
We will either live beyond our means and suffer the inflationary consequences as Washington continues to monetize debt (at ever more punitive rates) or this phase of the exercise in greed and denial ends in a deflationary event so that the Wizard may reload his inflation gun.
In the newsletter I have got to be cold and calculating to eventually beat 'them' at their own game. On the blog I can be whoever and however I want to be, because nobody pays me for these opinions. So speaking as the blogger, it pisses me off watching this mess hurtle toward one event or the other, a bigger picture and very dark inflationary one or a short term painful, longer term needed deflationary one.
And it's all because we have institutionalized living beyond our means.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability."Goldilocks continues on.
The P.I.G.S. are falling apart, the euro is exposed as the toilet paper that it is and the Fed continues to pretend that inflation 'expectations' are stable. Well, that is debatable, but what is not debatable is the inflation that was pumped into the system, which continues to manifest in asset price increases.
Scared money seeks out USD and gold as safe havens when the 'Markets Down on Greek Fears' headlines show up and then flow back into risk assets when the 'Markets Up on Easing Greek Fears' headlines invariably follow. Meanwhile our heroes at the Fed take advantage of the appearance that we are on some kind of conventional recovery.
We will ultimately have...
a) Recovery born of inflation, with associated fears breaking out soon enough or
b) The 'UNrecovery' as I believe Michael Panzner called it.
FR is now forming an interesting pattern. Given my 'safety' mode in treasuries and bearish positions, I think I can afford to attempt to coax this feller out of the cute looking reversal pattern. The caveat of course is that this pattern is only confirmed upon a successful break of resistance (neck) line.
Wednesday, April 28, 2010
Still holding AAU in the speculation account, which is not coincidentally guarded by bear positions.
Tuesday, April 27, 2010
All part of the markets my friends and when you invest in and trade the juniors and explorers, all the more so. This is what can happen when drill results don't come in as the market would like.
Support for TML just below as I hold my bag still.
"The top is in!
I just had a client call and demand that I purchase a large position in a small cap growth fund. It's a no-load fund so I can't even if I felt the fund was suitable for the client.
The fund in question is up 80% from the low but still down 15% from the high.
Sell low, buy high, repeat until capital is gone, sue advisor."
Monday, April 26, 2010
The stock charts and quick analysis sent out in today's update brought in multiple responses not unlike this one:
"Thanks for your updates: Greatly Appreciated! Since I follow you and Otto Rock, I try to combine fundamentals with technical buy and sell signals. Therefore, any educational contributions along your lines of work I try to understand and perhaps also use. So, keep it up, please!"
So, I am going to keep it up in both the letter and updates, although NFTRH will never be a stock pick hog caller. But the funny thing is that I really enjoy TA on individual stocks and I enjoy trading. So, screw it... I am going to try to incorporate this more often on stocks I consider either quality or lower risk.
Thanks for your feedfback.
NFTRH82 highlighted gold sector technicals and fundamentals in relation to those of the broad market, charted up other markets, indicators and stocks, and reviewed the updated dumb/smart sentiment picture. But in the middle of all this, the following bit of psychological navel gazing found its way in there as well, perhaps as a way to work through the fact that the market has not yet conformed to conclusions that the writer 'thinks' he knows are solid ones. :-)
Here is a secret; none of us has the divine right to the answers. To ultimately win at this sometimes manic game, we must employ a wide spectrum of technical and fundamental tools, but also be aware of sentiment and psychology both from a collective standpoint and a very personal one as well. In other words, know our competitors and even more importantly, know ourselves.
At the risk of exposing myself as the psychologist wannabe that I am (there are multiple mental health professionals in the subscriber base), let’s think about the general [psychological] profile currently in play. Many of us are micromanaging the massive rally off of the bottom of just over a year ago. Some, like NFTRH are micromanaging a would-be top. Others are going with the bullish flow, secure in the reinforcement of ever increasing positive sentiment. Still others are sitting sidelines, having been out since compelling downside sentiment forced them out in preservation of their sanity. I would venture that the market is wearing on a high percentage of people’s nerves.
