Tuesday, August 31, 2010

Cisco breaks

The Cisco Kid was a friend of mine
He drink whiskey, Poncho drink the wine

- War (1972)

Analysts looking for tech to save the day are drinking kool-aid, not whiskey.

This chart shows Cisco Systems breaking down below another support.

The outlaws had us pinned down at the fort
Cisco came in blastin', drinkin' port

Kind of makes you think of Gene Wilder in Blazing Saddles (the drunken Waco Kid)

Monday, August 30, 2010

Don't forget to click the "like" button -->

Mo Retail

In today's column, I followed up on retailers and how their stocks react poorly to good earnings. Expectations were set way too high and needed to be re-focused. That means lower prices.

One stock I cut out before editing was TJX. Here is what I wrote but never submitted:

Off-price apparel and home fashions retailer, TJX Companies (TJX), owner of the Marshall's and TJ Maxx chains, reported better than expected earnings on August 17and raised its outlook. Its stock barely moved and now sits on a very important support level below where it was before releasing its good news.

What that means is even a good earner is now trading below where it was before the good news came out. That is a rejection of the news as not being good enough.  Support at 40.25 seems mighty critical to me and it closed at 40.56 today. I am not telling you what to do if it is broken but look at the chart and you tell me.

Friday, August 27, 2010

The Lighter Side

From the PoliticsDaily website Friday. I make no judgments on the political leanings of that site as this is about the markets and only the markets.  Hat tip Dave Steckler for posting this in a few market chat rooms I frequent.


investors stock market cartoon

Retailers still stink

Can I be any more obvious?
- Avril Lavigne (Sk8tr Boi)



Thursday, August 26, 2010

Ryder just looks bearish

I was just flipping through some charts, not looking for anything in particular, and saw trucking stock Ryder (R). Transports are basically net unchanged for the past two days and Ryder is consolidating just under a broken support line. It is below major averages, too.

We can make a small argument for oversold conditions but Mikey' Rules say the longer something holds at support, the more likely it will break down below it.

Ripped from the headlines

My comments in bold within:

Initial unemployment claims declined by 31,000 to 473,000 in the week ended Aug. 21, the Labor Department said in its weekly report Thursday (a rare positive). New claims for the previous week, ending August 14, were revised to upward to 504,000 from 500,000.(making the economists ever wrong-er than we thought)

Wednesday, August 25, 2010

Sentiment from inside the markets

Yes, today saw the stock market dip way down and close with a gain. As I wrote in my column,  the S&P dipped into its support zone after falling for most of August. Oversold, ready to bounce and with sentiment growing more bearish all the time.

Bonds scored a bearish one-day reversal so end of flight to safety, right? Well, copper came back from its lows but closed negative. Crude oil closed way negative so this is corrective looking to me.

Where else is sentiment? All those economic reports that keep coming in worse than expected. It just shows that hope springs eternal when they pay you to paint a rosy picture of the market so investors will do business with their firms.  The Chinese Wall or whatever ethical divide they put in there between sales and analysis is just garbage.

Vive la independent research!

Tuesday, August 24, 2010

Things are so bad they are good?

Everything seems to be going wrong in the economy now as today's home sales shows. Prices in the stock market are sinking again and everything I see technically tells me that we are in for a nasty September. 

Yet, we at Quick Takes Pro are not fully short. Something smells like the market is ready to flip us one more bird before it dies.


And on another note, see that FaceBook stuff to the right? --> Trying to set up a presence there so if you don;t mind, how about clicking on the "like" button for me? Much appreciated.

And isn't that pathetic, by the way? Asking people to like me.

More things that p*** me off

Where are we as a society when lawyers put in or allow this in their contract language?

c. You must have express written permission to use another party’s trademarks or trade names, copyrighted or ....

What does that mean? You must have fast permission? It must be quick? Should we get that FedEx fast talking guy to say it? (If you are under 30, that reference goes deep into pop culture history - look it up).

It is "expressed written permission" as in actively given by the owning party.

