Friday, September 30, 2011

Markets fall as quarter ends

     Well, we are getting no window dressing at the end of the quarter unfortunately.  In fact it seems people are selling their winners rather than buying them at the end of this quarter!  All the stocks that have performed the best in this quarter have been getting whacked.  It is the high growth or "beta" names that have performed particularly badly in the past couple of days.

     Green Mountain Coffee Roasters(GMCR) is down about 15% in two days after rising about 20% in the quarter.  Apple one of my favorite's of course is down about 5% in a few days after rising more than 20% to a record high of 422 during the quarter.  Internet darling is getting taken to the woodshed as well after rising 10% during the quarter.  It has gotten smacked down to the tune of 30% in little more than a week.  Remember when I mentioned the window dressing trade yesterday?  This is like the anti window dressing trade. 

     Markets opened lower today as economic gloom pervaded the markets.  There was no significant news to cause us to open lower, only perhaps anticipation of bad economic data to come later in the day.  We opened lower by over 100 points on the DJIA.  We have recovered some of the losses in the first hour of trading as economic data has come in pretty good.

Economic Data
     The University of Michigan Consumer Confidence Survey came in better than economist had expected as consumer's mood perked up due to lower gas prices and a moderation in the stock market's decline.  Consumers were still worried about jobs and the economy but they were not as worried as last month.

"The data indicate that consumers have shifted from anticipating deeper declines to the growing belief that the economy will stagnate at its currently depressed level," said survey director Richard Curtin.

     The Chicago PMI or purchasing managers index was out as well which is an important reading on manufacturing activity in the Midwest.  This metric came in much better than economist had expected which contributed to a rise in stock prices in the early going.  The reading improved to 60.4 in August.  Economists had forecasted a drop to 54.5.  Any reading above 50 indicates economic expansion.

    This is a very positive number and I'm surprised markets haven't reacted strongly to this news.  Sure we've added a few points to indexes but we are still in negative territory.  A 60 print for the PMI is very bullish.

Market Recap
     Well, that was an ugly finish to an ugly quarter.  The SNP 500 dropped almost 14% for one of the worst quarters since 2008. I was looking at the reasons for today's selloff even in the face of a good PMI number and it turns out that incomes dropped for August.  It's been 2 years since incomes fell month over month and this is a horrible sign for the economy.  Worker's are getting less share of the pie and that will translate to weaker consumer spending and confidence.

     Stocks across the board were sold today and in the final 15 minutes of trading especially.  XLE was down almost 3% putting me down about 2 pct on my trade.  I am not optimistic about October as many stock market crashes have happened in the past during this month.  September is traditionally a horrible month and October is too and I expect it will be again this time.  My thesis is that we will break to new lows in the coming months as it looks like the US economy is sliding into a recession.  After making new lows in October, we get a relief rally into the end of the year. 


Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

Thursday, September 29, 2011

Markets rally on German vote

     Markets were rallying early Thursday morning as the German bundestag approved new powers for the European Financial Stability Fund.

     From Reuters...    

"The Bundestag (lower house) overwhelmingly approved new powers for the 440-billion-euro EFSF fund to make precautionary loans, help recapitalize banks and buy distressed countries' bonds in the secondary market."

      The markets welcomed this news as a sign of greater European solidarity as fears of German non participation in the bailout receded.  The Frankfurt DAX which had fallen almost 35% from the highs has been rallying strongly recently as German chancellor Angela Merkel has reiterated that the EU would not let Greece default and would keep the EU together.

     Other good news in the markets today was US 2nd quarter GDP was revised upwards to 1.3% from a previous 1% print.  This was on the back of better consumer spending and exports than previously thought. 

     Initial jobless claims also came in better than expected alleviating fears that the United States was sliding back into a recession.  Initial jobless claims came in at a seasonally adjusted 391,000 which was much lower than the 420,000 that economists had forecast.  Initial jobless claims measures the amount of new people filing for unemployment benefits in the past week.

     Markets are strong across the board this morning with the Dow up 200 points as of 7:23 AM PST.  The SNP 500 and NASDAQ are also solidly in the green up 1.4% and .67% respectively.  European stocks are up as well with the German DAX and Paris CAC up over 1%.  Across South America, the Brazilian Bovespa was up 1.3% and the Mexican IPC Index was up over 2%.

Market Recap
     Well, today had to be a frustrating day if you are a bull or a bear!  Markets opened up strongly and then sold off all day going from 250 pts up to 50 pts down on the DJIA only to rally in the final half hour to end up 143 pts higher.

      The interesting thing about today's market was the complete obliteration of some of the best performing momentum stocks today.  AAPL, BIDU, GMCR, AMZN, FOSL, RL all were clobbered today.  BIDU was down over 9% today on no news that I can see.  AAPL was down 1.6%.  All these had done well this year and with end of the quarter window dressing, I would have thought they would be going up on a good day like today.  It seems fund managers may be dumping the stocks they have profits in and scooping up perceived bargains like bank stocks.  Bank stocks were up across the board today with BAC and C up over 3% today.

     I got stopped out of AAPL today with a 4% loss.  It was a poor trade all around and I seem to have lost my mojo with AAPL for now and I will stay away from trading it for awhile.  I have almost given up all the gains I had for the year with the last few poor trades.  My XLE trade is working well for now (fingers crossed) although it did not look so good earlier in the day.  Today's close was quite powerful and I look for a continuation of the strength into tomorrow.  We should be able to get some follow through. 

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

Wednesday, September 28, 2011

Do we get some window dressing?

     At the end of every quarter on wall street there exists a phenomenon called "window dressing".  This is where portfolio managers and traders buy up stocks  that have done well in the quarter and sell the ones that have done bad to make their portfolio's look better to their investors.  Generally this is a time when stocks rise as money is put to work to make the quarter look better than it really was.  If you look at the end of the last quarter in June, you can see a good example of it.  Stocks really rose at the end of June.

     We are coming to another end of quarter and after last weeks drubbing, markets are looking for any reason to rally.  As such, stocks are once again up today nearly 100 points on the DJIA in the early going and the SNP and NASDAQ are up as well.   We gave back 150 pts of gain on the DJIA yesterday and today we may get it all back!  The headlines will say we are up on "European hopes" but we know's because of window dressing!

     After flying yesterday, European stocks have settled down a bit mostly in the red by modest amounts.  London was down almost 1%, Frankfurt was up with a marginal gain and Paris was down by .4%.  Gold remains near yesterday's closing price and seems to be stabilizing and silver is down a small amount.  Oil is down almost 1%.  The euro is rallying once again up a third of a percent.

     Across South America, the Brazilian Bovespa is up over 1% and the Argentina Merval is not open but was up 2% yesterday.  Asian shares were mixed with Tokyo up and Hong Kong down.

Tuesday, September 27, 2011

Gold bounces back

     Gold  was higher today a huge selloff cause prices to drop 350 dollars from the peak.  At one point in overnight Sunday, gold was at 1530 dollars but was near 1650 in recent trading up 4% from yesterday's closing price.  Silver also recovered up 9% after an even sharper 30% decline over the past week or so.

     Markets were higher once again this morning on hopes that European policymakers were finally getting a plan in place to fix the European debt crisis.

