Insomniac Hedge Fund Guy

Where do we stand? A look at Bullish Sentiment & Bull Markets

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According to Bespoke Invest, The S&P 500 is currently on pace to close at a new bull market high for the first time since February 18th.  With this milestone, the bull market will officially make it to the two-year mark (the last closing high on 2/18 was two and a half weeks shy of the two-year mark). In the chart below we compare the current bull market to the 25 prior S&P 500 bull markets since 1928.  With a gain of about 99% in a little more than two years (778 days), the current bull market ranks right near the middle in terms of … Read more

‘s Press Conference, No Rate Hike Until July 2012?

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Yesterday was a historic day. The Federal Reserve gave their first press conference, ever. Below is the actual full press conference so you can watch for yourselves, in full. What are your thoughts on how Ben handled the issues at hand? Barclays Capital looks does not look for the Federal Reserve to hike interest rates until the summer of 2012 and says the loose monetary policy in the meantime should remain supportive for gold. Prices rose after a Wednesday FOMC statement that said rates will remain low for an “extended time,” with gold hitting a fresh record overnight and silver also … Read more

Will Bernanke say the D word?

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The Fed will release its formal FOMC statement and rates decision today at 12:30 pm (ET). While the Fed is likely to make no changes to its stance on monetary policy, everyone will be on the edge of their seats waiting to here what Ben has to say. At 2:15 pm (ET), Ben will hold his first post-FOMC meeting press conference.  According to the Wall Street Journal, here are some details on the mechanics of the post-FOMC press conference: „ -Bernanke will give only a brief opening statement. „ -Only one reporter per credentialed news organization. „ -Reporters will be called on; questions will … Read more

US Dollar-Apropos of Everything

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“In May 2007 we wrote a lengthy piece called The Value of the Dollar in which we argued the following: Consistently excessive money and credit growth has taken the US economy past the point of no return. What (policy makers) have done consistently – and will continue to do – is inflate the money supply and promote more credit, thereby sustaining asset prices at the expense of the purchasing power of the US dollar. We argue the US dollar will ultimatily lose it’s status as the world’s reserve currency. In fact, we believe events currently unfolding may be foreshadowing the … Read more

Two new insider buys today piqued my interest

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Hasbro( HAS) CEO Brian Golden bought  10,000 shares at $44.95 on 4-21 for a total amount of $448,000.  Wells Fargo CFO Timothy Sloan bought 10,000 shares at $28.54.   Both stocks have retreated off of earnings that did not wow investors.  Bank stocks in general haven’t had a good year.  HAS bounced nicely on this news.  Wells did nothing.  I’ve made a lot of money trading around Golden in the past.   He is definitely a good timer.  You wouldn’t expect too much from this announcement with Wells Fargo since it wasn’t an obscene amount of stock that Sloan bought.  Besides he … Read more

The VIX, Defying Gravity. A Peek Behind the Curtain

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The VIX is pretty much color blind, it doesn’t differentiate between bullish or bearish activity. Simply put* If the market starts buying a bunch of calls (which is usually bullish), the VIX goes up…if the market starts buying a bunch of puts (which is usually a bearish trade), the VIX goes up.  Over the past years it’s usually been a lot of put buying that drove the VIX higher and higher. However now, people are using options much more as a capital enhancement tool and less as a capital preservations tool. Thus people are overwriting positions more than they ever have … Read more

The results from the chopping block

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OK, see the post saxangle.com/2011/04/my-neck-is-on-the-chopping-block  You may think this whole thing is silly and I wouldn’t disagree with you.  I’ll doubt if I’ll post this exercise again.  It seems like 70-80% of all volume in the market is involved in playing stupid games.  With commissions so low, I might as well join in.  The final tally between yesterday and today, 21 trades 17 winners 4 losers 80.95% profitable.  Then why am I in a crummy mood?  Because Apple fell almost 10 points off its pre-open high and I didn’t sell a single share.         The Trade  Results are … Read more