As a currently bearish newsletter writer, I have to tell you about something that makes me uneasy regarding my stance, short term. As part of the bus tours around Manhattan my family, friends and I enjoyed last week, we were taken through the Wall Street area among many other places – the memorials at the church at Ground Zero brought me tears and a rush of returning memories – we went through Wall Street twice. Each time, different tour guides made cracks about the crooks there and all the money that people lost. My thought was ‘dude… where have you been for the last year?’ with regard to the rally. Maybe when the tour companies drop that shtick the rally will be ready to roll over.
Anyway, a micromanaged rally is not likely to end on cue. That is one reason NFTRH81 noted that rallies don’t usually end on any given alarming news item. Dubai? Greece? Goldman/Merrill? It is all good until one day, after more cementing of perceptions, it no longer is. But the rally will not end logically and in a nice neat manner in which bears can simply climb aboard and short to the high heavens. Watching them scurry to cover on Friday afternoons is almost becoming comical, and the market is feeding on that.
This is why it is imperative to double check our own individual psychological profiles so that we thoroughly know who we are as market participants before deploying capital. This beast does not care about you or me. All of that said, I am personally attempting to employ the opposite strategy from that which I used late 2008 and early 2009; I am trying to remain cautious as opposed to brave. After last year’s gains, I have been in ‘preserve capital’ mode for what seems like an eternity, while holding a precious metals core-plus.
The market wants me to feel like it is an eternity because it wants me to become impatient and make a mistake. The market wants me to take my eye off the ball either through fatigue or greed or some other screw up. Ah, but I have a secret weapon; I get to sit down and write about the current market situation each weekend and work through my thoughts after the dust settles on a given trading week.
Nothing has changed for me or for NFTRH with the exception that the stance contrary to hope and greed has not yet come to fruition like the one contrary the angst and fear of a year ago did. I’ve got time. Not only that, but things are going better for me personally now than they were a year ago and that helps me remain focused, as opposed to dealing with vulnerabilities, which can manifest as additional mental noise.
I will remain strong in my convictions but only so far as the work that I do tells me to be so. We will not institutionalize negativity, bearishness or fear of the future here at NFTRH. What we will do is make an ongoing honest attempt to be on the right side of the macro trade, and if proved wrong, admit it and move on with a new course.
So, another important aspect of good personal market psychology is the ability to admit when we are wrong. It happens to the best of ‘em and it will happen to each and every one us; every last subscriber and the letter writer for sure. As of now however, I see no sign whatsoever that a cautious stance is wrong in any picture beyond the immediate manic bullishness.
If you would like to check out a service that focuses on technical analysis, macro-fundamentals and of course sentiment/psychology, give Notes From the Rabbit Hole a try on monthly basis. Not for you? You can cancel at any time. NFTRH remains on course to catch the larger themes in play in the macro markets, while respecting the shorter term swings driven by mass psychology, among other things. --http://www.biiwii.blogspot.com
Sunday, April 25, 2010
Portfolio structure is updated and I am sure there are a few other odds and ends in there as well. NFTRH82 out now.
Friday, April 23, 2010
Now of course, the current process playing out in markets is a slow motion event and bearish blogs like this one are to be dismissed by bull playahs far and wide because there is a party going on and there is coin to be made. This is both part of the fun and part of the agony of markets; watching something take shape and develop over time while at the same time moving at its own pace, not caring about what may be convenient.
Downside events come much quicker and with more intensity. Bull phases tend to grind higher. The GSR seemingly takes forever to consolidate before signaling the next pain cycle. But the chart is the chart and if one day it tells me that happy (read: asset inflationary) days are here again, then so be it, it's 2003-2007 all over again, only more intensely inflationary given the amount of funny munny printed, which would look for assets in which to denominate itself.
