Returns
*******
-1000 FAS @ 5.34 vs. +1000 @ 4.73
Holding period return (HPR) = 12.90%
Total realized HPR = 18.83%
Definitely disappointing given the two ETF highs yesterday, but being
seriously long and returning 19% as the S&P500 tanked this week is
somewhat rewarding. I just cannot accept the risk of holding FAS
through the weekend, even though huge falls in this ETF are typically
followed by gains in the subsequent session.
My strategy in this downturn is to generally avoid single stocks because
sector specific opportunities are easier to visualize without assuming
blink of an eye catastrophic losses - Even vs. 3x leveraged ETFs (see
Direxion)
Long-term prospects
*******************
The two year treasury broke its 100 day moving average yesterday as
supply issues outweigh the flight-to-quality trade. The 10yr treasury
crossed 3% despite the weekly plunge in equities. When America bounces
back, and I don't say if because our propensity to spend will eventually
return, rates will rise from current levels.
PST & TBT - both of these ETFs short treasury bonds. Go long in a
retirement trading account and forget about them.
Equity summary
**************
As for the markets - Dow and NASDAQ key technical supports (7,103,
1,374) have temporarily prevented sharp losses. Markets are led by the
tech sector, while banks continue to be a drag, a huge drag. If we close
in the green, the NASDAQ will lead the way.
An ugly week. Despite the sizeable weekly gains, I can't help but feel
queasy.
Live from Queens
TM
Friday, February 27, 2009
Friday woes
GDP commentary
**************
Equity futures are taking a beating, down more than 2% just before the
open on news of Citi dilution fears and sharply worse than expected 4Q
preliminary GDP (-6.2% vs. -5.4). Inventory reduction was the only
positive, although it contributed to a 4Q whacking. I think this will
provide a slight boost to 1Q 2009 GDP and that the losses in GDP going
forward will be less severe than -6.2%.
Positions
*********
FAS blew straight through my $5 stop this morning and I thought about
dumping it pre-market. I removed the stop-loss order and am watching it
because I think financials bounce from the pre-market lows. I am
watching it closely in case I am dead-wrong. Didn't expect financials
to take a beating because most of Citi's dilution was public
information. Ironically, both measures of bank health, Tier-1 Capital
ratio and TCE (tangible common equity) are now Citi's strengths.
Closed UCO last night in after-hours trading at 8.01 in advance risky
GDP report. May look to re-enter soon.
Returns
*******
-1000 UCO @ 8.01 vs. +1000 @ 6.505
Holding period return = 23.13%
Something tells me that financials close higher
**************
Equity futures are taking a beating, down more than 2% just before the
open on news of Citi dilution fears and sharply worse than expected 4Q
preliminary GDP (-6.2% vs. -5.4). Inventory reduction was the only
positive, although it contributed to a 4Q whacking. I think this will
provide a slight boost to 1Q 2009 GDP and that the losses in GDP going
forward will be less severe than -6.2%.
Positions
*********
FAS blew straight through my $5 stop this morning and I thought about
dumping it pre-market. I removed the stop-loss order and am watching it
because I think financials bounce from the pre-market lows. I am
watching it closely in case I am dead-wrong. Didn't expect financials
to take a beating because most of Citi's dilution was public
information. Ironically, both measures of bank health, Tier-1 Capital
ratio and TCE (tangible common equity) are now Citi's strengths.
Closed UCO last night in after-hours trading at 8.01 in advance risky
GDP report. May look to re-enter soon.
Returns
*******
-1000 UCO @ 8.01 vs. +1000 @ 6.505
Holding period return = 23.13%
Something tells me that financials close higher
Thursday, February 26, 2009
Lunchtime commentary
Positions
*********
FAS @ avg. 6.25, cost @ 4.73, increase stop to 4.95
UCO @ avg. 7.75, cost @ 6.505, increase stop to 6.95
FAS has considerable gapping risk that may blow past my stop.
I've calculated a few stats since the ETFs inception in November 2008:
Mean daily delta (high-low) = $3.08
Sample standard deviation of that delta is $2.114
Likely, these numbers are corrupted by sampling from multiple populations, but the message is clear. Overnight stops on 3x leveraged ETFs can turn sizable gains into quick losses - a trader's cardinal sin.