     "This comes after a European official said that a detailed plan to leverage money in the EFSF was in the works and that the it would use a portion of the money from the fund to shore up European bank capital, while another portion would be used as seed money for a European Investment Bank," said a CNBC article.  

     The DJIA opened up 150 points and quickly rose to 250 points higher in early trading.  Bank and energy stocks were leading the way with BAC up 3% and XLE up 4%.

     European shares rocketed higher with the FTSE up 3% and the DAX up 4.5%.  Asian shares rebounded as well with Hang Seng and Nikkei both registering large gains.  Across South America, the Brazilian Bovespa was up 900 pts.

Market Recap
     Wow, that was a pretty bad finish if you are a bull today.  We were up as much as 300 points on the DJIA but gave over half of it back in the last hour of trading finishing up about 150.  I'm not sure what caused the 200 point selloff at the end of the day but it might be because of fighting between countries about who's going to eat the cost of the bailout.  Governments want bondholders to eat a bigger portion of the cost. 

     From the Financial Times...

     A split has opened in the eurozone over the terms of Greece’s second €109bn bail-out with as many as seven of the bloc’s 17 members arguing for private creditors to swallow a bigger writedown on their Greek bond holdings, according to senior European officials.

     The divisions have emerged amid mounting concerns that Athens’ funding needs are much bigger than estimated just two months ago. They threaten to unpick a painfully negotiated deal reached with private sector bond holders in July.

      While hardliners in Germany and the Netherlands are leading the calls for more losses to be imposed on the private sector, France and the European Central Bank are fiercely resisting any such move. They fear re-opening the bond deal could spark renewed selling of shares in European banks, which have significant holdings of Greek and other peripheral eurozone debt."

     Needless to say, this is a bad sign for tomorrow.  I purchased some AAPL stock amid the euphoria early on and am quickly in the hole 1.5%.  AAPL had been outperforming the market recently but has lagged the last 2 days on the news that they are ordering parts for less ipads than expected.  This has led people to believe their sales are not as good as forecast which has put pressure on the stock.   It looks like this trade is not going to work out for me but I have a stop loss on the stock so it won't hurt me too much unless we get a huge gap down tomorrow which is possible. 

     This market is completely news driven right now which makes it hard to trade, for me anyways.  If I get stopped out of this AAPL trade, I will probably sit on my hands for awhile until a trend emerges.  I will keep adding to core holdings on big dips as well.


     If you are into trading, please check out my friend's blog.  It's called the Chartographer's Map Room.  This guy really knows his stuff.  Thanks.


Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

Sunday, September 25, 2011

Gold and silver in liquidation mode

     Gold and silver were in total liquidation mode on Monday morning as European and Asian traders are looking to raise cash anywhere they can.  Gold continued it's decline from the past 3 days as the dollar strengthened versus major currencies.  Gold was down 3.5% while silver was down a whopping 12.4% to 26 and change after earlier dropping as much as 17%!

     There is full blown panic in the commodities space as oil and copper were down big as well.  Oil was down 2.50 to 77.50 and copper was down 5.5%. 

      Well it looks to be another roller coaster day on Wall Street after a weekend of talks between central bankers and policymakers from around the world failed to produce any agreement on how to deal with the European debt crisis.

     "There was very little official detail on the talks however as speech after speech outlined how worried global policy makers were, without offering any clear signals on what the response will be to the debt crisis," said a CNBC article.

     There was talk of a shock and awe trillion dollar upgrade to the European Financial Stability Fund or EFSF but little consensus about implementation of such a plan.  Markets have been reacting negatively to all the confusion.

Saturday, September 24, 2011

Some of my favorite songs of all time

     There's a lot of great new music blogs on blogger like Sub-Radar Mike'sD4's and Lee Lee's and listening to the music out now it got me thinking about how I don't really keep up with music anymore.  I still love music and listen to it all the time but I guess I'm stuck in a past era like most people who get older.  Nowadays, I just listen to my old school rap on KDAY and various rock on JACK and it's good enough for me.

     When I was younger, I always had to be up on the latest jams.  I was a huge hip hop fan and when I was into it (1993-2005), it was a golden age for rap.  From the Wu-Tang Clan to Group Home to Mobb Deep, The Dawg Pound and Snoop and Dre, rap was great and I loved it all.  I got so into it I even started producing it myself!  My mom got me a Roland Groovebox for my birthday when I was 19 and it was on from there!  I started producing my own music along with a friend of mine and pretty soon we got a song on a demo by a rapper called Knoc-turn'al. We weren't that talented but my buddy was his brother in law so we got hooked up.  I even got a chance to meet Dr. Dre when Knoc-turn'al later started working with him.  I got a bunch of songs that we made back then that I soundclouded and I'll put them up in another post if you guys want.

     When I first started listening to hip hop, one of the first album's I bought was A Tribe Called Quest's Midnight Marauders.  I loved this CD so much especially this song...

Friday, September 23, 2011

Support is holding for now

     World markets are selling off once again today but strong support at 1120 is holding on the S&P 500.

     As you can see from this chart, the 112 level has been support for the last two months on SPY which is the ETF that represents the S&P 500.  Every time prices hit this level, buyers have come in and sent us back higher.  That is why it is called support.  I'm of the opinion that that we are finally going to break through 112 and head lower.   Generally when we break through support, more people start selling and we head dramatically lower.  If we can hold support here, we will probably head higher back to 1200.  We are in a trading range market for now as long as support holds.  If we break support, look out below!

Market Recap
    The big story today was gold which fell 100 dollars!  Gold has formed a double top formation and there could be more downside on the way.
    The reasons for gold's selloff is that hedge funds are selling their winners to raise cash.  Also, with the dollar strengthening gold's appeal as a currency hedge is lessened.

    There will probably be a buying opportunity coming up however so I am going to keep my eye on gold.  The Chartographer has a great post on gold here and basically called the top in gold.  I am real glad I sold my gold yesterday, I would not want to ride out this kind of move.

     Stocks finished today in the green with technology stocks showing strength.  The Dow was up 38 pts but the S&P 500 was up 7 and the NASDAQ was up 28.  Support at 1120 has held for now.  Overnight, SPY hit a low 110.85 but we bounced back smartly from there.  We could be heading back up the range, however, I don't know if there is strength enough for us to power to 1200 again.  But we could have a little rally from here to 1160-1170.  

     Foreign stocks did good today with European and Emergent Markets stocks doing well after getting obliterated yesterday.  I thought the selloff was way overdone on foreign stocks and so dipped my toe in yesterday and bought some EM's for my long term portfolio.  That is working out well so far as EM's are up about 2.5% today.  You can track Emergent Market's stocks with EEM.  My friend the Hasidic Plumber likes to track the Brazilian Bovespa and the Argentina Merval and you can track those with EWZ and ARGT or the Argentine Merval index if you like.

     I was away from the computer all morning so wasn't able to track the stock market and did not do anything with my portfolio.  I am definitely looking to get back into AAPL and start a position in MCD at this time.  I like stocks that have shown strength and AAPL and MCD are two of the strongest stocks in the market right now.  Cyclical stocks like CAT and energy stocks like XLE have really gotten bombed recently.  XLE is an energy index and CAT or Caterpillar is a good proxy for global growth.  These sectors are so weak it's best to stay away from them right now and stick with tech and consumer staples.  Utility stocks are also strong right now.

