Facebook Rising--Double Top Breakout

I took a position in Facebook stock today on the basis of the Point & Figure chart buy signal (double top breakout).  Holding an unleveraged position in the stock should be less like riding Fortune's wheel than the recent options experience.

Judgement Call

Facebook's uptrend is still intact, but October so far has been a roller coaster, considering the government shut down and all.  My October 48 calls may have been directionally correct, but the timing was not the best, since they expire on Friday.  With the expiration date looming and the implied volatility at 56 earlier today, I decided to protect capital and exit the position at 2.50 for a small loss of .16.  Naturally the market went higher after that.

Holding a position in the stock would have been easier.  Directional plays in options are more like gambling against the pros.  A near-the-money call gives you pretty much a 50-50 chance of losing all your premium.  Sometimes it still seems like a good idea, like adding an extra sail to your sailboat when the wind is right.  Or it can be more like wrestling an alligator.

I remain long Priceline and Google.  I have no position in currencies at the moment.  I am 60% in cash.

Dovish Fed Creams Dollar

After the market had "baked-in" a small taper and a likely Larry Summers Fed, surprise surprise!  The clock has been turned back. Ten-year bond rates had gotten ahead of themselves, resulting in too much dollar strength.  Emerging markets were wilting at the prospect of tightening monetary conditions.

The equity market bull is back for the short term.  I took positions today in Google and Priceline.  I expect to be short the US$ soon.  

Druckenmiller Not Short AUD/USD Any More--Waits for new Fed Chairman

I am no longer short AUD/USD.

Action Determines Character

With EPD continuing its "high pole warning" signal, I closed my position and retreated to the sidelines waiting character revealing actions in the Middle East.

I have no positions in the stock market for now.  I remain short the AUD/USD.  I attribute this week's rally in the OZ to the market pricing-in the change of government after tomorrow's election.  The more conservative government may be good for the Australian $, but time will tell.

Google Gives Another Sell Signal

I closed my position in GOOG near the close today based on
the point and figure chart sell signal, the 13% jump in the VIX,
and the market's agitation over the Syrian situation.

Oil is up 3%, gold and silver are up, and 10-year treasury note yields
are lower today.

Lagarde at Jackson Hole

Click here for Lagarde's story

I remain long EPD and GOOG.  Short the AUD/USD.  Subject to change.

Mobile Internet Opportunities

Both Facebook and Apple are on buy signals in the Point & Figure way of looking at things.  Both stocks have been beaten down for the past year, and I'm inclined to give them a green light on these signals.  Disclaimers, etc.

Once More Into The Beach

I decided to move back into the market this week.  I took a position in Enterprises Products (EPD), which owns 50% of the Seaway Pipeline, and a position in Google, after their disappointing earnings report caused the price to drop.

I remain short the AUD/USD.

Monetary Policy Report

Get the full report here.  Read it and draw your own conclusions, or notice that the US$ weakened on the release of the report.  Bernanke has yet to begin his testimony.  He will have many listening carefully.

Click here for the full report from the Federal Reserve

Still Looks Toppy To Me

The New York Bullish Percent Index was created by A.W. Cohen,  the first editor of Chartcraft, in 1955.  Mr. Cohen was trying to create a market indicator that was bullish at the bottom and bearish at the top.  A worthy endeavor.  Trend charts are always bullish at the top and bearish at the bottom.  So are our emotions. When more than seventy percent of the New York Stock Exchange stocks are on buy signals,we have a bullish situation.  When the P&F chart reverses to a column of Os and breaks below 70, this generates a bear signal.  According to Thomas Dorsey (Point & Figure Charting) this is a high risk condition, calling for defensive measures, such as puts, not buying stocks, going short, etc.  This indicator gave a "Bear Confirmed" signal on June 24.  So the light turned red.   The index dropped as low as 64.  Today, however, the chart reversed to a column of Xs, closing at the 70 percent mark.  Hence the designation "Bear Correction on null," since 70 is the null point that must be crossed.

What does it mean?  The way I read it, the stockmarket still looks toppy to me.  The bias is bullish once again, but things could go either way as soon as the next week.

I'm preparing to send the offense back in.  I remain short the AUD/USD, despite the dollar's fall after Bernanke's dovish comments, yesterday.  The main story is still the Fed's next move, when it will be and what it will be.

IMF World Economic Outlook Update--Lowering Expectations a Bit

Click here to explore this data.