Lunchtime Commentary
********************
Ugly, putrid economic data. Worse than expected across the board
January Durable goods orders ex-transportation (-2.5% vs. -2.1%)
Initial Jobless claims (Initial: 667k vs. 625k, Continuing: 5.112mm vs. 5.025mm)
** First time ever continuing claims > 5mm
** Highest initial claims since 1982 recession, although the labor force was much smaller in 1982
MoM New Home Sales (309k vs. 324k)
** Lowest ever, and -10.2% month-over-month (MoM)
Being a nocturnal creature by nature, I was up watching my man Tiger until 11:30pm and then was up to follow Asians markets through their close. U.S. markets are looking eerily similar. Big opening hour gains slowly wiped out. Hoping this doesn't happen, but in reality, nothing positive has happened today. Unless you are a fan of 9000 earmarks. $140MM for volcano monitoring - "It's the stimulus package stupid!"
Technicals are once again a factor.
1st level daily resistance was not broken: S&P @ 779, Dow @ 7398
We'll likely test these levels again as supports are more than 2% below current levels
Crude oil has risen sharply but faces tough resistance at 43.50 - 44 (Trendline/Fibonacci).
Pad-gra-prow? Sounds like a plan - spice it up.
Live from Queens
Think happy thoughts
TM
12:07pm
Because the true timestamp makes me sharper than Nostradamus
*********
FAS @ avg. 6.25, cost @ 4.73, increase stop to 4.95
UCO @ avg. 7.75, cost @ 6.505, increase stop to 6.95
FAS has considerable gapping risk that may blow past my stop.
I've calculated a few stats since the ETFs inception in November 2008:
Mean daily delta (high-low) = $3.08
Sample standard deviation of that delta is $2.114
Likely, these numbers are corrupted by sampling from multiple populations, but the message is clear. Overnight stops on 3x leveraged ETFs can turn sizable gains into quick losses - a trader's cardinal sin.
Lunchtime Commentary
********************
Ugly, putrid economic data. Worse than expected across the board
January Durable goods orders ex-transportation (-2.5% vs. -2.1%)
Initial Jobless claims (Initial: 667k vs. 625k, Continuing: 5.112mm vs. 5.025mm)
** First time ever continuing claims > 5mm
** Highest initial claims since 1982 recession, although the labor force was much smaller in 1982
MoM New Home Sales (309k vs. 324k)
** Lowest ever, and -10.2% month-over-month (MoM)
Being a nocturnal creature by nature, I was up watching my man Tiger until 11:30pm and then was up to follow Asians markets through their close. U.S. markets are looking eerily similar. Big opening hour gains slowly wiped out. Hoping this doesn't happen, but in reality, nothing positive has happened today. Unless you are a fan of 9000 earmarks. $140MM for volcano monitoring - "It's the stimulus package stupid!"
Technicals are once again a factor.
1st level daily resistance was not broken: S&P @ 779, Dow @ 7398
We'll likely test these levels again as supports are more than 2% below current levels
Crude oil has risen sharply but faces tough resistance at 43.50 - 44 (Trendline/Fibonacci).
Pad-gra-prow? Sounds like a plan - spice it up.
Live from Queens
Think happy thoughts
TM
12:07pm
Because the true timestamp makes me sharper than Nostradamus
Wednesday, February 25, 2009
Thursday's trading radar
Asian Markets & Equity Futures
*****************************
We are well into Asian trading and early optimism has faded as most indices are paring gains or showing outright losses. U.S. equity futures have been positive for most of the evening, but are also paring gains and currently showing slight gains.
U.S. Afternoon Recap
*******************
The major late-day reversal (unsustainable) in U.S. trade yesterday was likely aided by two major headlines.
1) Bernanke's testimony that effectively ruled out total nationalization. Nationalization wipes out common shareholders and the government takes over operations. That is not happening so please let's move on. So the banks, top 19 ($100B in asset or greater), will undergo "stress-testing" to identify which institutions need more capital. What I really like is the subsequent opportunity to raise the necessary capital privately, in a 6-month window
2) Bernanke's talk about resurrecting the uptick rule which prohibits short-selling unless we see a positive tick. Never been a fan of this, but it likely would help the bulls.
Thursday's Economic View
************************
Deja vu economic data? On the radar we have:
8:30am
January Durable Goods Orders (Ex-transportation) - Exp. -2.1% would only be the millionth month in a row of declines.
