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Time for Bulls to Put Up or Shut Up
Time for Bulls to Put Up or Shut Up
Courtesy of Phil of Phil's Stock World
Faith is a tricky thing. It's easily shaken, but hard to extinguish completely. Clearly investors have faith that the EU crisis CAN be solved, hence the strong reaction to "good" news out of Europe. But then, all it takes is a single naysayer and all but the most faithful lose their resolve while the whipsaw nature of the market punishes those who try to hold fast against the panicked crowds.
We have faith in our trading range but we PRAY that is gets broken - as it would be better for the Global Economy if we are able to make some progress in the markets. C had decent earnings, BAC made $5.9Bn last quarter (although really from a sale of their shares of China Construction Bank) - both have been priced for bankruptcy and I still think XLF ($12.20) is one of the best bargains in the market and you can play them through earnings with the Nov $11/12 bull call spread at .72, selling the $12 puts for .55 for net .17 on the $1 spread with a 488% upside if XLF just holds $12 through earnings season.
Matt McCormick had a great quote on BAC this morning:
"I think there's a tremendous value opportunity in Bank of America shares, but it's only for people with strong stomachs. I don't have a strong stomach so I'm not going to buy it."
The big news today is the 0.8% rise in September's PPI (CPI is tomorrow, Doug Short's chart above), 300% higher than forecast (0.2%) by leading Economorons, who really must be on a totally different planet than ours to be this clueless. Please MSM - there are Millions of people out of work - surely you can find random people who are better at predicting than the "expert forecasters" you continue to embarrass yourselves with week after week...
Not to worry though, our "core" PPI is just 0.2%, which is only double what the Economorons predicted and that's good news for all the people who live without food or energy. We talked about the inevitable inflation in yesterday's post so I won't rehash it here. Let's just move on and enjoy the drop in TLT off our $118 target and the rise in the markets as Global Investors scramble back to equities to hedge against the devaluation of everything else.
UK Inflation came in at 0.6% in September and is running at a rate of 5.2% for the year and its "QEQE2" program is just getting underway. At the same time as we have runaway inflation in the US, Europe and Asia (did I mention China?) while, at the same time, the CTFC is voting on curbing commodity speculation.
So, as I often point out to bearish Members - where else are people going to put their money if not into US equities? If inflation is real, then 10-year notes that yield 3.5% are NOT the answer unless you plan on saving $100,000 for every $50,000 you plan to spend next decade. Only stocks (see yesterday's list for a few ideas) are going to give you a proper, dynamic hedge against inflation as real companies make MORE money when prices go up and that makes their shares MORE valuable - keeping pace with inflation. (See How To Buy Stocks For A 15-20% Discount ~ updated to include new ideas.)
Don't forget, dividends also rise as profits rise and most companies fix a rate of return to the price of a share so they too, tend to go up with inflation. And, for those of us fortunate enough to know how to play the options game - inflation is our friend too as it takes the risk out of our buy/writes and overpays us on long calls and bullish spreads as we can vastly outpace almost any rate of ordinary interest through option sales.
So let's see what holds up today and enjoy the ride. Hopefully yesterday was simply the pause that refreshes and not another dip back towards our range as it's already October 18th and another 4 week down and up cycle would take us pretty much to Thanksgiving - and that would be a bit late for our expected Santa Clause Rally so it could be now or never for the Bulls if they want to see 1,250 to 1,300 by the year's end.
(Modified from the original post at PSW: Testy Tuesday - Time for the Bulls to Put Up or Shut Up)
*****
Moved up from the comments - a Keiser Report video, linked to by JW n FL (thanks!) ~ listening to it now.
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Burning down the house? yea that's sound about right
http://www.youtube.com/watch?v=pnKYO7jiW2k
I started using $100 bills as wallpaper today on my computer.
Next year, I'll probably redo the den.
"Inflation is your friend"
Does Phil know profits coming from stocks are subject to taxation and that therefore Inflation IS NOT your friend, because the IRS (whatever the country... everyone in the world is subject to income taxes) doesn't recognize Inflation and therefore the state takes his share on your Inflation profits?!?