     Being at the bottom of the range, it would seem like a good time to get back in and set a stop at the recent lows.  I will probably do that on Monday, although I will be away from the computer that day as well. 

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

Thursday, September 22, 2011

Stocks plunge worldwide

     A dour outlook from Fed chairman Ben Bernanke and slowing growth in China are contributing to a worldwide market selloff this morning.   US stocks are down 300 pts at the open.

     Yesterday's Fed statement offered a bleak assessment of the prospects of future economic growth in the US and said there are "significant downside risks to the economic outlook."  Markets sold off 284 pts after yesterdays Fed statement.

     Also, Chinese Flash PMI which is the purchasing manager's index, a measure or manufacturing output, declined to 49.4, the lowest in two months.  This is adding to fears that global economic growth is cooling.

     US Markets opened 300 pts lower with the SNP down 31 to 1135 and the NASDAQ off 66.  Oil cratered tumbling over 6% to 81 and change.  Gold fell sharply off almost 4% or 70 dollars down to 1737.70.  Meanwhile US 10 year yields hit a new 60 year low at 1.77%

     Foreign markets were down with the Hang Seng Index trading down 900 points or 5% and the Nikkei down 180.  European stocks as you can imagine are tanking as well with the French, German and British bourses all down 4% or more.

     Across South America, the Brazilian Bovespa is down 3.5% and the Argentina Merval is down 4.3%.

     It looks like we could be starting the next leg down in the selloff.  We still haven't broken down through support so I won't add any shorts until we do.  The bulls need to make a stand soon if they want to hold this bottom.  Interestingly enough, small cap stocks are outperforming today in a horrible tape which could mean we get a bounce from the lows.

Stocks I'm Watching
     IWM- The Russell 2000 small cap index is outperforming today in a brutal tape.  It is down 1% less than the Dow.  I watch the small caps for signs or risk taking and risk aversion.  Usually on a bad tape, the small caps underperform.  I'm taking this as a signal that we could bounce back from here and am adding a long.

     AAPL- Apple is also performing well today in a bad tape.  It seems to be a safe haven in this market environment.  AAPL is down only half as much as the DOW.  I will probably buy my AAPL back today.

     MCD- McDonalds is also performing well today down about half as much as the DOW.  MCD is a great place to hide out in this market.

     CAT- Caterpillar has been performing horribly lately.  It has completely broken down from support around 80 dollars.  This is a bad sign for global growth.  CAT is down over 10% in the last 2 days! 

     NFLX- NFLX is up today!  This is mildly surprising to me as today is a risk off day and NFLX short is a risk on trade.  NFLX is up 1%. 

     FCX- Freeport McMoran Copper and Gold has been getting absolutely obliterated lately on slowing global growth.  The breakdown in this name is a strong signal about slowing global growth.  It is down 9% today and 15% in two days.

Market Recap
     Well it was a pretty bad day for my trading account.  I sold my gold long for a 6 percent loss and I tried to trade AAPL today unsucessfully.  I bought AAPL in the early going and got stopped out when it dropped past 400 later in the day losing about 2 pct.  Today's action was brutal.  I don't understand this market right now.  I don't see how we can be down 500 pts on basically no news and when Greece was going to hell last week we were rallying!  Emergent Markets were down 6-9% today!  FCX was down 12%!  What the hell!  There was no news to justify that kind of action.  I know global growth was slowing but so did everybody else I thought.  China's PMI wasn't that bad last night! You would have thought Greece went belly up today based on the price action. 
    With that being said, I am now 100% cash in my trading account.  It looks like the market wants to break down from here.  EM's have already started the second leg down, it's just a matter of time for the US markets I believe.  Call me crazy but on day's like this I like to buy for my long term portfolio so I picked up a small amount of emerging markets stock today.  It's probably a mistake trying to bottom feed here but I don't see the justification for the kind of move we had today so I'll pick up some on the cheap. 

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

Wednesday, September 21, 2011

Let's Do the Twist

     The FOMC meeting concludes today with the market widely expecting the Fed to implement a new program to help stimulate the economy called Operation Twist.  The Fed has a dual mandate which is to keep inflation in check and promote employment.  With the economy struggling along and the unemployment rate remaining around 9% expectations are that the Fed has to do something to stimuate growth.  Back in the 1960s, the Fed implemented a program called Operation Twist so named because "The Twist" was a popular dance craze at the time.  The Fed bought longer term bonds and sold shorter term bonds on their balance sheet to flatten the yield curve.

    "By doing so the Fed drives down the desirability of 'safe' investments, making riskier options like investing in a business instead of government debt more attractive," says an article on Yahoo! Breakout. 

    This hopefully encourages investors to take on more risk by selling government bonds and buying stocks.  It also could potentially help the housing market by lowering borrowing costs.  The Fed is to make an announcement later today on what if anything they will do to help stimulate the economy.  Whatever they do, it will move the markets.

FOMC statement
     Well the Fed statement came out and as expected is going to implement the program known as "Operation Twist".  From the FOMC statement...

     "To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee decided today to extend the average maturity of its holdings of securities. The Committee intends to purchase, by the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less. This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate."

     Stocks reacted negatively to the news with the DJIA now plumbing new session lows down some 170 pts.

Final Recap
     Wow, the markets did not like that at all!  The Dow went straight down after the FOMC meeting results finishing 282 points lower!  I don't know what happened to set off all that selling and will have to look into it.  I suspect it is the algos that run the markets nowadays took the markets down because of no surprise stimulis from Bernanke.  Regardless, it looks as if we are heading back down the trading range and I suspect we might break through the bottom this time.  Lots of global growth names are getting slammed right now like CAT and EM's look very weak and of course Dr. Copper who has a PHD in economics is signaling problems.  I might put on a R2K short tomorrow or a European short. I don't like the looks of this market right now.  Today's reaction to the Fed was pretty bad. 

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

Tuesday, September 20, 2011

Italy downgraded!

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!   

      Yesterday, after the markets closed S&P downgraded Italian debt from Triple A to A+ rating citing a heavy debt load and weak growth and a dysfunctional political environment.  Hmm, sounds familiar?  Amazing they didn't cut it before.  S&P are real idiots and probably should be arrested for causing so much havoc in the financial markets.  How can you cut the US debt before you cut Italian debt, it makes no sense unless you have an agenda!  Not saying that the US debt deserves a triple A rating but the bond market sure thinks so with 10 years below 2 percent!!  Italian debt is junk and it's a travesty that S& P is only now getting around to downgrading Italy! Put them out of business, they are worthless!  Now there is word that the SEC is investigating insider trading by hedge funds ahead of the US debt downgrade.  S&P are crooks, lock them up and throw away the key!

     The Italian debt downgrade seems to have had a limited impact on the markets so far as futures dropped about 80 pts on the news but have since recovered and moved into positive territory.  Markets opened with a 40 pt gain but quickly sold off into negative territory before recovering.  Gold and oil are both up even with a stronger dollar and the euro is down. 

