Trade
*****
Sell 100 GS @ 116 vs. cost @ 74.79 (55.1% return)
Buy 1000 FAS @ 8.50
Sell 1000 FAS @ 8.9914 (5.81% return)
Positions
*********
+100 FAZ @ 9.34 vs. cost @ 17.02
+2000 UYG @ 3.75 vs. cost @ 2.00
Markets
*******
My stop was filled on GS on April 15th because I wanted to snag a sizeable profit and stick to my guns. Yes, GS is trading @ 122+ but discipline cannot be compromised. Besides, the trade was done on margin and that required me to ensure I managed my stops. I bought at 74.79 with an initial stop @ 70. Once I was comfortably in the green, I loosened the grip on my stops and let the winner fly.
There has been a theme of pre-announcing earnings results by financial firms this quarter. Thus far, the firms have all beaten consensus. With Citi scheduled to release tomorrow morning (-$0.33), one could hypothesize that a timely release signifies disappointing results. I will not be the one to make that hypothesis, but it is intriguing. JP Morgan's results topped estimates and I believe JP has the highest quality and most sustainable potential. They actually increased their loss provisions across the board.
I mentioned to a colleague today that the S&P500 was being supported by technology and that the Dow could catch up in a late day rally. I've seen a trend on the eve of a major financial firms' earnings release: Market rallies strongly in anticipation and sells off post release. I thus bought 1000 FAS @ 8.50 and placed a buy stop order @ 8.99. The move netted 5.81% returns, but I saw an opportunity and took it. Alas! The move was much stronger than I anticipated and FAS is trading @ 9.40.
Afraid to lose or afraid to lose out? I'd take the latter.
Live from Queens - Does Citi follow its predecessors?
TM
Thursday, April 16, 2009
Tuesday, April 14, 2009
Woeful Retail Sales Stamp Out Rally
Positions
*********
+100 FAZ @ 10.51 vs. cost @ 17.02
+100 GS @ 118.59 vs. cost @ 74.79, stop @ 116
+2000 UYG @ 3.46 vs. cost @ 2.00
Markets
*******
Goldman's surprise pre-announcement couldn't continue to provide a boost to the overall market as March Advance Retail Sales falls 1.1% vs. an expected 0.3% rise. It appears likely that my sell-stop on GS at 116 will be filled today. I do believe that Goldman has plenty of upside, but in this market I'm going to stick to my guns and snag a 50%+ gain if I must. Goldman sold $5B of its shares at $123 to help fund their anticipated repayment of the TARP funds. Many more financial will be reporting 1Q results later this week and next and if the market is disappointed with Goldman's performance, we'll see how the others fare. Goldman was saved by its fixed income revenue/profit, however. Both investment banking and equity numbers took a bath quarter-over-quarter and year-over-year. Perhaps the stop wont be filled...who knows?
Deflationary fears were buffeted as PPI #s were negative. CPI is slated for release tomorrow and the negative numbers are expected to appear again. March Housing Starts & Permits are also set to be released and the expectation is for modest improvement in starts and an unchanged reading in permits. Severe negative surprises in these indicators will not bode well for stocks in light of the recent selling pressure. We have seen consecutive months of gaining sales paces and mortgage applications (bulk or course due to refinance apps) and the equity rally depends on continued improvement.
The Dow is now trading at its intraday low, -153.08 @ 7,904.41 and the S&P is off more than 2.5% @ 840.72. Intel reports 1Q results after the close and the tech heavy NASDAQ is off more than 1.5%. News of a government stake in GM, in lieu of bankruptcy, has allowed GM to join C as one of few gainers on the day.
Live from Queens,
TM
*********
+100 FAZ @ 10.51 vs. cost @ 17.02
+100 GS @ 118.59 vs. cost @ 74.79, stop @ 116
+2000 UYG @ 3.46 vs. cost @ 2.00
Markets
*******
Goldman's surprise pre-announcement couldn't continue to provide a boost to the overall market as March Advance Retail Sales falls 1.1% vs. an expected 0.3% rise. It appears likely that my sell-stop on GS at 116 will be filled today. I do believe that Goldman has plenty of upside, but in this market I'm going to stick to my guns and snag a 50%+ gain if I must. Goldman sold $5B of its shares at $123 to help fund their anticipated repayment of the TARP funds. Many more financial will be reporting 1Q results later this week and next and if the market is disappointed with Goldman's performance, we'll see how the others fare. Goldman was saved by its fixed income revenue/profit, however. Both investment banking and equity numbers took a bath quarter-over-quarter and year-over-year. Perhaps the stop wont be filled...who knows?