8:30am
Weekly Jobless Claims - Exp. 625k, I don't see this stabilizing anytime soon. Continuing claims to top 5mm
10:00am
January New Home Sales - Exp. 330k annual sales pace. This metric keeps surprising to the negative, no relief in sight for falling home prices and thus no incentive to build. Builders are folding pocket Jacks pre-flop.
Ever heard of the aggregate demand multiplier? This is when people get jobs and buy homes and then purchase appliances and furniture. Then these businesses hire and invest and the cycle repeats to an extent. Okay just checking - Lets work on this.
Not looking good for the open - Asian markets turning sour and U.S. futures have followed suit. Did I mention anything about follow through?
12:40am
Like the bears, I don't trust this timestamp
*****************************
We are well into Asian trading and early optimism has faded as most indices are paring gains or showing outright losses. U.S. equity futures have been positive for most of the evening, but are also paring gains and currently showing slight gains.
U.S. Afternoon Recap
*******************
The major late-day reversal (unsustainable) in U.S. trade yesterday was likely aided by two major headlines.
1) Bernanke's testimony that effectively ruled out total nationalization. Nationalization wipes out common shareholders and the government takes over operations. That is not happening so please let's move on. So the banks, top 19 ($100B in asset or greater), will undergo "stress-testing" to identify which institutions need more capital. What I really like is the subsequent opportunity to raise the necessary capital privately, in a 6-month window
2) Bernanke's talk about resurrecting the uptick rule which prohibits short-selling unless we see a positive tick. Never been a fan of this, but it likely would help the bulls.
Thursday's Economic View
************************
Deja vu economic data? On the radar we have:
8:30am
January Durable Goods Orders (Ex-transportation) - Exp. -2.1% would only be the millionth month in a row of declines.
8:30am
Weekly Jobless Claims - Exp. 625k, I don't see this stabilizing anytime soon. Continuing claims to top 5mm
10:00am
January New Home Sales - Exp. 330k annual sales pace. This metric keeps surprising to the negative, no relief in sight for falling home prices and thus no incentive to build. Builders are folding pocket Jacks pre-flop.
Ever heard of the aggregate demand multiplier? This is when people get jobs and buy homes and then purchase appliances and furniture. Then these businesses hire and invest and the cycle repeats to an extent. Okay just checking - Lets work on this.
Not looking good for the open - Asian markets turning sour and U.S. futures have followed suit. Did I mention anything about follow through?
12:40am
Like the bears, I don't trust this timestamp
Lack of follow through
Positions
****************************
FAS @ avg. 5.13, cost 4.72
UCO @ avg. 6.99, cost 6.505
Mid-day trading report
****************************
U.S. equity markets have been unable to follow up on a large rally since the last 2 days of 2008. Some profit taking was to be expected but systemic fears continue to drag down the main indices. Financials look to be snapping a strong 2-day winning streak and an earlier weak January existing home sales report appears to be the primary culprits of the downturn.
January Existing Homes Sales @ 4.49mm vs. 4.74mm expected (TM @ 5mm - take a bow)
We've seen markets bounce numerous times from daily first level supports.
S&P 753, DJIA 7,183.
We've even seen two strong attempts to rally off the day's lows. S&P 760 is a key level to watch - if we can sustain this level as the last half hour approaches, we may be able to pare losses. I don't see enough of a push to make it positive, but it is possible. Losses of less than 1% across the board would be slightly encouraging.
A larger than expected drawdown in crude inventories sent oil prices higher, but the rally is tempered by weak equity markets. An rally into the close should add a big boost to oil - watch S&P 760
Live from Queens
Think happy thoughts - you'll need them
TM
****************************
FAS @ avg. 5.13, cost 4.72
UCO @ avg. 6.99, cost 6.505
Mid-day trading report
****************************
U.S. equity markets have been unable to follow up on a large rally since the last 2 days of 2008. Some profit taking was to be expected but systemic fears continue to drag down the main indices. Financials look to be snapping a strong 2-day winning streak and an earlier weak January existing home sales report appears to be the primary culprits of the downturn.
January Existing Homes Sales @ 4.49mm vs. 4.74mm expected (TM @ 5mm - take a bow)
We've seen markets bounce numerous times from daily first level supports.
S&P 753, DJIA 7,183.