     European stocks are solidly in the green at 7:18 AM PST with the FTSE up 1% and the DAX up 1.5%.  The Hang Seng index finished up 100 pts while the Japanese Nikkei played catchup from yesterday and fell 140 pts.

     The markets seem to be trading fairly well ahead of the 2 day FOMC meeting where it is widely expected the Fed will do another bond buying operation called Operation Twist.  This is where they will try to extend the duration of their portfolio of bonds by selling shorter duration bonds and buying longer duration bonds.  The size of their balance sheet will remain the same but their mix of bonds will change.  I don't see how this is going to help things because the 30 yr is already around 3.2%.  How low do they want it to go?

Stocks I'm watching
     AAPL-  Apple is making another new all time high in early going as the breakout continues.  Fast Money traders speculated that AAPL is becoming a safe haven and I had been saying that for awhile now.  AAPL has hit an all time high of 419.87 just below the magical level of 420.  OK AAPL has just hit 420 for a new all time high, so to speak.

     MCD-  McDonalds is trading very well again today up about 1% outperforming the overall market.

     IAU-  Gold is bouncing back nicely after yesterday's selloff as the chop continues.  IAU is up 1.3 pct in the early going.

     NFLX-  Netflix is down another 8% today as investors are piling out of the stock after yesterdays perplexing move by CEO Reed Hastings to split the company in two.  Netflix is the cool name, nobody gives a hoot about Qwikster!

     EEM-  Emerging markets have been underperforming US markets pretty significantly recently.  I'm not sure what's causing this.  It could be the stronger US dollar and lower commodity prices or perhaps investors fear a slowdown in the global economy.  Whatever the reasons, it is definitely worth monitoring.
One month chart of SPY(SNP 500 in yellow) vs EEM(in blue) the emerging markets index.  As you can see EM's have underperformed by about 7% coinciding with a rise in the US dollar.

Final recap
     Markets sold off in the final hour of trading today.  This was not a good finish for the bulls.  We are near the top of the range and had a big intraday reversal going from up 150 to up 10 at the bell.  I suppose it is a small victory that we did not go negative.  I got caught up in the selloff as I got stopped out of my AAPL today for about 413.63.  I had been raising my stop as I went along and AAPL got hit hard in the late day selloff and my stop was triggered.  It was still a very nice trade as I made 5% in about 5 days.  AAPL looks like it has topped for now but I will be looking to get back into AAPL at some point.

     The Dow finished up 10 pts and the SNP 500 was down by about 2 pts but the NASDAQ was down almost 1%.  NASDAQ had been outperforming recently but got hit hard in the late day selloff. Gold was up 30 bucks and oil was up a buck to 86 and change.

     This could be the top of this recent rally and we might start heading back down again.  Small caps performed very poorly today as well.  The wild card is the FOMC meeting going on.  Whatever the Fed says in the next few days will move the markets.

PS  Hey everybody, if you are interested in trading, I want you to check out a friend's blog.  It's called the Chartographer's Map Room.  This guy really knows his stuff and he's definitely a better trader than me!  So check it out if you are interested, especially if you are starting out looking to get into it, he has a lot of good advice.

Monday, September 19, 2011

Apple Breakout City!

Disclaimer:  Nothing in this blog should be construed as a recommendation to buy or sell any securities!  Please do your own due dilligence before buying any stocks or bonds!  

      I was just checking out the futures before bed and I noticed they were down about 1.5%.  Apparently, the Greeks are having some problems with their budget...AGAIN!  They are having problems meeting their budget cutting targets to get the next tranche of bailout money from the rest of the EU.  The Greek economy is in major contraction and trying to get more money out of the greek people is like squeezing blood from a turnip!  This has renewed the fears of traders who have pushed down stock futures.  US Dow futures are down 141 pts and the London FTSE is down 1%.  The German Dax is down 2% and the Hang Seng is down 450 pts as of 12:25 AM PST.  It looks like it could be another interesting day tomorrow!  I was hoping for a continuation of the rally but it looks like we are going to head back down in the trading range we've been in for a month now.

6:36 AM PST Update
    Stocks open lower investors fret over Greek default scenario.  Investors are dumping Euro's and European stocks today as fears of a Greek default grow.  Over the weekend, EU finance ministers met to discuss the situation but failed to come up with any new resolutions and German chancellor Angela Merkel lost another regional election putting more doubt into Germany's participation in the bailout.

     The IMF told Greece that it needs to make more cuts in government spending to receive a new 8 billion bailout payment.

     "Additional savings measures were needed to cut the public deficit to a sustainable level and reduce the public sector's claim on resources—code for axing jobs and cutting pay and pensions—while improving tax collection rather than adding further taxes," said a CNBC article.

     The Euro was down by 1.5% and European stocks were down 2.5% or more.  Oil was down over 2% and even gold was down about 1% as the dollar strengthened.    The 10 year US treasury bond yield cratered to 1.96% as traders sought the safety of US Government debt.  The DJIA was down 200 pts in early going and the dollar was up against a basket of currencies by about 1%.

1:14 PM PST Update
     Markets surged in the last hour trading after news broke that Greece was near an agreement with its lenders.

     "Greece is near an agreement with its international lenders to continue receiving bailout funds, a Greek finance ministry official said on Monday after a conference call between Finance Minister Evangelos Venizelos and inspectors from the EU, IMF and ECB, known as the 'troika',"said CNBC.

     The Dow Jones Industrial Average after being down 250 pts in the early going finished down 109 pts after the last hour surge.  The SNP 500 was down 1% and the tech heavy NASDAQ was outperforming down .36%.  The NASDAQ was green at one point during the day as AAPL hit an all time record high.

Stocks I'm watching
    AAPL-  Apple was up 11 bucks and hit an all time high at 413.23 earlier today.  This is trade is working out very well for me so far and if I had any more money I would be adding to this trade right here.  There could be another 10-40 dollars of upside right here.
                                  Break out city!

    NFLX-  Netflix after earlier being up 3% finished down 7%.  They are splitting their DVD and streaming services into separate businesses.

    We realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently. It’s hard for me to write this after over 10 years of mailing DVDs with pride, but we think it is necessary and best: In a few weeks, we will rename our DVD by mail service to “Qwikster”. We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming.

-- Reed Hastings, Co-Founder and CEO, Netflix

    If I had some nads I'd short the shit out of NFLX right now.  NFLX is a broken high growth stock and I think there is much more downside to go.
                                    U-G-L-Y you ain't got no alibi, charts ugly!

     IAU-  Gold tanked today after the dollar rose against a basket of currencies.  Gold is trading the opposite of the dollar recently.  When the dollar goes up, gold goes down.  Gold looks like it is going to chop around for awhile as it consolidates it's huge gains from the past few months.  My gold trade isn't working too well for me right now.  I won't be adding to it unless it goes past my original buy price.  I won't be selling it either.

     MCD-  McDonalds is performing real well in a bad tape up .59% at the close.  MCD is a classic defensive play in this environment and I am looking to add it to my portfolio.  It has a nice 2.8% dividend yield as well.  Problems include exposure to Europe, but they have nice growth in Asia and people like their cheap eats in this economic environment.  Their chart looks pretty as well.
                                       Its always a good thing when the price goes from the lower left to the upper right.