Please do your research on inflation taxes and then you'll find appropriate strategies (left hook & right jab)...
I recommend "Turning inflation into wealth" from Daniel Amerman not only for the beginners but also for the so-called stock experts; there's much more than the nominal to manage for making real profits (aka wealth).
I think it is funny how even the sane can be fooled by a bear market counter-trend rally. Yeah, enjoy the ride with one hand on the door handle.
...yeah,yeah,yeah...these guys were short at 1200
In the USD ,and in silver, oil.
"where else are people going to put their money if not into US equities"
Guns, Ammo and Gold. Dried food, medicine and fuel also come to mind. Water purification apparatus etc. Pieces of paper or their digital representations? Not so much.
Can we PLEASE get that chart with a bar showing the impact of tech gains (IE Ipad2 being 2x as powerful as IPod 1 at same price) and substitution broken out?
We need a simple CPI calc. Price of a fixed basket of non-prepared foods, house prices (not manipulated interest rate based rent equiv), gasoline, electricity, health care, off-brand clothes, other consumer goods etc... I have a feeling you'd see inflation inline with population adjusted M2 growth - IE 5% CAGR.
Predicting dip or two more and then great guns. 4Q will be the ultimate tell. Build the portfolios, shy on fins personally. BTFD. Buy the fins only if you have the stomach. Dancing with the devil there baby.
I am hoping for a few more choice oppty's to deploy those nickels. DCA baby.
so where are people to put their money? why not keep stacking, it has worked quite well over the past 10 years, it should continue to work well into the foreseeable future.
If Jimmy Fallon did a show on the economy, his name would be Max Keiser.
Commercial real estate may be in Big Trouble:
Office Leasing Slows in U.S. Central Business Districts on Economy Turmoil
By Katie Spencer
http://www.bloomberg.com/news/2011-10-18...
Southland office rents, occupancy rates stay low
http://articles.latimes.com/2011/oct/16/...
NYC Commercial-Property Dollar Volume Fell in Third Quarter
By David M. Levitt
http://www.businessweek.com/news/2011-10...
Only stocks (see yesterday's list for a few ideas) are going to give you a proper, dynamic hedge against inflation as real companies make MORE money when prices go up and that makes their shares MORE valuable - keeping pace with inflation.
Then the 70's should have been great for the stock market. But in fact, prices went up while stocks didn't. Stocks lost more than half of their real value during the 70's. But stocks did do very well in the 80's, after inflation had been brought under control.
Here's a chart of the relationship between inflation expectations and the S&P. In the 70s, it was different, and I'm thinking there's some connection between the relationship of the dollar to the stocks right now (dollar down, stocks up). That hasn't always been the case. I don't know what the cause and effect of these relationships are (hft models having more impact now?).
http://www.crystalbull.com/stock-market-timing/Expected-Inflation-chart/
Not to mention the embarrassing fact that stock indices are absolutely flat in NOMINAL terms since 2000, significantly failing to rise to keep even not only with the government's laughably manipulated CPI, but more importantly with the REAL rate of "inflation" (dollar depreciation) since 2000, which is more on the order of 60-70%.
There is no market by the way. The market was corrupted, broken and towed off to the dump some time ago. It is lying on its back next to some rotting vegetables, wheezing its last.
What we are left with is a Kabuki show of TPTB dancing on its grave saying all is well.
thats not true!
the government is the market!
since Black Monday!
http://en.wikipedia.org/wiki/Black_Monday_(1987)
SOMO
POMO
and / or whatever Mc-Fucking-Twist name you would like to spin for public consumption..
so, the real question is.. since this shit has been going on since I was 15 years old.. and no one ever said anyting until now.. why is it on heavy rotation on corporate owned media?
http://en.wikipedia.org/wiki/Black_Monday_(1987)
http://www.federalreserve.gov/pubs/feds/2007/200713/200713pap.pdf
http://research.stlouisfed.org/publications/review/04/03/Neely.pdf
Becuase they want it in heavy rotation..
NONE of YOU! are smart enough to even keep up let alone think ahead.. but recently, the most saturated, dumbed down version of the world.. EVER! figured it all out! BY ITSELF!! LOL!!!