GSR does not tell me that yet (nor do treasury bonds; not yet). It tells me that it is still looking to bottom amid the greedy mania going on out there. This has the potential to be one hell of an opportunity to either preserve capital or take advantage of systematic herding. Do you see it? Did you see its opposite 1.5 years ago?
Thursday, April 22, 2010
I am 'all-in' on this market - no real cash to spare in the speculative account if you don't count the three shorter term US treasury funds, which I guess really are cash; cash that should do well if we get our long awaited deflation belch.
Long precious metals and short the S&P500 and Nasdaq 100. Long volatility. Figuratively speaking it pays to try to be long common sense and short stupidity.
BTW, I had the chance to visit a subscriber's shop while I was there and all I can say is that there is class on Wall Street - or at least a bunch of blocks north of there. One thing I learned from starting a market newsletter is that if you do the best you can and work hard, you just may be lucky enough to assemble a subscriber base filled with smart, experienced people who do not look to you for answers (they've already got 'em), but actually become part of your network. A true bonus.
Edit (4:00) It goes without saying that the shorts are again with limits. Heroes can die ignominious deaths in the face of mania.
Tuesday, April 20, 2010
The dollar and euro are doing the dance of confidence, which swings from one to the other... doe see doe...
Gold, and the current PM leader silver meanwhile, firm up and bide time.
Edit (7:50) As you may have noticed, I do not have consistent access to the blog or the markets and silly financial media the first half of this week. As such, I just noticed this bit of hilarity from thestreet.com under the title Goldman Sachs Sinks Gold Prices:
NEW YORK (TheStreet) -- "Gold prices Friday were dropping steeply as investors traded out of riskier assets like gold and into the U.S. dollar."
Monday, April 19, 2010
Saturday, April 17, 2010
Friday, April 16, 2010
That's not Satan to the left. Satan is a concept that transcends a mere company and the length of its evil tentacles. Satan exists in the rotted to the core foundation that this mess is built upon.
Hey, have a great weekend!
Ever the bottom feeder, the online source from which I bought offered a 15% discount on top of an already reasonable price.
Well, I guess I do need it if you define need as 'already having humbucker and traditional single coil pups but in need of the creamy tone these P-90's put out'.
He is in a tough position because he is trying to do the right thing and remain cautious amid the euphoria, but he is under pressure from many clients who just cannot stand it anymore. They want IN or they want to be more in. They are missing all these gains, you see.
A classic setup states that these events can and often do go on longer than rational people would think, so shorting it is no slam dunk. But in the risk/reward realm, the bull trade is long since over.
Ding ding ding?
PHYS, unlike GLD however, is subject to premium/discount swings and it appears we are getting a bit euphoric here. Thus, I sell and take a 3.5% gain as the PHYS-GLD ratio chart shows a bump up in premium from what had been 8% last time I checked.
As you know, the spec account is not for long term philosophical holding, even of things I believe in strongly, like the value of gold. That type of investment is done elsewhere and through different means. So the spec account takes the froth off of PHYS and perhaps awaits future opportunities.
Why? Well, because I am and always have been hugely interested in human psychology, especially collective psych. I am fascinated by herding and group behaviors and, beginning about 20 years ago when I discovered the Jungian Shadow (both individual and collective within a society), I became fairly terrified of same because the collective will to do or accept evil - all under the banner of a given jingoism of the day - is always potentially there in crowds; especially in upset, frightened or charismatically swayed crowds.
Ignorance is also reassured in crowds. If the next guy's not concerned, why should I be? The herd feels okay and I would rather feel okay than not okay. "I am sheeple, hear me baaahhh."
Anyway, this stream of consciousness post is triggered by this article at Tech Ticker, which I checked out as I was reviewing my brand spanking new short position (QQQQ via QID): Another Reason Most Day Traders Are Deluding Themselves.
The article makes some really good points about da crooks we love to hate; our friendly troubadours who exist in the concept we like to label 'Wall Street'. Reading some of the author's views, I said to myself "duhh, no wonder you keep it clean and stick with the technicals and the herd's sentiment."