     DBC-  Commodities across the board got smoked today on dollar strength.  Copper fell 4%, oil fell 2.5% and gold of course fell 2%.   If copper drops because of dollar strength that is okay but if its down because of economic weakness, it's bad.

     Today's action at the end of the day makes me constructive on tomorrow.  If Greece get's their money it should be all systems go.  Tomorrow, the FOMC starts their two days of meetings to discuss monetary policy.  The market is expecting something called Operation Twist to come out of these meetings as the Fed looks to stimulate the economy.  Let's see what happens.

PS  Hey everybody, if you are interested in trading, I want you to check out a friend's blog.  It's called the Chartographer's Map Room.  This guy really knows his stuff and he's definitely a better trader than me!  So check it out if you are interested, especially if you are starting out looking to get into it, he has a lot of good advice.

Saturday, September 17, 2011

Anonymous Occupies Wall Street

I have posted a livestream of the event on this page.

Background on this occupation.

Anonymous and Adbusters are at Wall Street planning to stay a long time and they hope to gather more people.

There are thousands of people there.

There is a media blackout of the event so as not to encourage more people to attend.

There is free kool aid at the bull tomorrow.

How to buy American Part 2 of ?: Car Edition

    A couple of weeks back, I made my first post on how to buy American.  In that post, I said that it is time to declare war on the Great Recession and the way we fight this war is by buying American made goods.  If everybody in the US spent 100 dollars on American made goods instead of foreign made goods, it would create hundreds of thousands of jobs.  Here is how to buy American cars...

     By one estimate, the US Auto Industry contributes 500 billion dollars to US GDP.  The US GDP is 13 trillion dollars so the auto industry makes up about 4% of the US economy.  That's huge!  It is clear that if we all got together to buy a US car we could seriously impact the US economy in a positive way and generate jobs. 

     "Some private industries are integral to long-term national financial viability. The Detroit car industry—like our aircraft manufacturing capacity—falls into this category," says Bloomberg Business Week.

Some facts about the US auto industry....
  •  The American auto industry supports 3 million jobs including auto dealers, parts suppliers and of course assemblers.
  • American car manufacturers spend billions of dollars on plant equipment and research and development every year directly contributing to jobs in other industries.
  • Car manufacturers are important to national security.
  • Manufacturing is the single biggest contributor to national economic activity and auto manufacturing is the biggest part of US manufacturing.
           After the bailouts of 2 major US car manufacturers GM and Chrysler, the industry has had to reinvent itself.  GM and Chrysler were drowning in red ink and made cars that were too big, cost too much and made by workers who made too much and received too many benefits.  After their near death experience the companies renegotiated the contracts with their unions and resolved to make better cars that Americans want to buy and are smaller and more efficient.  Largely, they have succeeded.   While the quality isn't as good as other manufacturers like Ford or Toyota, they are improving.

     Ford on the other hand, never took a dime from the government and is positioned better than ever to succeed.  They renegotiated the contracts with their unions and will be solidly profitable even in hard times.  They have great new small fuel efficient cars like the Focus and they still make the #1 selling pickup in the United States the F150.  Their quality has improved greatly and is even better than Toyota's now in some surveys.

     The best way to support the US Auto industry is to buy an American car made in the USA.  You might ask, "wait aren't all American cars made in the USA?"   Surprisingly, the answer is no, there are many American cars made in Canada and Mexico.  Car companies moved some of their manufacturing there because wages are lower and unions are weaker.  In order to support the American worker, it is best to buy an American car assembled in America and avoid those cars assembled in Mexico, Canada and elsewhere.

     Here are all the American cars assembled in the USA according to

Chrysler- Chrysler Sebring, Dodge Avenger, Dodge Calibur, Dodge Dakota, Dodge Nitro, Jeep Compass, Jeep Grand Cherokee, Jeep Liberty, Jeep Patriot, Jeep Wrangler, Dodge Ram

GM- Cadillac CTS, DTS, STS, Escalade, Chevy Corvette, Cruze, Colorado, Express, Malibu, Silverado, Suburban, Tahoe, Tahoe hybrid, Traverse, GMC Acadia, Canyon, Savana, Sierra, Yukon.

Ford- Ford Econoline, Escape, Escape Hybrid, Expedition, Explorer, F150, F250, Focus, Mustang, Ranger, Shelby GT500, Taurus, Lincoln MKS and Navigator.

     Even some foreign cars are assembled here in USA however, they generally do not use too many American parts. 

BMW- X3, X5, X5M, X6, X6 M, X6 hybrid

Honda- Acura RDX, Acura TL, Honda Accord, Accord (Crosstour), Civic Sedans, CR-V, Element, Odyssey, Pilot and Ridgeline

Hyundai- Hyundai Santa Fe and Sonata

Kia- Kia Sorrento

Mazda- Mazda 6, Mazda Tribute, Mazda Tribute hybrid

Mercedes-Benz- Mercedes GL-class, M-class, R-class

Mitsubishi- Eclipse, Eclipse Spyder, Edeavour, Galant

Nissan- Altima, Armada, Frontier, Maxima, Pathfinder, Titan, Xterra

Subaru- Legacy, Outback, Tribeca, Equator

Toyota- Avalon, Camry, Camry hybrid, Highlander, Sequoia, Sienna, Tacoma, Tundra and Venza

      Here are cars that are not assembled in America and could be avoided(although buying the American ones still support America)

Assembled in Canada- Acura MDX, ZDX, Chevy Camaro, Equinox, Impala, Chrysler 300, Town & Country, Dodge Challenger, Charger, Grand Caravan, Ford Flex, Edge,  GMC Terrain, Honda Civic Sedan, Civic Coupe, Civic Coupe Si, Lexus RX 350, Lincoln MKT, MKX, Toyota Corolla, Matrix, Volkswagen Routan

Assembled in Mexico- Cadillac Escalade EXT, SRX, Chevrolet Avalanche, Aveo, HHR, Silverado, Silverado hybrid, Dodge Journey, Ford Fiesta, Fusion, Fusion hybrid, GMC Sierra, Sierra hybrid, Sierra crew cab, Honda CR-V, Lincoln MKZ, MKZ hybrid, Nissan Sentra, Versa, Dodge Ram 2500, 3500, 4500, 5500, Toyota Tacoma(made in USA as well), Volkswagen Jetta, Jetta sportswagon.

     While this list is by no means comprehensive, it can give you a reference to go by once you decide to purchase your American car.  To get the most bang for your buck when trying to support the US economy it's best to buy American cars assembled in America.  Second best would be to buy foreign cars made in America.  To fight the war on the Great Recession we need to buy more American made goods and support American manufacturing!  More later...

Friday, September 16, 2011

Markets continue rally

     Markets are in rally mode this morning on a continuation of positive momentum from the previous few days.  There hasn't been any major news out today to move the markets although the University of Michigan Survey of consumer confidence did come in better than expected. 

     The DJIA is up 60 pts so far as of 7:26 AM PST after earlier being up as much as 90 pts.  The SNP 500 is up 4 pts and the NASDAQ is up 10 points.  Gold rebounded after a recent selloff to 1795 and oil is down as well to 89.29 a barrel.