To be fair, I did find this reference:
Express (adj) - clearly indicated; distinctly stated; definite; explicit; plain: He defied my express command.
But the whole idea of communication is to communicate. Something that may be correct on some obscure level does not add to the communication so say it the way the intended recipient can understand it.
Or, as some profess, limit your adjective use.  You must have written permission to use......
Now, go conversate on that. (just joking about that "word" gives me the willies) 

Monday, August 23, 2010

Canary in a Coal Mine

First to fall over when the atmosphere is less than perfect
Your sensibilities are shaken by the slightest defect
You live you life like a canary in a coalmine
You get so dizzy even walking in a straight line
- The Police

I wrote about four sectors today in my column. Rather than just accept that they are key, I wanted to be clear why I think they are indeed key.

  • Financial - Why? Because that's where the money is (bank robber Willie Sutton). That's where it all begins.
  • Housing - Because that's what started this mess in the first place and must be fixed for hope of a recovery
  • Retail - If we are a consumer driven economy and consumers buy retail then this one is clear
  • Technology - Studies show corporations have lots of cash after making good profits this year and not hiring any workers. They can invest in themselves or go the easy way and buy another company. The latter means even more job cuts so that ain't good for the economy. Therefore, we can call this "industrial buying" (vs. consumer buying).

Friday, August 20, 2010

Dangerous Stock Pushers

I love how the industry still thinks stocks are the be all and end all for investors. Is there really nothing else? No, not bonds or gold. How about movies, restaurants, inventions, art, baseball teams and a zillion other things that do not happen on Wall Street?

Here is a statement from someone revered in the investment world. You would think that after two bear markets in one decade he might take his wad of cash and move to Florida.

Quote
Stocks are going to outperform bonds long-term. That's almost assured. Yes, we've had a decade where the stock market underperformed, actually had negative returns, but that was very unusual. You have to go back to the 1930s before you had another negative return for a decade in the stock market.
End Quote

Let's start with the math. Using his numbers, the 1930s had a negative return and the next one was the 2000s. How many 10-year units are between the two? Six. Granted with no statistics to back it up, that makes one in seven decades a loser. It also means that people with current life spans will see one, if not two of these "lost decades" in their time on Earth.

How long is "long-term," exactly?  You could be lucky and see a lost decade before you start investing (like when you are 10 years old)  and theoretically never see one again. No problem for you!

But what happens when a "lost decade" occurs smack in the meat of your investing life? Will you recoup your losses in 10 years? 20 years? How long is long?

Stock pushers are dangerous. Stock worshipers are deadly. They will take your fees and keep you riding the roller coaster that is the stock market and if you are unlucky enough to find a "lost decade" the answer is always "stay the course" and "we are long-term investors."


Sure, these guys can help you make money when stocks are in vogue.  But as they say, do not confuse brains with a bull market.

Thursday, August 19, 2010

McAfee buyout

Somebody at Intel is smoking some mighty fine dope.


The last time the stock traded there was in 1999. Helloooo bubble.

Wednesday, August 18, 2010

Tech follow up

Just an observation. Monday's column, entitled "What Happened to Tech Stocks?" seemed to strike a chord with readers. It zoomed right up to the most read article on the Barrons.com site early Tuesday. Could it be that too many people were too enamored with tech and the prospects for it leading a recovery?

I'll take that as a sentiment indicator and it is bearish tech.  Why bearish? People were worried enough to read it but not in agreement enough to email it to a friend. Typically, my "email" ranking beats my "read" ranking.

Tuesday, August 17, 2010

Relief rally

Volume poor, leaders close off their intraday highs. Looks like a bit of relief from the selling.

This was in the financial media:

"We've got a cornucopia of good news. We had upbeat guidance from the largest retailer on the planet, M&A activity is picking up, and economic data that blew away all concerns about deflation," said XXX at YYY.

Sorry, pal. Nothing new here. And WalMart closed well of its high for the day. Ditto for other big box retailers.

You know who did better?  Suppliers to WalMart and the others. The ISE WalMart suppliers index (WMX) was up over 2%.  I'd take this as WalMart selling a lot of crap and making no money. Unsustainable.