We've even seen two strong attempts to rally off the day's lows. S&P 760 is a key level to watch - if we can sustain this level as the last half hour approaches, we may be able to pare losses. I don't see enough of a push to make it positive, but it is possible. Losses of less than 1% across the board would be slightly encouraging.
A larger than expected drawdown in crude inventories sent oil prices higher, but the rally is tempered by weak equity markets. An rally into the close should add a big boost to oil - watch S&P 760
Live from Queens
Think happy thoughts - you'll need them
TM
Tuesday, February 24, 2009
Blackberry Storm Postings
Maybe you've noticed some glaring spelling errors, maybe you haven't. Even though back in November I single-handedly helped RIMM gain a point in purchasing the Blackberry Storm from backorder, posting blog entries is very difficult on it. So, please don't assume I'm as ignorant as Senator Chris "Todd." We all know Sure-Type enjoys mangling words.
Quick look at the markets
***********************
Asian markets, as expected, are rising after the U.S. surge. Japan's Nikkei is up over 1.5% in early trade and I like the Hang Seng (Hong Kong), KOSPI, and other Asian indices to follow suit. U.S. equity futures are vacillating between incrementally small gains and losses just prior to Obama's Presidential Address. It will be interesting to see if futures react positively, especially after Bernanke's uplifting comments earlier in the day.
Let's be clear - the economy is in dire straits. Serious fundamental issues are likely to depress economic growth for some time, but many sectors, namely financials, were significantly oversold. Hope, is forecasted to be the underlying theme, and we'll see if he touches on market specifics - not likely.
Tomorrow's Theme
*****************
A quick surge in equity markets tomorrow may create a tug-o-war between profit taking and short covering.
Live from the my west side commode....think happy thoughts
TM
Quick look at the markets
***********************
Asian markets, as expected, are rising after the U.S. surge. Japan's Nikkei is up over 1.5% in early trade and I like the Hang Seng (Hong Kong), KOSPI, and other Asian indices to follow suit. U.S. equity futures are vacillating between incrementally small gains and losses just prior to Obama's Presidential Address. It will be interesting to see if futures react positively, especially after Bernanke's uplifting comments earlier in the day.
Let's be clear - the economy is in dire straits. Serious fundamental issues are likely to depress economic growth for some time, but many sectors, namely financials, were significantly oversold. Hope, is forecasted to be the underlying theme, and we'll see if he touches on market specifics - not likely.
Tomorrow's Theme
*****************
A quick surge in equity markets tomorrow may create a tug-o-war between profit taking and short covering.
Live from the my west side commode....think happy thoughts
TM
sustainable rally?
So I was a day off. Bernanke's semiannual testimony proved to be the spark I was hoping for and anticipating - although I struck out on the source. Thank you Tim Geithner. I frankly don't agree with Mr. Greenspan or outspoken Senator Chris Todd regarding nationalization. 1 because I would take a beating that Rihanna could only imagine and 2 because its not going to solve anything.
Nationalization of ANY institution will actually worsen the problem. Socialize one and other shares will plummet in sympathy. So unless we nationalize everyone, let's not be ridiculous.
I actually support the Fed in their strategy to stress test the banks. Might have been a good idea to do this in 2006 but who is counting. Forget the tier one capital ratio and focus on TCE - tangible common equity. Weakness as measured by TCE will require additional stake ownership in the form of convertible preferred to common. Everyone knows that ridding the banks of their toxic, cancerous assets is the primary objective. The combined private/public asset buyer of last resort is a good idea. This way taxpayers don't get hosed like they did in the Goldman capital infusion. Two cheers for astute negotiator Hank Paulson.
Okay - to the numbers!
S&P resistance of 766 has been broken a number of times unconvincingly. Next level is 790 for today and 807 for the week. Risk to todays close? That ever so crazy 3:30 crunch time volatility
Here's saying the markets close up sharply, Dow greater than +200. Tomorrow we'll see what happens and there is room to run until S&P 800 before any real resistance. Economic calendar is light tomorrow with nothing pre-market. Existing home sales expected at 4.79mm but I see a number closer to 5. Vultures buying foreclosed homes as the primary driver. Watch Ambac earnings tomorrow pre-open, exp. -1.30.
Weekly crude supplies released tomorrow and expectation is for a drawdown in supplies. 10am
FAS @ 5.63, UCO @ 6.69
Increase stops to 4.35 and 6 respectively. Why? Profit taking tomorrow is a big possibility.