You know what they want yout to know and when they want you to know it.
thats it, there is nothing else..
the few that have the facts, dont share the truth.. http://www.youtube.com/watch?v=5j2F4VcBmeo
The Investor Sentiment numbers told you back in September that the "Bear Trade" was the ultimate crowded trade so this rally in stocks is what happens when all of you children apply your video game skills to investing. You stay long here for the MONSTER MOVE. It is playing out in front of us all and NO I do not nor ever have played a fucking video game because the only "boss" I have ever tried to beat is Mr. Market.
http://www.youtube.com/watch?v=coiTJbr9m04
to bad.. you might have learned something? like what a multi billion dollar franchise looks like?
and the market owns you, ant.
your not the boss in your own fucking house.. let alone of real men.
Did you really just post the link to a freakin video game on this site?
you child.
bitch slap
You need tpithy up or shut up bitch. I'm the only bull three years running here and on Seeking Alpha with a market that has doubled over that time frame. During that time I've read your indecipherable codex and found renaming you "philacio's world" helpful. Be a better bear (like zero hedge for example) and I will listen.
take your pstd.. inside the wire hiden.. bitchy ole self.. back to the Vet Hospital for a tune up..
angry old fucker!
how much prepps do you have stashed away?
how much ammo?
how much gold and silver?
how well will you and yours fair?
then you show a lil fucking gratitude to the rest since God has blessed you.. dont ya think?
Wasted my time reading this. Worthless info.
if you are going to have a pirate pic.. you are NOT! allowed to act like a bitch!
problems with no solutions? ='s BITCH!
so, if phil deez nutz sucks so bad??
what do you have to offer?
just sayin.......
Your husband beats you up and puts his cigarettes out on your face but where else are you gonna go?
You don't worry about where you're gonna go; you shoot him dead.
"Options Game" ? its not suppose to be a game you dumb fucks.
Irene and pasttense are a tag team, maybe the same persons?
The only way out is Ron Paul!
Dear Hu Jintao,
Please help Ron Paul with his fund raising, he is sensible and thinks longer term. We all need stable, steady, smarter leaders. A little from your reserves would be a good investment!
Please have a visit wwith him or If you can reallly speak what you think of Obama it would help the world.
Thanks you in advance.
Ps: He needs protection from the bankia!
even if Ron gets elected..
if he doesnt play ball..
the secret service will just stand down.. again. http://www.youtube.com/results?search_query=secret+service+stand+down&aq=0&oq=secret+service+stan
yeah this post seems at odds with the other posts, please explain why you changed your tune, and also, it is because we broke the descending triangle. another question. I don't like the big european sell offs the past two days with the buy in it, I have seen this go very wrong after about three days. things look bullish and then a big drop. I would be much more bullish of we had a drop, and then worked out way back. Not to a new low, but a higher low. I don't like these run ups that don't go back a good bit and then bounce higher from a higher low. we haven't had the regression of stocks (50 percent of the move? ) that I'd like to see. But of course we also have operation twist now so the primary dealers can always front runa dn make the market keep goiing up with leverage and options. UGH!!
Deflation homey.
CPI = consumer "price" index
Not Inflation-
The largest price increases in CPI are Government entities-(taxes) to pay for high priced Bureaucracy?
Apparel (consumer sentiment based) is an example of decreasing prices-
If housing was pegged to actual house "prices" instead of OER (owners equivalent rent) CPI would be much lower which would actually show a Deflationary trend-
Sorry Phil but are you being ironic? Only last week you were comfortably adding to short positions at 1200 confidently predicting that the S&P was ready to start its descent. And now you're bullish? Have some conviction for pity's sake.
You know what, first time I've resorted to really puerile commentary, but FUCK YOU and every other stock pumping asshole that is going to get mom and pop slaughtered when this market completely melts down.
do not shoot the messenger. Phil is adjusting his view based on new observations.
IMO, the most successful traders are the one that can admit quickly that they have been wrong.
CDS Ban
Greek 1Y Bond yield Up at 180%
jdelano,
I like you.. and I just wanted you to know that I really, really liked what you said and I hope that we can hang out some time and maybe hold hands.. cause I think your sexxy!