Predicting Black Swans

Nobody expects the Spanish Inquisition
-Monty Python

Below is an excerpt ripped from the headlines, er, "borrowed" from a free email distribution from Casey Research. It gives a nice explanation of how the market "pre-acts" to major news events and how surprises are what kills the markets.


=====================
Stock markets always react to important events in one way or another. If the event was predicted, the impact on the actual event date will be minor. Market predictions adjust prices long before the event actually occurs. If the event is a surprise, the market will react sharply.
This important insight has many applications today. For example, yes, there are still sovereign debt problems out there. But how well is the market prepared? Everyone recognizes the PIIGS problem. This could mean that the danger is partially factored into current prices. Further, double-dip debates are constant in the media. A sudden downturn wouldn’t catch everyone by surprise.
In 2008, many triggers were far less predictable – such as the collapse of AIG, Lehman Brothers, and Bear Stearns. The first rejection of TARP also threw Wall Street a curve ball. So, while there are certainly black swans on the horizon now, I have a feeling that the impact of another downturn won’t be as large as 2008. The really dangerous black swans are overlooked possibilities, such as a major economy facing a debt downgrade or an expanded war in the Middle East. These events would certainly catch Wall Street off guard and lead to big trouble.
But for more predictable events, too many people are playing it safe and are watching for a double-dip. This expectation could cushion an abrupt correction.

Monday, August 16, 2010

Sunday, August 15, 2010

Don't do this

If you are at all interested in getting quoted by the media, do not send garbage like this - and I quote:

"The indexes continue to be pulled in opposing directions by the buyers and sellers"

Can I get a "duh?" Amen

How about something like "earnings news gave temporary hope followed by macro conditions reminding investors that things were not so great.  The cycle repeated several times last week creating the choppy conditions."

Pet peeve. Back to the weekend.

Friday, August 13, 2010

Career advice from a friend

A friend of mine (Hi Sue) gave me some advice and I'll pass it along to you. The situation was whether I should connect with an old classmate on LinkedIn. He is related to a rather powerful and important person in the financial community and it would indeed be good to have that second degree connection.

But we were not friendly in school and I barely even knew him. Yeah, I know - use all connections and don't take prisoners but I don't want to be a ____ to the guy.

So here is where my friend comes in. She said that I was thinking like a trader. Instead, I should think like a long-term investor, make the contact with no mention of the famous relative. You never know when the time will be right for the latter.

Sage advice. And considering she is not a Wall Streeter, the terminology was especially insightful.

So, make those connections when you can and without an immediate goal. You never know where they will lead.

Thursday, August 12, 2010

AAII Sentiment Survey: Bearish Sentiment Falls to a 14-Week Low

From their newsletter update.

Bullish sentiment rose 9.4 percentage points to 39.8% in the latest Sentiment Survey. Despite the size of the increase, the proportion of individual investors expecting stock prices to rise over the next six months is only at a two-week high. The historical average is 39%.

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, fell 1.3 percentage points to 30.1%. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall, dropped 8.1 percentage points to 30.1%. This is a 14-week low. The historical average is 30%.

The survey period, Thursday through Wednesday, needs to be taken into consideration when looking at these results. Stock prices were essentially flat through most of this week’s survey period (with the obvious exception of yesterday), giving some investors hope that a short-term bottom had been established.

Though there were big changes in bullish and bearish sentiment, both optimism and pessimism are close to their historical averages. As a result, I would argue that individual investors confidence in the market remains fragile.

Wednesday, August 11, 2010

Debbie Dow - ner

For those of you who thought you got a Dow Theory buy signal when the Trannies eked out a higher high last month, take a look at these charts (printed 2:45 NYT Wednesday).


The Industrials never broke important resistance even though the took out the June high. Trannies broke resistance but you have to be the nittiest of pickers to call July a higher high over June.