June 25 VIX Point & Figure Reversal

Looks like I went for the fake.  The relatively high VIX readings on June 20 spooked me into standing aside to see which way the market was going.  So far, it looks like a normal bounce, rather than a 'correction.'  On June 25, the Point & Figure chart for the VIX signaled a downward move, indicating reduced fear.

Larry McMillan, one of my favorite pundits, is making more bullish sounds, "In summary, it seems almost certain that the indicators will turn bullish, because the put-call ratio signals are generally so dominant. However, their signals can be early, so we would not declare that the intermediate-term bullish trend has resumed, unless $SPX closed above resistance at 1630."

With half the trading day gone, the early gains are fading, but the S&P500 is holding above 1630 at around 1638.

I remain short the AUD/USD and have not yet re-entered the stock market.

VIX on. Risk off.

The VIX broke out of a triple top on the Point & Figure chart today.  Additionally, the S&P500 Index closed below the 1600 support level.  There seems to be risk of further correction.  I took profits in my long positions in stocks.  I will stand aside and see what happens.  I remain short the AUD/USD.

Druckenmiller Interview

The following interview appeared on ZeroHedge today.

http://www.zerohedge.com/news/2013-06-14/stanley-druckenmiller-chinas-future-and-investing-new-normal

No Longer Short the Yen

Since June 6 I am no longer short Yen.  I remain short AUD/USD.

Risk Off on Friday

Friday I took half my short position in Yen off the table.  

Staying Short the Yen and AUD/USD over the Weekend

Toyota Stock looking good still, with cheaper yen, despite recent gains.

Self-made Billionaire Stanley Druckenmiller Bets Against AUD/USD

“We think the Australian dollar will come down and will come down hard”

Stanley Druckenmiller - Duquesne Family Office

• Stock Idea - Long GOOG
• Commences by calling QE a nuclear weapon and believes that Bernanke has embarked on the wrong policy. But he notes that listening to Bernanke shows that he's not going "wobbly anytime."
• No condition of Bear market until Fed changes - so expect the market to continue to rise.
• On commodities, he says that the super-cycle is ending and believes that their a "poisonous cocktail" in commodities when it comes to China.
• He says he thinks the AUD will sell-off hard.
• He is bullish onGOOG  - says that its a great tech company and notes some of their new technologies pushing from glass to auto.

Complete Ira Sohn Conference Highlights

Gold Price Support Caves

Not sure how Hannity will explain this.  Goldman is suggesting shorting gold.

Bank of Japan's Kuroda Acts to Weaken Yen (fight deflation)

Forbes Comment on New Japanese QE



Note:  The Yen Continues Weakening Since Abe's Election

Elections May Be A Most Important Indicator For Currency Markets

Tesla Sales Beat Projections

Stock Price Jumps 18%!  I guess Model S is a success, while Chevy Volt is not.

Light Bulbs

What happened to my 100-watt lightbulbs?

The Problem

A possible solution.  Cree LED lightbulbs.

CREE earnings and stock price rise

Gold Reaches Bearish Objective on P&F Chart--$1560

Look for Support around Here.

PIMCO's new ETF, FORX

It should be on your radar.  The managers are heavily experienced and geeky.

http://www.pimcoetfs.com/Funds/Pages/FORX.aspx

A Simple Markov Chain Model of the Market

A Markov Chain has the beauty of not depending on
history, but solely on the present state of the system
and probabilities.

A simple concept, but as this book shows, you can very soon be way in the deep end of the pool!

Bull Confirmed since Dec 20--Fiscal Cliff Whipsaw Not On NYSE Bullish Percent Index Radar

Jacob Lew--Obama's Next Treasury Sec?

Not a great communicator.  A good ass-kisser and an ass.

Larry Fink of Blackrock--Our Next Treasury Sec?

I like this guy.

Meredith Whitney Bullish? Hello.

http://video.cnbc.com/gallery/?video=3000136283

Six Bill Gross Forecasts for 2013

http://blogs.wsj.com/marketbeat/2012/12/31/the-bond-kings-fearless-forecasts-for-2013/?mod=WSJBlog&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Fmarketbeat%2Ffeed+%28WSJ.com%3A+MarketBeat+Blog%29

Probability 97% Bearish

If we assume that the market moves randomly (why not?), each day it has a 50% chance of being up and a 50% chance of being down.  In such a world, the probability (P) that the market would be down five days in a row, such as it was the past 5 days would be P(.5) to the 5th power.  This works out to about a 3% chance.