Live from queens.
Think happy thoughts
TM
Nationalization of ANY institution will actually worsen the problem. Socialize one and other shares will plummet in sympathy. So unless we nationalize everyone, let's not be ridiculous.
I actually support the Fed in their strategy to stress test the banks. Might have been a good idea to do this in 2006 but who is counting. Forget the tier one capital ratio and focus on TCE - tangible common equity. Weakness as measured by TCE will require additional stake ownership in the form of convertible preferred to common. Everyone knows that ridding the banks of their toxic, cancerous assets is the primary objective. The combined private/public asset buyer of last resort is a good idea. This way taxpayers don't get hosed like they did in the Goldman capital infusion. Two cheers for astute negotiator Hank Paulson.
Okay - to the numbers!
S&P resistance of 766 has been broken a number of times unconvincingly. Next level is 790 for today and 807 for the week. Risk to todays close? That ever so crazy 3:30 crunch time volatility
Here's saying the markets close up sharply, Dow greater than +200. Tomorrow we'll see what happens and there is room to run until S&P 800 before any real resistance. Economic calendar is light tomorrow with nothing pre-market. Existing home sales expected at 4.79mm but I see a number closer to 5. Vultures buying foreclosed homes as the primary driver. Watch Ambac earnings tomorrow pre-open, exp. -1.30.
Weekly crude supplies released tomorrow and expectation is for a drawdown in supplies. 10am
FAS @ 5.63, UCO @ 6.69
Increase stops to 4.35 and 6 respectively. Why? Profit taking tomorrow is a big possibility.
Live from queens.
Think happy thoughts
TM
Monday, February 23, 2009
trade with caution
Please remember to consult your own financial advisor should you consider acting on any of my suggestions. This will be added to all trade executions going forward.
introduction
I've started this blog because there are numerous trading opportunities out there in this downtrodden marketplace. The current 5 day slide actually helps this cause. I plan on posting trades with real numbers and order levels, thus quantifying performance.
Over the weekend equity futures rebounded from losses following a Wall Street Journal online post that the government was considering increasing its stake in Citi
This created a nice short term selling opportunity. And by short term I'm talking about closing out before you take the 7 train to Naples outside Grand Central.
Yes I am a banker forced to commute from my wonderful upper west air commode across the filthty East River
To Queens!
Regardless I like buying selloffs for very short periods. I am one of the biggest proponents of leveraged short etfs FAZ and EEV have been kind to me.
Right now I like FAS. 3x leveraged long financials. For how long? Let's just say I'm banking on Geithner not duct taping a main frame leak Twice in February. His February 10th delivery caused the latest selloff. This time around I say he focuses on toxic asset management.
Financials get a bear market bounce before resuming their slide.
I've bought into a rising market in this crisis and quickly was taken out back.
Buy 1000 FAS @ 4.73
stop out at 3.92
Buy 1000 UCO @ 6.505
Stop at 5.77
This long play on crude oil goes hand in hand with financials. These are likely to fail or not together. Best case scenario is exiting voluntarily by Thursday evening before Fridays GDP report adds unnecessary risk.
As always - think happy thoughts
TM
Over the weekend equity futures rebounded from losses following a Wall Street Journal online post that the government was considering increasing its stake in Citi
This created a nice short term selling opportunity. And by short term I'm talking about closing out before you take the 7 train to Naples outside Grand Central.
Yes I am a banker forced to commute from my wonderful upper west air commode across the filthty East River
To Queens!
Regardless I like buying selloffs for very short periods. I am one of the biggest proponents of leveraged short etfs FAZ and EEV have been kind to me.
Right now I like FAS. 3x leveraged long financials. For how long? Let's just say I'm banking on Geithner not duct taping a main frame leak Twice in February. His February 10th delivery caused the latest selloff. This time around I say he focuses on toxic asset management.
Financials get a bear market bounce before resuming their slide.
I've bought into a rising market in this crisis and quickly was taken out back.
Buy 1000 FAS @ 4.73
stop out at 3.92
Buy 1000 UCO @ 6.505
Stop at 5.77
This long play on crude oil goes hand in hand with financials. These are likely to fail or not together. Best case scenario is exiting voluntarily by Thursday evening before Fridays GDP report adds unnecessary risk.
As always - think happy thoughts
TM
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