I'm goin' down, down, down
- Bruce Springsteen

Tuesday, August 10, 2010

Danger Zone

August is living up to its choppy nature and heading into September, the worst month of the year. Too soon to think that way? Maybe. But more than one analyst I respect is starting to talk about a nasty fall, and I don't mean Autumn.
They look at voodoo fundamentals but I have to tell you they look pretty rotten even to a technical analyst like me. Anyway, check this chart. We may cheer the intraday recoveries in two of the past three days but in Japanese candlestick parlance, the appeared after a decent rally and are labeled as "hanging man" candles. The name is ominous for a reason as they represent possible ends to the trend.

Of course, they need confirmation and that, by definition, means we cannot use them to pick the top. But there comes a point when the market will run out of shrugging power. How much longer can it shrug of all the bad news - including today's bailout of the states - before the bears win?

Sure, resilience in the face of bad news is bullish but it should manifest in a rally sooner rather than later. It is time to get off the pot, if you know what I mean, and start moving higher. The longer it stays here the worse it looks.

Monday, August 9, 2010

Just for Kicks - TSCM

Cramer bashing is indeed a national sport on Wall Street but don't kid yourself - he is one smart cookie. Well, maybe not for sitting down with Jon Stewart but in most other respects. Just for kicks, here is a chart of the company he founded and took public back in the day.

Kind of makes you shed a tear for him, no?

Sunday, August 8, 2010

Who knew The Who were Libertarians?

Seriously study these lyrics by The Who and apply to today. I've highlighted the spooky stuff.


We'll be fighting in the streets with our children at our feet
And the morals that they worship will be gone
And the men who spurred us on sit in judgment of all wrong
They decide and then the shotgun sings the song

(chorus)
I'll tip my hat to the new constitution
Take a bow for the new revolution
Smile and grin at the change all around
Pick up my guitar and play, just like yesterday
Then I'll get on my knees and pray
We don't get fooled again

The change, it had to come, we knew it all along
We were liberated from the fold, that's all
And the world looks just the same and history ain't changed
'Cause the banners, they are flown in the next war

(chorus)
I'll move myself and my family aside
If we happen to be left half alive
I'll get all my papers and smile at the sky
Though I know that the hypnotized never lie
Do ya?

There's nothing in the streets, looks any different to me
And the slogans are replaced, by-the-bye
And the parting on the left is now parting on the right
And the beards have all grown longer overnight

(chorus)
Yeah
Meet the new boss
Same as the old boss

Saturday, August 7, 2010

For budding analysts

Most newbie analysts and money managers are always looking for publicity. They pester CNBC to get on the air or maybe they penned an article in their relevant trade rag that a CNBC producer read. For the latter, the producer calls the analyst/manager and says he wants him on the air at X in the afternoon in their Englewood, NJ studio. They'll send a car to pick you up (let's assume you work in NYC).

So, you obediently drop everything, prepare a few notes and nervously rehearse them in the limo on the way to CNBC HQ. A four minute interview later with three other analysts and two hosts and back you go into the limo for the ride home.

Your contribution? A stock pick. What about the article you wrote? Sorry, boring television.

So, you wasted a few hours of your day and got no calls or emails except from your mother and two friends who are not in the business. CNBC got their content and you went back to your obscurity. Is it any wonder I turn down just about every interview request that involves me traveling more than 10 minutes to the local satellite up-link studio?  Radio - yes, by phone from my office.

OK, my tale of woe is over. The message I want to get across was inspired by an offering from a distribution list I am on. Last week, I quoted the Foundation for the Study of Cycles in my column and here is what they wrote: http://cycles.cc/not_good_enough.htm You will have to scroll down just a tiny bit to see them thank me for quoting them.

There are two ways I like to operate when wearing my journalist hat. The first is these email lists from analysis sources. Most of the time I have to wade through the muck to find the gold and I admit most time I just ignore it. If the email is to the point instead of all the typical pontificating about how smart they are punctuated with 50 "on the other hands" it will get read and it will spark ideas from time to time.

It is not unusual for me to quote someone without them even knowing it (they always say to quote them with appropriate attribution as I see fit). Sometimes I let them know. Sometimes I don't. Either way, they love it.

The second way, which is much preferred, is for the analyst to send me a single note with a fact or event that they think my readers will find interesting or important or both. Basic ally, find something valuable and let me know. Odds are, you will see you name in print that evening to use to your marketing heart's content. See, I was quoted in Barron's Online!