    Foreign indexes were all up nicely last night with the Japanese Nikkei up 225 pts and the Hang Seng index up 273 pts.  European stocks continued their nice run of late with the FTSE up 1% and the DAX up 2%.  The Euro traded down a half a percent and the dollar was up.

Stocks I'm watching
     RIMM- Research in Motion was down over 20% today after reporting bad earnings and poor guidance.  Apple is cleaning their clocks.  It could be a nice value play here as they have a ton of cash and some decent patents they could sell.  Blackberry is still pretty popular but the problem is their playbook tablet which few people are buying.

     NFLX-  Netflix is down another 8.5% today after dropping 20% yesterday.  This stock had been one of the best performing stock of the last 3 years.  It was trading at 300 a couple months ago and is now down to 156.00.  It is time to get out if you already haven't yet!  Their business model is now in question and short sellers are pressing the gas on this one.  There is more downside to come.

     AAPL- Apple is really flirting with the 400 level today but hasn't kissed it yet.  Apple is making a nice technical breakout past resistance at 393 and out of a triangle formation as well.  Also, RIMMs bad news is Apple's good news. 

     IAU-  Gold is bouncing back today after a vicious selloff yesterday.  Bargain hunters are stepping in and shorts are covering before the weekend.

5:00 PM PST update
     Today, was kind of an interesting day as there was a "risk off" flavor to the markets.  A lot of the stuff that had been rallying furiously the past 4 days took a back seat to the laggards.  Example, recent traditional safety trades like bonds, gold, utilities stocks and consumer staple stocks rallied today while small caps and european stocks lagged.  I don't know if the market is trying to tell us the rally may soon come to an end but it is worth monitoring for Monday.  For now, I remain positive as we had another nice upday continuing the momentum of the previous four days. 

     With oil dropping today and energy stocks lagging, I am looking for an energy play perhaps an oil service name like Transocean(RIG) or an E&P like Ultra Petroleum Corporation(UPL).  I have traded XLE this year but am looking for more of a targeted play. 

     That is five up days in a row for the markets which we haven't seen since June!  The SNP 500 was up 5.4% for the week.  I like this market right here and would be adding to longs ahead of the FOMC meeting next week.  It's been the best one week gain for stocks in over a year so let's see if we can continue the positive momentum for next week!

Thursday, September 15, 2011

Happy birthday to me!

    Well, it's my birthday today and I'm going to use my blog to make myself feel shower me with your love friends!  I am the big 34 today and plan on celebrating by not drinking any alcohol at all!  This is a big change from previous birthday's where I was shitfaced by 9am and lying in a pool of my own (what's a good synonym for vomit...) stinkpot by noon.

     Nah, I'm kidding, I never really go all out for my birthday's.  I just hope my friends and family remember and someone leaves me a nice happy birthday message on facebook.  Speaking of which, let me go check facebook real quick!  Here you can enjoy this while I'm gone...

     I'm back!  Hmm, no facebook birthday wishes, BRB killing self.  Nah, just kidding 3 messages already from some wonderful friends!  As if I already didn't feel good enough with the market up today.  Wow, things are going so good for me right now I can't help but wonder what calamities God has in store for me later on.  I guess I believe in one of the great Al Bundy's philosophy's...

     "Hooters, hooters, yum, yum, yum. Hooters, hooters on a girl that's dumb."

No, not that philosophy!  

     "The minute a Bundy has good luck he immediately starts building up an equal amount of bad luck."

     Yes, that's the one.  I've got to be building up a buttload of bad luck right now the way my good luck is running!  Never mind that, let's get to the markets...

     Markets were mostly higher today on European Debt crisis stabilization after central banks around the world stepped up to provide liquidity to the European banking system.  The Bank of Japan, the Bank of England, the Swiss National bank, and the US Federal Reserve will all be providing dollar loans to European banks.  This is easing fears of a Lehman like financial crisis and liquidity crunch in the European banking system.

     The Euro surged on this news to a high of 1.3934 and European stocks were broadly higher with the London FTSE up 2%, the German Dax up 3% and the French CAC up 3% as well.  
     The DJIA was seen higher by over 100 pts in early going but was paring gains as of this writing.  Gold was down big as well losing 43 dollars to 1783.

Economic Data
     Economic data was poor today overall with weekly jobless claims climbing to 428000.  This measures people who have newly filed for unemployment this week.
     CPI or the Consumer Price Index came in hotter than expected with producers passing price increases along to the consumers.  The increase was .4% which puts us at a 4.8% annualized inflation rate, above the Fed's target of 2-3%.

     The New York and Philly Fed survey's came out worse than expected as well.

Stocks I'm Watching
     Netflix- NFLX cratered 40 dollars today on a lowered forecast for subscriber growth.  Apparently, more people are cancelling their subscriptions after the recent price increase.  Netflix is trading at 169 dollars today down from 210 yesterday. 

     Apple-  AAPL is once again probing resistance and looks like it wants to break through.  It is trading at 393 up about 1% today.  I went ahead and bought myself a nice birthday gift of AAPL stock.  It has not broken out yet, but I think it will.  Although my technical analysis is rudimentary, I don't think you are supposed to buy the breakout until it is confirmed.  But to me, it looks great right here and I feel it will be confirmed soon.

     Gold- IAU is tanking today on the easing of fears in Europe.  I definitely did a bad trade with this one.  I did not have a great entry point.  Luckily, I bought a very small amount so it's definitely not killing me.  I will ride out this dip as the European debt crisis is far from over.

     Small caps- IWM is underperforming today in a good tape.  This is not a good sign for the rally for me.  As you all know, I watch the small caps for signs of risk aversion and people may be booking their risk on profits here.  IWM has outperformed all week so one bad day might not make a trend but I hope to see more strength here into the close.

3:38 PM PST Update
     Today was a great day for the bulls.  Markets ended up 184 pts today as this is the fourth day in a row the market has been up.  We have some nice momentum now and I expect we could head up to 1240-1250 on the SNP 500.  The European situation seems to have stabilized and I look for the bulls to try to keep the momo going.  I bought some AAPL today for a trade and set a 5% stop on it.  I think it's going to breakout and is up 3 dollars in afterhours.  I expect there could be 20-50 dollars of upside here and look to get in on some of it.  Let's see what happens.

Wednesday, September 14, 2011

Apple to institute a dividend?

On Fast Money yesterday, I watched an interesting interview with Kate Huberty an analyst with Morgan Stanley.  She thinks that Apple in it's quest to become the biggest company in the world by market capitalization, is going to institute a dividend.  Right now, Exxon Mobil has a market capitalization of 348.4 billion and Apple has a 356 billion valuation.  Here are some of her reasons that Apple might institute a dividend.

  • Apple generates 30-40 billion a year in cash
  • Apple is going to have 100 billion in cash on its balance sheet in 6 months
  • Apple would generate more buying interest in the stock if it were to institute a dividend
  • Value investors would buy in if there was a dividend
     She also thinks, best case scenario Apple will earn 50 dollars a share next year.  At current levels that puts a forward earnings multiple of about 8 on the stock.  Back out the current cash on the balance sheet and you get a forward multiple of 6.  Apple's stock is incredibly cheap right now.  Her 12 month price target is 468 dollars but in a best case bullish scenario her price target is well over 500.  