‘s chopping block

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I am sure many of you have listened or read investment managers that tell you what to own with tremendous conviction and confidence.  Ignore it.  Before you buy or sell anything, check their record.  You’ll be surprised.  So I’m going to put my neck on the chopping block.  Here are a list of stocks I would buy for earnings tonight and tomorrow before the open.  Never initiate large positions on earnings because the volatility can be gut wrenching.  Here is my earnings play with a very brief explanation why.  If you trade, trade a few of these names  to smooth out … Read more

Sector and Asset Class Correlations

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“Over the last six months, the Industrials and Technology sectors have been the most highly correlated to the S&P 500.  The dollar index and the long bond have been the most negatively correlated to the S&P 500.  Within sectors, Industrials and Consumer Discretionary, Technology and Consumer Discretionary, and Industrials and Materials have had the highest correlations, while Telecom and Energy have had by far the lowest correlation.  The two most negatively correlated asset classes over the last six months have been the US dollar and the S&P 500 Energy sector.”        Source: Bespoke Investment Group    

China Sees Conspiracy in Global Reserve Currency

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The topic of a reserve currency to replace the dollar never gets old, and the logic behind it is a bit fuzzy. First and foremost, why is the dollar the reserve currency of choice? Does America threaten to bombard any country that chooses to keep its reserves in euros, yen, Swiss francs, or gold, instead of adorable Benjamin Franklins? Let’s look at the landscape first. The Financial Times published the article “The best alternative to a new global currency,” authored by Joseph Stiglitz, a recipient of the Nobel Prize in Economics in 2001. Mr. Stiglitz points out some issues, as … Read more

Apple showing first buy signal in six months

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Apple about to rocket upwards

The proprietary signals I had coded are firing off a buy signal on Apple.  Note the bullish divergence paint signal on the Tradestation chart.  The last time this happened was on 8-27-10 and Apple went on a unparalled tear upwards of 80 points.  There are a lot of fundamental reasons to buy Apple.

1.It’s cheap versus the market or any other benchmarks.

2.The product cycle is explosive.  No Company in the history of technology is at a sweeter point than Apple is now.

3.Earnings are on the 20th.  They will be blowout.

Negatives are well-known.  Steve Jobs may not be coming back and is irreplaceable.  Parts shortage from Japan  overblown.  Apple couldn’t fill the orders for the Ipad before the earthquake.

Recent reports on lacklustre growth in the P.C. notebook are directly attributable to the Ipad.  The netbooks are counted in these notebook totals.   Even though the Ipad is worthless as a business tool, it is emasculating the netbook market.

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Pairs trades or parley bets?

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Pairs trades are tough.  When you are long one stock, ostensibly the strong one, and short another, the weak one, you have taken on the equivalent of the gaming term for parlay.  In essence two bets are harder to win than one, hence the better pay off.  In the stock market word this strategy is viewed as safer or defensive but in reality it might not be any different from the parlay bet so many of us are familiar with each football season.  It’s hard enough to pick one stock’s directional moves, much less two. This is an interesting excerpt … Read more

Stock Checklist- My Perfect 10

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This is a checklist I use to quickly come to a conclusion on a stock.  I score a stock, each line getting a 1, 0, or -1.  A stock  that scored 1 on each line would be a perfect 10.  Buy it! Some of these items are quite subjective.  For example how would I score Cash Flow?  If a company’s cash flow is much lower than it’s reported earnings, that raises a flag and I would score it a -1.  If there are more insiders buying than selling, I would score it a 1.  If there are no apparent catalysts … Read more

Natural Gas Breakout on Nuclear Tragedy

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Notwithstanding our sympathy for those who have suffered tragically as a result of the earthquake, tsunami, and nuclear radiation in Japan, the event has profound long-term implications for natural gas, the most attractive alternative fuel. Trading in futures has begun to validate the strategic change. The latest quote for U.S. delivery of natural gas for the next six years at $5.57 a million btu has crossed above its 40-week average for the first time in the 15 months since December 2009 (see chart below Natural Gas Six-Year Futures Strip). Diminished confidence in nuclear power also helps confirm the price uptrend … Read more