It's nothing most of us don't already know, but in frenzied and euphoric markets especially, it is good to be thinking about who's on what side of a given trade; who's feeling good and who's wink winking and nudge nudging.
Thursday, April 15, 2010
Wednesday, April 14, 2010
The original intent was to intiate FTEK - an old favorite of mine - on the pullback and then add on a gap fill. I got a bit stingy on the gap fill and never got more. So be it.
SIGM was a pullback and buy around the 62% fib. These are bottom-feed (in relation to the upside hysterics elsewhere) bull plays and after exercising some patience, we get to slap the 'so far so good' designation on the trades. We'll see how it works out.
Downtrends attempting to break up and out.
Please do not take this as a recommendation because they are just trades and if the objectives fail, the trades will be in the books quickly. This is just an illustration how, aside from the precious metals, I beat the inflation-fueled market at its own bull game back in Inflation Bull Part 1, circa 2003-2007. Your tack may of course be different.
No big lecture here, just a chart of CGR and the S&P 500 showing the close correlation between the assets of hope, growth and inflation, post Y2K, dot.com bubble and leading into phase one of the credit bubble.
If you are an investor in gold, you are not 'pro-inflation' as so many cheer leaders, commodity gurus and gold bugs seem to be. You instead favor economic contraction as it will signal what a normal system tries to do in order to purge itself of policy toxins. Well, I guess a lecture slipped in there after all.
What we have going on currently appears to be a sort of echo mania as the system promotes the delusion that more money printing, more credit and ever more POLICY can arrest the forces that compel economic contraction. Anyone looking for investment merit in gold and especially its miners and explorers is not cheering runaway inflation as manifested in after-effects like runaway prices in stuff like copper and oil.
Tuesday, April 13, 2010
Chart has now updated and obviously today's candle down into the support zone did not exist this morning.
This is textbook activity. One can't just sell because the market gets a little scary one day. One needs parameters, a working plan with technicals, fundamentals, time frames... all that shit.
It does not mean this won't fail tomorrow, it just is what it is as we navigate another day in the markets during the 'Drive to 5' as NFTRH calls the current broad market up leg.
You gotta love it.
Edit (3:51) Apologies for the on-the-fly editing if you noticed it. It happens sometimes when the blogger has limited time and flies through a post too quickly.
Kind of reminds me of a Time cover from not so long ago, which trumpeted a very different situation (and response by contrarian investors).
Got to love the MSM. Thanks Larry for the tickle on the Newsweek cover.
Monday, April 12, 2010
So enjoy As-Good-As-It-Gets '10 for however long it lasts, because this expression of hope and greed could not even afford a healthy interim correction.
Risk v. reward? We know what that profile looks like.
NFTRH is holding two small cap stocks ($185 M & $358 M) outside the precious metals and uranium sectors. But they are 'bottom feed' type plays like the now departed JOF. If ya can't beat 'em, I suppose you join 'em for a while; with limits and rules.
Here is an updated yearly chart of gold dating back to the inflationary hysterics that were in play when I was a very young man. All throughout the secular bull market we currently enjoy, we who understand value have had to endure hatchet jobs in the media regarding the ancient relic:
"You can't eat gold!" as they say.
Yes, I know; why would anyone want to eat a sound anchor to monetary value in a (mostly) civilized world that still operates on a currency basis? Why would anyone want to eat a heavy metal that will become the surrogate for human monetary and trade interaction including in the things that we can eat; in the things that we do need to survive and prosper? Gold only has all those centuries as a civilized medium of exchange to back it up.
"A deflationary price spiral will bring gold down and end the mania in the yellow metal!" they say.
Oh really? Well, you have been saying that for the majority of those green yearly candles on the right side of the chart. Your continued doubt assures that you will finally be buying a candle well higher than the current one. If we get a deflation, it will be an interim event and guess what? Gold's real price is going to rise during said event, even if its nominal price declines temporarily. Those phases are what smart investors call 'investment opportunity'.
"But, but, but..."
No 'buts' about it, forget your assumptions and gain some perspective.