Deflationary fears were buffeted as PPI #s were negative. CPI is slated for release tomorrow and the negative numbers are expected to appear again. March Housing Starts & Permits are also set to be released and the expectation is for modest improvement in starts and an unchanged reading in permits. Severe negative surprises in these indicators will not bode well for stocks in light of the recent selling pressure. We have seen consecutive months of gaining sales paces and mortgage applications (bulk or course due to refinance apps) and the equity rally depends on continued improvement.
The Dow is now trading at its intraday low, -153.08 @ 7,904.41 and the S&P is off more than 2.5% @ 840.72. Intel reports 1Q results after the close and the tech heavy NASDAQ is off more than 1.5%. News of a government stake in GM, in lieu of bankruptcy, has allowed GM to join C as one of few gainers on the day.
Live from Queens,
TM
Thursday, April 9, 2009
Financials storm ahead
Positions
*********
+100 FAZ @ 10.90 vs. cost @ 17.02
+100 GS @ 124.52 vs. cost @ 74.49, Increase stop to 110
+2000 UYG @ 3.50 vs. cost @ 2.00
Markets
*******
Pre-announced earnings from Wells Fargo that doubled the consensus have put a huge bid into financials and probably plenty of short covering as well. Borrow at zero, lend at stressed levels...seems like a simple plan to profitability. Tomorrow equity and bond markets are closed in observance of the holiday, but key financial earnings reports next week will set the tone. Credit spreads are widening across the board in the face of this strong rally and that should make the bears excited.
The spike at the close of trading was impressive and was led by financials. I placed a stop on GS @ 105 earlier in the week because I wanted to hold GS through the earnings report. Now it looks as if the stock will be able to hold that level (joke). A very, very interesting week lies ahead.
Live from the Masters - I wish
TM
*********
+100 FAZ @ 10.90 vs. cost @ 17.02
+100 GS @ 124.52 vs. cost @ 74.49, Increase stop to 110
+2000 UYG @ 3.50 vs. cost @ 2.00
Markets
*******
Pre-announced earnings from Wells Fargo that doubled the consensus have put a huge bid into financials and probably plenty of short covering as well. Borrow at zero, lend at stressed levels...seems like a simple plan to profitability. Tomorrow equity and bond markets are closed in observance of the holiday, but key financial earnings reports next week will set the tone. Credit spreads are widening across the board in the face of this strong rally and that should make the bears excited.
The spike at the close of trading was impressive and was led by financials. I placed a stop on GS @ 105 earlier in the week because I wanted to hold GS through the earnings report. Now it looks as if the stock will be able to hold that level (joke). A very, very interesting week lies ahead.
Live from the Masters - I wish
TM
Wednesday, April 8, 2009
Financial resiliance - speaking too soon?
Positions
*********
+100 FAZ @ 17.36 vs. cost @ 17.02
+100 GS @ 117.15 vs. cost @ 74.79, stop @ 105
+2000 UYG @ 2.83 vs. cost @ 2.00
Markets
*******
Despite a near 3% downturn to start this holiday shortened week, many financials have exhibited impressive resilience. Jim Cramer perhaps sparked a fire when he announced a buy on Citi, and Goldman Sachs was up most of yesterday on rumors that the company is in talks with the Government to give back the TARP money post stress testing. GS couldn't hold onto the gains into the close, but the run was impressive. During this downturn, any negative commentary from key figures (George Soros, Analyst Michael Mayo) would have pulled the rug from under financials.
The risk-reward profile in being long financials is attractive, given the 6 month hammering. Even though many analysts and pundits are still calling for Armageddon, missing out on a financial rally would be costly to money mangers. I think financials are holding ground because of next week's earnings calendar and the dearth of economic data this week. GS reports on Tuesday, 4/14 and the consensus has risen to $1.698. C reports on Friday, 4/17 and the consensus is -$0.339. Other financials are expected to report as well and just this morning, Oppenheimer lowered its view of Q1 MS loss and said that Bank of America would need a capital raise of nearly $37B by year-end.