Be Patient- wait for the opportunity

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One of the hardest lessons a trader learns is to do nothing at all.  Being able to sit still, watch the screen and resist the temptation of firing off a trade is too much for some people.  The Internet, the amazing drop in commissions, and the pulsating and riveting graphics of online trading programs have made it almost impossible to resist trading on impulse or inspiration.  Is it really that unlike the casino  with computer monitors replacing slot machines?   Many people learn this lesson the hard way.  It’s only when the account values drops to levels that are painfully … Read more

Top 6 Oil and Gas Drillers Paying Impressive Dividends

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In two of our recent articles, we looked for the top six oil & gas companies, and the top eight gas utilities paying excellent dividends. With oil and gas prices going even higher, we decided to screen for the best oil and gas drillers with quite impressive dividends, and a maximum P/E ratio of 30. All of the companies that follow offered a minimum 5% dividend yield, and have a minimum market capitalization of $300 million. Data is derived from finviz. While there are hundreds of drillers listed in NYSE, only the following large cap drillers fit this criteria: Crestwood … Read more

‘s the Hindenburg

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China is often admired as an economic miracle, especially since the government has been able to balance, thus far, a Communist/Socialist political infrastructure while operating a semi-capitalist “free” market. But as a side effect of a global economic slow down, and considering bits of information that filter out of an extremely well controlled society, China’s economic power is beginning to be questioned. The often mentioned Chinese “housing bubble” appears in the headlines from time to time, despite a lack of understanding of what exactly is taking place. In the United States and Europe, citizens understand what happened, and why the … Read more

‘s What Bonds Did The Last Time The Government Shut Down…

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With less than 10 hours left until the federal budget deadline and no deal in sight, a government shutdown now looks imminent. Federal agencies have already prepared to close up shop. But questions remain about what kind of impact it would have and how disruptive it will be to your life. American public. A shutdown might impact the trading volatility since it means the release of certain economic indicators would stop. However, the shutdown would NOT have any affect on tax collection, Treasury issuance, debt interest payments or existing social security beneficiaries. In the end, it is the White House … Read more

Contrarian indicator- newsletters who are bearish have fallen to 15.7%

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Based on data from Investors Intelligence (II), newsletter writers who are bearish on the US equity market have fallen to 15.7%, the lowest since December 2009 (15.6%) and below the level seen at the April 2010 highs (17.4%). II % Bears below 20% suggest that there are too few bears among advisory newsletter writers. As a measure of market sentiment, this has the potential to be contrarian bearish for the US equity market. Sentiment is not the best timing indicator, but after the sub-20% readings for II % Bears in December 2009 and April 2010, the S&P 500 pulled back from late January into early February 2010 (down 9%) and from late April into early July 2010 (down 17%). In addition, II % Bulls vs. II % Bears (see side bar) reached the highest level since June 2003, which preceded a sideways market going into September 2003.

 

 

Investors Intelligence % Bearish Advisors – weekly chart

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Slaughter the Dollar, Cry at the Pump

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The ongoing slaughter of the US dollar is sending everything that still has value, especially hard assets and commodities.  WTI Crude Oil just hit $111.25….1st time since 08….On a side note, China, Asia’s largest oil consumer, raised retail prices of gasoline and diesel for the second time this year, starting Thursday, as international crude oil prices continue rising, China Business News reported on Thursday. The benchmark retail price for gasoline will rise by RMB 500 a metric ton on April 7 and that for diesel will increase by RMB 400, the National Development and Reform Commission (NDRC), said on Wednesday. … Read more

Is Dish getting a Blockbuster deal?

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Activist investor Carl Icahn may have shown up in person at Blockbuster’s bankruptcy auction to place his bid, but it was U.S. satellite TV provider Dish Network that walked away the winner. Dish, led by satellite billionaire Charlie Ergen, won the assets of the once-mighty video rental chain for about $320 million, beating out Icahn and at least two other bidders in an auction that lasted into the early morning hours on Wednesday. NYSE Euronext will “absolutely not” be placing a counterbid for Nasdaq OMX, a source close to the Big Board told Reuters corresondent Paritosh Bansal in an exclusive interview. The … Read more