XOXOXXOXOX, JW
I have a place in Amelia Island if you're up for an assignation. (Female or post-op only.)
"So, as I often point out to bearish Members - where else are people going to put their money if not into US equities?"
Gold and silver.
Yes, bears have no problem hibernating for a while. Especially this time of year.
apple sort of indicating that the inflation effect has an upper limit. Honestly, ya think the OWS# is completely unrelated to the surging stock market, really. Earnings, aside accounting gimmicks, are a whitewash - there's a sea-change in consumer sentiment - that 'bright and shiny' isn't going to deflect - most people prefer Batman (and the Puzzler) to, damn, who's a bright and sunny character? Jennifer Aniston.
shorting is the thing to do for a while, especially ibm.
http://expose2.wordpress.com
Are there any regions or sectors PIMCO is particularly interested in at the moment?
From an opportunistic standpoint, the U.S. residential and commercial mortgage markets continue to present opportunities due to their size, regulatory uncertainty and housing weakness. Also, the issues surrounding sovereign debt and financial institution balance sheets in Europe have the potential to create attractive investments for some time.
From a liquid markets standpoint, the continued deleveraging in the global financial sector should produce a steady supply of highly motivated sellers of risk assets for non-economic reasons, creating temporary pricing anomalies from a bottom-up perspective. From a macroeconomic perspective, the distortions created by policymakers globally as they try to curb inflation and control capital flows in the developing world, while trying to address large debt overhangs and spur aggregate demand in the developed world, should create opportunities in the currency and interest rate markets.
http://www.finalternatives.com/node/18441
Europe is worth more to not only the Germans but Americans as well.. in a state of turmoil!
Wake Up!! Sheep!!! Privatization is the NEW NORMAL! that they forgot to tell YOU! about!! LOL!!
http://www.youtube.com/watch?v=t5jdMDiEeco
Uploaded by RussiaToday on Oct 18, 2011
This week Max Keiser and co-host, Stacy Herbert, talk about JP Morgan's bet against itself, a Florida legislator's plans to boost the economy with 'dwarf-tossing' and Tim Geithner flying economy. In the second half of the show, Max Keiser interviews Saifedean Ammous about Mubarak's odious debts and about whether or not Occupy Wall Street is an Arab Spring for the West.
Nice link JW. The Morgue is planning on acellerating WWIII. North Georgia is ready. We await the signal from Florida. Bring it.
I have offices and property in both JAX and Georgia both.. thats why I am against both.. as opposed to Palm Beach and being 53 miles away from the Bahamas! LOL!!
I am glad you are prepped.. maybe you dont need it for me as much as the hungry people that will be all around you?
but happy to help encourage you (and others) to do the right thing!
You are only playing with the Eurozone's latest rumor when you play the US equities. Everyday a newer, greater plan is disussed. The problem is that each of the 17 countries in the EU want the others to foot the bill so very little will ever get done. This is not the 1980's where earnings matter so playing US equities is a matter of assuming the EU and US will be able to keep issuing more debt at an accelerating rate. Good luck with 1980's thinking.
Instead of the typical comments, let's all show our chops on predicting what happens when CPI prints tomorrow.
Rules are simple:
1. if inflation comes in at twice or more the "expectations", market will rally or selloff?
2. if inflation comes in near or below the 'expectations', market will rally or selloff?
I'm going to say rally with option 1, and rally with option 2.
Here's a secret, traders and robots alike don't know how to interpret anything like this, so it's just "hmm, the reaction was up, but then it retraced (or the reverse), so...... fill in the blank with Bullshit and Horse Manure.
EDIT: CPI can only cause more damage now, as AAPL yelled fire in a crowded apple store with the doors barred from the outside. Game is pointless now. Carry on.
Fuck the CPI, just check the POMO schedule. That will tell you what's going to happen tomorrow. Position accordingly.
http://www.zerohedge.com/news/pomo-its-baaaaaaaaack
Right. Inflation is not our friend especially when it's under reported and especially when yields are surpressed It the biggest joke of the last 20 years.
This is funny, is there a sequel?
Wait, you read it?
I just stopped by to see how quiet it is in here.