Pulte Homes agreed to buy Centex in a $1.3B deal. The deal is the first for the battered home building industry and would create the largest US homebuilder by market capitalization and volume. Yes - I know, market capitalization doesn't mean too much to financials and home builders, but this will likely keep both companies afloat for the duration of the downturn.
Live from Queens,
TM
*********
+100 FAZ @ 17.36 vs. cost @ 17.02
+100 GS @ 117.15 vs. cost @ 74.79, stop @ 105
+2000 UYG @ 2.83 vs. cost @ 2.00
Markets
*******
Despite a near 3% downturn to start this holiday shortened week, many financials have exhibited impressive resilience. Jim Cramer perhaps sparked a fire when he announced a buy on Citi, and Goldman Sachs was up most of yesterday on rumors that the company is in talks with the Government to give back the TARP money post stress testing. GS couldn't hold onto the gains into the close, but the run was impressive. During this downturn, any negative commentary from key figures (George Soros, Analyst Michael Mayo) would have pulled the rug from under financials.
The risk-reward profile in being long financials is attractive, given the 6 month hammering. Even though many analysts and pundits are still calling for Armageddon, missing out on a financial rally would be costly to money mangers. I think financials are holding ground because of next week's earnings calendar and the dearth of economic data this week. GS reports on Tuesday, 4/14 and the consensus has risen to $1.698. C reports on Friday, 4/17 and the consensus is -$0.339. Other financials are expected to report as well and just this morning, Oppenheimer lowered its view of Q1 MS loss and said that Bank of America would need a capital raise of nearly $37B by year-end.
Pulte Homes agreed to buy Centex in a $1.3B deal. The deal is the first for the battered home building industry and would create the largest US homebuilder by market capitalization and volume. Yes - I know, market capitalization doesn't mean too much to financials and home builders, but this will likely keep both companies afloat for the duration of the downturn.
Live from Queens,
TM
Monday, April 6, 2009
Changing Rules As We Play The Game
Positions
*********
+100 FAZ @ 17.03 vs. cost @ 17.02
+100 GS @ 114.47 vs. cost @ 74.79, stop @ 105.25
+2000 UYG @ 2.89 vs. cost @ 2.00
Markets
*******
Respected financial sector analyst Michael Mayo gave his gloomy view on financials and the sector is the worst performer on the S&P500 today. Asians markets continued to rise, and European shares were up most of the day led by banks. Mayo's comments called the FASB accounting relaxation "window dressing." The FASB is purportedly an independent board with a duty to provide investors fair, timely, and accurate information to make economic decisions. Nothing about their relaxation was independent as the FASB was heavily swayed by Congress and banks. In what other realm can we change the rules as we play the game?
Regardless, the change is in effect, and our European counterparts are not following suit. Equity markets are breaking a 5 day winning streak and the VIX (all about buying puts - "fear gauge") climbs back above 40. This is a very light economic data week due to the holiday shortened period. Next week kicks off earnings season for the first quarter and we'll get to differentiate between facts and earlier bank CEO claims of early 2009 profitability.
GS reports 4/14 and the consensus is for EPS of $1.62.
Live - Monday from wet n' wild Queens,
TM
*********
+100 FAZ @ 17.03 vs. cost @ 17.02
+100 GS @ 114.47 vs. cost @ 74.79, stop @ 105.25
+2000 UYG @ 2.89 vs. cost @ 2.00
Markets
*******
Respected financial sector analyst Michael Mayo gave his gloomy view on financials and the sector is the worst performer on the S&P500 today. Asians markets continued to rise, and European shares were up most of the day led by banks. Mayo's comments called the FASB accounting relaxation "window dressing." The FASB is purportedly an independent board with a duty to provide investors fair, timely, and accurate information to make economic decisions. Nothing about their relaxation was independent as the FASB was heavily swayed by Congress and banks. In what other realm can we change the rules as we play the game?
Regardless, the change is in effect, and our European counterparts are not following suit. Equity markets are breaking a 5 day winning streak and the VIX (all about buying puts - "fear gauge") climbs back above 40. This is a very light economic data week due to the holiday shortened period. Next week kicks off earnings season for the first quarter and we'll get to differentiate between facts and earlier bank CEO claims of early 2009 profitability.