Although we still assume that on any given day there is a 50% chance the market will be up or down, the market's behavior the past week has been bearish.  Only 3% chance it was random.

VIX turns bearish.

According to Larry McMillan, a VIX close above 22 is bearish.
Blame the TV for whipping up fiscal cliff hysteria.

http://www.optionstrategist.com/weekly-charts?utm_source=Email+Updater&utm_campaign=233a2e6ebd-Updater12_28_2012&utm_medium=email&mc_cid=233a2e6ebd&mc_eid=640d05de85

Morgan Stanley--Top 10 Trades for 2013

http://www.businessinsider.com/morgan-stanleys-top-10-trades-for-2013-2012-12#overweight-stocks-in-asian-markets-ex-japan-1

Some Reading for the Holidays

IMF External Sector Report

Updated Estimates of Fundamental Equilibrium Exchange Rates

 

http://www.petersoninstitute.org/publications/pb/pb12-23.pdf

 

Bull Confirmed--NYSE Bullish % Index

The Latest from Hans Redeker re: EUR/USD

http://www.bloomberg.com/news/2012-12-17/euro-may-rise-to-1-34-on-resistance-break-technical-analysis.html

An Important Interview with Jan Hatzius

http://www.businessinsider.com/goldmans-jan-hatzius-on-sectoral-balances-2012-12

With Tax Increases on the Horizon, Munis Look Good

Blackrock's Peter Hayes makes a good case, and I like that guy's haircut.

Good Advice from Blackrock and Good Haircut

Goldman Sachs | Economic Outlook 2013 - Jan Hatzius on the 2013 Global Economic Forecast

Goldman Sachs | Economic Outlook 2013 - Jan Hatzius on the 2013 Global Economic Forecast

Regulation Blues

GFT Forex shuts down its retail operations in the US and Japan.  Although it was one of the 5 largest, regulation changes have made in impossible to make money with less than $50 billion a month.  They apologize for the inconvenience.  Now that my account is closed, I'm really feeling protected.  Thanks, Big Government.

http://www.fx-mm.com/20988/news/gft-abandons-us-and-japan-retail-fx-markets/

VIX Index Remains in Bullish Territory, $BPNYA Still Defensive

The market has remained relatively calm despite the correction
in the S&P500 since the election.  The VIX (Volatility Index)
is still in bullish territory.

Meanwhile, the NYSE Bullish Percent Index Continues to
flash Bull Market Correction since November 12.

New Team in China

Besides the new General Secretary, Xi Jinping, the other six members of the Standing Committee are: Comrade Li Keqiang, Comrade Zhang Dejiang, Comrade Yu Zhengsheng, Comrade Liu Yunshan, Comrade Wang Qishan, and Comrade Zhang Gaoli.

Comrade Li Keqiang served as a Standing Committee member of the Political Bureau of the 17th CPC Central Committee while other comrades served as members of the Political Bureau of the 17th CPC Central Committee.

http://www.businessweek.com/ap/2012-11-14/xi-jinping-takes-helm-of-china-amid-reform-calls

http://www.ft.com/intl/cms/s/0/8de22556-2eca-11e2-8bb3-00144feabdc0.html#axzz2CIrBGdlg

Transcript of Xi Jinping's speech

http://www.bbc.co.uk/news/world-asia-china-20338586

Market Correction Lowers Most Boats

The important indicator of market direction, NYSE Bullish Percent Index, showed "Bull Correction" on Monday, November 12.  Defence!

Homebuilders Not Holding Up

Pulte gave a sell signal yesterday.  MDC flashed sell on Friday.

Fiscal Cliff Equals Recession--AEI Pie Chart and PIMCO's Latest Analysis

http://www.pimco.com/EN/Insights/Pages/After-the-Election-Fiscal-Cliff-Outcome-May-Surprise.aspx

Home Builders Holding Up

Hovnanian Enterprises (HOV) did especially well today, despite the strong market selloff.  We still have Obama.  We still have QE3.  Homebuilders may continue their rally.  PHM, KBH, TOL, HOV, etc.  Just a thought.

Take Your Lumps--Exit Coal as Gracefully as You Can

We re-elected the coal killer.  Enough said.

Beyond Bernanke

An essay from PIMCO, looking beyond the event horizon.

http://www.pimco.com/EN/Insights/Pages/What-Would-Happen-at-the-Fed-Under-a-Romney-Presidency.aspx