I always tell newbies to network and write something. That's how I got started - write, write, write. Eventually you get paid.  And if you are not a writer, cultivate relationships with people who are. Believe me, every journalist has a pen of go-to sources for various needs.

Friday, August 6, 2010

Bonds still don't lie

Even before the jobs report, the 2-year note yield was falling.
This is a three-month chart. Once again today, at a new all-time low in yield and that does not spell confidence for the economy.

Blog Spam

Sorry, folks - I've had to put a verification step on the blog for commenters. I hope this does not dissuade you from making comments - favorable or unfavorable - but the constant barrage of non-english "comments" with links back to porno sites is now over. You may not have noticed since I delete them as soon as I see them.

Thursday, August 5, 2010

The Feeling Never Ends

Don't take yesterday's Barron's Online column as a sign I suddenly flipped to the bull side. There was evidence that August would not be so bad and I reported it. Personally, I am not out there with cash at the ready to participate.


Earlier this week, I opined that the market felt wrong. Then today, I got a marketing spam-mail from a self proclaimed guru who sees the market crashing by month end. I took the bait and requested his "special report" which I knew would  be 10% report and 90% self touting of his stock picks. I had to see what his thinking was, especially since he uses technical analysis as part of his arsenal.  For what it's worth, I immediately unsubscribed from his mailing list.  My inbox is filled with enough crap, thank you very much.

Let me say that after reading the "report" I have not changed my views and it is coincidence that we are both essentially bears.  Here are some of his reasons:

  1. usual stuff about government overspending 
  2. US economy has come to a screeching halt (really? has he looked at earnings?)
  3. the euro is in serious danger of being dissolved (hey wait a minute, the euro has been rallying since June)
  4. the 50-day moving average is about to cross below the 200-day (OK, now I see, this was written in late May or early June)
But his prediction was end of August so we have to give him time, even if half of his reasons are invalid.

But is it any wonder why the public is out? How my scheisters put out this drivel anyway. A 10-page marketing piece with claim after claim. I really don't care if they are true because they do not disclose times when they were wrong, do they?

Here's a marketing trick from a bucket shop. Send out 10,000 mailings - 5000 say buy stock X and 5000 say sell stock X. Let's say X goes up.

Now take the list of 5000 mailings that said to buy and send 2500 with a buy on stock Y and 2500 with a sell on stock Y.  Let's say stock Y goes up, too.

Now take the 2500 winner names and send 1250 buys on stock Z and 1250 sells on stock Z. Let's say Z goes down.

You now have a list of 1250 people who think you are a genius with 3 picks in a row. Rake in the subscription money and let reality begin. Who cares? You just sold 1250 subscriptions to people who won't renew. Say $250 for an annual subscription times 1250 people and you made $300 grand. What if you started with a list of 100,000 names. Now you are making some serious coin.

This is the land of crushed hope and dreams that Wall Street has become. Honest purveyors of financial advice are swamped by the crooks. A good bear market thrashing is necessary to "drain the swamp" as Nancy Pelosi likes to say.

Conventional thinking says to let your money work for you with a good mix of stocks, bonds, cash and maybe a hint of gold. Who says so? People with vested interests in selling you either the stocks themselves or the advice on how to manage them? People who will manage them for you but are hog tied by government restrictions on what is "prudent" for people like you? 

Were stocks "prudent" in 2008? How have they done over the past 10 years? It seems that wheat would have been better for your health than stocks since June. And shouldn't we have owned gold for the past decade? I truly believe that the best investment these days is in yourself - education, your own business, etc..

Stocks and bonds have their place and I am not going away just yet. But let's take them for what they are - manipulated markets. There is still plenty of money to be made by small traders but let's reserve the term "investor" for something else.

Tuesday, August 3, 2010

The wrong feel

In a comment on the previous post I said that something really bothered me about the market today. Yes, I acknowledge that being long-term bearish during a rather hefty July rally weighed on my psyche. But even so, I have seen changes to the way the market operates for quite some time.