GS reports 4/14 and the consensus is for EPS of $1.62.
Live - Monday from wet n' wild Queens,
TM
Thursday, April 2, 2009
Mark-to-Model
Trade
*****
+100 FAZ @ 17.02
Positions
********
+100 GS @ 114.34 vs. cost @ 74.79
+2000 UYG @ 2.89 vs. cost @ 2.00
Markets
********
Changes to mark-to-market accounting rules have caused another big rally with breadth. Nasdaq turns positive for the year and Jim Cramer calls the end of the depression. Mark-to-market accounting rules have required toxic assets to be valued at less than 20 cents on the dollar even if the holder was planning on holding-to-maturity. Nonetheless, the relaxing of the rules gave a big boost to financials as the Tier-1 Capital ratio becomes relevant again. US factory orders rose for the first time in 7 months as well. With great exception to the labor market, we have seem many positive economic data indicators (existing/new home sales, pending home sales, durable goods orders, construction spending, factory orders).
So this seems like a perfect time to get short financials. FAZ is a 3x leveraged financial short and I believe that financials still have a rocky road ahead. If I am wrong, the position will be overpowered by my long positions in GS and UYG. Markets are paring some gains, but all indices are up greater than 2%.
Live from the turn
TM
Wednesday, April 1, 2009
Few More Positive Signs
Positions
*********
+100 GS @ 108.34 vs. cost @ 74.79
+2000 UYG @ 2.63 vs. cost @ 2.00
Markets
*******
Markets rushed to quick 1.5% losses as labor market woes dominated headlines. Prior to the open, the ADP private labor market report showed an expected loss of 742,000 jobs for March - greater than expected. This indicator, intended to be a harbinger of the official Nonfarm Payrolls report, has mixed predictive ability. Futures were off more than 1% at the open in coincidence with weaker European stocks.
Trio of Positive Economic Data
******************************
March ISM Manufacturing: 36.3 vs. 36 consensus, prior 35.8 (Less than 50 is contracting)
February Construction Spending (MoM): -0.9% vs. -1.9%, prior -3.5
February Pending Home Sales: 2.1% vs. 0.0%, prior -7.7%
The picture is far from rosy, but improvement in capital spending and some signs of life in the housing market turned the markets around in a hurry. The employment picture is weak - ok that's a gross understatement. Home builders aren't likely to be going on many caviar packed corporate retreats in Dubai either. However, manufacturing and the housing markets (except builders) have shown tentative signs of improving. Any positives are good for the markets, but a trio? Let's see if this abrupt turnaround today has any staying power. Financials rallying again today in advance of tomorrows meeting with the FASB (Financial Accounting Standards Board) to discuss easing of rules regarding valuation of illiquid securities.
Live from Queens
Keep the left arm straight and think happy thoughts
TM
*********
+100 GS @ 108.34 vs. cost @ 74.79
+2000 UYG @ 2.63 vs. cost @ 2.00
Markets
*******
Markets rushed to quick 1.5% losses as labor market woes dominated headlines. Prior to the open, the ADP private labor market report showed an expected loss of 742,000 jobs for March - greater than expected. This indicator, intended to be a harbinger of the official Nonfarm Payrolls report, has mixed predictive ability. Futures were off more than 1% at the open in coincidence with weaker European stocks.
Trio of Positive Economic Data
******************************
March ISM Manufacturing: 36.3 vs. 36 consensus, prior 35.8 (Less than 50 is contracting)
February Construction Spending (MoM): -0.9% vs. -1.9%, prior -3.5
February Pending Home Sales: 2.1% vs. 0.0%, prior -7.7%
The picture is far from rosy, but improvement in capital spending and some signs of life in the housing market turned the markets around in a hurry. The employment picture is weak - ok that's a gross understatement. Home builders aren't likely to be going on many caviar packed corporate retreats in Dubai either. However, manufacturing and the housing markets (except builders) have shown tentative signs of improving. Any positives are good for the markets, but a trio? Let's see if this abrupt turnaround today has any staying power. Financials rallying again today in advance of tomorrows meeting with the FASB (Financial Accounting Standards Board) to discuss easing of rules regarding valuation of illiquid securities.
Live from Queens
Keep the left arm straight and think happy thoughts
TM
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