     Apple has a nice product refresh cycle coming up as well.

  • iPhone 5 is coming out in the next few weeks including a Sprint iPhone with unlimited data. 
  • iPad 3 coming early next year
  • new Mac Air within the first 6 months of next year
  • new low priced iPhone in the next 6 months of next year.  
  • long term, Apple TV will come out which she thinks will generate an additional 19 billion in revenues.
     All in all, Apple looks like a great buy right here for the long term.  It is cheap, it is coining money and it may institute a dividend.  I'm of the opinion that it will not institute a regular dividend but might have a special one time dividend for shareholders.  I don't know how much it will be but they could safely drop 20-40 dollars a share to investors and still have a mammoth amount of cash on their balance sheet.  They would still have enough money to buy a company like Groupon or Hulu.  I am going to pick some up on a breakout past 392. 

     Here is the interview if you want to take a gander at it...

Economic Data
     Retail sales for the month of August came in flat which was lower than expected.  Economists had expected a .2% rise which is a 2.4% annual growth rate.

     "An increase in sales of electronics, gasoline and food were balanced with drops in purchases of cars, furniture and clothes. Spending at restaurants and bars also dipped," said CNBC.
     Consumer spending was hurt by turmoil in the financial markets after politicos brought us to the brink of armageddon with the whole debt ceiling fiasco.   Stock futures pared gains after this report.

     In other economic data, the PPI or producer price index was also flat for August after rising .2% in July.  The PPI measures prices for the producer of goods.  This is a sign that inflation could be easing after sharp rises in oil and other commodities earlier in the year.  Rising food prices were offset by falling energy costs.  With inflation in check, this could encourage the federal reserve to take additional stimulis measures. 

     Markets opened higher but were seen down recently after the head of the European Commission said it will present ideas for joint Eurobonds.  Investors had been clamoring for Eurobonds to address the regions debt crisis but Germany had balked at the idea because they knew they were going to be on the hook for any default.  It seems markets are taking a wait and see attitude about this because stocks are selling off today on this news.  Markets probably do not believe this is a serious proposal or has a chance being implemented. 

     The DJIA is down 20 pts as of 717 AM PST.  The SNP 500 is down 2 pts and the NASDAQ is up 5 pts.  European stocks are broadly higher as bargain hunters have stepped in after a vicious selloff with the German Dax up 2% and London FTSE up 1%.

2:36 PM PST Update
     Today's action was very healthy with the first 3 days up in a row in September.  The DJIA was up as much as 250 pts before paring gains into the close.  The Dow finished up 140 pts but strength was found in the tech heavy NASDAQ index which was up 1.6%.  I don't make too much of the selloff into today's close, the more important thing in my opinion was we were up over 100 pts and it looks like momentum is building.  NASDAQ had real good volume today as well which confirms the rally.  It looks like we could get some follow through for the rest of the week.

     AAPL once again bounced back from resistance at 392.  It is having problems getting past that level.  I expect it will soon blast past it however in the midst of a nice market rally.

     With the eurozone situation stabilizing somewhat Gold has petered out trading in a 100 dollar range for the past 12 days or so.  The last 3 days gold has traded in an even tighter 50 dollar range.   Gold seems to have some nice short term support at 1800.  It is a good sign that gold has held up relatively well even as the dollar strengthened.  With the range narrowing, I'd expect gold to do something dramatic soon and my money is on another breakout.  The next fed meeting is coming up in a week which could provide a nice upside catalyst.

Tuesday, September 13, 2011

China to the rescue?

     European stocks rose today after Italy reached out to China to invest in its stock and bond markets.   Italy is trying to convince investors that it is safe to invest in their markets and are looking to the Chinese for help.  Chinese officials have expressed interest in helping out the European situation.

     "Europe will continue to be one of China's main investment markets," said Foreign Ministry spokeswoman Jiang Yu at a regular news briefing. "We will also expand financial and economic cooperation and investment cooperation with European countries to jointly address the financial crisis."

     There were no signs of Chinese buyers in today's 5 year Italian bond auction.  The yield came in at 5.6% on 4 billion worth of 5 year Italian bonds.  Demand was weak according to CNBC.

      Meanwhile, Angela Merkel in an attempt to reassure markets expressed determination that the EU will not let Greece default.

     “The top priority is to avoid an uncontrolled insolvency, because that wouldn’t just hit Greece and the danger that it hits everyone, or at least a number of other countries, is very big,” Merkel told Berlin-based broadcaster Inforadio. “I have made my position very clear: that everything must be done to keep the euro area together politically, because we would very quickly face a domino effect.”

     European stocks were up on the news today with the German DAX up 1.8%, the French CAC up 1.4% and the London FTSE up .9% at the close.  European banks were the main beneficiaries of Merkel's new resolve as "Barclays [BCS  9.54    0.36  (+3.92%)   ], UBS [UBS  12.55    0.63  (+5.29%)   ], Deutsche Bank [DB  32.23    2.31  (+7.72%)   ], ING [ING  6.54    0.27  (+4.31%)   ] and others [were] up 2 percent to 4 percent," according to CNBC.

     US stocks were higher as of 11:31 AM PST on European optimism.  The DJIA was up 69 pts and the broader SNP 500 was up over 1% and the tech heavy NASDAQ up almost 1.5%.  Small caps were outperforming up almost 1.5%.  Gold was up 30 dollars to 1843 and oil rose above 90 dollars.

     It may be risk on again for now as we trade back and forth in the range.

4:13 PM PST Update
     Markets closed on an upnote today building on gains from yesterday.  I am looking for more gains tomorrow as long as the European situation stabilizes.  Merkel saying the things she said today gives me the go ahead to put more risk on so I went ahead and purchased a small amount of Emerging Market stocks in my long term portfolio.  Foreign stocks are very cheap right now as long as the European situation doesn't spiral out of control.  I will be looking to buy more stocks tomorrow if we can keep rallying.  Of course I am looking at AAPL if we can get past 392 and XLE looks good here as well.  CAT may make a good trade here up to 90 bucks.  MCD looks good on this dip and so does IBM.

Monday, September 12, 2011

Buckle your safety belts

     I am up late watching the futures and it is not looking good out there.  Europe has opened sharply lower on what else is new...European Debt worries.  The French CAC is down 4% and the DAX is down 3%.  Call me crazy but I think it almost may be time to nibble on some European stocks.  Markets crashing may give the politcos some cover to stop waffling and get something done.  I wouldn't be backing up the truck here however.
     Hang Seng is down 800 pts and the Nikkei was seen lower by 235.  Gold is lower as well by 24 bucks as of 12:37 AM PST.  Dow futures are lower by 175.

7:00 AM Update
     Well, it looks like Merkel and company might be finally facing up to the reality that Greece cannot be saved and is preparing her banks for such an eventuality.

     "Officials in Merkel’s government are debating how to shore up German banks in the event that Greece fails to meet the budget-cutting terms of its aid package and is unable to get a bailout-loan payment..." said a Yahoo article.

     Also, French banks may get their credit ratings cut by Moody's.  This is exacerbating the French CAC's decline.