I retreat to the safety of pop culture. Let's start with a modified tune about trading volume, courtesy of Pete Seeger (don;t get me started on politics).

Where have all the retail gone?
Long time passing
Where have all the retail gone?
Long time ago (like since 2008)
Where have all the retail gone?
Institutions have picked them (off) every one
When will they ever learn?
When will they ever learn?

Retail is gone and not in a good way where they think stocks are going to go to zero for a bullish sentiment extreme. Retail is gone because they think the whole thing is rigged. High frequency trading,  bailouts, ETFs and the like all contribute to the feeling.

Don't let the discount brokers get you revved up (you Huckleberry). Retail stock trading jumped the shark last year (see this post) as I wrote here. Football coach Jimmy Johnson did a commercial for a trading software company and botched the terminology. Nobody at the company cared as they though retail stock trading was the wave of the future.  Of course, Jimmy went on to pitch for male enhancement tablets (Jimmy Johnson, that is) so I guess that industry is _______ (fill in the blank), too.

Then there is leverage. The average Joe can trade 3x ETFs and lose money faster than ever before. Too bad nobody realized that these things are mathematically defined to lose money. Prove it yourself. Plot any leveraged long ETF vs. the underlying non-leveraged version. You want to make money without thinking? Short BOTH the long and the short leveraged ETFs for the same underlying.

And in a related note, did anyone learn anything from Lehman? Cousins of ETFs, the ETNs are nothing more than counterparty promises to pay. Great in boring markets although you won't make any money but in Black Swan markets your counterparty may go belly up. Who will pay you for correctly calling the market then?

And finally, the almost-death of capitalism and the free markets. No not in 2008 but in 2010. When will there be a cash for bad trade (clunker) bailout? Save the retail trader!

So, can we make money? Sure we can. But being a day trader seems to encompass a whole lot less risk than being a long-term investor at this point. At least you won't wake up to your portfolio on fire.

Monday, August 2, 2010

Ball of Confusion

With the Temptations tune playing in my head (Ball of Confusion, That's What the World Is Today, Hey Hey) I have to wonder who is more confused. Ben Bernanke who said today "consumer spending is set to sustain the economic recovery" right after last week's "unusual uncertainty." Or is it the market where once again we see a huge rally on no volume where most of the gain took place on the gap up open.  Volume as I write this today at 3:30 NYT is on pace to just beat out Thursday's and there was a doji that day!

How about commodities? Risk assets are suddenly back in vogue. Crude oil soared on sugarplums of recovery dancing in everyone's heads but ugly, challenged step sister nat gas scored a monster bear reversal. Did the dollar getting crushed do that? See my story in MarketWatch today on the euro's resurgence.

I've seen reports on the market now entering wave 3 of 3 to the upside. I've seen reports of deflation. Of Dow Theory buy signals. Of death cross sell signals all over the stock market. Of Moody's warning of a downgrade of US debt. Greece and some of it PIIGS friends are rallying. Japan is falling. China releases bad news and everyone says it is good news. The TED spread is tumbling.

(sung)
Air pollution, revolution, gun control,
Sound of soul
Shootin' rockets to the moon
Kids growin' up too soon
Politicians say more taxes will
Solve everything
And the band played on
So round 'n' round 'n' round we go
Where the world's headed, nobody knows
Just a Ball of Confusion
Oh yea, that's what the world is today

Except for the rockets to the moon line, these lyrics could have been written today instead of in 1970. How about this? The next lines are:

Fear in the air, tension everywhere
Unemployment rising fast,

Wow!

So is the stock market doing its own thing? Looks that way. Let's just remember our job is to figure out what the market will do and not what makes sense in the world. My market sense is that August is going to suck too many willing lambs to slaughter before September comes in like a cat 5 'cane.

By the numbers

All info from Varney & Co on Fox Business

Assistant to the Governor of California - salary $0*
The Situation (The Jersey Shore) - $1 million
Snooki - 20K per club appearance

* - zero salary until they pass a budget, that is.

And we think the market is crazy? Imagine if all that cash went to something productive.

Sunday, August 1, 2010