    "BNP Paribas SA, Societe Generale SA and Credit Agricole SA, France’s largest banks by market value, may have their credit ratings cut by Moody’s Investors Service as soon as this week because of their Greek holdings," according to Yahoo.

     Stocks are recovering however from overnight lows as bargain hunters swooped in looking for deals.  It looks like we made a nice bounce from the lows overnight and could be headed back up to 1200 as this trading range continues.

    The Dow is down 24 pts, the tech heavy NASDAQ is up 17 pts and the SNP 500 is up 3 pts.  Gold is down 20 dollars and oil is down 60 cents.  The French CAC is down 3% and the DAX is down 2% but are well off their overnight lows.

Stocks I'm Watching
     Gold- Gold is down almost 3% as it once again pulls back from resistance.  The baby is getting thrown out with the bathwater here as stocks are down as well.  Dennis Gartman speculates that with stocks dropping, people are getting margin calls and so are selling their winners which includes gold. I am still long Gold and will stay that way.

     IWM- Small caps are outperforming today which could signal a rally coming up.  I have been watching small caps as a sign of risk appetite returning.

     Goldman Sachs- GS dropped below 100 for the first time since 2009.  Financials are performing horribly again.  The market can't go anywhere unless the financials get their act together.

     Euro- The Euro is up today after crashing last week.  It got up to 1.37 vs the dollar before selling off.  Greece is likely to default and take the Euro down with it.  EUO is a levereged way to short the Euro.

    I am not too confident on the short term direction of the market right now, so I will just sit back and observe.

6:58 PM PST Edit
     We had a huge surge into the close on good volume.  Apparently, China is negotiating with Italy to buy some of their bonds.  It seems China does not want the Eurozone and the Euro to fail either.  China had been buying Euro's and european bonds earlier in the year in an effort to stabilize the currency and the economic situation.  This bodes well for stocks tomorrow and we could rally from here.  I went ahead and purchased a small amount of large cap European stocks for my long term portfolio today via HIINX. 

Sunday, September 11, 2011

Dumb Money origins

     Greetings all, I would like to explain to you all why I named my blog Dumb Money.  Simply, "dumb money" is what wall street calls us small time retail investors.  It is a derisive term that comes from our behaviors when it comes to investing.  Have you ever heard the phrase to make money in stocks you have to "buy low and sell high"?  Well dumb money buys high and sells low.  Dumb money gets happy and excited when the market goes up and then gets scared when the market drops and sells everything locking in a loss.

     If you invest in the stock market without a plan, you are dumb money!   Most people who invest in stocks are dumb money because they just pick stocks and hope they go up.  Smart money is big time hedge fund managers, professionals who are the ones who move markets with their billions of dollars.  They plan and do a lot of research on company's they want to buy and they know how to read balance sheets and of course they know what to do if their bets go against them.

      Dumb money is a psychological thing as well.  People who make decisions based on fear and greed are dumb money.  That is how I used to invest and why I lost a lot of money in the past.  I would get happy when the market was going up and would buy lots of stocks but did not know what to do when the market went down.  In 2008 the markets were crashing and so were my stocks.  I told myself I could handle it and ride it out but I ended up selling a bunch of my stocks for huge losses near the bottom.  I am trying to fight those tendencies now and my blog title is there to remind me to not make rash decisions and plan carefully the moves I make in the market.      

     I don't want people to think that if they do not understand some of the things I talk about in this blog, they are dumb money.  That is not my intention.  It took me 4 years of reading about economics, stocks and investing to even feel comfortable to sort of know what I am talking about and I still feel like I am dumb money.  Dumb money has nothing to do with how much or how little you know about finance or the economy.

     Daniel Gross in an article for Slate magazine said it best...

      "On Wall Street, there's smart money and dumb money. You (and I) are dumb money. Smart money (big-time hedge-fund managers, private-equity honchos, leveraged buyout kings) reliably outperforms the market. Dumb money (individual investors, the sort of people who casually watch CNBC for stock tips) generally fares poorly. Individual investors—that is, we—are considered such dumb money that many professional investors regard us as contrary indicators. The lemminglike masses get excited and overly optimistic when the market's about to top, and they tend to get fearful and overly pessimistic when the market's about to bottom. So, if you could just figure out what the dumb money is doing and zig when it zags, that may be a path to easy profits."

     In other words, if you want to make money in the stock market, all you have to do is read this blog and do the opposite of what I do.  YOU CAN'T LOSE!!!


PS  On this 10th anniversary of 9-11, my thoughts and prayers go out to the victims of the tragedy and their families.  Here is a tribute video I found on the web which I thought was poignant.  Never forget...

Saturday, September 10, 2011

American Football is here!!

     Wow, what a great game Thursday night!  Could you ask for anything more from a football opener?  I was at a sports bar for the game and the whole place was going crazy!  Green Bay won 42-34 on a last second goal line stuff of Mark Ingram.  Here are some highlights if you didn't see the game...

     It was a great game for my fantasy players as well.  I had Greg Jennings who had 89 yards and a score and Jimmy Graham who had 56 yards and a score netting me a cool 25.6 pts to start the week.

     I couldn't think of anything else to write about today so I guess I'll share my fantasy football team with you all.  The league is a standard yahoo competitive 10 team league.  I had the 8th pick in the draft.  I did not do any kind of research prior to this draft and was going with the Yahoo expert ranks as my cheat sheet.  Oh yeah, I forgot to draft a kicker or defense but who the hell cares about kicker or defense.   Here was my draft with round and pick number...

Round Pick
1. (8) Rashard Mendenhall RB  I could have picked LeSean McCoy here also.  Mendenhall is a
lock for 10-15 TDs.
2. (13) Maurice Jones-Drew RB  Yahoo experts had him ranked pretty high but had
I known he is coming off knee surgery I wouldn't have picked him.
3. (28) Miles Austin WR  I wanted to get a couple of top receivers on good offenses and
Miles was the best one available.
4. (33) Greg Jennings WR  Tony Romo was my other thought here but want to diversify
my offensive players.
5. (48) Ahmad Bradshaw RB  I couldn't believe I got him this late.
6. (53) Jeremy Maclin WR  I probably should have drafted a QB here.
7. (68) Jimmy Graham TE  One of the best sleeper tight ends, might have reached a bit.
8. (73) Mark Ingram RB  I had to take Ingram here, couldn't believe he was still available.
9. (88) Eli Manning QB  I was hoping Stafford fell to me but someone scooped him up
right before me and now won't even take an offer for him.  I have
really low expectations for Manning this year and am looking for
a new QB. 
10. (93) Sidney Rice WR  I had no idea who to pick.  Seattle's passing game is going to
stink this year.
11. (108) Lance Moore WR  I had no idea who to pick so went with someone from a good
12. (113) Fred Jackson RB  A starting running back still left? I'll take him!
13. (128) Aaron Hernandez TE  He could be the number 2 receiver on the team behind Welker,
supremely talented.
14. (133) Roy Williams WR  Wasted pick because of my Bears love.  I had no idea how
many picks I had left at this point.
15. (148) Cam Newton QB  I love Cam this year and think he is going to do real well.
50 rushing yards a game are going to help a lot!